Barclays - CA.gov

NEW ISSUES — FULL BOOK-ENTRY RATING: S&P: AA-/Stable See “Rating” herein

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2017A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2017A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2017A Bonds. See “TaxMatters. ”

$33,530,000CITY OF RICHMOND, CALIFORNIA

WASTEWATER REVENUE BONDS, SERIES 2017A

Dated: Date of Delivery Due: August 1, as shown on inside cover pageThe $33,530,000 principal amount of City of Richmond Wastewater Revenue Bonds, Series 2017A (the “Series 2017A Bonds”) are being issued to provide

funds to: (i) finance improvements as described herein (the “Project”) to the City of Richmond (the “City”) wastewater collection, treatment and disposal system (collectively, the “Enterprise”); (ii) refund all the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2006A; and (iii) pay certain costs associated with die issuance of the Series 2017A Bonds, as more fully described herein. See “Plan of Finance.”

The Series 2017A Bonds are issued pursuant to the Wastewater Revenue Bond Indenture, dated as of October 1, 2006, as previously amended and supplemented, including as supplemented by the Third Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2008, as amended by the First Amendment to Wastewater Revenue Bond Indenture, dated as of November 1, 2009, as amended and supplemented by the Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2010, the Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of July 1, 2017 and the Sixth Supplemental Wastewater Revenue Bond Indenture dated, as of August 1, 2017 (collectively, the “Indenture”), each by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the ‘Trustee”). The principal of the Series 2017A Bonds is payable upon their respective stated maturities on August 1 of each year, as set forth on the inside cover page. Interest on the Series 2017A Bonds will be payable semiannually on August 1 and February 1 of each year, commencing February 1, 2018 (each, an “Interest Payment Date”). Interest on the Series 2017A Bonds is payable on each Interest Payment Date to the Owners of the Series 2017A Bonds as of the close of business on the Record Date in respect of such Interest Payment Date. “Record Date” means, with respect to the Series 2017A Bonds, the fifteenth day of the month preceding an Interest Payment Date.

The Series 2017A Bonds are being issued in fully registered form and shall be initially registered in the name of “Cede & Co.,” as nominee of The Depository Trust Company. The Series 2017A Bonds shall mature, subject to prior redemption as provided in the Indenture, upon the terms and conditions hereinafter set forth. The Series 2017A Bonds shall bear interest at the rate determined; provided that any overdue principal shall bear interest at the rate borne by the Series 2017A Bonds on the date on which such principal became due and payable. Each Series 2017A Bond may be assigned by the Trustee a distinctive number or letter and number, and a record of the same shall be maintained by the Trustee. Registered ownership of the Series 2017A Bonds, or any portion thereof, may not thereafter be transferred except as set forth in in the Indenture. Individual purchases of ownership interests in the Series 2017A Bonds will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof. See “The Series 2017A Bonds.”

The Series 2017A Bonds are limited obligations of the City payable from Net Revenues, consisting primarily of Gross Revenues of the Enterprise (defined herein) after payment of Operating Expenses. The pledge of Net Revenues under the Indenture securing payment of the Series 2017A Bonds is on a parity with certain bonds outstanding under the Indenture and the regularly scheduled payments under a swap agreement entered into in 2009. The City’s obligation to reimburse the Series 2008A Letter of Credit Bank for drawings under the Letter of Credit (as such terms are defined herein) is also secured by a pledge of Net Revenues on a parity with the Series 2017A Bonds. See “Security and Sources of Payment of the Series 2017A Bonds-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds.” The City may issue additional Parity Obligations secured by a pledge of Net Revenues on a parity basis the Series 2017A Bonds.

The Series 2017A Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Series 2017A Bonds. Purchasers will not receive certificates representing their interests in the Series 2017A Bonds. Payments of principal of and interest on the Series 2017A Bonds will be made by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Series 2017A Bonds. See Appendix F-“DTC and the Book-Entry Only System.”

The Series 2017A Bonds are subject to optional and mandatory redemption prior to their respective stated maturity dates. See “The Series 2017A Bonds-Redemption Provisions for the Series 2017A Bonds.”

THE SERIES 2017A BONDS ARE REVENUE OBLIGATIONS OF THE CITY AND ARE PAYABLE AS TO BOTH PRINCIPAL AND INTEREST, AND ANY PREMIUM UPON REDEMPTION THEREOF, EXCLUSIVELY FROM NET REVENUES AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE SERIES 2017A BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE CITY. THE SERIES 2017A BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION, OR A PLEDGE OF THE FAITH AND CREDIT OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE, EXCEPT TO THE EXTENT OF CERTAIN AMOUNTS HELD UNDER THE INDENTURE PLEDGED THEREFOR, SOLELY FROM NET REVENUES. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017A BONDS. THE ISSUANCE OF THE SERIES 2017A BONDS SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT.

This cover page contains certain information for general reference only it and is not intended to be a summary of the terms of this offering. An investment in the Series 2017A Bonds involves risk. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision, see “Certain Risks to Bondowners,” as well as other factors discussed throughout this Official Statement.

The Series 2017A Bonds will be offered when, as and if issued by the City and received by the Underwriters, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Bond Counsel. Certain matters will be passed upon for the City by the City Attorney of the City of Richmond and by SchiffHardin LLP, as Disclosure Counsel. Certain matters will be passed upon for the Underwriters by Jones Hall, A Professional Law Corporation, San Francisco, California. The Series 2017A Bonds, in book-entry form only, will be available for delivery through facilities of The Depository Trust Company in New York, New York on or about August 1, 2017.

Date of the Official Statement: July 19. 2017.

Barclays

$33,530,000CITY OF RICHMOND, CALIFORNIA

WASTEWATER REVENUE BONDS, SERIES 2017A

$6,575,000 Serial Series 2017A Bonds

Maturity (August 1)

PrincipalAmount Interest Rate

2018 $1,220,000 2.000%2019 1,255,000 4.0002020 1,305,000 4.0002021 1,365,000 5.0002022 1,430,000 5.000

Yield Price CUSIP No.t0.900% 101.092 764507 CS60.990 105.946 764507 CT41.080 108.596 764507 CU11.170 114.924 764507 CV91.260 118.068 764507 CW7

$7,415,000 5.000% Term Bond Due August 1, 2042-Yield: 2.960°/cr-Price: 117.546c-CUSIP No.T: 764507 CX5

$19,540,000 5.250% Term Bond Due August 1, 2047-Yield: 2.910°/cr-Price: 120.176c-CUSIP No.T: 764507 CY3

C Priced to first optional redemption date of August 1, 2027 at par.t Copyright © 2017 CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP

data are provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence, and are provided for convenience of reference only. The CUSIP numbers listed above are being provided solely for the convenience of bondholders and none of the City or the Underwriters makes any representation with respect to such numbers or undertake any responsibility for its accuracy. The CUSIP numbers are subject to being changed after the issuance of the Series 2017A Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the Series 2017A Bonds.

No Offering May Be Made E>cept ty this Official Statement. No dealer, broker, salesperson or other person has been authorized by the City or the Underwriters to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing.

No U nlawful, Sales, Solicitations, or Offers. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2017A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

Use of this Official Statement. This Official Statement is submitted in connection with the sale of the Series 2017A Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Series 2017A Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact.

Effective Date. This Official Statement speaks only as of its date. The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City of the Enterprise since the date hereof. This Official Statement, including any supplement or amendment, is intended to be deposited with the Electronic Municipal Market Access site maintained by the Municipal Securities Rulemaking Board.

P reparation of this Official Statement. All descriptions and summaries of documents and statutes set forth do not purport to be comprehensive or definitive, and reference is made to each document and statute for complete details of all terms and conditions. All statements in this Official Statement are qualified in their entirety by reference to each such document and statute. Certain capitalized terms used but not defined in this Official Statement are defined in Appendix C-“Summary of Certain Provisions of the INDENTURE-Defmitions.,,

The Underwriters have provided the following sentence for inclusion in this Official Statement: TheU nderwriters have reviewed the information in this Official Statement pursuant to their responsibilities to investors under the federal securities laws, but the U nderwriters do not guarantee the accuracy or completeness of such information.

Stabi Nation of and Changes to Offering Prices. In connection with this offering, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the Series 2017A Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell the Series 2017A Bonds to certain dealers and others at prices lower than the initial public offering prices or at yields higher than the initial public offering yields set forth on the inside cover page hereof and said initial offering prices or yields may be changed from time to time by the Underwriters.

The issuance and sale of the Series 2017A Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, and the Indenture has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions provided thereunder by Sections 3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.

Website Information Not Incorporated ty Reference. The City maintains a website. Unless specifically indicated otherwise, the information presented on that website is not incorporated by reference as part of this Official Statement and should not be relied upon in making investment decisions with respect to the Series 2017A Bonds.

U se of E sti mates and P rejections. Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” In this respect, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” “plan,” “budget,” and similar expressions are intended to identify forward-looking statements. Projections, forecasts, assumptions, expressions of opinions, estimates and other forward statements are not to be construed as representations of fact and are qualified in their entirety by the cautionary statements set forth in this Official Statement.

The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The City does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur or do not occur.

This Official Statement contains information concerning the ratings assigned to the Swap Counterparty (as defined herein). Such rating reflects only the view of the agency giving such rating and are provided for convenience of reference only. Such rating information has been obtained from sources believed to be reliable but has not been confirmed or re-verified by such rating agencies. Neither the City nor the Underwriters take any responsibility for the accuracy of such rating, gives any assurance that such rating will apply for any given period of time, or that such rating will not be revised downward or withdrawn if, in the judgment of the agency providing such rating, circumstances so warrant.

CITY OF RICHMOND, CALIFORNIA

City Council

Tom Butt, Mayor Jovanka Beckles, Vice Mayor

Ben Choi, Counci I member Eduardo Martinez, Counci I member

Gayle McLaughlin, Counci I rremberT Jael Myrick, Counci I member

Melvin Willis, Counci I member

City Administration William A. Lindsay, City Manager

Belinda Warner, City Finance Director Ryan Smith, Director of Water Resource Recovery

Bruce Goodmiller, City Attorney

PROFESSIONAL SERVICES

Orrick, Herrington & Sutcliffe LLP San Francisco, California

Bond Counsel

Schiff Hardin LLP San Francisco, California

Disclosure Counsel

The Bank of New York Mellon Trust Company, N. A. San Francisco, California

Trustee

Public Resources Advisory Group Oakland, California Municipal Advisor

t On July 12, 2017, Ms. McLaughlin announced her resignation effective July 18, 2017. Under the City Charter, the City Council has 60 days to appoint a successor.

TABLE OF CONTENTS

Page

CHANGES FROM THE PRELIMINARYOFFICIAL STATEMENT................................. 1

INTRODUCTION............................................. 1General.......................................................... 1Purpose.........................................................2The City........................................................2Outstanding Parity Obligations.....................2Security and Sources of Payment for the

Series 2017A Bonds..............................3Additional Bonds..........................................4Rate Covenant...............................................4Continuing Disclosure..................................4Summaries Not Definitive............................4

PLAN OF FINANCE.........................................5Financing of Capital Improvements.............5Application of Proceeds of the Series

2017 A Bonds; Plan of Refunding.........6Transactions Related to the Series

2008A Bonds........................................6Amendment of 2009 Swap Agreement.........6

ESTIMATED SOURCES AND USES OFFUNDS..............................................................7THE SERIES 2017A BONDS...........................7

General..........................................................7Redemption Provisions for the Series

2017ABonds........................................8Redemption Procedures for the Series

2017 A Bonds........................................9

DEBT SERVICE SCHEDULE........................ 10

SECURITY AND SOURCES OFPAYMENT FOR THE SERIES 2017ABONDS............................................................ 11

Pledge of Net Revenues Under theIndenture............................................. 11

Outstanding Parity Debt and ReserveFunds for Other Series of Bonds......... 12

Flow of Funds............................................. 13No Reserve Fund........................................ 15Rate Covenant............................................. 15Additional Bonds and Parity Debt.............. 16Rate Stabilization Fund............................... 16

THE WASTEWATER ENTERPRISE............ 16Overview.................................................... 16

Page

Service Area............................................... 18History........................................................ 20City Management....................................... 20Management of the Enterprise by Veolia... 20Capital Improvement Program................... 22Facilities Description.................................. 23Customer Base............................................ 26Wastewater Flows...................................... 28Insurance on the Enterprise........................ 28Regulatory Matters..................................... 29

FINANCIAL MATTERS RELATING TOTHE ENTERPRISE......................................... 31

Billing and Collection Procedures..............31Rates, Fees and Charges............................. 32Connection Fees......................................... 33Comparison of Enterprise Charges............. 34Basis of Accounting................................... 34Sources of Funds; Operating Costs............35Management’s Discussion of Operating

Results................................................ 36Budget Process........................................... 36Historical and Projected Revenues,

Operating Expenses, and Debt Service Coverage................................ 36

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES ANDAPPROPRIATIONS....................................... 38

Article XIII B............................................. 38Proposition 62............................................. 38Proposition 218........................................... 39Effect of Proposition 218 and of

Possible General Limitations onEnforcement Remedies.......................41

Future Initiatives......................................... 41

CERTAIN RISKS TO BONDOWNERS.......42System Demand.......................................... 42System Expenses........................................ 42Risks Related to Subsidy Receipts for

the Taxable Series 2010B Bonds.......42Limited Recourse on Default...................... 43Initiatives; Changes in Law........................ 43Statutory and Regulatory Impact................ 43Seismic Risks............................................. 44Climate Change.......................................... 44Insurance.................................................... 45

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No Tax Pledge; No Recourse to CityGeneral Fund.......................................45

Changes in Law..........................................46Loss of Tax Exemption...............................46Secondary Markets and Prices....................46

TAX MATTERS..............................................46

NO MATERIAL LITIGATION......................48

RATING..........................................................48

UNDERWRITING.......................................... 49

MUNICIPAL ADVISOR................................ 49APPROVAL OF LEGAL PROCEEDINGS ... 49

FINANCIAL STATEMENTS......................... 50

CONTINUING DISCLOSURE....................... 50

MISCELLANEOUS........................................ 51

MAPS AND TABLES

Figure 1 - Map Showing the Treatment Plant and Other Enterprise Facilities...................................... 17Figure 2 - Map of the Service Area of the Enterprise............................................................................ 19

Table 1 - Refunded Bonds...................................................................................................................... 5Table2 - 2017-2022 Capital Improvement Program Projects..............................................................23Table 3 - Customers Served and Total Revenues.................................................................................26Table 4 - Principal Wastewater Customers..........................................................................................27Table 5 - Average Monthly Dry Weather Flow...................................................................................28Table 6 - Average Monthly Wet Weather Flow...................................................................................28Table 7 - Annual User Rate and Charges............................................................................................. 33Table 8 - Comparative Monthly Wastewater Charges.........................................................................34Table 9 - Summary of Revenues, Expenses and Changes in Net Assets..............................................35Table 10 - Historical and Projected Revenues, Operating Expenses and Debt Service Coverage....... 37

APPENDICES

Appendix A - Economic, Demographic and Certain Financial Information Relating to theCity of Richmond......................................................................................................... A-l

Appendix B - Comprehensive Annual Financial Report of the City for theYear Ending June 30, 2016...........................................................................................B-l

Appendix C - Summary of Certain Provisions of the Indenture........................................................... C-1Appendix D - Proposed Form of Bond Counsel Opinion......................................................................D-1Appendix E - Form of the Continuing Disclosure Agreement.............................................................. E-1Appendix F - DTC and the Book-Entry Only System...........................................................................F-l

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OFFICIAL STATEMENT

$33,530,000CITY OF RICHMOND, CALIFORNIA WASTEWATER REVENUE BONDS

SERIES 2017A

CHANGES FROM THE PRELIMINARY OFFICIAL STATEMENT

This Official Statement contains changes from the Preliminary Official Statement dated July 7, 2017 to clarify the requirements for the issuance of Additional Bonds and Parity Debt. These changes are as follows: the text under the following captions were revised to read as set forth in this Official Statement: (i) “INTRODUCTION-Additional Bonds;” (ii) “SECURITY AND SOURCES OF PAYMENT FOR THE Series 2017A BONDS-Additional Bonds and Parity Debt;” and (iii) APPENDIX C-“SUMMARY OF Certain Provisions of The Indenture—Issuance of Bonds and Parity Debt.”

This Official Statement reflects, on the masthead page, the announced resignation of Councilmember McLaughlin after the date of the Preliminary Official Statement.

The discussions under the following captions were revised to reflect the remarketing of the Series 2008A Bonds described under the caption “Plan OF FlNANCE-Transactions Related to the Series 2008A Bonds:” (i) “INTRODUCTION-Outstanding Parity Obligations;” (ii) ‘PLAN OF FINANCE;” and (iii) “Security and Sources of Payment for the Series 2017A BoNDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds.”

This Official Statement incorporates the actual scheduled debt service on the Series 2017A Bonds into the Debt Service Schedule and Table 10-‘Historical and Projected Revenues, Operating Expenses and Debt Service Coverage,” populates the table under the caption ‘ESTIMATED SOURCES AND USES OF FUNDS,” and inserts information under the captions “THE SERIES 2017A BONDS-Redemption Provisions for the Series 2017A Bonds” and “UNDERWRITING.”

The information with respect to Veolia set forth under the caption “THE WASTEWATER ENTERPRISE-Management of the Enterprise by Veolia-Vedia” was expanded. Other minor changes to the text of the Preliminary Official Statement were also made in this Official Statement. No changes were made to the information presented with respect to the Enterprise.

INTRODUCTION

This Introduction is only a brief description of and partial guide to, and is qualified by mare complete and detailed information contained in the entire Official Statement, including the ccver page through the appendices, and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the Series 2017A Bonds to potential investors is made only by means of the entire Official Statement.

General

The purpose of this Official Statement, which includes the cover page through the appendices, is to set forth certain information concerning the City of Richmond (the “City”) and its wastewater collection, treatment and disposal systems (collectively, the “Enterprise”), in connection with the sale of $33,530,000 principal amount of City of Richmond Wastewater Revenue Bonds, Series 2017A (the

“Series 2017A Bonds”). The Series 2017A Bonds are being issued pursuant to Chapter 13.56 of Article 13 of the Richmond Municipal Code (the “Bond Law”) and the Wastewater Revenue Bond Indenture dated as of October 1, 2006, as previously amended and supplemented, including as supplemented by the Third Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2008, as amended by the First Amendment to Wastewater Revenue Bond Indenture, dated as of November 1, 2009, as amended and supplemented by the Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2010, the Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of July 1, 2017 and the Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of August 1, 2017 (collectively, the ‘Indenture”), each by and between the City and The Bank of New York Mellon Trust Company, N. A., as trustee (the “Trustee”).

The Series 2017A Bonds are being issued in fully registered form and shall be initially registered in the name of “Cede & Co.,” as nominee of The Depository Trust Company. The Series 2017A Bonds shall mature, subject to prior redemption as provided in the Indenture, upon the terms and conditions hereinafter set forth. The Series 2017A Bonds shall bear interest at the rate determined; provided that any overdue principal shall bear interest at the rate borne by the Series 2017A Bonds on the date on which such principal became due and payable. Each Series 2017A Bond may be assigned by the Trustee a distinctive number or letter and number, and a record of the same shall be maintained by the Trustee. Registered ownership of the Series 2017A Bonds, or any portion thereof, may not thereafter be transferred except as set forth in in the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE Series 2017A Bonds.”

Purpose

The Series 2017A Bonds are being issued to: (i) finance improvements as described in this Official Statement (the “Project”) to the Enterprise; (ii) refund all the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2006A (the “Refunded Bonds”); and (iii) pay certain costs associated with the issuance of the Series 2017A Bonds, as more fully described herein. See “PLAN OF FINANCE” and “Estimated Sources and Uses of Funds.”

The City

The City is located 16 miles northeast of the City and County of San Francisco, on the western shore of Contra Costa County along the San Francisco Bay and occupies 33.7 square miles of land area. The population of the City, as of January 1, 2017, is approximately 111,785. The City was incorporated in 1905 and adopted its charter in 1909.

Outstanding Parity Obligations

The pledge of Net Revenues under the Indenture securing payment of the Series 2017A Bonds is on a parity with a pledge of Net Revenues securing Prior Obligations, which, following issuance of the Series 2017A Bonds, will consist of $32,875,000 Outstanding principal amount of City of Richmond Variable Rate Wastewater Revenue Refunding Bonds, Series 2008A (the “Series 2008A Bonds”) and $40,010,000 outstanding principal amount of City of Richmond Wastewater Revenue Bonds (Taxable Build America Bonds), Series 2010B (the “Taxable Series 2010B Bonds”). The Series 2017A Bonds, together with the Series 2008A Bonds and the Taxable Series 2010B Bonds, and any additional bonds that may be issued under the Indenture are collectively referred to as the “Bonds.” The Series 2008A Bonds are supported by an irrevocable, direct-pay letter of credit issued by Barclays Bank PLC (the “Series 2008A Bonds Letter of Credit Bank”), pursuant to and subject to the terms of a Reimbursement Agreement, dated as of July 1, 2017, between the City and the Series 2008 Bonds Letter of Credit Bank. The City’s obligation to reimburse the Series 2008 Bonds Letter of Credit Bank for drawings under the letter of credit (the “Series 2008A Bonds Letter of Credit Reimbursement Obligation”) is also secured by

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a pledge of Net Revenues on a parity with the Series 2008A Bonds and the Prior Obligations. See “PLAN OF FlNANCE-Transactions Related to the Series 2008A Bonds.” See also “SECURITY AND SOURCES OF PAYMENT for the Series 2017ABONDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds-Outstanding Bonds.”

The pledge of Net Revenues under the Indenture securing payment of the Series 2017A Bonds is also on a parity with a pledge of Net Revenues under an interest rate swap. In connection with the issuance of the City of Richmond Wastewater Revenue Bonds, Series 2006B (the “Series 2006B Bonds”), the City entered into an interest rate swap agreement with Bear Steams Capital Markets, as predecessor to J.P. Morgan Chase & Co. This interest rate swap agreement was left in place when the Series 2008A Bonds were issued to refund the Series 2006B Bonds and the Series 2008A Bonds became associated with such interest rate swap. On November 19, 2009, the City entered into a new fixed payer swap agreement (the “2009 Swap Agreement”) with the Royal Bank of Canada (the “Swap Provider”) and the prior swap agreement was terminated. Any extraordinary termination payments payable to the Swap Provider are subordinate to the payment of principal of and interest on the Bonds. See “SECURITY AND SOURCES OF Payment for the BONDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds-2009 Swap Agreement.” The 2009 Swap Agreement was recently amended as described under “Plan OF Finance” and will remain in place.

Security and Sources of Payment for the Series 2017A Bonds

Pledge of Net Revenues of the Enterprise. The Series 2017A Bonds are limited obligations of the City payable from Net Revenues of the Enterprise, consisting of Gross Revenues remaining after payment of Operating Expenses (as such terms are defined under the caption “SECURITY AND SOURCES OF PAYMENTS for the Series 2017A BONDS-Pledge of Net Revenues Under the Indenture”) on a parity with the Series 2008A Bonds, the Taxable Series 2010B Bonds, the Series 2008A Bonds Letter of Credit Reimbursement Obligation and the 2009 Swap Agreement (as described above under “-Outstanding Parity Obligations”). The Series 2017A Bonds are not secured by a legal or equitable pledge of, or charge or lien upon, any property of the City or any of its income or receipts, except the Net Revenues.

THE SERIES 2017A BONDS ARE REVENUE OBLIGATIONS OF THE CITY AND ARE PAYABLE AS TO BOTH PRINCIPAL AND INTEREST, AND ANY PREMIUM UPON REDEMPTION THEREOF, EXCLUSIVELY FROM NET REVENUES AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE SERIES 2017A BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE CITY. THE SERIES 2017A BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSHTUTIONAL OR STATUTORY PROVISION, OR A PLEDGE OF THE FAITH AND CREDIT OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLIHCAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE, EXCEPT TO THE EXTENT OF CERTAIN AMOUNTS HELD UNDER THE INDENTURE PLEDGED THEREFOR, SOLELY FROM NET REVENUES. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017A BONDS. THE ISSUANCE OF THE SERIES 2017A BONDS SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIAHON FOR THEIR PAYMENT.

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Additional Bonds

Upon the satisfaction of certain conditions, the Indenture authorizes the issuance of additional bonds (“Additional Bonds”) and other indebtedness (‘"Parity Debt”) payable on a parity with the Bonds, provided that, among other requirements, the Debt Service Coverage Ratio for the most recent Fiscal Year for which audited financial statements for the Enterprise are available (based on the Debt Service payable during the Bond Year which commenced in such Fiscal Year), calculated as of the date of sale of such additional Series of Bonds and including the Bonds and Parity Debt then Outstanding and such additional Series of Bonds, will not be less than 1.25:1.0. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017A BONDS-Additional Bonds and Parity Debt.”

Rate Covenant

The City covenants under the Indenture that it will at all times, while any bonds (including the Series 2017A Bonds) remain outstanding, fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise which are sufficient to yield Net Revenues in each Fiscal Year so that the ratio of Net Revenues to annual Debt Service during the Bond Year which commences in such Fiscal Year is not less than 1.25:1.0. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017A BONDS-Rate Covenant.” However, the City’s ability to increase such rates, fees and charges is subject to the limitations imposed by Proposition 218. See “CONSTITUTIONAL AND Statutory Limitations on Taxes and APPROPRIATIONS-Proposition 218” and “-Effect of Proposition 218 and of Possible General Limitations on Enforcement Remedies.” The City has approved rate increases through Fiscal Year 2019-20. See “FINANCIAL MATTERS RELATING TO THE ENTERPRISE- Rates, Fees and Charges.”

Continuing Disclosure

The City has covenanted to provide certain financial information and operating data relating to the Series 2017A Bonds by not later than 270 days following the end of the City’s Fiscal Year (which currently is June 30) commencing with the report for Fiscal Year 2016-17 (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report and notices of material events will be filed by means of the Electronic Municipal Market Access (EMMA) site maintained by the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in the Annual Report or the notices of material events is contained within APPENDIX E-‘EORM of Continuing Disclosure Agreement.”

Summaries Not Definitive

The summaries and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary or reference is qualified in its entirety by reference to each such document, statute, report or instrument. The capitalization of any word not conventionally capitalized or otherwise defined herein indicates that such word is defined in the Indenture and, as used herein, has the meaning given to it in the Indenture. Unless otherwise indicated, all financial and statistical information herein has been provided by the City.

All references to and summaries of the Indenture, the Series 2017A Bonds and the Bond Law referred to herein are qualified in their entirety by reference to the full text of such document, copies of which are available for inspection at the office of the Director of Finance of the City at 450 Civic Center Plaza, Richmond, California, and will be available from the Trustee upon request and payment of duplication costs. Forward looking statements in this Official Statement are subject to risks and uncertainties. Actual results may vary from forecasts or projections contained herein because events and circumstances do not occur as expected, and such variances may be material.

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PLAN OF FINANCE

The net proceeds from the sale of the Series 2017A Bonds will be used to: (i) finance improvements to the Enterprise; (ii) refund all of the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2006A; and (iii) and pay certain costs associated with the issuance of the Series 2017A Bonds. The application of proceeds of the Series 2017A Bonds is described under ‘ESTIMATED SOURCES and Uses” below.

On July 12, 2017, the City undertook certain transactions related to the City’s Variable Rate Wastewater Revenue Refunding Bonds, Series 2008A (the “Series 2008A Bonds”), including the substitution of the letter of credit supporting the Series 2008A Bonds and the remarketing of the Series 2008A Bonds. See “-Transactions Related to the Series 2008A Bonds” below.

The City recently amended the 2009 Swap Agreement as described under the caption “-Amendment of 2009 Swap Agreement” below.

Financing of Capital Improvements

A portion of the proceeds of the Series 2017A Bonds will be applied primarily to pay, or reimburse, the costs of certain improvements (the “Project”) which comprise a portion of the City‘s Capital Improvement Plan. See “THE WASTEWATER ENTERPRISE-Capital Improvement Plan.”

The City has identified a number of projects to renovate, rehabilitate and improve the sewer collection facilities of the Enterprise and comply with regulatory requirements as well as obligations of the City under the Settlement Agreement, which is described in “THE WASTEWATER ENTERPRISE- Regulatory Matters-Prior Noncompliance-Baykeepers Lawsuit.” These projects are identified in the 2017-2022 Capital Improvement Program (the “2017-2022 CIP”).

The City estimates that the total cost of these improvements over approximately five years will be approximately $63.3 million, with funding from proceeds from the issuance of the Series 2017A Bonds of $31,718,000, with additional funding from a combination of pay-as-you-go sources and proceeds of a California Clean Water State Revolving Fund loan (“State loan”). See “THE WASTEWATER ENTERPRISE- Capital Improvement Program.”

Construction. Pursuant to the Management Agreement between the City and Veolia Water North America Operating Services, Inc. (“Veolia”), Veolia will be responsible for management of the Project. See “The Wastewater ENTERPRISE-Management of the Enterprise by Veolia-Summary of the Management Agreement” The City expects to award contracts to the contractors submitting the lowest responsive bids.

Environmental and Other Approvals. Projects undertaken by the City, including the Project financed with the proceeds of the Series 2017A Bonds, are generally subject to the California Environmental Quality Act, as amended (Division 13 of the California Public Resources Code) (“CEQA”). Under CEQA, a public agency is required, following preparation of an initial assessment, to determine whether an environmental impact report (an “EIR”), a negative declaration or a mitigated negative declaration is required for a project. If there is substantial evidence that significant environmental effects may occur, an EIR is required to be prepared.

The City has obtained all necessary CEQA approvals for the Project. Any other approvals are ministerial and expected in due course.

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Application of Proceeds of the Series 2017A Bonds; Plan of Refunding

A portion of the proceeds of the Series 2017A Bonds will be applied to refund all $7,120,000 outstanding principal amount of the City’s Wastewater Revenue Refunding Bonds, Series 2006A (the ‘Refunded Bonds”). The Refunded Bonds are described in Table 1 below. The Refunded Bonds have been called for redemption on August 1, 2017, the date of delivery of the Series 2017A Bonds.

Table 1Refunded Bonds

City of Richmond Wastewater Revenue Refunding Bonds, Series 2006A

Maturity Date Interest CUSIP No.(August 1) Amount Rate (764507)

2018 $1,315,000 4.000% BR92019 1,365,000 4.000 BS72020 1,420,000 4.000 BT52021 1,480,000 4.125 BU22022 1.540.000 4.625 BV0

Total $7,120,000

t Copyright © 2017 CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP data are provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence, and are provided for convenience of reference only.

Transactions Related to the Series 2008A Bonds

Prior to July 12, 2017, the Series 2008A Bonds were supported by an irrevocable, direct-pay letter of credit issued by MUFG Union Bank, N.A. On July 12, 2017, the Series 2008A Bonds were remarketed and are now supported by an irrevocable, direct-pay letter of credit issued by Barclays Bank PLC, pursuant to and subject to the terms of a Reimbursement Agreement, dated as of July 1, 2017, between the City and the Series 2008 Bonds Letter of Credit Bank. See “-Barclays Affiliates” below.

Barclays Affiliates. Certain entities affiliated with Barclays Capital Inc., one of the Underwriters of the Series 2017A Bonds, will engage in the transactions relating to the Series 2008A Bonds. The letter of credit supporting the Series 2008A Bonds will be provided by Barclays Bank PLC. Barclays Capital Inc. will become the remarketing agent for the Series 2008A Bonds.

Amendment of 2009 Swap Agreement

On May 30, 2017, the City entered into an amendment of the 2009 Swap Agreement, which represented an amendment of an interest rate swap initially entered into in 2006. Under the 2009 Swap Agreement, the City receives amounts expected to be approximately equal to the floating rate interest payments the City is obligated to make with respect to the Series 2008A Bonds in exchange for making fixed rate payments. Royal Bank of Canada as the Swap Provider is the swap counterparty.

The 2009 Swap Agreement contains certain provisions referencing ratings of obligations secured by Net Revenues of the Enterprise. Prior to the amendment described above, Moody’s Investors Service, Inc. (“Moody’s”) was a referenced rating agency. In connection with the transactions described herein, S&P will be the sole rating agency providing ratings for Net Revenue obligations of the Enterprise and Moody’s will no longer provide such ratings. Therefore, it became necessary to amend the 2009 Swap Agreement to remove the references to Moody’s therein. The 2009 Swap Agreement will remain in place following remarketing of the Series 2008A Bonds.

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See “Security and Sources of Payment for the Series 2017A BoNDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds-2009 Swap Agreement.”

ESTIMATED SOURCES AND USES OF FUNDS

The estimated sources and uses of funds with respect to the Series 2017A Bonds are as follows:

Sources:Principal Amount of Series 2017A Bonds PI US Original Issue Premium

Total Estimated SourcesUses:

Deposit to Project Fund Deposit to Redemption Account(1)Costs of Issuance12'Underwriters’ Discount

Total Estimated Uses

Series 2017 A Bonds

$33,530,000.005.905.633.80

$39,435,633.80

$31,718,000.007,120,000.00

425,404.11172.229.69

$39,435,633.80

(1) For redemption of the Refunded Bonds. See “Plan of FiNANCE-Application of Proceeds of the Series 2017A Bonds; Plan of Refunding.”

(2) Includes legal, financing and consulting fees, rating agency fees, fees related to printing costs and other miscellaneous expenses related to the issuance of the Series 2017A Bonds and the other transactions described in “Plan of Finance.”

THE SERIES 2017A BONDS

General

The Series 2017A Bonds are being issued in fully registered form, and when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository of the Series 2017A Bonds. Individual purchases of ownership interests in the Series 2017A Bonds will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof.

The Series 2017A Bonds will be dated the date of their initial delivery and will bear interest at the rates and mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. Interest on the Series 2017A Bonds is payable semiannually on February 1 and August 1 in each year, commencing February 1, 2018 (each, an “Interest Payment Date”), calculated on the basis of a 360-day year comprised of twelve 30 day months. Interest on the Series 2017A Bonds is payable on each Interest Payment Date to the Owners of the Series 2017A Bonds as of the close of business on the Record Date in respect of such Interest Payment Date. ‘Record Date” means, with respect to the Series 2017A Bonds, the fifteenth day of the month preceding an Interest Payment Date. Principal of and redemption premium, if any, and interest on the Series 2017A Bonds are payable by the Trustee to DTC, which is obligated in turn to remit such principal and interest to DTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2017 A Bonds. See APPENDIX F-‘DTC AND THE BOOK-ENTRY ONLY System.”

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Redemption Provisions for the Series 2017A Bonds

Optional Redemption. The Series 2017A Bonds maturing on or before August 1, 2022 are not subject to redemption prior to their maturity dates. The Series 2017A Bonds maturing on August 1, 2042 and August 1, 2047 shall be subject to redemption prior to their respective stated maturities, at the option of the City, from any source of available funds, as a whole or in part on any date (by such maturities as may be specified by the City and by lot within a maturity) on or after August 1, 2027, at a Redemption Price equal to 100% of the principal amount of Series 2017A Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium.

Mandatory Sinking Account Redemption. The Trustee shall establish and maintain with the Principal Fund a Sinking Account for the Series 2017A Bonds maturing on August 1, 2042. The Series 2017A Bonds maturing on August 1, 2042 shall be redeemed (or paid at maturity, as the case may be), at a Redemption Price equal to 100% of the principal amount of Series 2017A Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium, by the application of mandatory Sinking Account installments in the amounts and upon the Sinking Account Payment Dates hereby established for the Series 2017A Bonds maturing on August 1, 2042, as follows:

Series 2017A2042 Term Bond Sinking Account

Mandatory Sinking Account Payment Date

(August 1)2038203920402041 2042t

Mandatory Sinking Account Installments

$205,000315.000390.000

3.170.0003.335.000

t Maturity.

The Trustee shall establish and maintain with the Principal Fund a Sinking Account for the Series 2017A Bonds maturing on August 1, 2047. The Series 2017A Bonds maturing on August 1, 2047 shall be redeemed (or paid at maturity, as the case may be), at a Redemption Price equal to 100% of the principal amount of Series 2017A Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium, by the application of mandatory Sinking Account installments in the amounts and upon the Sinking Account Payment Dates hereby established for the Series 2017A Bonds maturing on August 1, 2047, as follows:

Series 2017A2047 Term Bond Sinking Account


(August 1)2043204420452046 2047T


$3,510,0003.700.0003.895.0004.105.0004.330.000

t Maturity.

Redemption Procedures for the Series 2017A Bonds

Selection of Series 2017A Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Series 2017A Bonds, the City shall select the Series 2017A Bonds to be redeemed, from all Series 2017A Bonds not previously called for redemption, in authorized denominations, by lot in any manner which the City in its sole discretion shall deem appropriate. The City shall promptly notify the Trustee in writing of the Series 2017A Bonds so selected for redemption. On or prior to any redemption pursuant to the Indenture, the City shall provide the Trustee with a revised sinking fund schedule.

Notice of Redemption of Series 2017A Bonds. The City shall notify the Trustee at least 30 days prior to the redemption date for Series 2017A Bonds. Notice of redemption of any Series 2017A Bonds shall be mailed by the Trustee, not less than 20 nor more than 30 days prior to the redemption date, (i) to the respective Owners of any Series 2017A Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee by first-class mail, (ii) to the Securities Depositories by facsimile and by first-class mail, (iii) to the Information Services by first-class mail, and (iv) to the Rating Agency. Notice of redemption shall be given in the form and in accordance with the terms of the Indenture.

Any notice of optional redemption of the Series 2017A Bonds may be conditional and if any condition stated in the notice of redemption is not satisfied on or prior to the redemption date, said notice will be of no force and effect and the City will not redeem such Series 2017A Bonds. The Trustee will within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled.

Partial Redemption of Series 2017A Bonds. Upon surrender of any Series 2017A Bond redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the City, a new Series 2017A Bond of authorized denominations, and of the same maturity, equal in aggregate principal amount to the unredeemed portion of the Series 2017A Bond surrendered.

Effect of Redemption of the Series 2017A Bonds. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, all or a portion of the Series 2017A Bonds so called for redemption being held by the Trustee, on the redemption date designated in such notice, all or a portion of the Series 2017A Bonds so called for redemption shall become due and payable at the Redemption Price specified in such notice, together with interest accrued thereon to the date fixed for redemption, interest on the Series 2017A Bonds so called for redemption shall cease to accrue, said Series 2017A Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Owners of said Series 2017A Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest.

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DEBT SERVICE SCHEDULE

The following table sets forth the scheduled annual debt service obligations in each Fiscal Year for the Outstanding Parity Debt and the Series 2017A Bonds. See Table 10 under the caption “FINANCIAL MATTERS RELATING TO THE ENTERPRISE-Historical and Projected Revenues, Operating Expenses, and Debt Service Coverage.”

Period Outstanding Parity Debt(1)(2) Series 2017ABonds(2) AggregateEnding Debt

August 1 Principal Interest13’ TotaP’ Principal Interest Total Service13’2017 $2,400,000 $4,090,573.53 $6,490,573.53 - - - $6,490,573.532018 1,165,000 3,702,794.20 4,867,794.20 $1,220,000 $1,663,150.00 $2,883,150.00 7,750,944.202019 1,195,000 3,653,421.04 4,848,421.04 1,255,000 1,638,750.00 2,893,750.00 7,742,171.042020 1,230,000 3,602,774.50 4,832,774.50 1,305,000 1,588,550.00 2,893,550.00 7,726,324.502021 1,265,000 3,542,883.97 4,807,883.97 1,365,000 1,536,350.00 2,901,350.00 7,709,233.972022 1,310,000 3,476,710.58 4,786,710.58 1,430,000 1,468,100.00 2,898,100.00 7,684,810.582023 2,970,000 3,406,423.48 6,376,423.48 — 1,396,600.00 1,396,600.00 7,773,023.482024 3,085,000 3,272,443.39 6,357,443.39 — 1,396,600.00 1,396,600.00 7,754,043.392025 3,195,000 3,128,312.03 6,323,312.03 — 1,396,600.00 1,396,600.00 7,719,912.032026 3,315,000 2,984,050.00 6,299,050.00 — 1,396,600.00 1,396,600.00 7,695,650.002027 3,450,000 2,820,732.94 6,270,732.94 — 1,396,600.00 1,396,600.00 7,667,332.942028 3,590,000 2,652,049.40 6,242,049.40 — 1,396,600.00 1,396,600.00 7,638,649.402029 3,735,000 2,472,664.23 6,207,664.23 — 1,396,600.00 1,396,600.00 7,604,264.232030 3,880,000 2,289,759.18 6,169,759.18 — 1,396,600.00 1,396,600.00 7,566,359.182031 4,035,000 2,098,523.37 6,133,523.37 — 1,396,600.00 1,396,600.00 7,530,123.372032 4,200,000 1,895,956.99 6,095,956.99 — 1,396,600.00 1,396,600.00 7,492,556.992033 4,375,000 1,682,673.71 6,057,673.71 — 1,396,600.00 1,396,600.00 7,454,273.712034 4,550,000 1,462,758.49 6,012,758.49 — 1,396,600.00 1,396,600.00 7,409,358.492035 4,735,000 1,233,267.59 5,968,267.59 — 1,396,600.00 1,396,600.00 7,364,867.592036 4,930,000 994,559.43 5,924,559.43 — 1,396,600.00 1,396,600.00 7,321,159.432037 5,130,000 745,319.34 5,875,319.34 — 1,396,600.00 1,396,600.00 7,271,919.342038 2,440,000 486,456.85 2,926,456.85 205,000 1,396,600.00 1,601,600.00 4,528,056.852039 2,500,000 329,834.06 2,829,834.06 315,000 1,386,350.00 1,701,350.00 4,531,184.062040 2,605,000 168,309.06 2,773,309.06 390,000 1,370,600.00 1,760,600.00 4,533,909.062041 — — — 3,170,000 1,351,100.00 4,521,100.00 4,521,100.002042 — — — 3,335,000 1,192,600.00 4,527,600.00 4,527,600.002043 — — — 3,510,000 1,025,850.00 4,535,850.00 4,535,850.002044 — — — 3,700,000 841,575.00 4,541,575.00 4,541,575.002045 — — — 3,895,000 647,325.00 4,542,325.00 4,542,325.002046 — — — 4,105,000 442,837.50 4,547,837.50 4,547,837.502047 — — — 4.330.000 227.325.00 4.557.325.00 4.557.325.00

Total $75,285,000 $56,193,251.36 $131,478,251.36 $33,530,000 $38,726,062.50 $72,256,062.50 $203,734,313.86

(1) Outstanding Parity Debt consists of the Series 2006A Bonds, the Series 2008A Bonds and the Taxable Series 2010B Bonds. See “Security and Sources of Payment of the Series 2017ABoNDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds.”

(2) The Series 2006A Bonds will be refunded in whole from proceeds of the Series 2017A Bonds.(3) The Series 2008A Bonds bear interest at a variable rate. The interest amount stated is the amount payable by the City under the 2009 Swap Agreement rate equal to 3.897%.

Interest on the Taxable Series 201 OB Bonds is based on the actual interest without regard to the Subsidy Receipts. See “Security and Sources of Payment of the Series 2017ABoNDS-Outstanding Parity Debt and Reserve Funds for Other Series of Bonds.”

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017A BONDS

Pledge of Net Revenues Under the Indenture

The Bonds (including the Series 2017A Bonds) are revenue obligations of the City and are payable as to both principal, accreted value, and interest, and any premium upon redemption, exclusively from Net Revenues and from the other funds pledged under the Indenture. Net Revenues are pledged to secure the payment of the principal of, accreted value, redemption premium, if any, and interest on the Bonds and any Parity Debt in accordance with their terms, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Indenture pledges to secure the payment of the principal, accreted value and redemption premium, if any, and interest on the Bonds in accordance with their terms all amounts (including proceeds of the Bonds) held by the Trustee under the Indenture (except for amounts held in the Rebate Fund), subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Said pledge constitutes a first lien on the Net Revenues and amounts in such funds and will be valid and binding from and after delivery by the Trustee of the Bonds or Parity Debt, without any physical delivery thereof or further act. See “-Additional Bonds and Parity Debt.”

The Net Revenues are pledged to the payment of Bonds and Parity Debt without priority or distinction of one over the other and the Net Revenues constitute a trust fund for the security and payment of the Bonds and Parity Debt; but nevertheless out of Net Revenues, certain amounts may be applied for other purposes as provided in the Indenture.

Out of Net Revenues, there shall be applied as set forth in the Indenture all sums required for the payment of the principal of (including any premium thereon) and interest on the Bonds and all Parity Debt, together with any reserve fund requirements with respect thereto. All remaining Net Revenues, after making the foregoing allocation, shall be available to the City for all lawful purposes of the Enterprise. The pledge of Net Revenues herein made shall be irrevocable until all of the Bonds and all Parity Debt are no longer outstanding.

The term “ Net Revenues” is defined under the Indenture to mean, with respect to any period, the amount of the Gross Revenues received during such period less the amount of Operating Expenses becoming payable during such period.

The term “ Gross Revenues” is defined under the Indenture to mean all gross income and revenue received by the City from the ownership and operation of the Enterprise, including (i) all fees and charges received by the City for the services of the Enterprise, (ii) all other income and revenue howsoever derived by the City from the ownership and operation of the Enterprise or arising from the Enterprise, (iii) all sums deposited, or required by the Indenture to be deposited, in the Wastewater Fund established under the Indenture including the Subsidy Receipts (defined below); and (iv) amounts transferred to the Wastewater Fund from the Rate Stabilization Fund pursuant to the Indenture; but excluding (a) the proceeds of any ad valorem property taxes received by the City to pay debt service on any outstanding obligations of the City, and (b) any contributed capital (other than connection fees).

The term “Operating Expenses” is defined under the Indenture to mean, for the then current fiscal year, the reasonable and necessary costs of maintaining and operating the Enterprise, calculated on the basis of generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order, and reasonable amounts for administration, overhead, insurance, taxes

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(if any) and other similar costs, but excluding (a) depreciation, replacement and obsolescence charges or reserves therefor or other bookkeeping entries of a similar nature, and (b) Debt Service.

“Parity Debt” is defined under the Indenture to mean any indebtedness, installment sale obligation, lease obligation or other obligation of the City for borrowed money or certain designated payments under a Parity Public Finance Contract having an equal lien and charge upon the Net Revenues, and therefore payable on a parity with the Bonds (whether or not any Bonds are Outstanding).

THE SERIES 2017A BONDS ARE REVENUE OBLIGATIONS OF THE CITY AND ARE PAYABLE AS TO BOTH PRINCIPAL AND INTEREST, AND ANY PREMIUM UPON REDEMPTION THEREOF, EXCLUSIVELY FROM NET REVENUES AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE SERIES 2017A BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE CITY. THE SERIES 2017A BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSHTUTIONAL OR STATUTORY PROVISION, OR A PLEDGE OF THE FAITH AND CREDIT OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLIHCAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE, EXCEPT TO THE EXTENT OF CERTAIN AMOUNTS HELD UNDER THE INDENTURE PLEDGED THEREFOR, SOLELY FROM NET REVENUES. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017A BONDS. THE ISSUANCE OF THE SERIES 2017A BONDS SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIAHON FOR THEIR PAYMENT.

Outstanding Parity Debt and Reserve Funds for Other Series of Bonds

Outstanding Bonds. The pledge of Net Revenues under the Indenture securing payment of the Series 2017A Bonds and reimbursement of the Bank for draws on the Letter of Credit is on a parity with a pledge of Net Revenues securing Prior Obligations, which, following issuance of the Series 2017A Bonds, will consist of $32,875,000 outstanding principal amount of City of Richmond Variable Rate Wastewater Revenue Refunding Bonds, Series 2008A (the “Series 2008A Bonds”) and $40,010,000 outstanding principal amount of City of Richmond Wastewater Revenue Bonds (Taxable Build America Bonds), Series 2010B (the “Taxable Series 2010B Bonds’’). The Series 2017A Bonds, together with the Series 2008A Bonds and the Taxable Series 2010B Bonds, and any additional bonds that may be issued under the Indenture are collectively referred to as the “Bonds.” The Series 2008A Bonds are supported by an irrevocable, direct-pay letter of credit issued by Barclays Bank PLC (the “Series 2008A Bonds Letter of Credit”), pursuant to and subject to the terms of a Reimbursement Agreement, dated as of July 1, 2017, between the City and the Series 2008 Bonds Letter of Credit Bank. See “PLAN OF FlNANCE- Transactions Related to the Series 2008A Bonds.”

The Taxable Series 2010B Bonds were issued as ‘"Build America Bonds” under the provisions of the American Recovery and Reinvestment Act of 2009 (the ‘Recovery Act”), the interest on which is not excluded from gross income for federal income tax purposes but is exempt from State of California personal income taxes. The Recovery Act provided for a cash subsidy (the “Subsidy Receipts”) from the United States Treasury equal to 35% of the interest payable on such Taxable Series 2010B Bonds. Subsidy Receipts constitute Gross Revenues, which are deposited into the Wastewater Fund for payment of principal of and interest on the Taxable Series 2010B Bonds. Beginning in 2013, the subsidy has been reduced in each year by varying sequestration percentages, ranging from a low of 6.8% in 2016 to a high

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of 8.7% in 2013. The City is obligated to make all payments of principal and interest on the Taxable Series 2010B Bonds from Net Revenues whether or not it receives the Subsidy Receipts. See “CERTAIN RISKS TO BONDEIOLDERS-Risks Related to Subsidy Receipts for the Taxable Series 2010B Bonds.”

2009 Swap Agreement In connection with the issuance of the City’s Wastewater Revenue Bonds, Series 2006B (the “Series 2006B Bonds”), the City entered into an interest rate swap. This swap agreement was left in place when the Series 2008A Bonds were issued to refund all of the Outstanding Series 2006B Bonds.

On November 19, 2009, the City terminated the original swap agreement and entered into the 2009 Swap Agreement with the Swap Provider pursuant to an International Swaps and Derivatives Association Inc. Master Agreement, dated as of November 19, 2009 (the “Master Agreement”) and a Confirmation under the Master Agreement, dated as of November 19, 2009 (collectively, the “2009 Swap Agreement”). The City entered into the 2009 Swap Agreement for the purpose of receiving amounts expected to be approximately equal to the floating rate interest payments the City was obligated to make with respect to the Series 2008B Bonds in exchange for making fixed rate payments.

On May 30, 2017, the City and the Swap Provider amended the 2009 Swap Agreement to remove Moody’s as a referenced rating agency. See “PLAN OF FlNANCE-Amendment of 2009 Swap Agreement.”

Pursuant to the 2009 Swap Agreement, the Swap Provider pays the City an amount equal to 63.42% of USD-LIBOR-BBA plus 22 basis points, and the City pays the Swap Provider an amount equal to 3.897%, measured on a notional amount equal to the initial principal amount of the Series 2008A Bonds, which amount reduces simultaneously with the scheduled amortization of the Series 2008A Bonds. The obligations of the Swap Provider are not insured and there is no requirement for posting of collateral. The 2009 Swap Agreement terminates on August 1, 2037.

As of July 1, 2017, the payment obligations of the Swap Provider were rated “Al” by Moody’s, “AA-” by Standard & Poor’s and “AA” by Fitch and the market value of the 2009 Swap Agreement to the City was ($8,472,000).

The regularly scheduled swap payments are secured by the Net Revenues under the Indenture on a parity with the Bonds. Any extraordinary termination payments under the 2009 Swap Agreement payable to a Swap Provider are subordinate to the payment of principal of and interest on the Bonds. The 2009 Swap Agreement was recently amended as described under “PLAN OF FINANCE.”

Reserve Funds for Other Series of Bonds. The Refunded Bonds are secured by the Parity Reserve Fund and the Taxable Series 2010B Bonds are secured by the Series 2010 Reserve Fund, which is established as a Series Reserve Fund. The Series 2017A Bonds are not secured by the Parity Reserve Fund or the Series 2010 Reserve Fund.

Flow of Funds

In order to carry out and effectuate the obligation of the City contained in the Indenture to pay the Bonds, so long as any Bonds are Outstanding, the City covenants and agrees in the Indenture that all Gross Revenues, when and as received, will be received, deposited and held by the City in the Wastewater Fund and will be accounted for through and held in trust in the Wastewater Fund, and the City shall have no beneficial right or interest in any of such moneys except only as provided in the Indenture. The City covenants and agrees to maintain the Wastewater Fund at all times so long as any Bonds shall be Outstanding under the Indenture. All Gross Revenues and Net Revenues, whether held by

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the City or deposited with the Trustee, all as provided in the Indenture shall nevertheless be disbursed, allocated, and applied solely to the uses and purposes set forth in the Indenture.

All amounts in the Wastewater Fund required to pay Operating Expenses of the Enterprise will be applied for such purpose from time to time by the City. So long as any Bonds are Outstanding, the City will transfer the remaining money in the Wastewater Fund to the Trustee as required for deposit into the following respective funds (each of which the Trustee will establish, maintain and hold in trust for the benefit of the Owners of the Bonds) in the following amounts, in the following order of priority, the requirements of each such fund (including the making up of any deficiencies in any such fund resulting from lack of Net Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any fund subsequent in priority; provided that on a parity with such deposits the Trustee may set aside or transfer amounts with respect to outstanding Parity Debt as provided in the proceedings for such Parity Debt (which will be proportionate in the event such amounts are insufficient to provide for all deposits required as of any date to be made with respect to the Bonds and such Parity Debt):

I nterest F und The City will transfer to the Trustee and the Trustee will set aside in the Interest Fund on or before the third Business Day prior to each interest payment date an amount equal to the interest becoming due and payable on the Outstanding Bonds (excluding interest for which there are moneys on deposit in the Interest Fund from the proceeds of any Series of Bonds or other source to pay such interest).

Principal F und; Sinking Accounts. The City will transfer to the Trustee and the Trustee will set aside in the Principal Fund on or before the third Business Day prior to each principal or mandatory sinking fund payment date an amount equal to (i) the amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds, plus (ii) the mandatory sinking fund payments to be paid into the respective Sinking Accounts for the Term Bonds; provided that if the City certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from excess amounts on deposit in the Parity Reserve Fund or other bond reserve fund upon such payment, no amounts need be set aside towards such principal to be so refunded or paid. All of the aforesaid mandatory sinking fund payments will be made without priority of any payment into any one such Sinking Account over any other such payment.

Parity Reserve F und and Reserve F unds for a Series of Bonds. Upon the occurrence of any deficiency in the Parity Reserve Fund established pursuant to the Indenture or such other Reserve Fund as shall secure a Series of Bonds issued under the Indenture as provided for in a Supplemental Indenture (a “Series Reserve Fund”), the City shall immediately transfer to the Trustee and the Trustee shall set aside in the Parity Reserve Fund, the Series Reserve Fund, or both Funds on a pro rata basis an amount equal to the aggregate amount of each unreplenished prior withdrawal from the Parity Reserve Fund or Series Reserve Fund until there is on deposit in the Parity Reserve Fund and the Series Reserve Funds amounts equal to the Reserve Fund Requirements as provided for in the Indenture, or, with respect to a Series Reserve Fund, as provided for in the Supplemental Indenture creating such Fund. Any amount transferred to the Trustee shall be applied first to pay reinstate any draws on any Credit Facility issued to support the Parity Reserve Fund on a pro rata basis. The Series 2017A Bonds are not secured by the Parity Reserve Fund or a Series Reserve Fund.

Net Revenues in the Wastewater Fund after the foregoing transfers described above, will be used and applied by the City toward the payment of fees and other amounts owed to any Applicable Credit Providers relating to Credit Facilities (including Credit Facility issued to support the Parity Reserve Fund), the payment of fees and other amounts owed to the providers of any Public Finance Contract Insurance Policies and the purchase of Bonds as and when and at such prices as it may determine.

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Net Revenues in the Wastewater Fund after the foregoing transfers described above, will be used and applied by the City toward the payment of termination payments due under any Parity Public Finance Contracts.

Any Net Revenues remaining in the Wastewater Fund after the foregoing transfers described above, except as otherwise provided in a Supplemental Indenture, will be held free and clear of the Indenture by the City and it may use and apply such Net Revenues for any lawful purpose of the Enterprise.

If, two business days prior to any principal payment date, interest payment date or mandatory sinking fund redemption date, the amounts on deposit in the Interest Fund and Principal Fund, including the Sinking Accounts therein, are insufficient to make such payments, the Trustee will immediately notify the City, by telephone or facsimile machine, of such deficiency and direct that the City transfer the amount of such deficiency to the Trustee on such payment date. The City has covenanted and agreed to transfer to the Trustee from any Net Revenues in its possession the amount of such deficiency on the principal, interest or mandatory redemption date referenced in such notice.

No Reserve Fund

No reserve fund is established under the Indenture for the Series 2017A Bonds.

Rate Covenant

The City has covenanted that it will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year which (together with other funds accumulated from Gross Revenues and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, and without regard to transfers from the Rate Stabilization Fund to pay the sum of the following amounts (i) all Operating Expenses estimated by the City to become due and payable in such Fiscal Year, (ii) the Debt Service on the Outstanding Bonds and any Parity Debt becoming due and payable during the Bond Year which commences in such Fiscal Year, (iii) all other payments required for compliance with the Indenture and the instruments to which any Parity Debt will have been issued; and (iv) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues or Net Revenues. In addition, the City has covenanted that it will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year which are sufficient to yield Net Revenues (taking into account transfers from the Rate Stabilization Fund pursuant the Indenture, if any, applicable to such Fiscal Year) during such Fiscal Year equal to at least 1.25 times the amount determined pursuant to the preceding clause (ii) above. The City may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but shall not reduce such fees and charges below those then in effect unless the Gross Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements described above. See “CONSTITUTIONAL and Statutory Limitations on Taxes and APPROPRIATIONS-Proposition 218” and “-Effect of Proposition 218 and of Possible General Limitations on Enforcement Remedies.”

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Additional Bonds and Parity Debt

The City may at any time issue additional Series of Bonds or Parity Debt payable from Net Revenues and secured by a lien and charge securing the pledge made under the Indenture equally and ratably with the Bonds previously issued, provided that, among other requirements, the Debt Service Coverage Ratio for the most recent Fiscal Year for which audited financial statements for the Enterprise are available (based on the Debt Service payable during the Bond Year which commenced in such Fiscal Year), calculated as of the date of sale of such additional Series of Bonds and including the Bonds and Parity Debt then Outstanding and such additional Series of Bonds, will not be less than 1.25:1.0. See Appendix C-“Summary of Certain Provisions of the Indenture—Issuance of Bonds and Parity Debt.”

Rate Stabilization Fund

The City covenants under the Indenture to maintain and hold a Rate Stabilization Fund. The City may deposit Net Revenues or any other lawfully available funds in the Rate Stabilization Fund as the City may determine, provided, that deposits for each Fiscal Year may be made until (but not after) 120 days following the end of such Fiscal Year. The City may withdraw amounts from the Rate Stabilization Fund for inclusion in Gross Revenues for any Fiscal Year, but only until (but not after) 120 days after the end of such Fiscal Year. All interest earnings on deposits in the Rate Stabilization Fund shall be withdrawn and deposited in the Wastewater Fund and accounted for as Gross Revenues. Withdrawals from the Rate Stabilization Fund may be made at any time by the City for any lawful purpose of the Enterprise. See Appendix C-“Summary of Certain Provisions of the INDENTURE-Net Revenues.”

THE WASTEWATER ENTERPRISE

Overview

The Wastewater Enterprise (hereafter referred to as the ‘"Enterprise”) is one of three utilities maintained and operated by the City. The two other utilities are storm sewer and cable television. As of January 1, 2015, the Enterprise provided sewer services to approximately 18,246 of the 27,004 residential parcels located within the City and, in addition, services 1,346 industrial and commercial parcels located in the City.

The Enterprise is comprised of a sanitary sewer collection system (the “Collection System”), a wastewater treatment plant (the “Treatment Plant”) and the disposal system. The Collection System consists of approximately 197 miles of sanitary sewer collection pipes and 13 wastewater lift stations. The Treatment Plant is located on an approximately 30-acre site in the southwest portion of the City at 601 Canal Boulevard. The current permitted capacities of the Treatment Plant are 16 million gallons per day (“mgd”) average dry weather flow and 40 mgd peak wet weather flow. For a map showing the Treatment Plant and other facilities within the Enterprise, see Figure 1 on the following page.

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Figure 1Map Showing the Treatment Plant and Other Enterprise Facilities

-j

Service Area

The service area of the Enterprise coincides with the boundaries of the Richmond Municipal Sewer District No. 1 (‘District No. 1”), which was created by the City in 1956. The service area of the Enterprise comprises approximately 14 square miles of the total approximately 33.7 square-mile land area of the City and corresponds to the original boundaries of the City as they existed in 1905. The Stege Sanitary District (the “Stege District”) and the West County Wastewater District (the “West County District”) provide sewer services to portions of the City that are not serviced by the Enterprise. These areas were originally outside the boundaries of the City and, since annexation of these areas to the City, have continued to be served by those districts. In 1977, the City, District No. 1 and the West County District formed the West County Agency, a joint powers agency, which constructed a 72-inch joint outfall pipe and other facilities jointly used by the City, District No. 1 and the West County District.

Figure 2 on the following page sets forth a map of the service area of the Enterprise.

(Remainder of this Page Intentionally Left Blank)

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Figure 2Map of the Service Area of the Enterprise

History

The Treatment Plant was initially constructed in 1953 as a primary treatment facility. In 1967 it was expanded to include secondary treatment. Smaller upgrade projects have been completed since that time, including the construction of a third circular clarifier in 1990. Wet weather diversion structures and various improvements, including expansion and modernization of the existing laboratory and construction of an emergency generator and fuel storage system, were added in the 1980s and early 1990s. Until 1999, the facilities of the Enterprise generally had an average age of 60 years, with many facilities nearing the end of their useful lives; the Treatment Plant had little automation and process control was mostly manual. However, beginning in 1999 major rehabilitation and renovation improvements to the Enterprise were undertaken and are continuing. See “-Capital Improvement Plan.”

City Management

Key members of the City staff responsible for the operation and financial management of the Enterprise include the officials listed below. Substantially all operations of Enterprise are managed by Veolia. See “-Management of the Enterprise by Veolia” below.

William A. Lindsay, City Manager. Bill Lindsay began his professional career as a Consultant with Deloitte Haskins & Sells (now Deloitte Touche Tohmatsu) in their Management Advisory Services group. He then moved to the public sector as Finance Director/Assistant to the City Manager with the City of Hercules, California, as Administrative Services Director with the City of San Ramon, California, and then as City Manager for the City of Orinda, California for nine years. Mr. Lindsay has been the City Manager of Richmond since February 2005. He earned a bachelor’s degree in Economics from Yale University and a master’s degree in General Management from the University of California at Berkeley.

Belinda Warner, Director of Finance and Treasurer. Belinda Warner began her long professional career with the City in 2000, starting as an accountant, and then senior accountant, in the Finance Department, then moved to the Police Department in 2012 and progressing upwards to become Finance Manager for the Police Department beginning in 2014. She became Director of Finance for the City in March 2015. Ms. Warner earned a bachelor’s degree from the University of Phoenix in 2000 and a masters of business administration from Golden Gate University in 2004.

Ryan Smith, Director of Water Resource Recovery. Ryan Smith began his professional career as a wastewater treatment plant operator-in-training with the City of Santa Rosa, and rapidly promoted to a senior level operator. He then accepted a similar position with the City of Petaluma for the construction and startup of the City’s new treatment facility, as an operations supervisor with the Las Gallinas Valley Sanitary District, and then as an operations superintendent and plant manager for the City of San Mateo. Mr. Smith has been the wastewater department head since October 2015. He earned a bachelor’s degree in Agriculture from the BioResource and Agricultural Engineering Department at the California Polytechnic State University in San Luis Obispo.

Management of the Enterprise by Veolia

Summary of the Management Agreement. In 2002, the City and Veolia Water North America Operating Services, Inc. (“Veolia”) entered into the City of Richmond Wastewater Treatment Facility Capital Improvements, Operations, Maintenance and Management Agreement, as amended, (the “Management Agreement”), which provides, among other things, for Veolia to design and construct improvements to the Enterprise and to operate, maintain and manage the Treatment Plant during the 20-year term of the Management Agreement. The Management Agreement has been amended to provide for the operation, maintenance and repair of the sewer collection system and storm drainage system, the

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preparation of sanitary sewer and storm drain master plans and completion of certain improvements to the pump stations pursuant to the Settlement Agreement. (See “-Regulatory Matters-Prior Noncompliance- Baykeepers Lawsuit”). Pursuant to the Management Agreement, the City provides all capital funding, at specified levels, and remains the owner of the Enterprise. Veolia designs, constructs and installs all capital improvements for the Enterprise and operates and maintains the Enterprise at guaranteed costs to the City (exclusive of pass-through costs such as utilities) for the contract term, subject to maximum and minimum total compensation amounts set forth in the Management Agreement. The initial term of the contract expires on May 14, 2022 with an option of the City to renew for up to two five-year periods and a mutual option to extend for an additional five-year period.

Veolia’s responsibilities with respect to the sewer collection and storm drainage facilities include: (i) maintenance, including both emergency and scheduled maintenance; (ii) development and implementation of a capital improvement plan; and (iii) responsibility for all relevant customer service requirements related to operation of the collection system including response to routine and emergency calls and new service tap inspections. The City retains responsibility of enforcing its Industrial Pretreatment Program, perform all regulatory duties, sampling analysis and reporting associated with the collection system and perform long-term collection system and service area planning. Veolia’s responsibilities with respect to capital improvements to the collection system facilities include development of a comprehensive capital improvement program for the collection system and provision of turn-key services to implement a comprehensive Sanitary Collection System rehabilitation program in compliance with the draft Capacity, Management, Operations & Maintenance (“CMOM”) guidelines of the EPA. In the event that final CMOM guidelines differ materially from the preliminary guidelines issued by the EPA, the parties will treat such material difference as a “Change in Law” under the Management Agreement.

Operation of the treatment facilities is provided by Veolia using Veolia employees. Compliance with all regulatory requirements and a conditional effluent quality guarantee are provided by Veolia. Capital costs, permitting, and construction schedule are similarly guaranteed by Veolia. Future changes in laws and regulations (if any) are treated as a change in scope of services with Veolia permitted to obtain reimbursement for documented additional costs (capital or operational) necessary for compliance with the new regulations and requirements. Failure by Veolia to meet certain requirements of the contract may result in the imposition of liquidated damages by the City, subject to notice and cure provisions, in the manner and in the amount set forth in the Management Agreement.

In the Management Agreement, Veolia provides an effluent quality guaranty, subject to certain Uncontrollable Circumstances (as defined in the Management Agreement). The effluent quality guarantee requires that influent to the treatment plant be within the raw wastewater parameters of the Treatment Plant’s design criteria and that the raw wastewater be free of hazardous and biologically toxic materials in quantities that exceed the maximums of the City’s laboratory and industrial pre-treatment program and the NPDES permit. Uncontrollable Circumstances that limit Veolia’s effluent guaranty include, among other things, acts of God, changes in law and labor disputes other than those of Veolia’s employees but does not include changes in general economic conditions, the financial condition of the City, Veolia, or the Project Guarantor or the consequences of Veolia error. Except in the event of Uncontrollable Circumstances, failure by Veolia to satisfy applicable law with respect to effluent limits may result in the imposition of liquidated damages in the manner and in the amount set forth in the Management Agreement.

All disputes arising out of or relating to the Management Agreement are subject first to nonbinding negotiation, and, if unsuccessful, non-binding mediation, as conditions precedent to the submission of the dispute to mandatory, binding arbitration.

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The City covenants in the Management Agreement to fix, establish, and revise from time to time the rates and charges for the Enterprise as necessary to provide sufficient revenues to pay amounts due under the Management Agreement. Such amounts include the capital improvement costs described above. The City’s obligation to pay Veolia the amounts as specified in the Management Agreement is a general, unsecured obligation and the City treats the payments to Veolia as Operating Expenses under the Indenture.

Veolia. Veolia Water North America Operating Services, Inc. (“Veolia”) is a subsidiary of Veolia Environnement (the “Company”), a French public limited-liability company headquartered in Paris. The company has three core businesses, water management, waste management and energy services. The Company has over 163,000 employees worldwide, and manages over 2,900 wastewater treatment plants.

In North America, Veolia has 7,800 employees and serves 165 municipal clients. Representative Northern California local governments for which Veolia provides operations, maintenance and management (“OM&M’) for wastewater treatment plant operations include Burlingame, Discovery Bay, Lathrop and Novato. Notable US engagements for which Veolia provides OM&M services for wastewater treatment include Milwaukee, where Veolia operates and maintains two water reclamation facilities with combined capacity of 660 MGD, the 320-mile collection system, biosolids production, and the 500 MG “Deep Tunnel” storage system. In Atlanta-Fulton County, Veolia operates and maintains the county's wastewater assets, including three treatment facilities, 30 wastewater pump stations and one grinder station, and also provides maintenance services for other water-related assets. Veolia also provides educational programming at the 10,000 square-foot Johns Creek Environmental Campus, promoting water and wastewater educational opportunities with an emphasis on educating children about the bioscience/life-science industry. Veolia provides large meter program/revenue enhancement for New York City in addition to optimizing day-to-day resources, helping provide $82 million in annually recurring savings and revenue enhancements.

Capital Improvement Program

Pursuant to the Management Agreement, Veolia is responsible for preparation of master plans for the Enterprise. Planning for the Enterprise addresses the Collection System, the Treatment Plant and the disposal system. (See “-Facilities Description” below.) For specific components of the plan, Veolia from time to time contracts with specialty engineering firms to assist in developing approaches to specific Enterprise components. Long-term planning includes recommendations for long-term projects that are anticipated to be needed through 2045, based on current understanding of anticipated Enterprise regulation and expected capacity needs.

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In the framework of long-term master planning for the Enterprise, the City develops on an annual basis, five-year capital improvement plans for the development, construction, installation and financing of improvements to the Enterprise. The 2017-2022 CIP includes approximately $63.3 million in projects necessary to expand and upgrade the Enterprise to satisfy regulatory requirements, comply with Settlement Agreement, as well as meet current and future demand. See also “PLAN OF FINANCE.” The projects in the 2017-2022 CIP consist of the following:

Table 2City of Richmond

2017-2022 Capital Improvement Program Projects

CIP Project Description ComponentEstimated

CosE

EstimatedCompletion

Date13th Street Sewer Capacity Collection $7,800,000 Sept. 201923rd Street Sewer Replacement Collection 2,800,000 Sept. 2019Leachate Line Assessment and Repairs Collection 1,250,000 Dec. 2018Sanitary Sewer Manhole Rehabilitation Collection 500,000 Dec. 2017Critical Pipeline Rehabilitation Collection 1,000,000 Dec. 2017Lift Station Assessment Collection 420,000 Dec. 2017Cutting & Carlson, and Hoffman Sewer Capacity Collection 7,168,380 Dec. 2020Secondary Clarifier Rehabilitation Treatment Plant 7,680,000 Oct. 2018Thickener Facility Treatment Plant 6,000,000 Nov. 2018Sodium Bisulfite System Replacement Treatment Plant 2,268,000 Dec. 2017Rockslide Protection Treatment Plant 1,500,000 Nov. 2018Advance Primary Treatment Treatment Plant 500,000 Oct. 2017Grit/Screenings Facility, and Aeration System Upgrade

TotalTreatment Plant 24,400,000

$63,286,380Dec. 2020

t Based upon engineering estimates for design and construction. Source: City of Richmond.

Proceeds of the Series 2017A Bonds in the amount of approximately $31,718,000 will be applied to the 2017-2022 CIP projects, with the remaining funds derived from pay-as-you-go sources and a State loan. Such State loan is anticipated to be secured by a pledge and lien on Net Revenues on a parity with the Series 2017A Bonds and other Bonds.

Facilities Description

Overview. Operation of the wastewater collection, treatment and disposal systems is a 24-hour, seven days a week, 365-day a year activity. During Fiscal Year 2015-16, an average of 5.8 mgd average dry weather flow of wastewater originating from residential, commercial, industrial and institutional customers within the Service Area was treated at the Treatment Plant.

The City’s Enterprise consists of three major components: the Collection System, the Treatment Plant and the Disposal System. In addition, the City operates a Pretreatment Program designed to reduce pollutant sources.

Collection System The Collection System includes approximately 197 miles of collection pipes and is estimated to have an average age of 65 years. Most pipes are six inches in diameter. In addition, the collection system also includes 13 sewage pumping stations, which lift wastewater throughout the

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sewer interceptors to the Treatment Plant. There are also two engineered overflow weirs (a control banner that permits measurement of water discharge) which discharge untreated water into the San Francisco Bay.

Pretreatment Program The City has operated a pretreatment program (the “Pretreatment Program”) to stop pollution from overloading or passing through the Treatment Plant since 1979. This program monitors industrial wastewater discharged into the sanitary sewage collection system, and issues up to approximately 75 permits to wastewater dischargers within District No. 1. As described under “-Service Area,” because not all businesses within the City discharge to the Enterprise, pretreatment inspection to businesses in the southern portion of the City served by the Stege District are provided by the East Bay Municipal Utilities District.

For more than 30 years the Pretreatment Program has been involved with identification and reduction of pollutant sources both to the sanitary sewer and the storm drains from industrial commercial and residential activities. Of particular concern are heavy metals such as copper, mercury, nickel and selenium which mostly settle out in the sludge (i.e. biosolids). See also “-Regulatory Matters-Disposal System” Keeping the metal content low enables the bio-solids to be used in a variety of ways. Currently, the bio-solids are used as a capping soil in a sanitary landfill. The Pretreatment Program is designed to keep the metal content in the biosolids low, resulting in more economic disposal options of the solids. The City is investigating available technologies to beneficially reuse the biosolids to offset energy demands at the Treatment Plant, as well as actively participating in the Bay Area Biosolids to Energy (BAB2E) Program, a coalition of Bay Area agencies, including the City, formed to create local sustainable solutions to biosolids management. Cyanide is also a priority pollutant, and the program is always vigilant of cyanide discharge to the sewer system. Grease in the sewers is also a major concern. Sewers blocked with grease can cause overflows which are expensive in terms of clean-up costs, damage to property, and fines if they cause overflows to the storm collection system.

Treatment plant The Treatment Plant provides primary and secondary treatment of raw wastewater that flows in from the collection system.

The 2013 NPDES Permit rates the peak capacity of the primary treatment facilities at the Treatment Plant at 40 mgd and the secondary treatment capacity at 16.0 mgd for average day maximum month flow and 20 mgd for peak hourly wet weather flow. The average annual dry weather flow at the Treatment Plant in 2016 was approximately 5.8 mgd. Wet weather flows sometimes exceed the peak capacity for secondary treatment at the Treatment Plant. The excess primary treated effluent is diverted around the biological treatment units to wet weather storage. Once storage is at capacity, excess primary- treated effluent is blended with secondary-treated effluent. The combined flow is then disinfected and dechlorinated prior to discharge to the San Francisco Bay. The stored wastewater is treated through the secondary treatment facilities after wet weather flows subside and there is capacity in those units. The blended effluent is required to meet secondary treatment discharge limits.

Preliminary Treatment. Preliminary treatment at the Treatment Plant consists of screening debris larger than one inch, and grit removal of heavy smaller particles such as rock and sand.

Primary Treatment. Primary treatment consists of primary sedimentation to remove floating material, oils and greases, sand and silt not removed in preliminary treatment and organic solids heavy enough to settle in water. In two primary treatment tanks, suspended material in the wastewater is allowed to settle out. The settled material (referred to as “primary sludge”) is removed to digesters while the liquid effluent flows to the secondary treatment facilities.

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Secondary Treatment. In secondary treatment, suspended and dissolved organic material is removed from the primary effluent by mixing it with biological organisms (“activated sludge”) and aerating the combined liquid in the tank. The resulting effluent then flows into secondary clarifiers where the activated sludge is allowed to settle out. This resulting “secondary sludge” is either recirculated to the aeration tanks for continuous treatment of the primary effluent, or removed for process control, while the remaining secondary effluent is transported to the chlorine contact basin for disinfection.

Disinfection and Dechlorination. Secondary effluent is conveyed to chlorine contact tanks for disinfection, where liquid sodium hypochlorite is used as the disinfecting agent. Effluent is then dosed with liquid sodium bisulfite to dechlorinate the treatment plant effluent, and is then mixed with the West County District treated effluent in the confluence structure before being discharged to the San Francisco Bay.

Anaerobic Digestion. Primary and secondary sludges are pumped to two heated and mixed tanks called digesters. Under anaerobic conditions, bacteria break down organic solids and produce methane and carbon dioxide gases. The digester gas is flared and digested solids are transported, via a six-inch diameter pipeline constructed by the West County Agency, to the drying beds located at the West County District. See “-Disposal System”

Power Source. The Treatment Plant purchases electrical energy power from Pacific Gas & Electric (“PG&E”).

Disposal System The combined outfall pipe, which transports treated secondary effluent from the West County District and the Enterprise to its discharge point, is jointly owned by the City (68% undivided interest) and the West County District (32% undivided interest). Effluent from the two entities meet at the confluence structure located west of the Treatment Plant. The combined effluent flows through the outfall pipe through the hills west of the Treatment Plant and then into a 1,000-foot-long, 72-inch outfall for discharge through a diffuser that extends 4,700 feet offshore of Point Richmond in the San Francisco Bay at a depth of 26 feet below mean lower water mark. The outfall risers are fitted with flexible rubber nozzles and marked by two navigation buoys in San Francisco Bay.

The anaerobically digested secondary sludge is currently pumped from the Treatment Plant through a six-inch, six-mile pipeline to sludge drying lagoons and beds located at and owned by the West County District plant. Dried sludge is disposed of at the West Contra Costa County Landfill. Piping from the Treatment Plant is glass lined and is cathodically protected.

On February 16, 2010, the City entered into an eight-year lease with the West County District for continued use of the sludge ponds through December 31, 2017. In December 2016, the City and West County District amended the lease which extends the agreement to year 2025 with updated terms. The City is also exploring alternative options to deal with sludge removal from the treatment plant. Preliminary estimates indicate that alternative facilities could cost approximately $19 million, but no firm estimates or course of action have been determined and the City Council has not been presented with any recommended option. However, Veolia is currently contracting with CH2M, a global engineering firm, to perform a holistic biosolids and energy evaluation. Following this evaluation process, which is expected to be completed in fall, 2017, the City will be in a position to evaluate its options.

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Customer Base

Set forth in Table 3 is the number of parcels served by the Enterprise and the total annual revenues (excluding connection fees) from parcels and total budgeted revenues for Fiscal Year 2012-13 through 2016-17.

Table 3City of Richmond Wastewater Enterprise

Customers Served and Total Revenues Fiscal Years 2012-13 through 2016-17

Single Family Multi-FamilyResidential Residential Commercial/Industrial

Fiscal Parcels Parcels Parcels TotalYear Served Revenues Served Revenues Served Revenues Revenues11'

2012-13 16,260 $9,804,780 1,938 $3,859,900 1,434 $3,659,005 $17,323,6852013-14 16,280 10,305,240 1,964 3,912,683 1,368 3,904,555 18,122,4782014-15 16,275 10,302,075 1,958 3,889,269 1,367 3,968,357 18,159,7012015-16 16,258 10,990,408 1,982 4,220,896 1,352 3,752,690 18,963,9942016-17(2) 16,263 11,741,886 1,983 4,571,889 1,347 3,449,463 19,763,238

(1) Excludes connections fees.(2) Budgeted.Source: City of Richmond.

(Remainder of this Page Intentionally Feft Blank)

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The principal wastewater customers in the City served by the Enterprise for Fiscal Year 2015-16 and estimated for Fiscal Year 2016-17 is set forth in Table 4. The largest user in the City accounts for approximately 0.82% of the Enterprise’s estimated revenues for Fiscal Year 2016-17. The ten largest users of the Enterprise collectively accounted for approximately 4.22% of the Revenues of the Enterprise for such period.


Principal Wastewater Customers Fiscal Year 2015-16 and Estimated for Fiscal Year 2016-17

Fiscal Year 2015-16 Fiscal Year 2016-17Total %of Total %of

Customer Product/Service Charges Revenues Charges RevenuesAtchison Village Mutual Homes Corporation Housing Project $172,062 0.82% $161,741 0.82%Chevron USA Inc. Chevron Services Co# Energy Company 133,070 0.73 144,784 0.73Cal/OSHA - Division of Occupational Safety and Health Services Health/Safety Organization 122,481 0.54 108,676 0.55Kaiser Foundation Hospitals Healthcare 126,698 0.55 107,173 0.54California Oils Corporation Oil Processer/Supplier 94,748 0.43 105,671 0.53Bio-Rad Laboratories Inc. Clinical Diagnostics 82,775 0.40 84,975 0.43United States of America GSA-PBS Fin Mgmt Staff Federal Government - - 78,889 0.40GATX Terminals Corp. Warehouse/Storage - - 69,586 0.35Safeway Stores CPTS #8122 Grocery Store 74,751 0.35 68,287 0.35Stephens & Stephens LLC Financial Services - - 64,555 0.33Regents of University of California University Governing Board 95,926 0.53 - -City of Richmond Local Government 72,361 0.38 - -Catellus Development Corp. Land Developer 67,172 0.35 - -

Subtotal 1,042,043 4.27% $994,338 4.22%All Others 18,159,971 95.73 18,768,900 95.78

Total $19,202,014 100.00% $19,763,238 100.00%

t Represents the non-refinery operations of Chevron USA Inc. in the City. Source: City of Richmond.

Wastewater Flows

Table 5 presents the average monthly dry weather wastewater flows through the Treatment Plant for Fiscal Years 2011-12 through 2015-16.


Wastewater Treatment Plant Average Monthly Dry Weather Flow Fiscal Years 2011-12 through 2015-16

Fiscal Year MGMT2011- 12 192.102012- 13 168.302013- 14 166.882014- 15 148.952015- 16 145.08

t All flows are expressed in millions of gallons per month (“MGM”).Source: City of Richmond.

Table 6 presents the average monthly wet weather flows through the Treatment Plant for Fiscal Years 2011-12 through 2015-16.


Wastewater Treatment Plant Average Monthly Wet Weather Flow Fiscal Years 2011-12 through 2015-16

Fiscal Year MGM12011-12 228.502012-13 182.402013-14 177.242014-15 187.382015-16 218.62

t All flows are expressed in MGM.Source: City of Richmond.

Insurance on the Enterprise

The City maintains insurance with respect to the Enterprise which the City believes is reasonable for activities such as the Enterprise. For Fiscal Year 2016-17, the City maintains the following insurance coverages:

General liability insurance (aggregate limit of $40 million) provided by the California Joint Powers Risk Management Authority, a joint powers authority. This coverage is subject to a self-insured retention of $500,000 per occurrence which is backed by a cash reserve fund determined annually by the City’s actuary.

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• Group purchased all-risk property damage insurance (aggregate limit of $1 billion per occurrence and $25 million per occurrence for flood), excluding coverage for earthquake damage, provided by a group of insurance companies rated “A” or better by A.M. Best, subject to a deductible of $5,000 per occurrence. This policy (excluding coverage for earthquake) provides blanket coverage for property of the City, and its affiliated organizations and agencies.

• Workers compensation insurance (aggregate limit of $50 million) provided by the California State Association of Counties-Excess Insurance Authority. This coverage is subject to a self-insured retention of $750,000 per occurrence and is backed by a cash reserve fund in an amount determined annually by the City’s actuary.

Under the Indenture, the City is required to maintain insurance on the Enterprise as is usual and customary for wastewater treatment systems similar to the Enterprise, subject to certain limitations. See Appendix C-“Summary of Certain Provisions of the Indenture—Insurance.” The City believes that the above-referenced policies currently meet customary standards. The City reviews its insurance coverage from time to time and may make changes in the future to its insurance coverage as permitted under the Indenture.

Regulatory Matters

The Enterprise meets all known current regulatory permit requirements for its facilities, and is in material compliance with the Porter-Cologne and Clean Water Acts (except as described below). This section summarizes the regulatory framework governing the Enterprise and its operations. The City is not aware of any environmental or regulatory issues that would adversely impact its ability to provide wastewater service as described in this Official Statement.

History and Background. In 1969, the State adopted the Porter-Cologne Water Quality Act (the ‘"Porter-Cologne Act”), creating the State’s current legal framework for the protection of water quality. This adoption was followed at the federal level by the Water Pollution Control Act Amendments of 1972 (the “Clean Water Act”). The Clean Water Act provided an aggressive timetable for eliminating pollution of the nation’s waters and established the basic secondary treatment requirements that 85% of pollutants, as defined in administrative regulations, be removed from sanitary wastewater. The Clean Water Act also required the issuance of discharge permits on a nationwide basis and established a federal grant program for construction of publicly owned wastewater facilities, subsequently replaced in California by the State’s revolving fund loan program. Although the U.S. Environmental Protection Agency (the “EPA”) has ultimate responsibility for administering the Clean Water Act, many functions have been delegated to the State. The administration of the current loan program and enforcement of regulations are a joint undertaking of the State Water Resources Control Board, the nine Regional Water Quality Control Boards, and EPA Region IX. The operation of the Enterprise is governed by the San Francisco Bay Regional Water Quality Control Board (the “SF Bay RWQCB”).

Federal and state Clean Water Act Permits. Each Regional Water Quality Control Board issues discharge permits under Section 402 of the Clean Water Act, which establishes the National Pollutant Discharge Elimination System (“NPDES”) permit system. These permits, issued for a five-year period, are also wastewater discharge requirements for the purposes of the Porter-Cologne Act.

The City operates the Enterprise under NPDES Permit No. CA 0038539 (Order No. R2-2013-0016) issued by the SF Bay RWQCB in May 2013 and held by the West County Agency (a Joint Powers Agency whose members are (l)the West County District, (2) the City, and (3) the Richmond Municipal Sewer District No. 1), which also covers the wastewater discharges from the

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Enterprise and the West County District. The current permit expires on June 30, 2018 and prescribes the effluent, receiving water, groundwater and pond disposal limitations for the Treatment Plant; requires additional testing, monitoring and limits for toxic substances; and requires the City to implement all feasible alternatives to reduce blending resulting from inflow and infiltration into the collection system. The City will file a Report of Waste Discharge before the December 31, 2017 deadline to commence the process for renewal of the permit.

Compliance Status

Current Status. The City is currently in compliance with all permits, laws and regulations necessary to operate the Enterprise. The City and the Enterprise have all environmental and other approvals necessary to complete the Project, other than ministerial approvals expected in the ordinary course of construction. See, however, “-Prior Noncompliance-Baykeeper Lawsuit,” below.

Prior Noncompliance

General. The City has been cited in the past for violations of its NPDES permits. According to complaints filed by the SF Bay RWQCB, the City and the West County District have, at various times, discharged treated wastewater to the waters of the State that exceeded allowable effluent limitations for certain pollutants. According to these complaints, the violations were not serious, but were subject to mandatory minimum penalties. The mandatory minimum penalty for each violation to which a penalty applied is $3,000 per occurrence.

Baykeeper Lawsuit. In 2005, litigation was commenced against the City (Baykeeper and West County Toxics Coalition v. City of Richmond, West County Wastewater District, Vedia Water North America Operating Services andWest County Agency, Case No. C-05-03829 MMC) (the “Baykeeper Lawsuit”) alleging that the City, the West County Agency and Veolia violated the Clean Water Act, and the effluent limitations contained in prior NPDES permits.

The parties entered into two settlement agreements in 2006; one focused on the wastewater treatment plant and the other on the collection system and the reduction of SSOs. The second settlement agreement focused on prevention of sanitary sewer overflows (“SSOs”) that had occurred from the collection systems of the Enterprise and the West County District. The settlement agreement pertaining to the SSOs was scheduled to terminate 10 years following the effective date thereof (the 45th day following receipt by the U.S. Department of Justice of the settlement agreement, i.e. December 9, 2016), with the City and Veolia agreeing to make improvements to the Enterprise to achieve reductions in maximum SSOs (expressed in overflow events in a year, with exceptions for storm years above design capacity).

Under the settlement agreement pertaining to the SSOs, the maximum SSOs permitted was reduced annually from 114 in 2007 to 10 in 2016. The City complied with the SSO limits from 2007 through 2013. In 2014, the parties extended the term of the settlement agreement pertaining to the SSOs from December 2016 to December 2017 to accommodate the extended construction schedule for the wet weather storage facility (the “WWSF”) at the treatment plant. The City did not achieve the required SSO reductions in 2014, 2015, and 2016. Although the WWSF was completed in 2015, the physical state of existing collection lines and the heavy 2016-17 winter rains limited compliance.

While the City is currently out of compliance with the terms of the settlement agreement pertaining to the SSOs, the CIP is designed, in part, to satisfy the SSO reduction and other

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requirements of said settlement agreement. See “-Capital Improvement Program” and “PLAN OF FINANCE.” In addition, the City has initiated discussions with Baykeeper regarding an extension of the settlement agreement pertaining to SSOs to allow for additional time to achieve SSO reduction compliance.

Regulatory Trends. Regulatory developments at the State and Federal level, as well as ongoing permit reissuance activities, may increase operation costs and capital needs of the Enterprise and may have an effect on the Enterprise operations and its revenues. In the future, additional constituents of concern (possibly including pollutants such as ammonia, nutrients, endocrine disrupting chemicals, human-made chemical/products) will likely be identified, and additional effluent limits may be added for wastewater discharges into the San Francisco Bay, as water quality objectives are developed for new compounds and improved analytical techniques become available. Additional source control measures, public education and outreach, and additional or advanced treatment processes may be necessary to achieve compliance.

Other Regulatory Agencies with J urisdiction Over the Wastewater Enterprise. Other regulatory agencies with approval or oversight responsibilities over the siting, construction or operational impacts of the Enterprise on air, water and natural resources include the Bay Area Air Quality Management District, the Bay Conservation and Development Commission, the California Coastal Commission, the State Lands Commission, the California Department of Public Health, the National Marine Fisheries Services, the United States Fish and Wildlife Service, the California Department of Fish and Wildlife, and the U.S. Army Corps of Engineers.

Other Laws Affecting the Wastewater Enterprise. As a public agency the actions of the City with respect to the Enterprise must be constituent with the California Environment Quality Act and, where federal approvals or funding is involved, the National Environmental Policy Act. The federal Clean Air Act and the California Clean Air Act of 1988 also regulate emissions from treatment facilities. The Enterprise’s Treatment Plant meets present Bay Area Air Quality Management District standards. Other State or federal laws could have an impact on operations of, or construction of improvements to, the Enterprise.

FINANCIAL MATTERS RELATING TO THE ENTERPRISE

Billing and Collection Procedures

General. Sewer charges are collected by the County Treasurer-Tax Collector’s office on the real property tax bill of each parcel owner. The City receives sewer service charge collections from the County in three installments with approximately 95% received in December and April and the balance received in June of each Fiscal Year. The amount of sewer service charges on each parcel constitutes a lien against that lot or parcel as of noon on the first Monday in March immediately preceding the date of levy of the charge. If any sewer service charge is delinquent, the City may in its discretion either sell the parcel or file a civil action to recover such charges. However, the City receives sewer charge revenue from the County without regard to delinquencies as described under the caption “-Teeter Plan” below.

Teeter plan. The County and its political subdivisions operate under the Teeter Plan pursuant to provisions of Sections 4701-4717 of the California Revenue and Taxation Code. Under the Teeter Plan, the accounts of all political subdivisions that levy taxes on the County tax rolls are credited with 100% of their respective tax levies regardless of actual payments and delinquencies. The County Treasury’s cash position (from taxes) is protected by a special fund (“The Teeter Plan-Tax Losses Reserve Fund”) into

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which all County-wide delinquent penalties are deposited. The County has used this method since Fiscal Year 1950-51.

Rates, Fees and Charges

The City’s wastewater charge has two components: a sanitary system charge and a storm program charge. The sanitary system charge covers the costs of administering, monitoring, operating, maintaining, improving and retiring the capital debts of the Enterprise. The Storm program was developed to pay for the costs of administering, monitoring, operating, maintaining and improving the storm sewer system throughout the City and is not included in Revenues pledged to pay the principal of and interest on the Bonds. In addition, the City charges fees for the issuance of permits, site visit inspections, site monitoring, sampling and testing, and laboratory charges for users covered by the City’s wastewater permitting program.

Sewer Service Charges. Customers of the Enterprise are billed an annual sewer charge based on a user classification system.

Residential. Single unit residential users of the Enterprise are billed a flat annual charge per sewer service unit (“SSU”). Multifamily residential users are billed a slightly lower amount SSU.

Non-Residential. All non-residential users of the Enterprise (i.e. commercial and industrial users and schools) are billed annually based upon industrial waste unit (“IWU”) plus strength charges per pound of the five-day biochemical oxygen demand in mg/L and pounds of total suspended solids (“TSS”) in mg/L in the effluent. In addition, all non-residential users are billed for actual cost of monitoring charges.

Current Rates To satisfy funding requirements for expansion, improvement, maintenance and operating the Enterprise on July 28, 2015, the City Council approved a multi-year rate ordinance that increased user charges by 6.8% per year for Fiscal Years 2015-16 through 2019-20, which became effective August 1, 2015.

Rates shown for single unit and multi-unit residences are flat rates per sewer service unit. Rates shown for commercial and industrial customers are minimum rates calculated based on metered usage per industrial waste unit, which is equal to a volume of industrial and domestic waste discharge of 1,000 cubic feet.

The City has covenanted in the Indenture to implement the capital expenditure program funded by Outstanding Bonds and to levy and collect rates and charges in conformance with the rate covenant in the Indenture. See “SECURITY AND SOURCE OF PAYMENT FOR THE Series 2017A BONDS-Rate Covenant.” The City believes that the current rate structure is consistent with State law, which requires generally that wastewater charges be proportionate to the operation, maintenance and replacement costs associated with providing service for each discharger or class of dischargers.

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Set forth below in Table 7 are the annual user charges for Fiscal Years 2014-15 through 2019-20 reflecting historic, current and adopted rates and charges.

Table 7City of Richmond

Wastewater Enterprise Annual User Rates and Charges

Fiscal Years 2014-15 through 2019-20

Fiscal YearUser Classification 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Single Unit Residential $633.00 $676.00 $722.00 $771.00 $824.00 $880.00Multi-Unit Residential 509.00 544.00 581.00 620.00 662.00 707.00CommerciaFIndustrial Base RateT 379.00 404.77 432.30 461.69 493.09 526.62Biochemical Oxygen Demand per lb 0.975 1.04 1.11 1.19 1.27 1.35Total Suspended Solids per lb 0.45 0.48 0.51 0.55 0.59 0.63Industrial Waste Unit per each 45.92 49.04 52.38 55.94 59.74 63.81

t Charges shown are minimum charges and will vary depending upon the amount of wastewater discharge (measured per industrial waste unit), biochemical/oxygen/demand levels, total suspended solids content, and strength and volume of wastewater discharge.

Source: City of Richmond.

Connection Fees

In addition to user charges, the City imposes a connection fee upon each owner connecting a building sewer with the Enterprise on or after July 1, 1992. The fee is payable at the time of issuance of a permit by the City to connect to the sewer system. For residential premises the current connection fees are $3,205 for single-family residences and is $2,594 for multi-family units, which fees are payable for each sewer service unit to be connected to the sewer system. The connection fees are Revenues and, as such are a part of the Net Revenues pledged to the payment of the Series 2017A Bonds and any Parity Debt.


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Comparison of Enterprise Charges

Table 8 shows average monthly residential service charges by various cities and agencies in the San Francisco Bay Area, as reported by each respective agency.

Table 8Comparative Monthly Wastewater Charges

Average Single Family Residences

Fiscal Year 2015-16

Fiscal Year 2016-17 Percent

Agency Charges Charges ChangeCity of Larkspur $88.92 $88.92 0.00%City of Benicia 110.78 86.90 (21.56)Los Gallinas Valley Sanitary District 61.17 69.58 13.76City of San Rafael 69.00 69.00 0.00City of Pinole 58.62 60.50 3.21City of Richmond 56.33 60.17 6.80City of South San Francisco N/A 49.00 -City and County of San Francisco 39.28 43.36 10.39City ofVallejo/Vallejo Sanitary & Flood Control District 43.35 43.35 0.00Central Contra Costa Sanitary District 39.25 41.92 6.79West County Wastewater District (San Pablo, El Sobrante) 35.17 39.00 10.90Delta Diablo Sanitary District/Antioch 25.83 38.03 47.23Delta Diablo Sanitary District/Bay Point 25.83 36.96 43.07City of San Jose 35.60 35.60 0.00City of Palo Alto 34.83 34.83 0.00City of San Leandro 33.17 34.03 2.59Dublin San Ramon Sanitary District 31.87 31.87 0.00Union Sanitary District 31.42 31.67 0.81

Sources: Rates were provided by each respective agency.

Basis of Accounting

The City reports operations on a fiscal year basis (currently July 1 through June 30). The City maintains the Enterprise as a separate enterprise fund for accounting purposes.

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Sources of Funds; Operating Costs

The following Table 9 sets forth the Enterprise’s audited summary of revenues and expenditures for Fiscal Years 2012-13 through 2015-16. For Fiscal Year 2015-16, of the approximately $19.8 million in sewer service charges received by the City, approximately $15.64 million was derived from residential parcels and $4.16 million came from industrial, commercial and other classifications.


Summary of Revenues, Expenses and Changes in Net Assets Fiscal Year Ended June 30

2012-13 2013-14 2014-15 2015-16Operating RevenuesSewer Service Charges $17,733,454 $18,566,311 $18,648,404 $19,757,863Other (Fines and Violations) 0 2.880 385.002 0

Total Operating Revenues $17,733,454 $18,569,191 $19,033,406 $19,757,863

Operating ExpensesSalaries and Benefits $803,697 $857,842 $849,665 $1,155,864General and Administrative 8,472,780 8,366,742 8,343,717 8,577,140Maintenance 10,832 218,451 197 5,197Depreciation 2,537,875 1,646,055 1,642,065 1,644,674Other 159.927 291.244 337.131 369.479

Total operating Expenses $11,985,111 $11,380,334 $11,172,775 $11,752,354

Nonoperating Revenues (Expenses)Interest Income $3,934,817 ($263,339) ($790,571) ($3,104,869)Interest (expense) T4.979.064j T4.918.289j T4.792.833j T 4.694.272)Total Nonoperating Revenues (Expenses) ($1,044,247) ($5,181,628) ($5,583,404) ($7,799,141)

Income (Loss) Before Contributions and Transfers $4,704,096 $2,007,229 $2,277,227 $206,368Capital contributions/grants $862,241 $793,693 $799,729 $801,453Change in Net Position $5,566,337 $2,800,922 $3,076,956 $1,007,821

Beginning Net Position (Deficit), As Restated'2’ $1,259,098 $15,825,435 $16,799,055 $19,876,011Ending Net Position (Deficit) $15,825,435 $18,626,357 $19,876,011 $20,883,832

(1) Estimated.(2) During Fiscal Year 2014-15, the City implemented new accounting pronouncements, adopted revised accounting policies

and made other corrections that resulted in restatements or adjustments to beginning net position or fund balance. For more information, reference is made to Note 10.F. of the City’s Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015.

Sources: City of Richmond Audited Financial Statements and the City of Richmond.

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Management’s Discussion of Operating Results

Audited operating results for the Enterprise for the last four fiscal years (Fiscal Years 2012-13 through 2015-16) are set forth in Table 10. Over this period, operating revenues increased by an annual average of approximately 3.7%; over the same period, maintenance and operating expenses increased by an annual average of approximately 2.3%.

Budget Process

Based primarily on the prior year’s expenditures, the annual Enterprise budget is developed by the Director of Water Resource Recovery for submission to the Finance Department and then the City Manager. Budgets for staffing levels, other operating costs, interfund transfers and capital expenditures are reviewed and approved by the City Council. The management of the Enterprise is held accountable for conformance to the approved budget.

Historical and Projected Revenues, Operating Expenses, and Debt Service Coverage

Table 10 presents historical and projected revenues, operating expenses and debt service coverage ratios for the period beginning in Fiscal Years 2012-13 through 2016-17 (historical) and 2017-18 through 2020-21 (projected). In preparing the projections, the City has made certain assumptions with respect to capital needs and the condition of the existing system and conditions that may occur in the future. While the City believes these assumptions are reasonable for the purpose of the projections, they are dependent upon future events, and actual conditions may differ from those assumed.


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Historical and Projected Revenues, Operating Expenses and Debt Service CoverageFiscal Year Ending June 30

Historical__________________ ______________________Projected2012-13 2013-14 2014-15 2015-16 2016-17® 2017-18 2018-19 2019-20 2020-21

Operating RevenuesSewer Service Charges (base)® $17,733,454 $18,566,311 $18,648,404 $19,757,860 $20,242,620 $21,043,019 $22,079,225 $23,190,586 $23,190,586Sewer Service Charges (growth

from new connections)® - - - - - 218,860 1,065,820 1,530,655 1,696,093Other 0 2,880 385,002 0 677,211 655,000 655,000 655,000 655,000

Nonoperating RevenuesCapital Contributions/Grants® 862,241 793,693 799,729 801,453 802,746 747,357 695,789 647,780 603,083Connection Fees® 0 46,964 220,842 115,650 313,651 1,131,608 3,260,658 1,439,670 606,996Interest Revenue 107,620 (31.242) 69.779 75.313 69.598 _ _ _ _

Total Revenues $18,703,315 $19,378,606 $20,123,756 $20,750,276 $22,105,826 $23,795,844 $27,756,492 $27,463,691 $26,751,758

Maintenance and OperatingExpenditures

Salaries and Benefits $803,697 $857,842 $849,665 $1,155,864 $1,128,340 $1,470,388 $1,499,796 $1,529,792 $1,560,388General and Administrative 8,472,780 8,366,742 8,343,717 8,557,140 9,337,821 9,399,902 9,405,970 9,539,659 9,676,021Other Operating® 170.759 509.695 337.328 374.676 673.046 677.160 688.639 700.820 713.747

Total Expenditures $9,447,236 $9,734,279 $9,530,710 $10,107,680 $11,139,207 $11,547,450 $11,594,405 $11,770,271 $11,950,155

Net Revenues $9,256,079 $9,644,327 $10,593,046 $10,642,596 $10,966,619 $12,248,394 $16,162,088 $15,693,420 $14,801,603

Debt Service on Existing Bonds® $6,121,771 $5,667,662 $6,614,235 $6,593,376 $6,439,254 $6,297,307 $4,842,848 $4,824,304 $4,800,224Debt Service on2017A Bonds - - - - - 831,575 2,870,950 2,868,650 2,867,450State loan payments (Projected)® _ _ _ _ _ _ _ _ 317.297Total Debt Service $6,121,771 $5,667,662 $6,614,235 $6,593,376 $6,439,254 $7,128,882 $7,713,798 $7,692,954 $7,984,971®

Debt Service Coverage 1.51x 1.70x 1.60x 1.62x 1.70x 1.72x 2.10x 2.04x 1.85 x®Debt Service Coverage without

Growth(10) 1.51x 1.69x 1.57x 1.60x 1.65x 1.53x 1.53x 1.65x 1.57x®

(1) Estimated.(2) Projected revenues include adopted Sewer Service Charge rate increase of 6.8% per year through Fiscal Year 2019-20.(3) Reflects sewer service charge revenue increases derived from connections resulting from new development within the Service Area. See Appendix A-“Economic, Demographic and Certain

Financial Information Regarding the City Of Richmond-Demographic And Economic Information—Recent Developments.(4) Represents Subsidy Receipts relating to the Taxable Series 201 OB Bonds, assuming sequestration reductions of 6.9% in each year for the Projected Fiscal Years.(5) Projected connection fees reflect the City’s projections for pending residential, commercial and industrial development in the Service Area.(6) Includes maintenance costs, bond-related expenses (including letter of credit fees) and other expenses.(7) Represents debt service on the Series 2006A Bonds (being refunded), the Series 2008A Bonds (based upon the 2009 Swap Agreement rate equal to 3.897%), the Series 2010A Bonds, and the

Taxable Series 2010B Bonds. Excludes debt service on the Series 2006ABonds after August 1, 2017.(8) Assumes State loan from the State Water Resources Control Board approved in Spring of 2018 and construction is completed in Fiscal Year 2019-20. See “The Wastewater ENTERPRISE-Capital

Improvement Program.”(9) Includes projected State loan payment.(10) Excludes Sewer Service Charges from new connections and Connection Fee revenue in calculation of debt service coverage.

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS

Article XIII B

At the statewide special election of November 6, 1979, the voters approved an initiative entitled “Limitation of Government Appropriations” which added Article XIII B to the California Constitution. Under Article XIII B, state and local governmental entities have an annual “appropriations limit” which limits the ability to spend certain monies which are called “appropriations subject to limitation” (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the “appropriations.” The “base year” for establishing such appropriation limit is the 1978/79 fiscal year and the limit is to be adjusted annually to reflect changes in population and consumer prices. Adjustments in the appropriations limit of an entity may also be made if (i) the financial responsibility for a service is transferred to another public entity or to a private entity, (ii) the financial source for the provision of services is transferred from taxes to other revenues, or (iii) the voters of the entity approve a change in the limit for a period of time not to exceed four years.

Appropriations subject to Article XIII B generally include proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions and refunds of taxes. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from (i) regulatory licenses, user charges, and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), and (ii) the investment of tax revenues. Article XIII B includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

Certain expenditures are excluded from the appropriations limit including payments of indebtedness existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by the voters and payments required to comply with court or federal mandates which without discretion required an expenditure for additional services or which unavoidably make the providing of existing services more costly.

The City believes that the sewer fees and charges it imposes for use of the Enterprise do not exceed the costs it reasonably bears in providing such services and therefore are not subject to the limits of Article XIIIB.

Proposition 62

A statutory initiative (“Proposition 62”) was adopted by the voters voting in the State at the November 4, 1986 general election which (1) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity, (2) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within that jurisdiction, (3) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (4) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIII A, (5) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities and (6) requires that any tax imposed by a local governmental entity on or after March 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988.

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Following its adoption by the voters, various provisions of Proposition 62 were declared unconstitutional at the appellate court level. On September 28, 1995, however, the California Supreme Court, in Santa Clara County Local Transportation Authority v. Cuardino (“Guardintf’), upheld the constitutionality of the portion of Proposition 62 requiring a two-thirds vote in order for a local government or City to impose a special tax, and, by implication, upheld a parallel provision requiring a majority vote in order for a local government or City to impose any general tax. Guardino did not address the question of whether or not it should be applied retroactively.

Following the Guardino decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62. On December 15, 1997, the Court of Appeals for the State of California, Fourth Appellate District, in McBrearty V. City of Brawley, determined that (i) Guardi no is to be applied retroactively to require voter approval of previously enacted taxes, and (ii) the three-year statute of limitations applicable to such taxes runs from the date of the Guardino decision (September 28, 1995). On June 4, 2001, the California Supreme Court released its decision in Howard J arvis Taxpayers Association v. City of La Habra, et al. (“La Habra”) holding (i) that a public agency’s continued imposition and collection of a tax is an ongoing violation upon which the statute of limitations period begins anew with each collection and (ii) that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.

Proposition 218

On November 5, 1996, the voters of the State approved Proposition 218, the so-called ‘"Right to Vote on Taxes Act.” Proposition 218 added Articles XIII C and XIII D to the State Constitution, which contain a number of provisions affecting the ability of local governments to levy and collect both existing and future taxes, assessments, fees and charges.

Article XIII C. Article XIII C removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. In Bighorn-Desert View Water Agency V. Beringson (“Bighorn”), decided by the California Supreme Court on July 24, 2006, the petitioner sought to establish his right to reduce a local water agency’s water rates and fees and charges through use of the initiative power. In holding for the petitioner on this issue, the court stated that the absence of a restrictive definition of “fee” or “charge” in Article XIII C suggests that those terms include all levies that are ordinarily understood to be fees or charges, including all of the property-related fees and charges subject to Article XIIID.

Though the California Supreme Court did not arrive at an exact definition of such terms in Bighorn, it did determine that fees and charges that are fees and charges within the meaning of Article XIII D are necessarily fees and charges within the meaning of Article XIII C. See “-Article XI11 D.” The Court held that Article XIII C authorizes the use of the initiative process to reduce water rate and other delivery charges but that it does not authorize use of the initiative power to impose a voter-approval requirement on future increases or new water delivery charges. The court declined to determine whether the initiative power is limited by other statutory provisions requiring that water service charges be set at a level that will pay system expenses and debt service since that issue was not before the court.

Consequently, the voters of the City could, by future initiative, seek to repeal or reduce any local tax, assessment, fee or charge, including the City’s sewer service fees and charges of the Enterprise, which are the source of Net Revenues pledged to the payment of debt service on the Series 2017A Bonds and the other Bonds. Though the use of the initiative power is arguably limited in the case of levies directly pledged to bonded indebtedness, such as the fees and charges imposed by the Enterprise securing the Series 2017A Bonds and the other Bonds, there can be no assurance that the voters of the City will not

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seek to approve an initiative which attempts to reduce the fees and charges imposed by the Enterprise securing the Series 2017A Bonds and the other Bonds.

Article XIII D. Article XIII D established procedural requirements for imposition of assessments, which are defined as any charge on real property for a special benefit conferred upon the real property. Standby charges are classified as assessments. Procedural requirements include the conducting of a public hearing and an election by mailed ballot, with notice to the record owner of each parcel subject to the assessment. The assessment may not be imposed if a majority of the ballots returned oppose the assessment, with each ballot weighted according to the proportional financial obligation of the affected parcel. The City does not currently impose standby charges or assessments for the Enterprise.

Article XIII D conditions the imposition or increase of any ‘Tee” or “charge” upon there being no written majority protest after a required public hearing and voter approval for fees and charges other than for sewer, water or refuse collection services. Article XIII D defines ‘Tee” or “charge” to mean levies (other than ad valorem or special taxes or assessments) imposed by a local government upon a parcel or upon a person as an incident of the ownership or tenancy of real property, including a user fee or charge for a “property-related service.” One of the requirements of Article XIII D is that before a property related fee or charge may be imposed or increased, a public hearing upon the proposed fee or charge must be held and mailed notice sent to the record owner of each identified parcel of land upon which the fee or charge is proposed for imposition. In the public hearing if written protests of the proposed fee or charge are presented by a majority of the owners of affected identified parcel(s), an agency may not impose the fee or charge.

In Richrrond et al. v. Shasta Community Services District (“Richmond”), the California Supreme Court held that a water connection fee was not a “property-related” fee and charge subject to Article XIII D. However, in the opinion the California Supreme Court suggested in dicta that fees for ongoing water service through an existing connection were “property related” fees and charges imposed on a person as an incident of property ownership. The court addressed this issue directly in the Bighorn case discussed above. In its decision, the court relied on its discussion in Richmond to reach the conclusion that fees and charges for ongoing water service through an existing connection are “property-related” fees and charges imposed on a person as an incident of property ownership for purposes of Article XIII D whether the fees and charges are calculated based on usage or are imposed as a fixed monthly fee.

The City has complied with the procedures required by Article XIII D in connection with the increase in the sewer fees and charges described under the caption “FINANCIAL MATTERS RELATING TO THE ENTERPRISE-Rates, Fees and Charges” herein.

In addition to the procedural requirements of Article XIII D, under Article XIII D, all property related fees and charges, including those which were in existence prior to the passage of Proposition 218 in November 1996, must meet the following substantive standards:

(1) Revenues derived from the fee or charge cannot exceed the funds required to provide the property related service.

(2) Revenues derived from the fee or charge must not be used for any purpose other than that for which the fee or charge was imposed.

(3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership must not exceed the proportional cost of the service attributable to the parcel.

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(4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, must be classified as assessments and cannot be imposed without compliance with Section 4 of Article XIII D (relating to assessments).

(5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to property owners.

The City believes that its rates comply with the foregoing standards.

Article XIII D provides that nothing in Proposition 218 will be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development.

Further interpretation and application of Proposition 218 will ultimately be determined by the courts or through implementing legislation with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the nature or scope of any such legislation.

Effect of Proposition 218 and of Possible General Limitations on Enforcement Remedies

The ability of the City to comply with its covenants under the Indenture and to generate Net Revenues sufficient to pay the principal of and interest on the Series 2017A Bonds may be adversely affected by actions and events outside of the control of the City and may be adversely affected by actions taken (or not taken) under Article XIII C or Article XIII D by voters, property owners, taxpayers or payers of assessments, fees and charges. Furthermore, any remedies available to the owners of the Series 2017A Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time consuming to obtain. In addition to the possible limitations on the ability of the City to comply with its covenants under the Indenture, the rights and obligations under the Series 2017A Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against municipal utilities in the State of California.

Based on the foregoing, in the event the City fails to comply with its covenants under the Indenture, including its covenants to generate sufficient Net Revenues, as a consequence of the application of Article XIII C and Article XIII D, or to pay principal of or interest on the Series 2017A Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Series 2017A Bonds.

Future Initiatives

Articles XIII B, XIII C and XIII D and Proposition 62 were adopted as measures that qualified for the ballot pursuant to California’s initiative process. From time to time other initiatives could be proposed and adopted affecting the City’s Net Revenues or ability to increase sewer fees and charges.

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CERTAIN RISKS TO BONDOWNERS

This section pra/ides a general overview of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in evaluating an investment in the Series 2017A Bonds. This section is not meant to be a comprehensive or definitive discussion of the risks associated with an investment in the Series 2017A Bonds, and the order in which this information is presented does not necessarily reflect the relative importance of various risks. Potential investors in the Series 2017A Bonds are advised to consider the following factors, among others, and to review this entire Official Statement to obtai n information essential to the making of an informed investment decision. Any one or more of the risk factors discussed below, among others, could lead to a decrease in the market value and/or in the marketability of the Series 2017A Bonds. There can be no assurance that other risk factors not discussed herein will not become material inthe future.

System Demand

There can be no assurance that the demand for sewer services of the Enterprise will occur as described in this Official Statement. Reduction in levels of demand on such services could require an increase in rates or charges in order to comply with the rate covenant in the Indenture.

System Expenses

There can be no assurance that the City’s actual expenses will be consistent with the projections in this Official Statement. Increases in expenses including, but not limited to, personnel costs, regulatory compliance costs and changes in technology, could require an increase in rates or charges in order to comply with the rate covenant in the Indenture.

Risks Related to Subsidy Receipts for the Taxable Series 2010B Bonds

The Taxable Series 2010B Bonds were issued as ‘"Build America Bonds” under the provisions of the American Recovery and Reinvestment Act of 2009, signed into law on February 1, 2009 (the ‘Recovery Act”), the interest on which is not excluded from gross income for federal income tax purposes but is exempt from State of California personal income taxes. The City receives the Subsidy Receipts with respect to the Taxable Series 2010B Bonds, which are Revenues under the Indenture. See ‘Financial Matters Relating TO THE ENTERPRISE-Historical and Projected Revenues, Operating Expenses, and Debt Service Coverage.”

Failure by the City to comply with certain requirements applicable to “Build America Bonds” may result in a delay or forfeiture of all or a portion of the Subsidy Receipts and may cause the obligations represented by the Taxable Series 2010B Bonds to cease to be treated as “qualified bonds” either prospectively from the date of determination of a failure to comply with the requirements or retroactively to the date of issuance of the Taxable Series 2010B Bonds. Should such an event occur the Taxable Series 2010B Bonds are subject to extraordinary optional redemption. Such circumstances could create an additional, or increased, obligation payable from Net Revenues.

In the past, the federal government has reduced the amount of the Subsidy Receipts through sequestration due to federal government’s financial condition. The City can provide no assurance that Subsidy Receipts may not be reduced or eliminated in the future due to sequestration, federal legislation, amendments to the Tax Code, court decisions or any other reason.

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Failure to receive the Subsidy Receipts, or a reduction in the amount thereof, could have an adverse effect on Net Revenues available to repay the Bonds. The City is obligated under the Indenture to make all payments of principal of and interest on the Bonds whether or not the City receives any Subsidy Receipts.

Limited Recourse on Default

If the City defaults on its obligation to pay principal or interest on the Series 2017A Bonds, the Owners of not less than a majority in aggregate amount of the Series 2017A Bonds at the time outstanding have the right to accelerate the principal of all Series 2017A Bonds then outstanding and the accrued interest thereon. However, in the event of a default and such acceleration there can be no assurance that the City will have sufficient funds to pay the accelerated principal and accrued interest from Net Revenues.

If at any time there is a deficiency in Net Revenues available to pay the principal and interest on the Series 2017A Bonds, available Net Revenues are required to be applied on a pro rata basis for such purposes and any amounts due with respect to Parity Debt, amounts required to replenish the Reserve Fund or any reserve fund established for Parity Obligations or Credit Facility Obligations, then under the Indenture.

Initiatives; Changes in Law

In recent years several initiative measures have been proposed or adopted which affect the ability of local governments to increase taxes and rates. Article XIII A, Article XIII B, Article XIII C, Article XIII D, and Proposition 218, were adopted as measures that qualified for the ballot through California’s initiative process. From time to time, other initiative measures could be adopted, which may place further limitations on the ability of the State, the City or local districts to increase revenues or to increase appropriations which may affect the Net Revenues or the ability of the City to expend its revenues. There is no assurance that the electorate or the State Legislature will not at some future time approve additional limitations which could affect the ability of the City to implement rate increases which could reduce Net Revenues and adversely affect the security for the Series 2017A Bonds.

Statutory and Regulatory Impact

Laws and regulations governing collection, treatment and disposal of wastewater are enacted and promulgated by government agencies on the federal, State and local levels. Compliance with these laws and regulations may be costly, and, as more stringent standards are developed to protect the environment, these costs will likely increase. In addition, claims against the City for violations of regulations with respect to its facilities and services could be significant. Such claims are payable from Gross Revenues or from other legally available sources.

Although the City covenants in the Indenture to fix, prescribe and collect rates and charges for the services and facilities furnished by the Enterprise during each Fiscal Year sufficient to yield the debt service coverage not less than 1.25:1, no assurance can be given by the City that the cost of compliance with such laws and regulations will not materially adversely affect the ability of the City to generate sufficient Net Revenues in the amounts required by Indenture. Increasing regulatory standards could materially increase the cost to the City of providing wastewater services. See also “CONSTITUTIONAL and Statutory Limitations on Taxes and APPROPRIATIONS-Proposition 218” and “-Effect of Proposition 218 and of Possible General Limitations on Enforcement Remedies.”

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Seismic Risks

There are several geological faults in the greater San Francisco Bay Area that have the potential to cause serious earthquakes which could result in damage to buildings, roads, bridges, and property within the City.

The City, the Enterprise and the Bay Area are generally located in a zone 4 seismic hazard area. Seismic zones aid in identifying and characterizing certain geological conditions and the risk of seismic damage at a particular location, and are used in establishing building codes to minimize seismic damage. The five seismic zones are: zone 0 (no measurable damage), zone 1 (minor damage), zone 2 (moderate damage), zone 3 (major damage) and zone 4 (major damage and greater proximity than zone 3 to certain major fault systems).

The City is located in the Hayward Fault Zone. Past experiences, including the 1989 Loma Prieta earthquake on the San Andreas fault, with a magnitude of 7.1 on the Richter scale and with the epicenter located in Santa Cruz, approximately 65 miles south of the City, have resulted in minimal damage to the infrastructure and property within the City.

The nearest active fault to the City is the Hayward fault, which is a northwest-southeast trending fault approximately 3.7 miles to the east of the City. The West Napa fault lies approximately 17 miles to the northeast. The Concord-Green Valley fault lies approximately 18 miles to the east. The Rogers Creek fault lies approximately 15 miles to the north. The San Andreas fault lies approximately 14 miles to the west. The northern part of the Calaveras fault lies approximately 20 miles to the southeast. All of these faults are considered active.

It is possible that new geological faults could be discovered in the area and a significant earthquake along these or other faults is possible during the period that the Series 2017A Bonds will be outstanding which may cause a delay or suspension of receipt of Net Revenues from the Enterprise.

The Treatment Plant is partially located on landfill. During an earthquake, landfill areas are subject to liquefaction, which is the temporary change of a saturated soil or fill to a liquid with the loss of support strength for structures. Commercial properties, residential properties and infrastructure in this project area could sustain damage in a major seismic event from ground motion and liquefaction of underlying soils. This could result in a substantial reduction or suspension of Net Revenues.

In the event of significant earthquake damage to the Enterprise, there can be no assurance that Net Revenues will be sufficient to pay principal of and interest on the Bonds.

It is believed that the City is not at great risk of earthquake-triggered tsunamis due to natural attenuation across San Francisco Bay and Brooks Island near the City. If a tsunami did occur on the open ocean, it is expected that waves would dissipate as they moved through San Francisco Bay and past Angel Island and that the tidal flats would absorb much of the impact.

Climate Change

In March 2009, the California Climate Change Center released a draft paper, for informational purposes only, which was funded by the California Energy Commission, the California Environmental Protection Agency, the Metropolitan Transportation Commission, the California Department of Transportation and the California Ocean Protection Council. The title of the paper is “The Impacts of Sea-Level Rise on the California Coast.” The paper posits that increases in sea level will be a significant consequence of climate change over the next century.

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Local impacts of climate change are not definitive, but the City could experience changes to local and regional weather patterns; rising bay water levels; increased risk of flooding; changes in salinity and tidal patterns of San Francisco and San Pablo bays; coastal erosion; water restrictions; and vegetation changes. The San Francisco Bay Conservation and Development Commission identified several portions of the shoreline in the City which may be affected by sea level rise.

In 2005, the Governor signed Executive Order S-3-05 (the “Executive Order”) setting the stage for multiple legislative actions to reduce greenhouse gas emissions (“GHG”) to 80% below 1990 levels by 2050. The adoption of the California Global Warming Solutions Act of 2006 (“AB 32”) and subsequent companion bills, including but not limited to the Sustainable Communities and Climate Protection Act of 2008 (“SB 375”) that builds upon AB 32 to reduce GHG emissions by linking transportation funding to land use planning, demonstrate the commitment by the State to take action and reduce GHG to 1990 levels by 2020 and to 80% below 1990 levels by 2050. In 2008, the City Council adopted Resolution No. 108-08 committing to the GHG emissions targets established by AB 32.

In October 2016, the City adopted a Climate Action Plan (the ‘GAP”) to serve as a roadmap for the reduction of GHG emissions, create local jobs, and prepare for the impacts of climate change on public health, infrastructure, ecosystems, and public spaces within the City. The CAP is a multi-objective plan that addresses environmental, social and economic issues related to climate change. The CAP builds on the goals and policies in the City’s General Plan 2030 (the comprehensive framework adopted by the City Council in April 2012 for developing a healthy City and healthy neighborhoods) and other planning documents and policies, including the Health in All Policies Strategy (to further the City’s efforts to build health equity through the reduction of local GHG emissions), to ensure that the City is prepared for the impacts of climate change, and to fulfill the requirements of AB 32 and SB 375.

Climate change concerns are leading to new laws and regulations at the federal, State and local levels. The City is unable to predict the impact such laws and regulations, if adopted, will have on Net Revenues. The effects, however, could be material.

Insurance

The Indenture obligates the City at all times to maintain with responsible insurers such insurance on the Enterprise as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. For a description of the required insurance coverage, see “THE WASTEWATER ENTERPRISE-Insurance on the Enterprise.”

No Tax Pledge; No Recourse to City General Fund

The obligation of the City to pay the principal of and interest on the Series 2017A Bonds does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Series 2017A Bonds nor the obligation of the City to make payments on the Series 2017A Bonds constitutes a debt of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

Owners of the Series 2017A Bonds have no recourse to the City’s General Fund for payment of amounts due with respect to the Series 2017A Bonds.

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Changes in Law

There can be no assurance that the State Legislature will not at some future time enact legislation that will amend or create laws resulting in a reduction of Net Revenues securing or available to pay the Bonds. Similarly, the State electorate could adopt initiatives or the State Legislature could adopt legislation with the approval of the electorate amending the State Constitution which could have the effect of reducing moneys securing or available to pay the Bonds.

Loss of Tax Exemption

As discussed under the caption “Tax MATTERS,” interest on the Series 2017A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2017A Bonds were issued, as a result of future acts or omissions of the City in violation of their covenants in the Indenture. Should such an event of taxability occur, the Series 2017A Bonds are not subject to special redemption and will remain outstanding until maturity or until redeemed under other provisions set forth in the Indenture.

Secondary Markets and Prices

The Underwriters will not be obligated to repurchase any of the Series 2017A Bonds, and no representation is made concerning the existence of any secondary market for the Series 2017A Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2017A Bonds, and no assurance can be given that the initial offering prices for the Series 2017A Bonds will continue for any period of time.

TAX MATTERS

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City (‘"Bond Counsel”), based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2017A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2017A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel relating to the Series 2017A Bonds is set forth in Appendix D hereto.

To the extent the issue price of any maturity of the Series 2017A Bonds is less than the amount to be paid at maturity of such Series 2017A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2017A Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2017A Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2017A Bonds is the first price at which a substantial amount of such maturity of the Series 2017A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2017A Bonds accrues daily over the term to maturity of such Series 2017A Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to

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the adjusted basis of such Series 2017A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2017A Bonds. Beneficial Owners of the Series 2017A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2017A Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2017A Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2017A Bonds is sold to the public.

The Series 2017A Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (‘"Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2017A Bonds. The City has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2017A Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2017A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2017A Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Series 2017A Bonds may adversely affect the value of, or the tax status of interest on, the Series 2017A Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the Series 2017A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the amount, accrual or receipt of amounts treated as interest on, the Series 2017A Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2017A Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2017A Bonds. Prospective purchasers of the Series 2017A Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion.

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The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Series 2017A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the Series 2017A Bonds ends with the issuance of the Series 2017A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Beneficial Owners regarding the tax-exempt status of the Series 2017A Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of Series 2017A Bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2017A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2017A Bonds, and may cause the City or the Beneficial Owners to incur significant expense.

NO MATERIAL LITIGATION

There is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the City in the execution or delivery of, or in any way contesting or affecting the validity of, the Series 2017A Bonds. There is no litigation known to be pending, or to the knowledge of the City, threatened, questioning the existence of the City or the title of the officers of the City to their respective offices.

Lawsuits and claims against the City may exist which are incidental to the ordinary course of operations of the Enterprise. In the view of the City’s management and the City Attorney, there is no litigation, present or pending, which will individually or in the aggregate materially impair the City’s ability to service its indebtedness or to expend the proceeds for the purposes for which the Series 2017A Bonds are authorized or which will have a material adverse effect on the business operations of the Enterprise.

RATING

S&P Global Ratings, a business unit of Standard & Poor’s Financial Ratings Services LLC (“Standard & Poor’s”) has assigned a rating of “AA-/Stable” to the Series 2017A Bonds.

The rating reflects only the views of Standard & Poor’s and is not a recommendation to buy, sell or hold the Series 2017A Bonds. An explanation of the significance of the rating may be obtained from the rating agencies as follows: Standard & Poor’s, 55 Water Street, New York, New York 10041. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency, if in the judgment of such rating agency circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2017A Bonds.

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UNDERWRITING

The Series 2017A Bonds are being purchased pursuant to a purchase contract between the City and Stifel, Nicolaus & Company, Incorporated and Barclays Capital Inc. (together, the ‘Underwriters”). The purchase contract provides that the Underwriters will purchase all of the Series 2017A Bonds if any are purchased. The obligation of the Underwriters to make such purchase is subject to certain terms and conditions set forth in the purchase contract.

The Underwriters may offer and sell the Series 2017A Bonds to certain dealers and others at prices or yields different than the initial public offering prices or yields. The offering prices or yields may be changed from time to time by the Underwriters.

The Underwriters purchased the Series 2017A Bonds at a price of $39,263,404.11 (which represents the principal amount of the Series 2017A Bonds plus an original issue premium in the amount of $5,905,633.80 and less an underwriters’ discount in the amount of $172,229.69).

On July 12, 2017, Barclays Capital Inc., one of the Underwriters of the Series 2017A Bonds, and an affiliated entity, engaged in transactions relating to the Series 2008A Bonds. See “PLAN OF FlNANCE- Transactions Related to the Series 2008A Bonds.”

MUNICIPAL ADVISOR

The City has retained the services of Public Resources Advisory Group, Oakland, California as Municipal Advisor in connection with the sale of the Series 2017A Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. Public Resources Advisory Group is an independent financial advisory firm and is not engaged in any underwriting, trading or investment activities. All of the fees of the Municipal Advisor with regard to the delivery of the Series 2017A Bonds are contingent upon the issuance and delivery of the Series 2017A Bonds.

APPROVAL OF LEGAL PROCEEDINGS

All legal matters incident to the authorization, issuance and sale of the Series 2017A Bonds are subject to the approval of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. The form of approving opinion of Bond Counsel is included as Appendix D to this Official Statement and the approving opinion will be delivered with the Series 2017A Bonds. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the City by the City Attorney and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel, and for the Underwriters by Jones Hall, A Professional Law Corporation, San Francisco, California, Underwriters’ Counsel. All of the fees of Bond Counsel, Disclosure Counsel and Underwriters’ Counsel are contingent upon the issuance and delivery of the Series 2017A Bonds.

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FINANCIAL STATEMENTS

Attached as Appendix B hereto is the City’s Comprehensive Annual Financial Report for the Year Ended June 30, 2016, which includes financial statements for the City, including for the Enterprise, which have been audited by Maze & Associates, Accounting Corporation, certified public accountants. See Appendix B-“Comprehensive Annual Financial Report of the City for the Year Ended JUNE 30, 2016.” Maze & Associates has not consented to the inclusion of its report in Appendix B and has not undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement.

CONTINUING DISCLOSURE

The City has covenanted for the benefit of the Series 2017A Bondholders to provide certain financial information and operating data relating to the Enterprise and the City by not later than 270 days after the end of the City’s fiscal year (presently June 30) in each year commencing with the report for the 2016-17 Fiscal Year (the “Annual Report”) and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report and notices of material events will be filed by the City or the Dissemination Agent, if any, on behalf of the City through the Electronic Municipal Market Access Site maintained by the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriters to comply with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of material events by the City is summarized in APPENDIX E-“FORM OF CONTINUING DISCLOSURE Agreement.”

In the past five years, the City did not fail to comply in any material respect with its obligations to file annual reports. However, prior to 2014, the City did fail on occasion to timely file annual reports by the 240th day or 270th day, as applicable, following the end of the Fiscal Year (the City had been making the filings by February 28 and March 31, as applicable, of each year which is a few days longer than 240 days and 270 days, respectively, after the June 30 Fiscal Year end and therefore resulted in the majority of the annual reports being filed a few days late). In January 2014, established procedures, including the appointment of Willdan Financial Services, as the Dissemination Agent for all City bond transactions who is required to determine each year the applicable filing date for the annual reports. In addition, the City designated the Finance Department Debt Analyst as the party responsible for monitoring and making the required filings. Since 2014, the City has timely complied with all of its annual report filing obligations.

In the past five years, the City did not fail to comply in any material respect with its obligations to make filings with respect to material events. The City did, however, inadvertently not make certain filings with respect to bond ratings changes arising from changes in the ratings of the applicable bond insurer. Such failures to file were remediated by subsequent filings.

The City undertakes continuing disclosure responsibilities for City bond issues and for bonds issued by the Richmond Joint Powers Financing Authority (the “Authority”) with respect to which the City is the “obligated person” under the Rule. In addition, the relevant City staff undertakes these responsibilities for the Successor Agency to the Richmond Community Redevelopment Agency (the “Successor Agency”) and its bond issues. The late filings of annual reports and certain inadvertent missed filings for ratings changes described above apply to certain Authority and Successor Agency bonds as well.

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MISCELLANEOUS

References made herein to certain documents and reports are brief summaries thereof and do not purport to be complete or definitive and reference is hereby made to such documents and reports for a full and complete statement of the contents thereof.

Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or registered owners of any of the Series 20I7A Bonds. The delivery and distribution of this Official Statement have been duly authorized by the City.

CITY OF RICHMOND

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APPENDIX A

ECONOMIC, DEMOGRAPHIC AND CERTAIN FINANCIAL INFORMATION REGARDING THE CITY OF RICHMOND

TABLE OF CONTENTS

Page

ECONOMIC AND DEMOGRAPHIC INFORMATION........................................................................A-lIntroduction.................................................................................................................................. A-lRecent Developments.................................................................................................................. A-lPopulation.................................................................................................................................... A-lEconomy...................................................................................................................................... A-2Employment................................................................................................................................. A-6Personal Income........................................................................................................................... A-7Living Wage Ordinance............................................................................................................... A-9Construction Activity................................................................................................................... A-9Community Facilities................................................................................................................... A-9Transportation............................................................................................................................ A-10Utilities....................................................................................................................................... A-11Education................................................................................................................................... A-11

CERTAIN FINANCIAL INFORMATION............................................................................................ A-12Financial Policies and Practices................................................................................................. A-12Pension Plans............................................................................................................................. A-13Other Post-Employment Benefits.............................................................................................. A-30City Employees; Collective Bargaining..................................................................................... A-33Risk Management...................................................................................................................... A-35

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INDEX OF TABLES

Table A-l - City, County and State Population Statistics................................................................ A-lTable A-2 - Principal Employers in the City....................................................................................A-6Table A-3 - Civilian Labor Force, Employment and Unemployment..............................................A-7Table A-4 - City of Richmond, Contra Costa County, the State of California and

United States - Total Personal Income....................................................................... A-8Table A-5 - Building Permit Valuations..........................................................................................A-9Table A-6A - Schedule of Contributions - Miscellaneous Plan (CalPERS).................................... A-18Table A-6B - Schedule of Contributions - Safety Plan (CalPERS)................................................. A-19Table A-7A - Changes in Net Pension Liability - Miscellaneous Plan (CalPERS).........................A-21Table A-7B - Changes in Net Pension Liability - Safety Plan (CalPERS)......................................A-22Table A-8 - Schedule of Contributions - General Pension Plan.................................................... A-24Table A-9 - Schedule of Changes in the Net Pension Liability and Related

Ratios - General Pension Plan............................................................................. A-25Table A-10 - Schedule of Contributions - Police and Firemen’s Pension Plan............................. A-27Table A-11 - Schedule of Changes in the Net Pension Liability and Related

Ratios - Police and Firemen’s Pension Plan....................................................... A-28Table A-12 - Post Employment Benefit Summary - Number of Participating Retirees..................A-30Table A-13 - Full-Time Equivalent Positions..................................................................................A-33Table A-14 - Summary of Labor Agreements.................................................................................. A-34

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APPENDIX A

ECONOMIC, DEMOGRAPHIC AND CERTAIN FINANCIAL INFORMATION REGARDING THE CITY OF RICHMOND

ECONOMIC AND DEMOGRAPHIC INFORMATION

Introduction

The demographic and economic information provided below has been collected from sources that the City has determined to be reliable. Because it is difficult to obtain complete and timely regional economic and demographic information, the City’s economic condition may not be fully apparent in all of the publicly available regional economic statistics provided herein.

Recent Developments

The City’s economy is recovering well from the prior economic recession, with strong job growth and increasing economic development activity. As of May 2017, the City’s unemployment rate reached an historic low at 4.0%, below the rate of unemployment for both the State (4.2%) and the nation as a whole (4.3%). This robust job growth has been led in recent years by the strong regional Bay Area economy, and by a boom in warehousing and distribution facilities, for which the City is an ideal location. As part of the growing distribution network, the City has entered the cyber-economy, with internet-based companies including Amazon, Blue Apron, and Hello Fresh all locating facilities in the City. This growth is expected to continue in the near future, with approximately 1.2 million square feet of new warehouse and distribution capacity either under construction or going through the entitlement process as of June 2017. See “-Economy-1 industrial Activity’ below.

The residential development sector is also in a strong growth mode, with 1,981 new residential units either under construction or in the entitlement process as of June 2017.

Population

City residents account for approximately 10% of the population of the County. While the period from 1980 to 2000 was characterized by rapid population growth in both the City and the County, the last five years reflect a trend of slower growth. Table A-1 below shows the population of the City, the County and the State according to the U.S. Census for the years 2000 and 2010 and the California Department of Finance for 2013 through 2017.

Table A-lCity, County and State Population Statistics

Year Citv of Richmond Contra Costa Countv State of California2000T 99,216 948,816 33,873,0862010 103,764 1,047,948 37,223,9002013 105,715 1,076,429 37,984,1382014 106,388 1,089,219 38,357,1212015 109,568 1,111,143 38,907,6422016 110,886 1,126,824 38,189,0352017 111,785 1,139,513 39,523,613

t Census 2000 counts include changes from the Count Question Resolution program. Data may not match that published in Census 2000 reports.

Sources: U.S. Census Bureau (2000 and 201Q, California Department of Finance, E—1: Population Estimates for Cities, Counties and the State, with Annual Percentage Change -January 1, 2010 through 2017 (May 2017).

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Economy

CVerview. The economy of the City includes oil refining operations, heavy and light manufacturing, distribution facilities, service industries, commercial centers, and a multi-terminal shipping port on San Francisco Bay. Richmond also serves as a government center for western portions of Contra Costa County.

The economy of the City has experienced growth in light industrial and high technology companies and new business parks that accommodate both light industrial and “office/flex” type commercial buildings. Growth in these sectors, and in the residential sector, is adding diversity to the City’s historically heavy industrial base. At the same time, major manufacturers continue to upgrade their facilities, making major investments in modernization and expansion.

The City is continuing its efforts to attract developers, builders, manufacturers and commercial activity to all areas of the City. Economic development program efforts are being expanded to increase private sector investment and job creation in the City.

Industrial Activity. Historically, the City has been viewed as an industrial and distribution center, largely due to the visible presence of a major oil refinery, Chevron USA Richmond Refinery (the ‘"Refinery”), and other major industries.

On July 29, 2014, the City Council approved certification of the final environmental impact report and applications submitted by Chevron Products Company for a Conditional Use Permit (“CUP”) and Design Review Permit (“DRP”), as well as an Environmental and Community Investment Agreement (the “ECIA”) to allow an approximately $1.0 billion replacement of the existing hydrogen plant, power plant, and reformer. The equipment is designed to improve the ability of the Refinery to process high- sulfur crude oil, reliability, energy efficiency, and add environmental controls. Pursuant to the ECIA, Chevron will invest $80 million dollars in the City over the next 10 years for community programs, including, but not limited to, competitive community grants, a scholarship program, community-based greenhouse gas reduction programs and a photovoltaic solar farm. Chevron made an initial payment to the City in the amount of $11 million in June 2015, and, in accordance with the agreement, has contributed $30 million of the total required amount through June 30, 2017. According to the terms of the ECIA, over a ten-year period, $35 million will be used to fund the “Richmond Promise,” a college scholarship program established by the City Council for students graduating from public, charter, and private high schools located in the West Contra Costa Unified School District. The amount of $30 million will be utilized for community based greenhouse gas reduction programs; and the remaining $25 million will be spent on other community based programs. As part of the ECIA, Chevron will also finance the construction of a 12 megawatt solar power generating facility, with an estimated value of $10 million.

On April 8, 2015, the Contra Costa County Superior Court lifted the injunction that halted project construction of this project in 2009. In addition, the Bay Area Air Quality Management District reissued the authority-to-construct permit.

Chevron has submitted its engineering, procurement and construction plans, and has initiated field construction of the project. It is expected that the project will be completed by the end of 2018.

“High tech” light industrial firms, research and development companies, biotechnology, and business park developments are growing industrial sectors in the City. Biotechnology, medical instruments, and computer software in particular are emerging sectors in the City’s economy.

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A number of factors appear to be attracting the new high tech firms to the City:

• The ongoing development and leasing of light industrial/business park property at Hilltop and in the Marina District along Richmond’s South Shoreline and the Richmond Parkway;

• Availability of fairly extensive vacant or underutilized land areas zoned for industrial use;• Relatively lower land costs than elsewhere in the Bay Area;• Richmond’s central location in western Contra Costa County, within a short distance of San

Francisco, Oakland, other East Bay cities and Marin County, and a relatively easy commute to the State’s capitol, Sacramento;

• Proximity to the University of California at Berkeley, one of the major scientific universities and library systems in the world;

• Good access and transportation (two Interstate freeways Interstate 80 and Interest 580 are located within the city, the Richmond Parkway, Amtrak, the Bay Area Rapid Transit District (BART) System and AC Transit, as well as heavy rail and water transportation facilities, including Union Pacific and BNSF Railroads, Santa Fe western terminal, and the Port of Richmond); and

• Availability of affordable housing in a variety of neighborhoods, housing types and price ranges.

Biotechnology'. Biotechnology companies located in the City include Analytical Scientific Instruments (ASI), Bio-Rad, Kaiser Laboratories, Coherent Integrated Optical Systems, Ekso Bionics, Onyx Pharmaceuticals, Sangamo Biosciences and Zygo Corporation Extreme Precision Optics.

The California Department of Public Health’s (CDPH) Richmond Campus is a 29-acre property located in Richmond's Marina Bay. Employing more than 1,200 people, the 700,000-square-foot CDPH Richmond Campus is one of the largest employers in the area and has played a critical role in revitalizing Richmond’s south shoreline.

Bio-Rad, a manufacturer of products for life science research and clinical diagnostics, first opened offices in Richmond in 1958. It currently leases 116,250 square feet of space in Richmond’s Pinole Point Business Park near Atlas Road on the Richmond Parkway and has an additional facility in Richmond’s south shoreline area.

ASI, a manufacturer of medical equipment instruments and components, purchased a building in the Hilltop area of the City and relocated from neighboring El Sobrante. ASI brought 25 existing employees with them and expects to hire 10 additional employees.

Coherent Integrated Optical Systems, a recognized leader in optical technologies, its products and precision optical capabilities enable high energy laser missions, fire control solutions, and stabilized tracking systems, operates in three buildings with a total of 6,910 square feet in the Hilltop area of the City.

Kaiser Laboratories handles more than 25,000 lab specimens daily in a 50,000 square foot facility located on Marina Way South in Richmond’s Marina District.

Ekso Bionics, originally named Berkeley Bionics, was founded in Berkeley, California in 2005. Ekso, a pioneer in exoskeleton bionic devices that enhance and augment strength mobility and endurance of people with lower extremity paralysis or weakness, relocated to the City in April 2012 with 80 employees. Since inception Ekso Bionics has forged partnerships with world-class institutions like University of California Berkeley (UC Berkeley), received research grants from the Department of Defense and licensed technology to the Lockheed Martin Corporation.

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Transcept Pharmaceuticals, a specialty pharmaceutical company focused on development and commercialization of proprietary products that address therapeutic needs in the field of neuroscience, is located in an approximately 12,757 square foot facility in the Point Richmond area of the City.

Sangamo Biosciences, a worldwide leader in the design and development of engineered zinc finger DNA-binding proteins for gene regulation and gene modification, is located in a 127,500 square foot facility in the Point Richmond area of the City.

Zygo Corporation Extreme Precision Optics, a global leader in the design and manufacture of advanced optical metrology systems and ultra-precise optical components and assemblies, is located in a 55,520 square foot facility in the Hilltop area of the City.

Green and High Technology'. Green-technology companies located in the City include SunPower, Polymers Systems, Heliodyne, Alion, PAX Water, Advanced Home Energy, Intellergy and MBA.

SunPower Systems, an international leader in design and manufacturing and distributor of high efficiency solar electric technology; has been operating in the City since 2007. SunPower System occupies 175,000 square feet in the refurbished, historic 520,000 square foot Ford Point Building in the Marina District.

Heliodyne, a leading US manufacturer of solar water heating equipment, has been located in the City since 1976 and occupies 4,298 square feet in the Southern Gateway area of the City off of Interstate-580.

Dicon Fiberoptics (“Dicon”), a manufacturer of fiberoptic components, modules and test instruments, is located in an approximately 201,000 square foot corporate headquarters building, of which a portion is leased to the City to house the City’s Police Department. An approximately 130,000 square foot research facility is located on an approximately 28-acre campus located in the Marina District of the City.

Future Development. Completion of the John T. Knox Freeway in the early 1990’s (Interstate 580 extension from Interstate 80 at Albany to the Richmond/San Rafael Bridge) spurred new industrial and commercial development along the freeway corridor throughout the South Shoreline area of the City.

University of California, Richmond Field Station: The Richmond Field Station is a 136-acre site along Richmond’s south shoreline owned by the University of California, Berkeley. In 2014 UC Berkeley and the Fawrence Berkeley National Faboratory (FBNL) jointly prepared a Fong Range Development Plan (FRDP) and Program Environmental Impact Report for the Richmond Bay Campus to reflect joint development goals for the Richmond Field Station and Regatta properties. Approved in May 2014, the FRDP initially provided guidance for the development of over 5.4 million square feet of research and development facilities at the Richmond Field Station that would establish a “second campus” for UC Berkeley and FBNL. Although the plan was reimagined in late 2014 as the Berkeley Global Campus (BGC), which intended to establish a global college in partnership with foreign research institutions and private companies, this vision was indefinitely suspended in 2016. The LRDP may be amended as the University continues to explore options for the site that reflect new priorities around enrollment growth and housing.

Richmond Bay Specific Plan: The City was awarded a Priority Development Area Planning Grant from the Metropolitan Transportation Commission and the Association of Bay Area Governments to develop the Richmond South Shoreline Specific Plan for an approximately 220-acre area located in the City south of Interstate Highway 580 and will focus on ways the City can take advantage of the planned

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BGC, Richmond Bay, future ferry service, and other area assets to create a sustainable shoreline district providing jobs, housing, transportation options, and opportunities for entertainment and recreation.

Richmond Ferry: At its March 5, 2015 meeting, the Water Transportation Authority (“WETA”) Board of Directors approved a Cooperative Agreement with the Contra Costa Transportation Authority (the “CCTA”) and the City for the CCTA to provide an operating subsidy for the proposed Richmond ferry service. The 10-year agreement will serve as the basis of future planning efforts to support and plan the Richmond ferry service. The City was selected for ferry service among other East Bay cities based on ridership projections and operating costs. WETA has approved funding to purchase two catamaran ferry vessels and to construct a Richmond ferry terminal on Richmond Bay Shoreline, at a cost of approximately $40-45 million. The contract for construction of the ferry terminal was approved in May 2017, and it is expected that the Richmond ferry service will be fully operational in fall of 2018.

Richmond Parkway: Development along the Richmond Parkway, which links the northern edge of the City (Interstate 80 at Hilltop) and the City’s southwest comer (Interstate 580) and the Richmond San Rafael Bridge, opened up a large tract of industrially zoned area in the northwest area of the City. Recent and planned development includes:

• Ex Steelscape site currently under construction for the development of 700,000 distribution center.

• Whole Foods Distribution Center - 47,000 square foot distribution center with 95 employees.

• Restoration Hardware - 200,000 square foot distribution center with 20 employees.• Amazon - 100,000 square foot regional “fulfillment” distribution center.• Williams Sonoma, Inc. - 247,908 square foot distribution center with 15 current

employees.

In 2015, Blue Apron opened an approximate 120,000 distribution center in Richmond’s Marina area and now employs approximately 1,200 individuals.

As the economy continues to improve, the shoreline area of the City will be in stronger demand for residential and commercial development. As of June 2017, there are 1,981 new residential units, and approximately 1,200,000 square feet of new warehouse and distribution capacity either under construction or going through the entitlement process, including the following:

• Terminal #1 300-Unit Residential Community• Nevin Avenue 289-Unit Affordable Apartments• Bay Walk 208-Unit Mixed Use Live/Work Marina Way & Wright Avenue• Hilltop Apartments 186 Units at Garrity Way & Hilltop Mall Road• Richmond Central Ave Project 166 Affordable Apartments• Garrity Way Apartments 98 Units• Greenway Senior Apartments 80 Units (Under Construction)• Mira Flores 80-Unit Affordable Senior Housing (former Oishi and Endo Nurseries at

South 45th & Florida Avenue)• Shea Homes/Bottoms Project 60-Unit Condominium• Marina Way Virtual Development 60 Single-Family Homes• The Point 27 Townhomes (Railroad Ave & E Richmond Avenue)• Westridge Apartments Modernization and Expansion Aberdeen Way & Lancaster Drive

in the Hilltop Area• Life Long Medical Facility Harbor Way South & Bissell Avenue• Hilltop Charter School• West Contra Costa Family Justice Center

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Employment

Table A-2 provides a listing of principal employers located in the City, as of Fiscal Year 2015-16.

Table A-2Principal Employers in the City

Fiscal Year 2015-16

Employer Name Product/Service

Estimated Number of Employees

Chevron Refinery Oil Refinery/Research Facility 3,456West Contra Costa Unified School District Education 1,689Social Security Administration Governmental Services 1,259Blue Apron, Inc. Meal Delivery Service 1,200State of California Department of Health 1,200U.S. Postal Service Governmental Services 1,047Contra Costa County Governmental Services 844City of Richmond Governmental Services 842The Permanente Medical Group Healthcare Services 732Kaiser Foundation Hospitals Healthcare Services 506Costco Wholesale #482 Wholesale Warehouse 405

Source: City of Richmond.


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The State Employment Development Department release of May 2017 (preliminary) data indicates that the unemployment rate in the City was 4.0%. The following Table A-3 compares estimates of the labor force, civilian employment and unemployment for the City, County, State and United States from 2012 through 2016.

Table A-3Civilian Labor Force, Employment and Unemployment

Annual Average for Years 2012 through 2016

Year and Area Labor ForceCivilian

Emplovment UnemplovmentUnemployment

Rate2016City N/AT N/AT N/AT N/ATCounty 556,500 531,800 24,600 4.4%State 19,102,700 18,065,000 1,037,700 5.4United States 159,187,000 151,436,000 7,751,000 4.9

2015City N/AT N/AT N/AT N/ATCounty 549,948 522,418 27,530 5.0State 18,981,800 17,798,600 1,183,200 6.2United States 157,130,000 148,834,000 146,411,000 5.3

2014City 53,300 49,500 3,800 7.1County 542,777 509,363 33,414 6.2State 18,755,000 17,348,600 1,406,400 7.5United States 155,922,000 146,305,000 9,617,000 6.2



t Data is not currently available.Sources: State of California Employment Development and Department Labor Market Information Division; U.S. Bureau of

Labor Statistics

Personal Income

The United Department of Commerce, Bureau of Economic Analysis (the “BEA”) produces economic accounts statistics that enable government and business decision-makers, researchers, and the public to follow and understand the performance of the national economy.

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The BEA defines “personal income” as income received by persons from all sources, including income received from participation in production as well as from government and business transfer payments. Personal income represents the sum of compensation of employees (received), supplements to wages and salaries, proprietors’ income with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance. Per capita personal income is calculated as the personal income divided by the resident population based upon the Census Bureau’s annual midyear population estimates.

Table A-4 presents the latest available total personal income and per capita personal income for the City, the County, the State and the nation for the calendar years 2011 through 2015 (the most recent annual data available).

Table A-4City of Richmond, Contra Costa County, State of California and United States

Total Personal Income Calendar Years 2011 Through 2015f

Year and Area

TotalPersonal Income

(thousands of dollars)

Per Capita Personal Income

(dollars)2015f

City N/At N/AtCounty 74,757 66,348State 2,103,669 53,741United States 15,463,981 48,112

2014City N/At N/AtCounty 69,527 62,540State 1,977,924 50,998United States 14,801,624 46,414

2013City 2,719 25,614County 66,608 60,776State 1,861,957 48,741United States 14,068,960 44,462



t 2014 and 2015 data for the City is not yet available.Source: U.S. Department of Commerce, Bureau of Economic Analysis.

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Living Wage Ordinance

In 2014, the City adopted a Minimum Wage Ordinance requiring that beginning January 1, 2015 (subject to certain exceptions), employees working within the geographic boundaries of the City be paid an hourly rate equal to $9.60, subject to a reduction equal to $1.50 per hour if the employer pays at least that amount per hour per employee towards an employee medical benefit plan. Thereafter, the minimum wage within the City will increase each January 1 until it reaches $13.00 per hour effective January 1, 2018. Beginning January 1, 2019, and each year thereafter, the City Minimum Wage will increase by the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco-Oakland-San Jose, California Metropolitan Statistical Area, or any successor index published by the U.S. Department of Labor or its successor agency.

Construction Activity

Table A-5 sets forth a five-year summary of building permit valuations and new dwelling units within the City. See “-Recent Developments” above for a discussion of new development within the City.

Table A-5 City of Richmond

Building Permit Valuations Calendar Years 2012 through 2016

($ in 000’s)

ResidentialValue of Total

Single Family Multifamily Alterations Residential NonresidentialYear Units Valuation Units Valuation and Additions Valuation Valuation Total*2012 17 $3,841 27 $8,156 $5,876 $17,873 $31,813 $49,6862013 2 650 0 0 9,917 10,567 59,349 69,9162014 6 1,106 56 8,810 10,833 20,749 75,486 96,2352015 18 3,407 63 13,523 16,769 30,292 48,288 78,5802016 25 7,305 0 0 15,282 22,587 66,298 88,885

t Total represents the sum of residential and nonresidential building permit valuations. Data may not total due to independent rounding.

Source: California Homebuilding FoundationConstruction Industry Research Board.

Community Facilities

Richmond area residents have access to modem health care facilities. The Richmond area has one general hospital, the Kaiser Hospital Facility, located in downtown Richmond. Richmond also has several convalescent hospitals. The Richmond area offers a variety of leisure, recreational and cultural resources, from boating, fishing and hiking, to live theater, golf, tennis and team athletics. Four regional parks are on the shoreline: Point Pinole, George Miller Jr./John T. Knox, Ferry Point, and Point Isabel. The City operates a public marina (775 boat berths at Marina Bay), four large community parks (Point Molate Beach Park, Hilltop Lakeshore Park, Nicholl Park, and Marina Park and Green), 25 neighborhood parks ranging in size from one to 22 acres, many play lots and mini parks, and seven community centers.

In addition, the City operates a disabled person’s recreation center, a sports facility, two senior centers (Richmond Senior Center and Richmond Annex Senior Center), the Richmond Museum, the Richmond Municipal Auditorium, the Richmond Swim Center (Coach Randolf Pool), the Richmond

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Plunge/Natatorium, the Washington Fieldhouse, the Veterans Memorial Auditorium, and the Richmond Public Library. The Richmond Art Center, a privately funded arts organization, is partly supported by the City of Richmond.

Also in Richmond are several private yacht harbors, golf and country clubs, and community theaters. Within 30-45 minutes by BART or car are the cultural resources of other cities in the East Bay and Bay Area, including Oakland, Berkeley and San Francisco.

East Bay Regional Park District (“EBRPD”) maintains one regional park, four regional shorelines, and one regional preserve within Richmond. One additional parkland facility, the 214-acre Kennedy Grove Regional Recreation Area, is located in an unincorporated area of the County bordering on the City at the eastern end of El Sobrante Valley. The four regional shorelines presently owned and maintained by EBRPD represent a substantial portion of the City’s shoreline. The regional shorelines and Wildcat Canyon Park are used not only by residents of the City but also by the general public within the Bay Area region.

Transportation

The City is a central transportation hub in the Bay Area, offering convenient access throughout the region and well into central California. The City’s port facilities, railroads and proximity to international airports are complemented by a network of freeways and public transportation services.

F reeways. Existing and new highways have made travel to and through the City more efficient and convenient. Interstate 80, which passes through the City, is a direct route to Oakland, San Francisco, Vallejo, Fairfield and Sacramento. Interstate 580 provides continuous freeway access from Richmond’s South Shoreline area to East Bay communities and to Marin County and is stimulating new commercial, industrial and residential development along Richmond’s South Shoreline. Similarly, completion of the Richmond Parkway through North Richmond in 1996 improves vehicular access between Marin and communities to the north and east on Interstate 80, while opening major tracts of land along the City’s north shoreline for new development.

Port and Rail. The City’s deep water port is third largest in the State by annual tonnage, handling more than 20.8 million metric tons of general, liquid and dry bulk commodities each year. In 2009, the Port executed an agreement with American Honda Company whereby Honda agreed to import a minimum annual guarantee of 145,000 units per year through the Port for 15 years. These auto imports are processed for distribution by Auto Warehouse Company (AWC) on Port property. The Port also has an agreement with Subaru for processing of automobiles by AWC. The Port receives compensation from these auto imports in the form of both wharfage and temporary storage of autos.

The Port of Richmond contains seven City-owned terminals, five dry-docks and 11 privately owned terminals. Private terminals are responsible for almost 95% of the Port’s annual tonnage. On- dock rail service is provided to many port terminals by the Burlington Northern Santa Fe (“BNSF”) and the Union Pacific Southern Pacific railroads. The Port, together with the BNSF operations, serve as a highly developed international rail facility. The John T. Knox Freeway has enhanced truck access to the Port.

The Port handles a widely varied assortment of cargos, although over 90% of the annual tonnage is in liquid bulk cargo, most of which is shipped through the Chevron Terminal. Principal liquid bulk cargos are petroleum and petroleum products, chemicals and petrochemicals, coconut oil and other vegetable oils, tallow and molasses. Dry bulk commodities include coal, gypsum, iron, ore, cement, logs and various mineral products. Automobiles, agricultural vehicles, steel products, scrap metals, and other diversified break-bulk cargos are also a significant part of the Port’s business.

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Regional Airports. Oakland International Airport (approximately 18 miles from the City) and San Francisco International Airport (approximately 28 miles from the City) provide the City with worldwide passenger and freight service. In addition, Buchanan Field Airport, located in the City of Concord, in central Contra Costa County, is 25 miles to the east of the City and Byron Airport, located in the unincorporated community of Byron, also in central Contra Costa County, each provide general aviation services.

Public Transit. The public is served by the San Francisco Bay Area Rapid Transit System (‘"BART”) with a station conveniently located in downtown Richmond; AMTRAK passenger train service is available from a station adjacent to the Richmond BART station; and AC Transit offers local bus service within the City, to other East Bay communities and to San Francisco.

Utilities

Utility services to the City are supplied by the following:

Electric power: Natural gas: Telephone: Water:Sewer:

Pacific Gas & Electric Co. (“PG&E”)PG&EAT&TEast Bay Municipal Utility District (“EBMUD”)West County Wastewater District (WCWD), Richmond Municipal Sewer District No. 1, and Stege Sanitary District

Approximately 89% of the EBMUD water supply is from the Mokelumne River watershed stored at the 69.4 billion gallon capacity Pardee Dam in lone, California. EBMUD is entitled to 325 million gallons per day under a contract with the State Water Resources Control Board, plus an additional 119 million gallons per day in a single dry year under a contract with the U.S. Water and Power Resources Service (formerly the U.S. Bureau of Reclamation).

On June 19, 2012, the City Council voted to join MCE (formerly Marin Clean Energy), a municipal energy provider (joint powers authority) that derives a minimum of 50% of its electricity from renewable sources.

Effective July 1, 2013, all City residents and businesses were automatically enrolled in the Green Light package offered by the MCE Community Choice Aggregation program unless they opted out of the program between April and June 2013. Although power is still be transmitted through existing PG&E lines, half of it comes from solar, wind, hydroelectric, and biogas (natural gas extracted from sewage systems or landfills rather than fossil fuels). City residents still receive their bills from PG&E.

MCE also offers customers the option of enrolling in the Deep Green package, which supplies 100% of electricity from renewable sources at rate increase of approximately one cent per kilowatt hour.

Education

The City comprises a portion of the attendance area of the West Contra Costa Unified School District, which comprises 38 elementary schools (20 of which are located in the City), seven middle and junior high schools, and eight senior high schools (four of which are located in the City), three continuation and alternative high schools, a district office school, and charter schools, college preparatory, and community day schools that had a total K-12 enrollment of approximately 30,973 students for Fiscal Year 2014-15. In addition, private schools operate in the City and several institutions of higher education are located near the City, including the University of California at Berkeley, Contra Costa College, Diablo Valley College, Los Medanos College, the California Maritime Academy,

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California State University - East Bay, San Francisco State University, and the University of California at San Francisco.

CERTAIN FINANCIAL INFORMATION

Financial Policies and Practices

The information set forth belcw regarding the City’s financial policies is provided primarily for general reference regarding the City. The Series 2017A Bonds are secured solely by a pledge of Net Revenues under the Indenture as described in the forepart of this Official Statement and Owners of the Series 2017A Bonds have no recourse to the City’s General Fund for payment of amounts due with respect to the Series 2017A Bonds.

Financial Policies. The current financial policies of the City are summarized below. Copies of the Cash Reserve Policy, Debt Policy, Swap Policy and Investment Policy can be obtained from the City’s website.

Cash Reserve Policy. In Fiscal Year 2004-05, the City Council adopted a policy to maintain structurally balanced budgets whereby one-time funds can be spent only on one-time uses and ongoing funds can be spent on ongoing (or one-time) uses and established a $10 million General Fund contingency reserve target.

Effective January 1, 2007, the City Council adopted a cash reserve policy (the “Cash Reserve Policy”) that requires that the City maintain year-end contingency reserve balances in the General Fund, including CalPERS savings reserves but excluding departmental carryover, equal to a minimum of 7% of the next Fiscal Year’s budgeted General Fund expenditures. City Council approval is required before any withdrawals are made from the cash reserve and the City Council has discretion to use the cash reserve only for emergencies and not for on-going expenses. The Cash Reserve Policy permits the cash reserve to be temporarily reduced in times of an emergency with approval by the City Council, but requires that the cash reserve be restored in accordance with a stabilization policy laying out the plans for restoration of the reserve, in order to allow the City to build up its capacity to handle future short-term economic downturns or emergencies without cutting services. As the City experiences net revenue gains in future years, the cash balance is required to grow back to 15% of total expenditures, following the stabilization policy. The City plans to reach the 15% target reserve level by retaining investment earnings, calculated on the principal balance of the reserve each Fiscal Year, in the reserve account until the target is reached, when funding is available. The contingency reserve is shown as a component of unassigned fund balance within the General Fund.

For Fiscal Year 2016-17, the cash reserve is estimated to be $11.7 million (equal to approximately 7.7% of General Fund expenditures). For Fiscal Year 2015-16, the cash reserve was $8.4 million (approximately 6.5% of General Fund expenditures) and for Fiscal Year 2014-15 was $9.9 million (approximately 6.8% of General Fund expenditures).

Debt Policy. In January 2006, the City Council adopted a debt management policy (the ‘Debt Policy”) pertaining to financings under the jurisdiction of the City, the Richmond Housing Authority, the former Richmond Community Redevelopment Agency and the Richmond Joint Powers Financing Authority. The Debt Policy is intended to guide the Finance Department in its debt issuance and includes components such as the financing approval process, selection of the method of sale for various types of debt issues, general bond structuring parameters, selection of financing team members, permitted investments, on-going debt administration and post-issuance tax compliance procedures for tax-exempt bonds and Build America Bonds. The City’s Debt Policy limits aggregate debt service payments funded

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from General Fund sources to no more than 10% of General Fund revenues and sets forth detailed debt management and refunding practices. Payments on bonds that are tied to a specified revenue stream other than General Fund sources are not subject to this 10% limit. In addition, the Debt Policy requires that no more than 20% of the City’s outstanding debt portfolio be comprised of unhedged short-term variable rate issues.

The City is in compliance with the Debt Policy.

Grant Management Policy. In May 2013, the City Council adopted a policy to establish an overall framework for the use and management of grant resources (the “Grant Management Policy”). This policy provides that: (i) aside from entitlement grants, the City should focus its efforts on securing grants for capital improvements; (ii) the City should only seek grants when sufficient staff resources are available to effectively administer the program in compliance with grant requirements and successfully perform the grant work scope and provide necessary matching requirements (both cash and in-kind matches); (iii) indirect costs of administering grant programs be recovered to the maximum extent feasible; (iv) operating departments will have the primary responsibility for seeking out grant opportunities, preparing the applications and managing grant thee programs after award; and (v) operating departments develop a simple system for tracking grant funding availability in their functional areas.

The City is in compliance with the Grant Management Policy.

Swap Policy. The City is authorized under California Government Code Section 5922 to enter into interest rate swaps to reduce the amount and duration of rate, spread, or similar risk when used in combination with the issuance of bonds. In May 2006, the City Council adopted a comprehensive interest rate swap policy (the “Swap Policy”) to provide procedural direction to the City, the Richmond Housing Authority, the former Richmond Community Redevelopment Agency and the Richmond Joint Powers Finance Authority (the “Authority”) regarding the utilization, execution, and management of interest rate swaps and related instruments (collectively, “interest rate swaps”). Periodically, but at least annually, the City reviews the Swap Policy and makes modifications as appropriate due to changes in the business environment or market conditions. The current Swap Policy was adopted on July 5, 2016.

The City is in compliance with the Swap Policy.

Pension Plans

Information regarding the City’s pension plans and other post-employment benefits is provided primarily for general reference regarding the City. The Wastewater Treatment Plant, the most significant and labor-intensive asset within the Enterprise, is privately managed. See “THE WASTEWATER ENTERPRISE” within the body of this Official Statement. There are approximately seven full-time equivalent employees (out of a total of 817 employees) assigned to the Enterprise for which the City makes pension payments from Revenues of the Enterprise (such employees being under the Miscellaneous Plan discussed below). The unfunded pension liability related to the Enterprise is less than one percent of the total unfunded liability.

The City contributes to a multiple-employer defined benefit retirement plan (“PERF”) administered by the California Public Employees’ Retirement System (“CalPERS”) as well as three separate City-administered, single-employer, defined-benefit pension plans - the General Pension Plan, the Police and Firemen’s Pension Plan and the Garfield Pension Plan. CalPERS does not manage any of the three separate City-administered pension plans. For information regarding the three City- administered plans, see “ -CityAdministered Pension Plans”

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CASB Accounting Standards. In 2012, GASB approved two new standards, Statement No. 67, Financial Reporting for Pension Plans (GASB 67) and Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68), with respect to pension accounting and financial reporting standards for state and local governments and calls for immediate recognition of more pension expense than was previously required. GASB 67 revises existing guidance for the financial reports of most pension plans and GASB 68 revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. In 2014, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date (GASB 71) to address an issue regarding application of the transition provision of GASB 68.

GASB 67. GASB 67, which is effective for fiscal years beginning after June 15, 2013, replaces the requirements of GASB 25 and GASB 50 as they relate to pension plans that are administered through trusts or similar arrangements meeting certain criteria. GASB 67 enhances note disclosures and required supplementary information for both defined benefit and defined contribution pension plans. GASB 67 also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10-year required supplementary information schedules.

GASB 68. GASB 68, which is effective for fiscal years beginning after June 15, 2014, requires immediate recognition of annual service cost and interest on the pension liability and immediate recognition of the effect on the net pension liability of changes in benefit terms. Other components of pension expense will be recognized over a closed period that is determined by the average remaining service period of the plan members (both current and former employees, including retirees). These other components include the effects on the net pension liability of (i) changes in economic and demographic assumptions used to project benefits and (ii) differences between those assumptions and actual experience. Lastly, the effects on the net pension liability of differences between expected and actual investment returns will be recognized in pension expense over a closed five-year period.

GASB 71. GASB 71 amends paragraph 137 of GASB 68 to eliminate the source of potential significant understatement of restated beginning net position and expense in the first year of implementation of GASB 68 in the accrual-basis financial statements of employers and non-employer contributing entities.

During Fiscal Year 2014-15, the City implemented GASB 68 and GASB 71. The implementation of these standards required the City to make prior period adjustments. As a result, beginning net positions were restated. See Note 9-“Fund Balances and Net Position,” Note 10-“Califomia Public Employees’ Retirement System Pension Plans,” and Note ll-“Other City Pension Plans” of APPENDIX B- “COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEARENDED JUNE 30, 2016.”

Pension Reform. On January 1, 2013, the “Public Employee Pension Reform Act of 2013” (‘LEPRA”) took effect, which implemented lower defined-benefit formulas with higher retirement ages for new employees hired on or after that date and includes provisions to increase current employee contributions. Key changes to retirement plans affecting the City include: (i) permitting the employer and employee organization to mutually agree to any cost sharing agreement for pension benefits between January 1, 2013 and December 31, 2017, however, commencing January 1, 2018, the employer may unilaterally require employees to pay 50% of the total annual normal cost (i.e. the cost of service accrual for the upcoming Fiscal Year for active employees, in the absence of any surplus or unfunded liability, expressed as a percentage of payroll) up to an 8% contribution rate for Miscellaneous Plan employees and an 11% or 12% contribution rate for Safety Plan employees and employers are prohibited from paying any of the required employee contribution; (ii) eliminating the ability of an employer to provide better health benefits or health benefit vesting to non-represented employees than it does for represented employees; (iii) eliminating the ability of any public employee to purchase nonqualified service or “airtime,” unless an official application was received by the system prior to January 1, 2013;

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(iv) requiring the combined employer and employee contributions, in any fiscal year, to cover that year’s normal cost; (v) requiring both current and future public officials and employees to forfeit pension and related benefits if they are convicted of a felony in carrying out official duties, in seeking an elected office or appointment, or in connection with obtaining salary or pension benefits, subject to certain requirements; (vi) limiting post retirement public employment by: (A) prohibiting working more than 960 hours or 120 days per year for any public employer; (B) requiring a 180-day “sit-out” period before a retiree could return to work except under certain circumstances; (C) requiring a one-year “sit-out” period for retirees who received either a golden handshake or some other employer incentive to retire; (D) prohibiting an individual receiving an industrial disability retirement from working for another public employer doing the same or substantially similar job; and (E) requiring a public retiree appointed to a full time State board or commission to suspend his or her retirement allowance and become a member of CalPERS; and (vii) requiring CalPERS (for plans it administers) to develop requirements for defining a significant increase in actuarial liability for a former employer due to excessive compensation paid by a subsequent public employer, and to develop a plan to assess the cost of that excess liability to the employer who paid the excessive compensation.

In addition to the above reforms, employees hired on or after January 1, 2013 are subject to: (i) a new benefit formula equal to 2% percent at 62 for Miscellaneous Plan employees with an early retirement age of 52 and a maximum benefit factor of 2.5% at 67 and for Safety Plan employees with a normal retirement age at 50 and a maximum retirement age at 57 with the defined benefit formula ranging from 1.426% at age 50 under the basic formula to 2.7% at age 57; (ii) a cap on pensionable salaries at the Social Security contribution and wage base of $110,100 (or 120% of that amount for employees not covered by Social Security), adjusted annually based on the CPI for All Urban Consumers; (iii) rules prohibiting a retirement board from administering, and a public employer from offering, a benefit replacement plan; (iv) a requirement that: (A) all public retirement systems in the State to adhere to the federal compensation limit when calculating retirement benefits for new members and (B) prohibit a public employer from making contributions to any qualified public retirement plan based on any portion of compensation that exceeds the limit; (iv) contributions equal to 50% of the total annual normal cost of pension benefits; (v) a requirement that compensation be defined as the normal rate of regular, recurring pay, excluding special bonuses, unplanned overtime, payouts for unused vacation or sick leave, and other special pay, provided that these requirements do not apply to the extent a system has adopted a more restrictive definition of compensation eamable; and (vi) a requirement that final compensation be defined as the highest average annual final compensation during a consecutive 36 month period, subject to the cap.

Costs for other post-employment benefits are not addressed in PEPRA. However, later retirement ages will help reduce such liabilities in the long-term.

The City is evaluating the impact this legislation will have on its near-term and long-term pensioncosts.

California Public Employees’ Retirement System. The following information concerning CalPERS and PERF has been obtained from publicly available information on the CalPERS and State Treasurer websites. The City believes such information to be reliable, however the City takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information.

CalPERS does not prepare department specific information for its members. The following information related to the City includes costs for all City departments, including those funded by the General Fund.

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The City contributes to PERF, a multiple-employer, public employee, defined benefit, pension plan. PERF provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CalPERS’ annual financial report may be obtained from their executive office: Lincoln Plaza North, 400 Q Street, Sacramento, California 95814.

The staff actuaries at CalPERS prepare annually an actuarial valuation which covers a Fiscal Year ending approximately 12 months before the actuarial valuation is prepared (thus, the actuarial valuation as of June 30, 2014 (the “CalPERS 2014 Actuarial Valuation”) was delivered to the City in October 2015). The actuarial valuation expresses the City’s required contribution rates in percentages of payroll, which percentages the City contributes in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City’s contribution rates derived from the CalPERS 2014 Actuarial Valuation, are effective for the City’s Fiscal Year 2016-17). CalPERS rules require the City to implement the actuary’s recommended rates.

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.

Employees of the City hired on or before December 31, 2012 participate in the Miscellaneous Plan under the 2.7% at age 55 Benefit Formula or the Safety Plan under the 3.0% at age 50 (Police) or 3.0% at age 55 (Fire) Benefit Formula. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees to CalPERS and hired after December 31, 2012. Employees at the City hired on or after January 1, 2013 participate under the Miscellaneous Plan 2.0% at age 62 Benefit Formula or the 2.7% at age 57 (Police and Fire) Benefit Formula.


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The Plans’ provisions and benefits in effect an June 30, 2016, are summarized as follows:

MiscellaneousPrior to On or after

Hire Date January 1. 2013 January 1. 2013Benefit formula 2.7% at 55 2.0% at 62Benefit vesting schedule 5 years service 5 years serviceBenefit payments Monthly for life Monthly for lifeRetirement age 50-55 52 -67Monthly benefits, as a % of eligible compensation 2.0% to 2.7% 1.0% to 2.5%Required employee contribution rates 8% 6.75%Required employer contribution rates 22.070% 22.070%

Safetv - Police Safetv - Fire Safetv — Police and FirePrior to On or after On or after

Hire Date January 1. 2013 January 1. 2013 January 1. 2013Benefit formula 3.0% at age 50 3.0% at age 55 2.7% at age 57Benefit vesting schedule 5 years service 5 years service 5 years serviceBenefit payments monthly for life monthly for life monthly for lifeRetirement age 50 50-55 50-57Monthly benefits, as a % of eligible compensation 3.00% 2.4% to 3.0% 2.0% to 2.7%Required employee contribution rates 9.00% 9.00% 12.25%Required employer contribution rates 30.264% 30.264%t 30.264%

t Effective July 1, 2015, Safety (Police and Fire) employees hired prior to January 1, 2013 pay 3% of the employer’s required contribution. Therefore, the required employer contribution rate is 30.264% and required employee contribution rate is 12%.

Contributions. The California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined annually by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.


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For Fiscal Year 2015-16, the actuarially determined contributions for the Miscellaneous Plan and the Safety Plan was $8,084,584 and $11,492,798, respectively. The Schedule of Contributions for Fiscal Years 2014-15 and 2015-16 for the Miscellaneous Plan and the Safety Plan is set forth in Table A-6A and A-6B, respectively.

Table A-6A City of Richmond

Schedule of Contributions Miscellaneous Plan

(CalPERS)

Fiscal Year 2014-15* Fiscal Year 2015-16

Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered-employee payroll

Contributions as a percentage of covered- employee payroll

Notes to scheduleValuation date:

$7,178,549(7,178,549)

$36,151,102

19.86%

6/30/2012

$8,084,584(8,084,584)

$36,638,889

22.07%

6/30/2013

Methods and assumptions used to determine contribution ratesActuarial cost methodAmortization methodAverage remaining amortization periodAsset valuation methodInflationSalary increases

Entry age normalLevel percentage of payroll, closed 24 years as of valuation date 15 year Smoothed Market value 2.75%Varies by Entry Age and Service

Investment rate of return

Retirement age

Mortality Rate Table

7.50%, net of pension plan investment and administrative expenses, includes inflationThe probability of Retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007.The probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Preretirement and Post-retirement morality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.

f Fiscal Year 2014-15 was the first year of implementation.Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 30, 2016

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Table A-6B City of Richmond

Schedule of Contributions Safety Plan (CalPERS)

Fiscal Year 2014-15^ Fiscal Year 2015-16

Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered-employee payroll

Contributions as a percentage of covered- employee payroll

Notes to scheduleValuation date:

$10,650,057(10,650,057)

$31,151,966

29.46%

6/30/2012

$11,492,798(11,492,798)

$37,352,212

30.77%

6/30/2013

Methods and assumptions used to determine contribution rates

Actuarial cost methodAmortization methodAverage remaining amortization periodAsset valuation methodInflationSalary increases

Entry age normalLevel percentage of payroll, closed 26 years as of valuation date 15 year Smoothed Market value 2.75%Varies by Entry Age and Service

Investment rate of return 7.50%, net of pension plan investment and administrative expenses, includes inflation

Retirement age The probability of Retirement are based on the 2010CalPERS Experience Study for the period from 1997 to 2007.

Mortality Rate Table The probabilities of mortality are based on the 2010CalPERS Experience Study for the period from 1997 to 2007. Pre-retirement and Post-retirement morality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.

f Fiscal Year 2014-15 was the first year of implementation.Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 30, 2016.

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Net Pension Liability. The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2015, using the CalPERS 2014 Actuarial Valuation rolled forward to June 30, 2015 using standard update procedures.

Actuarial Assumptions. For the measurement period ended June 30, 2015, the total pension liabilities were determined by rolling forward the June 30, 2014 total pension liability. The June 30, 2015 total pension liabilities were based on the following actuarial methods and assumptions:

Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions:Discount Rate Inflation Payroll Growth Projected Salary Increase Investment Rate of Return Mortality

Post Retirement Benefit Increase

Miscellaneous^June 30, 2014 June 30, 2015

Entry-Age Normal Cost Method

7.65%2.75%3.0%

3.2% - 12.2%(2) 7.65%(3)

Derived using CalPERS Membership Data for all Funds(4) Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter.

Safety(1)June 30, 2014 June 30, 2015

Entry-Age Normal Cost Method

7.65%2.75%3.0%

3.4% - 20.0%(2) 7.65%(3)

Derived using CalPERS Membership Data for all Funds(4) Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter.

(1) Actuarial assumptions are the same for all benefit tiers.(1) Depending on age, service and type of employment.(2) Net of pension plan investment expenses, including inflation.(3) The mortality table used was developed based on CalPERS’ specific data. The table includes five years of mortality

improvements using Society of Actuaries Scale AA. For more details on this table, please refer to the CalPERS 2010 expenence study report available on CalPERS website.

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 30, 2016.

All other actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be found on the CalPERS website under Forms and Publications.

Discount Rate. The discount rate used to measure the total pension liability was 7.65% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.65% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65% will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website under the GASB 68 section.

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.

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For additional information regarding the CalPERS plans see Note 10-“Califomia Public Employees’ Retirement System Pension Plans” in APPENDIX B-“COMPREHENSIVE ANNUAL FINANCIAL Report of the City for the Year Ended June 30,2016.”

Employees Covered. As of the date of the CalPERS 2014 Actuarial Valuation and the June 30, 2015 measurement date, the following employees were covered by the benefit terms for each Plan:

Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees

Total

Miscellaneous SafetyJune 30, 2014

876

489

4941,859

June 30, 2015883

503

4721,858

June 30, 2014450

77

264791

June 30, 2015467

76

260803

As of June 30, 2016, the City had 460 active members in the Miscellaneous Plan and 258 active employees in the Safety Plan.

Changes in Net Pension Liability. The changes in the Net Pension Liability for the Miscellaneous and the Safety Plan as of June 30, 2015 measurement date are set forth in Table A-7A and A-7B, respectively.

Table A-7A City of Richmond

Changes in the Net Pension Liability Miscellaneous Plan

(CalPERS)

Increase (Decrease)

Total PensionPlan

Fiduciary Net PensionLiability Net Position Liabilitv/tAssef)

Balance at June 30, 2014 $430,968,811 $343,397,537 $87,571,274Changes in the year:

Service cost 7,446,410 7,446,410Interest on the total pension liability 31,414,256 31,414,256Differences between actual and expected experience (5,280,549) (5,280,549)Changes in assumptions (7,116,200) (7,116,200)Changes in benefit terms (6,885) 6,885Plan to plan resource movement - -Contribution - employer 7,189,716 (7,189,716)Contribution - employee 3,141,565 (3,141,565)Net investment income 7,502,958 (7,502,958)Administrative expenses (379,925) 379,925Benefit payments, including refunds of employee contributions (23.302.793') (23.302.793') 0Net Changes 3,161,124 r5,855,364') 9,016,488

Balance at June 30, 2015 £434 1 29 935 $337 542 173 $96 587 762

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 3Q 2016

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Table A-7B City of Richmond

Changes in the Net Pension Liability Safety Plan (CalPERS)

Increase (Decrease)

Total PensionPlan

Fiduciary Net PensionLiability Net Position Liabilitv/(Assef)

Balance at June 30, 2014 $539,798,444 $429,405,680 $110,392,764Changes in the year:

Service cost 10,142,245 10,142,245Interest on the total pension liability 40,142,006 40,142,006Differences between actual and expected experience 3,799,388 3,799,388Changes in assumptions (9,563,090) (9,563,090)Changes in benefit terms 3,476 (3,476)Plan to plan resource movement - -Contribution - employer 10,652,641 (10,652,641)Contribution - employee 3,797,568 (3,797,568)Net investment income 9,408,186 (9,408,186)Administrative expenses (477,249) 477,249Benefit payments, including refunds of employee contributions (28,747,508 (28,747,508') 0Net Changes 15.773.041 (5.362.886') 21.135.927

Balance at June 30, 2015 $555 571 485 $474 042 794 $131 528 691

Totals — Miscellaneous and Safety Plans $989.701.420 $761.584.967 $228,116,453

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J iune 3Q 2016

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 calculated using a discount rate that is one-percentage point lower or one-percentage point higher than the current rate:

Miscellaneous Safety

1% Decrease Net Pension Liability

6.65%$149,934,428

6.65%$203,757,842

Current Discount Rate Net Pension Liability

7.65%$96,587,762

7.65%$131,528,691

1% IncreaseNet Pension Liability

8.65%$52,188,541

8.65%$71,974,250

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 3Q 2016

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On December 20, 2016, CalPERS reduced its assumed rate of investment return to 7.0% from 7.5%. The lower discount rate assumption will force government contributions toward long-term liabilities to increase, but will lessen the risk of unanticipated contribution hikes in the future from adverse investment performance. Investment risk-taking needed to justify a discount rate above declining return expectations would translate to a heightened chance of investment losses, which could ultimately produce even higher contribution requirements.

CalPERS will phase-in its discount rate change to soften the immediate budgetary impact. The State’s contribution requirements for the fiscal years ending June 30, 2018, 2019 and 2020 will be based on discount rates of 7.375%, 7.25% and 7.0%, respectively. The impact on contribution requirements for participating local governments, such as cities and school districts, will lag the State by one year.

City Administered Pension Plans. Additional information regarding the City Administered Pension Plans, including investment policies, net pension liability, expenses and financial statements is presented in see Note ll-“Other Pension Plans” in APPENDIX B-“COMPREHENSIVE ANNUAL FINANCIAL Report of the City for the Year Ended June 30,2016.”

General Pension Plan. The General Pension Plan funds retirement and other benefits payable to 36 retirees who are not covered by CalPERS. The General Pension Plan is closed to new membership, and all of its current members are retired. Benefits are funded from the assets of the General Pension Plan and from related investment earnings. The City is required under its charter to contribute the remaining amounts necessary to fund the General Pension Plan using the Entry Age Normal Cost actuarial cost method as specified by ordinance.

As of the June 30, 2016 actuarial valuation, the fair value of assets under the General Pension Plan was $2,581,820. Actuarial assumptions included a discount rate (net of investment expenses) of 3.00%. In computing the actuarial valuation, General Pension Plan assets were assumed to yield a 3.00%, inflation rate of 2.75%, and cost of living benefit increases of 5.00% annually.

For Fiscal Year 2015-16, the annual money-weighted rate of return on General Pension Plan investments, net of investment expenses, was 0.3%.


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below:The City’s contributions to the General Pension Plan for the last 10 Fiscal Years are presented


Schedule of Contributions General Pension Plan

(1)ActuariallyDetermined (2)Contribution Employer

Fiscal Year (ADCJ ContributionsJune 30, 2007 $238,264 $238,264June 30, 2008 307,948 307,948June 30, 2009 307,948 307,948June 30, 2010 486,092 486,092June 30, 2011 486,092 486,092June 30, 2012 455,662 148,186June 30, 2013 502,278 660,992June 30, 2014 602,970 602,970June 30, 2015 602,970 602,970June 30, 2016 750,016 602,970

(3)Contribution (4)

(5)ADC / Covered-

Deficiency Covered- Employee(Excess) Employee Payroll(1H2) Payroll am.

$0 N/A N/A0 N/A N/A0 N/A N/A0 N/A N/A0 N/A N/A

307,476 N/A N/A(158,714) N/A N/A

0 N/A N/A0 N/A N/A

147,046 N/A N/A

N/A = Not applicable.Sources: City of Richmond, Comprehensive Annual Financial Report for the Year Ended June 3Q 2016, and CASB 67/68

Actuarial Report


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The schedule of changes in net pension liability and related ratios for the General Pension Plan for the Fiscal Years 2014-15 and 2015-16 is presented below:


Schedule of Changes in the Net Pension Liability and Related RatiosGeneral Pension Plan

Total Pension Liability2014-15 2015-16

Service Cost $0 $0Interest 128,954 107,632Differences between expected and actual experience 345,786 0Changes of assumptions 322,312 0Changes of benefit terms 0 0Benefit payments, including member contribution refunds (672.546) (623.662)Net change in Total Pension Liability 124,506 (516,030)Total Pension Liability at beginning of year 3.775.051 3.899.557

Total Pension Liability at end of year S3.899.557 $3,383,527

Fiduciary Net PortionContributions - employer $602,970 $602,970Contributions - donations and other income 0 0Contributions - member 0 0Net investment income 2,017 2,255Other additions 0 0Benefit payments, including member contribution refunds (672,546) (623,662)Administrative expenses 0 0Other deductibles 0 0Net change in Fiduciary Net Position (67,559) (18,437)Fiduciary Net Position at beginning of year 1.043.196 975.637

Fiduciary net position at end of year $975,637 $957,200

Net pension liability (asset) at end of year $2,923,920 $2,426,327

Fiduciary net position as percentage of total pension liability 25.0% 28.3%

Covered-employee payroll N/A N/A

Net pension liability as percentage of covered employee payroll N/A N/A

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 3Q 2016.

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Police and Firemen’s Pension Plan. The Police and Firemen’s Pension Plan is a defined benefit pension plan covering the 98 police and fire personnel employed by the City prior to October 1964. The Police and Firemen’s Pension Plan is closed to new members, and substantially all of its current members are retired. Funding for the Police and Firemen’s Pension Plan is provided from the Pension Reserve Trust Fund. Employees eligible under the Police and Firemen’s Pension Plan were vested after five years of service, and members were allowed normal retirement benefits after 25 or more continuous years of service. The City is required under its charter to contribute the remaining amounts necessary to fund the Police and Firemen’s Pension Plan using the Entry Age Normal Cost actuarial cost method as specified by ordinance.

The City established the Secured Pension Override Special Reserve Fund, to which a portion of the proceeds of an ad valorem property tax override levied annually at the rate of 0.14% of the assessed value of all taxable property within the City and approved by the citizens of the City are credited, for the payment of benefits under the Police and Firemen’s Pension Plan as well as other pre-1978 benefits approved for general safety and miscellaneous employees enrolled in CalPERS. In Fiscal Year 2015-16, the revenue received by the Police and Firemen’s Pension Plan from the tax was $7,813,191, while benefits paid were $1,222,197.

As of the June 30, 2016 actuarial valuation, the fair value of assets under the Police and Firemen’s Pension Plan was approximately $11,121,486. Actuarial assumptions included a discount rate (net of investment expenses) of 5.75%. In computing the actuarial valuation, Police and Firemen’s Pension Plan assets were assumed to yield a 5.75% return, inflation rate of 2.75%, and a cost of living benefit increases were assumed at a rate of 3.00% annually (reflecting the terms of the most recent memoranda of understanding).

For Fiscal Year 2015-16, the annual money-weighted rate of return on Police and Firemen’s Pension Plan assets, net of investment expenses, was (1.20%).


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The City’s contributions to the Police and Firemen’s Pension Plan for the last 10 Fiscal Years are presented below:


Schedule of Contributions Police and Firemen’s Pension Plan

Fiscal Year

(1)ActuariallyDeterminedContribution

(ADCJ

(2)Employer

Contributions

(3)Contribution

Deficiency(Excess)(l)-(2)

(4)Covered-Employee

Payroll

(5)ADC / Covered-

Employee Payroll (l)/(4)

June 30, 2007 $2,215,648 $6,215,648 ($4,000,000) N/A N/AJune 30, 2008 2,199,459 5,000,000 (2,800,541) N/A N/AJune 30, 2009 1,887,057 4,800,000 (2,912,943) N/A N/AJune 30, 2010 2,477,902 4,600,000 (2,122,098) N/A N/AJune 30, 2011 2,257,912 0 2,257,912 N/A N/AJune 30, 2012 1,596,771 0 1,596,771 N/A N/AJune 30, 2013 1,813,721 1,596,771 216,950 N/A N/AJune 30, 2014 740,235 740,234 1 N/A N/AJune 30, 2015 740,235 740,235 0 N/A N/AJune 30, 2016 1,270,466 1,222,197 48,269 N/A N/A

N/A = Not applicable.Sources: City of Richmond, Comprehensive Annual Financial Report for Year EndedJ une 30, 2016, and CASB 67/68 Actuarial

Report


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The schedule of changes in net pension liability and related ratios for the Police and Firemen’s Pension Plan for the Fiscal Years 2014-15 and 2015-16 is presented below:

Table A-ll City of Richmond

Schedule of Changes in the Net Pension Liability and Related Ratios Police and Firemen’s Pension Plan

Total Pension Liability2014-15 2015-16

Service Cost $0 $0Interest 1,464,746 1,214,089Differences between expected and actual experience (323,462) 0Changes of assumptions 1,380,854 0Changes of benefit terms 0 0Benefit payments, including member contribution refunds f3.074.42D f3.140.552)Net change in Total Pension Liability (552,283) (1,478,746)Total Pension Liability at beginning of year 23.237.147 22.684.864

Total Pension Liability at end of year S22.684.864 $20,758,401

Fiduciary Net PortionContributions - employer $740,235 $1,222,197Contributions - donations and other income 0 0Contributions - member 0 0Net investment income 369,240 165,490Other additions 0 0Benefit payments, including member contribution refunds (3,074,421) (3,140,552)Administrative expenses 0 0Other deductibles 0 0Net change in Fiduciary Net Position (1,964,946) (2,083,845)Fiduciary Net Position at beginning of year 16.681.824 14.716.878

Fiduciary net position at end of year $14,716,878 $12,633,033

Net pension liability (asset) at end of year $7,967,986 $8,125,368

Fiduciary net position as percentage of total pension liability 64.88% 60.90%

Covered-employee payroll N/A N/A

Net pension liability as percentage of covered employee payroll N/A N/A

t Fiscal Year 2013-14 was the first year of implementation of the new financial reporting standards for pension plans. See“-GASB Accounting Standards.”

Source: City of Richmond, Comprehensive Annual Financial Report for Year Endedjune 3Q 2016.

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Garfield Pension Plan. Pursuant to a contractual agreement, the City maintains the Garfield Pension Plan to fund defined retirement and other benefits due to a retired Chief of Police of the City. Retirement, other benefits, and any continuation benefits to his surviving spouse receive the same cost-of- living increases as Safety Plan employees covered by CalPERS (i.e. cost of living increases of 2% per year, subject to CPI increase constraints, and purchasing power protection through the CalPERS Purchasing Power Protection Allowance). Mr. Garfield’s surviving spouse receives 50% of the retiree’s pension. The benefits are paid from the assets of the Garfield Pension Plan and from related investment earnings. In Fiscal Year 2015-16, the City contributed $102,140 to the Garfield Pension Plan. The beneficiary of the Garfield Pension Plan is not covered under the Police and Fireman’s Pension Plan, the General Pension Plan or CalPERS.

As of the June 30, 2016 actuarial valuation, the fair value of assets under the Garfield Pension Plan was $173,059. Actuarial assumptions included a discount rate (net of investment expenses) of 3.00%. In computing the actuarial valuation, Garfield Pension Plan assets were assumed to yield a 3.00% investment return, inflation rate of 2.75%, and cost of living benefit payments were assumed to increase 2.75% annually. The City’s annual payment toward amortization of the UAAL for Fiscal Year 2015-16 was $102,140 and for Fiscal Year 2016-17 is budgeted at $102,140, all of which is paid from the General Fund.

Actuarially Determined Contributions. As of June 30, 2015, the date of the most recent actuarial valuations, the actuarially determined contributions for each Plan were determined using the entry-age normal cost method and the assumptions in Note 11B in APPENDIX B-“COMPREHENSIVE ANNUAL Financial Report of the city for the Year Ended June 30,2016.

For the Police and Firemen’s Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (i) amortization of the unfunded liability as a level-dollar over a 10-year closed period as of July 1, 2013, plus (ii) future gains and losses amortized over the same period, but not less than five years. Over the past five years, the City contributed an average 77% of the Actuarially Determined Contribution.

For the General Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (i) amortization of the unfunded liability as a level-dollar over a 6-year closed period as of July 1, 2013, plus (ii) 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 89% of the Actuarially Determined Contribution.

For the Garfield Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (i) amortization of the unfunded liability as a level-dollar over a 7-year closed period as of July 1, 2013, plus (ii) 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 83% of the Actuarially Determined Contribution.

The Actually Determined Contribution and the actual contributions for each Plan for the year ended June 30, 2016 are presented below:

ActuariallyDetermined Amount PercentContribution Contributed Contributed

Police and Firemen’s Pension Plan $1,270,466 $1,222,197 96%General Pension Plan 750,016 602,970 80Garfield Pension Plan 79,987 102,140 129

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Other Post-Employment Benefits

In addition to the retirement and pension benefits described above, the City provides postemployment medical and dental benefits (“OPEB Obligations”). In order to qualify for these 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 and their dependents that vary by employment classification. In addition, certain eligibility rules and contribution requirements apply for future retirees, followed by current retirees as specified in City ordinances. For information regarding the eligibility rules and contribution requirements for each bargaining unit, see APPENDIX B- “COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2016- Note 12-Other Postemployment Benefits.”

The City began pre-funding its OPEB Obligations by moving its ARC into a Retiree Benefit Trust Account beginning in Fiscal Year 2007-08. From Fiscal Year 2007-08 through 2009-10, the City included in its budgets the ARC as well as the normal cost, and the City had set aside $2.0 million in Fiscal Year 2005-06 to begin prefunding the liability. The City temporarily ceased pre-funding the plan in Fiscal Year 2009-10 due to severe financial constraint. For Fiscal Year 2015-16 and Fiscal Year 2016-17, the budgeted City contribution represents the normal cost. In addition, the City has included in six of its seven labor union agreements cost contributions by employees for OPEB obligations.

Table A-12Post Employment Benefit Summary

Number of Participating Retirees

Number ofFiscal Year Participating Retirees Citv Contributi

2011-12 467 $2,975,9332012-13 479 3,185,7682013-14 491 3,296,8022014-15 487 3,428,1022015-16T 501 4,437,000

t Budgeted.Source: City of Richmond.

Funding Policy and Actuarial Assumptions. During Fiscal Year 2007-08, the City joined the Public Agencies Post-Retirement Health Care Plan, an agent multiple employer trust administered by Public Agency Retirement Services (“PARS”). The balance in the City’s PARS trust account as of June 30, 2016 was $2,121,069. PARS issues a publicly available financial report that includes financial statements and required supplementary information. A copy of the PARS financial report may be obtained from the Public Agency Retirement Services, 4350 Von Karman Avenue, Suite 100, Newport Beach, California 92660.

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 dated as of June 27, 2006. In December 2014, 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 (7%) in an effort to pay down the unfunded liability. Although the City paid $1,782,535 to the PARS trust during fiscal year 2015-16 there was no surplus as defined above in fiscal years 2014-15 or 2015-16 to provide additional funding contributions. The Fiscal Year 2015-16 annual required contribution (“ARC”) was determined as part of the July 1, 2015 actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those

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benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (i) 3.75% investment rate of return, (ii) 3.00% projected annual salary increase, (iii) 2.75% (general) and 4.0% (CPI medical care), and (iv) health care cost inflation rates of 8.25-6.0% for 2016 to 2019, 5.30% for 2020 to 2052 and decreasing to an ultimate rate of 4.40% in 2076 and subsequent, and 4.0% for dental and vision. The actuarial methods and assumptions used include techniques that smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates and made about the future. The City’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30-year amortization period on a closed basis (24 years remaining at July 1, 2015). Subsequent changes are amortized over closed 15-year period.

Funding Progress and Funded Status. Generally accepted accounting principles permit contributions to be treated as OPEB assets and deducted from actuarial accrued liability when such contributions are placed in an irrevocable trust or equivalent arrangement. During the Fiscal Year ended June 30, 2016, the City contributed $3,612,753 to the plan for pay-as-you-go premiums and an additional $1,782,535 was contributed to the plan, which represented 7.4% of the $73,167,448 of covered payroll. As a result, the City recorded a Net OPEB Obligation, representing the difference between the ARC and actual contributions, as presented below:

2011-12 2012-13 2013-14 2014-15 2015-16Annual required contribution $8,436,000 $9,229,000 $12,239,000 $13,268,000 $20,085,940Interest on net OPEB obligation 368,000 654,000 859,000 1,170,000 1,465,342Adjustment to annual required contribution

(753.000) (1.297.000) (1.671.000) C2.357.000) C3.256.100)

Annual OPEB cost 8,051,000 8,586,000 11,427,000 12,081,000 18,295,182Contributions made:Pay as you go (premiums paid) (2,975,933) (3,181,867) (3,317,828) (3,367,557) (3,612,753)Paid to Trust 1,700,000 (849,022) (1,991,260) (521,540) (1,782,535)Implicit subsidy - - - - (2,337,152)Less Premiums Paid To Trust — — 3.296.802 — —

Change in net OPEB obligations 6,775,067 4,555,111 9,414,714 8,191,903 10,562,742Net OPEB obligation Beginning of Year June 30

10.139.000(1) 16.914.067(2) 21.469.178(3) 30.883.892(4) 39.075.795(5)

Net OPEB obligation End of $16,914,067(2) $21,469,178(3) $30,883,892(4) $39,075,795(5) $49,638,537(6)Year (asset) June 30

(1) As of June 30, 2011. During Fiscal Year 2011-12, the City determined that the OPEB obligation had been understated in the amount of $6,010,260 due to premiums reimbursed in Fiscal years 2009-10 and 2010-11 being credited to the contributions in error, and the balance as of June 30, 2011 has been increased and restated in that amount.

(2) As of June 30, 2012.(3) As of June 30, 2013.(4) As of June 30, 2014.(5) As of June 30, 2015.(6) As of June 30, 2016.Sources: City of Richmond, Comprehensive Annual Financial Reports for the Years Ended J une 30, 2012 through J une 30,

2016

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The actuarial accrued liability (“AAL”) representing the present value of future benefits included in the actuarial study dated July 1, 2015 amounted to $196,378,960.

The Plan’s annual required contributions and actual contributions for the last five Fiscal Years are set forth below:

Percentage of Annual Net OPEB

Fiscal Annual Actual OPEB Cost ObligationYear OPEB Cost Contribution Contributed (Asset)

6/30/2012 $8,051,000 $2,975,933 37% $16,914,0676/30/2013 8,586,000 4,030,889 47 21,469,1786/30/2014 11,427,000 2,012,286 18 30,883,8926/30/2015 12,081,000 3,889,097 32 39,075,7956/30/2016 18,295,182 7,732,440 42 49,638,537

Sources: City of Richmond, Comprehensive Annual Financial Report for the Years Ended J une 3Q 2013 through J une 30, 2016.

The Schedule of Funding Progress (together with the required supplementary informationpresented in the CAFR) presents trend information about whether the actuarial value of plan assets isincreasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend data fromthe actuarial studies is presented below:

OverfundedOverfunded (Underfunded)

Entry Age (Underfunded) ActuarialActuarial Actuarial Actuarial Liability as

Actuarial Value of Accrued Accrued Funded Covered Percentage ofValuation Assets Liability Liability Ratio Payroll Covered Payroll

Date (A) (B) (A-B) (A/B) (C) 1(A-B)/C17/1/2009 $6,813,000 82,883,000 (76,070,000) 8% 69,788,000 (109)%7/1/2011 1,804,000 94,486,000 (92,682,000) 2 73,327,000 (128)7/1/2013 986,000 126,447,000 (125,461,000) 1 71,393,000 (176)7/1/2015 345,000 196,379,000 (196,034,000) 0 73,167,000 (268)

Sources: City of Richmond, Comprehensive Annual Financial Report for the Years Ended J une 3Q 2014 through J une 30, 2016.

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City Employees; Collective Bargaining

For Fiscal Year 2016-17, the City has budgeted 723.2 permanent, full-time equivalent positions.


Full-Time Equivalent Positions Fiscal Years 2012-13 through 2016-17

Fiscal Year2012- 132013- 142014- 152015- 162016- 17

Source: City of Richmond, Human Resources Department

Budgeted FTE Positions

771.1806.2757.2 738.7723.2

The City’s employees are currently represented by seven collective bargaining units, as follows: Fire Fighters, Fire Management, General, Management, Police Management, Police Officers, and Executive Management. Table A-14 summarizes the number of employees included in the largest labor organizations and negotiated changes to future compensation. The Enterprise has employees covered under the Exempt Management, ProfessionaFTechnical, and General bargaining units.


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Summary of Labor Agreements

Employee Representation Employee Contract Negotiated Changes_________ Organization*1*__________ Members*2* Term _________ to Future Compensation________

Fire Fighters I.A.F.F., Local 188 76 June 30, 2022 Additional OPEB contributions by employees:$200 per month effective 1/1/17 $300 per month effective 1/1/18 $400 per month effective 1/1/19

Active employee medical contribution:$100 per month effective 1/1/17 $125 per month effective 1/1/18

Fire Management, RFMA 4 June 30, 2022 Additional OPEB contributions by employees:$200 per month effective 1/1/17 $300 per month effective 1/1/18 $400 per month effective 1/1/19


General (Part time), S.E.I.U. Local 1021 171 June 30, 2010 In negotiationGeneral (Full time), S.E.I.U. Local 1021 272 March 31, 2016 In negotiationManagement, IFPTE Local 21 112 June 30, 2019 Additional OPEB contributions by employees

Police Management Association 13 December 31, 2021

$50 per month effective 1/1/17 $100 per month effective 1/1/18


Additional OPEB contributions by employees

Police Officers Association 151 June 30, 2021

$300 per month effective 1/1/17 $425 per month effective 1/1/18 $525 per month effective 1/1/19

Additional OPEB contributions by employees

City Council 7 N/A

$150 per month effective 1/1/17 $225 per month effective 1/1/18 $250 per month effective 1/1/19 $275 per month effective 1/1/20 $300 per month effective 1/1/21

Executive Management 35 Additional OPEB contributions by employees

Total 841

$50 per month effective 1/1/17 $100 per month effective 1/1/18


(1) Effective January 1, 2017, all new hires are subject to PEPRA requirements. See “-Pension Plans-Pension Reform”(2) Represents the number of funded positions in the Adopted Operating Budget for Fiscal Year 2016-17, which includes part-

time members.Source: City of Richmond, Human Resources Department

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Risk Management

The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; general liability; errors and omissions; injuries to employees; natural disasters; and inverse condemnation. The City began self-insuring its workers’ compensation in 1976. In July 2009, the City joined the City joined the California Joint Powers Risk Management Authority (“CJPRMA”) for general liability and employment practices coverage. In April 2009, the City joined the California State Association of Counties Excess Insurance Authority (“CSAC EIA”) for worker’s compensation insurance. The City has chosen to establish a risk financing internal service funds where assets are accumulated for claim settlements associated with the above risks of loss up to certain limits. See also Appendix B-“Comprehensive Annual Financial Report of the City of Richmond for the Year ENDED June 30, 2016-Note 14-“Risk Management-Liability for Self-Insured Claims.”

Excess coverage for the risk categories excluding inverse condemnation is provided by policies with various commercial insurance carriers. Current self-insurance, self-insured retention (“SIR”) levels, deductibles and insurance company limits for Fiscal Year 2015-16 are as follows:

Tvne of Coverage Self-Insurance/Deductible Coverage Limit Insurance CarrierDifference in Conditions Earthquake 10%pre-1970,

5% post-1970 of total insured value of building; minimum $100,000

All others: $25,000

$50,000,000 inclusive of deductible

Various

Crime/Employee Dishonesty $10,000 per claim $1,000,000 inclusive of deductible

National Union Fire Insurance Company of

Pittsburgh, PAProperty $10,000 per claim $1,000,000,000

inclusive of deductible $25,000,000 limit for

flood

Various

Boiler and Machinery $5,000 per claim $100,000,000 inclusive of deductible

Lexington

Port Liability $25,000 per claim $50,000,000 inclusive of deductible

Various

Special Events Program N/A $1,000,000 per occurrence;

$2,000,000 aggregate

Evanston Insurance

Excess Workers Compensation $750,000 per claim Statutory limit VariousStudent Volunteer N/A $50,000 limit Ace AmericanPollution Liability - Policy 1 $250,000 per claim $20,000,000 inclusive

of deductibleAce - Illinois Union

Pollution Liability - Policy 2 $75,000 per claim $1,000,000 limit VariousCyber Liability $100,000 per claim $2,000,000 limit Various

Source: City of Richmond, Comprehensive Annual Financial Report for the Year Ended J une 3Q 2016.

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CJ PRMA. The CJPRMA provides coverage against liability ($500,000 deductible with a coverage limit of $40 million) and employment practices ($500,000 deductible with a coverage limit of $ 10 million) under the terms of a joint-powers agreement with the City.

Once the City’s self-insured retention is exhausted on each claim, CJPRMA becomes responsible for payment of future expenses related to the claim. The City paid contributions of $587,813 for the year ended June 30, 2016. Actual surpluses or losses are allocated to members based on an actuarial study and losses are allocated on the basis of each member’s share of cash contributions.

Audited financial statements for the CJPRMA are available from CJPRMA, 3201 Doolan Road, Suite 285, Livermore, California 94551. Neither the City nor the Underwriters take any responsibility for the accuracy, completeness, or timeliness of such statements, and such statements are not incorporated herein by this reference.

CSAC El A. CSAC EIA is a public entity risk pool of cities and counties within Northern California. The CSAC EIA provides workers’ compensation coverage up to the California statutory limit, and the City retains a self-insured retention of $750,000. Loss contingency reserves established by the CSAC EIA are funded by contributions from member agencies. The City pays an annual contribution to the CSAC EIA, which includes its pro-rata share of excess insurance premiums, charges for pooled risk, claims adjusting and legal costs, and administrative and other costs to operate the risk pool. The City paid premiums in the amount of $278,774 for the year ended June 30, 2016. CSAC EIA provides insurance through the pool up to $10,000, beyond which group purchased commercial excess insurance is obtained. CSAC EIA has never made an additional assessment and is currently fully funded. No provision has been made on the financial statements of the City for liabilities related to possible additional assessments.

Audited financial statements for CSAC EIA are available from CSAC EIA, 75 Iron Point Circle, Suite 200, Folsom, California 95630. Neither the City nor the Underwriters take any responsibility for the accuracy, completeness, or timeliness of such statements, and such statements are not incorporated herein by this reference.

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APPENDIX B

COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30,2016

B-l

COMPREHENSIVE ANNUAL

FINANCIAL REPORTFOR THE YEAR ENDED JUNE 30; 2016

City of Richmond California

Comprehensive Annual Financial Report

Fiscal Year EndedJ une 30, 2016

Prepared by the Finance Department

Belinda Warner Finance Director/Treasurer

cover rendering tv Marcy Wong Dorm Logan Architects

CITY OF RICHMONDCOMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCALYEAR ENDEDJUNE 30, 2016

TABLE OF CONTENTSPage

INTRODUCTORY SECTION

Letts'of Transrrittal........................................................................................................................................................................... iOrganizational Chart......................................................................................................................................................................viiiList of Elated and Appointed Officials..................................................................................................................................... ixCFOA Certificate of Award............................................................................................................................................................x

FINANCIAL SECTION

IndependentAudtor’s Report.........................................................................................................................................1This Page Left I ntentionally B lank Management’s Di scussion and A nalysis....................................................................................................................... 5

BASIC FINANCIAL STATEMENTS:

Gcvernment-wideFinancial Statements:Statement of NS Position................................................................................................................20Statement of Activities......................................................................................................................22

Fund Financial Statements:BalanceSheet-Govsnmental Funds......................................................................................... 26Reconcilialionof theGovernmental Funds- BalanceSheSwiththe

Statement of NS Position................................................................................................ 28Statement of Revenues, ExperrituresandChangesinFund

Balances - Governmental Funds................................................................................... 30Reconcilialionof the NS Chang? in Fund Balances—Total

Governmental FundswiththeStatement of Activities............................................ 32Statement of NS Position - Proprietary Funds..........................................................................34Statement of Revenues, Expenses andChangesinFund

NS Position - Proprietary Funds................................................................................... 35Statement of Cash Flews - Proprietary Funds........................................................................... 36Statement of Fiduciary NS Position - Fiduciary Funds......................................................... 38Statement of Changes in Fiduciary NS Position-

Fiduciary Funds.................................................................................................................. 39

NotestoFinancial Statements:(1) OrganizalicnandDefinitionof Reporting Entity.....................................................................41(2) Summary of SigiificantAccountingPdicies............................................................................44(3) Cash and I nvestments....................................................................................................................... 51(4) I nterfund Transactions......................................................................................................................59(5) Notes and Loans RecSvade...........................................................................................................63(6) Capital Assets..................................................................................................................................... 71(7) LongTermOdigations.....................................................................................................................74(8) UnavailadeRevenueandUnearnedRevenue.........................................................................103




NctestoFinancial Statements(Continued):(9) Fund B alances and N et Position..................................................................................................104(10) California Pubic Errplcyees’ Retirement System Pension Plans..................................... 107(11) Other City Pension Plans...............................................................................................................113(12) Other Postemplcyment Benefits..................................................................................................125(13) DefetredCcmpensalionPlan........................................................................................................130(14) Risk Management............................................................................................................................ 131(15) Segrent Information for Enterprise Funds...............................................................................134(16) CornritmentsandContingencies................................................................................................135(17) Redevelopment Agency Dissolution and Successor A gncy Activities.......................... 143(18) Subsequent Events...........................................................................................................................159

REQUIRED SUPPLEMENTAL INFORMATION:

Budgetary ComparisonSchedJe- General Fund................................................................................. 162Budgetary Comparison SchedJe- Cost Recovery Special Revenue Fund...................................163Budgetary Comparison SchedJe - Community Development and Loan Progams

Special RevenueFind.............................................................................................................................. 164Budgetary Comparison Schedule-Environmental and Community Investment

AgeementSpecial RevenueFund......................................................................................................... 165Notes to Budgetary Comparison Schedules............................................................................................. 167SchedJeof Changes in the Net Pension Liablity and Related Ratios - MiscellaneausPlan.... 168Schedule of Contributions - Miscellaneaus Plan.................................................................................. 169Schedule of Changes in the Net Pension Liablity and Related Ralic6- Safely Plan................170Schedule of Contributions - Safety Plan..................................................................................................171Schedule of Changes in the Net Pension Liablity and Related Rati 06:

General Pension Plan............................................................................................................................. 172Pol ice and Fireman’s Pension Plan.................................................................................................... 173CarfieldPension Plan............................................................................................................................. 174

Schedule of Contri butions:Pdiceand Firemen’s Pension Plan............................................................................................. 175General Pension Plan...................................................................................................................... 175Garfield Pension Plan.....................................................................................................................175

Schedule of I nvestment Returns:Pdiceand Firemen’s Pension Plan............................................................................................. 176General Pension Plan......................................................................................................................176Garfield Pension Plan.....................................................................................................................176

Other Emplcyment Benefits Plan Schedules:Scheduled1 Contributions.............................................................................................................177Scheduled1 Fundng Progess......................................................................................................177




SUPPLEMENTARY INFORMATION:

Major Governmental Funds Other than the General Fund and Major Spezial RevenueFunds:

Schedule of Revenues, Experdtures, and Changes in Fund Balances - Budget andActual - Civic Center Debt Service Fund.................................................................................................... 180

Combining and I ndividual Fund Statements and Schedules:Ccmbning Balance Sheets - Nonmajor Governmental Finds........................................................184CcmbningStatements of Revenues, Expendtires and Changes in

Fund Balances - Nonmaja Governmental Funds................................................................ 188Ccmbni ng Schedules of Revenues, Experdtures and Changes i n

Fund Balances - Budget andActual - Budgeted Nonmajor Funds................................. 192CcmbningStatements of Net Position - Nonmajor Enterprise Funds...........................................198CcmbningStatements of Revenues, Expenses and Changes in

Fund Net Position - Nonmaja Enterprise Funds..................................................................199CcmbningStatements of Cash Flews - Nonmaja Enterprise Funds........................................... 200CanbningStalerrentsof Net Position - Internal Service Fund......................................................202ConbningStalerrentsof Revenues, Expenses and Changes in

Net Position- Internal ServiceFunds.......................................................................................203CanbningStalerrentsof Cash Flews - Internal ServiceFunds.......................................................204Statement of PensionTrust Funds Net Position.................................................................................... 206Statement of Changs in Pension Trust Funds Net Position.............................................................. 207Ccmbning Statement of Net Position Private PurposeTrust Funds...............................................208Ccmbni ng Statement of Changes in Net Position

Private PurposeTrust Funds.........................................................................................................209S ub-Comb ri ng Schedule of N et Positi on of the S uccessa A gncy

to the Richmond Community Redevelopment Agency........................................................210Sub-Comb ri ng Schedule of Changes i n Net Position of the Successa

Agncy to the Richmond Community Redevelopment Agrey........................................212Ccmbni ngStalement of Changs in Assets and Liablities-

Agrey Funds...................................................................................................................................216

STATISTICAL SECTION

Net Position by Component Last Ten Fiscal Y ears................................................................................................ 222

Changs in Net Position LastTen Fiscal Years........................................................................................................224

Fund Balances of Governmental Funds LastTen FiscalYears........................................................................... 226

Changs in Fund Balance of Governmental Finds LastTen Fiscal Years.......................................................228

Assessed and EstimatedActual Val te of Taxabe Property LastTen Fiscal Years...................................... 230

Property Tax Rates-AII Overlapping Governments LastTen Fiscal Y ears......................................................232




STATISTICAL SECTION (Continued)~|

Pri nci pal Property Tax Payers Current Year and N ine Years Ago..................................................................... 234

Property Tax Levies andCd lections LastTen Fiscal Y ears................................................................................235

Utility Users Tax Collections LastTen Fiscal Years............................................................................................... 236

Utility UsersTaxDirectRates........................................................................................................................................237

TcpTen Utility Users Taxpayers...................................................................................................................................238

Ratio of Outstandng Defct ty Type LastTen Fiscal Years.................................................................................. 239

Revenue Bond Coverage 1999, 2006, 2008, 20104 and 2010B Wastewater Revenue Bonds Last Ten Fiscal Years..........................................................................................................................................................240

Revenue Bend Coverage 1996, 1999, 2004, 2007 and 2C09 Pott Terminal Lease Revenue Bonds,Note and Point Potnero Lease Revenue Bonds LastTen Fiscal Years.......................................................241

Bonded Defct Pledged RevenueCoverageTaxAllocation Bonds LastTen Fiscal Years........................... 242

General Bonded Defct- Pension Obligation Bonds LastTen FiscalYears......................................................243

Corrputalion of Di nect and Overlapping Defct.......................................................................................................... 244

Corrputalionof Legal Bonded Defct Margn...............................................................................................................245

Derrogaphic and Econorric Statistics LastTen Calendar Years.........................................................................246

Principal Errplcyers...........................................................................................................................................................247

Full-Time EqiivalentCity Government Errplcyees by Finction LastTen Fiscal Years.............................248

Operating I ndcalors fcy Function/Progam LastTen Fiscal Years..................................................................... 249

Capital Asset Statistics ty Function/Progam LastTen Fiscal Years................................................................ 250

FINANCE DEPARTMENT

450 CIVIC CENTER PI A2A RICHMOND, CA 94804 (510)620-6740

February 23, 2017

Citizens of the City of Richmond The Honorable Mayor and Members of the City Council

Wc are pleased to present the Comprehensive Annual Financial Report (CAFRj of the City of Richmond, California (City). The Finance Department has prepared this report to present the financial position and tire results of tire City's operations for the fiscal year ended June 30, 2016, and the cash Rows of its proprietary fund types for tire year then ended. Tire basic financial statements and supporting schedules liave been prepared in compliance with Article IV, Section l(h)3 of the City Charter, with California Government Code Sections 25250 and 25253, and in accordance with generally accepted accounting principles (GAAP) for local governments as established by the Governmental Accounting Standards Board (GASR).

This report consists of management’s representations concerning the finances of the City. Consequently, management assumes foil responsibility tor the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft or misuse, and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from materia! misstatement. As management, wc assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects.

The City’s financial statements have been audited by an independent auditing firm of licensed certi lied public accountants. The objective of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year' ended June 30, 2016, are free of material misstatement. The independent audit involved examining, on a lesl basis, evidence supporting the amounts and disclosures in the financial statements: assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was reasonable basis for rendering an unqualified opinion on

the City’s financial statements for the fiscal year ended June 30, 2016. The Independent Auditors’ Report is presented as the first component of the Financial Section of this report.

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

The Reporting Entity and Its Services

The City has defined its reporting entity in accordance with generally accepted accounting principles that provide guidance for determining which governmental activities, organizations and functions should be included in the reporting entity. This CAFR presents information on the activities of the City and its component units.

As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Each blended component unit has a June 30 year-end. Discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements to emphasize their legal separateness from the City. The City’s three discretely presented component units are RHA Properties, RHA Housing Corporation and RHA RAD LLC.

The City’s blended component units and assessment districts are as follows: the Richmond Housing Authority, the Richmond Joint Powers Financing Authority, the Richmond Neighborhood Stabilization Corporation, the Richmond Surplus Property Authority and Harbor Navigation, Country Club Vista and Atlas Interchange Special Assessment Districts. The City also has one inactive component unit, Richmond Parking Authority. Please see note 1 for a detailed discussion of the financial reporting entity.

Profile of the Government

The City of Richmond was chartered as a city in 1909, and is located 16 miles northeast of San Francisco, directly across San Francisco Bay. Richmond is on a peninsula separating San Francisco Bay (on the south) and San Pablo Bay (to the north), spanning 32 total miles of shoreline. The City's total area is 56.1 square miles, 33.8 of which is land area and 22.3 water area. Richmond is situated near' major metropolitan cities and major new growth areas. San Francisco is within 35 minutes from Richmond by freeway; Oakland is 20 minutes; San Jose is approximately one hour's drive to the south and Sacramento, the state capital, is approximately 90 minutes to the east. Central Marin County is 15 minutes from Richmond directly across the Richmond-San Rafael Bridge. Freeways provide direct access from Richmond to major new growth areas along Interstate 80 north and east to Vallejo, Fairfield

and Sacramento; along Interstate 680 in central Contra Costa County; and south along Interstate 880 to the San Jose area.

Richmond’s population is 110,378. The population within a 30-mile radius of Richmond is over 3.7 million, and within a 70-mile radius is approximately 7.8 million. Richmond is located on the western shore of Contra Costa County, and is the largest city in the "West County" region consisting of five cities: Richmond, El Cerrito, San Pablo, Hercules and Pinole.

The City of Richmond provides a full range of municipal services, including police and fire protection, construction and maintenance of highways, streets and infrastructure, library services, storm water and municipal sewer systems, wastewater treatment facility and the administration of recreational activities and cultural events. The City also operates the Richmond Memorial Convention Center and the Port of Richmond.

The City Council is the governing body of the City and has six members elected at-large to alternating 4-year terms. The Mayor is elected at large and is a seventh member of the City Council. The City of Richmond is a Council-Manager form of government. The City Manager, appointed by the Mayor and Council, has administrative authority to manage administrative and fiscal operations of the City. In addition to the City Manager, the City Attorney, City Clerk and Investigative Appeals Officer are appointed by the Mayor and Council.

The mission of the City of Richmond is:

The City of Richmond provides services that enhance economic vitality, the environment and the quality of life of our community.

Factors Affecting Financial Condition

The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates.

Local economy

The economy of the City of Richmond includes heavy and light manufacturing, distribution facilities, service industry, high-tech, bio-tech and medical technologies, retail centers and a multi-terminal shipping port on San Francisco Bay. Richmond also serves as a government center for western Contra Costa County. The Richmond economy is experiencing growth in light industrial and high technology companies, as well as retail. At the same time, the Port of Richmond has found success in the importation of automobiles.

A number of prime factors appear' to be attracting new high-tech firms to Richmond:

• The ongoing development and leasing of light industrial/business park property at Hilltop and along the relatively new 1-580 freeway along Richmond’s South Shoreline evidence that an active market for this kind of space exists in the Richmond area;

• Availability of fairly extensive vacant or under-utilized land areas zoned for industrial use;

• Relatively lower land costs than most of the Bay Area;

• Richmond’s central location in western Contra Costa County; within a short distance of San Francisco, Oakland, other East Bay cities and Marin County, and a relatively easy commute to and from the State’s capital, Sacramento;

• Proximity to the University of California, Berkeley, one of the major scientific universities and library systems in the world;

• Good access and transportation (Richmond has two Interstate freeways as well as good rail and water transportation facilities, including Southern Pacific and Santa Fe Railroads, Santa Fe western terminal and the Port of Richmond and the Richmond Transit Village featuring an inter-modal station providing easy access to Bay Area Rapid Transit (BART, Amtrak and buses); and

• Availability of relatively affordable housing for employees in a variety of neighborhoods, housing types and price ranges.

Small business firms, with 20 or fewer employees, comprise a very high percentage of Richmond businesses. The City played a major role in building capacity to service this group by establishing the West Contra Costa Business Development Center, which is located in Richmond’s historical Downtown. The Center supports the Richmond Main Street Initiative, provides small business loans through a revolving loan fund and a facade improvement program.

Public policy decisions have been made that will improve the quality and quantity of the technical workforce ready to meet the challenges of the technological labor market. The Richmond area policy makers are working as a team to accomplish the common goal of retaining components of the current economic base and creating an economic environment that will attract and retain new businesses in growth industries. Some of the special programs and projects that have been created to accomplish this goal are as follows:

Richmond Enterprise Zone: This City of Richmond program offers businesses within its boundaries the opportunity to reduce their state business income taxes through a variety of tax credits. Most commercial and industrial areas of the City are within the Enterprise zone. Incentives include: a Hiring Tax Credit, Sales and Use Tax Credit, Business Expense Deduction for Real Property, Net Operating Loss Carry-over, Net

IV

Interest Deduction for Lenders and Employer Tax Credit for hiring Low-Income Employees.

Workforce Investment Board: The Richmond Workforce Investment Board (WIB) is the official oversight and policy-making body for federally-funded employer services and employment and training programs in Richmond. The mission of the Richmond WIB is to oversee the articulation and implementation of comprehensive workforce development strategies, policies and performance outcomes of the City of Richmond’s integrated service delivery system.

Significant Events and Accomplishments

The City of Richmond is committed to providing excellent municipal services to its diverseresidents and visitors. Highlights of the City’s activities and accomplishments for the fiscalyear'ended June 30, 2016 include the following:

Finance

• The National Procurement Institute (NPI) has awarded the City of Richmond its Achievement of Excellence in Procurement Award for the 6th consecutive year'. The award recognizes organizational excellence in procurement by public and non-profit organizations. The judging criteria are designed to measure innovation, professionalism, e-procurement, productivity, and leadership attributes of the agency’s procurement function, as calculated by standardized criteria.

Recreation

• The City of Richmond’s impact volunteering program, Richmond-Excellence Serving our Community (ESC), has been selected for the second time to serve as a Global Youth Service Day Lead Agency to mobilize Richmond youth to lead volunteer service projects that help meet community needs. The campaign of Youth Service America (YSA) and the largest youth service event in the world, Global Youth Service Day (GYSD), celebrates and mobilizes millions of children and youth who improve their communities each day of the year' through service.

• The City of Richmond Recreation Department was selected as a 2015 California Park & Recreation Society (CPRS) Award of Excellence recipient for the Richmond Swim Center. The CPRS awards program recognizes outstanding achievement in the areas of facility design, park planning, marketing and communication, and community improvement and programming through demonstrating the CREAM (challenge, resourcefulness, execution, accomplishments, and mission) principles. This acknowledgement is particularly rewarding because of the partnership between the West Contra Costa Unified School District, which provided funding and construction oversight, and the Richmond Recreation and Public Works Departments, which provided design input and assisted in project management.

v

Library

• The Richmond Tool Library is a tree service that will provide community members with building, landscaping, and artistic tools to be self-sufficient, take agency over their neighborhoods, and build a more sustainable Richmond.

Employment and Training

• The RichmondBUILD Academy began its 30th cohort on April 18th. Over twelve weeks, students received intensive job training in construction and valuable certifications in CPR/First Aide, OSHA 10, HAZ Whopper 40, Confined Spaces, and Traffic. Their graduation was June 30th. As a result of their training, RichmondBUILD graduates are eligible for direct entry in the respective unions for Carpenters, Laborers, Dry Wall/Lathers, and Iron Workers.

Public Safety

• The Richmond Fire Department’s Youth Academy was in its 22nd year of ensuring that the next generation understands the value of service, commitment, and giving back to community. This session continued to mentor and develop future leaders by establishing the importance of academic achievement, goal-setting, and personal and mutual accountability as the foundations of a better and safer Richmond.

Strategic Support

• Received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada (GFOA) for the fiscal year ending June 30, 2015.

• Received the Distinguished Budget Presentation Award for fiscal year 2015-16 from the Government Finance Officers Association (GFOA).

• Received the California Society of Municipal Finance Officers (CSMFO) Operating Budget Excellence Award and Capital Budgeting Excellence Award the fiscal year 2015- 16.

Long-Term Financial Plan

• One of the City Council’s most important goals is to receive and review a five-year projection of operating revenues for budget planning purposes. To this end, the City Council approved a memorandum of understanding with the National Resource Network (NRN), which is a core component of the Obama Administration’s Strong Cities, Strong Communities (SC2) initiative that provides technical assistance to help cities develop the tools and strategies they need to grow their economies. One of the projects undertaken through the agreement with NRN was to work with Public Financial Management, Inc. (PFM), an NRN partner, to develop a financial model for the City organization. In December of 2015, the Council was presented with a five-year projection by PFM. Since

VI

then, there have been two additional presentations. The City continues to update its five- year plan as changes occur and inform the Council.

• Adhered to the Debt Policy which reflects general debt service cannot exceed 10% of General Fund Revenue.

• As part of its effort to address unfunded OPEB liabilities, the City Council, in December 2014, adopted a policy to place into its OPEB trust an amount equal to one-half of any one-time, non-operating revenues, and one-half of any year-end surplus in excess of the City’s unfunded liability for retired employee health costs.

AWARDS

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2015. In order to be awarded a Certificate of Achievement, a government must submit a published comprehensive annual financial report which substantially complies with GFOA’s Certificate program requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

ACKNOWLEDGEMENTS

The preparation of this CAFR 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 Maze & 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

Vll

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CITY OFFICIALS

J UNE 28, 2016

CfTY COUNCIL

Mayor .

Vice Mayor... . .......................... ........................... ..............................................

Councilmember .. .....................................................................................................................

Councilmember . .......... ............ ..............................................................................................................

Councilmember . .....

Councilmember . ................. ................. . ........................................................................................................ .

Councilmember... ........................................................ ..................................................................................................

ADMINISTRATION AND DEPARTMENT HEADS

City Manager ....... .............. ............ ........... ......... .............................................................................................................

Capital improvement Director.................................................................................................................................................................

City Attorney . ........................................................................................................................................................................

City Clerk ... . .......................

Community Services Director............................................................................................................................................

Employment 8, TrainingDlrector .........................................................................................................................................................

Finance Director /Treasurer................................................................................................................................. ..................................

Fire Chief ...................... . ...

Housing Authority Director.......................................................................................................................................................................

Human Resources Director.................................................................................................................................................................

information Technology Director...... ....................................................................................................................................................

infrastructure Maintenance 8, Operations Director,,,.,,,,,,,,,,,,,,,,,.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.........................................................

Library and Cultural Services Director.......... ............. . ......................................................................................................................

Planning Director......................................................................................................................................................................................

Police Chief................................................................................................................................................................................................

Port Director...............................................................................................................................................................................................

Water Resource Recovery Manager............................................................................................................................................ .......

... Tom Butt

................ Eduardo Martinez

...............Cayle McLaughlin

....................Nathaniel Bates

....... j ovanka Beckles

........................ Vinay Pimple

................ JaelMyrick

Bill Lindsay

..................Yader Bermudez

..................Bruce Coodmiller

. ........ Pamela Christian

........................Rochelle Monk

................................. Sal vaca

.................... Belinda Warner

. . . Adrian Sheppard

.............................. TimJ ones

................. Lisa Stephenson

.... Sue Hartman

............................Tim Higares

............................... Katy Curl

.....................Richard Mitchell

........................Allwyn Brown

........................ J im Matzorkis

............................Ryan Smith

IX

Government Finance Officers Association

Certificate of Achievement

for Excellence in Financial Reporting

Presented to

City of Richmond California

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

Juiu* 30, 2015

Executive Direcror/CEO

d/osoemicb

INDEPENDENT AUDITOR’S REPORT

Tothe Honorable Mayor and City Cornell City of Richmond California

Reportcn Financial Statements

We have audted the accompanying financial statements of the governmental activities, the businessHype activities, each major fund, and the aggegate remaining fund information of the City of Richmond as of and fa the year enefedj une 30, 2016, and the related notes to the financial statements, which col lectiveiy comprise the City’s basic financial statements as listed in theTable of Contents.

Management’s Responsi b lity fa the F inancial Statements

Management is responsible fa the preparation and fair presentation of these financial statements in accadance with accounting principles generally accepted in the United States of America; this inducts the desigi, implementation, and maintenance cf internal control relevant to the preparation and fair presentation of the f i nanci al statements that are free from materi al mi sstatement, whether due to fraud a erra.

Audtor's Responsibly

Our responsiblity is to express opinions cn these financial statements based cn our audt Wedd notaudt the component unit financial statements of RHA Properties, RHA HousingCaporation and RHA RAD LLC, which cdleztively represent 2.57%, 8.9®6 and 0.0£% of the assets, net position and revenues, respectively, of the primary government. We dd rot audt the component unit financial statements of the Richmond Housing Authority (Authority), which is both a maja fund and 16.72%, 47.22% and 22.14% of the assets, net position and revenues, respectively, of the businessHype activities These component unit financial statements were audted by other audtors, whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amoints inducted fa these entities, i s based solely on the report of these other aid tors

Wecondrctedar audt in accadance with audting staneferds generally accepted in the U ni ted States cf America and the staneferds applicable to financial audts contained in Government Audting Standards, issued by the Comptrdler General of the United States These standards reqairethatwe plan and perform the audt to obtain reasonable assurance aboutwhelher the financial statements are free frem materi al misstatement.

An audt invdves perfarring procedaes to obtain audt evidence abort the amounts and dsdaures in the financial statements. The procedures seiezted depend on the audtor’sjudgrent, indudng the assessment of the risks of material misstatement cf the financial statements, whether due to fraud a erra. In making those risk assessments, the audter consicfers internal control relevant to the City’s preparation and fair presentation of the financial statements in erder to desigi audt prccedrres that are appropriate in the circumstances, but rot fa the pirpc6ecf expressing an opinion on the dfectiveness of the City’s internal control. Accord n^V, we express no sixh opinion. An audt also indicts evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates rraefe by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audt evidence we have obtained is sufficient and appropriate to provicte a basis fa cur audt opinions.

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1

Opinions

I n cur opinion, based on our audt and the report of other audtors, the financial staterents referred to above present fairly, in all rralerial respects, the respective financial position of the gDvernmental activities, the business-type activities, the dscrefely presented componmt unit, each rrajor fund and the aggegafie remaining fund inforrralion of the City as of J une 30, 2016, and the respective changes in financial position and where applicable, cash flews thereof for the year then ended in corformity with accounting principles generally accepted i n the U nited States of America.

E mphasi s of Matters

General Fund Cash and Fund Balance and Other FundCash Balances

The accompanying financial statements have teen prepared in conformty with accointing principles generally accepted in the United States of Amaica, which contemplate continuation of the City as a going concern. Hcwever, as of June 30, 2016, the General Funds unrestricted cash balance represented approxirratdy fifteen days of Gmeral Fund expendtures, unassigied fund balance represents available find balance and equates to approximately twenty-eight days of Gereal Fund expend tures, and revalues exceeded expendtures and other financing uses in fiscal year 2016 ty S.7 million. In addtion, the Richmond Housing Authority Enterprise Fund Port of Richmond Enterprise Fund other Non-Major Enterprise Funds and Non-Major Governmental Funds had borrowed S38.6 mil lien from the Gereal Fund and other funds. As a result of the interfund borrowing City-wicfe the City has a total of only S586 million cf unrestricted cash as of June 30, 2016, a declineof 22% cverthelast sixfiseal years. I fdddeit spend ng continues, itredxesthelikelihoodthattheCity will be able to continue as a goingccncern

The emphasi s of thi s matter does not constitute a modficalion to our opinions.

I mplerrentation of New Gcvernrrental Account] ngStandards Board Pronouncements

Management adopted the provisions of Gcvernrrental Accounting Stancferds Board Statement No. 72, Fair Value Measurement and Application, which became effective during the year ended J une 30, 2016asdscussed inNote2J to the financial statements.

Management early-implemented the provisions of Govenmental Accounting Stancferds Board Statement No. 82, Pension Issues - An Arrendrent of GASB Statements No. 67, No. 68, and No 73, ciring theyear aided J une 30, 2016 as noted in the Pension-Related Required Supplementary Information.

The emphasi s of these matters does net constitute a modficalion to oir opinions.

2

Other Matters

Required Supplementary I nformation

Accounting principles generally accepted in the UnitedStales of America require that Managements Discussion and Analysis and other Required Supplementary Information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required ty the Governmental Accounting Stancferds Board who considers it to bean essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic cr hi stcri cal context W e and otter audtors have appl i ed certai n I i mi ted procedures to the requi red suppl ementary irformalion in accordance with audting stancferds generally accepted in the United States of America, which consisted of inquiries of management about the methods cf preparing the information and comparing the irformalien for consistency with management's responses to our inquiries, the basic financial statements, and other knowledgewe obtained during our audt of the basic financial statements. We do not express an opinion or provide ary assurance on the information because the limited procedures do not provide us with sufficient evidence to express an qd nion or provide ary assurance

Other Information

Our audt was conducted for the purpose of forming opinions on the financial statements that cdlectively comprisetheCity’sbasic financial statements as a whde Thelntroductory Section, Supplemental Information, and Statistical Section as listed in theTable of Contents are presented for purposes of addtional analysis and are not required partsof the basic financial statements

The Supplemental Information is the responsibility of maraigment and was derived from and relates dreetly to the underlying accountingamd other records used to prepare the basic financial statements The information has been subjected to the audting procedures applied in the audt of the basic financial statements and certain addtional procedures, inducing comparing and reconciling such information drectly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other addtional procedures in accordance with audting stancferds 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 stalementsasawhde

The I ntrodetory and Statistical Sections have not been subjected to the audting procedures applied in the audt of the basic financial statements and accordn^y, we cb not express an opinion or provide ary assurance on them

Other Reporti ng Requi red ty Government Audting Stancferds

I n accordance with Government Audting Stancferds, we have also issued our report dated February 23, 2017, on our consideration of the City’s internal contrd over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, andgant ageements and other matters. The purpose of that report is to describe the scope of our testing cf internal control over financial reporting and comjdianceand the

results of that testing and not to provide an opinion on internal control over financial reporting or on compliance That report is an integal part cf an audt performed in accordance with Government Audting Stancferds in considering the City’s internal control over financial reporting andcompliance

Pleasant Hill, California February 23, 2017

3

This Page Left Intentionally Blank

MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended J uneSO, 2016

This narrative overview and analysis of the City of Richmond’s (the “City”) Basic Financial Statements for the fiscal year ended June SO, 2016. We encourage readers to consider the information presented here in conjunction with the accompanying transmittal letter, basic financial statementsand notes to the financial statements.

FINANCIAL HIGHLIGHTS

• The liabilities and deferred inflows of resources of the City exceeded its assets and deferred outflows of resources at the close of the most recent fiscal year by $161.3 million (net deficit). Of this amount, $79.3 million is restricted for specific purposes (restricted net position); $291.7 million is the net investment in capital assets and $532.4 million represents adeficit in unrestricted ret position.

• The City’s total net position decreased by $20 million from adeficit $141.3 million during the fiscal year. This decrease is attributed to a $3.1 million and $16.9 million decrease in governmental and business4ype activities, respectively. The change in ret position for governmental activities represents a 1.5% decline from prior year. Expenses exceeded revenues by $1.8 million in addition to special items related to a $1.4 million ret adjustment to terminate the City’s Civic Center swaption and basis swap and assets transferred from Successor Agency. The change in net position fa busiress4ype activities represents a 34.4% decrease from prior year that is primarily due to the transfer of $14.5 million of capital assets to the City’s discretely presented component unit RHA RAD LLC.

• At June 30, 2016, the City’s unrestricted net deficit (government and businessHype activities) totaled $532.4 million, a $34.0 million or 6.8% decrease from prior year due to an increase in long-term liabilities such as debt and pension and postemployment benefits promised to cirrent and farrer employees. The unrestricted ret deficits represent the net unfunded Iiabilities of the government. Overtime, increases and decreases in this account wi 11 al I ow the reader to determi ne i f the C i ty’ s condi ti on is improving a deteriorating. The City funds the majaity of these costs on a pay as you go basis. Restricted ret position fa governmental and business4ype activities increased by a net $15.3 millionto$79.3 million.

• The Net Pension Liability of $239.1 million, representing an accounting measure of the City’s unfunded pension obligation, increased by $29.8 million from $209.3 million. The City repats $49.6 million in aher post-employment benefit (OPEB) liability for this fiscal year which is an increase of $10.5 million from the $39.1 million liability reported in the prior year. The increase represents the cirrent year change in net OPEB obligation and was the resdt of actuarially required contributions exceeding actual contributions

5

OVERVIEW OF FINANCIAL STATEMENTS

The City’s basic financial statements are comprised of government-wide financial statements, fund financial statements, and notes to the financial statements This report also contains other required supplementary information in addition to the basic financial statements themselves.

Government-Wide Financial Statements

The government-wi de fi nanci al statements are desi gned to provi de readers wi th 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 usefui indicator of whether the financial position of the City is improving a 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 went giving rise to the change occurs, regardless of the timing of the related cash flows

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and grants, governmental activities, and business-type activities which are intended to reccver 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 Stabilization 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 bl ended as part of the pri mary government.

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

The government wide financial statements can be found on pages 20-23 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 compl i ance wi th fi nance-rel ated I egal requi remerts.

Governmental F unds- Governmental funds focus on near-term inflows and outflows of spendabl e resources, as wel I as on bal ances of spendabl e resources avai I abl e at the end of the fiscal year. Such information may be useful in determining what financial resources are avai I abl e i n the near future to fi nance tbeCity’s programs

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

The City has 19 governmental funds of which five are considered major funds for presentation purposes Each maja fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances The City’s five major funds are the General Fund, Cost Recovery Special Revenue Fund, the Community Development and Loan Programs Special Revenue Fund, Ervironmental and Community Investment Agreement Special Revenue Fund (“ECIA”) and Civic Center Debt Service Fund. The basic governmental fund financial statements can be found on pages 26 through 32 of the financial repat. Data from the other fourteen governmental funds are combined into a single, aggregated presentation and separately on pages 34 through 36 of the financial report.

Proprietary Funds - Proprietary funds of the City are two types: (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 management program, police telecommunications and compensated absences The proprietary funds financial statements can be found on pages 34 through 36.

F iduciary F unds - Fiduciary funds are used to account for resources 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’sown programs The fiduciary funds for the City consist of Pension Trust Funds Pt. Molate Private-Purpose Trust Fund, Successor Agency to the Richmond Community Redevelopment Agency Private-Purpose Trust Fund and Agency Funds The fiduciary funds financial statements fa these funds can be found on pages 38 through through 39.

NotestotheFinancial Statements

The notes provide additional information that is essential to a fuil understanding of the data provided in the government-wide and fund financial statements The notes to the financial statements can be found on pages 41 through 159 of this report.

7

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Government-wide Net Position

Comparative financial information is presented below to provide the reader with highlights of changes from the prior year.

City of Richrroncfs Net Position June3Q 2016and2015

(in thousands)Ccvemrrental Business-type

Activities Activities TotalsFY2016 FY2015 FY2016 FY2015 FY2016 FY 2015

Assets:Cirrent assetsCapital assets

$138,475319,820

$128276 308 358

$ 29,379 174,125

$ 31,095 189,803

$ 167,854 493945

$159,371498,161

Total Assets 458295 436 634 203504 22Q898 661,799 657,532

Deferred Outflows of Resources:

Deferred outflow related to pensions Deferred charge cn reUndng

22609 17,607 9365452

8005827

23,5455452

18,4075,827

Total Deferred Outflows of Resources 22609 17,607 6388 6627 28,997 24,234

Liabilities:Cirrent liabilities 92803 88538 57,409 2Q581 150,212 109,119Lcng-termliabilities 578564 522578 102148 138,092 680,712 66Q670

Total Liabilities 671,367 611,116 159,557 158,673 830,924 769,789

Deferred Inflows of Resources:Deferred inflows related to pensions 19,904 5Q362 1,304 2,954 21,208 53316

Total Deferredlnflcws of Resources 19,904 5Q362 1,304 2,954 21,208 53316

Net Position:Net investment in capital assets 228,292 218145 63405 74,922 291,697 293067Restricted 70324 54,579 9,008 9,408 79,332 63987Unrestricted (508 982) (479,961) (23382) (18,432) (532,364) (498,393)

Total NetPcsiticn(Deficit) $(210 366) $(207,237) $ 49,031 $ 65898 $(161,335) $(141,339)

Analysis of Government-wide Activities

The following table indicates the changes in net position fa governmental and business- type activities:

City of Richmonds Changes in Net Position For theYearsEndedJ une 30, 2016 and 2015

(inthcu sands)

GovernmentalActivities

Revenues:Progam revenues:

FY2016 FY2015

Charges fcr services $ 25,916 $ 27,044Operati ng gants,tcntri bub ore 20,995 9,231Capital gartsAcrtnbudcns

General revenues:17,535 21,097

Property taxes-current cd lections 51,303 45129Sales taxes 40,877 33155Utility user taxes 43,365 48,300Docimentary transfer taxes 6,187 4,819Other taxes 5,735 5100U se of money and property 1,198 (4,752)U rrestricted 1 ntergavemmental 43 1,807Pension stab liz® on revenue 916 954Other 4,258 2,151Gainonsaleofcapital assets 263 269

Total revenuesE xpenses:

218,591 194,304

General government 32,198 28,879Pibic safdy 107,380 102733Pibic works 44,410 42364Ccnmnity development 5,003 4,772Cdtural & recre&on 11,021 1Q492Housings redevelopment 2,052 2751Interestandfiscal chargesRichmond Housing AuthorityPort of Ri chmcndRichmond M arinaM m a pal SewerStcrmSewerCabeTV

18,903 17,220

Total expensesExcess(Defidency) ofRevenues

220,967 21Q211

Over (U ncter) E xpenses (2,376) (15907)Special iterrs (1,353)Transfers 600 179

Changs in N a Position Napcsition(deficit) a beg mi ng of

(3,129) (15728)

yearNd position (deficit) A end of

(207,237) (191,509)

year $(210,366) $(207,237)

Business-typeActivities Totals

FY2016 FY2015 FY2016 FY2015

$ 35 995 $ 34,141 $ 61,911 $ 61,18521,951 22112 42946 31,3432156 2190 19,691 23,287

51,303 45,1294Q877 33,15542 365 48,3008187 4,8195735 5,100

(2077) (563) (1,879) (5,315)43 1,807

916 9544,258 2,151

263 26957,025 57,880 275616 252,184

32198 28,879107,380 102,73344,410 43,364

5003 4,77211,021 10,4922052 2,751

18903 17,22026,385 28049 28385 28,04911,133 9,923 11,133 9,923

237 235 237 23516447 15966 15447 15,9662466 2282 2466 3,2822114 948 2114 948

58782 58403 279,749 268,614

(1,757) (523) (4,133) (16,43d(14,510) (15863) -

(600) (179) - -(15867) (702) (19,996) (16,43d

65898 68600 (141,339) (124,909)

$ 49,031 $ 65898 $(161,335) $(141,339)

9

Governmental Activities

Governmental activities decreased the City’s net position by $3.1 million accounting for 15.696 of the City’s total decreaseinnetpositionof$20million. Total expenses of $221 million exceeded ra/entesof $218.6 million by $2.4 million. Revenues increased $24.3 million or 12.596 from prior year primarily due to $14 million increases in property and sales taxes within the City as well as the receipt of $129 million grant funding for the ECIA program. Expenses increased $10.8 million or 5.196 from prior year primarily in general government and public safety expenses. The City incurred a net of $16.3 million expense in terminating swap agreements associated with the 2009 Lease Revenue Bonds that was offset by a $ 15 mi 11 i on transfer of assets from the S uccessor Agency.

Business Type Activities

Business4ype activities decreased the City’s net position by $16.9 million. Ke/ factors contri buti ng to the decrease i n busi ness4ype activities are as fol lows:

• The Richmond Housing Authority’s (“RHA”) ret position decreased by $15.7 million primarily due to a $14.5 million transfer to RHA RAD LLC to finance capital asset purchase resulting in the $15.7 million negative change in net position. RHA’s operating loss of $24.5 million improved $1.6 million, a 6.196 from prior year due to decreases in depreciation expense and salaries and benefits. The operating loss is partially offset by grant funding of $21.9 million, which declined only $200 thousand from the prior year.

• The Port of Richmond (“Port”) reported operating income of $1.8 million During the year, the Port incirred $2.9 million of interest expense which resulted in a $539 thousand decrease in ret position.

• The Municipal Sewer fund reported operating income of approximately $8 million, there were $7.8 million of non-operating expenses the majority of which represented interest and swap expenses incurred on various Wastewater Debt issues, offset by $801 thousand in federal subsidies received to reduce interest costs associated with Richmond Wastewater Revenue Bonds, Series 10B, resulting in a $1 million change in net position.

• Other Enterprise funds had a combined $1.6 million decline in ret position. The majority of the decline, $1.3 million, is attributed to the Cable TV fund that experienced increased salaries and benefits in addition to transferring of $500 thousand to the General Fund.

10

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 ra/enies used to cover the net expenses

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

Expenses and Procyam Revenues


Prog’am Nd (Expenses)Expenses Revenues Revenues

Fundi cnsGeneral government $ 32197,941 $ 15513357 $ (16684,584)Pitiic safdy 107.38Q286 8782898 (98596388)Pitiic works 44.4IQI02 22 504,743 (21,905359)Coimri ty devel qxnent 5,003,045 14,344,895 9,341,850CUtiral and recreati cnal 11,021,226 203Q86I (899Q 365)H cusi ng and redevel oprrent 2051,898 1,268085 (782813)Interest cn long-term defat 18902831 - (18902831)

Total $ 22Q967.329 $ 64,445839 $ (156521,490

Total governmental activities expenses of $221 million were offset by $64.4 million in program revenues in fiscal year 2016. These expenses do not include capital outlays which are reflected in the City’s capital assets 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 $156.5 mi 11 i on.

As reflected in the pie chart below, 4C96 of the governmental program revenues came from Charges for Services, which includes licenses and permits and fees fires forfeitures and penalties, and several other revenues The remaining 6C96 percent of governmental program ra/entes come from Operating Grants and Capital Grants Contributions which include restricted revenues such as Gas Tax, Transportation and SalesTax, and Federal/State Grants.

Program Revenues by Source Governmental Activities

Charges for ServicesServices

11

General revenues are all other revenues not categorized as program revenues ard include property taxes, sales taxes, utility users’ tax, documentary transfer taxes, investment earnings, grants ard contributions not related to specific programs ard other miscellaneous general revenues. Total general revenues from governmental activities were $154.1 million in fiscal year 2016. The three largest components of general revenues received were Property Taxes-currert collections of $51.3 million, Utility User Taxes of $43.4 million ard SalesTaxes of $40.9 million. The following table details the City’sgeneral revenues by source.

General Revenues bySource Governmental Activities

Document Transfer

The fol I cwi ng tabl e detai I s net program costs for busi ress4y pe activi ti es:

E *penses and Prcg'amRe/enues B u s ness-type A co vi 11 es

Pregram Ns (Expenses)E senses Re/enues Ra'enues

B u s n ess-type A co vi 11 esRichrrcnd Hcus ng Authority $ 26,385,133 $ 25,156,898 $ (1,228,235)Pert of Ridirrcnd 11,132,997 10,581,419 (551,578)Richrrcnd Manna 237,129 517,108 279,979Municipal Saver 16,446,626 20,559,316 4,112,690Stcrm Saver 2,465,929 1,966,537 (499,392)CSdeTV 2,114,436 1,320,486 (793,950)

Tad $ 58,782,250 $ 60,101,764 $ 1,319,514

Richmond Marina and Municipal Sewer generated net revenues of $280 thousand and $4.1 million, respectively. However, theremainingbusiness4ypeactivitieswere notable to generate enough user fees sufficient to cover operating costs by $3.1 million. As reflected in the pie chart below, 6C96 of the business4ype program revenues came from Charges for Services and the remaining 4C96 were derived from Operating and Capital Grants.

12

Program Revenues by Source Business-Type Activities

Operating Grants 4 Contributions 36%

Capital Grants 8, Contributions 4%

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

As noted earlier, the City uses find accounting to ensure ard demonstrate compliance with finance-related legal requrements.

Governmental Funds

The focus of the City’s governmental finds is to provide information on near-term inflows, outflows, ard 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 $69.8 million, an increase of $9.4 million, or 15596 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 resultsoftbedailyoperationsoftheCity. The major revenue sources are utility users’ tax, sal es tax and property taxes The maj or expendi tures are sal ari es and administrative expenses The City’s general fund revenues and expenditures both grew by 2.396 or $3.4 million and $3.2 million, respectively. This increase is primarily due to the conti nui ng growth i n the Ci ty ’ s assessed val uati on of properti es within the City whi ch al I owed the Ci ty to expand publ i c safety services to i ts ci ti aens

At the end of the current fiscal year, the total fund balance increased by $716 thousand from the prior year to $29.4 million. General Fund reported an inassigned find balance of $11.0 million, an increase of $1.1 mi 11 ion from prior year.

Cost Recovery This fund was established to record the receipt and use of monies for services provided to the public and developers Cost recovery fund balance decreased $632 thousand, or 7.396 from prior year. Revenue increases of $985 thousand were not sufficient to offset the $3.1 million increase in expenditures primarily due to a pavement rehabilitation project funded by state grants. However, the deficit was partially reduced by a $2.2 mi 11 ion Sol id Waste J PA reimbursement that is restricted for specific purposes

13

Community Development and Loan Programs This fund was established toaccoint for the receipt of Community Development Block Grant, HOME Investment Partnership Program and Neighborhood Stabilization Program grant monies and the use of the grants In conjunction with the dissolution of the Redevelopment Agency, this fund also accounts for the lew and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency’s lew and moderate income housing activities Asofjune SO, 2016, fund balance is $24.1 million which represents a $492 thousand, or 2% increase from prioryear.

Environmental and Community Investment Agreement This fund was established to account fa funding received from Chevron in conjunction with the Chevron Modernization Project Environmental and Community Investment Agreement which funds various projects and programs within the City of Richmond. The City has received a total of $13 million and has spent approximately $2 million on various projects within the City. Asofjune 30, 2016, fund balance is $11 million, which is restricted fa use on projects under the agreement.

Civic Center Debt Service This fund was established to account for debt service on the Civic Center Lease Revenue Bonds Find balance decreased by $3.3 million during the year due to the City’s partial funding of debt service payments through charges for services, subsidies and remaining Civic Center Swaption proceeds received in the 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 Saver.

Richmond Housing Authority The Richmond Housing Authority (“RHA”) was established to administer finds provided by the Department of Housing and Urban Development (HUD) to assist lew-income families in obtaining decent, safe and sanitary housing. RHA’S net position declined $15.7 million to $23.2 million at Jure 30, 2016. Of the $23.2 million, $21.2 million is invested in capital assets, net of related debt and $2 million is unrestricted. The majority of the $15.7 million decline is attributed to a $14.5 million transfer to RHA’s discretely presented component unit, RHA RAD LLC, to fi nance the sal e of assets

The Port of Richmond The Port ofRichmond (“Port”) is a public enterprise established by the City of Richmond and is administered as a department of the City. Operations include the marine terminal facilities and commercial property rentals. The Port’s ret position decreased by $539 thousand, a 7.EP6 to $7.1 million. The decrease is partially attributed to increased dredging and oil spill maintenance expenses

14

Municipal Sewer Fund This fund is used to account for a variety of sever service- related revenues and expenses. Municipal Sever’s net position increased $1 million, or 4.896 to$20.9 millionatjure30, 2016.

GENERAL FUND BUDGETARY HIGHLIGHTS

The adopted budge, excluding transfers, bond premium and proceeds from sale of property, reflected $143.2 million in estimated racemes and $140.8 million in appropriations

Budget adjustments reflect extensive analysis and updates arising from the MidA/ear Revenue and Expenditure Review, and Coincil approved amendments that occurred during the fiscal year.

The final amended budget included a $1.1 million increase in estimated revenue and a $1.6 million decrease in appropriations Actual revenues of $143.4 million were $791 thousand I ess than the adj usted operati ng ra/enie budget, a vari ance of 0.6 percent. K e/ el ements of vari ances i n ra/enies are di scussed as fol I cws:

Actual property taxes totaled $33.2 million which is $225 thousand less than expected. The City did not receive an expected payment from the County related to Successor Agency Surplus Payment of $273 thousand because of implementation of Senate Bill 107 which diverted Successor Agency Surplus revenue to the Pension Tax Override Fund rather than the General Fund.

Actual sales tax totaled $40.9 million which is $601 thousand less than expected. The shortfall stemmed from significant decreases in the Business To Business Sales Tax category, the third most impatant category making up 16.7% of the regular sales tax revenue. It decreased by 22.4% year-over-year. This category includes the segments of Energy Sales, Light Industry and Chemical Products. The decrease is primarily attributed to the drop in oil prices

The utility user tax is a tax imposed on various utilities and is usually collected from customers through their utility bills The original budget was increased $100 thousand from $43.9 million to $44.0 million to adjust for the updated UUT cap provision. Actual revenue of $43.4 mi 11 i on was $600 thousand I ess than expected as a resul t of a I ewer than expected UUT from Tel ecommini cations The main factor is the higher usage of prepaid cellular phones which were previously exempt from UUT, and the decrease of landlines and monthly cellular plans. Beginning January 1, 2016, a prepaid mobile telephone services (MTS) surcharge was imposed on purchasers of prepaid MTS as a percentage of the sales price of each retail transaction irvolving prepaid wireless cards/service in this state. Even with this new revenue stream, the decrease in telecommunications UUT could not be mitigated.

Actual other tax revenue of $11.6 million is $573 thousand more than the final budget. This is the result of collecting $2.0 million more than originally budgeted in Transfer Tax on sal e of properti es i n R i chmord.

15

The final adjusted appropriations totaled $139.2 million, a decrease of $1.6 million from the original adopted budget appropriation of $140.8 million. The adopted budget appropriation was reduced due to reductions in salary and benefits to account fa vacarcy savings in both swan and non-sworn classifications; and other operating savings. Actual operating expenditures of $138.9 million were $348 thousand less than final appropriations

CAPITAL ASSETS AND DEBT ADMINISTRATI ON

Capital Assets

The City’s investment in capital assets for its governmental and business4ype activities as of J tre 30, 2016 amounted to $493.9 million, net of accumulated depreciation. This investment in capital assets includes land, bdldings improvements, machinery and eqdpmert, infrastructure and construction in progress is illustrated belcw

Capital AssetsbyType

Governmental acovioes Business-type acoviaes Tccal

2016 2015 2016 2015 2016 2015

LandCcrsrurocr in

ProcessB u Id rg and i rrpro/errerTs M «ch rery and ecju pmcnt I nfrasrurojre

$ 24,369,421

78,644,060117,30^401

10,078*22689,424240

14,428*675 $ 7,19^ 986 $ 5231,777 $ 31,565,407 $ 22660,452

56,394,914120,90596812,241,846

104,386,459

25250,4^3 31,375761 5171,749

107,125090

25577,142 39,309,887

5401,541 105283040

101,894,523 148,683,162 15,249,975

196,552, SO

84972056160,21585517,643387

212669,509

Tcca Captal assets $ 319.820.S8 $ 308, S7,872 $ 174125CS9 $ 189,803387 $ ^3,9^,397 $ 433161,259

The City’s infrastructure assets are recorded at historical cost in the governmentalde financial statements

Some of the Ci ty ’ s maj or capi tal asset events duri ng the year are detai I ed be! cw:

• $15 million in capital assets were transferred to the City from the Successor Agency as part of the apprcved Long Range Property Management Plan consisting of $9.6 million of various land parcels and $5.3 million construction in progress related to Lucretia Edwards Park, Marina Bay Trails and Marina Waterfront Esplanades

• $ 10.4 mi 11 i on i n construct on i n progress were transferred from S uccessor Agercy for the Moody Underpass and MetroWalk/Transit Village associated with Moody U rderpass

• Richmond Housing Authority transferred capital assets with a carrying value of $14.4 million to RHA RAD LLC as part of the Rental Assistance Demonstration project.

Additional information about the City’s capital assets can be found inNote6onpages71 through73inthefinancial statements.

16

Debt Administration

Long Term Debt - The City’s total debt outstanding at June 30, 2016 increased $10.3 mi 11 i on from $397.6 mi 11 i on to $407.9 mi 11 i on.

Outstanding Debt J une 30

Governmental Activities Business-type Activities T otal

2016 2015 2016 2015 2016 2015

Revenue tonefcLease rev eiue bonefc

Persi on odiga) on bonefc

$ 115218,619

15507} 29

$ 87,121,545

135,491,679

$ 84,637 ®339,35^875

$ 86,867,2041,984,610

$ 84 ©7,9© $154 573,494

155070,539

85,867 20 129,10*5155

135,491,679Total Lords p^^le 270,289,158 243,613,224 123,997858 128,82,130 394282,016 372,465 354

Loans p^ade

Cartel leases2,143,550 7,944 891

12.97Q813

5295,123

3,483,127 2,861,189 526,687

7^44,891

15,837032

9,295123

Total outstand rg d±* $ 28O.377.0S $ 265,879,105 $ 127,475 $5 $ 131,713,319 $ 407 853,591 $ 397,597479

The City does not have any general obligation bonds as of J une 30, 2016.

On December 23, 2015, the City received an updated issuer credit rating from S&P affirming the BBB +issuer credit rating and removing the ratings from CreditWatch and noti ng that the outl ook i s stabl e.

For more detailed information on the City’s long-term debt see Note 7 on pages 74 through 102.

Economic Factors, Next Year’s Budget and I nflation Rates

The City's economic base continues to grew after years of recession. Property values assessed by the County as of J anuary 1, 2016 have increased by 5.896 over the priayear. Sales Tax is expected to stay about the same in FY2016-17 as compared to the previous year. As of June 30, 2016, unemployment in Richmond stands at 5.696, slightly improved from 5.896 ayearago.

The City of Richmond is in contract with Terminal One Development, LCC to sell an approximately 10-acre site for development purposes at a price of $10 million. The developer has paid the City $500,000 in a non-refundable deposit, with the balance of $9.5 million due following granting of all entitlements and close of escrow. Following City Council certification of the environmental impact report (El R) for the project in July 2016, a lawsuit was filed that challenged certification of the EIR. A settlement was reached by all parties to this lavsuit in November 2016, which allows the project entitlement process to proceed. Close of escrow on the real estate sale by the City to Terminal One Development, LLC, including the transfer of the $9.5 million balance due from the developer to the City, isanticipated in October 2017.

17

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. The City continues to work with National Resource Network’s financial forecast model in planning, upcoming labor negotiations 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 reduztionsand 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. Questions concerning any of the information provided in this report or requests fa additional information should 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 Fi nance#ci .richmond.ca.us.

18

CITY OF RICHMOND JUNE 30,2016

STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES

The purpose of the Statement of Net Position and the Statement of Activities is to surrmariae the entire City’s financial activities and financial position.

The Statement of Net Position reports the dfference between the City’s total assets and deemed outflows of resources and the City’s total liabilities and deferred inflows of resources, inducing all the City’s capital assets and all its long-term debt The Statement of Net Position focuses the reader on the composition of the City’s net petition, by subtracting total liabilities and deferred inflows of resources from total assets and deferred outflows of resources and summarizes the financial position of all the City’s Governmental Activities in a si ncje column, and the financial position of all the City’s Business- Type Activities in a sineje cdurm; these columns are followed by a Total column that presents the financial position of theenti reCity.

The City’s Governmental Activities include the activities of its General Fund along with all its Special Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds primarily service these Funds, their activities are consol idated with Governmental Activities, after el i mi rating interfund transactions and balances. The City’s Business Type Activities include all its Enterprise Fund activities and ary portion of the Internal Service Fund balances that service Enterprise Funds. Fiduciary activity isexcluded

The Statement of Activities reports increases and decreases in the City’s net position. It is also prepared on the full accrual basis, which means it inducts all the City’s revenues and all its expenses, regardessof when cash changes hands. This dffers from the “modfied accrual” basis used in the Fund financial statements, which reflect only current assets, current liabilities, deferred outflows/lrflcws of resources, avai lable revenues and measurable expend tures.

Bah these Statements induct the financial activities of the City, Richmond Joint Powers Finance Authority, City a Richmond Housing Authority, Richmond Neighborhood Stabilization Caporation and Richmond Surplus Property Authority, which are legally separate but are component units of the City because they are control led by the City, which is financially accountable fa the activities a these entities The balances and the activities of the dscretely presented component units a the RHA Properties, RHA Housing Capaalion and RHA RAD LLC are inducted in these Statements as separate columns

19

CITY OF RICHMOND STATEMENT OF NET POSITION

JUNE 30, 2016

Primary Govanmat

Govanrrental Business-TypeActivities Activities

ASSETSCash andinvestrrents (Ncte3|Restricted cash end investments (Note3|Receivables:

Accants, ndInterestGrantsDuefrcmdsvelcpe’INcte I6EI Loans (Notes 5and 1&|

Intand balances(Ncte4D)Prcperty hdd fcr resale (Ncte 31 Prqaaids, supplies, and other assets (Ncte 2C|Capital assets(Note6|:

Nondepreciable Depreciable net

Total Assds

DEFERRED OUTTLCWS OF RESOURCES Defaredoutflows rdatedtopeisicns (Notes 10and 11| Defared charcp on rdundng (N ote 2G|

Total Defared Outflows of Resources

LIABILITIESAccounts payable and accrued I iebilities I ntaest payable Refindade cfeposits U neamed revenue (Note 8|Derivative instrurrent at fair value-liability (Note 7) Corrpaisdedabsences (Note2D):

Due within cneyear Due in mere than cneyear

Claims liabilities (Ncte 14):Due within cneyear Due in mere than cneyear

L ong-tam cfebt (N cte 7):Due within cneyear Due in mere than cneyear

Net pension liability (Notes 10 and III:Due in mere than cneyear

NetOPEB obligation (Note 12):Due in mere than cneyear

Total Liabilities

DEFERRED INFLOWS OF RESOURCES Defared inflows related to pensions (Notes 10 and III

NET POSITION (Ncte9|Net irvestmait in capital assets Restrict edfor:

Capital projects Debt serviceHousing andredsvelcpmsnt Paisicn baiefitsCcrrmirity develcpmsnt projects

Total RestridedNdPcsition

Unrestricted (Deficit)Total NetPosition (Drficit)

$33,542,030 $25,066,04314,778,824 10,703,223

16,942,938 6137,69125,666 12,424

5,810,836 53,19111,221,743

42,315,6%23,815,753 (23,815,7531

665,139578,027

103,013,471 30,446,459216,806,867 143,678,600

458,295,247 203,503,621

22,609,247 936,0885,452,156

22,609,247 6,388,244

6,540,494 2,952,3873,466,568 3,239,825

524,938 333,39411,112,807 509,00040,847,992 12,182,683

6,660,018 90,1506,001,820 487,754

13,331,21326,072,016

10,319,252 38,101,574270,058,357 89,374,411

226,792,840 12,285,963

49,638,537

671,366,852 159,557,141

19,903,845 1.301.117

228,292,389 63,405,228

7,519,8037,827,246 9,008,038

41,475,2452,468,263

11,032,15070,322,707 9,008,038

(508,981,2991 (23 382,6591($210,366,203) $49,030,607

Seeacccmpartying notes to finanaal stdemaits

20

Total

Corrpcnait Units RHA

RHA Housing RHAProperties Ccrpcration RAD LLC

$58,608,073 $27,726254820(7

2308Q629 $25000003&090

5864,027 11,221,74342315696 $14,510,000

665139 578,027

133459,930 36Q 485467

661,798,868 _________ 250Q000 ___________ 27,726 ________ 14,510000

22 545 335 5452156

28,997,491

9,492881 34,1386706,393

858,332 11,621,807 5203Q675

675QI686489,574

12331,21326072016

48.42Q826 2 50Q000359,432 768

239,078803

49,638537 __________________ _________________

83Q 922993 _________ 250Q000 ___________ 34,138

21,207,962

291,697,617

7,519,8031683528441,4752452468263

11,03215079,33Q745

(532 363958) (6412) I4,5IQ000($161,335 5961 ($6412) $14,510000

21

CITY OF RICHMOND STATEM ENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2016

Functi onsfrogetrs ExpensesCharges fo

Servi ces

Progam Revenues Operati ng

G rants andCotntri fcuti cns

CaptalGrants and

Ccntri butionsPrimary Co/a nment

Go/anmental ActivitiesGenaal go/anrtent $32,197,941 $12,468525 $1,622,511 $1,422,321Pudicsafay 107,380,285 7,271,472 1,179,132 333,294Pudicwoks 44,410,102 3,936242 3,815,169 14,753,332Corrmunity development 5,003,045 1,069,767 13,275,128Cultural and recreai cnal 11,021,226 1,128267 902,594Hous ng and reda/el cprrent l ntaest cn 1 angtem debt

2,051,89818,902,831

42,00 260,600 1,026045

Taal Go/anmental Aaivities 220,967,329 25,916313 2 6 994,534 17,534,992

B usi ness-type AaivitiesRichmond Hcusi ngAuthaityPatofRidnimondRichmondManna

26,385,13311,132,997

237,129

1,851,33710,581,419

517,166

21,951,328 1,354,233

Mumopal SaverStom SaverCatleTV

16,446,6262,465,9292,114,436

19,757,8631,9665371,320,485

801,453

Taal Eusiness-typeAaivities 58,782,250 35,994,750 21,951,328 2,155,635

Taal Prirrery Go/anment $279,749,579 $61,911,063 $42,945,852 $19696678

Component UnitsRHA PropertiesR HA H aisi ng Coporati cn $173,079 $166667RHA RAD LLC

Geneal ra/enues Taxes

Prcperty taxes-curremt cd lections Seles taxes Utility user taxes Documentary transfer taxes Other taxes

U nrestn cted i ntergo/ernmental U se of money and property Pens on stabi 11 zati on revenue Canfromsaleofcaptal assas Otha

Transfers, na (Noe 4)Special items

Swaptem nation (Noe 7A)A ssas transferred frcmSuccesso A gency (Noe 66)Transfa of captal assastoRHA RAD LLC (Noes 66 and 16L)

Taal geneal ra/enues, transfers and special iters

Changein Na Pcstion

Net Position (Deficit)-6eginning

Net Position (Deficit)-Ending

Seeaccorpanyingnaestoflnanoal staements

22

Net (Expense) Ra/enue and Changes in Na Position

PnmaryGo/em merit

Go/enmental Busi ness-typeAaiviti es Aaivities Taal

($16664,584) ($16664,584)(98 596386) (98 596386)(21,905,359) (21,905,359)

9341,850 9341,850(8996365) (8996365)

(783,813) (783,813)(18902, SI) (18902, SI)

(156521,490) (156521,490)

($1,228235) (1,228235)(551,578) (551,578)279979 279979

4,112,690 4,112,690(499392) (499392)(793,950) (793,950)

1,319514 1,319514

(156521,490) 1,319514 (1 55,201,976)

RHA Properties

CcmpcnentUnitsRHA

Hcusi ng Corpoaicn

RHARAD LLC

($6,412)

51,302,638 51,302,63846 877,125 46 877,12543,365,249 43,365,2496187,096 6187,0965,734,802 5,734,802

43,312 43,3121,196,266 (3,076857) (1,878591)

915,850 915,860262,667 262,667

4,258,061 4,258061600,000 (606OX)

(16321,171) (16321,171)14,968712

(14,516000)14,968712

(14,516000) $14,510, OX

153,392,617 (18,186857) 135,205,760 14,516000

(3,128,873) (16,857,343) (19938216) (6412) 14,516000

(207,237,330) 65,897,950 (141,339380)

($216366203) $49,036607 ($161,335,596) ($6412) $14,516000

23



FUND FINANCIAL STATEMENTS

Major funds are defined generally as having sigiifi cant activities or balances inthecurrentyear.

The funds ctescrifced belcw were determined to fce Maja Funds by the City in fiscal 2016. Indvidual non-rrajorfunds may befoundintheSupplemental seztion.

GENERAL FUND

The General Fund is used for all the general revenues of the City not specifically levied or collected fa other City funds and the related ©cpendtures. TheCeneral Fund accounts fa all financial resources of a governmental initwhicharenctaccountedfainanotherfund

COST RECOVERY SPECIAL REVENUE FUND

The Cost Recovery Special Revenue Fund recads the receipt and use of monies fa services provided to the pud i c and devel opers.

COMMUNITY DEVELOPMENT AND LOAN PROGRAMS FUND

The Community Development and Loan Progams Special Revenue Find accounts fa the receipt cf Community Development Block Grant, HOME Investment Partnership Progarn and Neicfibahcod Stadlization Progam gant monies and the use of the gants. The Fund also accounts fa the lew and moderate income housing activities of the City as Housing Successa to the farrer Redevelopment Agency, and activities related to the City’s loan from the Califania Department of Toxic Substances Control fa the Miraflaes Rerredation projezt. The gants and lean progams are to be used to provide, within the City of Richmond rev affaefede housing improve existing housing condtions, assist homeless and dsaded with housing and to expand economic opportunities in business, andemplcyment fa lew and moderate income residents.

ENVIRONMENTAL AND COMMUNITY INVESTMENT AGREEMENT (ECIA) SPECIAL REVENUE FUND

The Environmental and Community I nvestment Ageement (ECIA) Spezial Revenue Fund accounts fa fundng received from Chevron in conjunction with the Chevron Modernization Project Environmental and Community Investment Ageement to fund various projezts and progams within the City of Richmond

CIVICCENTER DEBT SERVICE FUND

The Civic Center Debt Service Fund accants fa principal and interest payments on the Civic Center project Lease Revenue Bonds

25

CITY OF RICHMOND GOVERNMENTAL FUNDS

BALANCE SHEET JUNE 30, 2016

GeneralCost

Recovery

Commnlty Development

and Loan Programs

EnvironmentalandCommnity

InvestmentAgreement

CivicCenter Debt Service

ASSETS

Cash and investments (Nae 3)Reariaedcash and investments (Nae 3) Received es

A ccounts, nal ntereaGrantsLoans(Nae5)

Due fran aher funds (Nae 4A)Prcperty hel d fa resd e (Nae 21)Advances to aher funds (N ae 4B)Prepaids, supplies and aher assas

$5,903,610

11,873,9935,384

5183143,829,481

119,442

14,483,730577,477

$1,836,489

3,141,455

$3,301,288

98323898

535 229 37,040,831

665,139174,067

$11,114,503$940,048

Tad Assas $37,305,431 $4,977,944 $41,816775 $11,114,503 $940,048

LIABILITIES

Accounts payed e and accrued 11 ad 11ti es RefundadedepcstsDue to aha funds (Nae 4A)Uneaned revenue (N ae 8)

$2,775,74875,023

4,299,385

$1,667,973449,915

7,393,5261,513,086

$332,042

1,455,7109750

$82,353

$1,453,8423,113,580

Tad Liabilities 7,150,157 11,024,500 1,797,502 82,353 4,567,422

DEFERRED INFLOWS OF RESOURCES

Unava 1 ad e revenue (Nae 8) 757,879 3,231,766 15,872,103

FUND BALANCES (Note 9)

NaispendadeReari aedAsa gnedUnassi gned

18404,669

4,46010,988266 (9,278,322)

24,147,170 11,032,1 50

(3,627,374)

Tad FundBdances 29,397,395 (9,278,322) 24,147,170 11,032,1 50 (3,627,374)

Tad Liabilities, Deferredlnflavsof Resources and Fund B dances $37,305,431 $4,977,944 $41,818775 $11,114,503 $940,048

Seeatcarpanyingnaestofinanaal staements

26

Other TotalGovernmental Governmental

Finds Finds

$8413,209 $25,428 32210,537,488 14,778824

2,690,91 7 184997225,013 11,295

1,614,838 5,810836895,384 41,765,696

119442665,139

14,654,797550 578027

$24,157,399 $120312,100

$1,442,645 $6300761524,938

2,005,33 8 12,308416887,766 9 823,568

4,335,749 28957,683

1,735,043 21,596 791

55018 572,927

431,857 (918,737)

18405,21953,752,247

436327(2,836167)

18036607 69757,626

$24,157,399 $120312,100

27

CITY OF RICHMOND Reconciliation of the

GOVERNMENTAL FUNDS -BALANCE SHEET with the

STATEMENT OF NET POSITION JUNE 30, 2016

Total fund balances reparted on the governmental funds balancesheel

Amounts reparted for Gcvernrrental Activities intheStaterrentof Net Pcsitionare different from these reparted i n theGcvernmental F unefe above because of the fd lewi ng:

CAPITAL ASSETSCapital assets used in Gcvernrrental Activities are not current assets or financial resources and

therefore are not reportedin theGcvernmental Funds.

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION I nternal sendee funds are not gcvernrrental funds. However, the/ are used tv management to

charge the ccsts of certain activities, such as insuranceand central sen/ices and maintenance to individual gcvernrrental funds. The net current pcsition of the I nternal Service Funds are therefere included in Gcvernrrental Activities in the fdlcwing line items intheStaterrentof Net Pcsition.

Cash and investments Accounts receivable Interest receivable Loans receivable Due from dher funds Advances to dher fundsAccounts payable, accrued liabilities and interest payable Due to dher funds Compensated absences U nearned revenue Claims payable

ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES Revenues which are unavailable on the Fund Balance Sheets because the/ arendavailablecurrently

are taken into revenue in theStatement of Activities.

LONGTERM ASSETS AND LIABILITIESThe assets and liabilities belcw are nd due and payable in thecurrent period and therefore are nd

reported i n the F unds:Interest payable Long-term debtDerivative instrument at fair value—liabilityNet pension liability and deferred outflows/lnflcws related to pensionsNetOPEB obligationGovernmental activities portion of compensated absences

NET POSITION OF GOVERNMENTAL ACTIVITIES

See accompanying rates to financial statements

28

$69,757,626

319,820,338

This Page Left Intentionally Blank8113,708

443,21614,371

550,00020,524,924

2,213,421(239,733)

(1,388415)(230,682)

(1,289,239)(39,403,229)

21,5%,791

(3,466,568)(280,377,609)

(40,847,992)(224,087,438)(49,638537)(12,431,156)

($210,366,203)

CITY OF RICHMOND GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDEDJUNE 30, 2016

GeneralCost

Recovery

Commrilty Development

aid Loan Proqrams

Environmental and Commrilty

Investment Aqreement

ClvicCenter Debt Service

REVENUESProperty taxes $33,232,037Sales taxes 40,877,125Utility user taxes 43,365,249Other taxes 11,628,519Licenses, permits and fees 2,542,704 $7,648737 $892,767Fines, forfeitures and penalties 398096 481,926U se of money and property 35,493 129185 $1,346l ntergo/ernmental 1,954,943 1,126115 1,018142Private gents $12,971,138Charges for servi ces 8,284,694 2,379,273 2,569,384Pens on stabi 11 zati on revenueRent 765,753Other 353,991 2,188172 1,062,155

Total Revenues 143,438606 13,824,223 3,102,249 12,971,138 2,570,730

EXPENDITURESCurrent

General cp/emment 22,371,710 8923,282 847,166Pudicsafoy 85,859,602 5,010,804 411,944Pudicworks 17,899,366 3,119,134 105,548Ccmminity development 25,743 444,438Cultural and recreati cnal 9,952,449 129890Haisi ng and reds/el cpmerit 2,742,753

Captal outlay 404,053 3,228497D ett servi ce

Pnnopel 1,079,062 1,635,5451 merest and fi seal charges 318574 6636,967Swap termi nati on payment 28554,000

Taal Expendtures 138,864,816 18279,717 2,768496 1,938966 36 877,512

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES 4,553,790 (4,455,494) 333,753 11,032,150 (34,306,782)

OTHER FINANCING SOURCES (USES)issuance of deb: (Note 7) 28390,000B end i ssuanoe prem um 1,393,619Proceeds from sal e of property 45429 10512Transfers in (Note 4C) 3,090,044 3,823,807 147,593 1,235,584Transfers (cut) (Note 4C) (6,974,604)

Taal Other Financing Sources (Uses) (3,838131) 3,823,807 158105 31,019,203

NET CHANCE IN FUND BALANCES 71 5,659 (631,667) 491,858 11,032,150 (3,287,579)

BEGINNING FUND BALANCES (DEFICITS) 28,661,736 (8648635) 23,655,312 (339,795)

ENDING FUND BALANCES (DEFICITS) $29,397,395 ($9278322) $24,147,170 $1 1,032,150 ($3,627,374)

See accompanying naes to financial statements

30

Other TotalGovernmental Governmental

Finds Finds

$19482,503 $52,714,54046 877,12543,365,24911,628519

1,151,275 12,235,48321,814 901,83848763 212,787

16341,343 14,44654312,971,138

228919 13,462,270915,850 915,850

3,OX 768753695,832 4,306150

32,867,309 208794,255

1,677,2092,492,1954,5686154,373,506

468996295,382

4,936013

31,81936994,774,54525,6X663

4,843,66716551,3373,0381358568563

63®,3025,547,XI

9148909 12,503,442 28554,OX

36741,121 2294X650

2,148186 (266X395)

205,7263,827,138

(5,116602)

283XOX 1,3X619

262,667 12,124,IX

(12,091.2X)

(1,0®, 738) 36079246

1,062,450 9382,851

17,024,157 66374,775

$18036607 $69757,626

31

CITY OF RICHMOND Reconciliation of the

NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS with the

STATEM ENT OF ACTIVITIES FOR THE YEAR ENDEDJUNE 30, 2016

The schedule below reccnoles the Net Change in Fund Balances reported cn theGo/emmentcl Funcb Staement of Revenue, Expendtures and Changes m Fund Balance, whidn measures only dnangesin current assas and current I labilities an the trod fiedacanucl teas, with the Change in Na Pcstionof Covenmental Aaivities reported in the Staement of Aaivitie, which ispreparedcn the full atauel teas.

NET CHANCE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS $9,382,851

Amounts reported for go/enmental activities in the Staement of Activities aredffeent because of the fd lowing

CAPITAL ASSETS TRANSACTIONS

Governmental Funcb include capital outlays in departmental expendtures. Howeva, in the Staement of Activities the cost of these assas is capitalized and allocated o/er ther estimaed useful lives and reported as deprecation expenseThe capital outlay expendtures ae therefore added task to fund balance 7,424,260Deprecation expense is deducted fromthe fund balance

(Deprecation expense is net of internal service fund depreciai on of$1,998,283 which has already been allowed to serviced funds) (19355,437

R ai remans of cap tal assets ae deducted fromthe fund tel ance (Retirements arena of internal service fund retirements of$11,175 which ha already been alIcoated to serviced funds) (16,120)

Capital contributions from da/el epes and the Successor Agency aeacdedto fund balance 10,410,645Transfers to l nt anal Services Funds are deducted from fund balance (264,695)A ssets transfered from Successor Agency are added to fund tel ance 14,968,712

LONG TERM DEBT PROCEEDS AND PAYMENTS

B and proceeds pro/i de current finanaal resources to cp/anmerntal funds, but issuing debt inaeases longterm I labilities in the Staement of Na Position.R epayment of bond princi pel isan expendturein the cpvanmerntal funds, but in the Staement of Na Position the repayment reduces Iengwm liabilities.

Repayment of delapn no pal is added beck to fund balance 21,381,738Captal appreciaicn bonds accretion is deducted from fund balance (4,895,850)intaea atonal son data: are deducted from fund balance (1,543,516)Proceeds from debt issuance is deducted from fund balance (28390,600)B end i ssuance prem um i s deducted from fund tel ance (1,393,619)

ACCRUAL OF NON-CURRENT ITEM S

The amounts below inducted in the Staement of Activities do na pro/idecr (require) the use of current finanaal resources and thaefore arena reported as re/enue or expenditures ingo/emmental funds (net change)

intereapeyatae 64,102Una/a I aide revenue 341,768Derivaiveinarument a far value — Natality SX.8S5Compensated absences 479,894Net pension liability and deferred outflows^ nflows related to pensions 6,743,950NetOPEB obligation (10,562,742)

ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY

internal Service Funds are used by management todnargethecoas of cenan activities, such a equipment acquisition, maintenance, and insurance to indvi dual funds.The pcrticn ofthena re/enue (expense) of these internal Service Funds arising out of their transacticnswith go/emmental funds is repented with go/ernmental activities,

because the/ service these activities.Change in Na Position -All internal Service Funds ________(8705,689)

CHANCE IN NET POSITION OF COVERNM ENTAL ACTIVITIES ($3,128,873)

See accompanying naes to financial statements

32


MAJOR PROPRIETARY FUNDS

Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise The intent of the City is that the cost of providng goods and services be financed primarily throuc^i user charges.

The concept of major funds established by CASB Statement 34 ettenefe to Proprietary Funds. The City has identified the funds belcw as major proprietary funds i n fi seal 2016.

CASB 34 ctoes not provide for the dsdosure of budget vs actual comparisons recprdng proprietary funds that are major funds

RICHMOND HOUSING AUTHORITY

This fund accants fa al I funds provided by the Department of Housi ng and U rban Development (HUD) to assist lew income families in obtaining decent, safe and sanitary housing

PORT OF RICHMOND

This find accounts fa al I financial transactions relating to the City-owned marine terminal facilities and commercial property rentals.

MUNICIPAL SEWER

This find accounts fa all financial transactions relating to the City’s Wastewater Cdlection and Treatment Services are on a user charge basi s to residents and business owners located i n Richmond

33

CITY OF RICHMOND PROPRIETARY FUNDS

STATEMENT OF NETPOSITION JUNE 30, 2016

________________ B ua ness-type Agim ti es-Enteipri se Funds__________________ GcvernrrertalRidirrcnd ” ' Other Activities-Haisi ng Pat of MuniapS E nterpri se irternsl Seivice

Authairv Ridirrcnd Sever Funds Tads Funds

ASSETS

Currait asecC*h aid i rrvesonaits (Note 3) $770,g34 $20,771,320 $3,523,889 $25,050043 $§113,7C8Rstncred cash and

i rrvstrrerns (Note 3) 99,225 $9,CC€>038 1,595,960 10,703,223ReravahJes

Account, net 723,816 4,503,887 494,236 415,752 6,137,691 443,216Interest 10,669 1,755 12,424 14,371Crams 53,191 53,191Note (Note 3 550, COO

Duef nom other funds (Note 4A) 20,524,924Total current assas 1,647,065 13,511,925 22,872,185 3,941,396 41,972,572 29,645219

Noncurreit ssasReravahJes

Due from drvd oeer* 11,221,743 11,221,743Caoitd ssas (Note Q

Nondaxeci dole 2,69^684 4,937,160 22,812,615 30,445 4 59 245896Depreciable, net 18,469,455 50,025 535 71,615,422 3,565188 143,675600 4,715720

Advaices to otherfum± (Note 46) 901,396 167,451 1,035847 2,213,421

Total nnnrum*ira««ra 32,387,882 54,965695 9 5 329,433 3,732,639 185,415649 7,179,037

Totd Assets 34,034,948 65477,620 115201,618 7,674,035 228,385221 35825256

DEFERRED OUTFLOWS OF RESOURCES

Defer ad outflows rdaedto tensions (Note 1C) 4C§547 161,692 161,692 205157 935 088 249,814Deferred change on refund ng (Note 2Q 5452,156 5452,156

Totd Dderred outflows of rsourcs 4C§547 161,692 5613,848 205157 6,385244 249,814

LIABILITIES

CurrentliablitiesAccounts pa/dd e and accrued li da lies 260,216 311,021 2,171,923 209,227 2,952,387 239,551Interea pay dole 1,375244 1,748,777 114,804 3,239,825 182Dueto othe* funi± (Note4A) 2,122,080 2,990,374 1,® 5081 6,947,535 1,385415Refundable deposits 99,225 151,550 82,619 333,394Comeei sated abseics (Note2D) 27,280 62,870 90,150Claims p^dde (Note 14) 13,331,213Current portion of long-term ddx (Note 76) 2, SO, COO 35190,COO 81,574 38,101,574 353,378

Total current liablioes 2,5C§801 7,659,189 39,110,700 2,385175 51,664,865 15312,739

Noncurreit li da liesAdvances from other fun cfe (Note 4B) 1,242,914 14,480,730 2,213,421 17,937,065Comeei sated abseics (Note2D) 24^521 197,770 44,463 487,754 2 30,682U neamed rev eiue (Note ® 500, COO 9, COO 509,000 1,289,239Claims p^dde (Note 14) 25072,016Deivaivemsmimeit atfairvalue-liablitv (Note 76) 12,182,683 12,182,683Long-term ddoi; net (Note 76) 700,000 35524,875 49,447,963 2,701,553 89,374,411 180,754Na ceison liabhtv (Note 10) 5,959,465 1,931,755 1,931,755 2,462,988 12,285963 2,984,562

Total noncurreitliablitis 8,147,900 53,635130 63,615,884 7,377,962 132,775876 30,757,2S

Totd Lidoilms 10.656 701 61.294.319 102,726,584 9.764,137 184.441.741 45069.992


Deferred inflows rdaedto rensions(Ncte 1C) 632,579 205050 205,050 261,438 1,304,117 315802

NET POSITION (Note a

Net i rrvearrent in caoital assas 21,165139 24,615858 15838,170 782,061 63,405 2 28 4,431,484R strict ad for housing programsR stricted for debt servi ce 9,CC5038 9,CC5038Unrsorcted 1.985.076 (26485.953) 4 045.662 (2.927,444) (23,382,659) (13.743.2C8)

Total NetPosioon $23,152,2 1 5 $7,139,943 $20,833,832 ($2.145383) $49,030,607 ($9311.724)

S ee accorrparvi ng notes to fi nanci d stare mans

34

CITY OF RICHMOND PROPRIETARY FUNDS

STATEMENT OF REVENUES, EX PENSES AND CHANCES IN FU ND NET POSITION

FOR THE YEAR ENDEDJUNE 30,2016

B usiness-tvpe A ctivities-E ntetprise F nick Go/anrmtalRichmond Oder Activities-Hating Pat of Miricipal Enterprise Internal ServiceAuthaitv Richmond Sewer Finds Tctals Funck

OPERATING REVENUESRenal $1,022,893 $1,082893S ervi ce chergss $2,631,766 $19,757,953 $3)33,489 25,443,109 $23,856784Lease inccme 7,421,299 521,362 7,942,661Other 768,444 27,354 229,289 1,025/087

Total Operai ng Revenues 1,851,337 10/080,41 9 19,757,863 3,804,131 35,493,750 23,856,784

OPERATING EXPENSESSdanes aid benefits 5,240,455 6^4,471 1,155,854 1,773,520 8,854,310 8,325,103General end administrative 2,278,144 8,577,140 1,307,122 12,662,406 2,146,1 23Maintenance 1,803,621 1,778,31 2 5,197 3,587,150 579,251Depreciation 1,621,696 3,510/058 1,644,674 1/037,754 7,81 4,1 52 1,998,280Housing assist dice 17,719,361 17,719,361Cl d ms losses 20,485/068Other 3,928 369,479 74 373,481 9,687

Total Operai ng Expenses 26,385,133 8,264,913 11,752,354 4,618,470 51,020,870 33,543,512

0 perati ng I reeme (L os$i (24,533,796) 1,815,506 8/005,509 (814,339) (1 5,527,129) (9,686728)

NONOPERATING REVENUES (EXPENSES)Loss on rai rement of capital assets (11,1 75)1 merest 1 rcome 139 12,947 (3,104,8691 14,926 (3,076,857) 184,594Crams 21,951,328 21,951,328Sademems 501/000 501/0001 meres (expense (2,868,684) (4,694,273 (199)024) (7,761,389) (24,115)

Total Nonoperating Revenues (Expereeî 21,951,467 (2,354,137) (7,799,141) (184)098) 11,614/091 149,304

l reeme (Lcsî BefbreCcrtribuiorsaidTraisfers (2,582,329 (538,631) 206,368 (998,437) (3,913)929) (9,537,424)

CaptaJ ccntribuions/g'ans 1,354,233 301,453 2,155,685 264,695Trensfersm(Nc«:e 4G) 567/040Transfers on(Ncte 4G) (60QOC9O) (690099)

T otal Comn buo ens ard T ransfers 1,354,233 301,453 (890030) 1,555,685 S3! ,735

l reeme (Lcsî B efbre Speci al I terns (1,228)096) (538,631) 1/007,521 (1,598,437) (2,357,343) (8,705,689)

Special Item (Nccse6B erdl6L)Transfer of captel assets to R HA RAD LLC (14,510)009 (14,510099)

Change in net position (15,738)096) (538,631) 1/007,521 (1,598,437) (16 957,343) (8,705,689)

BEGINNING NET FOSITION (DEFICIT) 38,890,311 7,678,574 19,876,011 (546,946) 65,897,950 (896035)

ENDING NET FOSITION (DEFICIT) $23,1 52,215 $7,1 39,943 $20,883,832 ($2,145,383) $49,030,607 ($9,311,724)

See ecccmpartyi ng ncces to financial eraemerrcs

35

CITYOFRICHMOND PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30,2016

B us n ess-type A ctmties-E rater prise F unds Ccvemme ratalRida mo nd Other Acovioes-Hoisirg Port of Mini ci pal Eraterpnse Internal Service

Auhcritv Richmond Sewer Fuads Tctals FundsCASH FLOWS FROM OPERATING ACTIVITIES

Recei pcs frem customers $1,63D,0C6 $10283540 $19,327,850 $3814258 $©,05,693 $24015,231Paymertsto suppliers (22097,125) (3®62S6 (8552,500) (1,621,217) (©,287,141) K75Q41S)Paymertsto employees (2555,736) (506697) (934,143) (1,229,718 (5,716,294 (8 7©,624)Insurance premure end claims paid (1065,579)

CashFIcwsfromOperacrgAcovioes (23.062.SS6) 5380.544 9,791,24? 5633© (6.927.742 1,910,612

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES

Interfind receipts 1,3©,415Interfind payments 04539 (419,923 <714,452 (75,257)Receipts from edaer gevemmerts 21,58^ 194 21,5©, 194Saxlemert receipts 501,000 501,COOTrarsferscut (800 COO (600,008Trarsfersm 587,040

Cash Flovsfrcm NoncapitalFiranongAcovioes 21,588,194 206461 (1,019,9©) ©,774,732 1,202,1©

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES

Receipts from edaer gevernmerts 801,453 801,<S3Crart receipts 1,35423 1,354, ©3Acqusiocn of capital assets (545,321) (594?,787) 1 (6,454,107) (©,861)Principal payrrerts on capital debt (2.723 (2 200 OCO) (73053 (5,001,517) (342806)Interest pad (2,869,343) (4585 375) (©2244 (7,464, ©2 (24,231)

Cash Flovsfrcm Capital andRel ated F i ranci rg A covin es 807,912 (5592798 (11.739.7C9) (©Q©5) (16,804, ©8 (4C6.9C0)

CASH FLOWS FROM INVESTING ACTIVITIESInterest 139 855 75313 13171 ©,278 170,401

C ash F1 ov s frem 1 rave so rg A covio es 139 655 75,313 13171 ©.278 170.401

Net Cash FIoms (686611) (5158) (1,873,14?) (523734 (2,8©, ©2 2876311

Cash and iravesorerts at begimirg cf period 1,536670 9,013176 24240429 3,847,623 ©,637, ©8 5237,397

Cash and iravesorerts at end cf pen cd $870059 $9.008088 $22 367.280 ©.523 ©9 $3S7©.2© $81137©

Record li an on cf Opera rg 1 rcorre (LosS to Cash F lewsfrom Operai rg A covio es

Operaong mccrre (Ics9 ($24 533,756) $1,815506 $8 006,509 ($814339 ($15,527,128 ($9,6©7©)Acjusorentsto reconcile opera rg income

to cash fl oms from eperaong acovioesDepreciaoon 1,621,656 3510058 1,644,674 1,©7,754 7,814,182 1,9©,2©Cam enseie of assets (151,740 (151,747)

Cheng* in assets aadliabi hoesRecavatde& ret 66275 133321 (438973) 10127 (2©, ©8 ©,973Prepa ds and edaer assets 39,301 ©,©1Accoints payable and accrued 1 lab hoes

and odier accried expenses 881,963 64086 359,316 185979 1,531,843 4,6<SRefundable depcsts (103518) 69,800 (©,718)Unearned revenue 9, OCO 9, COO 91,474Ccmpensated absences payeble 8833 18,078 13539 4D,<S0 (31,523)Claims payable 9,819,4©Net pens on liability and deferred cutflcws^rflcws

cf resouces (883030) (221,06$ 153643 ©0263 (4©, 183 (©1,956)

Cash FlcwsfrcmOperaong Acovioes ($23,062,856) $5380.544 $9,791,24? $5633© (©.927,742 $1,910,612

Non cashuarsacooreCharge mfairvalie cf irvesorert denvaove $12292 ($3150,6©) (©,178,©1)Arrorozaooncf d*ferred charge cn refuadng (wa (368020) (374, ©2Reorerrert of captal assets ($14368 255 ($11,175)Conjibuocnscf capital essets 264,6©Advance oansferred to lorg-termd*bt 700 oco

Seeacccrrtarwrigrcrcestofirarcial sraterrerts

36


FIDUCIARY FUNDS

Fiduciary funds are presented separately from the Gcvemment-wicte and Fund financial statements

Trust funds are used to account for assets held ty the City as a trustee agaat for indviduals, private organizations, cr ether governments

Agency funds are used to account for assets held ty the City as an acpnt for indviduals, private organizations, and other governments.

The financial activities of Trust and Agency finds are excluded from the City-wide financial statements, tut are presented in separate Fiduciary Fund financial statements.

37

CITY OF RICHMOND FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2016

PensionTrust Private-Purpose AgencyFinds Trust Finds Finds

ASSETS

Cash andinvestments(Nae3) $10,373,652 $5,582,170Restricted cash and investments (Nae 3) investment in reassessment tcnds(Ncte3)

29,026 789 9,656841 11,3 TO OX

Pension plan cashand investments (Nae TIC)City of Ridnmcnd Investment PadLasl Agency investment FundMutual Fundlnvestments

$2,581,820 173,059

11,121,486Accounts receivable 190,920 312,879interest receivableGrants receivableLeans receivable (Note 17B)Prepacts and ether assas

23,720 553 1,920,000 6765,678

2,741

Capital assets (Nae 17C)Ncndepreo able 62568X

Tctal Assas 13,876,367 58256396 $26,924,631

LIABILITIES

Accounts payable and accrued liabilitiesRefundable deposits payable l merest pay aid eDaivative instrument at far value -Natality (Noe 17D)

2,582,627

1,4964735,332,800

$321,1899,136795

Lcng-tam debt (Note 17D)Duewithin one yeaDue in more than one yea

D ue to assessment d stri a bancfnol das

6585,191104,596719

17,464,647

Tctal Liabilities 120897,810 $26,924,631

NET POSITI ON

Restricted for employees' pension benefitsHeld in trust fo aha go/anments

$13,876,367($62,641,412)

See accompanying naestofinancial statements

38

CITY OF RICHMOND FIDUCIARY FUNDS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2016

PensionTrust Private-PurposeFinds Trust Finds

ADDITIONS

Property taxes $19,953,198Li cases, permts and feesCcntri buti cns from the CityN a i investment i ncorne

$1,927,3 07200,000

Net increase (decrease) in the far value of iinvestments (391,236)l ntaest i ncorne 313,653 732,024l investment management fees

intago/ernmental ra/enue(84,719)

6474,204M i seel 1 aneais revenue 1,072,154

Tael Addticns 1,765,005 26 431,580

DEDUCTIONS

Community developmentPension benefits 3,854,874

15,509401

Payments in accedence with trust agreements 3,433,452Depreo aticn 6395l merest and fi seal dnarges 5,63961 7

Taal Deduoicns 3,854,874 24,590,855

Change in na position befoespeoal item (2,089,859) 3,840,715

SPECIAL ITEM

Assastransfaredtothe City (Noe 17C) (14,968,712)

Changein net position (2,089,869) (11,127,997)

NET POSITION (DEFICIT), BEGINNING OF YEAR 15,966236 (51,513,41 5)

NET POSITION (DEFICIT), END OF YEAR $13,876367 ($62,641,412)

See accompanying naestofinancial statements

39


CITY OF RICHMONDNOTES TO BASIC FINANCIAL STATEMENTS

Fa the Year Ended J uneSO, 2016

1 -ORGANIZATION AND DEFINITION OF REPORTING ENTITY

The City was incaporated in 1905 under the laws cf the State cf Califania and adapted its charter in 1909 The City operates under a Council4Manager form cf government and provides the fdlcwing services to its citizens as authaized ty its charter: police and fire protection, planning and comrunity development, streets and roads, parks and recreation, sewacp treatment, dainage and capital projects. In addtion, the City hasaport, marina, municipal and storm sever enterprises, a housing authority, ajoint powers financing authority, and a parking authority which is inactive

The accompanying basic financial statements present the financial activity cf the City, which istheprirrary government presented alongwith the financial activities of its component units, which are entities fa which theCity is financially accountable Althcuc^i they are separate legal entities, blenctedcompcnent units are in substance part cf the City’s operations and are reported as an illegal partcf theCity’sfinancial statements Thedscnaely presented component init, on the ether hand is reported in a separate colurm in the basic financial statements to emphasize it islegally separate from thegovemrrent

PRIMARY GOVERNMENT

The financial statements of the primary government of the City include the activities of theCity as well as the Richmond Housing Authority, the Richmond Joint Powers Financing Authaity, the Richmond Neic^iborhocd Stabilization Corporation, the Richmond Parking Authority and the Richmond Surplus Property Authority all of which are controlled ty and dependent cn theCity. While these are separate lecpl entities, their financial activities are integal to these of the City. Their financial activities have been aggegated and merged (termed “blencted’) with those of the primary government of the City in the accompanying financial statements.

BlendedComponent Units:

Richmond Housing Authaity (Housing Authaity) - Famed in 1941 as a separate lecpl entity under the provisions of the Housing Act of 1937, the Housing Authaity was established to use funds provided by the Department of Housing and Urban Development (HUD) to rehabilitate local cfeteriaated housing and to subsid ze I cw-i ncorre farri I i es i n cbtai ni ng decent, safe, and sani tary housi ng needs.

Although the Housing Authaity is a separate legal entity, it is an integal part of the City. The City exercises significant financial and management control over the Housing Authaity and members of City Council serve as the governi ng board cf theHousingAuthority. Thefinancial statements of the Housing Authaity are inducted in theCity’s basic financial statements as an enterprise fund Separate financial statements fa the Housing Authaity may be obtained by contacting the Richmond HousingAuthority, 33024thStreet, Richmond Califomia94804.

RichmondJ oint Powers Financing Authaity 0 PFA) -A jant exercise of powers authaity famed on December 1, 1989, by and between the City and the fairer Redevelopment Agency, the J PFA was created to assist theCity, the Redevelopment Agency, andaher local public agencies in financing and financing capital improvements and waking capital pursuant to the Marks-Roos Local Bond Pooling Act of 1985. TheJPFA is authaized to purchase obligations of theCity, Redevelopment Agency, and other local public agencies.

41



NOTE 1 -ORGANIZATION AND DEFINITION OF REPORTING ENTITY (Continued)

Although theJPFA is a separate legal entity, it is an integal part cf the City. The City exercises significant financial and management control ever theJPFA and the rrerrters of the City Coincil serve as the Beard of Directors. The operations of theJPFA are inducted in the City’s basic financial statements as a debt service fund Separate financial statements fa theJPFA trey be obtained by contacting the Office of Finance, City of Richrrond 450 Civic Center Plaza, Richrrond Califania 94801.

Richmond Neighborhood Stabilization Capaation (RNSC) - A California nonprofit public bendit Capaalion formed inj liy 2009 by the City and the former Rectevelopment Agency under the laws of the State of Califania The Capaalion was agjanized fa the purpose cf addnistering and operating the City’s Neighborhood Stabilization Prcgjam(NSP), which inducts purchasing cteveloping financing rehabilitating land banking and/a demolishing blighted properties and faedcsed a abandoned properties utilizingtheNSP fundsaaher public and private fund ng sources, and assisting the City and the Agjency in previdng affadable home ownership opportunities fa households of lew and moderate income by facilitating the financing necessary fa the sale and resale cf deed-restricted affadable ownership uni ts to lew and moderate income households at affadable costs, and other si mi lar functions.

The Corpaation is gpvemed by a board of drectors consisting of the City Managjer, the Finance Directa, and five other City and Housing Authority Directors. Although the RNSC is a separate legjal entity, it is an integral part of the City. The City exercises significant financial and rranagjement contrd ever the RNSC and members of the Board of Directas are appointed by City Council and City management has operational responsiblity fa the RNSC. The operations of the RNSC are inducted in the City’s basic financial statements as a special revenue fund Separate financial statements fa the RNSC may be obtained by contacting the Office of Finance, City of Richmond 450 Civic Center Plaza, Richmond Califomia94804.

Richmond Surplus Property Authaity - Formed to become the cwner of certain property ctedared surplus by the U.S. Government, the Authority is a separate legjal entity but it is an integral part of the

City. The City exercises significant financial and managjement contrd ever the Authaity and members of the City Council serve as the governing board of the Authaity. The Authaity was reactivated in fiscal year 2011 to facilitate certain Port of Richmondtransactions. Thefinancial activitiesof theAuthaity are indicted in the Port of Richmond Enterprise Find Separate financial statements are na issued fa the Authaity.

Richmond Parking Authaity (Parking Authaity) - Formed in 1975 pursuant to the previsions of Califania statutes fa the purpose of financing the construction of off-street parking facilities. Although the Parking Authority is a separate legjal entity, it is an integral part of the City. The City exercises significant financial and management contrd ever the Parking Authaity and members of the City Council serve as the governing board of the Parking Authaity. The Parking Authaity is inactive

42



NOTE 1 -ORGANIZATION AND DEFINITION OF REPORTING ENTITY (Continued)

B. DISCRETELY PRESENTED COMPONENT UNITS

RHA Properties - A jant powers agreement between the City and the Housing Authority famed in 2004 fa the purpose of cwri ng and rranag ng the operations cf an affadable housing residential complex known asTheHilitcpatWestridgeApartments in theCity, cfed cated to the needs of elderly persons. The City and

the Housing Authority functed the acqjisiticn of this complex through the issuance cf debt TheCity and Housing Authaity exercise significant financial and management contrd ever RHA Properties and appdnt members of the Board of Directors, hcweverRHA Properties manages its cwn programs separate from the City a the Housing Authority. Therdote, the financial activities of RHA Properties are dsetetely presented in the RHA Properties Component Unit cdum of the Statement of Net Position and theStatement of Activities

RHA Housing Capaation- RHA HousingCaporation was ircapaatedand registeredonjanuary 26, 2004 as a California nonprofit public benefit caporation to benefit and si£port the RHA with respeztto the Easter Hill development. RHA Housing Caporation entered into RAD Conversion rectevelopment activities and it acts as the sde and managng member of RHA RAD LLC. The Corpaation's fiscal year ends on December 31, 2016. The City and Housing Authaity exercise significant financial and management contrd ever RHA Housing Caporation and appdnt members of the Board of Directors, however RHA Housing Caporation rranagjes its cwn programs separate from the City a the Housing Authaity. Therefore, thefinancial activities cf RHA Housing Corporation aredscretely presented in the RHA Housing Corporation Component U nit cdurm of theStatement of Net Paiticn and the Statement of Activities. Separate financial statements fa RHA Housing Corpaaticn may be obtained by contacting theRichmondHousingAuthority, 33024thStreet, Richmond Califaria94804.

RHA RAD LLC -A California limited liability company was famed onj uly 11, 2013 by RHA Housing Capaalion, the sde and managng member. The Company is operated exclusively to further the tax exempt charitable pirposes of the sde and managng member to prcvicte affadable housing fa Icw- incorre persons where no adequate housing exists fa such persons, and to cwn and operate housing fa the benefit of lew-i ncome persons who are in need of affadable decent, safe and sanitary housing and related services, where an inadequate supply of housing exists fa such persons. The City and Housing Authaity exercise significant financial and management contrd ever RHA RAD LLC and RHA Housing Capaalion is the sde member of RHA RAD LLC, hcweverRHA RAD LLC managjes its cwn progams separate from the City a the Housing Authority. Therefore, thefinancial activitiesof RHA RAD LLC are dscretely presented in the RHA RAD LLC Component Unit cdurm cf theStatement cf Net Position and the Statement of Activities Separate financial statements fa RHA RAD LLC may be obtained by contacting theRichmond Housing Authaity, 330 24* StreS, Richmond Califania 94804.

I nacter fa theAuthaity to proceed in its participation into the RAD Progam as dscussed in Note 16L, RHA RAD LLC shall actasthemanagnggjeneral partner of RHA RAD Housing Partnership LP.

43



NOTE 2-SUMMARY OF SICNIFICANT ACCOUNTINC POLICIES

The basic financial statements of the City of Richmond have teen prepared inconfarrity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted stancterd setting body fa establishing governmental accounting and financial repotting principles. The City’s sigrificant accounting policies are described telcw.

A. Basisof AccountingandMeasurerrentFccus

The accants of the City are aganized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted fa in a separate set of self-balancing accounts that comprise its assets, liabilities, deferred outflcws/inflcws of resources, fund eqiity, revenues, and expendtures a expenses. City resources are allocated to and accounted fa in indvidual finds based upon the purpose fa which they are to be spent and the means by which spendng activities arecontrdled

Government-Wide Financial Statements - The Govemment-Wicte Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities fa the City accompanied by a total column. Governmental activities Generally are financed throuc^i taxes, intergovernmental revenues, and aha non-e<chang transactions Business-typeactivitiesarefinarcedinwholea in part by fees charged to extanal parties Fiduciary activities a the City are net included in these statements; they are presented separately.

The Statement of Activities presents a comparison between drezt expenses and progam revenues fa each segrentathe business-typeactivitiesatheCity and fa each function a the City’s govanmental activities Direct expenses are those that are specifically associated with a pregam a function and thadote, are clearly identifiable to a particular finction. Progam revenues induct (a) charges paid by the recipients of gods a services afaed by the progams, (b) gants and contributions that are restricted to mating the opaational needs of a particular progam and (c) fas, gants and contributions that are restridedtofinancingtheacqusitionaconstructicnacapital assets. Revenues that arena classified as progam revenues, indudngall taxes, are presented as gneral revenues

The Government-wide financial statements are presented on an “ economic resources” measurement faus and the accrual basis of accounting Accadn^y, all of the City’s assets, cteferred outflcws/inflcws a resources and liabilities, inducing capital assets as well as infrastructire assets and long-tam liabilities, are inducted in the Statement a Net Position The Statement a Activities presents all the City’s revenues, expenses and aha changs in Net Position. Uncter the accrual basis of accounting revenues are reccgiized in the period in which they are earned while expenses are recogiized in the period in which the liability is incurred

All intanal balances in the Statement of Net Position have been eliminated except these representing balances between the gxanmental activities and the business-type activities, which are presented as internal balances and eliminated in the total cdimn. IntheStatementaActivities, intanal service find transactions have been eliminated Hcweva, transactions betweoi gxanmental and business-type activi ti es have na ban el i mi rated

44



NOTE 2-SUMMARY OF SIGNI FICANT ACCOUNTI NG POLICl ES (Continued)

Govanmental Fund Financial Statements - Governmental Fund Financial Statements include a Balance Shea and a Statement of Revenues, Expendtures and Changes in Fund Balances fa all maja govanmental funds and in the aggegale fa all non-maja funds. An accompanying schedule is presented to reconcile and explain thedffaences in ret position as presented in these statements to the ret position presented in the Govemment-Wicte financial statements.

All govanmental funds are accounted fa on the “cirrent financial resources” measurement faus and the modfied accrual basis of accounting Acordnc^y, only current assets and current liabilities are indicted on the Balance Shots The Statement of Revenues, Expendtures and Changes in Fund Balances presents i ncreases (revenues and aha financing soirees) and decreases (expendtures and otha fi nanci ng uses) i n na current assas.

Uncter the modfied accrual basis of accounting revenues are reccgiized in the accounting period in which they become bah measurable and available to finance expendtires of the current paiod Accadn^y, revenues are recaded when received such as business licenses and fines and penalties in cash, except that revenues subject to accrual (generally sixty days afta the fiscal year-end) are recogiized when due The primary revenue sources which have been treated as susceptible to accrual by the City are properly taxes, sales taxes, transient acupancy taxes, franchise taxes, certain otha intagxanmental revenues, and earnings on investments. Expendtures are raacted in the accounting period in which the related fund liability is incurredalsogoiaally sixty days afta the fiscal year end

Reconciliations of the Fund Financial Statements to the Govanment-Wicte Financial Statements are provicted to explai n the d fferences between the two approaches.

Proprietary Fund Financial Statements-Proprietary Fund Financial Statements include a Statement of Na Position, a Statement of Revenues, Expenses and Changs in Fund Na Position, and a Statement of Cash Flews fa each maja proprietary fund and in the aggegale fa all non-maja funds. A column representing intanal service funds is also presented in these statements Hcweva, intanal service balances and activities have been combined with the govanmental activities in the Govemment-Wicte Financial Statements

Proprietary funds are accounted fa using the” economic resource ’̂ measurement faus and the accrual basis a accounting Accadmjy, all assets, liabilities and cfefared outflcws/inflcws a resources (whaha current a non-cirrent) are inducted on the Statement of Na Position. The Statement of Revenues, Expenses and Changes in Fund Na Position presents increases (revenues) and decreases (expenses) i n total na position.

Uncter the accrual basis a accounting revenues are recogiiaed in the paied in which they are earned while expenses are recogiized in the period in which the liability is incurred regardess a when cash charges hands.

Operating revenues in the proprietary fund; are those revenues that are gnerated from the primary opaationsef thefund All otha revenues are reported as non-opaating revenues. Operating expenses are those expenses that are essential to the primary opaations of the fund All aha expenses are reported as non-operati ng expenses

45



NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICl ES (Continued)

Fiduciary Fund Financial Statements and Statement cf Changes in Net Positioi - Fiduciary Find Financial Statements induct a Statement of Fidiciary Net Position, and a Statement of Changes in Fiduciary Net Position. The City’s Fiduciary funds represent Pension Trust funds, Private-PurposeTrust funds and Agency funds. Agency funds are custodal in nature (assets eqial liabilities) and do not involve measurement of results of operations. Pension Trust funds and Private-PurposeTrust finds are accounted fa on an economic resources measirement focus under the accrual tasi s cf account] ng

B. Maja Funds

Maja funds are defined as funds that have either assets, liabilities, revenues a expendtures/expenses equal to ten percent of their fund-type total and five percent of the gand total. The General Fund is always a maja fund TheCity may al so select aher funds it be! ieves should be presented as maja funds.

The City reported the foil owing maja governmental funds in the accompanying financial statements:

General Fund - The General Find is used fa all the general revenues of the City na specifically levied a collected fa aher City funds and the related expendtures. The General Fund accounts fa all financial resources cf a governmental unit which are na accanted fa in anaherfund

Cost Recovery Special Revenue Fund - The Cost Recovery Spezial Revenue Fund recads the recei pt and use cf monies fa services provi ded to the pud i c and devel cpers

Community Development and Loan Progams Special Revenue Fund - The Community Development and Loan Progams Special Revenue Fund accounts fa the receipt a Community Development Blak Grant, HOME Investment Partnership Progarn and Neic^ibahood Stadl izaflon Progam gant monies and the use a the gants The Find al so accants fa the lew and moderate income housing activities cf the City as Housing Successa to the former Recfevelopment Agency, and activities related to the City’s loan from the California Department a Toxic Sinstances Control fa the Miraflaes Remedalion projezt. The gants and lean progams are to be used to provicte, within the City cf Richmond nav affadade housing improve existing housing condticns, assist homeless and dsaded with housing and to expand ezonorric opportunities in business, and employment fa lew and moderate income residents

Environmental and Community Investment Ageement Special Revenue Fund - The Environmental and Community Investment Ageement Special Revenue Fund accounts fa fundng received from Chevron in conjinction with the Chevron Modernization Project Environmental and Community Investment Ageement to fund various projects and progams within the City cf Richmond

Civic Center Debt Service Fund - The Civic Center Debt Service Fund accounts fa principal and i ntenest payments on the Civic Center project Lease Revenue Bonds.

46


Fa the Year E tided J uneSO, 2016


The City reported the fd lewi ng maja enterpri se funds i n the accompanying fi nancial statements:

Richmond Housing A uthaity - Thisfundaccountsfaall funds provicted by the Department cf Housing and Urban Development (HUD) to assist lew income families in obtaining cfecent, safe and sanitary housing

Pat a Richmond - This fund accounts fa all financial transactions relating to the City-cwned marine terminal facilities and commercial property rentals.

Municipal Saver - This fund accounts fa all financial transactions relating to the City’s Wastavater Cdlection and Treatment Services are on a user charge basis to residents and business owners laaled in Richmond

The City al so reports the fd I ewi ng fund types:

Internal Service Funds. The funds account fa insurance reserves, eqjipment services and replacement and pdice telecommunications, all cf which are provided to aher departments on a cost-rei mbursement basis.

Trust Funds. The Pension Trust Funds account fa assets held by the City as an Agent fa various functions. The General Pension, Pdice and Fireman’s and Garfield Pension Funds account fa the accumulation cf resources to be used fa retiree pension payments at appropriate amounts and times in the future. The Pt. Mdale Private-PurposeTrust Fund is used to account fa assets held ty the City as an agntfathe U.S. Navy and a private cfeveloper fa the cleanup cf Pant Mdateas dscussed in Note 16H. The Successa Agency to the Richmond Corrmmity Redevelopment Agncy Private-PurposeTrust Fund was established as a February 1, 2012 to account fa the activities cf the Successa Agency to the former Richmond Corrmmity Redevelopment Agency as dscussed in Note 17. The financial activities cf the Trust Funds are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements.

Agency Funds. These finds are used to account fa assets held ty the City as an agnt fa indvidials, private agarizations, and other governments, inditing spezial assessment dstricts within the City and non-public aganizations The financial activities of these funds are excluded from the gzvemment-wicte financial statement but are presented in separate Fidiciary Fund financial statements.

47




C. PrepaidsandSupplies

Certain payments to vencbrs reflezt costs applicable to future fiscal years and are recorcted as prepaid items i n bah government-wide and fund fi nancial statements. The cost cf prepaid items i s rezacfed as e<pendturesYxpenses when consurred rather than when purchased Prepaid items in governmental finds are equally offset by nonspendable find balance which irdcates that they do na constitute avai I aid e sperdald e resources even thouc^i they are a ccmponent cf net current assets.

Supplies are valued at cost using the weighted average method Supplies of the governmental funds consist of expendable supplies held fa consumption. The cost is recaded as an expendture in the governmental funds at the time indvidual inventory items are cammed rather than when purchased Reported governmental fund inventaies are equally offset by nonspendable fund balance which irdcates that they do na constitute avai lable sperdaide resources even thouc^i they are a component cf net current assets.

D. Compensated Absences

Compensated absences comprise unused vacation and certain aher compensated time off, which are accrued and charged to e<penseas earned Governmental funds include only amounts that have matured while their long-term liabilities are recaded in the Statement cf Net Position.

Changes in compensated absence I iabil ities fa the fi seal year were as follows:

GovernmentalActivities

Business-TypeActivities Total

Beginning Balance AdditionsPayments

$13,173,25532,934,122

(33,445,539)

$536,426672,627

(631,149)

$13,709,68133,606,749

(34,076,688)

Ending Balance $12,661,838 $577,904 $13,239,742

Current Portion $6,660,018 $90,150 $6,750,168

The long-term portion a governmental activities compensated absences is liquidated primarily by the General Fund Compensated absences fa business-type activities are liquidated by the fund that has recacfedtheliablity.

48




E. PropertyTaxLevy, Collection andMaximumRates

The State cf Califania’s Constitution limits the combined maximum property tax rale on any gven property to one percent cf its assessed value except fa vaer approved incremental property taxes Assessed value equals purchase price and may be adjusted by no mote than two percent per year unless the property is modfied, sold a transferred The State Leg slaturedstributes property tax rezeipts from among the counties, cities, school dstricts, and other dstricts.

Contra Costa County assesses properties and bl Is fa and col lects property taxes as fd lews:

Secuied____________________________ UnsecuiedValuation/liendales January 1 March 1Levied dales Julyl JulylDue dales 5CP6 on November 1 Julyl

5CP6 on February 1Delinquentasa Dezember 10(fa November) August 31

April 10 (fa February)

TheternV'unsecured’ refers to taxes on personal property other than landamd bui Icings. Thesetaxesare sezured by liens on the property being taxed Property taxes levied are recaded as revenue in the fiscal year a levy.

F. Expendtures in Excess cf Appropriations

Thefdlcwing funds incurred departmental expendtures in excess a appropriations.

_______________________ Furri/Department

General FundGeneral Government DebtService-Prircipal

Cost Recovery Special Revenue Fund Public Safety

Environmental and Corrmunty Investment AgreementSpecial RevenueFund

PublicWorksCivic Center Debt Service Fund

I merest and fiscal charges Swap term nation payment

ParatransitOperationsSpecial RevenueFind General Government

Public Safety Special RevenueFund Public Safety

ExzessofExperditires

OverAppropriations

$1,574,32331,077

419,255

16,715

212,8621,497,954

288,554

158,902

49




C. DeferredOutflcws/I nflcws of Resources

In addtiai to assets, the statenent cf financial pcsitiai a balance shod. repot a separate section fa cfefared outflows of resources. this separate financial statement element, cfeferredcutflcvvscfrescurces, represents a consumption of net position that applies to a future period^) and so will rot be recogiized as an outflow cf resources (expaise/expenclturc) until then. The City fas ate item that qualifies fa report]ng iri this category, tire cfeferred charge at refundng repatad in the statement of net position. A cfefaied charge at rcfundng results from the dffaere in the canyirtg value cf refunded cfebt and its reacquisition price This amount is cfcfared and amortized ever the shorter of the life cf the refunded a rdaindngctefcl. TheCity also has cfefaredaitflavscf resources related to pensions as dscussed in Notes lOandll.

In addtion to lialdlities, the statement a' financial positiat a balance sheet repat a separate section fa cfeferred inflows cf resairces. This separate financial statement element, cfcferred inflows of resources, represents an acquisition of na position a fund balance that applies to a future periods) and so will not be recogiized as an inf lav cf resairces (revalue) until that time The City has ate items, which arises only unefcr a modified accrual basis cf attainting, which qualifies fa reporting in this category. Accord ncjy, the item, unavailable revenue is only reported in the governmental funds balance sheet. The governmental funds repat unavailable revenues from three sources: leans receivable, gants receivable and interest at interfurd advances. See Note 8 fa- further dscussion. The City also has cfcferred inflows of resources related to pensions as dscussed in Notes 10 and 11. These amounts are cfcferred and recogii ted as an i rf lew of resources i n the pai cd that the amounts become avai i able

H. Bondi ssuanceCcats, Orignal I ssueDiscountsand Premiums andDdfemedChargon Refund ng

Fa proprietary fund types, bond premiums and dscoints are cfeferred and amortized ova the life cf the bads using the effective interest method Bonds payableare reported net tof theapplicable bond pterriuma dscourt. Any dffaences between proprietary refunded cfebt and the cfebt issued to refund it, called a cfcfared charge on refundng is amortized ova the remaining life of eitha the refunded debt a the rdxindngcfefct, whichever is shorter. The cfcferred charg on refundng is reported as a cfeferred inflow a outflow of resources, as applicable Bond issuance costs, otha than prepaid insurance are e<pensed in theyearircurred

I. Property Held fa Resale

Property held fa resale is accounted fa at the Iowa of cc6t a net realizable value a ageed upon sales price if adsposition ageement has been made with actevelopa.

TheCity received five properties fa resale in fiscal year 2013 with a book value of $573,822 from the acceptance of a cfeed in lieu of faeclosure on the property related to ctevelopa defaults on pria loans unefcr the Richmond Neighborhood Stabilization loan progam dscussed in Note 5. These properties wae rehabilitated during fiscal years 2014 and 2015 increasing the carrying value by a total of $749,716 and $39,303, respectively. In fiscal year 2014, the City received an addtional four properties with a carrying value of $648,238 Six properties have beat sold as of J une 30, 2016, the remaining three preperti es he! d fa resal e had a Ixok val ue of $665,139 as of that date

50




J. FairValueMeasurements

Fair value is defined as the price that would be received to sell an asset a paidtotransfa a liability in an acfcrly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hiaarchy established by generally accepted accounting principles. The fair value hiaarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets fa identical assets a liabilities.

Level 2 inputs are inputs - otha than quoted prices inducted within level 1 - that are observable fa an asset a liability, either drectly a indrectly.

Level 3 i nputs are inobsetvable inputs fa an asset a liability.

If the fair val ueof an asset a liability is measured using inputs from more than cne I eve! of the fair value hiaarchy, the measurement is considered to be based on the lowest priority level input that is significant to the enti re measurement.

K. U se of E sti mates

The preparation of financial statements in corformity with generally accepted accounting principles (GAAP) requites management to make estimates and assumptions that affect the repotted amounts of assets and liabilities and dsclaure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and e<penses during the reporting paiod Actual results could dffa from those esti mates

L. New Funds

TheCity established the Compensated Absences Internal Service Fund to account fa sick, vacation and compensatory ti me leave payouts rel ated to empl cyee reti rements.

The Richmond Promise Agency Fund was established to account fa assets bdongng to the Richmond Premise non-profit aganization held as agnt by the City.

NOTE 3-CASH AND INVESTMENTS

A. I nvestmentsandCash Deposits

The City maintains a cash and investment pod of cash balances and authorized investments of all funds e<cept fa funds requiredto be held by fiscal agnts unefcr the previsions cf bendinefertures, which the City Treasurer invests to enhance interest earnings. The poded interest earned is allocated to the funds based on average month-end cash and i rvestmert balances i n these funds

51



NOTE 3-CASH AND INVESTMENTS (Continued)

The City and its fiscal agaits invest in indvidual investments and in investment pads. Indvidual investments are evidenced ty specific identifiable pieces of paper called seeurities instruments, a ty an electronic entry reg stering the owner in the recads of the institution issuing the security, called the bock entry system Indvidual investments are generally trade ty the City’s fiscal acpnts as required uncfer its debt issues. In orcfer to maxirrize security, the City errplcys the Trust Department of a bank as the custodanofall City rranagadinvestments, regardessof theirfam

All investments are staled at fairvalie. Market value is used as fair value fa all secirities.

The California Government Code tegJres Califaria banks and savings and loan associations to secure the City’s cash deposits by pledgng securities as cdlateral. This Cocte states that cdlateral plecfcpd in this rranner shall have the effect of perfeetingaseeirity interest in such cdlateral Siberia to those of a general credta. Thus, cdlateral facashdepositsisconsicfetedtQbeheldintheCity’snarre Therrarketvalieof pledgad seeurities must equal at least 11CP6 of the City’s cash deposits Califaria law also allcws institutions to secure City cfepositsty pledgng first trust cfeadmcrtcpcp notes having aval te of 15CP6 of the City’s total cash deposits The City may waive cdlateral regirements fa cash deposits which arefdly insuredupto S25QOCO ty theFecferal Deposit Insurance Corporation. TheCity, however, hasnctwaived thecdlateralizaticn regirerrents

B. Cash, Cash Equivalents and Investments

Fa purposes of reporting cash flews, the City considers each fincf s share in the cash and investments pod and restricted cash and i nvestrrents to be cash and cash equivalents.

C. Classification

Cash andinvestmentsareclassifiedinthe financial statements as shewn belcwatj une30, 2016:

Cash and i nvestrrents $58,608,073Restricted cash and investments 25,482,047

Total Primary Government cash and investments 84,090,120

Cash and investments 27,726Total Discrete Component Unit cash and investments 27,726

Cash and investments in Fiduciary Funds (Separate Statement)Cash and investments 15,955,822Restricted cash ard investments 38683,630Investments in reassessment bonds 11,370,000

Total Fiduciary Fundscashand investments 66,0C9,452

Total cash and investments $150,127,298

52


Fa the Year E tided J uneSO, 2016

| NOTE 3-CASH AND I NVESTMENTS (Continued) |

D. I nvestrrents Authaited ty theCalifania Government CccteandtheCity’s I nvestrrent Pdicy

Uncfer the provisions of the City’s Investment Pdicy, and inaccacfencewith Cdifomia Government Cede, the fd lewi ng i nvestrrents are authorized

A uthorized 1 nvestrrent TypeMaximumMaturity

MinimumCredit

Quality

Maximum Percentage of Portfdio

MaximumInvestment

InOnelssier

U.S.Treasuy Bills Boncfeand Notes 5 years A None None

Obligations issued ty United States Government a its Agercies

5 years None None

Treasury bonefe and notes issued ty the State of California a ary local agency with California

5 years A None None

Commercial Paper 270 days A ICRS (A) 1C%

Negotiable Certificates cf Deposit 5 years A 3C% None

MediumTermCaporate Notes 5 years A 3C% None

Money Market Mutual Finds N/A Top rati rg categoiy

15% None

California Local Agency Investment Fund N/A None $50 M i 1

Government Sponsaed Investment Pads (CalTrust)

N/A N/A None

Cd lateral ized Time Deposits 5 years 3C% 1C%

(A): City may invest an addtional 15% a a total of 2C% of City surplus money, only if ddlar- weigitedaverage maturity eftheentinearrount does nae<ceed31 days

Prohibited I nvestrrents

Uncfer the City’s Investment Pdicy, the City imposed restrictions on investments TheCity cannot invest in any finds in inverse floaters, rancp notes, a interest only Separate Tradng of Regstered Interest and Principal of Securities (STRIPS) that are drived from a pod of mortgages. In any security that could result in zero interest accrual if held to maturity (other than money market mutual funds).

53




E. Investments Authaiaad ty the Califania Ccvernrrent Cede and the Housing Authaity’s I nvestrrent Policy

The Califania Govanment Cccte allows the Authaity to invest in the fdlowing provicted approved percentages and matirities are rot erceated The table telcw also ictentifies certain provisions of the Cal ifomiaCovemrrent Cccte

Authorized InvestirentTvpeMaximumMatiritv

Maximum Specified Percentage of Portfdio

MinimrmCreditQuality

Local Agency Bonds 5 years None NoneU.S.Treasuiy obligations 5 years None NoneState of Califania obligations 5 years None NoneCA Local Agency obligations 5 years None NoneU.S.Agercies 5 years None NoneB anker's Acceptances 180 days 4m A1 /PICorrrrercial Paper-select agencies 270 days 4<K A1 /PICorrrrercial Paper-otter agencies 270 days 25% NoneNegdiableCertificatesof Depcsit 5 years 3C% NoneRepurchase Agreements 1 year None NoneReverse Repurchase Ageerrents andSeurities Lending Agreements 92 days 2C% None

M edi in Term Corporate Notes 5 years 3C% AMutual Finds N/A 2C% MultipleMorey MarkelMutual Funds N/A 2C% MultipleCdlateralizol Bank Deposits 5 years None NoneMortgage Pass-Through Securities 5 years 2C% AATine Deposits 5 years None NoneCointy Poded Investment Funds N/A None NoneCalifania Local Agercy Investment Fund N/A None None

Thete are no restrictions on the maximum amount invested in each security type a maxi mum that can be i nvested i n ary cne i ssua.

The Authority cbes rot have reverse repurchase agmrents

54



NOTE 3-CASH AND I NVESTMENTS (Continued)

F. I nvestments Authaized b/ Debt I ssues and Lease Ageements

U ncter the terms of the City’ sand Acprcy’ sand ctebtissies and lease ageorents, the City and Agncy are subject to various restrictions in the type, maturity andcredt ratings of investments of the unspent praeads of these issies These restiictiais are gmerally no mote restrictive than those listed above regardng investment cf the City’s and Agency’s finds. In addticn, sore bond inctentires authorize investments in giaranteed investment contracts ard investment ageements with manrity dates that coincicte with the applicable debt maturities. AtJ me 30, 2016, the City and Agency were in compliance with the terms cf all these testricticns

C. InterestRateRisk

Interest rale risk is the risk that changes in market interest rales will adversely affect the fair value of an investment. Namally, the longer the maturity of an investment, the geater the sensitivity cf its fair value to changes in market interest rates One of the way's the City manages its exposure to interest rale risk is ty purchasing a comb nation of shorter term and longr term investments and ty timing cash flows from matirities so that a portion of the portfdio is maturing a coming close to maturity evenly ova time as necessary to provide the cash flow and I iquidty neected fa operations.

Information about the sensitivity of the fair values of the City’s investments (inducing investments held ty bond trustees) to market interest rate fluctuations is provided ty the following table that shows the dstributionof the City’s investments ty maturity a earliest call dale

Primary Government:

i^monms crLess

F ecferal A gancy S eari ti es $6,001,740U.S. Treasury Bills 515,020Califcma Local Agancy 1 nvestrrent Find 22,621,817CalTrust S hort Term F und 14,101,923CalTrust MedimTermFindCertificates of Deposit-Negotiable

81,419

M orey M arket M utual Fund (U.S. Searities)Heldby Trustee:

138,039

Mcney Matkd Mutual Finds (US. Securities)1 nvestrrert A geerrentGuaranteed 1 nvestrrent Contracts

46,468,677

Reassessrrent B ends 1,050,000Total Investments

Cash in B arks and cn hand -Primary Govemrrent Cash in Banks-RHA Housing Corporation

Total Cash and 1 nvestments

$90981,635

Remaining Matuity (in M orths)ITto24Months

25 to 60Months

Mae tnan t>umonths Total

$8,000300

755361

$3,026,400

$1,039,778

$17,031,440515020

22621,81714,101,923

81,419755361138,039

46468,6771,039,778

564,000 625001 1,189,0011,097,500 3,840,000 5382500 11.37QOOO

$9,853161 $7,430,400 $7,017,279 115,31247534,787,097

27,726$150,127,298

55




The City is a participant in the Local Agsncy Investment Fund (LAIF) that is regdated ty Califania Government Code Section 16429 under the oversight of theTreasurer of the State cf Cal ifomia The City reports its investment in LAIF atthefairvaluearrount provicted ty LAIF, which is the same as the value of the pool share The balance is available fa withdawal on ctemand and is based cn the accanting recads rraintained ty LAIF, which are recaded on an amortized cost basis. Inducted in LAIF’s investment portfdio are collateralized mortgage obligations, mortgacp-backed securities, aher asset- backed securities, loans to certain state funds, and floating rate securities issued ty federal agencies, government-sponsored enterpri ses, Uni ted States Treasury Naes and Bills, andcaporations. AtJ une30, 2016, these investments matured in an average of 167 days.

The City is a participant in the Short-Term Find and Medum-Term Fund of the Investment Trust of Califania (CalTrust), ajoint powers authority and piidic agercy established ty its members under the provisions of Section 6509.7 of the Califania Government Code Members and participants are limited to Califania public agencies. CalTrust is governed ty a Board cf Trustees of seven Trustees, at least seventy-five percent of whom are from the participating agencies. The City reports its investment in CalT rust at the fair value amount provided ty CalT rust, which i s the same as the value of the pool shares. The balance is available fa withdawal cn demand and is based on the accounting recads maintained ty CalTrust Indicted in CalTrust’s investment portfolio are United States Treasury Naes, Bills, Bonds a Certificates of Indebtecteiess; regstered state warrants a treasiry notes a bonds; Califania local agency bonds, naes, warrants a aher indebtedness; federal agency a United States government- sponsored enterprise obligations; bankas acceptances; commercial papa; negotiable certificates of deposit; repurchaseageements; medumterm naes; mcney rrarka mutual funds; naes, bonds a aha obligation seeured ty a first priority security interest in searities authorized under Government Cccte Seaion 53651; and mortgage passthrouch securities, collateralized mortgage obligations, and otter assa - backed securities. CalTrusf s Short-Term Fund has a target portfolio duration a 0 to 2 years and CalTrusf s MedurnTam Fund has a target pcrtfd io duration a 0 to 4 years AtJ une 30, 2016 the Short- Term Fund investments matured in an avaage of 409 days and the Medum-Tam Fund investments matired in an avaage of 752 days

Money marka funds and mutual funds are available fa withdawal cn ctemand and as of J ire 30, 2016 have an avaage maturi ty from 4 to 48 days.

56




H. CredtRisk

Credt risk is the risk that an issua of an investment will na fulfill its obligation to the holder of the investment. This is measured ty theassigament of a rating ty a nationally reccgiized statistical rating aganization. Presentedbelcwistheactual ralingasdjune30, 2016faeachinvestmenttype

Investment Type AAAm AAf AA + TotalFederal Agancy Searities $17,031,440 $17,031,440Mcney Market Mutual Fincfc (U.S. Searities) $46468,677 46468677CalTrust Short TermFirid $14,101,923 14,101,923

Totals $46468677 $14,101,923 $17,031,440 77,602040

Exempt Frcm Rating:U.S.TreasiryBills 515,020

Not RatedCalifornia Local Agency Investment Fund 22,621,8171 rrvestrrent Ageerrent 1,039,778Guaranteed Investment Ccntracts 1,189,001Certificates of Deposit-Negotiable 755361Mone/ Market Mutual Finds (U.S. Securities) 138039CalT rust M edium Term Fund 81,419Reassessment Bcncfc 11,370000

Total Investments 115,312475Cash in B anks and On Hand 34,814,823Total Cash and Investments $150,127,298

I. Custodal CredtRisk

Custodal credt risk is the risk that in the event a a tank failure the City’s deposits may na be returned to it AsofJ une 30, 2016, the took valued the City’s cash with tanks and petty cash was $34,787,097 andtheassaiated tank balances wae $43,758063. Of the City’s tank balances of $43,758063 as of Jine30, 2016, $790,467 was e<posed to custodal credt risk, because it was rot collateral izal beyond the FDIC insurancelirritasdscussedinnae3A above

57




J. F ai r Val ue H ierarchy

The City categorizes its fair value measurements within the fair value hierarchy established ty Generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measire fair valie of the assets. Level 1 inputs are quoted prices in an active market fa identical assets; Level 2inputsare sigiificant other observableinputs; andLevel 3 inputs are significant unobservable inputs.

The following is asurrmary of the fair value hierarchy of the fair value of investments of the City as of J ine 30, 2016:

________________ Invest mart Type________Invest marts Measured at Fair Value

Federal Agency Securities U.S.Treasury BillsCalifornia Local Agency Invest mat Find CalTrust Short Term Find CalTrust MediumTermFirid Certificates of Dqnosit - Negotiable

Total IrvestiTHits Measured at Fair Value Investments Measured at Amortized Cost:

Mone/ Marks Funds Held by Trustee

Invest mat Agreement Guaranteed Investment Contracts Reassessment B ends More/ Marks Funds Total I invest mats

Level 1 Level 2 Total

$17,031,440 $17,031,440$515,020 515,020

22,621,817 22,621,81714,101,923 14,101,923

81,419 81,419755,361 755,361

$515,020 $54,591,960 55,106,980

138,039

1,039,778 1,189,001

11,370,000 46,468,677

SI 15,312,475

U.S. Treasury Bills, classified in Level 1 of the fair value hierarchy, are val ued based on quoted prices in active markets fa identical assets. Federal agency securities and negotiable certificates cf cteposit, classified in Level 2 cf the fair value hierarchy, are valued using matrix pricing techniques maintained ty variouspricingvendors Matrixpricingisusedtovaluesezuritiesbasedonthesecurities’ rdationshipto benchmark quoted prices. These prices are obtai ned fromvarious pricing sources ty our custcdan tank. The Local Agsncy Investment Fund are classified in Level 2 is valued based on the fair value facta provided ty theTreasurer of the State of California, which is calculated as the fair value dviefed ty the amortiaed cc6t of the investment pool. The investments in CalTrust classified in Level 2 of the fair value hierarchy, are valued based on the fair value facta provided ty CalT rust, which is calculated as the average cost to net asset value per share of the Fund Atjune30, 2016, the fair value approximated the City’s cost Fair val ue iscfefined as thequaed market value on the last trading day of the period

58




K. CcncentralicncfCredtRisk

Investments in the securities of ary indvidral issuer, other than U. S. Treasury securities, mutual funds, and external investment pools that represent 5% a mere of total Govemment-wicte investments are as fd lows atj une 30, 2016:

________________Issuer_______________ Type of Investments _____Armunt

Federal National MortgageAssociaticn Federal Acpncy Securities 55,994,510Federal Home Loan MortgageCorpmaticn Federal Acpncy Securities 4,997,300

Sigiificant investments in the sezurities of ary indvidual issuers, aher than U. S. Treasury securities, in Fiduciary Funds atj une 30, 2016 were as fd lows:

___________ Fiduciaiy Finds__________ ________ Issuer________ Typeof Invest mart A mootAgency Finds:

20C6A&B Reassessment District CityofRichmandJPFA Minicipal Bards $8,415,000JPFA Reassessmat CltyofRichmaTdJPFA Minicipal Bonds 2,955,000

NOTE 4-1NTERFUNDTRANSACTIONS

A. Current Interfund Balances

Current interfurd balances arise in the normal corse cf business and represent shot-term barowings occurring as a result of ©ependtures which are paid pria to the receipt of revenues. These balances are expected to be repaid shortly after the end of the fiscal year when revenues are rezeived Current amounts defrem one fund to another atj une 30, 2016wereasfdlows:

Due Fran Otha Funds Due To Otha Funds ArrantGenaal Ford Richrrcnd HcusingAuthority Entaprise Ford $119,442Internal Service Ford Ccst Recovery Special RevenueFind

Carrmnity Development and Loan Procpams7,393,526

Special Revenue Ford 1,455,710Civic Center Ddat Service Fund 1,453,842Richrrcnd HcusingAuthority Entaprise Ford 2002,638Port of Richmond Enterprise Fund 2990,374Ncn Major Governmental Fincfc 2005,338Ncn Major Enterprise Fund 1,835,081Internal Sevice Fund 1,388,415

Total $20 644,366

59



| NOTE 4-1NTERFUNDTRANSACTIONS (Continued) |

B. LoigTerml nterfundAdvances

AtJ une 30, 2016 the funds belcw had macte advances which were not expected to fce repaid within the next year.

Amount ofFund RecavirgAdvance________ _________ Fund MakingAdvance________ Advance

Richmond HousingAuthority Enterprise Furd Cormunity Development and Loan ProgramsSpecial Revenue Fund $174,067

Municipal Sewer Enterprise Fund 901,3%Non Major Enterprise Fund 167,451

Port of Richrrond EnterpriseFund General Fund 14,480,730NonMajorEnterpriseFund Internal Service Funds 2,213,421

Total $17,937,065

In fiscal 2007, the former Recfevdcprrent Agency ad/arced SI 74,067 to the Richmond HousingAuthority Enterprise Fund cdlaleralized by a cteed of trust on the Westridge at Hilltop Apartments, to assist the Authority with its lease payments fa the 2003 A-S MiJtifarrily Housing Revenue Bonds. The lean bears interest of 3%. I n fiscal 2012 the ad/arce recevadewas transferred to the City as Housing Successa to the former Redevelopment Agency and is recacfed in the Community Development and Loan Progams Special RevenueFund

In fiscal years 2C07 throuc^i 2014, the General Fund and the Municipal Sever and Storm Sever Enterprise Funds made advances to the Richmond HousingAuthority Enterprise Fund fa police sever, and other services as well as the HousingAuthority’s employee payroll. The advance repayment terms wee amended in April 2010 and the advance tears no interest and was payable in 135 monthly installments of S30,0C0 and one final installment of $22,446 on a before August 1, 2021. On June 28, 2011 the ageement was amended to make the monthly payments S50,C00 fa the remaining 71 payments, starting J uly 1, 2011, and one final installment of $36,634. However, in lieu of monthly payments, repayment may be in a lump stm on August 1, 2021. During fiscal year 2013, S6,60Q000of the advance was assumed by RHA Properties and is classified as a loan receivable, as dscussed in Nae 5, and the rerrai ni ng balance of the interfund ad/ance as of J une 30, 2016 is $1,068847.

60



NOTE 4-I NTERFUND TRANSACTIONS (Continued)

Infiscal 2C06 the General Fund established repaymenttermsfaitsadvanceof$17,139,855 to the Port of Richmond Enterprise Fund to assist the Port with various lease transactions and other projects. The advance dd net bear interest fa the first three years; the next five years it bae an interest rate of 4%, with the balance payable on a befotej une 30, 2015. The advance repayment terms were arrencted in October 2013, effectivej une 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 $15Q000 are due begnningj une 30, 2014 throuc^i J une 30, 2066, with a final principal payment of $32593 cteonj une 30, 2067, and in addticn to those payments, the annual berthing cost of the vessel Red Oak Victory at the Port that is to be paid by the General Fund will instead offset and reduce the principal balance of the advance based on an established rental schedule Histaical rental payments from August 2004 toj une 3Q 2012 totaling $842,877 were applied to the pri nci pal balance cf the loan as of J une 30, 2013. Another provision cf the arrencted ageement provides that upon the sale of any Port property, inducing Terminal One and Terminal Far, 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 ofj une 30, 2016 is $14,480,730.

In fiscal 2008 the General Fund advanced $1,758342 to the Storm Seva Enterprise Fund fa the purpose of providng a clean storm sewer system and street sweeping activities. In fiscal year 2009 the advance was moved to the Insurance Reserves Internal Service Fund The ad/ance bears interest of 4.34% and is payable as fd lows: Semi-annual principal and interest payments in the amount of $52,460 are to be macte April 30and December 31 of each year commencing in December 2C09 until December 2038 Thefinal interest payment of $52,298 and the distancing principal balance is de April 30, 2039. The Storm Seva Enterprise Fund dd nd make the required payments diring fiscal years 2015 d 2016, therefore unpaid interest of $146,982 was added to the balance of the loan. The balance of the advance and accrued interest as of J me 30, 2016 is $2,213,421.

C. Transfers Between Funds

WithCcuncil approval, resources may be transferred from one City fund to another. The purpose of the majaity of the transfers is to move General Fund resources to provide an annual subsidy to the Cost Recovery Fund and dher non-maja governmental funds, as well fund debt service, pension costs and capital projects Transfers between funds during the fiscal year enctedj me 30, 2016 were as fd lows:

ArrountF und Recavinq T ransfers Fund MakinqTransfers Transferred

General Fund Non Major Governmental Funds $2,590,044Non Major Enterprise Funds 500,000

Ccst Recovery Fund Gereral Fund 3,623,129Non Major Governmental Funds 100,678Non Major Enterprise Funds 100,000

Cormunity Development and Loan Progams Fund Gereral Fund 147,593Civic Center Debt Service Fund General Fund 1,235,584Non Major Governmental Funds Gereral Fund 1,401,258

Non Major Governmental Funds 2,425,8801 nternal Service Funds General Fund 567,040

Total Interfund Transfers $12,691,206

61



NOTE 4-INTERFUNDTRANSACTIONS (Continued)

None cf these transfers were unusual a non-recurri ng i n nature, except fa the transfer from the Secured Pension Overricte Special Revenue F und to the General FundinthearrDuntofSl,635,842tofundcurrent year pension contributions to PERS, which is inducted in transfers from Ncn-Maja Governmental Funds.

D. Internal Balances

Internal balances are presented in the Govemment-wicte financial statements only. They represent the net interfund receivables and payables remaining after the elimination cf all such balances within governmental and business-type activities.

62



NOTE 5-NOTES AND LOANS RECEIVABLE

Atjune30, 2016, notes and leans receivable consistedof the following

CalTrans Loan PdiceChief Loan Groundwork Richmond RHA RAD Project Loan Richmond Neighborhood Stabilization Loans East BayCenter for thePerformingArts Community Development BlockGrant, Home Investment

Partnership Program, EDA and CAL Home Loans: Mechanics Bank Loans Deferred LoansHome I nprovement Program Loans Rental Rehabilitation Loans Infill Phase 11 Loan The Carquinez ProjectCreely Avenue Housing Rehabilitation Loan (Arbors)Lillie Maejores Project LoanNevin Court Horrswier Development ProjectEDA LeansCALHome ProgramMiraflores LoanSubtotal -CDBG, HOME, EDA andCALHomeLoans

Housing Successor Loans:Rental Rehabilitation Loans The Carquinez ProjectCreely Avenue Housing Rehabilitation Loan (Arbors) Lillie Maejores Project Loan Miraflores LoanMacDonald Place Senior Housirtj Heritage Park Development Silent Second Mortgage Loans ChesleyAvenie Mutual Housing Development Easter Hill Project Infill Phase 11 Loan RHA RAD Project Loan

Subtotal -Housing Successor Loans

RHA Properties Loans

Total Notes and Loans Receivable

Amount

$566,38956,4496,643

700.000 895,384550.000

41,0964,483,412

900,862340,589

1,106,428148,490

2,124,0091,195,362

457,327399,971

1,858,9051,208,258

14,264,709

20,0001.152.510 2,004,284 2,156,081

471,0444.078.511

115,2911,849,1614,741,4924,957,921

159,3051,070,522

22,776,122

2,500,000

$42,315,6%

63



NOTE 5-NOTES AND LOANS RECEIVABLE (Continued)

CalTransLcan

The total of $566,389 consists of two loans from the City of Richmond to Richrrond Neicjibahcod Housing Services. These are pass-throucji loans fromCalTrans fa the construction of 27 new hemes located in North Richrrond

PdiceChief Loan

Under the Resolution Nurrter 169-C6, the City trade a long-term loan of $150,00Q and a short-term I can of $50,0C0, fa a total loan arrant of $200,000, to finance the acquisition of the PdiceChief s personal residence located within the City of Richrrond The loan is secured ty a cfeedof trust on the property. The loan is due upon sale of the property, within eicjiteen months after the Pd ice Chief’s employment with the City terminates, a fifteen years from the date of the loan, whichever occurs first The Pdice Chief left the City in January 2016, and although he continues to make the scheduled loan payments under the terms of the ageement the loan is due inj uly 2017. The loan tears a variable interest rate from the date of dsturserrent until repaid in full at an amount equal to the average annual interest rate of the California State Treasurer’s Office Local Agency Investment Fund adjusted effective as of each annual anniversary date of the close of escrow of the Property purchased ty the PdiceChief. The shortterm I can of $50,000 was repai d dm ng f i seal year 2006.

Groundwak Richmond

On May 10, 2013 the City entered into an ageement to loan $9,995 in cash flow assistance to Groundwak Richmond Groundwak Richmond is a local non-profit aganization dedcated to helping the City of Richmond reach its goals fa improving the cutdxr environment, and to engagng local residents in specific outdoa improvement projects. The loan tears interest of 1.4294 and was due on December 31, 2013. The loan was amended in December 2014 to extend the repayment datetojune 30, 2015 and the I can was acpi n amended i n December 2015 to extend the repayment cfete toj une 30, 2017.

RHA RAD Project

In December 2014, the General Fund loaned $700,000 to the Richmond Housing Authority Enterprise Fund fa ptedeveloprrent costs related to the Triancje Court and Friendship Mana Rental Assistance Derronstration(RAD) Projects.

In December 2015, the loan ageement was replaced and the City entered into an amended ageerrent to lean $5,400,000 to the RHA Housing Corpaation fa the furtherance of the development of the RAD Projects as dscussed in Note 16L. Fundng fa the loan is as follows: $1,162000 from the City’s General Fund $3,138,000 will come from the Community Development and Loan Progams Fund and $l,lCO,OOOfromtheHousingSuccessafunds. RHA Housing Caporation assigned the loan ageerrent and associated obieptions to RHA RAD Housing Partners L.P. on December 22, 2015 upon closing of the financing fa the rehabilitation of the RAD projects See Note 16L faaddtional information related to the RAD projects. The loan is secured ty a leasehold deed of trust, assigiment of rents and security ageerrent The loan bears simple interest of 1% and the loan is repayable from residual receipts, as defined in the loan ageerrent, starting May 1 of the year after issuance of the Certificate of Completion, and inpaid principal and accrued interest is due December 1, 207Q As noted above, $700,000 cf the General Fund lean was dsbirsedin December 2014. Asofjune30, 2016, $1,070,522 of the funds had been dawn down frem the Housing Successa.

64




Richmond NeighborhoodStabilization Loans

The Richmond Neighborhood Stab lization Corpaation (RNSC) operates a residential rehab litation loan progam financed ty Department of Housing and Urban Development gants that have passed through the City under its Neichbahcod Stabilization Progam(NSP1) and addtional allocation under the third round cf fundng refared to as (NSP3). The progam provides affadable home ownership opportunities fa househdds cf low and moderate income ty facilitating the development financing necessary fa the purchase, rehabilitation, and resale of deed-restricted affadable ownership inits. During fiscal year 2014, the City faeclosed on seven of the loans with a carrying value of $780,153 and reacquired the properties which have been recaded as property held fa resale as dscussed in Note 21. As ofj une 30, 2016, the total balance of outstandng loans fa NSP1 was $896,384 and no NSP3 leans had been issued Loans are payable upen the resal e of i mproved properties.

East Bay Centa fa thePafamingArts

OnJ une 12, 2009 the forma Redevelopment Agency entered i nto an ageement to loan $2,500,000 to the East Bay Centa (Center) fa the PerfarringArts to fund renovations to the Winters Buildng The East Bay Center fa the Perfarring Arts is a Califania nonprofit pubic benefit caporation that offers progams and training in theater, music and dance The loan bae interest of 3% pa year and repayments of accrued interest was due in quarterly installments The Center made a payment of $1,100,000 pria to January 31, 2012. Due to the dssdution of the Recfevelopment Agency effective January 31, 2012 as dscussed in Note 18 the balance of the loan was evaluated and it was deterninoi that although the RedevelopmentAgency implemented and adri listened the I can, the Insurance Internal Service Fund had funded the loan via an interfund advance and thadote the interfund advance was repaid in fiscal year 2012 ty transfaringtheloan receivabe to the Insurance Internal Service Fund The ageement with the Center was amended on June 27, 2012, to reduce the interest rate to <M and extend the repayment of the remaining$l,40Q000toJune30, 2016.

On February 18 2014, the ageerrent was amenefed a second ti me to extend the matmty cfete of the lean tojune30, 2018 and to provide an annual gant from the City inthe amount of $20Q000fathe next five years begnninginjune2014. Theannual gantwill beusedtoreducethebalanceof theloan each fiscal year.

Mechanics Bank Loans

Loans are amortized home improvement loans to low and moderate income borrowers and are repaid at 3% paannum CDBG lean contracts are forwarded to Mechanics Bank fa servicing

Defared Loans

Defared I cans are ganted to low and moderate i ncorre fami I ies to assi st them i n pirchasi ng thei r hemes Emagency repair loans na exceedng $10,000 funded ty the HOME Investment Partnaship Progam (HIPP) are provided to low income families in Richmond to assist them in rehablitating their existing housi ng uni ts. These loans are requi red to be repai d ova a paiod of 15 years to 30 years.

65




Hone I mprcvement Prog-am Leans

"Silent secod’ mortgage leans are provided to lew and moeferale incare first time horrebuyers as gjap financing to prcvicte the minimum amoint needed to close the gjap between the primary lender’s requi rerrents and the borrower’s abi I i ty to pay cfcwn payments a cl osi ng costs.

Home i mprcvement pregam loans induct amortized leans to assist lew incore families in Richmond in the i mprcvement of thei r homes The i ntenest rates fa these loans rang fran CP6 to 3P6 and are payable ever a period of 15 to 30years.

Rental Rehabilitation Loans

Rental Rehabilitation Leans help make rental units affadade to lew and very lew income housing families. Loans assist private and non-profit owners in pirchasingandrehabilitalinge?<i sting multifarrily housing units.

Scattered Site I nfi II Housing Development (Infill Phased)

Under a lean ageerrent cteted September 30, 2010, the City loaned Community Housing Development Capaalion of North Richmond $1,198,013 to find construction of 36 tewnhomes to be made available favery-lcwandlcw income households. Fundng fa the loan was as follows: $602,556 in HOME funds, $266,000 in CDBC funds and $329,457 in CDBC-R. Although the developer has nd dawn cfcwn all of the proceeds from the HOME funds portion of the loan, the Department of Housing and Urban Development (HUD) has indcated that future dawcfcwns will na be reimbursed by the gantor. The current fundng was fa predevelopment activities in conjunctiai with the construction and development of the townhomes. The loan is secured by a deed of trust on the property. The artstandng balance cf the loan bears simple interest at the raleof 3% peryear. The payment cf principal and interest isdderredand deattheendof thetermdueSeptember 30, 2C65. Ascfjune30, 2016, $1,265,733 had been dawn cfcwn ontheloan.

TheCarquinez Project

Under a loan ageerrent dated November 14, 2008, the forma' Rectevelopment Agjency loaned Carquine Associates, L.P. $1,00Q000 to find rehab litation of a five story build ng with 36 apartments housing lownncome senias On August 23, 2010 the ageerrent was amended to provide the Developer with a total amoint of $1,301,000. Fundngfa the lean is as follows: $l,152,510funded by Series 2C07 Bond and $148900 funded by CDBC. Repayments on the loan are to be made from residual receipts as coined in theageement. The loan cbes not bear interest and the unpaid principal balance is due in November 2043. With the dssdution of the Redevelopment Agency as dscussed in Note 17, the City ageed to become the successa to the Rectevelopment Agency’s housi ng activities and as a result City, as Hcusing Successo, assured the loans receivable cf the Redevelopment A grey’s Low and Moderate Income Housing Fund i ndudng the balance cf the Carqaine loan as cf February 1, 2012.




C reely Avenue H ousi ng R ehabi I itati on (A r ba s)

On September 15, 2006, the farrer Redevelopment Agncy and the City loaned Arbors Preservation Limited Partnership the amount of $2558557, to construct extremely low, very lew and low income rental housing units and a new community room on Creely Avenue On October 31, 2008 the loan was amended to prcvicte thedeveloper a total loan amoint of $3,208113. Fundng fa the loan is as follows: $2,026,612 in HOME funds, $97,397 in CDBC funds and $1,594,057 in 2007 Series B bond funds. Although the developer has na dawn ctwn all a the proceeds from the HOME funds portion d the loan, the Department cf Housing and Urban Development (HUD) has indcated that futue dawetwns will na be reimbursed by the gantor. The loan bears simple interest at the rate cf 3% per year. All unpaid prindpal and interest on the loan is due on April 29, 2063. With the dssdution cf the Redevelopment Agncy as dscussed in Note 17, the City ageed to beccme the successa to the Redevelopment Agncy’s housing activities and as a result the City, as Horsing Successa, assumed the loans receivable cf the Redevelopment Agncy’s Low and Moderate Income Housing Fund i ndudng the balanced the Arbos loan as cf February 1,2012.

LillieMaeJ onesProjezt

On January 19, 2010, the fairer Redevelopment Agncy and the City entered into an ageerrent with Lillie Maejones Plaza, L.P. and the Community Horsing Development Corpaalioi cf North Richmond to loan $3,119,000 to construct and prcvicte 26 housing units to very low and low income househdds. Fundng fa the lean is as fdlcws: $1,081,291 in HOME funds, $84,0C0 in Section 108 funds and $1,953,709 in 2007 Series B bonds. AI though the developer has ndefcawn cfcwn all cf the proceeds cf the HOME funds portion d the lean, HUD has indcated that future cfcawcfcwns will nd bereimbtrsedby the gantor. The loan bears an interest rated 3% peryear and repayments on the loan are to be made from residual receipts as defined in the ageerrent. All unpaid principal and accrued interest is due injanuary 2065. Theageement was amended in November 2011, die to securing a $293,884 loan fromCointy of Contra Costa with Mental Health Services Act, which specifies that two units ate required to be available to and occupied by Mental Health Services Act Eligible Tenants pursuant to the Cointy Regulatory Ageement with Lillie Maejones Plaza, L.P. With the dssdution cf the Redevelopment Agncy as dscussed in Nde 17, the City ageed to become the successa to the Rectevelopment Agncy’s housing activities and as a result the City, as Housing Successa, assured the loans receivable cf the Rectevelopment Agncy’s Low and Moeferale Income Housing Fund inducing the balanced the Lillie Maejones loan as cf February 1, 2012. As djuie 30, 2016, Lillie Maejones has dawn cfcwn $3,111,038

Nevin Court Homeowner Development Project

In May 2005, the City entered into an ageerrent with Community Housing and Development Copoalion cf North Richmond (Development), in the oignal amount d $227,000 to construct and develop 10 singe family homes fa low and moeferale income househdds. The ageement was amencted in November 2008 to increase the loan to $377,0C0. In fiscal year 2010, the Development dew cfcwn $343,839, and the outstandng balance d the loan is $457,327, which includes accrued interest d $113,488 The loan bears interest d 3% peryear and the unpaid balance is due in November 2063.

67




EDA Leans

The Agray’s Revolving Loan Fund (RLF) is a corrmmity based progam with the goal of fostering local economic gewth thrombi the creation and retention of emplcyment opportunities fa Richmond residents and complementing corrmmity and indvidual development initiatives. With the dssd ution of the Redevelopment Agency as dscussed in Nae 17, the EDA loan progam that was funded with gant funds from the Economic Development Administration is new administered by the City effective February 1, 2012

C A L H ome P rogam

The CALHome loan progam provides housing assistance to Richmond residents to assist with first-time homeowner down payments a rehabilitation projects fa awner-occuped homes. The loans are secured by deeds of trust on the properties. Principal arid interest on the loans are deferred fa 30 years, unless otherwise specified in the promissory note. With the dssdution of the Redevelopment Agency as dscussed in Note 17, the CALHome loan progam that was funded with gant funds is now administered by the City dfeztive February 1, 2012

MiraflaesLoan

Under an amended loan ageement dated June 21, 2011, the City ageed to loan Community Housing Development Caporation cf North Richmond and Eden Housing Inc., $1,465,000 to fund the construction cf 1 lOsenia housing units fa low and moderate income residents. Fundngfathe lean is as follows: $449,000 in CDBC funds, $925,000 in HOME funds, and $91,000 Redevelopment Agency Low and Moderate Income Housing Fund funds. Althoucjm thecfeveloper has nadavn down all of the proceeds of the HOME funds portion of the loan, HUD has indcatedthat future cbawdzwns will rat be reimbursed by theganta. With the dssdution of the Redevelopment Agency as dscussed in Note 17, the portion of the Miraflotes loan that was funefed by the Redevelopment Agency's Low and Moderate I ncomeHousingFundwas assumed by the City as Housing Successa. The lean does rat bear interest and the unpaid principal balance was die September 22, 2015, unless it was converted to a permanent loan. The loan was converted into a permanent loan onjume 25, 2015. Asofjume30, 2016, $1,679,302 cf the loan had been dawn down.

HousingSuccessa Loans

With the dssdution of the Redevelopment Agency as dscussed in Nde 17, the City ageed to bezome the successa to the Redevelopment A gray’s housing activities and as a result City, as Housing Successa, assumed the loans receivable of the Redevelopment Agray’s Low and Mocferate Income Housing Fund inducing the balance of certain loans dscussed above and all of the loans below as of February 1, 2012




MacDonaldPlaceSenia Housing

On J time 26, 2007, the farmer Redevelopment Agray ageed to loan MacDonald Housing Partners, L.P., and Richmond Laba and Love Community Development Capaalion the amount of $4,720,000, to construct seria housing units, a managment office small meeting rooms and ancillary retail use, and a separate space fa community services. The loan’s gincipal is due 57 years from the date of dsbursement. The lean bears simple of interest of 2X, per year payable from ary residual receiptsavailablefromthepriacalermdaryearwithanaddtjormal 1% peryear, but only to the extent that funds are avail able to pay such conti ngnt interest from the Agray’s shareof residual receipts, as defined in the ageement

HeritagPark Development

In 1999, the farmer Redevelopment Agray leaned Hilltop Croup LP a total of $500,000, col lateral i zed by deeds of trust and beari ng i nterest at an effective rate of 1'/;% starti ng September 2C04. The leans were used to finance the envelopment of the Heritag Park Development in the City. Monthly installments of interest and principal in the total amount of $3,115 are payable threu^m September 1,2019.

Silent Second Matgg Loans

Leans were govidad to qualifying indviduals fa the dffererce between the amount received by the indvidual s who qmalifiedfa low and mocferate income housing loans and the arrant needed to purchase the homes. Thelcansaretobefagveninthefutureifthegoperfyawnersdonctsell a refi nance the property.

Chesley Avenue M utual Housing Development

On December 1, 2003, the former Redevelopment Agray loaned Chesley Avenue Limited Partnership the amount of $4,741,492, to construct very low and low income housing units The loan’s gincipal is due in 2058; interest is payable starting May 1, 2C06, at the rate cf 2% per annim a i n the amount cf 96% of ary resicLral receigs remaining from the ga year, whichever isless

Easter Hill Projezt

The loan from the farmer Redevelopment Agray to Easter Hill Development L.P. is govidng financial assistarmceinthedevelopmentoftheEasterHill Projezt The Easter Hill Projezt consists cf singe and multifarrily home components. Easter Hill Development L.P. shall use the loan to pay fa gedevelopment, acquisition and construction costs The cutstandng balance cf the loan bears simple interest at the rate cf 2% per year. Repayments on the loan are to be macte from residral rezeips as ddmned in the ageement. All unpaidgncipal andaccruedinterestontheloan isdueFebriary 1, 2C69.

69


For the Year Ended J uneSO, 2016


RHA Properties Loans

In fiscal years 2007 through 2014, the General Fund trade advances to the Richmond Housing Authority Enterprise Fund for police save-, and other services as well as the Housing Authcrity’s errplcyee payroll, as dscussed in Note 4B, and RHA Properties assumed a portion of that advance during fiscal year 2013, which is new classified as a loan recavable

On May 1, 2013, a Memorandum of Understand ng(MOU) was reached baweenthe Housing Authority andRHA Properties, which states that the RHA Properties shall provide resources cteived from the sale proceeds of Westridge at Hilltop Apartments to pay a financial sanction imposed ty the Office of the I nspector General (OIG) in an amount no I ess than $2,257,799 to the Housing Authority and to nairethe outstandng debt ewed to the General Find ty the Housing Authority in an amount no less than $6,600,000 upon dsposition of Westridge at Hilltop Apartments ty RHA Properties. Using the proceeds from the sale of Westridge at Hi II top Apartments, RHA Properties paid tack to the City $7,717,728 of assumed debt during the fiscal year 2013-2014. Inducted in the repayment was the OIG Sanction cfebt of the $2,257,799, was fully repaid as of J une30, 2014.

As of J une 30, 2014, the Housing Authority had invested $1,000,000 in start-up contributions and had advanced $966,183 to RHA Properties, which was used for cted sevice and operating e<penses. The enti re amount was repaid ty RHA Properties from the proceeds of the dspositicn of the Westridge at HilltopApartments.

At J une 30, 2014, total debt ewed to the City of Richmond ty the Authority was $3,687,450, out of which $2,500,000was assumed ty RHA Properties on behalf of the Authority, $1,187,450 rerrainedwith the Authority, which is inducted in the long term interfund advances in Note 46.

Indicted in the $2,500,000 assumed ty the RHA Properties was $1,359,929 of new cfebt ewed ty the Authority to the City of Richmond which represented naroactive charges the City of Richmond tilled during fiscal year 2013-2014 for the services the City had provided to the Authority prior to fiscal year 2013-2014. The entire amount of cfebt assumed ty the RHA Propeties is expected to be repaid from a $2,500,000 repair reserve fund hdd in an escrcw account from the sale of Westridge. This fund was releasedtoRHA PropertiesinAugust2016.

The total balance of the Geieral Fund loan receivable from RHA Proposes as of J une 30, 2016 is $2,500,000.

70



NOTE 6-CAPITAL ASSETS

A. Policies

Capital assets are valued at historical cost a at estimated fair value on the date donated If actual historical costs are net available assets have been valued at approximate historical cost. The City’s policy is to capitalize assets costing at least $5,000, and the Housing Authority’s pdicy is to capitalize assets costing at least $1,000 Depreciation is recacted on a straight4ine basis over the following estimated usefd lives:

Improvements other than buIdngs 20yearsBuildngsandbuildngimprovements 20-50yearsVehicles 3-10yearsI nf rastructure 25 - 50 yearsMachinery andequipment 3-20years

Infrastructureindrxtes streets systems, parks and recreation lands and improvement 9/stars, stormwater collection systems, and buildngs combined with site amenities such as parking and landscaped areas used ty the City in the conduct of its business Each maja infrastructure 9/stem is dvicted into subsystems. Fa example the street system includes pavement, curbs and gutters, sidewalks, rredans, streetlights, traffic ccntrd devices such as sigjis, sigials and pavement markings, landscaping and land In the case of the initial capital ization of general infrastructure assets reported ty governmental activities, the City chose to include all such items regjardessof their acquisition datea amount

Net interest costs incirred diring the construction of capital assets fa the business-type and proprietary finds are capital ized as part of the asset’s cat.

71



NOTE 6-CAPITAL ASSETS (Continued)

B. Current Year Activity

The fd Icwi ng i s a surrmary of capital assets fa governmental activities:

BdarceaJune 3D, 2015 Add ti ore Rgi rements Tranfers

T rarsfers frcm the Successor Agency

Bdarceat June 59,2016

Governmental activities

Capital assets rot being depreciated

Lard $14,428,675 $300,278 $9,640,468 $24,369,421

Ccnsrixtion i n progress 56,394,914 $17,528,925 (608,033) 5,328,244 78,644/950

Total capital assets rot being depreciated 70,82$,589 17,528,925 (307,755) 14,968,712 103/913,471

Capital essets being depreciated

B u 1 d rigs end improverrerts 151,291,694 1 51,291,694

M arhinery ard equipment 43,548,441 345,841 ($931,371) 709,314 129,448 43,783,673

L ard i mproverrents and i nfrasnxture 458,639,395 (392,559) 458,246,836

T otal capital essets bei rg ctepreci aed 653,479,539 345,841 (931,371) 307,755 129,448 653,322,203

Less arcumd ated ctepreci ai cn fcr

B u 1 d rigs end i mproverrents (30,385,726) (3,601,567) (33,987,293)

M arhinen/ ard equipment (31,3CS,5S6) (3,1 82,480) 904,076 (1 20,448) (33,765,447)

L ard i mproverrents and i nfrasnxture (354,252,926) (14,569,670) (368,822,596)

Total accumulated depreoaticn (415,945,247) (21,353,717) 904,076 (1 20,448) (436,515,3 36

Capital asset be ng depreciated, ng 237,534,283 (21,007,876) (27,296) 307,755 216,835,867

Coverrmertal a^ivity capital assets, net $308,357,872 ($3,478,951) ($27,295) $14,968,712 $31 9,823,338

As dscussed in Note 17C, pursuant to the terms of the Long Range Property Management Plan, the Successa A gncy transferred capital assets to the City with a carrying value of $14,968,712, which has teen reported as a Special Item in the Statement of Activities.

Governmental activities depreciation e<penses fa capital assets is charged to functions and progams based on their usage of the related assets. The amounts allocated to each function a progam fa the year encfedj une 30, 2016 were as fd I cws:

Governmental ActivitiesGeneral Government $4,841,884Ptfclic Safety 927,459Ptfelic Seivices 13,412,542Community Development 4,664Cultural ard Recreational 168,888Internal SeiviceFunds 1,99&280

Total Governmental Activities $21,353,717

72



NOTE 6-CAPITAL ASSETS (Continued)

The fd Icwi ng i s a surrmary of capital assets fa tusi ness-type activities:

BalancedJune30, 2015 Addtions Transfeis

Balance at June30, 2016

B usiness-type activitiesCapital assds ret being dqoraoiated:

Lard $8,231,777 ($1,035,791) $7,195,986Coretiution inprogress 28,577,142 $5,549,109 (10,875,778) 23,250473Total capital assds not being depreciated 36,808,919 5,549,109 (11,911,569) 30,446,459

Capital assds being depreciated:B uildings ard iirpiwenerts 94,581,945 (15,842938) 78,739,007Maohineiy and eqtipimt 17,273645 945,000 (689,836) 17,528,809Irfrastiuctuie 199,247,486 3,802217 203,049,703Total capital assds being depreciated 311,103076 945,000 (I273Q557) 299,317,519

Less axurulated depreciation forB uildings ard iirpiwenerts (55,272058) (2,078122) 9,989,934 (47,360,246)Maohineiy and eqiipimt (11,872104) (778893) 293937 (12,357,060)Irfrastiuctuie (90,964,446) (4,957,167) (95,921,613)Total aocumiated dqoraoiaion (158,103608) (7,814,182) 10,283871 (155,638919)Capital assd being cfeprsiiated, id 152,994,468 (6,869,182) (2,446,686) 143,678600

BusinessAypealivity capitai assds, rd $189,803387 ($1,320,073) ($14,358255) $174,125,059

As dscussed in Note 16L, the Richmond Housing Authority transferred capital assets with a carrying valueofS14,35&255tDtheRHA RAD LLC during fiscal year 2016.

BusinessAype activities depreciation expenses fa capital assets allocated to each progam fa the year encfedj une 30, 2016 were as fd I cws:

Business-Type ActivitiesRichmxidHousingAuthority $1,621,6%Port of Richrrond 3,510,058Municipal Saver 1,644,674Richrrond Marina 85,1%StormSaver 929,867CableTV 22,691

Total Business-TypeActivities $7,814,182

73



NOTE 7- LONG-TERM DEBT OBLIGATIONS

Government-Wide Financial Statements - Lcng-termdebt is repotedas liabilities of the appropriate <yvernmental a business-type activity.

Bond premiums and dsccunts are deferred and amatiaed ever the life of the bond; using the straioutline method Bonds payableare reported net of theapplicable premiuma dscount Issuance costs are expensed i n the year i ncurred

Fund Financial Statements - Proprietary fund financial statements report long-term debt under the same principles as the City-wicte financial statements Gcvemmental fund financial statements do not present long-term debt.

Gcvemmental funds report bond premiums, dscounts and issuance costs in the year the debt is issued Bond proceeds are reported as other financing sources net of premiuma dscount. Issuance cats are reported as debt setvi ce expend tures.

A. Gcvemmental Activities

Fdlcwing is a summary of governmental activities long-term debt transactions during the fiscal year erriedj une 30, 2016:

BaJarce

JulyOl, 2015 Addti ens (A) Retirements (B)Balance

June 30, 2916DueWithnOre Year

Due in Morethan Ore Year

B onefe payabl eLoans payableCapital leases

$243,613,22412,970,813

9,295,123

$34,679,4791,543,516

($8,093,545)(1 2,370,769)

(1,350,232)

$270,289,1582,143,5©

7,944,891

$9,110,000146,727

1,052,525

$261,179,158 1,996,833

6,882,366

Total $265,879,1® $36,222,996 ($21,724,546) $293,377,609 $10,31 9,252 $270/358,357

(A) Additions to bonefe payabl e i nd ude bond accreti on for capital appreciati on bonds total i ng $4,895,8©, new bonds payabl e i n the amourtof $28,390,000, and a rew bond premi um of $1,393,619. Additions to I oans payab e i nd udes i merest accrual of $1,543,516.

(B) Reti re mens of I oans payabl e i nd ude the princi paJ and accrued i rterest of the i merest rate swapti on -embedded loan due to the swap termi nao onin the ameum of $12,232,829.

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NOTE 7- LONG-TERM DEBT OBLIGATIONS (Continued)

Bards Payable

Bards payable atj une 30, 2016 consisted of the fd I owing

_______ NetPension Obligation Bonds -1999 SeriesA $9,580,000Pension F undi rg B ond Series 2005 145,490,539JPFA L ease Revenue Refunding Bonds-2009 85,435,000JPFA LeaseRevenueBonds-2016 29,783,619

Total $270,289458

1999 Series A City of Richmond Taxable Limited Obligation Pension Bonds - Orignal Issue $36,280,000

The bends 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 costscf issuanceassociatedwiththeissuanceofthebonds. lnterestratesvaryfrom6.37% tDamaximum of 7.3®o and are payable semiannually on February 1, and August 1. The term bonds consist of S8,960,000due August 1, 2020with an interest rateof 7.57% and $3,435,000 due August 1, 2C£9withan interest rate of 7.62%. The bonds are payable from certain pension tax cverricte revenues received by the City from a special tax pursuant to City Coincil Ordnance 9-99 adopted by the City Coincil on March 30, 1999. Principal and interest paid fa the current fiscal year and total pension tax cverricte revenues were $2,413,430 and $7,813,191 respeetively.

The annual debt service reqji rements on the bonds areas fd lews:

FortheYearsEndingjune30, Principal Interest Total

2017 $1,570,000 $667,499 $2,237,4992018 1,520,000 550,543 2,070,5432019 1,375,000 440,967 1,815,9672020 885,000 355,426 1,240,4262021 795,000 291,838 1,086,838

2022-2026 2,700,000 730,759 3,430,7592027-2030 735,000 84,013 819,013

Total $9,580,000 $3,121,045 $12,701,045

75



NOTE 7-LONG-TERM DEBT OBLIGATIONS (Continued)

2005 Taxable Pension Funding Bards- Orignal I ssueSl 14,995,133

These Bards were issued to prepay the unfuncted liability of the Miscellaneous and Safely pension plans provictedthrougitheCalifariaPublic Errplcyees’ RetirementSystem(SeeNaelO). The Bards consist of three series as shewn fcelcw:

I rdex Rate Corveraon Data

B ordTvpe & Senes

InitialInterest

Rate

LessCreditAdjust

ment

Adjusted1 merest

RaeM 310*112/

Date

OngnalPn mpal Amount

FullAccreticn

Date

AdjustedSi±>seqjert

InterestRate

AdjuredMairityVdu?

Current 1 merest -2CC6A 5.93 XS6 -0.10XS6 5.835C& 8/1/13 $26,533,00 n/a n/a n/a

Corverti bl e A ixo on R ate Secuities, CapitalAppreci aicnB ends -

XC5B AZ05B-2

6.25XS66.56XS6

-0.10XS6-0.10XS6

6.1 550X1 6.465CS6

8/1/238/1/34

47,0Cl ,96041,403,1 73

8/1/138/1/23

1 merrch LIBOR + 1.4%1 merrch LIBOR + 1.4%

$66/058/000127,968/000

$114,996,1 33 $1 9402600

Credt Adjustment - The Bonds wete issued on November 1, 2005 in a private placement at the initial interest rales. Inducted in the Indenture wete previsions which adjust the initial interest rates on each series based on the City’s meeting certain condtions. As a result cf the City issuing its J une 3Q 2005 financial statements and receiving an upgacted credt rating of A3 by Moody’s by May 1, 2006, the initial1 ntenest rates were reduced by 1 /I Cfhl of one percent.

Current Interest Bonds-TheSeries 2C05A Bonds were fully repaid duringfi seal year 2015.

Capital Appreeiatjar Bonds-The Series 2005B-1 Bonds and 2005B-2 Bonds are capital appreciation bonds, which means no interest is paid intil the Adjusted Maturity Value is reached on the Full Accretion Dale. Capital appreciation bends are issued at a cteep dscount which then "accretes” ever time The d scount on these bonds represented as the effective i nterest rate on each series i s shewn abeve

Mandatory I nctex Rate Conversion - On the respective Full Accretion Date, the Series 2005B-1 a 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 moithLIBOR index pi us 1.4%. This rate fluctuates accodng to the rrarket condtions is lirritedto 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 rangng from $4,468,000 to $11,593,000. The 2005B-2 Bond; are due in annual installments from 2024 to 2034 rangng from $6,466,000 to $18538000.

Optional Auction Rate Conversion - OntherespeztiveFull Accretion Date, the2005B-l andthe2005B-2 Bonds may be converted to A rxtion Rate Bonds provided that certain conversion requirements are met Auction rates fluctuate accadng to the market condtiais is limited to a maxi mum 17 percent per year and a minimum of 80 percent of the LIBOR inctex rate The Series 2005B-1 Bonds dd rot convert to auction rate bends, andwere instead converted to inctex rate bonds, as dscussed above

76




SwapiAgeerrents -The City entered into two interest rate swapageerrents 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 cfces rot become dTective until August 1, 2023, in the same amount as the outstandng principal balances of the Borriscn that date Theccmbnalionofthevariablerateboncteand a floating swap rate will create synthetic fixed-rate ctebt fa the City. The synthetic fixed rate fa the 2005B-1 Bonds was 6.913% at J ine 30, 2016. Because neither the variable rate ror the swap rates are effective fa the 2005B-2 Bond; as cf J une 30, 2016 the initial bond interest rates dscussed abeve are used fa dsclosure purposes

Atjune30, 2016, theBonds consisted of the following

Maturity ValueAccretion/

Amortization

UnamortizedPremium

(Discount) NetCapital appreciation bonds $194,026,000 $4,895,860 ($53,431,321) $145,490,539

The annual ctebt service requi rements areas fd lows:


2017 $5,660,000 $6,578844 $12,2388442018 6,653,000 6,124,636 12,777,6362019 7,720,000 5,597,091 13,317,091

2020 8366,000 5,022,463 13,3884632021 9,458000 4,374,913 13,832,913

2022-2026 41,354,000 13,346,922 54,700,9222027-2031 47,351,000 8177,872 55,5288722032-2035 67,464,000 2,063,759 69,527,759

Total $194,026,000 $51,286,500 $245,312,500

Richmond J ant Powers Financing Authority Lease Revenue Refunding Bonds, Series 20C9 - Orignal I ssue-$89,795,000

On November 10, 20C9, the Authority issued Series 20C9 Lease Revenue Refundng Bonds in the amount of $89,795,000. The proceeds from the Bonds were used to refund and retire the outstandng principal amount cf the Authority’s 2007 Lease Revenue Bonds. The 2007 Bends were used to finance a portion of the costs of the new Civic Center Project, and to refund a portion of the 1995A J ant Powers Financing Authority Revenue Refundng Bonds and the remaining principal amount of the 2001A Joint Powers Financing Authority Lease Revenue Bonds. The 2007 Bonds were also used to refund the remaining 1996 Port Terminal Lease Revenue Bends. The 1995 A Boris were cal led in November 2007 arrithe2001 A Bonds were cal led in February 2011.

77




The Series 2009 Boris in the principal arrant of $85,435,OCO have teen recocted as governmental activities ctebt, and the business-type activities portion was fully repaid in fiscal year 2016asdscussedin NOe7B below.

The Bonds tear interest rates that range from 3.5CP6 to 5.875%. Principal payments are die annually on August 1 throuc^i 2038 and semi-annual interest payments are due August 1 and February 1 commencing on February 1, 2010.

In connection with the issuance of the 2007 Lease Revenue Bends, the Authoity entered into a swap ageement fo$l 01,42Q000, the entire amount of the Bonds. On November 10, 2C09, in connection with the i ssuance of the Series 2009 Bonds, the Authoity terminated the oignal swap agmrent and entered i nto an ammeted swap ageement effective December 1, 2009 fo $85,360,000. The arrencted ageement regjired the Authority to make and receive payments based on variable interest rales. The Authority rracte payments based on a variable interest rate egral to 10CP6 of SIFMA plus a fi>ed percentage of 0.5(1% and the Authority received variable rate interest payments equal to6£% of 1-month LIBOR from the swap counterparty. Floating rate payments were due semi-annually on August 1 and February 1 comrrencingon February 1, 2010.

On February 1, 2016, the interest rate swap ageement related to the 2009 Lease Revenue Refurring Bonds was terminated with the issuance of theSeries 2016 Lease Revenue Bonds dscussedbelcw.

The annual ctebt service requirements on the Series 2009 Bonds areas fd lews:

FortheYearsEnding Jure 30, Principal Interest Total

2017 $1,880,000 $5,340,030 $7,220,0302018 1,970,000 5,237,835 7,207,8352019 2,080,000 5,125,472 7,205,4722020 2,190,000 5,006,882 7,1%,8822021 2,315,000 4,8789% 7,193,9%

2022-2026 13,780,000 22,040,207 35,820,207

2027-2031 19,130,000 16,859,537 35,989,5372032-2036 28135,000 9,227,611 37,362,6112037-2038 13,955,000 882,707 14,837,707

Total $85,435,000 $74,599,277 $160,034,277

78




Richmond J ant Pcwers Financing Authoity Lease Revenue Bonds, Series 2016 - Orignal I ssue- $28390,000

On February 1, 2016, the Authority issued Series 2016 Lease Revenue Bonds in the amount of $28390,000. The proceeds from the Bonds were used to pay the obligations of the City related to the termination of the interest rale swap ageement and the option on swap ageement (swaption) related to the Authority’s Series 2009 Lease Revenue Refurring Bends and to pay the costs associated with the issuance of the Series 2016 Bonds On February 3, 2016 the interest rate swap ageement and the swaption related to the Series 2009 Bonds were terminated with a swap termination payment of $28554,000.

The Bonds bear interest rales of 4.0CP6 to 5.5CP6. Principal payments are due annually on November 1 througi 2C87 and semi-annual interest payments are due May 1 and November 1 comrrencingon May 1, 2016.

Atjune 30, 2016, the 2016 Bonds consisted of the following

Bonds outstanding $28390,000Unarrortized premum 1,393,619

Total $29,783fiT9~

The annual ctebt service requi rements areas fd lews:

FortheYearsErdirtjJune30, Principal Interest Total

2017 $1,343,375 $1,343,3752018 1,343,375 1,343,3752019 1,343,375 1,343,3752020 $235,000 1,337,206 1,572,2062021 1,015,000 1,304,394 2,319,394

2022-2026 6,310,000 5,572,277 11,882,2772027-2031 8270,000 3,565,676 11,835,6762032-2036 9,035,000 1,608900 10,643,9002037-2038 3,525,000 140,497 3,665,497

Total $28390,000 $17,559,075 $45,949,075

79




I nterest RateSwapandSwaption Ageements

The City entered into interest swapageerrents in connexion with the 2005B-1 Taxable Pension Fundng Bonds and the 2009 Lease Revenue Refundng Bonds. The transaction allows the City to create a synthetic fixed rate a a synthetic variable rate on the Bends, protecting it against increases and decreases in short-term i nterest rates. The various risks associated with the swapageerrents aredsclosed belcw. Fa the swap ageement pertaining to the 2005B-2 Taxable Pension Fundng Bonds, the dsclosure is inducted below, but the swap ageement dees net become dTective until August 1, 2023. In February 2016, the interest rale swap ageement relating to the 2009 Lease Revenue Bonds was terminated using proceeds from the 2016 Lease Revenue B ends.

The City entered into an option on swap ageement (swapdorj) in correction with the anticipated rrfundngof the 2009 Lease Revenie Rdxindng Bonds. In February 2016, the swaption was terminated using proceeds fran the 2016 Series Lease Revenue Bonds. See further dscussion of the swaption in the loans payable section of Note 7A below.

On May 13, 2015, Moody’s Investa Services (" Moody’^’) ctwngacted the City’s issuer rating from “Al” to"Baal” and the rating on its 1999 Taxable Limited Oblicption Pension Bonds from "A2’ to "Baa2”. Inaddticn, theCityanditsWastswalrerEnterprisebondswere placed uncter review fa possible cbwngactes. OnAugust4, 2015, Moody’s further ctwngacted theCity’s issuer rating from"Baal” to "Bal” and its rating on the City’s Taxable Pension Obligation Bonds and 1999 Taxable Limited Obligation Pension Bonds ("POB’s) from "Baa2”. In addtion, Moody’s ctwngacted its rating on the City’s Wastewater Revenue Bonds, Series 20064 tD"Baa2” from"A2”. On September 1, 2015, Standard and Pea’s Rating Services ("S&P”) lowered the City’s Issuer Credt Rating from “AA- to "BBB+” placing the City on CredtWalch. Other credt ratings ctwngactes inducted S&P’s assigied underlying rating (SPUR) fa the Wastewater Enterprise Fund that was lowered from" A +” to"BBB”.

Mcody’sdowngacteof the City’s issuer rating to "Bal” resulted in allowing the counterparty, JPMacpn Chase Bank, NA ("JPM”) to declare an Addtional Terminalion Event (ATE) with the interest rale swaps the City entered in conjunction with the 2005 Taxable POBs (2007 Swaps). This means that J PM could exercise a ricît to term rate the 2007 Swap6 and demand i rrmedale payment of an approxi irately $31.5 million settlement arrant that represented the present value of the City’s e<pected future performance obi i gations uncter the 2007 Swap6 atthetimeoftheATE. TheCity entered i nto a restructuri ng cf certai n of its oblieptions throucî the issuance by the Richmondjoint Powers Financing Authaity of Lease Revenue Bonds Series 20164 (tax-exempt) to fund the cost cf terminating the Civic Center Swap6 relating to the Richmondjoint Powers Financing Authaity Series 2C09 Civic Center Lease Revenue Bonds held by Royal Bank cf Canada (RBC). RBC simultaneously entered into a novation of the 2007 Swap6 with JPM. By terminating the Civic Center Swap6, the City reduced RBC’scredt exposure to the City sufficiently to allcw RBC to accept the addtioral credt e<posure associated with stepping into J PM’s position in the 2007 swap6 throucî novation. Contemporaneous with the novatiai fromJPM to RBC, RBC and the City amended and restated the 2007Swap6, indudng eliminating the existence of the ATE by removing rdterence to a Moody’s rating in the ATE provisions, reducing the Standards Poa’s rating threshold fa a future ATE toBBB-fromBBB and providng a mandatory early term nation of the 2007 Swaps in 2023. Theearly terminalionwill regiiretheCity toeither refunda restructure the 2007 Swap at that date if a term nation payment is due at the time In addtion, terminating the Civic Center Swap6 eliminated the risk of an ATE with respect to the Civic Center Swaps, which require the City to maintain its Issuer Credt Rating at the current level of BBB + toavddanATE.

80




On August 4, 2015, the City received an ipdated issuer credt ralingfromS&P affirming theBBB + issuer credt rating and removing the ratings from CredtWatch and noting that the outlook is stable and the City’s i ssuer credt rating from S& P was B B B + as of J une 30, 2016.

Terms. The terms, indudng the canterparty credt ratings of the outstandng swap6, as of J une 30, 2016, are inducted below. The swapageerrents contain scheduled reductions to the outstandng rational amount on an annual basi s.

Pay-Fixed, Receve-VariableSwap Ageements

Fa the following Pay-Fixed, ReceiveVariable swapageemmts, the City owes interest calculated at a fixed rale to the counterparty of the swaps In return, the counterparty owes the City interest based on a variable rate that approxi mates the rale required by the Bends. Debt principal is na exchanged i t i s only the basi s cn which the swap recei pts and payments are calculated

Pay-Fixed, Recave-VariableOutstanding Long-Term

Notional Effective CredtRaong

Amount Dace Counterparty (S&PA^cocV'sfitch)

2935B-1 Taxable Pension F unding B ends,

JPM organChase$66,068,745 8/1/2313 BaikNA. A+/Aa3/AA-

2935B-2 Taxable Pension F unding B ends,

JPM organChase$127,993,254 8/1/2323 BaikNA. A+/Aa3/AA-

Fixed VariableRace Race FairValueac Termination

Pad Received Jure30,2316 Dace

lem of USD-35.712% Month LI BOR ($12,386,732) 8/1/2323

KXK cf USD-35.73W Month LI BOR ($28,461,260) 8/1/2334

81




Fair value Fair value cf the swaps take into consideration the prevailing interest rate environment, the specific terms and cordtions of each transaction and any upfront payments that tray have teen received Fair valuewas estimated using the aero-coupon dscounting method This method calculates the future payments requited ty the swaps, assuring that the current fotward rates implied ty the LIBOR swap yield curve are the market’s test estimate of future spa interest rates. These payments are then dscounted using the spa rales implied ty the current yield cuve fa a hypothetical zero-capon rate bond die on the date cf each future net settlement on the swap The swaps are classified in Level 2 a the fair value hierarchy, usi ng a market approach that considers observable swap rales commonly quaedfa the f ul I term a the swaps.

As aj une 30, 2016, the fair value fa the each cf theoutstandng swaps was in fava cf the respective canterparties. The fair value represents the maximum loss that would be recogiized at the reporting date if the counterparty failed to perfam as contracted The City has accounted fa the change in fair val ue cf each cf the i neffective hedges as rated be! cw:

C harass i n F ai r V al ue Fair value at Jure S3,2016

Classification Arroint Classifi canon Arroint


Pay-Fixed, Receive-Variable2C0SBJ TaxaUePenscnFundngBcnds Investment rarerue $923,268 I rvestment ($12,386,7322CC5B-2 T axaU e Pena cn F und ng B ends Investment rarerue 113,097,260) Irvestmert (28,461,26QC i vi c Center R efun d ng S wapo cn Ag'eement Investment rarerue 3,512,877 (A) 0

Pay-V ar i abl e, R ecei ve-V ari abl e2C09 L ease R ann ue R efund ng B ends Investment rarerue 9,456,003 (A) 0

Tctals $800,885 ($43,847,993

(A) Civic Certer RefixidngSwaptionAgreemert ardthe 3X9 Lease Reverue B crdsswep were terminaed carg proceeds frcmthe 3D16 Leeee ReverueB ends in February 2016. T he dirigeinfairvelue used far valuers of January 27,2016, the closer aralatde to the termi ran on date.

Credtrisk ThefairvaluesatheswapsrepresenttheCity’scredtexposuretothecounterpardes Asa J me 30, 2016, the City was na exposed to credt risk on theoutstandng swaps because the swaps had neeptive fair values. However, if interest rales change and the fair value a the swaps wete to bezorre positive, theCity would beexposed to credt risk.

Interest rate risk TheCity will beexposed to interest rate risk fa the Pay-Fixed ReceiveVariable swaps only if the counterparty to the swaps defaults a if the swaps are terminated As the SIFMA Municipal Swap lnde< Rale increases a the LIBOR decreases, the City’s net payment cn the swap increases

82




Basis risk Basis risk is the risk that the interest rate paid ty the City cn the underlying variable rale bonds to the bondxdders tempaari ly d ffers from the vari ad e swap rale received from the counterparty. TheCity bears basis risk on the Pay-Fixed ReceiveVariable swaps. Theswap6 have basis risk since the City rezeives a percentage a the LI BOR Index to afset the actual variadebond rate the City paysonthe underlying Bonds. TheCity is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variade rale the City pays on the bonds. Dependng on the magiitude and duration a ary basis risk shortfall, the expected cost cf the basis risk may vary.

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

Termination risk The City may terminate if the other party fails to perform uncter the terms cf the contract. TheCitywill be exposed to variade rates if the counterparties to the swap contracts cfefault a if the swap contracts are terminated A terminaljon cf the swap contracts may also resdt in the City’s making a receiving a termination payment based cn market interest rales at the time a the term nation If at the time cf termination the swaps have a negative fair value, the City worJd be Made to the comterparty fa a payment equal to the swap! s fair value

Swap payments and assaiated ctebt. Using rales as aj une 30, 2016, debt service requrements cf the City’s cutstandng fixed rale 2005 Taxade Pension Fundng Bonds and net swap payments, assuming current i ntetest rales remain the same fa their terrn are as fd lows. The2005B-2 Bond is na inducted in thetade, because the swap is na dTeztive until Augjst 1, 2023. As rales vary, net swap payments will vary.

2005 Taxable Pension F unding Bonds

FortheYears Variable-RateBorris InterestRateErdirtjJure30, Principal Interest Swap, Net (A) Total

2017 $5,660,000 $3,498,595 $3,080,249 $12,238,8442018 6,653,000 3,376,868 2,747,768 12,777,6362019 7,720,000 3,235,487 2,361,604 13,317,0912020 8,366,000 3,081,488 1,940,975 13,388,4632021 9,458,000 2,907,945 1,466,968 13,832,913

2022-2026 41,354,000 12,003,128 1,343,794 54,700,9222027-2031 47,351,000 8,177,872 55,528,8722032-2035 67,464,000 2,063,759 69,527,759

Total $194,026,000 $38,345,142 $12,941,358 $245,312,500

(A) Includes only the 2005 B-l, because the 2005 B-2 is not effective until August 1, 2023.

83




Leans Payable

Leans pay ad e at J ine 30, 2016 consi sted of the fd I ewi ng

CalTrans Horre Loans $477,074California Energy Corrmssion Loan#l 498,207California Energy Corrmssion Loan#2 1,168,279

$2,143,560

CalTrans Home Loans - Orignal Amount $1,467,160

The City has a loan from CalTrans which it used to purchase 43 homes in 1991. These hemes were resdd to Richrrond Neighborhood Housing Services in acter to prcvicte heusing to very lew, and lew and mocterate income persons. Interest on the I can iscorrputed annually based upen the average rate of return by the Poded Money Investment Board fa the past five years Payment of principal andinterest fa 16 of the homes is made in quarterly payments ever a 40year period Payment of principal and i ntenest fa 27 of the homes i s deferred at least fa the peri od that each horre was comri tted by CalTrans to be used as affadade housing which varies from seven to ten years. When the payments mature fa the 27 homes, the City has the option to either make the full payment of principal and interest to CalTrans a execute a promissory note to pay the balance in quarterly payments ever thirty to thirty-three years.

Califania Energy Commission Phase 1 - Orignal Amount $621,558

On April 22, 2013, the City entered into a loan ageement with the California Energy Comrrission in the amount of $621,558 The purposed1 the loan is to prcvicte fundng fa the replacement of street ligiting with new LED ligits. The loan bears a 3% interest rate and is due in semi-annual payments in December andj une thrcugi December 2025.

The annual ctebt service requi rerrents on the loan areas fd lews:

ForthsYearsEndirtjJune30, Principal Interest Total

2017 $46,061 $14,605 $60,6662018 47,453 13,213 60,6662019 48,888 11,778 60,6662020 50,338 10,328 60,6662021 51,886 8,779 60,665

2022-2026 253,581 19,411 272,992Total $498,207 $78,114 $576,321

84




Califania Energy Commission Phase 2- Orignal Amount $1,239036

During fiscal year 2015, theCity entered intoa loan ageement with the Califania Energy Commission in the amoint of $1,239,036. The prrpose of the lean is to prcvicte fundng fa the replacement of street ligiting with new LED ligits The loan bears interest at 1% and is due in semi-annual payments in December andj une througij une 2030.

The annual ctebt service requi rerrents on the loan areas fd lows:

FortheYearsErdirtjJune30, Principal Interest Total

2017 $78,150 $11,488 $89,6382018 78,933 10,705 89,6382019 79,724 9,914 89,6382020 80,499 9,139 89,6382021 81,331 8,308 89,639

2022-2026 419,032 29,158 448,1902027-2030 350,610 7,944 358,554

Total $1,168,279 $86,656 $1,254,935

Option on Interest Rate SwapAgeerrent (Swaption)

OnJ uly 9, 2014 the Richmondjdnt Powers Fi naming Authaity entered into an option to enter a swap at a future dale (swaption) ageement with the Royal Bank of Canada (RBC). The swaption counterparty, RBC, is the hdeter of the option and has the rigit, but nd the obligation, to place the City intoa pay- fixed receive variade swap in the future. Upon entering into the swaption, theCity received an up-front payment from RBC. The majaity of the payment was a result of the option being in-the-money at inception, which means the written option has intrinsic value as the swaption’s fixed rale is geater than the at-the-market rate The remainder of the up-front payment reflects the time value that RBC pays fa hddng the option. To the City, the time value portion of the payment represents deferred investment revenue This transaction was reported as a hybrid instrument The intrinsic valueof the swaption was considered a borrowing fa financial reporting purposes and was treated as a liability a loan payable in the gvernment-wide financial statements. Interest is accreted to the balance of the liability from inception througi the swaption’s exercise date Thereafter, assuming the swaption was exercised there would have been level amortization payments attributed to the borrowing The aher element of the hybrid instrument was measured at fair value Fair value chancps are reported within the investment revenue classification as noted i n the I merest Rale Swap6 section above

The City entered into the swaption to effect a refundng of the Richmond Joint Powers Financing Authority Civic Center Project Lease Revenue Bonds, Series 20CG, in acter to realize substantial ctebt service savings. The Bonds are subject to early redemption on a after August 1, 2019, however due to the market’s interest rales in J uly 2014, if the Authority rduncted the bonds, the negative arbitrage associated with an advanced rdundng would offset the potential ctebt service savings. The swaption ageement all owed the Authority to capture the estimated saving of the future refundng without issuing refundng bonds until a later dale.

85




The swaption ageerrent was issued in the nctional arrant of $77,315,000 and the City received an upfront payment in the amount of S1Q659,909, which represented the errbedzted loan payable and incurred cats of issuance that resulted in a net cash payment of $9,386,0C0.

On February 1, 2016, the swaption was terminated with the issuance of the Series 2016 Bends.

Interest of $1,543,516 accreted on the embedded loan during fiscal year 2016 and the balance of the lean asof February 1, 2016, the dale of termination, was $12,232,829.

Capital Leases

Capital leases payableatjune 30, 2016 consisted of the fd I owing

Qualified Energy Conservation Lease $757,717J PFA Recovery Zone Economic Development Lease 911,716Hdman Capital Corporation Lease#2 534,132Holman Capital Corporation Lease#3 212,648Hdman Capital Corporation Lease#4 1,472,162Street Light Capital Lease 4,056,516

Tdal $7,944,891

Qualified Energy Conservation Lease - Orignal Amount $1,052,526

On Dezember 22 2010 the City entered into a capital lease with Bank of America in the amount of $1,052,526 to finance the purchase and installation of energy conservation equipment at various City- owned buildngs. The City rezeived an allocation of the national Qualified Energy Conservation Bond which inducts a drezt subsidy from the United States Treasury fa the interest payable on the bonds uncter the Hiring Incentives to Restae Employment Act (HIRE Act). The subsidy will be payable on a about the dale that the City makes its ctebt service payments and is equal to 59.7$% of the interest payable on the lease The subsidy received in fiscal year 2016 was $15,567. The lease bears interest at a rate of 6.7$% and principal and interest payments are die semi-annually eachjine 15 and December 15 commencing on December 15, 2011 througi 2026.




The annual debt service requirements on the capital leaseareasfdlcws:

FortleYearsEndingjune30, Principal Interest Total

2017 $66,865 $50,322 $117,1872018 68,703 45,751 114,4542019 70,591 41,054 111,645

2020 72,531 36,228 108,7592021 74,525 31,269 105,794

2022-2026 404,502 77,067 481,569Tdal $757,717 $281,691 $1,039,408

RichmondJ oint Powers FinancingAuthaity Recovery Zone Economic Development Lease- Or i g nal A mount $ 1,316,000

On December 22, 2010 the Authaity entered into a 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 senia center. The City ageed to I ease the three fire stations to the Authaity in exchange fa lease payments in the amount of the debt. The Authaity receivezi the lease proceeds under an allocation of the National Recovery Zone Economic Development Bends ureter the American Recovery and Reinvestment Act of 2009, which inductesadrect sttesidy from the U nited States Treasury fa the interest payableon the Bends. The lease subsidy will be payable on a about the date that the Authaity makes its debt service payments and is equal to 45% of the interest payable on the lease igxxi filing of a request by the Authority. The total subsidy received in fiscal year 2016 was $26,481. The lease bears interest at a rale of 6.5C% and principal and interest payments on the lease are die semi-annually eachjune 15 and December 15, commencingonjune 15, 2011, througi 2026.

The annual debt service reqjirements on the capital leaseareasfdlcws:


2017 $82,169 $57,938 $140,1072018 85,133 52,549 137,6822019 88,203 46,966 135,169

2020 91,385 41,182 132,5672021 94,681 35,189 129,870

2022-2026 470,145 78,202 548,347Tdal $911,716 $312,026 $1,223,742

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Holman Capital Capaation Lease #1- Police and Fire Radios - Orignal Amount $2,711,743

On November 30, 2011, the City entered into a capital I ease ageerrent with Holman Capital Corpaation to finance police and fire department radc6. The lease tears an interest rale of 2.47%. Principal and interest payments on the lease are die semi-annually on each May 31 and November 30 commencing on November 30, 2011 througi 2015. The loan balance was fully repaid during the year enctedj une 30, 2016.

Holman Capital Capaation Lease#2- Equipment - Orignal Amount $2,854,454

On J ine 1, 2012, the City entered into a capital lease ageerrent with Holman Capital Corpaation to refinance two SunTrust leases fa the acquisition of street sweeping vehicles and tricks, fire vehicles and related equipment and various aher vehicles The lease bears interest rates that rancp from 2.21% to 3.0£%. Principal and i ntetest payments on the lease are due semi-annual ly on eachj une 26 and December 26 commencingonj une 26, 2012 througi 2017.

The annual debt service requirements on the capital leaseareas follows:

FortfeYearsEndingjune30, Principal Interest ______ Total______

2017 $353,378 $13,661 $367,0392018 _180,754 2,766_______ 183,520Total $534,132 $16,427 $550,559

Holman Capital Capaation Lease#3 - Mall Directional Sigis -Orignal Amount $502,500

On J ine 1, 2012, the City entered into a capital lease ageerrent with Holman Capital Corpaation to finance the purchase of mall drectional sigis. The lease bears an interest rate of 3.35%. Principal and interest payments on the lease are due semi-annually on eachj ine 26 and Dezember 26 commencing on

J une 26, 2012 througi 2019.





FortfeYearsEndingjune30, Principal Interest Total

2017 $68,541 $6,555 $75,0962018 70,857 4,239 75,096

2019 73,250 1,846 75,096Total $212,648 $12,640 $225,288

Holman Capital Capaation Lease#4- West Contra Costa FamilyJ usticeCenter -Orignal Amount $2,00Q000

On Ncvember 1, 2012 the City entered into a lease agmrent with Holman Capital Capaation in the amount of $2,000,0C0 to fi nance imprcvements to the City’s West Contra Costa Family J ustice Center. The lease bears an interest rate of 3.17%. Principal and interest payments on the lease are due semiannually on eachj dy 14andjanuary 14 commencing onj dy 14, 2013 througij anuary 14, 2023.



2017 $215,943 $44,770 $260,7132018 197,894 38,266 236,1602019 204,217 31,943 236,160

2020 210,743 25,419 236,1622021 217,476 18,684 236,160

2022-2023 425,889 16,300 442,189Total $1,472,162 $175,382 $1,647,544

Street L igit Capital Lease-Orignal Amount $4,641,936

On J uly 31, 2013 the City entered into a lease ageement with Bank of America in the amount of $4,641,936 to finance the pirchase of streetligits and the associated upgade costs. The lease bears an interest rate of 2.55%. Principal and interest payments cn the lease are due semi-annually on each October 30 and April 30corrmencingonApril 30, 2014 througi October 30, 2026.

89




The annual debt service requirements or the capital leaseareasfdlcws:

ForthsYearsEndingjune30, Principal Intaest Total

2017 5275,629 5101,731 5377,3602018 313,719 94,586 408,3052019 352,159 86,211 438,3702020 370,787 77,114 447,9012021 390,184 67,538 457,722

2022-2026 2,270,692 175,816 2,446,5082027 83,346 1,063 84,409

Total 54,056,516 5604,059 54,660,575

B. Business-TypeActivities

The following is a surrrrary of long-term ctefct of business-type activities during the fiscal year ended Jure BO, 2016:

Balance Balance DueWithn DueinMaeJuly 01,2015 Add tiers (A) Rsi rerrerts jme 30, 2016 One Year than One Year

B ends payaU e $128,852,130 ($4,859,272) $123,902,858 $38020,000 $85,972,858Naes and Leans pa/aUe 2,861,189 $700,000 (78,052) 3,483,127 81,574 3,401,553

Taal $131,713,319 $700,000 ($4,937,334) $127,473,985 $38101,574 $89,374,411

(A) Addticnsto loans payable indude the transfer of an aj/ancetolcngtermctett.

Bonds payable atj une30, 2016 consisted of the fd lowing

Wastavata Revenie Bonds Series 2006A 59,978,480Wastavata Refunding Revenue Bords 20084 32,755,86020C94 Point Potrao Lease Revenue Bonds 26,672,59820C6B PdntPotreroLeaseRevenueBonds 12,682,277W astavata Revenie B onds Saies 201CA 1,101,173Wastavata Revenie BondsSaies 2010B 40,802,470

Total 5123,992,858

90




Wastavater RevenueRdunding Bends Series 20064 and 2006B - Orignal Issue $48,830,000

On October 17, 20C6 the City issued $16,570,0C0 of Wastavater Revenue Bonds, Series 2C064 and $32,260, OOOof Wastavata Revenue Bonds, Series 20C6B to refund the retraining $38,516,264 principal amount of the Wastavata Revenue Bonds, Saies 1999 and to fund certain capital cats of the City’s Wastavata Enterprise Net proceeds wae used to purchase U.S. government secuities placed in an irrevocable trust to provide all the future cfebt service payments fa the 1999 Wastavater Bonds. The outstand ng ddeased bonds wae cal I eddiring the fiscal year endedJune3Q 2010. Duing the fiscal year erriedj une 30, 2009, theCity issued $33,015,000 of Wastavata Revenie Refund ng Bonds, Saies 20084 to refund the 2006B Bonds.


B onds outstardi ng: 59,590,000Unarrartized premium 388,480

Net 59,978,480

Principal and interest payments are die semi-annually on February 1 and August 1 of each year througi Augist 2022 fa the Saies 20C64 bonds. The annual cfebt service regiirarents on the 20C64 Bonds are as follows:

FortleYearsEndingjune30, Principal

2017 51,205,0002018 1,265,0002019 1,315,000

2020 1,365,0002021 1,420,000

2022-2023 3,020,000Total 59,590,000

Intaest Total5377,000 51,582,000

321,575 1,586,575269,975 1,584,975

216,375 1,581,375160,675 1,580,675137,363 3,157,363

51,482,963 511,072,963

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Richmond Variable Rate Wastewater Revenue Refunding Bonds, Series 2C08 A - Orignal I ssue $33,015,000

On October 17, 2008 the City issued Series 2008A Wastewater Revenue Reftndng Bonds in the anoint of $33,015,000. The proceeds from the Bends were used to refund the City’s 20C6B Wastewater Revenue Bonds. The2008A BondsweteissiedasvariablerateBonds. TheratefluctuatesaccadngtQ the market condticns, but is capped at 12%. Along with the issuance, the City entered into an irrevocable drect-pay letter cf credt issued by Union Bank of California in orefer to rerrarket the bonds at lower interest rates. The Union Bank letter of credt is valid througi April 21, 2017, thetefae the Bonds are reported as due in one year. The City aignally entered into a 31-year interest rale swap ageerrent fa the entire amount of the 2006B Bonds, and the City continued this interest rate swap ageerrent after the redemption of the 2006B Bonds, and the 2008A Bonds are associated with the interest rate swap ag'eement, but the notional amount of the swap is based on the 2006B Bonds. The comb nation of thevariade rale bends and a floating rale swap creates a synthetic fixed-rale debt fa the City. The synthetic fixed rale fa the Bonds was 3.82C% atjune30, 2016.

Atjune30, 2016, theBonds consisted of the fdlowing

Bonds outstanding $32,915,000Unarrortized discount (159,140)

Net $32,755,860"

Theannual debt servicereqLirementscn theBonds areasfdlcws:

Fa theYearsEndngJ une 30, Principal Interest Total

2017 $32,915,000 $1,506677 $34,421,6772018 1,093,581 1,093,5812019 1,093,581 1,093,5812020 1,093,581 1,093,5812021 1,093,581 1,093,581

2022-2026 5,130,610 5130,6102027-2031 3,640,920 3 640,9202032-2036 1,766984 1,7669842037-2039 94,409 94,409

Total $32,915,000 $16513,924 $49,428,924

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RichmondJ dnt Powers Financing Authaity Lease Revenue Rdunding Bonds, Series 2C09 - Pat Refunding Bonds Orignal I ssue $2,673,455

On November 10, 20C0, the Authaity issued Series 2009 Lease Revenie Rdundng Bonds in the amount of $89,795,000 as dscussed in Note 7A above The proceeds from the Bonds were used to refund the Authority’s entire outstandng principal amount of its 2007 Lease Revenue Bonds. A portion of the proceeds from the 2007 Bonds were used to refund the remaining $3,865,000 principal amount of the 1996 Port Terminal Lease Revenue Bonds. The 1996 Bonds were called in March 2008 The Port of Richmond Enterprise Funds Portion of the Refundng Bonds was fully repaid during the fiscal year errefedj une 30, 2016.

In connection with the issuance of the 2007 Lease Revenue Bends, the Authaity entered into a swap ageerrent fa $101,42Q000, the entire amount of theBonds. On November 10, 2C09, in connection with the i ssuance of the Series 2009 Bonds, the Authaity terminated the aignal swap ag'eement and entered into an amended swap ageerrent effective December 1, 20C9 fa a notional arrant of $85,360,000. The amended ag'eement requi res the A uthority to make and receive payments based on vari abe i nterest rales. The Authaity will make payments basedenavariabe interest rale equal to 10C% of SIFMA plus a fixed percentage of 0.5(1% and the Authaity will receive variabe rale interest payments equal to 68% of 1- rronth LIBOR from the swap canterparty. Floating rale payments were made semi-annually on August 1 and February 1 commencing on February 1, 2010. On February 3, 2016, the interest rate swap ageerrent was terminated as dscussed in Nae7A above

I nterest RateSwapAgeements

On November 19, 2009, the City term rated the swap ag'eement associated with the 2006B Wastewater Revenue Rdundng Bends dscussed above by using the proceeds from a swap ageerrent that is based on the $32,260,000 notional amount of the 2006B Bonds. In connection with the 2009 swap ageerrent the City received an upTront payment in the amount of $4,431,618 that was used to make the termination payment on the pria swap ag'eement The fixed rate payments to the counterparty will be due semiannually on August 1 and February 1, commencing February 1, 2010. Thevariade payments from the canterparty will be due on a monthly basis on the last business day of each month commencing Decerrber31, 2009. ThetransactionallowstheCity tocrealeasyntheticfixedratecnthe2008A Bonds, praecting it against increases in short-term interest rales. The terms, fair value and credt risk of the swap ag'eement are dsclosed below.

The City also entered into a swap ag'eement associated with the 2009 Lease Revenie Refundng Bonds, fa which the terms and risks are dsclosed in Note 7A above On February 3, 2016, the swap ag'eement was term rated with the i ssuance of the Series 2016 Lease Revenue Bonds. Only d sclaure related to the change i n the fai r val ue cf the 2009 L ease Revenue B onds i s i ncl uded be! cw.

93




Terms. The terms, includngthecanterparty credt ralingof theoutstardng 20C6B Boris swap as of J une 30, 2016, are inducted below. The swapageanent contains scheduled reductions to theoutstardng notional amount on an annual basis

Outstardi ng

Noti oralAmount

EffectiveDate Courterparty

Long-Term

Credit Rati ng (S&PAIoocV's/Fitch)

Fixed

RatePaid

Van &leRate

ReceivedFair Value at

June 30, 2016Termi nai or

Dae

$32,2SXOO 11/23/2C09Royal B ank of Canada AA-/Aa3/AA 3.897%

63.42% of USD-1Month LIBOR pits 22 baas

points ($1 2,1 82,683) 8/1/2037

Based on the swapageement, the City ewes interest calculated at a fixed rate to the canterparty of the swap In return, the counterparty owes the City interest based on the variable rate that approximates the rate requred by the Bends. Debt principal is rot ©cchangd the outstardng notional amount of the swap i s the basi s on whi ch the swap recei pts and payments are cal cul aled

Fair value Fair value cf the swap6 take into consideration the prevailing interest rale environment, the specific terms and corritions of each transaction and any upfront payments that may have been received Fair value was estimated using the zero-coupon dscounting method This method calculates the future payments required by the swap assuming that the current forward rales implied by the LIBOR swap yield curve are the market’s best estimate of future spa interest rates. These payments are then dscounted using the spa rales implied by the current yield cuve fa a hypothetical zero-coipon rate bond due cn the dale of each futire net settlement on the swap The swaps are classified as Level 2 cf the fai r val ue hierarchy, using a market approach that considers observable swap rales commonly quaed fa the fd I term a the swaps.

A s a J une 30, 2016, the fai r val ue fa the each cf the outstarri ng swaps were i n fava cf the respective canterparties. The fair value represents the maximum loss that wculd be recogiized at the repotting date if the counterparty failed to perfam as contracted The City has accounted fa the change in fair val ue a each cf the i neffecti ve hedges as rated be! cw:

Chaigesin Fair Velue Fair val teat Jure S3,2016Clarification Arrout Cl as fi can in Airou-c

Busi ness-Typs Activities

Pay-Fixed, Receive-Vari able20XB Waa&vater B ends l rvestrrert reverue ($3,190,683) 1 rvestment ($12,182,683)

Pay-V ar i abl e, R eceiveV ari abl e2039 Lease R e/enue Refund ng B onds l rvestrrert reverue 12,292 (A) l rvestment 0

TctaJs ($3,178,391) ($12,182,683)

(A) The 2039 Lease Reverue Refund r*g Bonds swap ayeerrert wasterminaed with the i ssuarce of the 2316 Leeee ReverueB ends in February 2016. The change in fair velue i s of J a*iuary 27, 2316, the closest ava latte to the terminal on dae.

94




Credt risk As cf J une 3Q 2016, the City was na exposed to credt risk on the outstandng swaps because the swaps had a negative fai rvalue However, if interest ralesincreasearrithefairvalueathe swaps were to become positive the City would be exposed to credt risk. TheCitywill beexposedto i nterest rate ri sk only if the counterparty to the swap ctefaul ts a i f the swap i s term rated

Basis risk Basis risk is the risk that the interest rate paid by the City cn the uncterlying variable rale borate to the borahdeters tempaarily dffers from the variable swap rale received from the counterparty. The City bears basis risk on the swap The swap has basis risk since the City receives a percentage cf the LIBOR I nctex to afset the actual variable bond rate the City pays on the uncterlying 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. Depend ng on the magritucte and duration a any basis risk shortfall, the expected cost cf the basi s ri sk may vary.

A portion cf 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 cf a reduction in federal and state income tax rates. ShorJd the relationship between LIBOR and the tncterlying tax- exempt variable rate bonds converge the City is exposed to tils basis risk.

Termination risk The City may terminate if the other party fails to perform uncter the terms cf the contract. TheCitywill beexposedtovariaderatesifthecounterparty to the swapcontract defaults a if the swap contract is terminated A termination cf the swapcontract may also result in the City’s making a receivi ng a term nation payment based on market interest rales at the time a the term nation. If at the time a term rati on the swap has a negative fair value, the City would be liable to the counterparty fa a payment equal to the swap! s fair value.

Rollover Risk Rollover risk is the risk that the swapassaiated with a ctebt issue matures a may be terminated priatothe maturity cf the assaialedctebt. When the swap term nates a a termination option is exercised by the counterparty, the City will be re-exposed to the risks benghedgsdby the swap The swap based on the 2006B Wastewater Bonds, assaiated with the 2008A Wastewater Revenue Bonds, exposes the City to rollover risk because the swap terminates on August 1, 2037 while the 2008A WastewaterRevenueBorrismaturecnAugustl, 2038.

Swap payments and assaiated ctebt. Using rales as aj une 30, 2016, ctebt service regirements cf the City’s outstandng variable-rate Bonds and net swap payments, assuming current interest rales remain the same fa their term are as follows. As rates vary, variable-rate bond interest payments and net swap payments wil I vary. These payments below are i nducbd in the Debt Service Reqji rements above

95




FortheYears Variable-Rate Bonds 1 merest RateEndingjune30, Principal Interest Swap, Net Total

2017 $32,915,000 $413,0% $1,093,581 $34,421,6772018 1,093,581 1,093,5812019 1,093,581 1,093,5812020 1,093,581 1,093,5812021 1,093,581 1,093,581

2022-2026 5,130,610 5,130,6102027-2031 3,640,920 3,640,9202032-2036 1,766,984 1,766,9842037-2039 94,409 94,409

Total $32,915,000 $413,0% $16,100,828 $49,428,924

RichmondJ cint Pewers FinancingAuthaity Point Potrero Lease Revenue Bonds, Series 2009A and 2C09B - Orignal I ssueSeries 20094. ($26,83Q000), Series 200* (S20,82Q000)

On July 13, 2009, the Authority issied Series 2009A and Series 200* Point Pctrero Lease Revenue Bonds inthearrountsof $26,830,000andS20,820,000, respectively. T he proceeds from the B onds were used fa the construction of an autorddle warehousing and dstribution facility, inducing rail improvements, to te located at the Point Potrero Terminal at the Port of Richmond The facility began operations in April 2010. The Bonds tear interest rates that range from 6.25% to 8.5CP6. Principal payments are due annually cn July 1 and semi-annual interest payments are ctej uly 1 and January 1 commencing on January 1, 2010 throuc^i 2025 fa the Series 20CQA and throu^i 2020 fa the Series 200* Bonds.

Atjune30, 2016the Series 2009A Bonds consisted of:

Bonds outstanding $26,830,000Unarrortized discount (157,402)

Net $26,672,598

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Theannual debt service reqiirerrentscn the 20CQA Bonds are as fdlows:

For theY earsEndingjune30, Principal Interest Total

2017 $1,676,875 $1,676,8752018 1,676,875 1,676,8752019 1,676,875 1,676,8752020 1,676,875 1,676,8752021 $3,905,000 1,554,844 5,459,844

2022-2025 22,925,000 3,393,281 26,318,281Total $26,830,000 $11,655,625 $38,485,625

Atjune30, 2016theSeries200* Bonds consisted of:

Bonds outstanding $12,815,000U nanratized discount (132,723)

Net $12,682,277

Theannual debt service reqiirerrentscn the 20C6B Bonds are asfdlows:

FortfeYearsEndingjune30, Principal 1 merest Total

2017 $2,830,000 $956,838 $3,786,8382018 3,065,000 709,419 3,774,4192019 3,320,000 441,419 3,761,4192020 3,600,000 151,031 3,751,031

Total $12,815,000 $2,258,707 $15,073,707

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Richmond Wastewater Revenue Bonds, Series 201OA and Richmond Wastewater Revenue Bonds Taxable Bui Id America Bonds, Series 201 OB-Orignal Issues $3,110,000 and $41,125,000

On October 7, 2010 the City issued Series 20104 Wastewater Revenue Bonds in the anoint of $3,110,000. The proceeds from the Bonds were used to finance improvements to the City’s wastewater cdleztion, treatment and dspcsal 9/stem Principal payments are die annually cn August 1. Interest rates on the Bonds range from 3% te>4% and payments are due semiannually on A ugust 1 andFebruary 1 begnning February 1, 2011. The Bonds rratureonAugjst 1, 2016. Atjine30, 2016 the Series 20104 Bonds consisted of:

Bonds outstanding $1,070,000Unanratizedprenium 31,173

Net $1,101,173

Theannual debt service regdrerrentscn the 20104 Bonds are as follows:

FortheYearsEndingjune30, Principal Interest _____ Total

2017 $1,070,000 ________$21,400 $1,091,400

On October 7, 2010 the City also issued Series 2010B Wastewater Revenue Bonds Taxable Build America Bonds in the anoint cf $41,125,000. The proceeds of these Bonds will be used in conjunction with the 20104 Bonds fa the projects listed above The taxable 201CB Bonds were sold as "Build America Bonds” pursuant to the American Rezovery and Reinvestment Act of 2009 The interest cn Build America Bonds is na tax-exerrpt and therefaethe bonds carry a higher interest rate However, thi s higher i nterest rate wi II be offset b/ a sriosid/ payable ty the United Stales Treasury equal to 35% of the interest payable on the Bends. The sifcsidy will be payable on a about the date that the City makes its debt service payments and the total subsidy received in fiscal year 2016 was $801,453. Principal payments on the Bonds will be made annually on August 1. The Bonds bear interest of rales that rancp from 3.757% to 6.461% and payments are due semiannually on August 1 and February 1 begnning February 1, 2011. TheBondsmatureonAugustl, 2040

Atjune30, 2016theSeries2010B Bonds consisted of:

Bonds outstanding $41,125,000Unarrortized discount _______ (322,530)

$40,802,470

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Theannual debtserviceregjrementscnthe2010B Bondsareasfdlows:


2017 $2,463,546 $2,463,5462018 $1,115,000 2,442,601 3,557,6012019 1,145,000 2,397,359 3,542,3592020 1,175,000 2,347,247 3,522,2472021 1,210,000 2,293,638 3,503,638

2022-2026 6,665,000 10,454,991 17,119,9912027-2031 8005,000 8328448 16,333,4482032-2036 9,790,000 5,516,724 15,306,7242037-2041 12,020,000 2,005,172 14,025,172

Total $41,125,000 $38 249,726 $79,374,726

PledgeofWastewater Revenues

The City has pi edzpd future wastewater customer revenues, net of specified operating expenses, to repay the 20064, 20084, 20104 and 201 OB Bonds througi 2041. The Municipal Sewer Enterprise Funds total principal and interest remaining to be paid on the bonds is $140,968013. The Mmicipal Sewer Enterprise Funds principal and interest paid fa the ament year and total customer net revenues were $6,593,375 and $9,889,640, respectively.

Naes and Loans Payable

Naes and loans payable atj me 30, 2016, consisted of the foil owing

California Department of Boating and Waterways $2,783,127RHA RAD Housing Partners L.P. Promissory Note 700,000

Total $3,483,127

99




Califania Department of Beating and Waterways

The City has three loan agmrents with the Califania Department of Beating and Waterways fa total borrowings of $9,427,000. Proceeds from the loans were used to finance marina construction projects The loans tear interest at rates rangng from 4.5% to 7.5% and are due in annual installments througi August 2042. The total amount cutstandngatj ine 30, 2016 was $2,783,127.

The annual debt service requi rerrents on these loans areas fd lews:


2017 $81,574 $125,241 $206,815

2018 85,246 121,570 206,8162019 89,081 117,734 206,8152020 93,090 113,725 206,8152021 97,279 109,536 206,815

2022-2026 556,132 477,943 1,034,0752027-2031 693,042 341,033 1,034,0752032-2036 640,873 182,112 822,9852037-2041 438,941 52,647 491,5882042-2043 7,869 534 8,403

Total $2,783,127 $1,642,075 $4,425,202

RHA RAD Housing Partners, LP Promissory Nae

On December 17, 2014, the Hcusing Authority’s Component Unit RHA Housing Corporation, entered into an ageement with the City and promised to pay a principal arrant of $700,000, plus accrued interest The proceeds of the Note were then loaned from RHA Housing Corporation to the Hcusing Authority to finance accprisitions and development of the properties undergoing rehabilitation work in conjunction with a RAD conversion (Friendship Mana/Triange Court). On December 22, 2015, the official clc6ing of the RAD conversion took place, at which time the Nae was assigned to a nevly created entity, RHA RAD Housing Partners, L.P. The Note payable to theCity was assigned fromRHA Caporalion to RHA RAD Housing Partners, L.P. along with a nae receivable from the Hcusing Authority. Theprinciple balance shall bear 1% simple interest The term a the Note shall expirefifty- fiveyears after. The balanced the promissory naeatj me 30, 2016 was $70Q000.

In fiscal year 2015, theCity 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 dscussedin Nae 5. Therefae, the Richmond Housing Authority Enterprise Fund new ewes this amount to RHA RAD Housing Partners L.P. and the interfund advance was converted to I ong-termefebt in fiscal year 2016.

too



NOTE 7-LONG-TERM DEBT OBLIGATIONS (Continued) |

C. Business-TypeActivities-RHA Properties

The following is a summary of RHA Properties long-term ctebt activities during the fiscal year ended Jine30, 2016:

Loans payable

Balance Balance DueWithinJuly 01,2015 AcHticns Retiranerts Jine30,20l6 OneYear

$2,5OQO0O $2,500,000 $2,500,000

Loans Payable

In fiscal years 2007 througi 2014, the General Fund made advances to the Richmond Housing Authority Enterprise Fund fa police sever, and other services as well as the Housing Authority's employee payroll, as dscussed in Note 4B, and RHA Properties assumed a portion cf that advance diring fiscal years 2013 and 2014, whi ch i s repotted as a I can payable

On May 1, 2013, a Memorandum a Understand ng(MOU) was reached between the Housing Authority andRHA Properties, which states that the RHA Properties shall provide resources derived from the sale praeedsd theWestridge at HilltcpApartments to pay a financial sancticn imposed by theOfficeathe I nspecta General (OIC) in an amount no less than $2,257,799totheHousingAuthaity and to retire the outstandng cfebt owed to the General Find by the Hcusing Authority in an amount no less than $6,600,000. Upondspositioncf theWestridge at HilltopApartments, RHA Properties had paid back to the City $7,717,728 of assumed cfebt during fiscal year 2013-2014. Inducted in the repayment was the OIC Sanction ctebta $2,257,799, which had been fully repaid as cfj une30, 2014.

As aj une 30, 2013, the Housing Authaity had invested $1,000,000 in start-up contributions and had advanced $966,183 to RHA Properties, which was used fa ctebt service and operating expenses The entire amount was repaid by RHA Properties from the praeeds a the dspc6ition of the Westridge at HilltopApartments

At June 30, 2016, total cfebt ewed to the City by the Authaity related to the above activity was $5,571,485, a which $2,500,000 was assured by RHA Properties on behalf cf the Authaity in fiscal year 2014; $3,071,485 rerrainswith the Authority. Inducted in the $2,50Q000 assumed by the RHA Properties was $1,359,929 cf nev cfebt ewed by the Authaity to the City, which represents retroactive charges the City billed diring fiscal year 2013-2014 fa the services the City had provicted to the Authaity pria to fiscal year 2013-2014. The enti re amount cf cfebt assumed by the RHA Properties is expected to be repaid from the $2,500,000 cf repair reserve fund withheld in the escrcw account assaiated with the sale cf the Westridge at Hilltop Apartments when the fund is released to RHA Properties.

101




D. Special AssessrrmtDebtWithoutCityCotrrnitment

Special assessment dstricts ha/e teen established in various parts of the City to provicte imprcverrents to properties located in those dstricts. Properties in these dstricts are assessed fa the cost of imprcverrents; these assessments are payable sdely ty property owners ever the term of the ctefct issued to finance these imprcverrents. The City is na legally a rraally obligated to pay these debts a Lethe purchaser of last resort of any faeclosed properties in these spedal assessment dstricts, na is it odigated to advance City funds to repay these debts i n the e/ent of cfcfad t by any of these dstricts. At J ine30, 2016, the balances of these Districts’ outstanding debt wereasfd lews:

Harbor Navigation I rrprovemsnt District $200,OCD

RichmondJPFA Reassessment Revenue RefuidngBonds, Seles 2O06A (inducingSeries 2006AT) 7,420,000

RichmondJPFA Reassessment RevenueRefundngBends,Senes2006B 1,500,000

RichmondJPFA Reassessment RevenueRefundng Bends, Series 2011A 2,955,000

E. Conduit Debt

The City has assisted private-sector entities by sponsaing their issuance of debt fa purposes the City deems to be in the pubic interest. These debt issues are secured solely by the property financed by the debt. The City is na legally a rraally odigated to pay these debts a be the purchaser of last resort of any foreclosed properties secured by these debts, nor is it odigated to advance City funds to repay these debts in the event of default by any of these issuers. At J une 30, 2016, the balances of these issuers’ outstand ng debt were as fd I cw s:

Richmond Cormuiitv Foundation, Richmond Haising Rehabilitation Prog’am.Sodal Impact Bond, TaxableSeries2015A $3,000000

102



NOTE 8-UNAVAILABLE REVENUE AND UNEARNED REVENUE

At J une 30, 2016, the fdlcwing unavailade revenues were recaded in the Fund Financial Statements because the funds were na avai lad e to fi nance e<pend tunes of the current peri od

Loans GrantsReceivable Receivable Total

General Find $483,019 $274,860 $757,879Cost Recovery Special Revenue FindComminity Development and Loan

3,231,766 3,231,766

Programs Special Revenue Fund 15,869,463 2,640 15,872,103Non-MajorGovemmental Finds 895,384 839,659 1,735,043

Total $17,247,866 $4,348,925 $21,596,791

Atjune30, 2016, the fdlcwing inearned revenues were reacted in the City-wicte financial statements on the Statement of Net Position

CAD Fees DeveloperEnhancement PrepaidRent Fees* Other Total

General Find $3,652,098 $647,288 $4,299,386Ccst Recovery Spedal Revenue Fund Ccmmnty Develcprrent and L oan

1,513,086 1,513,086

PtogamsSpeaal Revenue Find 9,750 9,750Civic CenterDefctServiceFund 3,113,580 3,113,580N ai-M ajcr Governmental Finds 887,766 887,766P at of R i chrraid E nterpi se F ind 500,000 500,000Municipal Sewer Enterprise Find 9,000 9,000Internal SeiviceFind $1,289,239 1,289,239

Total $1,289,239 $6,765,678 $3,566,890 $11,621,807

103



NOTE 9-FUND BALANCES AND NET POSITION

A. NetPcxiticn

IntheCity-wictefinancial statements, NetPositicnisclassifiedasfollcws:

Net I nvestment in Capital Assets - This amount consists of capital assets net of accumulated depreciation plus cfeferred outflows of resairces associated with the rdundngof related capital debt, reduced ty outstandngdefct that was used fa the acqui si ticn, construction, a improvement

of these capital assets

Restricted Net Position - This amount is restricted ty external credtas, gartors, coitributas, laws a regulations of other governments Inaddtion net position restricted fa pension benefits are restricted as a resdt of enald ing leg siation.

Unrestricted Net Position - This amount is all net position that do na met the definition of "net investment in capital assets a "restricted net position.”

When an expense is incurred fa purposes fa which both restricted and unrestricted net position are available theCity’s pdicy is to apply restricted net position first

B. FundBalances

Governmental fund balances represent the net current assets of each fund Net current assets gnerally represent a find s cash and rezavaides, less its I i abilities.

TheCity’s fund balances are classified based on spend ng constraints imposed on the use of resarces Fa progams with multiple fundng sources, the City priaitiaes and expends finds in the following acfer: Restricted Committed Assigned and Unassigied Each category in the fdlcwing hierarchy is ranked accad ng to the degee cf spend ng constrai nt

Nonspendalde represents balances set aside to indcate items do na represent available spendable resources even thouc^i they are a component cf assets. Fund balances required to be maintained intact srxh as Permanent Funds, and assets na expected to be converted to cash, such as ptepaids, interfind advances and notes receivable are inducted However, if proceeds realized from the sale a collection a nonspendable assets are restricted committed a assigned then nonspendabl e amounts are regi red to be presented as a component cf the appl i cabl e category.

Restricted fund balances have external restrictions imposed by credtors, gantors, contributas, laws, regulations, a eroding leg slat on which regii res the resources to be used only faaspeaific purpose

Committed fund balances have constraints imposed by formal action cf the City Council which may be altered only by the same farral action a the City Council. The hipest level a formal action a the City Council isanOrdnance

104



NOTE 9-FUND BALANCES AND NET POSITION (Continued)

Assigned fund balances are amounts constrained by theCity’s intent to be used fa a speaific purpose, but are neither restricted na committed Intent is expressed by the City Council a itsdesigiee, the Finance Directa, and may be changed at the dscrelion cf the City Council a its desigieq during the budget approval process a via budget amendrents in accadancewith theCity’s adopted budget policy. This category inducts encumbrances; nonspendables, when it is the City’s intent to use proceed; a cdleotions fa a specific purpose, and residual find balances, if any, aspecial Revenue Capital Projeots and Debt Service Funds which have na been restricted a committed

Unassigied fund balance represents residual amounts that have na been restricted committed, a assigned This inducts the residual general fund balance and residual fund ctficits, if any, cf aha governmental funds.

DelailedclassificationsatheCity’sfundbalances, asajune30, 2016, arebelcw:

Special Revenue_________________ Debt Setvice

Furd B alance Cl asa fi cati cnsC ener al

FundCost

Recoverv

CommunityDevelopment

andLoanPrograms

Environmental and Community

1 nvestmentAaree merit

Civic CenterDebt Service

OtherC cvernmental

Funds Traal

NonspendableItems rot i n sperdabl e form

Prepai ct> suppli es ard other assetsLoarE receivableAdvance to other furds

$577,4773,346,462

1 4,493,730

$550 $578/0273,346,462

14,490,730

Total Ncnspendable Fund B alances 1 8,404,669 550 18,405,219

Restricted fcrStreet I mprovement ProjectsE mpl oymerit ard T raj m ng P rogram sPubl i c S afety C rant Pro-ams (P ol i ce aid F i re) Lighting ard LandscapingPena cn Obligati cnsHoua ng and Common ty Devel opmertDebt ServiceCommunity Development ProjectsOtherCapitaJ Projects

$24,1 47,179

$11/932159

2,319,957 1,266,952

311,540 973,922

2,468,263 560,588

7,827,246

2,844,549

2,319,867 1,266,952

311,540 973,922

2,468,263 24,707,758 7,827,246

11,032,150 2,844,549

T otal R estri cted F und B al ances 24,1 47,170 11,032,150 18,572,927 53,752,247

Assign edtoOtherCapitaJ ProjectsOther Contracts 4,490

431,957 431,8674,460

Total Asagned Fund B alances 4,460 431,957 436,3 27

UnasagnedGeneral FurdOther C ovemmertaJ F urd Defi cit Rea dial s

10,988,266($9,278,323 ($3,627,374) (918.737)

10,988,266 f 13,824,433)

T otal U nasa gned Fund B al ances 10,988,266 (9,278,323 (3,627,374) (918,737) (2,836,1 67)

Tctal Fund B alances (Defi cits) $29,397,395 ($9,278,323 $24.1 47.173 $11/932159 ($3,627,374) $18,085,637 $69,757,626

105



NOTE 9-FUND BALANCES AND NET POSITION (Continued)

C. ContingaicyResevePdicy

In fiscal year 2016, the City Ccuncil updated the fund balance policy to require the City to rraintain a year-md ccntingsncy reserve balance of a rrinirrum cf 7% of the next year’s budgaed General Fund expendtures. This is the rrinirrum needed to rraintain the City’s credtworthiness and to adequately prcvide for economic and legslative uncetainties, cash flew needs and contingexies. City Coincil approval i s requi red before ary cash can bewithdawn from the tesevefind The Counci I shall have the dscretion to use the reserve for one time emerepneies only and net to be used for ongoing expenses. At the time of City Council approval of ary use of reseves, 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 J ine 30, 2016, which is a componmt cf unassigied fund balance of the General Fund is S5.9 million, which is approximatdy 4.1% cf fiscal year 2016-17 budgaed General Fundexpmdtures. As the City expeiences na revenue (guns in futireyears, the cash balance must grow back to 7% of total expendtures, following the stabilization policy, in orefer to allcw the City to build up its capacity to hard e futire short tarn economic downturns or enagaxi es without cutti ng servi ces.

D. Deficit F und Balances and Accumulated Deficits

At June 30, 2016, the fdlcwing funds had ddlcit fund balance or cteficit ret petition, which will be el i mi rated by future revalues:

Major Funds:

Cost Recovery Special Revenue Fund $9,278,322Civic Center Debt Service Fund 3,627,374

Non MajorCcvemmental Funds:Paratransit Operations Special Revenue Fund 825,324Developa Impact Fees Special RevenueFund 93,413

Non Major Enterprise Funds:StormSewer 2,610,616Cable TV 1,689,535

Intanal Service Fund:Insurance Reserves 12,797,568

Compensated Absences 1,388,415Private-PurposeTnst Fund:

Successor Agency to the RichmondCommunity Redevelopment Agency 67,642,836

106



NOTE 10- CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM PENSION PLANS

Fa purposes of measuring the net pension liability and evened outficws/inflcws of resources related to pensions, and pension expense, infamalion about the fiduciary net position of the Plans and addtions to/daductions from the Plans’ fiduciary net position have been determined oi the same basis as they are reported by theCalifomia Public Employees’ Retirement System(CalPERS) Financial Office Fa this purpose, benddt payments (inducing rounds of employee contributions) are reeogiized when currently due and payald e i n accacfence with the benefit terms I nvestments are reported at fai r val ue

A. General Infarration abort the Cal PE RS Pension Plan

Plan Description - All qualified permanent and probali aiary employees are el ig be to participate in the City’s separate Safety (jxlice and fire) and Miscellaneous (all other) Plans, agent multiple-employer defined benefit pension plans adrinistered by CalPERS, which acts as a corrmcn investment and adrinistrative agent fa its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available repots that inductea full description of the pension plans regard ng benddt provision, assumptions and membership i nformali oi that can be found on the Cal PE RS websi te.

Benefits Provided - CalPERS provides service retirement and dsability benefits, annual cost of living adjustments and death berdits to plan members, who must be public employees and benddeiaries. Benefits are basedonyearsef credted service, eqjal tooneyearof full timeemployment. Members with five years of total service are eligble to retire at age 50 with statutorily reduced benefits. All members are eligble fa non-duty dsability benefits after 10 years of service The death benefit is one of the following the Basic Death Benefit the 1957 Snviva Benefit a the Optional Settlement 2W Death Benefit The cost of living aejustments fa each plan are applied as specified by the Public Employees’ Retirement Law.

The City’s employees hi red on a before December 31, 2012 participate in the Miscellaneous Plan under the 2.7% <® 55 Benefit Farrula a the Safety Plan under the 3.C% <® 50 (Police) a 3.C% <® 55 (Fire) Benefit Formula The Pension Refam Act of 2013 (PEPRA), Assembly Bill 34Q is applicable to employees new to CalPERS and hi red after December 31, 2012 The City’s employees hired on a after January 1, 2013 participate uncter the Miscellaneous Plan 2.0*4 <® 62 Benddt Formula a the 2.7% <® 57 (PdiceandFire) Benddt Formula

107



NOTE 10 - CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM PENSION PLANS (Camtinued)

The Plans’ prcv i si ons and benefi ts i n dfect at J une 30, 2016, are summarized as fd lews:

M i seel 1 aneaisPriato On a alter

Hire dae Jenuery 1,2013 Jenuery 1,2013B enefit farrU a 2.7% ® 55 2.0% ® 62B enefit vesti ng sdiedul e 5years service 5 years servi ceB enefit payments motNyfalife rrcrthlyfalifeR si rerrent 50-55 52-67MatNy benefits, asa% ofeligdecorpensaioi 2.% to 2.7% l.C% to2.5%R equi red errpicyeecatributiai raes aa% 675%R equi red errpl cyer earn buti cn raes 22.070% 22.070%

Safsy-Pdice Safsy -Fire Safsy -Pdice and Firepriato priato on a arts

Hire dae January 1,2013 Jenuery 1,2013 Jenuery 1,2013B enefit farrU a 3.0% ® 50 3.0% ® 55 2.7% ® 57B enefit vesti ng sdiedul e 5years service 5 years servi ce 5 years sent ceB enefit payments motNyfalife rrcrthlyfalife rrothly fa lifeR si rerrent a^ 50 50-55 50-57MatNy benefits, asa% of eligdecarpensaioi 3.0% 2.% to 3.0% 2.0% to 2.7%Required errpicyeecatributiai raes aa%" acc%" 12.25%R equi red errpl cyer corn bun a raes 33.26% " 33.26%" 33.26%

’ Effective Jiiy 1, 2015, Safety (Police and Fire) employees firedpriertojeruarv I, 2013 pay 3% of the employer's reepired contribution. Therefore, the requ red employer contribution rate is 30.26496 and required employee contributicn rate is 126.

Emplcyess Covered - As of thejune 3Q 2014 actuarial valuation date and thejune 30, 2015 measirement date, the fd I owing errplcyees were covered ty the tenefit terms fa each Plan:

Miscellaneous SafetyJune 36 2014 June 36 2015 Jure36 2014 J ure 36 2015

l nanve errpl cyees a benefi a eri es currertly receivi ng benefits 876 883 450 467l nan ve errpl cyees era tl ed to but na ys receivi ng berefi ts 489 503 77 76Activeerrid cyees 464 472 264 260

Tad 1,859 1,858 791 803

As of June 30, 2016, the City had 460 active employees in the Miscellaneous Plan and 258 active employees i n the Safety Plan.

Contributions - Section 20814(c) of theCalifania Public Employees’ Retirement Law reqjires that the employer contribution rates fa all public employers be determined on an annual basis by the actuary and shall be dTeetiveon the July 1 following notice of a chancy i n the rate Furdng contributions fa 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, withanaddtional amount to finance any unfuncted accrued liability. The City isreqiired to contribute the dfference between the actuarially determined rate and the contribution rate of employees.

108



NOTE 10 - CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM PENSION PLANS (Continued)

B. NetPension Liability

The City’s net pension liability fa each Plan is measured as the total pension liability, less the pension plan’s fiduciary net paiticn. The net pension liability of each of the Plans is measured as of J une 30, 2015, using an annual actuarial valuation as of J une 30, 2014 rolled forward to J une 30, 2015 using standard update procedres. A summary of principal assumptions and methods used to determine the net pension liability is shewn belcw.

Actuarial Assumptions - Fa the measurement period ended June 30, 2015, the total pension liabilities were determined ty rolling forward thejune 30, 2014 total pension liability. TheJ une 30, 2015 total pension I iatilitieswere based on the following actuarial methods and assumptions:

Miscellaneous (1) Safety (1)

vduaioiDae MeasurerreitDae Actuarial CcstMshcd Actuarial Asstrrpiais

Di scaunt R ae infl aicn Pa/rdl Growth Projected Sal ay l noeaee l rwestrrert R ae of R aurn

Motdiry

Pea R eo rerrent B enefit l rcreaee

June 30,2014 June30, 2015

Entry-A^Norrd CcstMalxd

jure 30,2014 Jure 3Q 2015

Entry-A^Ncrrrd Cca Malxd

7.65%2.75%3.06

3.2% -12.2% (2) 76% (3)

Dai ved using Cal Pens M errbership Daa fa d I Fuids(4)

coral ujla upt0 2./5% urn i ptroiaarg Pews Praeai on Al I cwance FI oa on Purdies ng Pews applies, 2.75% thaeafea

765%275%3.06

3% -20.1% (2)

7.65% (3)Daived us ng Cd Pas M entered p Daa fa dl

Funds(4)uatraii.uLA upto^./s% until Furaiasing Pcwa Protection All cwaice Flea on Purdies ng Pcwaapplies,2.75% thaeafea

(1) Aauaid assurrptiaisarethesarrefaall benefittias(2) Depadngoi ag, setviceandtypeoferrplcyrreit(3) NaofpensonpleninveaiTentexpenses,irdudnginflacn(4 The rrratd ity ted eusedwes developed based on Cd PER S' speo fi c chta The table ind udss 5 yeas of rratd icy irrprcverreits us ng Sea ay

of A ausri es Seal e AA. Fa rraedsal sen thi stable, please refer tothe CalPERS 2010 experience study repot a<alddecn CdPERS website.

All other actuarial assumptions used in thej une 30, 2014 valuation were based on the results of an actuarial experience stucV fa the period 1997 to 2011, indudng updates to salary increase, mortality and retirement rates The Experience StucV report can be foind on the CalPERS website under Farrs and Publications.

Change of Assumptions - CASB 68 paragaph 68 states that the long long-term e<pected rate of return should be determined net of pension plan investment expense, but without redaction fa pension plan administrative expense Thedscount rateof 7.5C% used fa thej une 30, 2014 measurement date was net of administrative expenses Thedscount rate of 7.65% used fa thej une 30, 2015 measurement date is without rediction of pension plan administrative expense All other assimpdons fa thej lime 30, 2014 measirement date were the same as those used fa thej une 30, 2015 measirement date

109




Discount Rate-The dscant rate usedto measure the total pension liability was 7.63^ fa each Plan. To determine whether the municipal bond rate should te used inthecalculalicn of ad scount rate fa each plan, CalPERS stress tested plans that wodd most likely result in ad scount rate that would te dfferent fromtheactuarially assumed d scount rate Based on the testing none of the tested plans run out of assets Therefore, the current 7.65% d scount rate is adequate and the use of the municipal bond ratecalculation is rat necessary. The long term exported dscount rate of 7.65% is applied to all plans in the Pubic Employees Retirement Fund(PERF). The stress test results are presented in a detailed report that can be obtained from theCal PERS website meter the CASB 68se:tion.

The long-term exported rate of return on pensi on plan i rivestments was cfetermi ned usi ng a bui I d ng-bl ock method in which best-estimate ranges of expected future real rates of return (expected retirns, net of pension plan investment expense and inflation) are developed fa each maja 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 flews Such cash flews were developed assuming that both members and employers will make their required contributions on timeandasschecLiledinall future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first lOyears) and the long-term (11- 60 years) using a bui Id ng-dock approach. Using the expected nominal returns fa both short-term and long-term, the present value of benefits was calculated fa each fund The expected rate of return was set by catenating the si nc^e equivalent expected return that arrived at the same present value of benefits fa cash flews as the one calculated using both short-term and long-term returns The expected rate of return was then set equival ent to the si n^ e eqji val ent rate cal cul ated above and rounded drwn to the nearest one quarter of one percent.

The tade belcw reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the dscount rate and asset allocation. These geometric rates of retirnarenetof adrinistraliveexpenses.

Asset Class

NavStrategic

AllocationReal Return

Years 1 -10(a)Real Return

Years 11-Kb)

Global Equity 51.C% 5.25% 5.71%Global Fixed Irtorre 19.C% 0.9S% 2.43%Inflation Sensitive 6.C% 0.45% 3.36%Private Equity 10.CP6 6.83% 6.95%Real Estate 10.CP6 4.5C% 5.13%1 nfrastructure and Forestland 2.0*6 4.5C% 5.05%Liqiidity 2.0*6 -0.55% -1.05%

Total 100.C%

(a) Anexpectedinflationof 2.5% usedfor this period.(b) Anexpectedinflationof 3.C% used for this period.

110




C. Changssin theNetPension Liadlity

The changes in the Net Pension Liadlity as of thejune 30, 2015 Measurement Date fa each Plan fdlcws:

Miscellaneous Plan:

Balance at June 30,2014 Changss i n theyear:

Service costInterest cn the total pension liability Differences baweenectual and expected experience Changes in assimptions Changss in benefit terms Plan to pi an resource rreverrent Contribution -errplot'er Contribution -enployee Net irvestrrent inccrre Achiristrative expenses Benefit payrrents, indudngrefinck of errplo/ee contributions

Na changes

Balance at June 30,2015

SafetyPlan:

Balance at June 30,2014 Changss i n theyear:

Service costInterest cn the total pension liability Differences baween actual and expeded experience Changes in assimptions Changss in benefit terms Plan to pt an resource rroi'errent Contribution -errplot'er Contribution -enployee Na irvestrrent inccrre Achiristrative expenses Benefit payrrents, indudngrefinck of errplo/ee contributions

Na changes

Balance at June 30,2015

Totals -M iscellanecus and Safety Plans

Increase(Decrease)Total Pension

LiabilityPlan FiduciaryNd Position

NaPensionLiablitvfAsset)

$430,968,811 $343 397,537 $87,571,274

7,446,41031,414,256(5,280,549)(7,116,200)

7,446,41031,414,256(5280,549)(7,116,200)

(6,885)7,189,7163,141,5657,502958(379,925)

6,885(7,189,716)(2141,565)(7,502,958)

379,925

(23,302,793) (22 302 793)3,161,124 (5,855 364) 9,016,488

$434,129,935 $337,542 173 $96,587,762

Increase(Decrease)Total Pension Plan Fiduciary NaPension

Liabilitv NdPositicn LiebilitvfAssa)

$539,798,444 $429,405680 $110392,764

10,142,245 10142,24540,142,006 40142,006

3,799,388 2799,388(9,563,090) (9,563,090)

2476 (3,476)10,652641 (10652,641)3,797,568 (2797,568)9,408186 (9,408,186)(477,249) 477,249

(28,747,508) (28747,508)15,773,041 (5,362886) 21,135,927

$555,571,485 $424,012794 $131,528,691

$989,701,420 $761,584,967 $228116,453

111




Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The fdlowing presents the net pension liability of the City fa each Plan, calculated using the dsccunt rale fa each Plan, as well as what the City’s net pension liability wouid be if it were calculated using a dscount rate that is 1- percentage pd nt I ewer a 1 -percentage pd nt hic^ier than the current rale

1% Decrease Net Pension Liability

Current Discount Rate Net Pension Liability

1% Increase Net Pension Liability

Miscellaneous Safety

6.65% 6.65%$149,934,428 $203,757,842

7.65% 7.65%$96,587,762 $131,528,691

865% $52,188,541

8.65% $71,974,250

Pension Plan F iduciary Net Paition - Detailed inforrration about each pension plan’s fidiciary net position is available in the separately issued CalPERS financial reports

D. Pension Expenses and DderredOutflcws/1 nflcws of Resources Related to Pensions

FatheyearenctedJ une30, 2016, the City recogrized pension expense of $13,099,772 AtJ une30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the fd I ewi ng sources:

Deferred Outflowof Resoirces

Deferredlnflcwsof Resources

Pension contributions sifcseqjent to measurement date DifferencesbetweenExpectedandActual Experience Changes of AssumptionsNet Differences between Projected and Actual Earnings cn Pension Plan Investments

$19,577,3822 772526 ($2,984,658)

(11,000,671)

(7,222,633)

Total $22,349,908 ($21,207,962)

$19,577,382 reported as deferred outflows of resources related to contributions subseqjent to the measurement date will be reccgiized as a reduction of the net pension liability i n the year ended J ire 30, 2017. Other amounts reported as deferred outflows of resources and deferred i nflcws of resoirces related to pensions will berecogizedas pension expense as fd lews:

YearEnded June 30

AnnualAmortization

2017 ($12,085,599)2018 (8,312,675)2019 (6,228,383)2020 8,191,2212021 0

Thereafter 0

112



NOTE 11 - OTHER CITY PENSION PLANS

A. Plan DescripdonsandFundngPdicies

The City administers three sinc^e-employer pension plans which are funded entirely by City contributions These are the General Pension Plan, Pdice and Firemen’s Pension Plan, and Garfield Pension Plan (cdlectively, the "Plans”). The General Pension Plan, a dddned benefit pension plan, covers seventeen former City employees (a their beneficiaries) nd coveted by CalPERS, all of whom have retired The Pdice and Firemen’s Pension Plan, a defined benddt pension plan, covers forty-four retired pdice and fire personnel (a their beneficiaries) employed pria to October 1964. The Garfield Pension Plan is a cfefined benefit pension plan established fa a retired pdice chief. The Plans provide retirement dsablity, and death benefits based on the employee’s years of service, age and final compensation. Benefit previsions fa the Plans are established by City Ordnance Noseparatefinancial statements are i ssued fa the Plans.

The City estaldishedtheSezured Pension Overricte Special Revenue Fund to which proceeds of a special incremental property tax levy vaed by the citizens of the City of Richmond are credted fa the payment of benddts under the City’s pension plans. The incremental property tax revenue received fa the year enefedjune 30, 2016 was $7,813,191, and the City used the funds to pay the General Pension Plan and the Pdice and Firemen’s Pension Plan contributions of $73,592 and $1,222,197, respectively.

General Pension Plan - Retirement and other benddts are paid from the assets of the Plan and from related investment earnings. The City is required under its charter to contribute the remaining amounts necessary to fund the Plan using the entry age-narral actuarial method as specified by Ordnance Management of the Plan is vested in the General Pension Board which consists of seven members:, the Maya, City Manacpr, Directa of Finance two members appointed by the Maya, with the concurrence of five members of the City Council, each of whom shall be and remain a resident of the City in aderto be a member of the Board and serve a term of five years, and two members to be elected every five years by secret ballavoteof the rank and file of Plan emplcyees and of Plan emplcyees who have retired and are receivi ng pensions from the Plan. Four members of the General Pension Board are to be concurred i n by four members.

The Plan is closed to new members. Retirement benddtsfa Plan members are calculated as one-half of the average annual salary attached to the position held by the retiree diring the three years pria to the dale of retirement Surviving spouses receive 10CP6 of the retiree’s pension. Benefit terms provide fa annual cost-of-living adjustments to each member’s retirement allcwance siteequent to the member’s retirement date The annual adjustments are an automatic increase of 2% per year. City Council may gantaddticrral increases of upto 3% per year to bring the total increaseinagvenyearto5%.

Pdice and Firemen’s Pension Plan - Findng fa the Plan is provided from the Secured Pension OverricteSpecial RevenueFind Employeeswerevestedafterfiveyearsof service Membersof thePlan areallcwednamal retirement benefits after 25 a rrcrecontiniaas years of service TheCity isreqaired under its charter to contribute the remaining amounts necessary to fund the Plan using the entry age- normal actuarial method as specified by Ordnance Management of the Plan is vested in the Pension Board which consists of seven members: the Maya, City Manacpr, Directa of Finance, two members appdnted by the Maya, with the concurrence cf fair membersof the City Council, each of whom shall be and remain a resident of the City in aeferto be a member of the Board and serve a term of five years, one representative of the Pd i ce Department and one representative of the F i re Department.

113



NOTE 11 - OTHER CITY PENSION PLANS (Continued)

The Plan is closed to new merrfcers Retirement bendits fa Plan rrerrters are calculated as one-half of the annual salary attached to the rank a position held by the retiree one year pria to the date of retirement Surviving spouses receive 10CP6 of the retiree's pension. Benefit terms prcvicte fa annual cost-of-l ivi ng adjustments to each member’s retirement al Icwance subsequent to the member’s retirement dale. The annual adjustments are an increase each year fa changes in the salary attached to the retiree’s rank i n the year before retirement

Garfield Pension Plan - Retirement and ether benefits are paid from the assets of the Plan and from related investment earnings. Plan previsions have been established and may be amended upon ageerrent between the City and Mr. Garfield Management of the Plan is vested in the City Council.

Mr. Garfield s pension and any coitinialion to his spouse receive the same cost-cf-living increases as the City’s pdice employees coveted by CalPERS. (CalPERS cost-of-living increases induct a 2% per year increase subjezt to CPI increase constraints, and purchasing power prdeztion threuefi the CalPERS Purchasing Power Protection Allowance) Mr. Garfields surviving speuse receives 5CP6 of the retiree's pension.

B. SigiificantAccountingPdicies

City contributions fa all plans are rezogiized when due and the City has made afarral commitment to provide contributions. Benefit payments and rdunds are recogiized when due and payable in accadance with the terms of the Plan. Adrrinistralivecc6tsfaall plans, except the investment manargment fees of the Police and Fireman’s Pension Plan, are paid by the City’s General Fund The investment management fees are financed throuc^i investment earnings. Assets are valued at fair value based on avai lable market i rf arrali on obtai ned f ran i independent sources.

C. Pension Plan Assets

AtJ une 30, 2016 the pension plans reported assets avai lable fa benefits as shown below. Fa actuarial purposes, thevalueof thePlans’ assets were determi ned to be fair value

City cf Richmond Investment Pool $2,581,820Lccal Agency Investment Fund (Garfield Plan) 173,059Wellington Trust Company Fund (Pol iceand Firemen’s Plan) 11,121,486I merest receivade 2

A ssets avai lad e fa benefi ts at J une 30, 2016 $13,876,367

The City of Richmond Investment Pool, classified in Level 2 of the fair value hierarchy, is valued using each Plan’s share of the investment pool. The Califaria Local Acpncy Investment Fund (LAIF), classified in Level 2 cf the fair value hierarchy, is valued using the fair value facta provided by the Treasurer of the State of California, which is calculated as the fair value dvided by the amortized cost of the investment pool. The Wellington Trust Company Fund investments, classified in Level 2 of the fair value hierarchy, are valued using the market approach, which uses prices and other information generated from market transactions, which typically inducts securities priced with unadjusted market qjotes, evaluated dds, market multiples, and tract informalien, and also generally inducts short term securities valued at amortized cost which approximates market value Fair value is coined as thequaed market val ue on the last trad ng day of the peri od

114




I nvestment Policies

The General Pension and Police and Firemen’s Pension Plans’ policies in regard to the allocation of invested assets is established and may be amended by Resolution of the respeztive Boards. The Plans al I ow i nvestments i n the fd lowi ng

(a) Ininvestmentswhichareauthaizedby General law fa savings banks.

(b) I n investments ether than those specified in subdvision (a) hereof, inducing, but nd limited to, caporale bond; and securities, common stocks, prderred stocks, investments in real estate and investment trusts, provided that the total amount invested pursuant to this subdvision shall not exceed fifty percent (5CP6) of the total amount cf fund; invested pursuant to this seztion, and provided further that the fdlowingcondtions are met

(1) Any stocks a ether caporate securities, in which funds are invested except stocks of banks, insurance companies a mutual funds, shall be regstered on a national securitiesexchangeas provided by the Federal Sezurities ExchangeAct

(2) The total amount i nvested i n common and preferred stocks shall not exceed al costal the time of purchase twenty-five percent of the total amount invested pursuant to this section.

(3) The total amount invested in the common and preferred stocks of ary one company shall rat exceed at cost of the time of purchase two percent of the tctal amount invested pursuant to this section and shall rat e<ceedfive percent of the outstanding preferred a common stock of that company.

(4) No funds shall be invested in the common stocks cf any company unless it has paid cash dvictnds on srxh stocks in eic^t of the ten years irrmedately precedng its ptrehase by the Board

(5) No finds shal I be i nvested i n the stocks a aher sezurities cf any ccmpary aher than a bank a instance company mless it has assets of at least one hunched million ddlars ($100,00Q000), a in the stocks a aher sezurities of a bank a insurance company unless it has assets a at least fifty million ddlars ($50,0C0,000).

(6) The total amount i nvested in teal estate and other than teal estate owned by a leased to the City cf Richmond which amoint may induct land buildngs, land and biildngsa real estate loans, shall rat exceed twenty-five percent a 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 a which are guaranteed by the Veterans Adri ni strati cn.

The Garfield Pension Plan does rat have a separate investment pdicy, therefore it uses the City’s investment pd icy.

115




I nterest, Credt andCaxentratioi Risk

Interest rate risk is the risk that changes in rrarket interest rales will adversely affect the fair value of an investment Nonrally, the loncpr the matirity of an investment the gealer the sensitivity of its fair value to chances in market interest rales The City invests in equities which may' bedawncfcwnas needed sulqezt to terms of the underlying trust ageerrent The investments held in the Pension Trust Finds all mature in less than cneyear.

Credt risk is the risk that an issuer of an investment will not fulfill its obligation to the hdder of the investment. This is treasured ty theassigirrent of a rating ty a nationally reccgiized statistical rating organization. Ascfjune30, 2016theinvestrrentsinthePensionTrustFindswerenarated

Concentration risk states that significant investments in the securities of ary indvidual issuers, other than U. S. Tteasiry securities a mutual funds, are required to be dsclosed when they exceeds five percent of the total pension investments. Only the Pdiceand Fire Pension Plan had investment concentration risk andsuch investmentswereasfollowsatj une30, 2016:

Issuer Type of 1 nvestrrent Arrount

CIF II CoreBondSeries 1 Equity Equity Fund $3,923,862CIF Research Equity Equity Fund 2,256,060CIF Opportinistic Investment Allocation Equity Equity Fund 1,677,734CIF International Research Equity Equity Fund 1,606,261CIF Global Contrarian Equity Equity Fund 1,097,285CIF Small Cap Quant Equity Equity Fund 560,284

Rateof Return

Fa the year ended J une 30, 2016, thearmual rroney-waedited rateof return on pension plan investments, net of pension plan investment expense fa the Police and Firemen’s, General Pension and Garfield Pension Plans was -1.2%, 0.3% and 0.4%, respeztively. The rroney-waedited rale of return expresses investment perfarrance, net of investment expense adjusted fa the chargrigamoints actually invested

116




D. NetPension Liabilityof thePlans

Thecorrponents of the net pension liability of the City fa each of thePlans is the total pension liability, less each Plan’s fiduciary net position.

Actuarial Assurrptions. The total pension liability as ofj une 30, 2016 was deterrri rred based on J une 30, 2015 actuarial valuations, rolled forward tojune 30, 2016 using standard update procedures. The fdlcwingactuarial assurrptionsappliedtoall periods irxludedinthemeasurement:

Police and FiremeVs CaieralPlan Paision Plan

Discouitrate net of investment expeises E xpected retirn on plan assets Inflation rale Cc6t-of4iving increases Actuarial cost method Salary increases

5.75% 5.75% 2.75%

3% per year Entry age ncrmal

N/A

3.0C% 3.0C% 2.75%

5% per year Entry age normal

N/A

Garfield Pension Plan

2% pe year Entry age ncrmal

N/A

Mortality rates were based on the CalifaniaPERS Mortality Table in its 2014 experience study (based on CalPERS 2001-2011 experience).

Discount Rates The dscount rales used to measure the total pension liability fa the Pdice and Firemen's Pension Plan, General Pension Plan and Garfield Pension Plan were 5.75%, 3.0CP6, and3.0CP6, respectively, as of J une 30, 2015 and 2016.

Fa the Pdice and Firemen’s Pension Plan, based on the 5 previous years the City has on averacp contributed 77% of the Actuarially Deterrrined Contribution (ADC). A sufficiency test was perfamed indudng (1) expected benrfit payments fa all futire years; (2) assuring that 77% of the ADC is contributed to the Plan infutireyears; (3) assuring that futire contribution losses areamcrdzedaccadng to the Plan’s furdng pdicy; (4) using the Plan’s assumed investment return bdore the projezted asset depletion (if any); and (5) using a 20year AA tax-exerrpt general obligation rruticipal bond index rate of 2.85% (using as a rrunicipal bond rate soiree the Bend Buyer CO 20Year Municipal Bend Index as of June30, 2016) after theprojectedassetcfeplelion. Based on these parameters, pi an assets are projected to be sufficient to pay all futire benefits until a derrinirrus amount of estirrated futire benefits retrain Thermae the Plan’s I erg-term expected rate of retirn of 5.75% was used as the d scant rate

Based on the 5 previous years the City has on average contributed and 83% of the Actuarially Deterrrined Contribution (ADC) fa the General Pension Plan and Garfield Pension Plan, respectively. A sifficiency test was performed indudng (1) expected benefit payments fa all future years; (2) assuring that 8^% oftheADC iscontributedtotheCeneral Pension Plan and 83% of the A DC is contributed to the Garfield Pension Plan in future years; (3) assuring that future contribution losses are amortized accadng to the Plans’ fundng pdicies; (4) using the Plans’ assumed investment retun befae the projected asset depletion (if any); and (5) using a 20year AA tax-exerrpt general obligation rrunicipal bond inctex rateof 2.85% (using as a rrunicipal bond rale source the Bond Buyer CO 20-Year Municipal Bond Index as of J une 30, 2016) 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 derrinirrus amount of estimated future bendlts remain. Therefaq the longterm expected rateof return of 3.0C% wasusedas the dscount rate fa each of these Plans.

117




The long-term expected rate of return or pension plan investments was cfeterminedfa each Plan using a builcing-block method in which test-estimates of e<pected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed fa each rraja asset class. These asset cl ass esti mates are comb ned to prodxe the portfd io I ong-term expected rate cf return ty wei cfiti ng the expected future real rates of return ty thecirrent asset allocation percentage (a target allocation, if availald^ and ty acting expected inflation (2.75%). All results are then roindedtothe nearest quarter percentage poi nt

The best-estimate of expected futire real rates of return were enveloped ty aggeepri rg cfeta from several piidished 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 asdverse views regard ng anticipated future return The expected inflation assumption was developed based on an analysis of histaical experience blendedwith forward-looking exportations available in market data

Best-estimates cf geometric real and nominal rates of return fa each maja asset class included in the Plans’ asset al location as of the measurement date are summarized below:

Allocation^ LcngTerm LcngTermMeasuerrent ErpectedReal ExpectedNorrind

AssetClass DSe RcteofRdun RateofRetim

Pol ice and Firemen's PlanDorresticEqutyInternational EqutyFiredlncorreReal EstSe and AlternativesCash and E quvdents

52%C%

36%C%

12%

5.58%571%2.27%4.44%Q84%

833%846%502%7.16%156%

TctSReduced for assured investment expenseTotS (wacftedavg rcundedto 12496)

IOOBS 6.91% (Q64%)

625% (l)

General Pension PlanDorresticEquty 0% 556% &33%International Equty c% 571% 846%Fisedlncorre c% 2.27% 502%Real EaSeandAltematives c% 4.44% 7.16%Cash and E quvdents IOOBS 0.84% 156%TctSReduced for assured investment expenseTotS (wacftedavg rcundedto 1/4%)

IOOBS 156%(Q5C%1

10C%

Garfidd Pension PlanDorresticEquty c% 5 56% &33%Intematicnd Equty c% 571% 846%Firedlncorre c% 227% 502%Real EaSeandAltematives 0% 4.44% 7.16%Cash and E quvdents IOOBS Q84% 156%TctSReduced for assured investment expenseTotS (wacftedavg rcundedto 12496)

IOOBS 156%(Q5C%)

10C%

(1) Theprdimnarv retumforijie Police and Firemen's Plan of 625© w*then redteed ty 50 basis ecintsto 575© in orderto r^lectthe ^fect of expected i nvesonent excess

118




E. Changes in the Net Pension Liability of Each Plan

The net pension I iabil ity of each Plan i s measured as cf J une 30, 2016 as fd lews:

PdiceandF irerren'sPlan: Increase (Decrease)Total Persion Plan Fiduciary Na Pension

Liability Na Position Liability AAsset)Balance at J une 30, 2015Changes intheyear:

$22,684,864 $14,716,878 $7,967,986

Service costInterest onthetotal pension liabilityDifferences baweer actual and expected experience

1,214,089 1,214,089

Changes in assumptionsC hanges in berait termsContribution-employerContribution-employee

1,222,197 (1,222,197)

Na invest met income (165,490) 165,490Administrative expensesBerait payments, including raurds ofenployeecontributions (3,140,552) (3,140,552)

Na changes (1,926,463) (2,083,845) 157,382Balance at J une 30, 2016 $20,758,401 $12,633,033 $8,125,368

Plan fiduciary na position as apercetage ofthetaal pension liability 60.6%

General Pension Plan: Increase(Decrease)Total Pension Plan Fiduciary Na Pension

Liability Na Position Liability <Assa)B alance at J une 30, 2015Changes intheyear:

$3,899,557 $975,637 $2,923,920

SeivicecostInterest onthetotal persion liabilityDifferences baweer actual and expected experienceChanges in assumptionsChanges in benait terms

107,632 107,632

Contribution -employeContribution -employee

602,970 (602,970

Na invest met income 2,255 (2,255)Administrative expensesBerait payments, including lamdsof errployeecortributions (623,662) (623,662)

Na changes (516,030 (18,437) (497,593)B alance at J une 30, 2016 $3,383,527 $957,200 $2,426,327

Plan fiduciary net position as a percetageofthetotal pension liability 28.3%

119




Garfield Paision Plan:Total Persian

Increase (Decrease) Plan Fiduciary Na Pasion

Liability Na Position Liability AAsset)Balance at J une30, 2015 $765,834 $273,721 $492,113Changes intheyear:

Service costInterest onthetotal pension liability 21,615 21,615Differexes baweai actual and expected expaiaceChanges inassurrptionsC hanges in bairfit tentsContribution-errployer 102,140 (102,140)Contribution-errployeeNa irvestmet income 933 (933)Adrrinist native expensesBeta it payments, including rdtnds oferrployeecontributi ons (90,660) (90,660)

Na changes (69,045) 12,413 (81,458)Balance at J une30, 2016 $696,789 $286,134 $410,655

Plan fiduciary na position as apercetage of thetotal paision liability

Totals -Other City Paision Plans $24,838,717 $13,876,367

41.196

$10,962,350

Sensitivity of the Net Pensioi Liability to Changes in the Discount Rate The fdlowing presents the net pension liability of the City fa each of the Plans, calculated using the dscount rate as well as what the City’s net pension liability wodd be if it were calculated using a dscount rale that is 1-percentage-point lower a 1 -percentage-pant hic^ier than the current rate

Pdiceand Firemen's Plan

GeneralPension Plan


1% Decrease 4.75% 2.0C% 2.0C%Net Pension Liability $9,302,210 $2,594,892 $448,485

Cirrent Discount Rate 5.75% 3.0C% 3.0C%Net Pension Liability $8,125,368 $2,426,327 $410,655

1% Increase 6.75% 4.0C% 4.0C%Net Pension Liability $7,064,265 $2,272,529 $376,132

120




F. Actuarially DeterrrinedContributions

As of June 30, 2015, the dale of the rrost recent actuarial valuations, the actuarially determined contributions fa each Plan were determined using the entry-age normal cost method and the assumptions inNctellB above

Fa the Pd ice and Firemen’s Pension Plan, the City’s contribution pd icy is to annually contribute an amount equal to(l) amortization of the unfunded liability as a level-dollarover a 10-year closed period asofj uly 1, 2013, plus (2) future gains and losses amortized ever the same period but nd less than five years. Over the past five years, the City has contributed an average of 77% of the Actuarially Defermi red Contri bution.

Fa the General Pension Plan, the City’s contribution pdicy is to annually contribute an amount equal to (1) amortization of the unfundedliabilityasalevel-ddlarovera6-year closed period as ofjuly 1, 2013, plus (2) future gains and losses amortized over the same period but nd less than five years. Over the past fiveyears, the City has contributed an average cf 85% d the Actuarially Determined Contribution.

Fa the Garfield Pension Plan, the City’s contribution pdicy is to annually contribute an amount eqaal to (1) amortizaliondtheunfuncfedliabilityasalevel-ddlarovera7-yearclosedperiodasdjuly 1, 2013, plus (2) future gains and losses amortized over the same period but nd less than five years. Over the past fiveyears, the City has contributed an average cf 83% d the Actuarially Determined Contribution.

The Actuarially Determined Contribution and the actual contributions fa each Plan fa the year ended Jine30, 2016are presented below:

ActuariallyDelermned Arrount Percent

Contribution Contributed Contributed

Pdiceand Firerreris Pension Plan $1,270,466 $1,222,197 96%General Pension Plan 750,016 602,970 8C%Garfield Pension Plan 78,987 102,140 129%

121




C. Pensioi Expenses and DrferredOutflows/l nflcws of Resources Related to Pensiois

For the year enctedj une BO, 2016, the City recognized pension expense fa each of the Plans as follows:

PensionExpense

Pdiceand Fireman's Plan $773,284General Pension Plan 97,766Garfield Pension Plan 17,736

Total $888,786

At J une 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions fa these Plans from the fd lowing sources:

Deferred Outflows Deferred I nflows of Resources of Resources

Pension contributions subsequent to rreasurerrent date - -Differerces between Expected and Actual Experierce - -Charges of AssurrptionsNet Differences between Projeted and Actual

Earrings on Pension Plan Investments $1,195,427 -Total $1,195,427 $0

A mcunts reported as deferred outfl ows cf resources and deferred i nflows of resources re! aled to pensi ons will fce recognized aspensionexpenseasfollows:

Year Ended AnnualJune 30 Amortization

2017 $335,0182018 335,0182019 335,0172020 190,374

122




H. Plan Financial Statements

The Statement of Net Pc6i ticn fa the Plans atj une 30, 2016 fd lows:

Pol ice andFireman's General Garfield

ASSETSPension Pension Pension

Pension plan cash aid investments:City of Richmond Investment PoolLocal Agency Investment FindMutual Find Investments

$1,511,546

11,121,486

$957,200 $113,074173,059

Interest receivable 1 1

Total Assas 12,633,033 957,200 286,134

NET POSITION

Restricted forerrployees' pension benefits $12,633,033 $957,200 $286,134

The Statement of Changes i n Plan Net Position fa the year enefedj une 30, 2016 fdlows:

PdiceandFireman's Gaiaal Garfidd

ADDITIONS

Paisicn Pension Pension

N a investment income:Na increase! decrease) in the fair value of investmaits ($391,1191 ($1081Intaest income 310,348 2,363 $9421 nvestrrent management fees (84,7191 (9)

Contribution fromtheCity 1,222,197 602,970 102,140

Total Ackltions 1,056,707 605,225 103,073

DEDUCTIONS

Pension benefits 3,140,552 623,662 90,660

Total Deductions 3,140,552 623,662 90,660

N a 1 ncrease (Decrease! (2,0838451 (18,437) 12,413

NETPOSITION RESTRICTED FOR PENSIONS

Becjnringofyeer 14,716,878 975,637 273,721

E nd of year $12,633,033 $957,200 $286,134

123




I. PARS DfTinedCaitritutiai Plan

Effective J uly 1, 2014, the City contracted with the Public Agency Retirement System (PARS), to sponsa a Seztion PARS 457 FICA Alternative Retirement Plan created in accordance with IRC Sections 3121(b)(7)(F) and 457(b), which is a qualified defined contribution pension plan cohering all eligble part-time seasonal and temporary employees cf the City on that date and hired thereafter.

The Plan requires these employees to contribute 6.2% and the City to contri bute 1.3%, of the employees pay plus adriri strati cn costs. The City’s required contributions of 520,216 and the employees’ regained contributions of $96,414 were made during the fiscal yearerdngj une30, 2016.

124



NOTE 12-OTHER POSTEMPLOYMENT BENEFITS

A. Plan Previsions

In aefer to qualify fa postemployment medcal andcfcntal benefits an employee must retire from the City and maintain enrollment in one of the City’s eligble health plans The City pays a portion of the Cal PERS premiums fa retirees and their dependents that vary by employment classification In addticn, the following eligblity rides and contribution retirements apply fa future retirees, fdlcwed by current retirees:

PI an Prcvi sons for F uture R etireesClassification tiigiDiinrv (Agefcavice y ears) M onthlv P remi um Pai d by C i cy B efcr e/Atter M edi care

SEIU Locd 1021

Service Rsi rement50/20, 51/18,52^6, 53/14,54/12, 55/10DisebihryRsiremem: an/agylO

Retiree orly or suvivirg spouse the lesser of $435 ard rreded premunRetiree+1 errrore the lesser of $567 aid medicd premiuriPlus PEMHCA Mm rrum $13Retired after 7/1 /1995 Reimbursement dlowedtowadsron- PERS plans

IFPTE, MiscellaneousExecuive M aiagement,Cnv Ccurcil

Service Rsi rementSame asSElU

Retiree orly or suvivirg spouse the lesser of $435 ard rreded premunRetiree+1 errrore the lesser of $567 aid medicd premiumPlus PEMHCA Mm rrum $13

FireLctal 1S8 35/15

Pacertage of premium (medcal premium mi res PEMHCA m n mum) for rsi ree^dependertsfiurviving space cp to premi un for coverage. Percentage is 90%, ircreeeed to 103% after 27 years of servi ce.Total Cicyccntnbuticn, exdudngPEMHCA minrrum, iscepped a Kaiser ron-Medicaeeligde premun for coverage sel ected Plus PEMHCA minimun $125

F i re M aiagement and F i re Execuive M aiagement 35/15

Pacertage of premi urn (rred cal premium mi rus PEMHCA m n mum) for rsi ree^dependertsfiurviving space cp to premi un for coverage. Percentage is 83%, ircreeeed to 956 after 15 yea's of service and 103% after 3 years of service. Tad City cortnbuion, exclud rg PEMHCA m n rrum, is capped a K aiser rcn-M ed care eJ i g bl e premi un for coverage sel ectedPlus PEMHCA minimun $125

Ridimord Pd ice Off! cer Assgaaticn(RPOA)

10 yea's of serviceServi ce i rcluctes ren City service Minrrum 5 yearsCity Service

Lesser of percentage of prem un for reo reeKteperdertsfiurvi vi rg spouse times med cd premium m roe PEMHCA m n rrum a percerTage of premium for rai ree^dependertsfiurviving spouse bu no mere than $827 per rrorth, m rus dead aid vis on prem uns. Percertage is 50%, ircreeeedto after 15 yeas ofservi ce, aid 1056 after 25 years of servi cePlus PEMHCA Minrrum $13City al sg pa/s 1056 ofctertd ard vis on premiums

PdiceWidcws Deahmlireofdjy Fdl oremun of rreded. dental ard vi son

Pd ice ManagerrerT aid Pd ice Execuive M aiagement

50/20, 51/18,52/16, 53/14,54/12, 55/10Servi ce i rcluctes ren City serviceM i n rrum 5 'rears Ci tv S ervi ce

Pacertage of premi urn (rred cal premium mi roe PEMHCA m n mum) for rai ree^dependertsfiurviving spouse op to K aiser (Pre Med care) ard 2id highea premium pj ai (post Medicare. Pacertage i s 65%, i ncreased to 75% afta 20 years of servi ce, aid 103% afta 3 '/ears of service.

125



NOTE 12-OTHER POSTEMPLOYMENT BENEFITS (Continued)

Plan Provisions for Current Retirees

Classification Subg’cupMonthly PreriumReirrtoursenent Bdore/Afto M edicare

Eligbility

SEIU Local 1CB1 Retiredjulv 1, 2007or later S arre as future red rees

Retired prior tojiiv 1,2007

S ane as future red rees, but caps are:Rdireeonly or surviving spouse: $224,5182Rdiree +1 a mere $344/1284

IFPTE, MiscdlaneousE xecutive M anagenert

Retiredjulv 1, 2007or later S cme as future red rees

RetiredNoventeS, 1999toJune 30 2007

S cme as future red rees, but caps are:Rdireeonly or surviving spouse: $2245182Rdiree +1 a mere $344/5284

Red red before Novenbier 5, 1999

S cme as future red rees, but caps are:Rdireeonly or surviving spouse: $124582Rdiree+1 a mere $2445184

FireLocd 188 S arre as future retirees

FireManaqsmeit

Red re on a after 7/12006 S cme as future red rees

Red re before 7/12006

S arre as future red rees, but caps are:Percentage of prerrium for rdiree/ctependentsArrviving spouse up to Kaiser non-MedcaeeligblepreTium for coverage selected Percentages 9(K, incrasedto I0(K after 2 7 years of service

126




Plan Provisions fer Current Retirees (Continued)

Classification SubcrcupM cnthly Premum Reimbursement Betcre/Atter M edcare

EligbilityRichrmndPolice Officer Association (RPOA) R dire cn or alter 7/1 /2008 S arre as futire red rees

R dired between 7/12004 and 6502008

Sarreas futire red rees, but:Reinbursenent capped at $614

R dired between 7/1/1997 and 6502004

Sarreas futire red rees, but:Reinbursenent capped at $550

R dired between 7/1/1994 and 650/1997

Percentage of prerrium (medcal prerrium rrinus PEMHCA rriritnim) for retiree/cfependentsAurvivingspcuse indudng cfental and vision. Percental is 65K for 10-19 yeas of sovice, increasedto 75% after 20yeas of sevice, aid lOOPo after 27 yeas of servi cePrerrium paid for cfental andvisicn.Plus PEMHCA rrinimm

R dired befcre7/l /1994

Percentage of prerrium (medcal prerrium rrinus PEMHCA rriritnim) for retiree/dependentsAurvivingspcuseindudng cfental andvisicn. Percentages 6SK for 10-19 yeas of sevice, inoeasedto 75% after 20yeas of sevice aid lOOPo after 27 yeas of servi ceReimbursement, exdudngthe PEMHCA rrinimm, ceppedat $210 for single coveage and $300 for 2-party coveragePrerrium paid for cfental andvisicn.Plus PEMHCA ninimm

PdiceManagenentaidPdiceE xecudve M anagsmsrit R dired on or after 7/12008 Sarreas futire retirees

Rdiredbetween 1/I/I99511’ and 6502008

Percentage of prerrium (meded prerrium rrinus PEMHCA rriritnim) for redree/tispendentsSurviving speuse Percentage is 65% fer 10-19 veers of sevice inoeasedto 75% after 20yeas of service and lOOPo after 27yeas of soviceRetired afte 1/12007-ReinbursemsntCcppedatKaiser premium, exdudng the PEMHCA rrinimum for pre-M edcare aid 2nd hicfiest prerriim plan for post-M edcare fer coverage selectedRetired before 1/1/2007 -Reinbursenent capped at 2nd finest prerrium plan, eidudngthe PEMHCA rririmim, for coverage selectedRetiredafto 7/1/1995: Rambursemsntallowedtowards non- PE RS plansPlus PEMHCA ninimm: $125

(1) Although the City dd provide medcal premium benefits with sincje and 2-party cap6 fa Police Management that retired pria tojanuary 1, 1995,ofJune 3Q 2016 therewere no retirees receiving such benefits.

127




Fa retirees eligbe to catinue health benefits, tut failing to meet the criterioi in the tables abcve the City pays the Public Employees Medcal and Hospital Care Act (PEMHCA) minirrurn which is SI 25 in 2016.

B. Fundng Pol icy and Actuarial Assumptions

During the year ended J une 30, 2008, the City joined the Public Agencies Post-Refinement Health Care Plan, an agent multi pie emplcyer trust adrinistered by Public Agency Retirement Services (PARS). The balance in the City’s PARS trust accant as of June 30, 2016 was $2,121,069. PARS issues a publicly availablefinancial report that inducts financial statements andreguired supplementary information. That report may be obtained from Public Agency Retirement Services, 4350 Von Karman Avenue, Suite 100, Newport Beach CA, 92660.

The City’s policy is to partially prefind these bendits by accumulating assets with PARS dscussed abaealongwith making pay-as-you-gD payments pursuant toResduficn No. 52-06 of J une 27, 2006. In December 2014, the City adapted an addtional find ng policy to place into the PARS trust half of ary one-time revenues and half cf ary year-end sirplus in e<cessof the City’s minimum reserve policy (7%) in an effort to pay down the unfunded liability. Althcugi the City paid $1,782,535 to the PARS trust during fiscal year 2016, there was no surplus as ddined abcve in fiscal years 2015 a 2016 to prcvide addfional fundng contributions. The fiscal year 2016 annual regtired contribufioi (ARC) was daerminedas part of aj uly 1, 2015 actuarial valuation using the entry age normal actuarial cost method This is a projected benefit cost method which takes into account those benefits that are expected to be earned in the future as well as those already accrued The actuarial assumptions inducted (a) 3.75% investment rate of return, (b) 3.CP6 projeeted annual salary increase (c) inflation rale of 2.75% (general) and4.C% (CPI medcal care),and(d) health care cost trend rates fa medcal of 825-6.C% fa2016to 2019 5.3CP6 fa 2020 to 2052 and decreasing to an ultimate rate of 4.4C% in 2076 and subsequent and 4,C% fa dental and vision. The actuarial methods and assumptions used induct teehniques that smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspeetive and actuarial valuations involve esfimales cf the val ue of reported amounts and assumptions about the probab I ity of events far i nto the future A ctuari al ly defiermi ned amounts are subject to revi si on at least b annual ly as resul ts are compared to past expectafi ons and new esti males are made about the futire TheCity’sOPEB unfunded actuarial accrued liablity is beingamorfizedasalevel percentacpof projected payroll usinga30year amortization period on a closed basis (24 years remaining at July 1, 2015). Subsequent changes are amortized ever a closed 15-year period

Changes of assumptions si nee the pri a actuarial valuation were♦ To comply with newly revised Actuarial Standard of Practice No. 6 (ASOP 6), thej uly 1, 2015

actuarial valuation inducts an implicit subsidy liablity. This liablity was net calculated in pria reports because cf the farrer"community rating' exemption fa errqdcyers participating in lamp pcoled health plans NkeCalPERS. When premiums fa retirees are determined using a bend of active emplcyee and retiree experience, it creates an implicit subsidy to the retirees, since retiree healthcare costs are generally higher than active errqdcyees. ASOP 6 effectively requires most piidic agencies to calculate an implicit subsidy liablity whenever their retirees participate in the goup medcal plans, but only pay the same prerriims as active employees ASOP 6 is effective fa all actuarial valuations with a measurement date cn a after March 31, 2015.

128



NOTE 12-OTHER POSTEMPLOYMENT BENEFITS (Continued)]

♦ Thedscant rate was changed from4.0C% to3.75% based on updated expectations of longterm returns on trust and general City assets.

♦ Healthcare, dental and vision trend rates were reset to rdlect updated cost increaseexpectafions♦ The assumed future CPI Medcal Care increase rate was changed from 4.5G& to4.0C% toreflect

updated i ncrease expectations.♦ Retirement, dsablity, mcrtal ity and salary increase rales were updated from the rales used in the

CalPERS 1997-2C07 Experience Study fa Miscellaneous, Police and Fire Pubic Agencies to rales used in the 6/30/2014 CalPERS Pubic Agency Miscellaneous, Police and Fire actuarial val uations.

♦ The percent of cirrent retirees under acp 65 currently waiving coverage assumed to elect coverage at age 65 changed from 2CP6 toC% to reflect updated expectations based on recent plan experience

♦ The payroll gewth assumption was changed from 3.25% to 3.0C% to be consistent with the assumptions used in the 2014CalPERS actuarial valuations

♦ ThegeneraJ inflafiaiassumpfiaiwaschangedfrom3.0CP6 to 2.75% to reflect updated historical analysi s and fotwarddooki ng market exportations.

C. FundngProgessandFuncfedStatus

Generally accepted accainting principles permit contributions to be treated as OPEB assets and deducted from the Actuarial Accrued Liablity when such contributions are placed in an irrevocabe trust a egJvalent arrangement During the fiscal year endedj une 30, 2016, the City contributed $3,612,753 to the Plan fa pay-as-ycu-ge premiums and an addtional $1,782,535 was contributed to the Plan, which in total represented 7.4% of the $73,167,448 of covered payroll. Asaresult, the City has recacted the Net OPEB Obigafion, representing the dffenence between the ARC and actual contributions, as presented below:

Annual requiredcoitribution Interest on net OPEB obigafion Adjustment to annual regJ red contribution Annual OPEB cost

Contri bud ons made Pay as you ge( premiums paid)Paid to trust I mpl icit subsidy

ChancpinnetOPEB obieplion Net OPEB obigalionjLne30, 2015

Net OPEB obligationj une30, 2016

$20,085,9401,465,342

(3,256,100)18295,182

(3,612,753)(1,782,535)(2,337,152)

10,562,74239,075,795

$49,638537

The actuarial accrued liablity (AAL) representing the present value of futire benefits, inducted in the actuarial study datedj uly 1, 2015, amanted to $ 196,378 $60.

129




The Plan’s annual regii red coitributicris and actual ccntritudons fa the fiscal year are set foth bdcw:

FiscalYear

AnnualOPEBCcst

ActualContribution

Percentage of Annual

OPEB CcstContributed

Net OPEB Obligation

(Asset)6/30/2014 $11,427,000 $2,012,286 ia% $30,883,8926/30/2015 12,081,000 3,889,097 32% 39,075,7956/30/2016 18295,182 7,732,440 42% 49,638537

The Schedule of Faring Progess fcelcw and the reqiired supplementary irforrralion irrmedately following the notes to the financial statements presents rrulti-year trend irforrralion abort whether the actuarial value of plan assets is increasing a ctereasing ever time relative to the actuarial accrued I iablity fafcerefits. Trendcfelafrcmtheactuarial studes is presented belcw:

ActuarialActuarialValue of

Entry AgeActuarialAccrued

Overfirided (U nderfinded)

Actuarial Accrued Firided Covered

Overfirided (U nderfinded)

Actuarial Liability as

Percentage ofValuation Assas Liability Liability Ratio Payroll Covered Payroll

Die (A) (B) (A-B) (A/B) (C) [(A —B )/C]7/1/2015 $345,000 $196,379,000 ($196,034,0001 0.2% $73,167,000 -266%

NOTE 13- DEFERRED COMPENSATION PLAN

City employees may' defer a portion of their compensation indera City spensaed cfeferred compensation plan created in accadancewith Internal Revenue Code Section 457. U refer this pi an, participants arena taxed on the cfeferred portion of their compensation inti I dstriLuted tothern dstribudens may be rracte only at term nation, retirement cfeathainanemercfncy asefefinedby the plan

The laws governing cfefemed compensation plan assets regJre plan assets to be held by a Trust fa the exclusive bendita plan participants and their bendiciaries. S i nee the assets held under this pi an are ret the City’s property and arena subject to claims by general credtorsatheCity, they have been excluded from these financial statements

130



NOTE 14-RISK MANAGEMENT

The City is exposed to various risks a loss related to theft a, damage to, and destruction a assets; general liablity; errors and omissions; injuries to employees; natural dsasters; and inverse condemnation. The City begin self-insuring its workers’ compensation in 1976. Injuly 2C09theCity jdned the Califomiajant Pcwers Risk Manacpment Authaity (CJPRMA) fa general liablity and emplcymentpracticesccveracp. InApril 2C09theCityjdnedtheCalifariaStat£AssocialiondCounties Excess I nsurarce Authaity (CSAC El A) fa waker’s compensation insurance The City has chosen to estadish a risk financing internal service fund where assets are accumulated fa claim settlements and expenses associ ated with the above ri sks d loss up to certai n I i mi ts.

Excess coverage fa the risk categories e<cludng inverse condemnation is provided by policies with various commercial insurance carriers Self-insuranceandinsurancecompary ISirritsareasfdlcws:

Tvce of Coveraoe Self-insurance / Deductible CoverageLimt insurance Carier

Difference in Conditions

Earthquake 1C% pre-1970,5% post-1970 oftotd insuredvalue

of each buildng, mnirnum $100,003

All ahers $25,003 $50,003,0301 nd usi ve of deducti d e Various

Cri rree irp oyee D i shonesty $10,003 per clam $1,033,003 incl usi ve of deducti d e

Naicnd umonFire1 nsurance Company of

Pittsburgh, PA

Property $10,033perdam$1,003,030,0331 ncl usi ve of deducti bl e

$25,030,033limtfo fiend Vai ous

Boler andMathi nery $5,030pErdaim $ 103,030,033 ind usi ve of deducti bl e Le^ngcn

Port Liability $25,003 per clam $50,003,0301 nd usi ve of deducti d e Various

Speoal EventsProgam N/ASI ,OCO,COO per occurrence, $2,CCO,OCO

cgjegae Evanston InsuranceE xcess W okers1Conpensaion $750,030 per clam Stautcrylimt Various

StudentVol unteer N/A $50033limt Ace Amen can

Pollution Liablity -Pdicy 1 $250,030perdaim $20,003,030 ind usi ve of deducti d e A ce -111 ino s U m on

Pollution Liability-Pdicy 2 $75,003 perdam $1,030,033 limt Various

Cyber Liabiliry $100,003 per clam $2,003,003 limit Van ous

131



NOTE 14-RISK MANAGEMENT (Continued)

CJ PRMA

TheCJ PRMA prcvicfes coveragacpinst the fdlcwing types cf loss risks uncfer the terms of a joint powers ageementwith theCity asfdlcws:

Type of Coverage (Deducti He)________CoveragLimitsLiability ($500,000) $40,000,000Emplcyrrent Practices ($500,000) 10,000,000

Once the self-instred retenticn is exhausted on each claim, CJPRMA becomes responsible fa payment of future expenses related to the claim TheCity paid contributions of $587,813 fa the year ended June 3Q 2016. Actual surpluses a Ic6ses are sharedaccadngtoaforrrulacfevelopedfromoverall loss cc6ts and spread to rrerrber entities on a percentage basi s after a retrospective rati ng

A ud ted financial stalerrents fa the CJPRMA are availabefromCJ PRMA, 3201 DcdanRcad Siite285, Livermore, CA 94551.

CSAC-EIA

CSAC-EIA is a piidic entity risk pod of cities andcountieswithinCalifania TheCSAC-EIA prcvicfes workers’ corrpensalicn cocerag ip to the statutory lirrit and the City retains a self-insured retention of $750,000. Loss cortingncy reserves established by the CSAC-EIA are funcfed by contributions from rrerrber agencies. TheCity pays an annual contribution to theCSAC-EIA, which inducts its pro-rata share of excess insiranceprerriums, charts fa pooled risk, claims adjusting and legal costs, and adrini strati ve and other costs to operate the risk pool. TheCity paid contributions cf $278774 fa theyearencfedJune3Q 2016. CSAC-EIA prcvicfes insurance throuc^i the pod uptoacertain level, beyond which goup purchased ccrrmercial excess insurance is obtained CSAC-EIA is currently fiJ ly funded No prevision has been tract on these financial statements fa liabilities relatedtopossibleaddtional assessments.

Audted financial statements fa CSAC-EIA are available from CSAC-EIA, 75 Iron Point Circle, Siite 200, Fdscm, CA 9563Q

HousingAuthaity I nsuranceCroup

The HousingAuthaity is exposed to various risks of loss related to torts: theft damage, and destruction of assets; erras and omissions; injuries to employees and natural dsaster. The A uthai ty joi ned togther with other entities and participates in the HousingAuthaity Insurance Crcup a public entity risk pool currently operating as a ccmrron risk management and insurance pregam fa its rrerrber entities The purpose of the HousingAuthaity I nsuranceCroup is to spread the ad/erse effects of losses ameng the rrerrber entities and to purchase excess insurance as a goup thereby reducing its cost The Authority pays annual premiums to Housing Authority Insurance Croup fa its property damage insurance as fdlows:

132



NOTE 14-RISK MANAGEMENT (Continued)

Property

BuildngandPersonal

Property PremiumAnnual

Premium DeductibleTriancJeCcurt $13,170 $13,543 $25,000Nevin Plaza (#1) 4,769 4,886 25,000FriendshipMarar 5,438 5,664 25,OCOHacienda 10,365 10,365 25,OCONystromVillag 16,922 17,443 25,COOAdri nistration Office 639 639 25,OCO

All of the Housing Authority properties areinduded in thegeneral liability coverage uncfer theCJ PRMA progam

Liability fa Self I nsuredClaims

TheCity recads a liability to reflect an actuarial estimate of ultimate uninsured losses fa both general liability claims (indudng property damage claims) and wakers’ compensation claims. Theestimated liability fa wakers’ compensation claims and gneral liability claims is based on case reserves and include amounts fa claims incurred but rat reported (IBNR), and is retarded in the Insurance Reserves Internal Service Fund At June 3Q 2016, the esti mated claims payable of $39,403,229, consisting of reserves fa both repotted and IBNR leases, as well as allocated loss adjustment expenses, have been recacfed in the Insurance Reserves Internal Service Fund The claims payable are reported at their present value usingexpected futire investment yield assumptions of 3% andan8CP6 confidence level. The undscounted claims totaled $43,868000 at J une30, 2016. Changes in the claims liabilities fa the years endedj une 30, 2016 and 2015 were as fd lows:

Claims liabilities, begnningof year Currentyear claims Chang in priayear claims Clai m paymentsLecpl, adrinistraliveandaher expenses

Clai ms I iabi I ities, end of year

Claims liabilities, due in one year

2016 2015

$29,583,740 $25,697,1509,802,COO 8931,9788480,693 4,661,085

(5,232,866) (5,969,331)(3,230,338) (3,737,142)

$39,403,229 $29,583,740

$13,331,213 $7,919,524

Fa the years endedj une 30, 2016, 2015 and 2014 the amount of settlements dd rat exceed insirance coverag

133



NOTE 15-SEGMENT INFORMATION FOR ENTERPRISE FUNDS

The Ci ty’s non-rraja enterpri se funds i nd ucte the fd I cwi ng

• Richrrond Marina Fund- Marina operations and rraintenance, indudngberthrentalsanduse of rrarina facilities.

• Storm Sma F und - Storm sewa rranacpment and urban runoff control.• Cable TV Fund - Adrini strati on and enforcement of the franchise ageerrents with twocable

television systems, management of a rrunicipal cable channel, departmental video services, rredaand public infarration, andtelecorrmunications planning

Fiscal 2016 condensed financial infarratjonfatheRichrrondMarinaEnterpriseFundisasfollcws:

Condensed Statement of Net Position

AssetsCurrent assas $3,525,793Ceptal asas 1,608,325

Taal assas 5,134,118

LiabilitiesCurrent liabilities 277,797L cng-term liabilities 2,701,553

Total liabilities 2,979350

Net positionNa irwestrrent in captd assets (1,174,802)Unrestricted 3,329570

Taal na position $2,154,768

Condensed Statement of Revenues, Expenses and Changes in Net Position

Opaaingrevenues Lease income

Opaaingexpenses Cenael andcttnniarative Depreci ai on

Operai ngincome Noncpaaingrevenues (expenses)

l merest income l merest expense

income (Loss) Befoe Contributions andTransfes Transfers cut

Changein net position Begnnmg net position Endngna position

Condensed Statement of Cash Flows

Net cash pro/ided(used) tyOpeaingaaivities $485,018Noncapital andrelatedflnanongaoivities (100,000)Ceptal andrelatedflnanongaoivities (206,814)irrveaingaaivities 11,850

Nainaease 190,054Begnningcaah and i investments 3,262,392Endngcash and investments $3,452,446

$517,108

(26,400)(85,196)405,512

13,524(125,533)293.503

(103,030)193.503

1,561,265$2,154,768

134



NOTE 16-COMMITMENTS AND CONTINGENCIES

A. Lease and Coistructioi Canrritments

The Police Department axupies leased prerrises owned by DiCoi Fibaoptics, Inc. The City’s orignal lease was a three year lease which expired on Decerrter 31, 2009, and it had an option to renew fa five (5) one year periods until Decerrter 31, 2014. In October 2014, the City and DiCon Fiberopdcs, Inc. entered into a new five year lease e<tension with the term corrmercing January 1, 2015 throng Decerrter 31, 2019 with an option to renew fa five (5) one year periods until Decerrter 31, 2024. The leasecallsfa rrinirrum monthly lease payments of SI 00,573.

The City’s future corrrritmerts under coistrucdon and aher projects totaled approximately S60.1 trillion atj une30, 2016 fa various projects

B. Litigation

The City is invdved in various claims and liticptioi resulting from its normal operations The ultiirate outcome of these rratters is ret presently determinable In City rranagsmenf s opinion these natters will ret have a significant adverse effect on the City’s a RHA Properties’ financial position, with two potential exception noted below:

In March 2012, a developer and an associated entity filedacorrplaint in fecferal court against the United States of America, twoindviduals, and the City contend ng breach of contract related to a Land Disposition Ageement (LDA) between the efevdepa and the City fa the envelopment of City-owned property fa a specific use The efevdepa and associated entity seek damages of S30rrillicnaswell as lost profits of ova S750rrillicn. The City dsputes the al leeptiens and contends that the LDA ddnctcomritthedevdopaa the City to develop the property fa the specific use and that the efevdeper’s ric^t to move forward with the development was subject to various fecferal approval s The City received a favorable judgment on the rratta, but an appeal by the efevdepa and associated entity is pendng The City had filed a separate lawsuit in state court acpinst the developa seeking ctedaraloty relief that the City ddnet breach the LDA, but that lawsiitwas stayed ty the state court jucfcp pendng resolution of thefederal action. TheCity rray be negatively irrpacted should thecourt rule in favacf the developa and associated entity, howevaarry such i rrpact carrot be detarri ned at thi s ti me.

C. Grant Progams

TheCity participates in sevaal fecferal and State gant progams. These progams are subject to further examination ty the gantors and the anoint, if any, cf etpendtures which rray be dsallcwed ty the gantingagenciescanna be determined at this time, except as noted inefer Grant Progams - Disallowed Costs below.

135



NOTE 16-COMMITMENTS AND CONTINGENCIES (Continued)

D. GrantProgams-Di sallowed Costs

HOME andCDBG Prog-ams

During fiscal year 2013, the City was subject to two separate rronitoring visits ty the Department of Housing and Urban Development (HUD) of the City’s HOME investment partnership (HOME) and Community Development Block Grant (CDBG) activities. In its reports, HUD listed thirteen findng; covering various activities performed over a six year period applicabe to the progams and d sal lowed costs approximating S2.4 million The City prepared responses to the firdngs, inducing assembling and providng addtional dximentation to HUD as well as perfaming nimerous careztive actions and meetings to negdiate settlements with HUD. In July 2016, HUD dtermined the City’s repayment obligation to be $366,063, $786,597, and $1,807,490fa CDBG-R, CDBG and HOME, respectively. The City could request a Vdmtary Grant Reduction in the arrant of $1,807,409 in unspent HOME funds to be applied toward the obligation, however, if the City ele:ted to make this request, all remaining obligations waild be due within 90 days. Alternatively, the City caild reqjest a repayment plan with installments over a three-year period In lieu of making payments to HUD fa the retirn cf the ineligbe costs, in August 2016, theCity reqjested aVduntary Grant Reduction of $1,807,409 in unspent HOME finds to be applied toward the obligation. The City also requested a Voluntary Grant Reduction in the amount of $85,000 in unspent CDBG funds to be used toward; the $786,597 CDBG repayment obligation. Finally, the City requested a payment plan with installments over three years fa the remaining CDBG and CDBG-R funds. In December 2016, the City accepted HUD’s repayment terms regard ng the treatment cf the ineligble costs fa the CDBG repayment obligation of $786,597, which is payable in two equal installments in fiscal years 2018and 2019. The CDBG-R repayment obligation of $366,063 is due on a befae March 30, 2017. As of February 2017, theCity has na rezeived approval from HUD regardng the treatment of the HOME ineligble costs and the ultimate method of repayment canna be determi ned at thi s ti me

Neigibahood Stab Nation Progam(NSP 1)

During fiscal year 2014, theCity was subject to a monitoring visit from theOffice of I nspezta General of the City’s Neigibahood Stablizalion Progam(NSP1) and received notification in October 2014 from HUD that it was cterrandng the repayment of $914,090 fa indigbe expenses. In lieu of making a payment to HUD fa the return of the ineligbe costs, in November 2014, the City reqjested a gant reduction of $595,863 in unspent NSP1 funds to be applied towards the findng In adzition, the City requested approval to use the proceeds frcm income generated from the perdng sale of certain NSP1 properties to make upthe $318,227 dfference Given that the NSP1 is governed ty CDBG regJalions, theCity believes that HUD’s Voluntary Grant Reductions in Lieu of Repayment fa Ineligbe CDBG and HOME Activities’'Progami’ applies to NSP1. Injuly 2016, HUD notified theCity that it could make a request fa aVduntary Grant Reduction of $595,863 in unspent NSP1 funds to be applied towards the NSP1 repayment obigation. If the request was made, the remaining $318,227 woiid be due within 90 days. In August 2016, theCity made a second request fa the approval of aVduntary Grant Reduction of $595,863 in unspent NSP1 funds and fa the remaining $318,227 to be paid using the proceeds from income generated from the sale of NSP1 properties. In December 2016, the City accepted HUD’s repayment terms regardng the treatment of the ineligbe costs of $318,227, which are due in two payments i n fi seal year 2017 ($62,645) and fi seal year 2018 ($255,762).

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Environmental Prdeztion Agency Progam(EPA)

In May 2014, theCity received notification from the U.S. Environmental Prctecticn Agency (EPA) that due to four findngs included the fiscal year 2012 Singe Audt related to four separate gant progams, the EPA is questioningas unsupported $1,200,0C0 in gant expendtures. The notification reqjires theCity to either confirm that the carective actions to resdve the Singe Audt findngs were implemented a to repay the gant funds to the EPA. City staff submitted a response to the ratification, providng the required dxurrentalion and objecting to the claim The matter is still perdng with the EPA as of February 2017, and the final amointdd sal I owed costs, if any, canna be determined at this time.

HOME and Neigibahood Stablization Progam(NSP3)

During fiscal year 2015, the City was subject to monitaing visits ty the Department cf Housing and Urban Development (HUD) a the City’s HOME investment partnership (HOME) and Neigibahood Stablization Progam (NSP3) activities In its reports, HUD listed three findngs (two HOME findngs andcneNSP3 findng). The findngs require the City to repay $1,089613 cf e<pendedgant funds on the Filbert Phase 2 activity, which is rat a HOME digbe activity, and to repay $23,070 fa expenses dsbursed by theCity pria to the completion cf the required environmental review. TheCity prepared responses to the findngs, indudngassembing and providng addtional documentation to HUD as well as performing numerous carective actions and masting; to negotiate settlements with HUD. The negaiations are still in process as cf February 2017, and the final amount cf d sal lowed costs canrat be determi ned at this time.

Housing and U rban Development

OnJ une3, 2016, the Office a the Inspecta General issued a report in response to an al legation that the Authority allowed the City to use HUD funds and Authority assets and that the City charged the Authority fa rent and services at an unreasenabe price The report conducted that the allegations held merit and the Authority misspent $2.2 million in HUD finds and had $994,910 in unsupported costs die to a lack cf independence between the Authority and the City along with a weak internal control environment. The OIG recorrmencted that the Direzta cf the San Francisco Office cf Pubic Housing that monitors theAuthaity, require the Authority to repay $2.1 mil lien fa ineligbe used HUD fund along with $53,347 fa dedicate charges, and $60,000 fa a City initiated management audt. In adzition, it was suggested the Authority be reqbred to provide addtional support fa $80,890 cf the Executive Director’s salary spent on activities, $180,COO spent on office rent, determine proper use cf former maintenance buildng property, and ctevelop and implement financial policies and procedures fa the current operating environment. Further, it was recorrmencted that HUD wak with the Authaity to improve control and accountablity indudng HUD receivership and separating the Authority finances from the City. The Authority is contesting several cf the conclusions made by the OIG and is seeking legal counsel with regard to further actions nezessary. OIG's report is subject to HUD and the Departmental Enfacement Center Revisions and evaluations. Authaity management strongy believes in its response made to Ol C that the Authaity’s actions were proper and ageed to in advance ty HUD. As d February 2017, theamountd ineligbecosts canrat be determi ned at this time

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E. HousingAuthaity-Easter Hill Projezt

The Authaity participates in a nurrter of fecterally assisted gant progams, principal of which are the Section 8 Housing Assistance and the HOPE VI Recital izalion Grant. It is pasiblethat at sorre future dale, it nay fcedaerrrined that the Authaity is not in corrpliancewith applicable gantrequrements. The arrounts, if ary, of ©cpendtures which nay ted sal lowed ty theganting agencies cannot be determined at this time, although the Authaity cbes not expect such dsallowedamomts, if ary, to rraterially affect the financial statements.

Injure 20C0, the Richrrond Housing Authority rezeiveda $35 trillion gant (HOPE VI Grant) from the U.S. Department of Housing and Urban Development (“ HUD”) fa the revitalization of the farrer Easter Hill Pubic Housing Projezt. Theaignal Easter Hill site, owned ty the Richmond Housing Authority, inducted 300 units on 21 acres in theCorte/Stegeneigibqhocdof Richmond

The Califaria Tax Credt Comrritteq City of Richmond Bank of America, Silicon Valley, Federal Home Loan Bank, Califania Housing Finance Agncy, the Richmond Housing Authaity along with the $35 million dollar HUD gant financed this $120 million revitalization effort Physical costs are estimated to be approximately $108 million and life services, relocation, acquisition, adrinistrativeandaher costs are estimated to be approximately $12 million The physical development inducts approximately 320 rental and homecwnership units to replace the 300 rental units aignally at the site and 273 remaining units at the time of gant approval. Amenities at the revitalized site induct a pool and a 5,000 square feet community roomwith facilities fa an after schod progam computer center, gymnasium and conference room

In add don pursuant to the same ageement, theAuthaity is end tied to rezave rembrrsemat fa certain costs it has incurred in development of these projects. Upon completion of the project, the Authority rezacted $14,276,909 representing reimbursement from the developer which had been recaded in the accomparyi ng fi nancial statements as due from developer. The balance cutstandng as of J une 30, 2016 is $11,221,743.

In 2002, the Authority chose the development team of McCormack Baron Salazar, Inc. and Emjohnson Interest Inc. to develop) the site Emjohnson Interest has developed the 82 homeownership units affadalde to low, moderate and market rate buyers. McCamack Baron was charged with the development of 300 rental units, affacteide to househdds 6CP6 a below the area rredan income fa Contra Costa County.

Thus far, all new construction rental units at the fairer Easter Hill site have been developed Thirty-six rehab rental units at the site are underway. The remaining 202 rental units at the site have been leased Similarly, all 82 homeownership units at the former Easter Hill and Cortez sites have been constructed Withthee<cepdonof oneunitattheCcrts site all homeownership units have been sdd

Due to the City Council’s action to na allow the Authaity to retain the Fite Training site aignally anticipatedfqphaselll of the project, the third phase is being revised to inzlucte the Authaity’s Nystrom Vi Nag and Hacienda Public Housing sites. This will inducte the demolition and reconstruction of the 252 rental units presently existing at the two sites As the proposal and conceptual plans are being devd oped the final financial and construction plans are nactetermined at this time

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F. Disposition of Westridgeat Hilltop Apartments

On May 24, 2013, RHA Properties entered into a Purchases Sale Ageement (PSA) with Menlo Capital Group LLC (the Buyer) fa the dspositicn of Westridg at Hilltop Apartments fa a price of $40 million Upon closure of the dsposition on April 15, 2014, title of all capital assets was transferred from RHA Properties to Menlo Westridg Affadalde Partners, LP. The gin from the capital assets sale after charges and costs associated with the sale was $12703,208 Accadngto the sales ageement at June 3Q 2016, $2500,003 of sales proceeds were wi thheld i n an escrow account as a repai r reserve find he! d by the B uyer to be usedfa repairs within 18 months after closing

The Buyer, at its sole and absolute dscretion will hire third party contractors to implement suzh repairs Once the repairs are complete the Buyer is to submit third part audted and certified invoices to escrow fa i rrmeziale rei mbursement to the B uyer a payment to contractors fa such repai rs at the B uyer’s option. A11 repairs and reimbursement of repairs from the Repair Reserve Find Hddiack are sitoject to the Buyer’s

sole and absolute dscretion. RHA Properties has macte ctemands to retirn the $2,500,000 based on the passage of 18 months from the cl csi ng dale of the sale

Pirsuant to the Hdctack Ageement, the finds held in escrow were only available to the Buyer within 18 months of closing which has e<pired Management of RHA Properties is of the opinion that they are in a very gxd position andean expect to cdlect the $2,500,000. A lavsiitwas filed by theAuthority /RHA Properties acpinst the buyer of Westridgeat Hill top Apartments to release the funds and accord ng to the Attorney acting on behalf of RHA Properties, thecaseismzvingalongas expected The repair reserve fund wasreleasedtoRHA PropertiesinAugust2016.

G. RHA Properties-Statusof Operations

RHA Properties having sdd Westridge at Hilltop Apartments isatthepantofbeingan entity with no activity. It is ide and available to be used in the future. Management cirrentiy has no further plans fa the entity.

H. PdntMdate-Pdluticn Rermziaticn

In September 2008 the City entered into an Early Transfer Cooperative Ageement (ETCA) with the United States Department of the Navy the (Navy) to facilitate the transfer of 41 acres of property that was formerly the Naval Fuel Depot PdntMdate (PdntMdate). The ETCA identifies certain known pdlution issues with the property, and the Navy is the responsible party. However, uncter the provisions of the ETCA, the Navy ad/anced$28 million to the City representing the esti mated cat of cleanup and the City committed to rranag the project Any pd lution found that was nd caused by the Navy’s useof the land is to be paid by theCity, however, asofj une 30, 2016, noaddtional pdluticn fas been identified

The City also entered into an ageement in September 2008 with a Developer to sell approximately 134 acres of land located the Pant Mdalealongwiththe41 acres of which the Navy is to transfer to the City. The Developer is to complete the cleanupon behalf of theCity inaccadancewith the requirements of the ETCA. TheCity comritted to pass-throig the funds received from the Navy to the Developer.

In April 2010, theCity and Developer entered into an ageement to establish a fiscal agnt escrow accoint to maintain the funds held fa the remeziaticn of Pant Mdate. The finds ad/arced by the Navy are to be held in escrow with a fiscal agent and the agent is responsible fa dsbursing funds to the Developer as costs are incurred The terms of the ageement are effeztive mtil a certificate of completion is issued fa the remedation of the property.

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Under the tarns of the ageerrents with the Navy and the Developer, the City does not retain responsibility fa the cleanupof the known pollution. The City is merely acti ng as a pass-thru of the gant funds from the Navy to the Developer and the activities fa the project are reported in the Pt. Mdate Private-PurposeTrust Fund

I. Other - Maja Taxpayer

In fiscal year 2C09, a rraja business license taxpayer filed a complaint challenging the legality of MeasureT, a voter initiative that took effect onj anuary 1, 2009. MeasureT amended the City’s business license tax calculation fa manufacturers. Although the City believed MeasureT to be lawfd, the court rdedon Dezemba 17, 2009 that the tax was unconstitutional. The court ruled in fava of the business license taxpayer award ng a refund of the S2Q5 million MeasureT taxes paid The City filed an appeal, however in May 2010 the taxpayer and the City entered into a settlement ageement in ader to achieve certainty in the tax revenue that the City will receive from the taxpayer over the next 15 years. The ageement provides fa annual payments from the taxpayer rangng from $4 million to $13 million starting J dy 1, 2011, with payments totaling $114 million. In addtion, the ageement incaporated the ptia settl errent of ad spute ova fiscal year 2C06, 2007 and 2008 utility user’s taxes totaling $28 million that was paid in four installments begnning in fiscal year 2009. Payments totaling $61 million wete received under the setti errent ageerrents i n f i seal years 2011 throuc^i 2016.

In fiscal year 2015, the City entered into an Environmental Community I nvestment Ageement (ECIA) with the same taxpayer that proviefes fafundngtotheCity andaher community agencies totaling $80 million ova the next ten years. During fiscal year 2016, the City rezeived $8 million that is restricted fa use on pte-approved projects, andtheCity has received $12 million tocfete

J. PdiceCcmmunications Systems

TheCity administers a progam to provide recads management and dspatch services to participating local agencies. The participating agencies, which inzlude the City, are responsible fa maintenance and system enhancements. TheCity is required to account fa the enhancement in a separate account which is shewn in the PdiceTelecommunications Internal Service Fund as meamed revenue as of J ine 30, 2016.

K. Department of Toxic SubstanceContrd (DTSC) Settlements

During the fiscal year endedj une 30, 2015 the City entered into a settlement ageement with DTSC fa the Drew Midzle and South Property Richmond Parkway Site The City dsputed the amount of opaations and maintenance costs charged by DTSC fa the remedation of affezted sdl at the property. The settlement ageement stipulates that the City will pay DTSC a total of $31,365 fa charges that occurred during fiscal years 1996 thrcuc^i 2013. Monthly installment payments will be made ova 24 consecutive months with the fi rst payment due Decerrfca 15, 2014.

During the fiscal year endedj une 30, 2015 the City entered into a settlement ageement with DTSC fa the R ichmond Parkway Site The City d sputed the amount of epaatiens and maintenance costs charged by DTSC fa the remedation of affezted soil at the property. The settlement ageement stipulates that the City will pay DTSC a total of $24,476 fa charges that occurred drring fiscal years 1996 thrombi 2013. Monthly installment payments will be made ova 24 consecutive months with the first payment dueDezember 15, 2014.

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Fa the Year Endedj uneSO, 2016


The outstandng liabilities payable at year-end related to these settlement ageerrents were deemed immaterial fa presentation purposes

L. HousingAuthaity Rental Assistance Demonstration

RHA Rental Assistance Demonstration ("RAD") P rogam corrvasi on of the F ri errdshi p M ana arrd T ri ancj e Cart piidic housing sites occurred dm ng the 2016 calendar year (i relucts both the 2015 and 2016 fiscal years). Starting in Decerrfca 2015, 156 units of Piidic Housing will convert to non-profit cwnaship with Sezticn 8-Projezt Based Voucher rental subsidy on two separate properties; all 156 units, except fa three units (two are reserved fa onsite managers and one fa a manager’s office), will be used to house low- income resiefents.

On Octoba 8 2015, the Department of Housing and Urban Development (HUD) issued and e<ecuted the RAD Convasion Commitment (RCC) which represents the ageed upon and approved tarns of the RAD ccnvasion transaction

On Novorta 18 2015, CalifaniaTax Crezit Allocation Committee rracte a preliminary reservation of federal tax credts in the amount of $1,228 999 accommodated upon ©tecutingTax-Exempt Bend Project to raise fund ng in the amount of $36.7 million, the apprexi mate estimated cost of the RAD projezt; of which $16.5 mi Mien shall beprovidedby athird-party Tax Credt investa.

The Authority has partnered with thejehn Stewart Compary and The Richman Crap to form a Limited Partnership, RHA RAD Housing Partners L.P., that will complete the conversion, manage the property and cwnthebuildngs. TheAuthaity will relinqiishthelandviaalongtermgcundlease

I n furtherance of the fi nances proviefed by the Authority, the City of Richmond loaned $1,77Q522 to RHA RAD Housing Partnas L.P. as a portion of a $5.4 million lean that will be repaid in 55 years and accrues interest at a rate of 1%. The loan was initially siged with RHA Housing Corpaation and then it was transfaredandreassigedtoRHA RAD HousingPartnasL.P., asdscussedinNote5.

After the property is placed in service and rezeives approval of the 86C6 documents from the State of Califaria, the Authority will split a developa fee of $25 mi Mien with its gnaal partnajehn Stewart Compary (7CP6/3CP6). The projezt will rat be placed in service until approximately April 2017, so the majority of thefeewill rot be rezeived inti I that time

RHA RAD Housing Partners L.P. will also rezeive $732557 in Public Housing and Capital Improvement funds throuzjxxrt thejanuary 1, 2016 - Dezemba 31, 2016 calendar year to cova the RAD Housing Assistance Progam (HAP) Voucher commitments of subsidy fa the low income housing units at the two developments. The terms of this regirement are consistent with Notice 2012-32 of the Rental Assistance Demonstration pregam which regiires RAD ccnvasicns that close after Novemba 3CF of the calendar year to be funefed cut of Piidic Housing and Capital Fund Progams until the next calendar year, at which time the Developments will befindedwith Sezticn 8 Housing Choice RAD Vouchers.

In a transaction related to the RAD project, the Richmond Housing Authority sold capital assets to RHA RAD Housing Partners LP with a carrying value of $14,358 255 in return fa two loans receivable in the amounts of $8891,500and $5,618500 These loans are to be repaid in 55 years and bear annual interest rates of 2.8-96. The sale of the capital assets, along with thedffererce between the loans receivable of $14,510,000 and the carrying value of the capital assets, have been recacfed as a spezial item in the Statement of Activities

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M. StateGasTaxAudt

The State Coitrd ler’s Office corpleted an audt of the City’s use of gas tax funds fa the period J uly 1, 2006 throuc^i J ine 30, 2C04 and in its J uly 2016 repot indcaled that the City had charcpd trial lowabe debt service payments to the Gas Tax Special Revenue Find totaling $1,861,769. Althorx^i City staff dsputed thed sal lowed costs, the Stale Contrd ler1 s Office dd no reverse its position and i n the response to the audt findng indicted in that report, management ageed to repay the dsallowed costs ever six years tegnning in fiscal year 2018. Subsequent to that response, City staff dsccvered that a September 1992 judgnent in fava of the City authorized the use of gas tax revenues to fund the debt service dsallowed by the State The City again dsputed thed sal I owed costs to the State Controller’s Office in February 2017. Although the Stale Controller’s Officewould na accept the debt service as an allowable expense, they dd indcale that the City could replace the debt service with pria eligble street-related expendtures that had been incirred in funds other than the Gas Tax Special Revenue Fund Thermae, the City delerrri red that it had i ncurred el ig ble street repaving costs i n the General Capital I mpreverrent Capital Projects Fund in fiscal year 2011 i n excess of the indig be costs above and had reclassified those costs to replace the pria year ctebt service ©ependtures in the Gas Tax Special Revenue Fund as instructed by the Stale Contrd ler’s Office

N. Other Comrri trren ts and Con ti nepnei es

The Authority and its component units RHA Housing Capaalion and RHA RAD LLC entered into several arrangements irxludng a Co-Guaranta Contribution Ageerrentwith third parties as participants in a tax credt bond; projezt to accommodate the required fundng to convert two properties from a conventional pubic housing project to a rental assistance demonstration progam, as dscussed in Note 16L.

O. Encumbrances

The City uses an encumbrance system as an extension of namal budgetary accounting fa governmental finds. Ureter this systern purchase acters, contracts, and aher commitments fa the expendture of monies are rezacted in acter to reserve that portion of applicabe appropriations Encimbrances outstandng at year-end are tecacted as restricted, corrmitteda assigned fund balance, depend ng on the classification of the resources to be used to liquidate the encumbrance, since they do na constitute expendtures a liablities. Outstand ng encumbrances at year-end are automatically reapproprialed fa the following year. Unencumbered and une<pended appropriations lapse at year-end Encumbrances outstand ngascfj une 30, 2016 were as I i sted bd ow:

AmountGeneral Furd $4,460Ccst Recovery Special Revenue Fund 544,630Community Development and Loan Programs

Special Revenue Fund 692,222Environmental andComrruiity Investment

Agreement (ECIA) Special Revenue Fund 35,536Non-Major Governmental Finds 1,668,071

$2,944,919

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NOTE 17 - REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES

A. ReztevdopmentDissdution

In an effort to balance its budget, the State a California adopted ABxl 26onJune28, 2011, amencted by AB1484 onj ine 27, 2012, which suspenctedall new rectevdopment activities except fa limited spezified activitiesasathal daleanddssdvedreztevdopment agencies enjanuary 31, 2012.

The suspension previsions prohibt all rectevdopment agencies fromawicte rangea activities, irxludng incirringnew indebtedness a ddigatiens, entering into a mDdfyingageements a contracts, acqjiringa dsposinga real property, taking actions to adopt a amend rectevdcpment plans and other similar actions, except actions reqjiredby law a to carry outexistingenforceabeobigations, asctefinedinABxl 26.

ABxl 26 and AB1481 created three regulatory authorities, the Successa Agency Oversicjit Beared Stale Controller and Department of Finance (DOF), to review farrer Agency’s asset transfers, obigation payments and wind cfcwn activities ABxl 26 specifically drects the State Controller to review the activi ti es a al I rectevd oprrent agerci es to determi ne whether an asset transfer between an agency and any pubic agency occurred on a after J anuary 1, 2011. If an asset transfer dd occur arrd the pUdic agency that reedved the asset is na contractually committed to a third party fa the e<pendtire a encumbrance a the asset, the legslation pirports to require the State Controller to acter the asset returned to the Rectevdopment Agency a, on a after February 1, 2012, to the Successa Agency. The State Controller’s Office completed its asset transfer review in November 2013 and the State actered the retirn a certain assets to the Successa Agency to the Rectevdopment Agency. The City complied with certain aspezts of the Staid s acter during fiscal year 2013 by returning applicabe capital assets to the Successa Agercy and the Oversight Board retroactivdy approved aher pria transfers to the City and the Stale has indcaled that no further action is necessary. The State also actered the return a assets previously transferred to the City as Housing Successa totaling $16,460,848, because the transfer of the housing assets had na been approved by the Oversight Board The Oversight Board adopted a Resdution on February 25, 2014 retroactivdy approvi ngthe transfer of the loans to the Housing Successa.

Effeztivejanuary 31, 2012, the Rectevdopment Acprcy was d ssdved Certainassetscf theRectevdopment Agency Low and Moderate Income Housing Fund were dstributed to a Housing Successa and the rerraining Rectevdopment Agency assets and liablities weredstriLuted to aSuzeessa Agency.

Uncter the provisions a AB 1481, the City can dect to became the Haising Srxcessa and retain the housing assets The City dated to become the Housing Successa and on February 1, 2012, certain heusi ng assets were transferred to the City’s Low and M octerafie I neeme H cusi ng F und whi ch i s i ncl ucted i n the Community Devdcpment and Loan Progams Special Revenue Fund The activities of the Housing Srxcessa are reported in the Low and Moderate Income Housing Asset Fund as the City has control of those assets, which may be used in accordance with the low and moderate income housing previsions of Cal ifari a Rectevd cprrent Law.

The City also dected to become the Successa Agency and on February 1, 2012 the Rectevdopment Agency’s rerrai ning assets were d stributedto and liablities were assumed by the Srxcessa Agency. ABxl 26 reqjires theestabishmentaan Oversicjit Beard to oversee the activities a the Successa Acpncy and one was estabished in April 2012. The activities of the Srxcessa Agency are subject to review and approval of the Oversight Board, which is comprised cf seven members, indidng one member of City Coincil and one former Rectevdopment Acpncy employeeappantedby the Maya.

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NOTE 17 - REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued)

AB1484 required the Successa Agency to complete two due dligence reviews - one fa the lew and moderate income housing assets cf the Srxcessa Agency (Housing DDR), and a second fa all other balances cf the Successa Agency (Ncn-housing DDR). The due dligence reviews wete to calculate the balance cf unencimbeted balances as of June 30, 2012 available to be remitted to the Canty fa dsburserrent to taxing entities The Successa Agency submitted bah due dlicpnce reviews to the State Department cf Finance fa review and approval. The Department of Finance approved the Haising DDR, after making an acjustrrent, and theSuccessa Agency remitted the unencimbeted balance of $4,067,242 to theCounty in November 2014. The Department of FinarceapprovedtheNon-hcusingDDR in December 2014, and no finds wete reqiiredto be remitted to the County. The Srxcessa Agency reeved a Findng of Completion on December 9, 2014.

The activities of the Successa Agency are reported in the Srxcessa Agercy to the R ichmond Community Recfevelopment Agency Private-Purpose Trust Fund as the activities are under the contrd of the Oversight Board The City provides administrative services to the Successa Agency to windcfcwn the affairs of the former Redevelopment Agency.

Cash and investments of the Successa Agercy as of June 30, 2016 are dscussed in Nae 3 above Information presented in the following footnotes represents other assets and liabilities of the Successa Agency as of J une 30, 2016.

B. Loans Receivable

The Successa Agency assumed nen-housing loans receivable of the Redevelopment Agercy as of February 1, 2012. The Redevelopment Agency encpged in progams designed to encourage economic development U refer these progams, gants a loans were provided under favaalde terms to developers who ageed to expend these funds i n accacfence with the Agency’s terms

Fad Assembly BuildingLoan

U refer a loan ageement dated November 22, 2004 between the Recfevelopment Agency and Fad Poi nt LLC, the Recfevelopment A gncy ageed to loan S3,COO,000 to fund improvements to the Fad Assembly Buildng cdlafieralized by a Deed of Trust The Recfevelopment Agency funded the loan in fiscal 20C6 with proceeds from the Section 108 HUD loan dscussed in Nae 7. The I can’s principal is due in August 2025. Interest is payable starting August 2006 atavariableratebasedon the OO-cty LIBOR rale plus 70 basispdnts; adjusted cpiarterly. The interest rate converts to a fixed rate in accadance with the terms of the ageement after the Section 108 loan is sold by HUD. Thecfeveloper repaid $143,000 of the lean in fiscal year 2010, $147,000 in fiscal year 2011, $150,COO in fiscal year 2012, $154,000 in fiscal year 2013, $158,000 in fiscal year 2014, $162,000 in fiscal 2015 and $166,000 in fiscal 2016 and the balance of the I can was $ 1,920,000 as of J ine 30, 2016.

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C. Capital Assets

The Successa Agncy assumed the non-housing capital assets cf the Redevelopment Agency as of February 1, 2012. All capital assets are valued at histaical cost a estimated histaical cost if actual histaical cc6t is na available Contributed capital assets are valued at their estimated fair market value on the date contributed The Successa Agncy’s policy is to capitalize all assets with costs exceedng certai n mi ri mum thresholds and with useful I i ves exceed ng two years

All capital assets with limited useful lives are depreciated ova their estimated useful lives The purpose of depreciation is to spread the cost of capital assets equitably amongall users ova the life of these assets The arreunt charged to depreciation expense each year represents that yeah s go rata share of the cost of capital assets.

Depreciation of all capital assets is charged as an expense aginst operations each year and the total amount of depreciation taken over the years, called accumulated depredation, is reported cn the balance sheet as a redicticn in the bcok value of capital assets.

Depreciation is provided using the straight line method which means the cost of theassaisdvidedby its expected useful life in years and the result is charged to expense each year until the assa is fully cfepeciated The Successa Agency has assigied the useful lives and capitalization thresholds listed below to capital assas.

Improvements other than bii Id ng 20yearsBuildngsandbuildngimprovements 50yearsVehicles 3-10yearsI nf rastructure 25 - 50 yearsMachinery andequiprrent 3-20years

Capital assets retardedatj une30comprise

BdaiceaJune30, 2015 Addtiois Rairerrents

Traisfasto the City

BdaiceaJune30, 2016

Captal assas na be ng cfep’ea aedLaid aid 1 aid i rrp'cvaraitsCoistruaiai in Procress

$17,603,1625,328,244

($1,733,888) ($9,640,468)(5,328244)

$8 258 SIB

Tad captal assas net bang depea aed 22,931,405 (1,733,888) (14,968712) 6,258805

Captal assas be ng cfepea aedM alii ray aid eqji prrmt 120,448 (120,448)

Less ascumjl aed dspeaai cn faM alii nay aid eqji prrent (112,053) ($8395) 120,448

Captal assas be ng dspea aed, na 8835 (8395)

Captal assas, na $22,@9,831 ($8395) ($1,733,888) ($14,968712) $6,258836

145




Pursuant tothe terms of the Long Rancp Property Management Plan, theSuccessa Agency transferred capital assets with acarrying value of SI 4,968,712 to the City.

D. Long-termOtlicpticns

The fd I cwi ng i s a surrrrary of long-term cfebt transactions duri ng the fi seal year enefedj une 30, 2016:

BalanceJuly 01,2015

(A)Addticns Retirements

BalanceJune 30, 2016

DueWithinOne Year

Due in Maethan One Year

Bends pa/afcle $77,847,743 $1,069,131 ($5,781,5671 $73,135,307 $5,565,00 $67,570,307Loans pa/afcle 24,135,OX (790,00) 23,345,00 830,00 22,515,00Naes pa/efcle 15,482,536 (478,933) 15,093,603 490,191 14,513,412

Taal $117,465,279 $1,069,131 ($7,050,50) $111,483,910 $6885,191 $104,598,719

(A) includes bod aco’Sioi fa captel apprea ai a tends tctal irg $1,069,131.

Bonds Payable

B orris payable at J une 30, 2016 consi sted cf the fd I cwi ng

NetHarbour Tax Allocation Refunding Bonds-1998SeriesA $7,745,586SubordinateTaxAllocation Bonds-2007Series B 11,610,455SubordinateTax Allocation Refunding Bonds -2010 Series A 27,640,000Successor Agency of RCRA RefundingBorris-2014SeriesA & B 26,139,266

Total $73,135307"

1998 Harbour Redeyelcpment Project Tax Allocation Rfunding Bonds Series A - Orignal I ssue $21,862,779

The bonds were i ssued by theAcprcy to refi nance a portion of the 1991 Harbour Redeye! cpment Project Tax Allocation Refund ng Bonds, rdinance certain loans from the City to the Agency, which were used by the City to finance certain publicly cwnei capital projects, finance certain recfevelopment activities within the Harbour Redevelopment Project Area, fund a reserve account and pay certain costs of issuance of the 1998 bonds. The bonds mature annually throuc^i 2023, in amounts rangng from $50,000 to $1,130,000. Interest rates vary from 3.5% to a rraximum of 5.2% and are payable semiannually on January 1 andJrJy 1. Thebondsaresecuredtyapledgeoftaxrevenuesderivedfromta>ableproperty within the Harbour Project Area On March 27, 2014, the Agency issued the Successa Agency to the Richmond Community Redevelopment Acpncy Refund ng Bonds 2014 Series A & B which resulted in the defeasance of the outstandng balance of the current interest portion of the bonds in the amount of $9,180,000, as d scussed belcw.

146





Capital appreciation bondsValue________

$9,200,000

Accretion/Annrtization

$384,156

U nanratized Premum

(Discount) ($1,838,570)

Net$7,745,586

The annual debt service reqji rements on the bonds areas fd lows:

FortheYearsEnding Jure 30, Principal

2017 $1,150,000

2018 1,150,0002019 1,150,0002020 1,150,0002021 1,150,000

2022-2024 3,450,000Total $9,200,000

Richmond Community Redevelopment Agency Subordinate Tax Allocation Bonds Series 2007A andSeriesB -Orignal IssueSeriesA $65,400,000,SeriesB $9,772,622

On July 12, 2C07 the Redevelopment Agency issued Series 2007A SubadnateTax Allocation Bonds in the amount of $65,400,000. The proceeds from the Bonds were used to pay the amount of $22,000,000 to the City to assist with the financing of the Civic Center Project and to find other Redevelopment Agency projects.

The 2007A SubadnateTax Allocation Bonds were issued as variable auction rate bonds with interest calculated every thirty-five days, however, the Acpncy entered into a 29-year interest rate swap ageement fa the entire amount of its 20074 SubadnateTax Allocation Bonds. In fiscal year 2010 the Agency experiencedasigificantcfedine in tax increment revenue I nader to bring cfebt service in line with current revenues and maintain compliance with the reqiired 1.4:1 tax increment to cfebt service coveracp ratio, the Acprcy suspenefed a number of projects origrally funefed by the 2007A Bonds and applied approximately $36 million of the unspent 2007A proceeds and other available funds along with the proceeds from the issuance of the Subadnate Tax Allocation Rdxindng Bands, Series 20104 to refund the aitstandng balance of the 2007A Bonds. As part of the issuance of the 20104 Bonds, the interest rate swap ageement associated with the 20074 Bonds was arrencted and restated as d scussed with the Series 20104 Bonds below.

147




OnJ liy 12, 2007 the Redevelopment Acpncy issued Series 2007B Housing Set-Asicte Subordinate Tax Allocation Capital Appreciation Bonds in the amount cf $9,772,622 at interest rales rangng from 5.57% to6.4C%. The proceeds from the 2007B Bonds will be used to finance certain lew and moderate income housing activities of the Recteveloprrent Acpncy. The 2007B Bonds rrature annually througi 2037, in amounts rangng from $465,000 to $2,020,000. The 2007B Bonds are secured by a pledge of subord rated housi ng and notvhousi ng tax revenues.

Atjune30, 2016, the 2007B B onds consisted of the fd I owing

Capital appreciation bonds

Accretion/Maturity Value Amortization

$20,855,000 $684,975

UnamortizedPremum

(Discount)($9,929,520)

Net$11,610,455

Thearmual defct servicereqiirerrentscn the2007B Bondsaneasfdlcws:

FortheYears Endingjune 30, Principal

20172018 $935,0002019 990,0002020 1,040,0002021 1,415,000

2022-2026 5,665,0002027-2031 5,800,0002032-2036 4,175,000

2037 835,000Total $20,855,000

2010SubadinateTaxAllaaticn R drindi ng B ends Series A - Orignal Issue $33,740,000

The 201OA Bonds were issued on March 31, 2010 by the Agency. The proceeds of the 2010A Bonds were used to refund al I of the cutstandng Series 2007A Sitordnate Tax Allocation Bonds. I ntetest rates range from 3.0C% to 6.125% and are payable semiannually on March 1 and September 1. The 201CA Bonds mature annually througi 2037 ard are secured by a pledge of certain tax increment revenues derived from taxable property within the Merged Project Area

148




In connection with the issuance of the Series 2C07A Subadnafie Tax Allocation Bonds, the Agency entered into a swap ageerrent fa $65,400,000, the entire amount of the 2007 A Bonds. With the issuance of the 201 CA Bonds, the Agency amended and restated the swap ageerrent The amended ageerrent regjires the Agency to make and receive payments based on variable interest rales. The Agency will make payments based on a variable interest rale equal to 10C% cf SIFMA plus a fixed percentage cf 0.83% and the Agency will receive variable rale interest payments equal to 6£% of 1- rronth LIBOR from the swap counterparty. With the issuance of the 2014 Successa Agency to the Richmond Redevelopment Agency Refundng Bonds, the Successa Agency amended the swap ageerrent to subad rate the term nation payment provisions of the swap ageerrent to the debt service on the 2014 Bonds.

The annual debt service reqji rements on the bonds areas fd lows:

FortheYearsEndingjune 30, Principal Interest Total

2017 $1,165,000 $2,019,455 $3,184,4552018 1,240,000 1,946,446 3,186,4462019 1,325,000 1,864,331 3,189,3312020 1,015,000 1,785,745 2,800,7452021 1,270,000 1,688,909 2,958,909

2022-2026 6,980,000 7,029,013 14,009,0132027-2031 9,610,000 3,371,633 12,981,6332032-2036 4,020,000 1,291,900 5,311,900

2037 1,015,000 34,735 1,049,735Total $27,640,000 $21,032,167 $48,672,167

I nterest Rate Swap Ag'eement

The Agency entered into an interest swap ageerrent in connection with the 201 CA Subadnafie Tax Allocation Rdrindng Bonds. The transaction allows the Agency to create a synthetic variable rale on the Bonds. The terms, fai rvalue and credt risk of the swap ageerrent are dsdosed below.

Terms. The terms, inditing the counterparty credt rati ngef the outstandng swap as of June 30, 2016 are inducted below. The swap ag'eement contains scheduled redictions to the outstandng notional amount

Outsardi ng

Noti ond

Amount

Effective

Date Cotriterparcv

Long-Term

Credt Rating

(S&PAIoccVsf itch)

Van able

Rate

Paid

Variable

Rate

Received

FairValte at

June 30, 2016

Termi nao on

Date

$52,ay3£CO 7/12/2C07 Rcyal B ank of

Canada

AA-jAa3/4A SIFMA

Mini cipal

Swap l nctex

6S% of USD-1

Month LIBOR

($5,332,8X} 9/1/2036

149




Based or the swapageerrent, theAgency ewes interest calculated at a variable rate to the counterparty of the swap and in return, the counterparty ewes the Agency interest based on a variable rate Debt principal is rot e<changd the outstardng notional amount of the swap is the basis on which the swap recei pts and payments are cal cul ated

Fair value Fair value of the swap takes into consideration the prevailing interest rale environment, the specific terms and cordtions of each transaction and any upfront payments that tray have been received Fair valuewas estimated using the aero-coupon dscounting method This method calculates the future payments required by the swap assuming that the current fetward rales implied by the LIBOR swap yield curve are the market’s best estimate of future spot interest rates These payments are then dscounted using the spot rales implied by the current yield cuve fa a hypothetical zero-capon rate bond due on the dale of each future net settlement on the swap The swap is classified as Level 2 of the fai r val ue hi erarchy, usi ng a market approach that consi cfers the obsetvald e swap rales commonly quoted fa the full term of the swap As of J une 3Q 2016, the fair value of the swap was in fava of the canterparty.

The fair value represents the maximum loss that would be recogiized at the reporting cfete if the canterparty fai led to perform as contracted The Agency has accounted fa the chang in fair value of the i neffective hedge as noted below:

_______ Chains in Fair Valie___________ _______ Fai rvalue a Jure 30, 2016Cl«saficaticri Amount Classification Amcurt

Pay-Variable, R ereive-Variable2XCASubordnate Tax Allocation Reminding B onefc I rvesmerT revenue ($11,141,330) investment ($5,332,3X3

Credt risk As of J une 30, 2016, the Agency was rat exposed to credt risk on the outstardng swap because the swap had a negative fair value However, if interest rates increase and the fair value of the swapweretobecomepc6itive theAgency would be exposed to credt risk. TheAgency will bee<posed to interest rale risk only if the canterparty to the swapd^aults a if the swap is terminated

Interest rate risk The swap increases the Agray’s exposure to van aide interest rates. AstheSlFMA Municipal Swap Index Rate increases a the LIBOR ctecreases, the Agency’s net payment on the swap increases

Basis risk Basis risk is the risk that the interest rale paid by the Agency cn the underlying fixed rate bond; to the boratedders temporarily dffers from the variable swap rale received from the counterparty. The A gray bears basis risk cn the swap The swap has basis risk since the A gray receives a percentag of the LIBOR I ndex to offset the fixed bond rale the Agency pays cn the uraferlying Bonds

TheAgray is exposed to basis risk should the floating rate that it receives cn a swap be less than the fixed rale theAgray pays on the bonds Deperdng on the magiitucte and duration of any basis risk shortfall, the expected cost of the basis risk may vary.

150




A portion of this basis risk is tax risk. TheAgray is exposed to tax risk when the relationship between the taxable LI BOR based swap and tax-exempt fixed rate bend changs as a result of a reliction in federal and state income tax rates. Shoiid the relationship between LIBOR and the underlying tax- exempt fixed rate borate converg the A gray is exposed to this basis risk.

Termination risk TheAgray may terminate if theaher party fails to perfam under the terms of the contract. TheAgrcywill be exposed to variable rates if the counterparty to the swap contract faults a if the swap contract is terminated A termination of the swap contract may al so result in theAgray’s making a receiving a termination payment based on market interest rates at the time of the termination If at the time of termination the swap has a negative fair value, the Agray would be liable to the canterparty fa a payment equal to the swapls fai rvalue

Swap payments and associated cfebt Using rates as of J me 30, 2016, cfebt service reqairements of the Agray’s outstardng fixed rate Bonds and net swap payments assuming current interest rates remain the same fa their term, are as follows As rates vary, fixed rate bond interest payments and net swap payments wil 1 vary. These payments below are i relucted in the Debt Service Reqti rerrents above

FortheYears Fixed-RateBords 1 merest RateEndingjune30, Principal Interest Swap, Net Total

2017 $1,165,000 $1,551,043 $468,412 $3,184,4552018 1,240,000 1,498,386 448,060 3,186,4462019 1,325,000 1,437,361 426,970 3,189,331

2020 1,015,000 1,377,846 407,899 2,800,7452021 1,270,000 1,317,325 371,584 2,958,909

2022-2026 6,980,000 5,500,420 1,528,593 14,009,0132027-2031 9,610,000 2,535,870 835,763 12,981,6332032-2036 4,020,000 963,156 328,744 5,311,900

2037 1,015,000 31,084 3,651 1,049,735Total $27,640,000 $16,212,491 $4,819,676 $48,672,167

151




Successa Acpncy totheRichmcnd Community Redevelopment Agency Refunding Bards 2014 Series A & B - Orignal I ssue Amounts $25,795,000 and $1,655,000, respeztively

The 2014 A & B Bonds were issued on March 27, 2014 ty the Successa Agency to the Richrrond Community Redevelopment Agency. The proceeds of the Bonds, together with aher avail aide funds, were used to refund and defease the outstanding balance cf the current interest portion of the 1998 Harbour Redevelopment Project Tax Allocation Refund ng Bonds Series A, and the outstanding balances of the Richmond Joint Powers Financing Authority Tax Allocation Revenue Bends Series 2C00 A & B and Richmondjoint Powers Financing Authority TaxAIIccation Revenue Bonds Series 2C03A. Interest rates range from 1.4CP6 to 5.0CP6 and is payable semiannually on March 1 and September 1. The 2014A Bonds mature annually on each September 1 thrcugi 2025 while the 2014B Bends mature annually on each September 1 througi 2018 Beth Bonds are secured ty a pledge of Redevelopment Property Tax T rust F ind revenues. The outstand ng balances of the defeased debt as of J une 30, 2016 were as fd lows:

Harbour TaxAllocation Refunding Bonds-1998SeriesA $7,700,000JPFATaxAllocationRevenueBonds-2000SeriesA& B 8,395,000JPFA TaxAllocation Revenue Bonds-2003 SeriesA 12,205,000

$28300,000

Atjune30, 2016, the 2014 A & B Bonds ccnsistedof the following

$24,305,000 1,834,266

$26,139,266

Bonds outstanding: Unarrortized premium

Net

Theannual debt service retirements on theA & B bonds are as follows:


2017 $3,250,000 $1,027,195 $4,277,1952018 3,375,000 903,144 4,2781442019 3,505,000 771,512 4,276,5122020 1,775,000 659,375 2,434,3752021 1,870,000 568250 2,438 250

2022-2026 10,530,000 1,336,000 11,866,000Total $24,305,000 $5,265,476 $29,570,476

152



NOTE 17 - REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITI ES (Continued)

Loans Payable

The Richmondjoint Powers Financing Authority (Authority) has issued the Bonds listed below to assist in financing the Acpncy’s operations. The Authority has retained reserve amounts required under the respective Bend indentures and loaned the net proceeds of these Bond issues to the Agency. The Authority is responsible fa paying principal and interest on the Bonds; the Acpncy is responsible fa making payments to theA uthority in the amounts shown below.

Thecutstandng balances of loans payable to the Authority at J ine 30, 2016 came from the Bond issues listed below:

JPFA TaxAllocation Revenue Bonds-2003 Series B $9,155,000JPFATaxAllocationRevenueBonds-2004SeriesA& B 14,190,000

Total $23,345,000

Loan from the Authority dated August 1,2003

In 2003, the A uthority issued 2003 TaxAIIccation Revenue Bonds SeriesA and Series B in the orignal amount of $28580,000. The net proceeds cf the bond issue were loaned to the Agency to provide findng fa certain capital improvements and to repay the City of Richmond $18000,000 in partial payment of pria obligations. Unefer the terms cf the lean ageement between the Agency and the Authority dated Augist 1, 2003, repayment cf the loan is being made from certain tax increment revenues derived from taxable property within the Post-2C04 Limit Area pledged ty theAcpncy fa the purpose of loan repayment. On March 27, 2014, the Acpncy issued the Successa Acpncy to the Richmond Community Redevelopment Acpncy Refund ng Bonds 2014 Series A & B which resulted in the rdundrig and cfefeasanceof the outstandng balance cf the 2003 Series A Bends in the amount of $12,910,000, asdscussedabove

Theannual debt service reqjirementson the 2003 Series B loan as ofj une 30, 2016 are as fd lews:

For theYearsEndingjine30, Principal Interest Total

2017 $525,000 $554,035 $1,079,0352018 555,000 522,391 1,077,3912019 590,000 488842 1,0788422020 735,000 448403 1,183,4032021 785,000 400,523 1,185,523

2022-2026 5,965,000 1,094,154 7,059,154Total $9,155,000 $3,508348 $12,663,348

153




Lean frantheAuthaity dated October 1, 2004

In 2C04, the Authority issued the 2004 Tax Allocation Revenue Bonds Series A and Series B in the orignal amoints cf SI 5,00Q000 and $2,000,000, respectively. The net proceeds of the bond i ssue were IcanedtotheAgency toprcvictefurdngfacertaincapital improvements, Icw/rrcxferate income housing and to repay the City cf Richmond $6,367,081 in pria oldigations. Uncfer the terms of the loan ageerrent between the Agency and the Authority dated August 1, 20C6, repayment cf the lean is being made from certain subordinate housing and non-housing tax increment revenues derived from the taxable property wi thin the Merged Project Area pi edged by the Agency fa the purposed1 loan repayment

The annual debt service retirements fa these loans as of J une30, 2016 are as fd lews:


2017 $305,000 $737,664 $1,042,6642018 320,000 722,711 1,042,7112019 335,000 707,050 1,042,0502020 3,105,000 620,564 3,725,564

2021 680,000 525,014 1,205,0142022-2026 4,090,000 2,011,442 6,101,442

2027 5,355,000 145,106 5,500,106Total $14,190,000 $5,469,551 $19,659,551

Pledge of Redevelopment Tax Increment Revenues

The Bond issues and loans payable to the Authority dscussed above consist of senia and parity oldigations secured by future tax increment revenues The pledge of all future tax increment revenues (housing and non-housing revenue) ends goon repayment of $140,620,542 remaining debt service on the Bonds and loans which is scheduled tooccur in 2027.

With the dssduticn of the Redevelopment Agency dscussed above, Tax Increment is no longer dstributed and instead the Successa Agency receives payments from the County’s Redevelopment Property Tax Trust Fund (RPTTF) that are to be used to fund debt service on the Bonds, with no dstinction between housing and non-heusing revenues. In adcition, uncfer the provisions of the laws dssdvingthe Redevelopment Agency, the Successa Agency only receives the funds necessary to fulfil I its approved obligations. Total property taxes available fa dstributicn to the Successa Agency and other taxing end ties fa fiscal year 2016 calculated by the County A idta-Contrdler were $22,309,960. The total received by the Successa Agency fa fiscal year 2016 debt service and aher enfaceable obligationswas $19,953,198 and debt servicewas$10,661,960.

154



NOTE 17- REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITI ES (Continued)

Naes Payable

HUD Section 108Leans SERAF Lean

Total

$3,722,00011,281,603

$15,003,603

HUD Section 108- Orignal Amount $3,000,000

In fiscal 2004, the Agency entered into a Disposition and Development Ageerrent to receive a Section 108 loan from the Department of Housing arid Urban Development to finance costs related to the Fad

Assembly Bui Id ng project Interest is payable quarterly and the interest rate is fixed at 2.5®6 a, in specific condtions, adjusted to the latest LIBOR Rate The principal payments are due annually from 2009througi 2026 as fd lews:

FortheYearsErdirtjJure30, Prircipal Interest Total

2017 $171,000 $91,422 $262,4222018 175,000 83,602 258,6022019 180,000 75,454 255,454

2020 184,000 66,816 250,8162021 189,000 57,648 246,648

2022-2026 1,021,000 136,360 1,157,360Total $1,920,000 $511,302 $2,431,302

155




HUDSectioi 108- Orignal Amount $3,500,000

In fiscal 2006, the City received a Section 108 loan from the Department of Housing and Urban Development to finance costs related to the North Richmond-Iron Triange project. The loan proceeds weregven to the Agency fa the projezt, therefore the Agency is responsible fa the repayment of the loan. Interest is payable quarterly and the interest rate is fixed at 2.5E96 a, in specific condtions, adjusted to the latest LIBOR Rate During the fiscal year ended J me 30, 2015, the City received CDBG gant finds from HUD in the arrant cf $1,092,323 fa the partial repayment of the loan, which were transferred to the Agercy to retire that portion of the loan. The payment indicted $998000 in principal and $104,323 in interest The principal payments are due annually from 2012 througi 2026 as follows:


2017 $46,491 $46,491

2018 46,491 46,4912019 46,491 46,4912020 $102,000 44,079 146,0792021 250,000 37,948 287,948

2022-2026 1,450,000 82,841 1,532,841Total $1,802,000 $304,341 $2,106,341

SERAF Lean

The State of Califaria adopted AB 26 4X inj dy 20C9 which drects that a portion of the incremental property taxes received by the rectevdopment agencies, be paid instead to the County sggdemental edxational revenue augrentation fund (SERAF) in fiscal years 2010 and 2011. The Agency dd na have the resources to make these payments and i nstead was aid e to enter i nto a structured payment pi an ageement wi th the State Department of F i nance that al I cws the payments to the County to be made over a ten year period The loan bears interest at a rate of 296. Payments of principal and interest are due on an annual basis, commencing May 10, 2014.


2017 $319,191 $225,632 $544,8232018 325,575 219,248 544,8232019 332,087 212,737 544,824

2020 338,728 206,095 544,8232021 9,966,022 9,966,022

Total $11,281,603 $863,712 $12,145,315

156




Debt Without Agency a City Comrritmait

A special assessment dstrict has been established in an area of the Agency to provide improvements to properties located in that dstrict. Properties in the dstrict are assessed fa the cost of improvemmts; these assessments are payable solely by property owners over the term of thectebt issued to finance these improvements. The Agency is rot lecplly a maally obligated to pay these cteds a be the purchaser of last resort of any faeclosed properties in these special assessment dstricts, na is it old iepted to advance Agency funds to repay these debts i n the event of cbfaul t

One District, Marina Westshore Community Facilities District No. 1998-1, had issued Community Facilities District No. 1968-1 Special Tax Bonds which had a remaining balance outstanding of $2,860,000 atj une30, 2016.

Conduit Debt

The Agercy has assisted private-secta entities by sponsaing their issuance of debt fa purposes the Agency deems to be in the pubic inteest. These cted issues are secured sdely by the property financed by theefebt. The Agency is rot legally a maally obligated to pay these debts a be the purchaser of last resort of any foreclosed properties secured by these debts, na is it obligated to advance Acpncy funds to repay these cteds in the event of d^ault by any of these issuers. Atjune 30, 2016, the balances of these issue's’ outstandngdebtswereasfdlcws:

Baydiff Apartment Project 2004 Revenue Bonds S2649Q000Crescent ParkApartrrent Project 2007SeriesA& Series A-T Re/enue Bonds 27,104,008

E. Corrmi trren ts and Con ti nepnei es

StateApproval of EnfacealdeOblicpiticns

The Sixcessa Agency prq^res a Recognized Odicption Payment SchedJe (ROPS) annually that contains all proposed expandtures fa the subsequent twelve-month palod The ROPS is subject to the review and approval of theOversigt Board as well as the State Department of Finance Althougn the State Dq^rtmmt of Finance may na question items inducted on the ROPS in one paled they may question the same items in a future paled and dsallow associated activities The amount if any, a current obligations that may be denied by the Stale Dq^rtment of Finance canna be cteermined at this time The City expects srxh amounts, if ary, tobeimratalal.

Miraflaes- Pollution Remediation

The City, througn the forma Redevelopment Agaicy, has unctelaken a knewn pdluticn remedation project at the Miraflaes Housing Devdopment site The Successa Agaicy assumed the administration a the project as rf February 1, 2012. Clean upathe 14 acre farrer flower nursery site, located at South 45* Strea and Wall Avamue, will provide future resiefential and open space I and Theraredation phase a the Miraflaes project was complded during the fiscal year ended J une30, 2015.

157




Atthetimetheorignal Remedal Action Plan was prepared the orig nal cost of the prlerred alternative reredation was estirratedto fce $3,200,000. As of J une 30, 2015, the estimate had increased to $13.6 million. During the fiscal yearencfedjune30, 2016, theAgercy ctecreasedthe reredation estimate to $13.4 million. The Agaxy spent $13.2 million in pollution reredation costs since the project’s inception througij une 30, 2016, leaving a remaining estimated pdluticn liability of $232,000 atj une 30,

2016 for ongoing monitoring cc6ts The Successor Agency has recorcted this amount as an accrued liability in the Statement cf Fidxiary Nd: Position, hcweva this obligation is an estimate and is subject to changes resulting from price increases or relictions, techndogy, or changes in applicable laws or regulations.

Marina Bay - Pollution Remediation

The Successor Agaxy cwns a goip of land tracts cdlectively rderexed as the “Nine Deed Restricted Properties.” The Successor Agaxy is named as a responsible party at these sites under a Voluntary CleanupAgeement with the State Department of Toxic Substances Control (DTSC) to conduct pollution monitoringandremedalion. TheseninepropertiessitwithinthelargerMarinaBaydevdopmentsite A Remedation Action Plan (RAP) was prg^redfor Marina Bay in 1993, and ind uded rdeences to each of the Deed Restricted Proposes. Eigit of the nine deed restricted properties are subject to an Operations & Maintenarce(0&M) Plan. TheO&M PI ansreqji re annual inspections!1 the cap material and reporting of the fi nd ngs to DTSC. The O&M Plans also regjire that a five-year review report be prepared and sifcmitted to DTSC. The five-year review reports descri be the inspection and maintenance activities that wereperformedoverthepreviousfiveyears. Thearmual monitoring costs are estimated at $8700, with the five year review estimated at $45,OCO. The monitoring costs ever a five year period are estimated at $88,500.

The RAP was subsequently amended in 2008 to adless Area T, one of the Nine Deed Restricted Properties. TheammcfedRAP subjects thesitetogoundwater sampling analysis, and remedation. The approximate annual costs for the existing goundwater sampling analysis and remedation preg'am is approximately $49,500. The known pollution at this site is a layer 1 pdrdeum hylocarbons above goundwater and pdrdeum hylocarbons dssdved in goundwater. Active remedation has been conducted since September 2C08 by the forme' Recbvelopment Agexy and now by the Successor Agency. DTSC reqiested that the Successor Agexy submit a work plan describing the mahods to enhance the recovey of free prodxt and dssdved petrdeum hylocarbons at Area T. The Successor Agexy submitted a Work Plan for Enhancement of Groindwate Remedation Progam to DTSC in March 2015 (Work Plan). DTSC approved the Work Plan in April 2015. The cost to implement the enhanced goundwater remedation preg'am is estimated at $115,000. This preliminary estimate has not beei accrued as a liability in the Successor Agexy’s Statement of Fiduciary Net Position. This estimate is subject to change as the daft work plan moves througi the regulatory review process. This estimate is also sulqect to change from price increases or reductions, techndcgy, and chances in applicable laws or regulations.

158



NOTE 18- SUBSEQUENT EVENTS

A. CalPERS DiscountRate

In December 2016, CalPERS’ Beard of Directors vied to lewer the dscount rate used in its actuarial valuations from 7.5% to 7.C% over three fi seal years, beg nning in fiscal year 2018 The chancy in the dscount rate will affect the contribution rates fa employers begnning in fiscal year 2019, and resdt in increases toemployers’ rormal costs and mfunctedactuarial liabilities.

B. Terminal OneLandSale

The City is in contral with Term nal One Development, LCC, to sell an approximately 10-acre site fa development purposes at a price of $10 million. The developer has paid the City $500,000 in a non- refundable cfepasit, with the balance 1 $9.5 million due fdlowing the ganting of all entitlements and close of escrow. Fdlowing City Ccuncil certification 1 the environmental impact report (EIR) fa the projel in J uly 2016, a lawsiit was filed that challencpd certification of the EIR. A settlement was reached by all parties to this lawsuit in November 2016, which allcwsthe project entitlement process to proceed Close 1 escrow on the real estate sale by the City to Terminal One Development, LLC, inditing the transfer of the $95 million balance due from the developer to the City, is anticipated in October 2017.

159


City of RichmondRequired Supplementary I nformation

BUDGETARY COMPARISON SCHEDULES

161

CITY OF RICHMOND GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGETANDACTUAL FOR THE YEAR ENDEDJUNE 30, 2016

VariancewithBudgaedArrtxrits Final Buclga

Actual PositiveOriginal Final Arrtxrits (Negative)

REVENUESProperty taxSales taxUtility user feesOther taxesLicenses, permits end feesFines, forfeitures and penaltiesU se of money and property l ntergo/ernmentalCharges for servicesRentOther

$33,572,92642,321,81143,883,4999493,4332,854,228

341,445 90,605

1,608,023 7,310,034

751,209 930,600

$33,456,87741,478,59344,00616011,055,4752,854,228

500,000X,605

1,845,9147918,560

759,109264,334

$33,232,03749 877,125 43,365,249 11,628519 2,542,704

398098 35,493

1,954,943 8284,694

765,753 353,991

($224,840) (601,46® (640,911) 573,044

(311,524) (101,302) (55,112) 109029 366134

6644 89657

Total Revenues 143,158 513 144,229855 143,438606 (791,249)

EXPENDITURESCurrent

General go/ernment 1848& 324 20797,387 22,371,710 (1,574,323)Pubicsafay 20,262,671 88273,744 86859602 1,414,142Pudicwcrks 18822,783 18219,434 1 7899366 329068Cultural and recreati onal 10,734,748 9973,481 9952,449 21,032

Captal outlay 282,000 602,272 404,053 198,219Deb: Service

Pnnopel 1,047,265 1,047,985 1,079062 (31,077)1 merest and fi seal charges 469,548 318932 318574 358

Total Expenditures 140,808,059 139233,235 138884,816 348,419

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES 2,350,454 4,996620 4,553,790 (442,SO)

OTHER FINANCING SOURCES (USES)Bend premi umProceeds from sal e of property

85,OX150,XO 79000 46429 (23,571)

Transfers in 2,924,831 2,924,831 3,099044 165,213Transfers(cut) (5,510,188) (6438301) (6974,604) (536 303)

Total ether finanongsources(uses) (2,350,357) (3,443,470) (3,838131) (394,661)

NET CHANCE IN FUND BALANCE 97 1,553,1 50 715,659 (837,491)

Fundbelancejuly 1 28681,736 28681,736 28681,736

Fundbelance,June30 $28681,S3 $39234,886 $29397,395 ($837,491)

162

CITY OF RICHMONDCOST RECOVERY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES BUDGETANDACTUAL

FOR THE YEAR ENDEDJUNE 30, 2016

Budgeted A martsVariancewith Final Budgd

Original FinalActual

AmartsPositive

(Negative)

REVENUESLicenses, permits and feesFines, forfeitures and penalties inter gj/ernmentalCharges for servicesOther

$6144,230750,OX

6404,783 2,270,543

599

$6693,165759OX

6406397 3,607,0552,1 75,797

$7648,737 481,926

1,126,115 2,379,273 2,188,172

$955,572 (268074)

(5,2 8 9 282) (1,22 7,782)

12,375

Total Re/enues 15,570,155 19632,414 13,824,223 (5,868 191)

EXPENDITURESCurrent

General go/ernmentPublicsafetyPublicwcrks

Captal outlay

6603,3464,629,4563,570,4625,048,5®

7943,5024,591,5494,445,2425,079472

6923,2825,010,8943,119,1343,226,497

1,029220(419255)

1,3261681,843,975

Total Expendtures 19851,847 22,059 765 18279,717 3,771,048

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (4,281,692) (2,418351) (4,455,494) (2,037,143)

OTHER FINANCING SOURCES (USES)Transfersin 4,310,032 4,423,129 3,823,897 (599322)

Total etherfinanangeairces(uses) 4,310,032 4,423,129 3,823,897 (599322)

NET CHANCE IN FUND BALANCE 28,340 2,004,778 (631,687 (2,636465)

Fundbelance(deficit),July 1 (8646,635) (8646635) (8646,635)

Fundbal ance (ctefi cit), June 30 ($8618,295) ($6641,857 ($9278,322) ($2,636465)

163

CITY OF RICHMONDCOMMUNITY DEVELOPMENT AND LOAN PROGRAMS SPECIAL REVENUE FUND



VariancewithBudgaedAmouts Final Budga

Original FinalAdual

AmoutsPositive

(Negative)

REVENUESLicense, permits and fee $5,439,518 $627,243 $892,767 $265,524Use of money end property 28,582 43,082 129,185 85,103l ntergo/em mental 8789,61 7 6,061,735 1,018142 (5,043,593)Other 236,206 436205 1,062,155 625,949

Total Revenue 14,493,923 7,168266 3,102,249 (4,066017

EXPENDITURESCurrent

CoTimjnity deve! cpment 8 352,160 2,381,396 25,743 2,355,653Housi ng and redeve! cpment 7,123,114 4,647,559 2,742,753 1,904,806

Ceptal outlay 2,164,319 2,164,319 2,164,319

Total Expendture 17,639,593 9,193,274 2,768496 6424,778

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (3,145,670) (2,025,OK) 333,753 2,358761

OTHER FINANCING SOURCES (USES)Proceeds from sal e of property 950,000 332,059 10512 (321,547Transfers in 457,085 180,207 147,593 (32,614)

Total etherfinanangsairces(use) 1,407,085 512,266 158105 (354,161)

NET CHANCE IN FUND BALANCE (1,738,585) (1,512,742) 491,858 2,004,600

Fundtelancejuly 1 23,655,312 23,655,312 23,655,312

Fundtelance,June30 $21,916,727 $22,142,570 $24,147,170 $2,004,600

164

CITY OF RICHMONDENVIRONMENTALANDCOMMUNITY INVESTMENTAGREEMENTSPECIAL REVENUE FUND



BudgaedAmouts

Original FinalAdual

Amouts

Variancewith Final Budga

Positive (Negaive)

REVENUESPrivate gents $12,961,833 $12,981,S3 $12,971,138 ($10,695)

Total Revenue 12,961,833 12,961,S3 12,971,138 (16695)

EXPENDITURESCurrent

General go/ernment 11,250,000 11,339,305 847,166 16492,137Pudicsafay 450,000 446OX 411,944 28056Pudicwcrks 86,S3 88833 105,548 (16715)Ccmmunity development 444,438 444,438 444,438Cultural andrecreetional 605,562 605,562 129 SX 475,672

Captal outlay 143,000 153,OX 153,OX

Total Expendture 12,961,833 13,071,138 1,938988 11,132,150

NET CHANCE IN FUND BALANCE (89305) 11,032,150 11,121,455

Fundtelancejuly 1

Fundtelance,June30 ($89305) $11,032,150 $11,121,455

165



NOTES TO BUDGETARY COMPARISON SCHEDULES

B udgets and B udgetary Acccunti ng

The City adapts a budget annially to te effective J liy 1, for the ensuing fiscal year. Budgeted e<pendtures are adapted through the passage of a lesdution. This resolution constitutes the maximum authorized experdtures for the fiscal year and cannot legally te exceeded except ty subsequent amerdrentscfthebudgetby the City Council.

The City uses an encumbrance 9/stem as an extension of normal budgetary accounting for the General Fund special revenue finds, andcapital projects funds. Under this system purchase orders, contracts, and other comrritrrents for the experdture of monies are recorded in order to reserve that portion of applicable approptialiens. Encumbrances outstandng at year-end are rezordad as reservations of fund balance si nee th^ da not consti tute expend tures or I i ati I ities. Outstand ng encumbrances at year-end are reappropriated for the fd I ewi ng year. U nencimbered and unexpended appropri ations lapse at year-end

An operating budget is adapted each fiscal year on a basis consistent with Generally Accepted Accounting Principles (GAAP) for the General Fund certain Special Revenue Funds (State Gas Tax, General Purpose, Paratransit Operations, Public Safely, Cc6t Recovery, Limiting and Landscaping Districts, Developer Impact Fees, Community Development and Loan Progams, and Richmond Neighborhood Stabilization Corporation) and certain debt service funds (2005 Pension Obligation Bonds, General Debt Service and Civic Center Debt Service). Piidic hearings are conducted on the proposed budgets to review all appropriations and sources of financing Capital projects funds are budgaed on a project length basisand are therefore not comparable on an annual basis.

Experdtures are controlled at the fund level for all budgeted departments within the City. This is the level at which experdtures may not legally exceed appropriations. B udgeted amounts for the Statement of Revenues, Experdtures and Changes in Find Balances-Budgt and Actual include budget amerdrents approved ty City Council.

167


Miscellaneous Agent Multi ple-Enployer Defined Benefit Pension Plan

Last lOYears*SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

Measurement Date 6/30/2014 6/30/2015

Total Pension LiabilityServiceCcst $ 7,816,868 $ 7,446,410Interest 30,597,498 31,414,256

Differerces between expected and actual experience (5,280,549)Changes inassunptionsChanges in benefits

(7,116,200)

Benefit payments, including refunds of enplcyee contributions (23,007,539) (23,302,793)Net change in total pension liability 15,406,827 3,161,124Total pension liability-beginning 415,561,984 430,968,811Total pension liability -ending (a) $ 430,968,811 $ 434,129,935

Plan fiduciary net pcsitionContributions -employer $ 6,661,038 $ 7,189,716Contributions -employee 3,195,699 3,141,565Net investment income (1) 51,867,728 7,502,958Plan to plan resource movement (6,885)Adm nistrative expense (379,925)Benefit payments, including refunds of employee contributions (23,007,539) (23,302,793)Net change in plan fiduciary net pcsition 38,716,926 (5,855,364)Plan fiduciary net pcsition -beginning 304,680,611 343,397,537Plan fiduciary net pcsition -ending (b) $ 343,397,537 $ 337,542,173

Net pension liability —ending (a)-(b) $ 87,571,274 $ 96,587,762

Plan fiduciary net pcsition as a percentage of the total pension liability 79.68* 77.75*

Covered payroll $ 37,210,225 $ 36,151,102

Net pension liability as percentage of covered payroll 235.34* 267.18*

Notes toSchedule(1) Net of adrrinistrativeexpensein 2014.Benefit changes The figures above do not include aw liability inpact that may have resulted from plan changes which occurred after theactuarial valuation date This applies for vduntaiy benefit changes as well as any offers of Two Years Additional Service Credit (a.ka. Golden Handshakes).Chancres in assumptions. GASB 68, paragraph 68 states that the lorg longterm expected rateof return should be determined net of pension plan investment expense, but without reduction for pension plan adminstrative expense The discount rate of 7.5C% used for thej une 30, 2014 measurement date was rut of adm nistrative expenses. Thediscountrate of 7.65% used for the Jure 30, 2015 measurement date is without reduction of pension plan adm nistrative expense All other assumptions for thej une 30, 2014 measurement date were the same as these used for the June 30, 2015 measurement date

* - Fiscal year 2015 was the 1st year of implementation.

168


Miscellaneous Agent Multi ple-Enployer Defined Benefit Pension Plan As of fiscal year endi ng J ure 30

Last lOYears*SCHEDULE OF CONTRIBUTIONS

Fiscal Year Ended J une 30 2015 2016

Actuarially cfetermined contri but)on Contributions in relation to the actuarial ly cfeterm ned contributions

S 7,178,549 S

(7,178549)

8084,584

(8084,584)Contribution efficiency (excess) S S -

Covered payrd 1 s 36,151,102 S 36,638889

Contributions as a percentacp of covered payrd 1 19.86% 22.07%

Notes toScheduleValuation dale: 6/30/2012 6/30/2013

M elhods and assumptions used to cteterrri ne contri tuti on rates:

Actuarial cost methodAmortization methodAveracp retrai ni ng amorti zali on peri odAssetvaliation methodInflationSalary increases

I nvestment rate of return

Retirement age

Entry age normalLevel percentage payroll, closed 24 years as of valuation date 15 year S moothed Market val ue 2.75%Varies ty Entry Age and Service7.5C%, net of pension plan investment andadri nistrative expenses, inducts inflation

T he probabi I i ty cf Reti rernent are based on the 2010 Cal PERS Experience Study for the period from 1967 to 2007.

T he probabi I ities of mortal i ty are based on the 2010 Cal PERS Experience Study for the period from 1967 to 2007. Pre-retirement and Post-retirement mortality rales i nd ucte 5 years of projected mortal i ty i mprovement

Mortality RaleTable using Scale AA published by the Society of Actuaries.

-Fiscal year 2015 was the 1st year cf implementation.

169


Safety Agsnt Multiple-Employer Defined Benefit Pension Plan

Last 10 Years*SCHEDULE OF CHANCES IN THE NET PENSION LIABILITY AND RELATED RATIOS

M easurement Date 6/30/2014 6/30/2015

Total Pension LiabilityService Ccst $ 10,167,167 $ 10,142245InterestDifferences between expected and actual experienceChanges in assirrptionsChanges in benefitsBenefit payments, inducing refunds of employee

38,254,517 40,142 006 3799,388

(9,562 090)

contributions (27,199,743) (28,747,508)Nef chang; in total pension liability 21,221,941 15,772041Total pension liability -beginning 518,576503 539,798,444Total pension liability -ending (a) $ 539,798,444 $ 555,571,485

Plan fiduciary nef positionCcntributicns -employer $ 9,352,438 $ 10,652 641Ccntributicns -employee 3,348,408 3,797,568Net investment income (1)Plan to plan resource movementAchinistrative expenseB enefit payments, inducing refolds of employee

64,842,562 9,408,1862476

(477,249)

contributions (27,199,743) (28,747,508)Net change in plan fiduciary net position 50,343,665 (5,362886)Plan fiduciary net position -begnning 379,062,015 429,405680Plan fiduciary net position -ending (b) $ 429,405,680 $ 424,042794

Net pension liability-ending (aHb) $ 110,392,764 $ 131,528,691

Plan fidjciary net position as a percentage of the totalpensicn liability 79.55% 76 33%

Levered payroll $ 35,479,947 $ 36151,966

Net pensicn liability as percentag; of covered payroll 311.14% 363.82%

Notes toSchedule:(1) Net of achinistrative expense in 2014.Benefit changes. Thefigires above cb not inducteany liability impact that may have resulted from plan changes which occurred after the actuarial valuation date. This applies for volintar/ benefit chancps as well as any offers of Two Y ears Additional ServiceCredit (a.k.a. Golden Handshakes).

Changes in assumptions. GASB 68, paragaph 68 states that the long longterm expected rate of retirn should be determined net of pension plan investment expense but without reduction fa pension plan achinistrative expense Thediscouitrateof 7.5C% usedfa thejune30, 2014 rreasirerrmt date was net of achinistrative expenses. The disc cunt rate of 7.65% usedfa thejune 30, 2015 measurement date is without reduction of pension plan achinistrative expense All other assirrptions fa thejune 3Q 2014 measurement date were the same as those used fa thej une 3Q 2015 meastrement date

* -Fiscal year 2015 was the 1st year of implementation.

170


Safety Agsnt Multiple-Employer Defined Benefit Pension Plan As of fiscal year ending June 30

LastlOYears*SCHEDULE OF CONTRIBUTIONS

Fiscal Year EndedJ une 30 2015 2016

Actuarially determined contribution $ 10,650,057 $ 11,492,798Contributions in relation to the actuarially determined contributions (10,650,057) (11,492,798)Contribution deficiency (excess) $ $ -

Covered payroll $ 36,151,966 $ 37,352,212

Contributions as a percentage of coveredpayroll 29.46% 30.77%

NotestoScheduleValuation date: 6/30/2012 6/30/2013

Methods and assumptions used to determine contribution rates:

Actuarial ccet methodAmortization methodAverage remaining amortization periodAsset valuation methodInflationSalary increases

I investment rate of return

E ntry age normalLevel percentage of payroll, closed 26 years as of val uati on date 15 year Smoothed Market value 2.75%Varies ty Entiy Age and Service

7.5U6, net of pension plan investment and administrativeexpenses, includes inflation

The probability of Retirement are based on the 2010CalPERS Retirement age Experience Study for the period from 1997 to 2007.

The probabilities of mortality are based on the 2010CalPERS Experience Study for the period from 1997 to 2007. Preretirement and Post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published

Mortality RateTable by the Society of Actuaries.

-Fiscal year 2015 was the 1st year of implanaitation.

171


SCHEDULE OF CHANCES IN THE NET PENSION LIABILITY AND RELATED RATIOS

Last lOFiscalYears*

General Paisicn Plan

Total Pension Liability Savice Cost InterestDifferences between expeded and actual expaiaice Chants of assurrptions Chants of beiefit ternsBenoit payments, inducing msrrtoer contribution refinck NetchangeinTotal PensionLiability Tad PaisionLiablityabegmingofyea

Taal pension liability at end of year

Fiduaary N a Position Contributions -arpioi'a Contributions -donations and ether income Contributions -msrrtoer N a investment i neeme OthaaddtionsBen dit payments, includngmerrtoer contribution refindAdrinistrative expaisesOthadedictiblesN a change in Fiduciary N a Position Fiduciary Na Position d begnringofyear

Fiduciary na position a end of year

Na peisicn liability (assa) a end of year

F iduaary na position as pecentage of total pension liability Ccvaed payrollNa pension liability as pacentageof ewered payroll

M easurement Paiod E ndedj une 302014 2015 2016

$147,247 $128,954345 786 322,312

$107,632

(592,105) (672,546) (623,662)(444,858) 124,506 (516,0304,219,909 3775051 3899,557

$3,775051 $3899,557 $3 383,527

$602,970 $602,970 $602,970

(837) 2,017 2,255

(592,105) (672,546) (623,662)

1Q028 (67,559) (18,437)1,033168 1,043196 975,637

$1,043196 $975,637 $957,200

$2,731,855 $2,923,920 $2,426,327

27,e& 25.06 28.3%11.9 n.9 11.911.9 nfa. n9

* Fiscal year 2014 was the lstyearof implementation.

172



Last lOFiscalYears*

Police and Firemen's Pension Plan

Total Pension Liability Service Cost InteestDifferences bdween expected and adud experience Changes of assurrptions Changes of benefit termsB enefit payments, includngmemba contribution refund NachangeinTdal PensionLiability Total Pension Liability a begrring of year

Total pension liability a end of year

Fiduaary Net Position Contributions -employa Contributions -dndions and dha income Contributions -merrtoa N et i nvestment i ncome OthaaddtionsB enefit payments, includngmemba contribution refundAdrinistrative expenseOthadedictibleNet change in Fidiaary Net Position F i dici ary N et P csi ti on at beg nri ng of year

F iduciary net position a end of yea

N a pension liability (asset) a end of year

Fiduaay nd position as pacentageof total pension liability CoyeedpayrdlN a pension liability as pacentageof co^aed payed I

M easurement Paiod E ndedj une 302014 2015 2016

$1,579,762 $1,464,746(323,462)1,380854

$1,214,089

(3,436,887) (3074,421) (314Q552)(1,857,125) (552,283) (1,926463)25,094,272 23237,147 22684,864

$23,237,147 $22684,864 $20758401

$740,235 $740235 $1,222197

2,968,492 369,240 (165490

(3,436,887) (3074,421) (314Q552)

(3,424,568)(3,152,728) (1,964,946) (2083845)19,834,552 16,681,824 14,716878

$16,681,824 $14,716878 $12633033

$6,555,323 $7,967,986 $8125368

71.8% 64.86% 6086%n 9 n.9 n.9n.9 n 9 n 9

* Fiscal year 2014 was the lstyearof irrplementalj on.

173



Last lOFiscalYears*


Total Pension Liability Service Cost InterestDifferences bdween expected and adual experience Changss of assirrpticns Changss of benefit termsBenefit payrrents, inducing rrerrber cortri bud cn refunct NdchangUnTotal PensionLiatility Total PensionLiatility at begrring of year

Total pension liability at end of year

Fiduaary Net Position Caitrituticns -errployd Caitrituticns -cbnaticns and ether inccrre Caitrituticns -rrerrber Nd investrrent inccrre Other acUticnsBenefit payrrents, inducing rrentier cortritudcnrefunck Achinistrative expenses Other deduct) tiesN d change in Fi diciary N d Positi cn Fiduciary Nd Position d begnningof year

Fidua ary nd position at end of year

Nd pensicn liability (assd) at end of year

Fiduaary nd pcsiticn as percentage of total pension liability Cova edpayrdlNd pension liability as percentage of ccvaed payroll

M easurement Period E ndedj une 302014 2015 2016

$30,759 $28597 $21,615(45,458)

64,544

(87,140 (88883) (9Q660(56,381) (41,200) (69, Of 5)863,415 807,034 765834

$807,034 $765,834 $696 789

$102,140 $102140 $102140

227 577 933

(87,141) (88883) (9Q660

15,226 18834 12413244,661 259,887 272721

$259,887 $272721 $286134

$547,147 ________$492,113 _________ $410655

322% 35.7% 41.1%n.an.a n/a na


174


SCHEDULE OF CONTRIBUTIONS

Last 10 FI seal Years

FiscalYear

(1)Actuarially Determined

Ccntr ibution (ADC)

(2)Employer

Ccntr ibutiens

(3)Ccntr ibution

Deficiency (Excess)(1M2)

(4)Covered-Employee

Payroll

(5)ADC /Covered- Employee Payroll

(1X4)

Policeand Firemen's PlanJune3Q 2007 $2215,648 $6215648 ($4,00Q00Ql n/a n/aJine3Q 2008 2199,459 500Q000 (280Q541) n/a n/aJine3Q 2009 1,887,057 4,80Q000 (2912943) n/a n/aJine3Q 2010 2477,902 4,60Q000 (2122098) n/a n/aJine3Q 2011 2257,912 0 2257,912 n/a n/aJine3Q 2012 1,596 771 0 1,596 771 n/a n/aJine3Q 2013 1,813721 1,596 771 216950 n/a n AJine3Q 2014 74Q 235 74Q234 1 n/a n/aJine3Q 2015 74Q 235 74Q235 0 n/a n/aJine3Q 2016 1,270466 1,222197 48,269 n/a n/a

General Pension PlanJine3Q 2007 $238,264 $238 264 $0 n/a n/aJine3Q 2008 307,948 307,948 0 n/a n/aJine3Q 2009 307,948 307,948 0 n/a n/aJine3Q 2010 486 092 486 092 0 n/a n/aJine3Q 2011 486 092 486 092 0 n/a n/aJine3Q 2012 455 662 148186 307,476 n/a n AJine3Q 2013 502 278 66Q992 (158,714) n/a n AJine3Q 2014 602 970 602 970 0 n/a n/aJine3Q 2015 602 970 602 970 0 n/a n/aJine3Q 2016 75Q016 602 970 147,046 n/a n A

Garfield Pension PlanJine3Q 2007 $73917 $73917 $0 n/a n/aJine3Q 2008 72484 72484 0 n/a n/aJine3Q 2009 72484 72484 0 n/a n/aJine3Q 2010 76692 76692 0 n/a n/aJine3Q 2011 76692 76692 0 n/a n/aJine3Q 2012 78731 0 78,731 n/a n/aJine3Q 2013 92092 77,000 15,092 n/a n/aJine3Q 2014 102140 102140 0 n/a n/aJine3Q 2015 102140 102140 0 n/a n/aJine3Q 2016 78987 102140 (23,153) n/a n A

175


SCHEDULE OF CONTRIBUTIONS (Continued)

Notes toSchedulePdice and Firemen's Plan General Peiacn Plan CarflddPensicn Plan

Actual ally deem ned corn tuiairaes srecdculatedcsoftheendofthefiscd year in whidicotnbutiaisare repoted

M shads aid assumpti cns teed to cfeterrn re ccrtn fcuti cn raesActuend coarrahod Erttya^norrd cost Ertryagenorrd cost Erttyagenarrd costArratizaicn rrshad investment Gains& Losses Stragt-linearratizaicn ever adosed5-year penal

E ffects of Assumptions Changes and Expsience Gains and Losses Sira chtd i re arratizaicn eve a dosed period equal to the a/ea^ of the expected rerraningsen/ice lives of ell rrenters that ae provided with pens ersthreuji the pens oi|dai.Since the |dai rolcrge has alive rrerters, the effects of assumption diaiges aid experience

Rerraringarmnizaticn pen adgars aid losses ae recognized imrredately.

5 years 5 yeas 5 yearsAssetvduancn mahad Maks vd ueof assas M arka vd ue of assets M aket vd ue of assasinflaicn 2.7S% 2.7S% 2.73%Sal ary i nueases need to eai mae future inueeKsto pensi ens NA NA NA

Discaurt rae, ns of irweamert expense S.75% 3.CC% 3.CC%R ai rerrert Cl osed to nav rrenters ClosedtoneA' rrenters Cl osed to nav rrentersMortality CdifcrnaPERS MordiryTadeimts 2014 experi ence stud/

(based on Cal PE RS 2C01 -2011 experience)

SCHEDULE OF INVESTMENT RETURNS

Last lOFiscalYears*

Annual money-weiefited rateof return, net of investment expense 2014 2015 2016

Police and Fireman's Plan 3.90% 2.40% -1.20%

General Pension Plan 0.1CP6 0.3Q% 0.30%

Garfield Pension Plan 0.40% 0.30% 0.40%


176


OTHER POST-EMPLOYMENT BENEFITS PLAN SCHEDULES

SCHEDULE OF CONTRIBUTIONS

The Platf s annual required contributions and actual contributions for the last three fiscal years are set forth below:

FiscalYear

AnnualOPEBCcst

ActualContribution

Percentage of Annual

OPEB CcstContributed

Net OPEB Obligation

(Asset)6/30/2014 $11,427,000 $2,012,286 1806 $30,883,8926/30/2015 12,081,000 3,889,097 32% 39,075,7956/30/2016 18,295,182 7,732,440 42% 49,638,537

SCHEDULE OF FUNDING PROGRESS

TheSchedilecf Furring Progess below presents rrulti-year trend information about whether the actuarial value of plan assets is increasing or cfecreasing ever time relative to the actuarial accrued liability for benefits Trend data from the actuarial studesispresentedbelcw:

Overfincted

ActuarialValuation

Die

ActuarialValue ofAssas

(A)

Entry Age Actuarial Accrued Liability

(B)

Overfinded(Underfunded)

ActuarialAccruedLiability(A-B)

FindedRatio(A/B)

CoveredPayroll(C)

(U nderfuicted) Actuarial

Liability as Percertageof

Covered Payroll [(A -B)C1

7/1/2011 $1,804,000 $94,486,000 ($92,682,0X0 1.906 $72,327,0X1 -128%7/1/2013 986,000 126,447,000 (125,461,000) 0.836 71,393,000 -176%7/1/2015 345,000 196,379,000 (196,034,000) 0.2% 73,167,000 -268%

177


CITY OF RICHMOND JUNE BO, 2016

MAJOR GOVERNMENTAL FUNDS, OTHER THAN _______________________ GENERAL FUND AND SPECIAL REVENUE FUNDS______________________

CIVICCENTER DEBT SERVICE FUND

This find accounts for principal and interest payments on the Civic Center project Lease Revenue Bonds.

179

CITY OF RICHMOND CIVICCENTER DEBTSERVICE FUND



FinalActual

A moots

Variance with FinalBudgd

Positive (Negative)

REVENUESCharge for servicesUse of mere/ and property

$4,942,040 $2,5693841,346

($2,372,656)1,346

Total Re/enues 4,942,040 2,570,730 (2,371,310)

EXPENDITURESDefctservi ce

Pri ncipalinterest and fiscal chargesSwaptermnation payment

1,695,5456424,105

27,056,046

1,686545 6,636567

28,554,OX(212,852)

(1,497,954)

Total Expendtures 35,166,696 36,877,512 (1,716816)

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (30224,656) (34,366782) (4,082,126)

OTHER FINANCING SOURCES (USES) issuance of dab:B end i ssuance prem umTransfersin

28,390,0001,393,6191,235,584

28,3966001,393,6191,235,584

Total aherflnanangsources(uses) 31,019,203 31,019203

NET CHANCE IN FUND BALANCE 794,547 (3,287,579) (4,082,126)

Fundbalancejuly 1 (339,795) (33 9 795)

Fundbal ancejune 30 $454,752 ($3,627,374) ($4,082,126)

180


NON-MAJ OR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

State C as Tax F und accounts for the subventions received from state gas taxes incfer the provi sion of the Stress and Hicfways Cocte. State gas taxes are restricted to uses for street construction activities inducing location of undergand utilities, geotechnical work relating to identification of soil and gourxivaler contamination, materialssampling and testing

General Purpose Fund accounts for other restricted monies that are tote used for the specific purposes for whi ch the funds were set up

Paratransit Operations Fund accounts for monies used to provide sutsidzed accessible transportation to the seniors and dsatled resicfents of the City of Richmond and the adjacent unincorporated areas of W est Contra Costa County.

Employment & T raining Fund is a fund set up to plan, adrinister and operate job training progams for the adult andyouth resicfents of Richmond

Public Safety Fund records the receipt and use of g'ant monies under the Local Law Erforcements Block Grant Prog'am, Office of Traffic Safely Grants, OES Grants, FEMA Grants and various other gants

Limiting and Landscaping Districts Fund was set up to account for maintenance services in the nature of landscaping limiting cleaning prcvicfed to the Hilltop parking let area, the Marina Way Development area, and the Marina Bay area

Developer Impact Fees Fund is used to account fa monies received from fees levied ty theCity on new commercial arid residential projects. These funds will teusedtorriticptetheaddtional pubic safely and

i nf rastructure costs resulti ng from these devel oprrent projects.

Secured Pension Override Fund - The Secured Pension Override Fund recads the receipt of Pension Tax overri de col lected throucji property taxes fa payment of pensi on contri tutions.

Richmond Neighborhood Stabilization Capaation Fund -The Richmond Neighborhood Stablizatiai CorpaationSpecial RevenieFindaccountsfatheactivitiesof theCorporalion.

181


NON-MAJOR GOVERNMENTAL FUNDS (Continual)

DEBT SERVICE FUNDS

2005 Pension Obligation Bonds Debt Service Fund receives transfers from the General Fund and the Pension Tax Override Find and pay's the debt service on the 2005 Pension Obligation Bonds.

General Debt Service Fund accounts for monies received in connexion with the 1995A and the 1999 Series A Pension Obligation Bonds and the related payments on srxh debt The 1995 Series A bonds were to refinance the cost of capital improvements, and the 1999 Series A bonds were issued to find a portion of the mfundad accrued actuarial liability in the Pension Fund

CAPITAL PROJ ECTS FUNDS

General Capital I mprovement Fund accounts for ironies designated for capital improvement projects.

Measure CJ Fund was set up when the voters of Contra Costa County approved Measure C providing for the creation of the Contra Costa County Transportation Authority. Thehalf-cent transportation sales tax was renewed under MeasuneJ, effectiveApril 1, 2009 TheAuthority cdlects one-half of one percent sales and use tax. Twenty percent of this tax is allocated to the City of Richrrond to be used for the improvement cf local transportation, ircludng streets and roads in accordance with Measire C and MeasuneJ compliance

Harbor Navigation Fund records the expenses relating to the construction of certain pubic improvements relating to the Pert of Richmond consisting of dedgng and deepening of the Richrrond Harbor.

182


CITY OF RICHMOND NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS JUNE 30, 2016


Stae General Paratransit Errplo/mentGasTax Purpose Operati cns andTranmq

ASSETS

Cash andinvestmentsReariaed cash andinveamentsRecevabes

Accaints, nainterestGrantsLeans

Ad/ances to aher fundsPrepa ds and aha assas

$1,349,936

172,052766

$1,363,106

3,365823

713,416

$2,125

$1,122,6497,090

46,076

430,290

550

Total Assets $1,522,756 $2,090,710 $2,125 $1,606,655

LIABILITIES

Accounts payab e and aconued liabilities $553,719 $196,023 $21,688 $158,355Due to aher funds 905,761Uneaned re/enue 810,766 77,000

Total Liabilities 553,719 1,008,789 827,449 235,355


Unavalabere/enue 295,071 103,798

FUND BALANCE

Ncnspendable 550Reari cted 969037 776,850 1,266,952AsagnedUnassi gned (825,324)

Total FundBalances(Defiots) 969037 776,850 (825,324) 1,267,502

Total Liabilities, Defered inflows ofResources and Fund B dances $1,522,756 $2,009710 $2,125 $1,606,655

184

SPECIAL REVENUE FUNDS DEBTSERVICE FUNDS

PubicSafav

Limiting and Landacapng

Districts

Da/el eper IrrpactFees

SecuredPensionOveride

RichmondN a cjnbcrhaxl Stablizaticn Capcraicn

2005Pena on

Obigaticn Bonds

GenedDeb: Service

$389641 $1,037,563 $435,668124,772 $0936523

20439342

543 $784$2,467,299

964 2 83

895,384

$429187 $1,030106 $784 $2,460263 $1,456,107 $0936523

$100647 $64,184 $3,89790,300

$135$1,109277

100647 64,184 94,197 135 1,109277

895,384

311,540 973,922

(93,413)

$2,460263 569 588 7,827,246

311,540 973,922 (93,413) 2,460263 569 588 7,827,246

$420187 $1,030106 $784 $2,460263 $1,456,107 $0936523

(Cano nued)

185


COMBINING BALANCE SHEETS JUNE 30, 2016

CAPITAL PROJ ECTS FU NDS

Genaal Captal1 rrcro/emeit M easure C /J

HaberNai/iqation

TotalNonmajor

GovernmentalFinds

ASSETS

Cash andinvestmaits S6S1.S32 $1,601,162 $431,652 $8413,209Restriaed cash and investments 1,123,595 345,568 10,537,488Recavabes

Accounts, na 2,690,91 7interest 13 416 215 5,013Grants 170,790 270,009 1,614,838Leans 895,384

Ad/ancesto aha fundsPrepa ds and aher assas 550

Tad Assets $1,976,230 $1,871,578 $777,375 $24,157,399

LIABILITIES

Accaints peyatl e and acaued liabilities $83,249 $250,748 $1,442,645Due to aher funds 2,095,33 8Uneaned ra/enue £87,766

Taal Liabilities 23,249 250,748 4,335,749


Unai/alablerevenue 170,790 270,009 1,735,1043

FUND BALANCE

Nonspaidsble 550Restri aed 1,722,191 1,350,830 $345,508 18 572,927Assigned 431,857 431,857Unassi gned (918,737)

Taal FundBalances(Defats) 1,722,191 1,350,830 777,375 18035,607

Total Liabilities, Defared inflows ofResources and Fund Balances $1,976,230 $1,871,578 $777,375 $24,157,399

186



COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2016


Stae General Pararansit EmploymentGasTax Purpose Ocean ons andTranmq

REVENUESProperty taxesLicenses, perms and feesFines, fcrfetures and penaltiesUse of rroney and property1 intergovernmentalChages for servicesPension stcblizaicn revenueOtherRent

$7,2732,223,683

$18059421,814

61091,683,930

5,004

$810882 51,919

3,511

$2,218,262177,030

509,8883,030

Tael Revenues 2,230,953 1,897,451 856312 2,938,150

EXPENDITURESCurrent

General go/emmentPublicsafayPudicwoksCcnmunity dB/elcpmentCultural and reoeati cnalH cusi ng and reds/el cprrent

Capital outlayDeb: Service

Pri ncipell merest and fi seal dnarges

1,342,499

2,176,216

165,695405,546238639

420832

203,353

1,437,922

4,373,506

Taal Expendtures 3,518,715 1,434,065 1,437,922 4,373,506

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (1,287,762) 463,385 (571,610) (1,465,356)

OTHER FINANCING SOURCES (USES)Proceeds from sale of propertyT ransfers i nTransfers(cut)

7,803 816,887

Taal Other Financing Sources (Uses) 7,803 816,887

NET CHANCE IN FUND BALANCES (1,287,762) 471,185 (571,610) (648,469)

BEGINNING FUND BALANCES (DEFICITS) 2,256793 305,664 (253,714) 1,915,971

ENDING FUND BALANCES (DEFICITS) $969,037 $776850 ($825,324) $1,267,502

188

SPECIAL REVENUE FUNDS DEBTSERVICE FUNDS

PubicSafety

Lighting and Landscapn ng

Di arias

De/el eper impactFees

SecuredPensionOverride

RidnmondNei cfibcrhoad Stabilizai on Corpcraicn

2035Pension

Obligai on Bonds

GeneralDebService

$1,411,932$970681

$7,813,191 $10,257,410

$2,103306469

3,785 9,429 4,425 $2®1,783

7,261

108485 12,295 42,04091 5,850

417,055 1,427,962 980110 7,817,616 44,103 11,180531

7364451,932,245

12803773,592

1,222,197

21,693

663028794

48166

382,364295,382

4,692,OX 4,746027

$1,62 5,OX 793,080

758138 1,977,341 558537 1,295,789 295,382 9,438027 2,418033

(341,083) (549,359) 421,573 6 521,827 (251,279) 1,742,504 (2,418033)

584,371(4,053,922)

2 05,726

(954,202)2,418033

584,371 (4,053,922) 2 05,726 (954,202) 2,418033

(341,083) 35,012 421,573 2,467,935 (45,553) 788302

652,623 938910 (514,985) 358 606141 7,038944

$311,540 $973,922 ($93,413) $2,468263 $560 588 $7,827,246

(Continued)

189


COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2016

CAPITAL PROJECTS FUNDSTotal

NonmajorGeneral Captal Harter Gcty em mental

l mpro/ement M easure C /J Navigation Finds

REVENUESProperty taxes $19,482,503Licenses, permits and fees 1,151,275Fines, forfeitures and penalties 21,814Use of money and property $7S2 $3,249 $2,C67 46,763l ntergo/em mental 338,705 2,757,635 10341,343Charges for services 228919Pension stablizaticn revenue 915,350Other 14,60S 695,832Rent 3,030

Total Re/enues 354,035 2,760,884 2,667 32,887,309

EXPENDITURESCurrent

General go/ernment 1,677,209Pubicsafay 2,492,195Pudicwcrks 497,792 585,440 4,566,615Community development 4,373,506Cultural and recreational 468998Housi ng and rede/el cprrent 295,382

Captal outlay 1,039,951 1,112,426 4,936013Dett Service

Pnnopel 6383,302l merest and fi seal charges 5,547,931

Total Expendtures 1,537,753 1,697,356 30741,121

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (1,183,658) 1,1X3,018 2,C67 2,146188

OTHER FINANCING SOURCES (USES)Proceeds from sal e of property 205,726Transfers in 3,827,138Transfers(out) (7,803) (103,678) (5,116602)

Total Other Financing Sources (Uses) (7,833) (103,678) (1,083,738)

NET CHANCE IN FUND BALANCES (1,191,458) $62,340 2,667 1,662,450

BEGINNING FUND BALANCES (DEFICITS) 2,913,649 388,493 775,3C8 17,024,157

ENDING FUND BALANCES (DEFICITS) $1,722,191 $1,350 SO $777,375 $18036607

190


CITY OF RICHMOND BUDGETED NON-MAJOR FUNDS

COMBINING SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGETANDACTUAL FOR THE FISCAL YEAR ENDEDJUNE 30, 2016

REVENUES Property taxes Licenses, perms and fees Fines, fafatures and penalties Use of money and property I tnterggvernmetntal Charges fa servi ces Pension stabilization re/enue Rent Othe

Tctal Revenues

EXPENDITURESCurrent

General go/enment Publicsafety Publicwoks Cormunity ds/elcpnent Cultural andreaeaticnal H aisi ng and redeve! oprrent

Captal outlay Deb: Service

Pri ncipdinterest and fiscal charges

Taal Expendtures

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES (USES) Proceeds frcm sale of property Transfesin Transfes(cut)

Taal OtherFinanongSources (Uses)

NET CHANCE IN FUND BALANCES

BEGINNING FUND BALANCES (DEFICITS)

ENDING FUND BALANCES (DEFICITS)

STATE CAS TAX

Budget Aaual

VariancePcstive

(Neqative)

$2,243,630$7,273

2,223,630$7,273

(19,950)

2,243,630 2,230,953 (12,677)

1,928,21 7 1,342,499 585,718

2,453,413 2,176,216 277,197

4,381,630 3,518715 352,915

(2,138,000) (1,287,762) 850,238

($2,138,000) (1,287,762) $850,238

2,256799

$969037

GENERAL PURPOSE

Budget Aaual

VariancePcstive

(Negative)

$227,000 $139594 ($46,406)28000 21,814 (6,186)

2,000 6109 4,1092,397,357 1,683,930 (713,937)

10,500 5,004 (5,496)

2,665,367 1,897,451 (767,916)

287,000 165,695 121,305605,504 405,546 199,958

1,224,799 238639 935,160

913,016 420,832 492,184

283,647 203,353 30,294

3,313,966 1,434,065 1,879,901

(648,599) 463,335 1,111,985

7,800 7,300(10,000) 10,000

(2,200) 7,300 10,000

($650,799) 471,135 $1,121,965

305,664

$776850

192

PARATRANSIT OPERATIONS PUBLICSAFETY LIGHTING AND LANDSCAPING DISTRICTS

Budget Aaual

Van ancePositive

(Neqative) Budga Aaual

VariancePositive

(Negative) Budget Aaual

VariancePostive

(Neqative)

$1,411,909 $1,411,902 ($7)

$854,06440,000

$81068251,919

($43,182)11,919

$435333,635

$2,100306469

$1,614(27,217)

3,785 3,785

349,940 3,511 (346429) 49327 108435 59159 12,295 12,295

1,244,004 866312 (377,692) 383,499 417,055 33,556 1,411,909 1,427,962 16073

1,149,368 1,437,922 (288554)577,543 736445 (158902)

2,051,660 1,902,245 149415

379143 21,693 357,450 70,000 70, OX

66,3028,794

663028794

1,149,368 1,437,922 (288554) 956635 758138 198548 2,196,756 1,977,341 219415

94,636 (571,610) (666246) (573,187) (341,083) 232,104 (784,847) (549359) 235,488

584,371 584,371

584,371 584,371

$94,636 (571,610) ($666246) ($573,187) (341,083) $232,104 ($200,476) 35,012 $235,488

(253,714) 652,623 938910

($825,324) $311,540 $973,922

(Conti nued)

193

CITY OF RICHMOND BUDGETED NON-MAJOR FUNDS

COMBINING SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL FOR THE FISCALYEAR ENDEDJUNE 30, 2016

RICHMOND NEIGHBORHOOD STABILIZATION DEVELOPER IMPACTFEES CORPORATION

van axe variancePositive Pcstive

Budqa Actual (Negative) Budget Actual (Negative)

REVENUESPrcperty taxesLicenses, perms and feesFines, forfeitures and penalties

$370,082 $970,681 $600,592

U se of rroney and preperry 341 9,429 9,088 $2 83 $283l ntergo/enmentalChagesfcrservi cesPensi on stebi 11 zai on revenueRent

$30,000 1,780 (28220)

Othe 42,040 42,040

Tael Re/enues 370,430 580,110 609,680 30,000 44,103 14,103

EXPENDITURESCurrent

General gg/emrrentPudicsafayPudicworks

31 7954 128007 189,947

Conmuniry develcpmentCultural and reoeati cnal 165,000 48166 116,834Hcusi ng and rede/el cprrent

Captal outlayDeb: Service

382,358 382,364 (6)397,094 295,382 101,712

Pnnapell nteest and fi seal chages

Taal Expendtures 865,312 558537 366,775 397,094 295,382 101,712

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (494,882) 421,573 916,455 (367,094) (251,279) 115,815

OTHER FINANCING SOURCES (USES)Proceeds from sal e of prcpertyTransfesinTransfes(ait)

367,094 2 05,726 (161,368)

Taal Othe Financing Sources (Uses) 367,094 2 05,726 (161,368)

NET CHANCE IN FUND BALANCES ($494,882) 421,573 $916,455 (45,553) ($45,553)

BEGINNING FUND BALANCES (DEFICITS) (514,585) 666141

ENDING FUND BALANCES (DEFI CITS) ($93,413) $560 588

194

2035 PENSION OBLIGATION BONDS GENERAL DEBT SERVICE

Budqa Aaual

Van ancePcsitive

(Negative) Budget Aaual

vai ancePcsitive

(Negative)

$10,257,410 $10257,410

7261 $7,261

934,414 915,850 (18,554)

11,191,824 11,180,531 (11,293)

4,692,0006,655,266

4,692,6004,746027 1,909,239

$1,625,000793,930

$1,625,600793,080 $850

11,347,266 9438027 1,909,239 2,418,930 2,418090 850

(155,442) 1,742,504 1,897,946 (2,418,930) (2,418090) 850

(955,243) (954,202) 1,0412,418,930 2,418090 (850)

(955,243) (954,202) 1,041 2,418,930 2,418090 (850)

($1,110685) 788302 $1,896,567

7,038,944

$7827,246

195



NON-MAJOR ENTERPRISE FUNDS

Richmond Marina Fund records revenues collected from fcerth rentals and the use of the marina facilities. The fund also records expenses incurredfor the operation of the facility and for the payment of the lean from the Cal iforria Department of Boating andWaletways

Storm Sewer Fund records the revenues from stormwater fees and transfers from operations reserves. It also rezords the expenses cf maintaining a clean storm sewer system so that the City is in compliance with the federally mandated S term W ater Pdlution Prevention Progam

CableTV F und was set up for the adaini stration and enforcement of the franchi se ageerrents with two cade television systems, management cf municipal cade channel, cfepartmental video services, rreda and pudic information, and teleconmunicalicns planning The fund rezords revenue received from franchisefees and indrect charts to other funds and adalristration expenses incurred in operating the system

197

CITY OF RICHMOND NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENTS OF NET POSITION JUNE 30, 2016

RidnmcndMari na

StormSava

CadeTV Tael

ASSETS

Current AssetsCash andinvestmentsReceived es

Accountsinterest

$3,452,446

71,6731,674

$4,899

$71,443

339,18081

$3,523,889

415,7521,755

Tael Current Assets 3,525,733 4,899 410,704 3,941,396

NoncurrentAssasCapital assets

Depreciable, netA d/ances to ether funds

1,608,325 1,929,690167,451

27,173 3,565,188167,451

Tctal NoncurrentAssas 1,608,325 2,097,141 27,173 3,732,639

Tctal Assas 5,134,118 2,102,040 437,877 7,674,035

DEFERRED OUTFLOWS OF RESOURCES Defared outfl ows re! ated to pens ons 36381 169,776 205157

Tctal Defared Outflows of Resources 36381 169,776 205157

LIABILITIES

Current LiabilitiesAccounts peyade and accrued liabilities Refundabledepcsts l ntaest pay ad eDue to ether fundsCcmpensaed absencesCurrent portion of lengterm deb:

81,419114,804

81,574

203,0141,203

1,835,08115,540

6213

47,330

20922782,619

114,8041,835,081

62,87081,574

Tctal Current Liabilities 277,797 2,054,835 53,543 2,385175

NoncurrentLiabilitiesAck/ance from aha fundsL ongtam debtNa pens on liadliry

2,701,5532,213,421

434,645 2,028,343

2,213,4212,701,5532,462,988

Tael NonaurrentLiad 11ties 2,701,553 2,648,056 2,028,343 7,377,962

Tael Liabilities 2,979,350 4,702,901 2,081,885 9764,137

DEFERRED INFLOWS OF RESOURCES Defared mflo/vs re! ated to pensi ens 46136 215,302 261,438

Tael Defared inflows of Resources 46136 215,302 261,438

NET POSITION

Net investment in captal assasUnrestn aed

(1,174,832)3,329,570

1,929,690(4,540,305)

27,173(1,716,708)

782,061 (2,927,444)

Tael NetPostion $2,154,768 ($2,616616) ($1,689,535) ($2,145,383)

198


COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION

FOR THE YEAR ENDED JUNE 30, 2016

RidirrondMama

StamSava

CableTV Taal

OPERATING REVENUESService chagesLeaseinccmeOtha

$517,1C8$1,962,2®

4,254$1,091,197

229,289

$3,053,480521,362229289

Taal OpaaingRevenues 517,108 1,966537 1,320,486 3,894,131

OPERATING EXPENSESSalaies and benefitsGeneral andadmmstraiveDepreci ai onOtha

26,40085,196

8,8311,453,740

929857

1,764,689326,982

22,69174

1,773,5201,897,1221,037,754

74

Taal Opaaing Expenses 111,596 2,392,438 2,114,436 4,618470

Opaaing l neerre (L css) 405,512 (425,901) (793,950) (814,339)

NONOPERATING REVENUES (EXPENSES) l merest income l merest (expense)

13,524(125,533) (73,491)

1,402 14,926(199024)

Taal NcncperaingRa/enues(Expenses) (112,099) (73,491) 1,402 (184,098)

l neeme (L css) B efae T ransfas 293,503 (499392) (792,548) (998,437)

Transfas out (106090) (509,090) (606090)

Changein Na Position 193,503 (499392) (1,292,548) (1,598 437)

BEGINNING NET POSITION 1,961,265 (2,111,224) (396987) (546,946)

ENDING NET POSITION $2,154,768 ($2,616616) ($1,689,535) ($2,145,383)

199


COMBINING STATEMENTS OF CASH FLCWS FOR THE YEAR ENDED JUNE 30, 2016

RichmondMarina

StormSewer

CableTV TOTAL

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customersPayments to sippl ieisPayments to employees

$510,680(25,662)

$1,964,649(1,268,376)

(202,859)

$1,338,929(327,179)

(1,026,859)

$3,814,258(1,621,217)(1,229,718)

Cash Flows from Operating Activities 485,018 493,414 (15,109) 963,323

CASH FLOWS FROM NONCAPITALFINANCINGACTIVITIES

T ransfers OutIrterfind receipts (payments)

(100,000)(419,923)

(500,000) (600,000) (419,923)

Cash Flows from Noncapital FinancingActivities (100,000) (419,923) (500,000) (1,019,923)

CASH FLOWS FROM CAPITAL FINANCINGACTIVITIES:

(Acquisition) saleof capital ass asRepayment of longterm borrowingInterest paid

1(78,062)

(128,753) (73,491)

1(78,062)

(202,244)

Cash flows from capital financing activities (206,814) (73,491) (280,305)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest received 11,850 1,321 13,171

Cash Flows from Investing Activities 11,850 1,321 13,171

Na Cash Flows 190,054 (513,788) (323,734)

Cash and investments a beginning of period 3,262,392 585,231 3,847,623

Cash and investments a end of period $3,452,446 $71,443 $3,523,889

Reconciliaion of operating income (loss) to na cash flows from operating activities:

Operaing income(loss) $405,512 ($425,901) ($793,950) ($814,339)Adjustments to reconcile operaing income to na cash flows

fromoperaing activities:Depreciation 85,196 929,867 22,691 1,037,754

C hange in assas and 1 iabil it ies:Accouts receivable (6,428) (1,888) 18,443 10,127Accouts payableandacciued liabilities

and aha accrued expenses 738 185,364 (123) 185,979Corrpersaed absences 6,893 6,646 13,539Na pension liability and deferred outflows inflows

of resources (200,921) 731,184 530,263

Cash Flows fromOpaainq Activities $485,018 $493,414 ($15,109) $963,323

200


INTERNAL SERVICE FUNDS

Internal Service Funds are used to finance and account for special activities and services performed ty a designated cfepartrrent for ether departments i n the City on a cost rei rrfcursement tasi s.

The concept of major funds introduced ty CASB Statement 34 does not e<tend to internal service funds because they do not do busi ness with outsi de parti es CASB Statement 34 requi res that for the Statement of Activities, the net revenues or expenses of each internal service fund be eliminated ty netting them against the operations cf the ether City cfepartments which generated them The remaining balance sheet items are consolidated with these same funds in the Statement of Net Position.

However, internal service funds are still presented separately intheFund financial statements, inducing the funds belcw.

I nsurance Reserves Fund is used to report activities related to employee’s claims due to industrial injuries and activities related to general claims against the City fordamaeps incurred

Equipment Services and Replacement Fund is used to report activities related to maintenance and replacement of City vehicles.

Police Telecommunications Fund is used to report activities related to CAD dspalch, RMS records maintenance, and 800 MHz equipment expense

Compensated A bsences F und is used to account for sick, vacation and compensatory ti me leave payouts rel aled to employee reti rements.

201

CITY OF RICHMOND INTERNAL SERVICES FUND

COMB INING STATEMENTS OF NET POSITION JUNE 30,2016

Equi pment Pdice1nsurance Services and Tde- CcmpensaedReerves R epl acement ccmmjni caicns A bsences Tad

ASSETS

Current AssasCah and i riveaments $6,583,314 $406384 $1,127,010 $8,113,708Receivable

A ccaints 42,6® 406530 443,216l nteret 13,621 281 469 14,371Lean 550, COD 556000

Duefrcm othe funds 20,524,924 20,524,924

Tctal Current Assas 27,711,545 406665 1,528039 29,646219

Ncncurrent AssetsCeptal assas

N cndepreci ab e 246856 246856Depreaabe, na 4,651,784 66936 4,718720

Advancetoothe funds 2,213,421 2,213,421

Tctal Ncncurrent Assas 2,213,421 4,898683 66936 7,179037

Tctal Assas 29,924,566 5,305,345 1,594,945 36,825,256

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows relaedtopensicns 249814 249814

Tctal Defered Outflows of Recurce 249814 249814

LIABILITIES

CurrentLiabilitieDuetoothe funds $1,388415 1,388415Accounts payede and acaued liabilities 209242 817 29492 239551interest payable 182 182Acaued cl a ms 11 ab 11 ti es 13,331,213 13,331,213Current pcrticn of Icngterm debt 353,378 353,378

Tctal CurrentLiablitie 13,540,455 354,377 29492 1,388,415 15,312,739

Ncncurrent LiabilitiesCcmpensaed absence 58513 172,169 236682Uneanedra/enue 1,289239 1,289239Acaued cl a ms 11 ab 11 ti e 26072,016 26072,016Long-term debt 186754 186754Net pension liability 2,984,562 2,984,562

Totd Ncncurrent Liabilities 29115,091 186754 1,461,408 36757,253

Tctal Liabilities 42,655,546 535,131 1,456903 1,388,415 46,069992

DEFERRED INFLOWS OF RESOURCESDeferred infl ows rel aed to pensi cns 316832 316832

Taal Deferredlnfl ows of Resource 316832 316832

NET POSITION (DEFICIT)

Na investment in capita esas 4,364,548 66936 4,431,484Unretri aed (12,797,568) 405,666 37,109 (1,388,41 5) (13,743,268)

Taal Na Position (Deficit) ($12,797,568) $4,776214 $104,045 ($1,388,41 5) ($9,311,724)

202

CITY OF RICHMOND INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION


Equipment Pdiceinsurance Service and Tele- CcmpensaedReserve R ed acement ccrrrruni can cns Absence Tad

OPERATING REVENUESChage for service-tntenal $16,525,950 $435,603 $3,637,128 $1,689603 $22,287,678Chage for service-extand 1,569166 1,569166

Totd OperaingRa/enues 16525,950 435,COD 5,206234 1,689603 23,856784

OPERATING EXPENSESSdanes and benefits 1,076982 4,176166 3,078015 8,325,103Cenad andadmniaraive 1,229905 916218 2,146123Maintenance 457,439 121,812 579251Depreo aticn 1,904,462 93,818 1,998283Claimslasse 26485,068 20,485,068Other 9,687 9687

Totd OperaingExpense 22,795,642 2,361,501 5,307,954 3,07801 5 33,543,512

Opaaingl neeme (Less) (6,269692) (1,926901) (101,720) (1,38841 5) (9,68672®

NONOPERATING REVENUES (EXPENSES)Cain (less) frem sal e of property (11,175) (11,175)Captd contributions 264,695 264,695l nteret i ncome 182,016 2,578 184,594l nteret expense (24,115) (24,115)

Totd NancperatmgRevenue(Expense) 182,016 231,583 413,999

inccrre(Lcss) BefaeTransfers (6,687,676) (1,694,91® (101,720) (1,388415) (9,272,729)

Transfesin 206003 36 7,040 567,040

Changein Na Pcsticn (5,887,676) (1,327,878) (101,720) (1,388415) (8,705,689)

BEGINNING NET POSITION (DEFICIT) (6,509892) 6056092 205,765 (606035)

ENDING NET POSITION (DEFICIT) ($12,797,568) $4,776214 $104,045 ($1,388,41 5) ($9,311,724)

203

CITY OF RICHMOND INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF CASH FLCWS FOR THE YEAR ENDEDJUNE 30, 2016

Equi pmetnt Pdiceinsurance Services and Tele- CompensatedReserves R epl acemetnt ccmmjni caicns Atsences Total

CASH FLOWS FROM OPERATINC ACTIVITIESR eca pits from customers $16,653,264 $435,000 $5,207,367 $1,689,600 $24,015,231Payments to empJ cyees (1,435,841) (4,194,766) (3,078,015) (8768624)Payments to suppJ i ers (1,199,890) (476122) (1,054,404) (2,736416)insurance premums and d aims pad (10,665,579) (16665,579)

Cash FI oivs from Operai ng A aiviti es 3,381,954 (41,122) (41,805) (1,388415) 1,916612

CASH FLOWS FROM NONCAPITALFI NANCI NC ACTIVITI ES

interfund reca pits 1,386,415 1,388415l nterfund payments (753,2 5 7) (753,257)Transfers in 200,000 367,040 567,040

Cash Flows from Ncncaptal Financing Activities (553,257) 367,00 1,388415 1,202,156

CASH FLOWS FROM CAPITAL AND RELATEDFI NANCI NC ACTI VITI ES

Acquisition of capital assets (39,851) (39,851)Prinopal payments cn capital debt (342,866) (342,808)interest and fiscal chagesped (24,231) (24,231)

Cash Flows fromCapital andRelatedFinano ngActiviti es (466500) (466500)

CASH FLOWS FROM 1NVESTI NC ACTI VITI ESinterest 168,573 2,297 (469) 176401

Cash Flows from Investing Activities 168573 2,297 (469) 176401

Net Cash Flows 2,997,270 (78685) (42,274) 2,876311

Cash and iinvestments a tegnnmg of period 3,583,044 485,069 1,169,284 5,237,397

Cash and iinvestments a end of period $6580,314 $406384 $1,127,010 $8113,766

R econo 11 an cn of operating income (less) to net cash flowsfrom cperai ng acti vi ti es

Operaingincome (less)Adjustments to reccno 1 e operaing i ncome to na

($6269,692) ($1,926901) ($101,720) ($1,388415) ($9,636728)

cash flows from operating activitiesDepreo an an 1,504,462 93,818 1,958230

Change in assas and NatalitiesReceived es, net 157,314 (960,341) 66973Accounts and ether pay ad es 39,702 (18,683) (16374) 4,645Unearned ra/enue 91,474 91,474Ccmpensaed atsences (12,861) (18662) (31,523)Clams peyade 9,819,489 9,819,489(Deoease) increase in due to rairement system (351,956) (351,956)

Cash Flows from OpaaingActivities $3,381,954 ($41,122) ($41,805) ($1,388415) $1,916612

N cn cash transacti cnsRairement of captal assets ($11,175) ($11,175)Ccrntridutionsof capital assets $264,695 $264,695

204


TRUST FUNDS

TRUST FUNDS are used to account for assets held ty the City as a trustee agmt for irdvidials, private organizations, and other governments Thesefundsinductethefollcwing

PENSION TRUST FUNDS

General Pension Fund records the activity of the General Pension Plan, a defined benefit pension plan thatccvers 28 former City employees not ccvered ty PERS, all of whom have retired

Police and Fireman’s Pension Fund records the activity of the Police and Fireman’s Pension Plan, a defined benefit pension pi an thatccvers 75 police and fire personnel emplcyed prior to October 1964.

Garfield Pension Fund records the activity of the Garfield Pension Plan, a defined contribution pension plan that was set up for a retired pdicechief.

PRIVATE-PURPOSE TRUST FUNDS

Pt. MdateFund is usedto account for assets heldty the City as an agent for theU.S. Navy and a private developer for the cleanip of Point Mol ate

Successor Agency to the Richmond Community Redevelopment Agency Fund accoints for the activities of the Successor Agency to the former Redevelopment Agency.

205

CITY OF RICHMONDSTATEMENT OF PENSION TRUST FUNDS NET POSITION

JUNE 30, 2016

CenaalPenacn

Police end Firemen'sPension

GarfieldPension Tad

ASSETS

Pena on plcn cash and investmentsCity of Richmond investment pod $957,203 $1,511,546 $113,074 $2,581,820Locd Agency investment FundMutud Fund investments

l merest recavable11,121,435

1

173,059

1

173,05911,121,485

2

Tad Assas 957,203 12,633,033 285,134 13,876367

NET POSITION

Restriaedfa employees' pens on benefits $957,203 $12,633,033 $285,134 $13,876367

206

CITY OF RICHMOND PENSION TRUST FUNDS

STATEMENT OF CHANGES IN PENSION TRUSTFUNDS NET POSITION FOR THE YEAR ENDEDJUNE 30, 2016

GenedPension

Police and Firemen'sPension

GarfieldPension Totd

ADDITIONS

Net investment income

Na inaease(decrease) inthefarvdueof investments ($108) ($391,119) ($9) ($391,236)

l merest income 2,363 316348 942 313,653

l investment management fees (84,719) (84,719)

Ccntri buti cns to trust 602,970 1,222,197 102,140 1,927,307

Tad Addticns 605,225 1,056 707 103,073 1,765,035

DEDUCTIONS

Pena on benefi ts 623,662 3.14Q552 96660 3,854,874

Tad Deduaicns 623,662 3,146552 96660 3,854,874

Net l ncrease (Decease) (18,437) (2,083,845) 12,413 (2,089,859)

NET POSITION RESTRICTED FOR PENSIONS

Begnm ng of year 975,637 14,716878 273,721 15,966236

End of year $957,203 $12,633,033 $286134 $13,876367

207

CITY OF RICHMOND PRIVATE PURPOSE TRUST FUNDS

COMBINING STATEMENT OF NET POSITION JUNE 30, 2016

Pt. Molete

SuccessorAgency to the

Richmond CommriityRede/el op mat Agency Total

ASSETS

Cah and i m/eaments $10,373,652 $10,373,652

R estn cted cadi and i m/estments $5,031,024 24,025,765 29,026 789

Accaints recavabe 403 190,520 190,920

Grants recavabe 3,720,553 3,720 553

Leans receivable 1,920,000 1,920OX

Prepads and ether assets 6,765,678 6765,678

Ceptal assasNcndepeaabe 6,258806 6258805

Total Assets 5,031,424 53,254,974 58256396

LIABILITIES

Accaints payab e and atoned liabilities 2,582,627 2,582,627

interea psyche 1,498,473 1,498473

Derivaiveinarument a fairvalue-liablity 5,332,800 5,332,8X

Longterm deb:Due within cneyeaDue in maethan cneyea

6,885,191104,596,719

6885,191 104,598 719

Totcl Liabilities 120,897,810 120897,810

NET POSITION

Held intrust aha go/ernmants $5,031,424 ($67,642,836) ($62,641,412)

208

CITY OF RICHMOND PRIVATE PURPOSETRUSTFUNDS

COMBINING STATEMENT OF CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2016

Pt. Molete

SuccessorAgency tothe

Richmond Comrmnity Rede/elopmert Agency Total

ADDITIONS

Prcperty taxes $19,953,196 $19953,198Licenses, pamts and fees 200, OX 209OXinvestment income $3,336 728666 732,024l ntagovanmental ra/enue 6474,204 6474,204M i seel 1 anecus ra/enue 1,072,154 1,072,154

Tael Acbtions 3,336 28428244 28 431,580

DEDUCTIONS

Carmunity ds/elcpment 15,509401 15,509401Payments in atcadencewith trust agreements 3,433,452 3,433,452Depreci aicn 8395 8395l nterea and f seal chages 5,639617 5,63961 7

Tael Deduaions 3,433,452 21,157,413 24,599855

Changein net position befae special item (3,430116) 7,270831 3.84Q715

SPECIAL ITEM

Assas trensfared to the City (14,968712) (14,968712)

Changein net position (3,430116) (7,697,861) (11,127,997)

NET POSITION (DEFICIT), BEGINNING OF YEAR 8431,540 (59544,955) (51,513,41 5)

NET POSIT ON (DEFICIT), END OF YEAR $5,001,424 ($67,642,836) ($62,641,412)

209

CITY OF RICHMONDSUBCOMBINING SCHEDULE OF NET POSITION OF THE

SUCCESSORAGENCY TO THE RICHMOND COMMUNITY REDEVELOPMENT AGENCY PRIVATE PURPOSE TRUST FUNDS

JUNE 30, 2016

Redeye) opmert Property Tax Tiua Find Administration

CapitalProjects

BondFiridedCapitalProjects

BondPayments

Intra Find Eliminations Total

ASSETS

Cajh aidim/estmaits $10,355,563 $17,607 $77 $10,373,652

R estri aed cash and i m/estments 2,881,519 $1,150,449 $19933,797 24,025,765

Accounts recavdde 190,520 150,520

Graits recavdde 3,720,553 3,720 553

Leans recavabe 1,920,000 1,920, OX

D ue fron aha funds 1,837,518 ($1,837,518)

Prepacks and aher assas 6,765,678 6765,678

A ck/ances to aha funds 654,OX (654,OX)

Cepitd assasNaidepreciddeDepreaabe, na

62586X 6258SX

Tad Assets 12,193,435 17,607 21,737,153 1,150,449 20,647,797 (2,491,518) 53,254,974

LIABILITIES

A ccaints peyab e and acaued liabilities 17,607 2,565,020 2,582,627

Due to aher funds 1,703,326 134,192 (1,837,518)

l merest payed e 1,498,473 1,458473

A ck/ances from otha funds 654,OX (654,OX)

Daivative instrument a farvdue4iablity 5,332,3X 5,332,3X

Lcngtamdeb:Duewithin one yeaDue in mere than one yea

6,835,191104,596,719

6365,191 104,598 719

Tad Liabilities 17,607 4,268,346 134,192 1183691® (2,491,518) 120697,810

NET POSITION (DEFICIT)

Hdd in trua fa otha go/anments $12,193,435 $17,468,307 $1,016,257 ($56,321,335) ($67,642,836)

210 211

CITY OF RICHMONDSUBCOMBINING SCHEDULE OF CHANGES IN NET POSITION OF THE

SUCCESSOR AGENCY TO THE RICHMOND COMMUNITY REDEVELOPMENT AGENCY PRIVATE PURPOSETRUSTFUNDS


Redevelopment Bond FundedPrcpertyTax Capital CapitalTrust Fund Administration Projects Projects

ADDITIONS

Prcperty taxesLicenses, pants and feesInvestment income l ntagavanmental rs/enueTrersfas from aha fundsM iscell aneais rs/enue

$19,953,198

$417,635577,726

$209OX95,402

5055 569 5,055,693 1,072,154

$565

Total AcOtions 19,953,156 995,361 12,489818 565

DEDUCT! ONS

Cormunity de/el cpmemDepreci aticnl merest and fiscal chargesT rarsfas to aher funds 16,859,691

995,361 14,314,008395

35S37 134,192

Total Deduaicns 15359891 995,361 14,359272 134,192

Change in net position befoespeoal item 3,083,307 (1,878454) (133,627)

SPECIAL ITEM

Assas trarsfared to the City (14,958712)

Changein net pasiticn 3,083,307 (15347,166) (133,627)

NET POSIT ON (DEFICIT), BEGINNING OF YEAR 9110,179 34,315,973 1,149364

NET POSIT ON (DEFICIT), END OF YEAR $12,193,485 $17,468307 $1,015257

212

BondPayments

IrtraFindEliminations Total

$631,721

11,07,501 ($17,00920)

$19953,196200,000728,668

5474,204

1,072,154

12,039 222 (17,00920) 28428244

209OX

5,639617(17,00920)

15,5094018,395

5,639617

5,839617 (17,00920) 21,157,413

5199605 7,270831

(14,268712)

5199605 (7,697,861)

(104,529991) (59 944,955)

($98321,385) ($67,642,836)

213



AGENCY FUNDS

AGENCY FUNDS account for assets held ty the City as an agent for indviduals, governmental entities, andnon-pxidicorganizations. Thesefundsindudethefollcwing

Special Assessment Fund accounts for the monies collected and dstursed for land-based debt, whenethe City is not obligated fa the debt

General Agency Fund accounts for assets held ty the City as an agent for indviduals, private organizations, and other governments.

J ohnson Library Fund accounts for norevpendahle trust funds to be used to provide furring for special library projects.

Senior Center Fund accounts fa assets held ty the City in an agent capacity fa progams benefiting the senia citizens residng within the City.

J PFA Reassessment Fund receives secured tax payments (fromassessment rolls), and rrakes payments on thej PFA Revenue Reassessment Bond; Series 2003-1.

Payrdl Benefits Fund accounts fa accurrulalion of monies relating to errplcyee and errplcyer payroll liabilities

2006 A& B Reassessment District Fund receives payments cf principal and interest on pria assessment bond;, and rrakes payments on thej PFA Reassessment Revenue Bends Series A andB.

Richmond Promise Fund accoruts fa assets telongng to the Richmond Promise non-profit aganization hddasanagnt ty theCity.

215

CITY OF RICHMOND AGENCY FUNDS

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2016

BalanceJune 30, 2015 Add ti ons Reduai ons

BalanceJune 36 2016

Special Assessment

Cash and investments $1,029,626 $318,172 $427,202 $92 6 596

Restriaed casbi and investments 653,479 106464 553,015

interest receivable 451 451

Tctal Assas $1,683,105 $318,623 $527,666 $1,474,062

Due to assessment d stria tcncbidders $1,683,105 $318,623 $527,666 $1,474,062

General Acencv

Casbi and investments $1,159,778 $5,963 $9,531 $1,156210

intaest receivable 576 576

Tctal Assas $1,159,778 $6,539 $9,531 $1,156785

Accounts payable and acaued liabilities $9,531 $270 $9,531 $270

RefundableDepc6its 1,150,247 6269 1,156516

Taal natalities $1,159,778 $6539 $9,531 $1,156 785

Jcbinsoi Library

Casbi and investments $10,189 $37 $16226

l ntaest reca vab e 5 5

Taal Assas $10,189 $42 $16231

Refundabledepcsts $10,189 $42 $16231

Senicr Center

Casbi and investments $51,805 $11,247 $2,548 $66504

l ntaest reca vab e 30 30

Taal Assas $51,805 $11,277 $2,548 $66534

Accounts peyabeand acaued natalities $2,548 $250 $2,548 $250

RefundataeDeposits 49,257 11,027 66284

Taal natalities $51,805 $11,277 $2,548 $66534

(Cora nued)

216



BalanceJune 36 2015 Add ti ons Reduai ons

BalanceJune 36 2016

JPFA Reassessment

Casbi and investments $2,301,326 $903,587 $804,763 $2,405,1 50

Restriaed casbi and investments 634,196 25,450 659,648

l ntaest reca vab e 1,180 1,180

l nvestment i n reassessment bonds 3,635,000 680,000 2,955,000

Taal Assas $6576524 $935,217 $1,484,763 $6,026978

Due to assessment d stria bcncbidders $6,576524 $935,217 $1,484,763 $6,026978

Payrdl Benefits

Casbi and investments $879,266 $227,672 $1,111,582 ($4,642)

Accounts receivable 227,671 312,879 227,671 $312,879

Taal Assas $1,106939 $540,551 $1,339,253 $308237

Accounts payabe and accrued liabilities $1,106939 $546551 $1,339,2 53 $308237

20XA&B ReassessmentDistria

Casbi and investments $1,015,954 $865,852 $857,680 $1,034,126

Restriaed casbi and investments 519,542 440 519,962

intaest receivabe 499 499

l nvestment i n reassessment bonds 8742,500 327,500 8,41 5,000

Taal Assas $16277,996 $885,791 $1,195,180 $9,969,607

Due to assessment d stria bcncbidders $10,277,996 $866791 $1,195,180 $9,969,607

(Cora nued)

217



BalanceJune 30, 2015 Addtions Reduai ons

B danceJune30, 2016

Richmond Promise

Restriaedcash and investments $7,924,196 $7,924,196

Tad Assas $7,924,196 $7,924,196

Accaints payable $12,432 $12,432

RefundebleDepasits 7,911,764 7,911,764

Due to assessment dstna tcndidders $7,924,196 $7,924,196

Tad Aqency Funds

Cadi andinvestrrents $6,447,946 $2,357,530 $3,223,306 $5,582,1 70

R estri aed cash cndinvestrrents 1,837,219 7,950,085 103,464 9,656841

l nvestrrent i n reassessment tends 12,377,500 1,037,500 11,370,000

Accounts receivable 227,671 312,879 227,671 312,879

intaest receivable 2,741 2,741

Tad Assas $20 850,336 $10,623,236 $4,558,941 $26,924,631

Accounts payatJe and accrued liabilities $1,119,018 $553,503 $1,351,332 $321,189

RefiundebleDepasits 1,209,693 7,929,102 9,138795

Due to assessment dstna tcndidders 18,531,625 2,143,631 3,207,609 17,464,647

Tad natalities $20,850336 $10,623,236 $4,558941 $26,924,631

218


STATISTICAL SECTION

This part of the City’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the infamaticn in the finarcial statements, rote dsdcsures, and required supplementary information says abait the City’s overall financial health. In contrast to the financial seotion, the statistical section information is not siioject to independent audt.

Financial TrendsThese schedules contain trend information to help the reader understand how the City’s financial performance and wdlbeirg have changed eve time

1. Net Position by Component2. Changes in Net Position3. FundBalancesofGcvernmental Finds4. Changes in FundBalanceof Governmental Funds

Revenue CapacityThese schedules contain irformation to help the reader assess the City’s nest significant local revenue source the property tax

1. Assessed and Estimated Actual Valueof Taxable Property2. PropertyTaxRates, All CVerlappingGcvernments3. Principal Property Tax Payers4. Property Tax Levies and Collections5. Utility UsersTaxCdlections6. UtilityUsersTaxDirectRates7. TopTen Utility UseisTaxpayers

Defct CapacityThese schediies present information to help the reader assess the affondability of the City’s cuirent levels cf outstand ng debt and the City’s abi I ity to issue additional defct i n the futire

1. Ratio of Outstand ng Dell by Type2. Revenie Bond Coverage- 1999, 2C06, 2008, 201CA & 2010B Wastewater Revenue Bends3. Revenue Bond Coverage- 1996,1999, 2001, 2007 and 20C6 Port Terminal Lease Revenue Boncfe, Note and

Pant Potrero Lease Revenie Bonds.4. Bonded Debt Pledged Revenue Coverage -Tax A11 ocati on Bonds5. General BondedDebt- Pension Obi i gati on Bends6. Computation of Direct and Overlapping Debt7. Computation of Legal Bonded Debt Margin

Demographic and Economic InformationThese schedules offer demographic and eoonomic indicator to help the reader undeistand the environment within which theCity’s financial activities take place

1. Demographic and Economic Statistics2. Principal Employers

219


Operating InformationThese schedules contain seiviceard infrastructure data to Pei p the reader understand hew the i (formation in theCity’s financial report relates to theseivicestheCity provides and theactivities it performs:

1. Full-Tirre Equivalent City Government Employees ty F urction2. Operating Indicators ty Function/Piogram3. Capital Asset Statistics ty Function/Program

SourcesUnless otherwise ncted, the infermatien in these schedules is derived from the Annual Financial Reparts for the relevant year.

220


CITY OF RICHMOND Net Position by Component

Last Ten Fiscal Years (accrual basis of accounting)

m' ’BNetlrvesorerT inCapcal Assas oResmcted oUnresmcted

Fiscal Year EndedJ une 302007 2008 2009 2010 2011(a)

Governmental activitiesNet investment in capital assetsRestrictedU nrestri cted

$170258,85760271,16948795188

$188,467,600188950882

(101,295,871)

$201,607,368135,801,179(57,236,422)

$201,197,63972,114,985

(66,103,671)

$164,739 567 78,105,002

(83,013,306)Tdcf governmental activities nd position $279,325,214 $276,122,611 $280172,125 $207,208,953 $159,831,26 3

Business-type activitiesNet investment in capital assetsRestrictedU nrestri cted

Tdcf fcusi ness-type activities net position

$97,164,3011,427,804

(8084,756)$90507,349

$77,558,806 1,526,840 (519,625)

$78,566,(El

$79,540643612,613

(3,963,417)$76,189,839

$86,432,59021,150740

(42,004,396)$65,578,934

$78,162,9708,334,722

(16,389,951)$70107,741

Primary governmentNet investment in capital assetsRestridedU nrestri ded

$267,423,15861,6989734Q71Q432

$266,(E6,406 190477,722

(101,815,496)

$281,148,011136,413,792(61,199,839)

$287,63022993,265,725

(108,108,067)

$242,902,53786,439,724

(99,403,257)Tdcf primary government net position $369832,563 $354,688,632 $356,361,964 $272,787,887 $229,939,004

(a) Balance was restated in fiscal year 2012. Years prior to 2011 have not been restated(b) Balance was restated in fiscal yetr 2013. Years prior to 2012 have not been restated(c) The City irrplementedthe provisions of CASB S tat an art 63 in fiscal year 2013,

which rqd xed the term "net assets" with the term "net position".(c# Balance was restated in fiscal year 2014. Years prior to 2013 have not beat restated(e) The City irrplementedthe provisions cf CASB Statemait No 68 in fiscal year 2015. Years priorto2015 have net been restated

222

Fiscal Year Endedjune302012(b) 2013(c) (d) 2014 2015(e) 2016

$242,281,32357,989,820

(118620471)$181,650672

$214,572,54655,396,056

(119,231,699)$150736,903

$227,828,24350461,923

(148,161,106)$130129,060

$218,144,81154,578,939

(479,961,080)($207,237,330)

$228292,38970322,707

(508981,299)($210366203)

$76731,8718,169,878

(24,759,367)$60142,382

$76,966,4489,196,255

(6,365,742)$79,796,961

$72,911,0009,793,767

(3,096,845)$79,607,922

$74,922,3039,408,237

(18,432,590$65,897,950

$614052289008038

(21382,659)$49030607

$319013,19466159,698

(141379,838) $241,793,054

$291,538,994 64,592,311

(125,597,441) $230 533,864

$300 739,24360 255,690

(151,257,951) $209,736,982

$293,067,11463,987,176

(498,393,670($141,339,380)

$291,697,6177933Q745

(532,361958)($161,335596)

223

CITY OF RICHMOND Charges in Net Position LastTen Fiscal Years

(Accrual Basis of Accounting)

Fiscal Year Endedjure 30

Coverrmental Activities CereraJ Coverrment Pubic Safety Pubic Worts Ccmmunity Develcpment Cultural teid RecreatcnaJ Hcu9rg aid Redavelcpment Interest aid Fetal Charts

Total Coverrmenal Activities Everses 6 us i res-T ype Activites

Pi dm end Hcisirg Authority PortofRidmcnd R i dm end Manra Municipal Sewer

C±>le TVTotal Buenas-Type Activities Everses Total Primary Coverrment Everses

Prcgram Revenues Coverrmental Activities

Charges forServices Cenaral Coverrment Public Safe tv Public Worls Community D eve tepment Cultural and Reeieatioial HciEirgand Redevetepment

Cteratrg Crate and Ccntntuticr's Coital CrariE and Ccntntuticr's

Total Coverrment Activities Prcgrati Revents Businas-Type Activities

Charges forServicesRichmcnd HciErg Authontv Ponof Rchmcnd Richticnd Manra Municipal Sewer

Cable TV Cotv ent i cn C ente r

Cperaorg CratE and Ccntntuticr's Coital CrariE and Ccntntuticr's

Total Buenas-Type Activities Prcgram Reverie Total Primary Coverrment Prcgram Revenues

Net (E>^ens)/Revenue Coverrmenal Activities Businas'Type Activites Total Primary Coverrment Net E^erse

Ceneral Revenues and Other Charges in Net Pcsiticn Coverrmenal Activities

$12,500,031

1641,139562,647

$13661,289

952,330

1037,1129642,033

28608,088 _________32845,691

$7813,724 3331,893

8,4026356337,686

1633,745 1,776,252 3066,8315,392626 5300,126 5065,840

12,410,236 1 3664,120 1 4,432,9491655,726 1 637,151 1,579,626

3,744,638 (466,382) (3,466,463)($1246296077 ($172,225,655) ($190,453,283)

P reperty Taxes Cunent Col lecooE

Sates Taxes Utility use raxes 0 cement trarsfer taxes OtherTaxes

Use of Mcney and Property Unrest ncted Intergovernmental MiscellanaasCam cn Sales of Capial Ases Persicn sabilizaticn reverie Developer revenue darirg

Specalitextraordirary items S wap a rm irationAsses trarsfe ned o/liinhoesasmedby

HcLSirg Success ^Successor Agsxy Total Coverrment Activities Businas'Type Activities

$73,426,915

27007,410

12042,215 7395,606

(2,346,206)

$77012,608 $78,279,81827322,62848353,034

7359,6836851,2662,197,148

5000,0025,262,746

(692,391)

157349,682 _______ 168,556,670 _______ 191036,334

Use of Money and PropertySettlementOtherCam (Los) cn Sals of Capital Specal Item

Extraordinary items Total BusresType Activties Total Primary Coverrment

Change m Net Postcn Coverrmental Activities BusiresT ype Activites Total Primary Coverrment

(14,425,7500692,391

4016,914$161386,756"

(11,474,346) 1092,281$157081724" $192,126,615

$26,576,643 ($3,202,603) $4049,5147,761,552 (11341,328) (2,376,182)

$37339195" ($15,143,931) $1673,332

(a) The Redave torrent Agency was disolved effective Jteiary 31, 2212 and is ret pcsiticn transferred D aSuccesor Agarcy(b) The City implemented the provis»>s of CAS B Statement 63 n fiscal year 2013, whidi replaced the term 'VetaseE" with be term "retpcsticn"(c) The Ciry implemented the proviscrB of CAS B Statement No 68 mfisal year 2015 Yeats prior to 2015 have rot teen restated

8611,216232,855

13611,0982,527,838

53684,008 52,448,064$282J 39850" $273360,342

$6612,893 5674,457 1658,353

222,459

37337,933 _________58,312,826

3682,11

15381,4S 7,342,276

21,549,587 23,332,1672,426,7C6 ________ 2,685,479

($1 SO, 513,348) ($164,356,432)(4,581,2000 2,176,355

($1960761487 ($169223,076)

6062,050(7618,063)

146382,235 ________153,323,778

(2,768303)1,922,260

(500,0000

(1,157,700) $145024,535"

($44,331,713)(5,718,500)

($50050613"

224

$32397341$32,549,754100,403,28542,747,958

5645,588

19633,468235,532,583

$35,272,51797,12860246,011618

123 23362 2,816064

15,411831 213687,782

$26,119,297102684,55146,4038204618,101

106083311384308

222028688

$28579,074102,732,652

4,77157510,492020

2,751,20017,219305

5,003045

28049,4749323,282

23505415385608

3,282,406948,426

16,4466262,4653232314,426

58,782,250$279,749,579"

$11,556612 $16317,1135,400,200 6,217,7493,000,211 4,160604

234828 405,404516,456 584,475

9,703,416 8,43401811,2803 53 34,53030841,502017 71,250,471

3609,577 3328,2421,265689 1,069,767

475061 13 28,26742040

9,231039 20,564,53421067,158 17,53436257,372,528 64,445839

2,354,197

1022,100

22,742,102

$103411,72?"

2,619689 262S8349,043026 10,201,751

468321 45835817,733,454 18,589,1911,842001 18690641,320,552 1,2286 64

22,323,335 2135 3,40110,087,528 1673,35865,428,497 58,591,459

$107328614" $123841320

($189,288,182) ($171,785,765) ($150,766,395) ($152326,087) ($158,521,4500(1,712,351) 6,069,580 (1,363,722) 39,283 1,319,514

($191Q68,53T ($165,716,185) ($152J 52,117) ($152,758,604) ($156201376)

$52,219,777 $47,207,734

2,765,942 2,957834

(22064,235)4,752,2457317,715

2,544,175 2,549322

$42,226820 23627,711 48033,706

3,592,218

174574588839

4818328 6,1870665089,511 5,734602

(4,752,158) 1,158,2881606,532 43,3122,151042 4,258061

268327 262687954,202 915680

1O30,‘ 600,000

(16,321,171)

153,392617

(5,331,310 4,0540 73 (185,246) (563,123) (3,076857)

(1030,428) 550,394___________ 9,023,704 1,359323

(6,281,728) 13,688,171 1,174683$20484368 ~ $158858,477 $131355,235

(14,5100000(178,487) (600000}

(741616) (18,168857)$138288,549" $136 205,760

$21819,403 ($28,597,459) ($20607843) ($15,727322) ($3,128873)(8074,079) 19,737,751 (189039) (702,333) (16,687,343)

$13,746320 (38859,708) ($20796832) ($16,430,255) ($19,586,216)

CITY OF RICHMOND FundBalanceofCovernmental Funds

LastTen Fiscal Years (MadifiedAciTual BasisofAccounting)

Millions

BReserved fl Unreserved ff'lcnsendable

ORestncted BAsigied BUresigied

________________________________________________________ Fistal Year Ended Jure 30,_____________________________________________________

CeneraJ Fund

Unreserved

AssignedUrassiged

Too) CeneraJ Find

$22X60,54032,341,360

$54,431520

$24582,4©20555,1©

$45,537578

$25544,325

11036547 $37,353,353

All Other CoverrmenoJ Finds

Unreserved, reported in Special reverie (inds Debt service (inds Caprol prcjectlinds

NiTT^Wffchife Rest need Assiged Urassiged

Tool all other goverrmenoJ (inds

21,732,666

$118054021 $208,008465

0125026 5,218574

$454 $59241017502 53,752,247

5,755,130J 113,354,433$31 ©30© $0,392,231 fej


la} The derge n ©ol (indfceJarxe for the CeneraJ Find and ©♦ergoverrmenel (ini ise«lair«d in Maregsment's Dtso^sscnandAraJyss

tJ The City irrplemenedthe proviscrsof CAS 3 Sotement 54 n fiscal year 2010,ard years prior to 20© have not teen reseed to conform wih he new regjbticrs

tc) Balance was reseied n fiscal year 2014 Years prior to 2013 have not been resoled

226

CITY OF RICHMONDChangss in Fund Balanceof Governmental Funds

LastTen FiscalYears (ModifiedAccrual Basis of Accounting)

Fiscal Year Endcdj une 30,2007 2008 2009 2010 2011

Revenues

Property taxes $73,563,141 $77,764,908 $79,947,®0 ©3, ©8,143 $57,113,666Sales taxes 33,217,856 29,006,711 27,922,® 8 25,000,182 23,025,923Utility cser fees ®, 0®,410 29,553,243 48,® 3,004 40,38,719 50,007, ©6

Other taxes 12,0*2,215 8,3*2,85 7,9®, 6® 6,©2,©0 7,824,181License^ permtsandfees 8,379,690 8,194,006 6,415,8® 7, ©8,407 7, *85, ©3Developer revenue sharirg 591,051 201,270 51,7® 1 ©,494 101, ©9F i res, forfeitures and penalo es 312,723 312,706 3®, 870 481,294 *24,839

Use cf money and property 6,879,814 10,390, OS 5,278,6® 1,949,894 1,©1,7461 ntergoverrmentaJ 24,439,245 18,092,672 15,753, ©4 21,©7,513 38,® 5, ©6

Private grarrcCftargesfor services 4,488,092 6,026,1® 5,5®, 3® 8,517,2© 9, *25,434Pension staD lizao on revenue 4,240,135 4,256,500 5,292,7*6 2,7©,314 2,728,314

Rert 60^207 3®, 617 312,0© 7®,017 9®, 661Other 3,008,830 3,407,481 11,©5,170 4,7®, 4© 6, ©6, ©8

Total Revenues 194,196,409 195,823,817 214,617, ®2 183,722, ©3 ©5, *62, *06

ExpendituresCurent

General goverrment 22,645,791 26,022,790 19,044,304 14,412,971 15, ©3,928

PuPic safety 72,869,340 86,716,916 93,5®, 626 95, ©9, ©3 94,269,101PuPic works 12,207,806 18,121,576 30,513,373 20, ©7,947 23,144,011Corrmnity developrent 5449,106 5,196,890 4,394,5® 7,692,5*6 7,65,697

Cultural and recreao cnal 15,1*2,75 30,814,656 16,7©, 5© 15,137,948 14,59,213Hotsmg and redeveloprrert 11,3*8,178 22,833,774 22,0*8,876 12, ©8, ©3 11,767,©4

SERAF 10,118,826 2,0©,2©

Captal oulayDebt service

34,281,457 62,7*2,853 90,4©, 151 25,142,692 27,189,722

Principal recurrent 9,079,459 6,300,956 9,694,5® 171,714,191 14,® 9, ©6Interest and fiscal chargesSwap termnaoon payment

10,129,575 15,612,543 14,0©, 2® 21,418,597 14,59,940

Total Expenditures 193,151,414 294,357,978 ©0,435, ©4 ©4,723,153 225,161,110

Exces (defici ercy) of revenues over(under) expenditures 1,044995 <68,534,161) (®, 817,652) (211, COO, ©0) (19,®8,704)

Other FmancmgSources(Uses)Tranrfersm 33,071,479 194,513,756 79,414,731 49, ©3,2*6 62, ©7, ©1Tranters out (31,800,296) (185,®7,975) (80,148,188) (43, ©0, ©6) (55, *62, *67)Sale cf property 4747,114 4,287,517 5,0*0,000 ©,300Payment to refund bond escrow agent (32,897,515)1 suarce of lorg-term debtB end isuarce premum

172,962,622 121,076,391 14,721,130

Total oOierfmancmgsouces (uses 5015297 143,006,444 4,3®, 543 127,502,330 21,746, *84

Special and E xuaordmary 1 terns

Assetstjanrferredtojh ab hoes asuned byM otci ng S u:ce sor £ urcessor A gercy

1 nterfund advance resiucturingTotal Special and Exuacrdinary Items

Net Change in fund balances $7, OS, 292 $74,474,2® (©1,511,109) (©3,*88,©0) $2, ©7,790

Debt service as a percentage ofnoncapital expenditures 11 9% 107% 11 1% 51 9% 145%

NOTE(a) Del* service in20101ndudesthe curerc refundingofthe 20D7TaxAIlocalcnBordscf $64,275,00.(b) The Redevelcpme* Agency was dissdved effeccivejaruary 31, 2312 ard its net assetstransferred to aS utcesror A gerc/.

228

Fiscal Year Endadjuna 3Q2012 2013 2014 2015 2016

351, ©4,005 $*8,518,3© $*8,5®, 3© $*8,4©, 061 ©2,714,54027,788,59 29,86^548 29,6®,711 ©,131,4® 40,877,1350, ©4,315 4§39§349 *8,0®, 7© *8,25,95 *8,3®, 2*8

6,5®, 8© 3247,352 7,053691 9,918,4*2 11,63,5199,3©, 8© 11,833426 7,713634 12,408,63 12,2©, 4®

5,95

55,510 617,509 821,411 1,353518 901,85932,3© 557,936 153958 223529 212,7®

36,121,561 19,993922 17,073035 19,2©, 9© 14,440,5*8

12,971,139,204,016 9,350051 ©, 022968 13,6®, 840 13,462,2702,544,175 2549,922 993839 95^202 915,8®

7©, 144 681,141 703626 809,113 7®, 7©7,1*2,854 2703133 2843117 1,977,688 4,3®, 1®

304,011,©! 181,315,617 178,617,001 183,414,454 ©8,794,35

30,35,614 33251,610 33003878 ©,7®,0© 31,819,3®

87,25,2*8 87,573539 91,673955 ©,219,981 94,774,5*825,55,9© 23 063 996 23363885 S,8©,437 3,6®, 65

5,643,5*8 **709,478 **357,885 **583333 4,843,6®

12,15,3® 11,173362 1Q223708 10,021,481 10,551,3®6,2®, 418 3089,640 3263265 3623533 3,0©, 1©

©,721,772 1370** 486 1 **363888 3173649 8,5®, 55

14,312,544 3691,629 3773769 7,843830 9,1*8,9©

11,3©, 091 7,50** 922 1 Q989,996 13,407,604 12,55,4*2©,554,0®

221,®7,S6 197,763662 1©,0©,2© 1 ©,474,9® 229,4®, 6®

(17,® 5, ©5) (13451,043 (©,409,228) (4,0®, 473) (©,6©, 3©)

3,45,03 21,143031 2Q143264 12,879,975 12,124,1®(33, *87,® 3) (19,663470) (©,85,344) (13,815,569) (12,091,20®

15,4® 53,618 17** 874 263927 263667

3,214,2*8 3621,558 3163445 11,175,4® ©,3®,0®

100,701 106,740 83880 1,3©,619

8,53,7© **26Q477 3623239 10,591,6*8 ©,079,2*8

(33,32,56) (IS745,119

(33,32,56) 745,119

($43, ©7, *89) ($11,4*8,4*8) ($14,782,989) ©,531,176 ©,382,851

123% 87% 9*% 11 46 226%

229

CITY OF RICHMOND ASS E SS E D AN D E STIM ATE D ACTUAL

VALUE OF TAXABLE PROPERTY LASTTEN FISCAL YEARS

(In Thasam±)

Lard

Improvemens

Total Real Prcperty

PersyaJ Property 572348

$12,475,546

8,395571

12JC9571632,870

$14,127018

$3,541392

$12,297,705

$3,218,339 $3,781 SB $4,166,239

7,181,567 8,187,250 8683,770

10,3SS,SC6 11363,669 12670006

53,195 460061 669634

$10,453,101 $12,429,550 $13,539643

HcmeoAne is®

Other1®

TOTAL

338,751 564,531 432,140

$452,166 $477827 $543,933

Met of Exempticcs)

Redevelcpmertt T ax Increment^9

NET INCREASE (DECREASE)

Total Direct Tax Ratec*>

$120131,189 $12,791,5 $11,753,772 $12656,! $12601629

1362350 2,333,771 2,404,325

$10048,259 $10,457,437 $11,244066

1,534,587 1,578,062 1,556,233 1,595,033 1,799 831 2,055811

1,641,310 $9,242,647 $11066,501 $6,250,509 $9343313 $10,745818

$787,459 ($1,227640 ($1,375,916)

043216% 040770% 041 395%

,b Asesed value (full cadi value) of taxable property represensall props rtywihm the City For the fiscal year 133162 ard thereafter, the value s 1CC% of the foil c^i value in axordarce wih Sate legislaicn The maximm ta< rate is 1% of ihe full cadi value or$161C0of the value, excludirgthe tax rate for debt service

18 ExempBcrs are amtianad as follows(a) HcmecrAners1 exemption arises from Article X III (25) which reimburses Iccal goverrrtiens for revenues bst thrcu^i da hxneoAners1 exempticn

in Article X III (3)(k)ib) Other exempt i crs are reverues lest to the C ity becai.se of provisions of California Ccr'Etitutcn, Article XIII (3)

19 Tax ire remans are allceaiccs made © the Redevelcpment Ag-ncy cn^r auhonty of California Ccrstituocn, Article XVI

** Cal ifomia cites do rot set their ovn dneo t3< rae The state co'sotuticnestiilid'es da rate at 1% ard allocates a pc ro on of hat amount, byanarrual caloulaticn, to all the ta-irg entities withn ata< rate area The City of Ridmced erocmp®es more thai 92 Bx rate ares See Property Ta< Rates statistics for addncral informaicn

Source Canty of Centra Costa Office of the AudiCrCcntroller HdL reports

230


CITY OF RICHMOND PROPERTY TAX RATES

ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS

Base City cfCountv Richmond Wide 1981 Pensen

Levy(l) Liability (2) BART

EasBayRegional

Parks AcalanesDistrict Union

EasB ayMUDDistl Ormda

B ond Elementary

Wes:ContraCoaa

Unified

CoaaCommunity

College

TotalDirects

OverlappingTax Rates Q

3307 $1 003003308 1 003003309 1 003003310 1 003003311 1003003312 1 003003313 1 003003314 1 003003315 1 003003316 1 00300

$014300014300014300014300014300014300014300014300014300014300

$000930000760000930000570000310000410Q00430000750ooo^so000260

$0 00850 000830 001030 Q01C60 0 00840 000710 000510 000780 000850 000670

$0 02920 0 02590 0 02890 0 02S60 003110 0 03330 0 03330 0 03610 0 03930 0 00030

$0 03683 0 03693 0 03643 0 03693 0 03670 0 03670 0 03683 0 03683 0 03470 0 03343

$0 02593 0 02370 0 02470 0 02383 0 02443 0 02743 0 02783 0 02593 0 02333 0 03003

$0 11483 010393 012303 018283 018693 0 23233 0 21570 0 28183 0 33083 0^810

$0 00430 0 01080 0 00560 0 01260 0 01330 001440 0 0C670 0 01330 0 0320 0 02200

$1 38400 1 32600 1 34360 1 41180 1 41390 1 46520 1 44120 1 51860 1 52140 1 45280

NOTES(1) In 1978, Californavoterspased Propcsticn 13vjhich setOie property tax rate at a 1 0G3 fixed amourt This 1 CC& is Siared by all taxing agencies for which

Oie suq ect property resdeswithn In addticn ® Oie 1 CC& fixed arrcun; property owners are charged taxes as a percertage of assessed property val ues for Oe payment of arry voter approved bonds

(2 Voter approved debtO Overlapping races are Oiose of local and courry geverrmernsthat appyto property cwrersw lOimOie City Not all overlapp rg races apply to all city property owners(4 City'sShare of 1% Levy is based cn Oie City's stare cf tie general fund tax race areawiOi Oie I arges: next taxable value wiOimOie City ERAF general fuid tax shfc

may not be included in tax raoo figuesO RDA race is based cn the largest RDA tax race area (TFA) aid ircl udes only race(9 from mdebtedres adopted prior to 1989 per California sate statute

RDA d rect and cverlappng races are applied only to Oie incremental property val ues(© Total Direct Race is Oie weighed average of all individual direct races applied by Oie government prepan rg Oie stao so cal secocn informaoonandexdudes revenues

derived from aircraft Begmmrg in 2013/14the Total DirectRaceno longer includes revenue generated fromOie former redevelcpmert tax race areas Challenges® recogiized erf orceabe obligaocns are asurred ® have Ceen resolved dun rg 3312/13 F a Oie purposes Oie races reported res deal revenue is assumed® be disoibuted ro Oie City mthe same proportions as general fund revenue

Source County of Corroa Cosa, Offi ce cf Oie A udiror-Coruoller

232

City's Share of

1% LevyPer Prcp13 H)

General TctalObligation Debt Rede/eJcpment Direct

Rate R ate (5) R ate (g)

$0 3784 0 3784 0 3784 0 3784 0 3784 0 3784 0 3784 0 3784 0 3784 0 3784

$0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300 0 1 4300

$1 14350 $053111 14300 043491 19300 0432161 19380 0 407701 14340 0413951 1*10 Q 4Q518000300 03353000300 041948000300 041930000300 043781

233

CITY OF RICHMOND Principal Propaty Taxpayers

Current Year and Nine Years Ago (In Thousands)

3015-3016 3X6-3007

T axoaver Tvoe ofB usj ness

T axable Assessed

Value Rank

Percentage ofTctal City

Taxable Assessed

Value

T axable Assessed

Value Rank

Percentage ofTotal City

Taxable Assessed

Value

Chevron USA Indsn al $3,514,51 6,371 1 27.45% $2,966540,231 1 24.82%

GuardanKW HillccpLLC Resi dermal 150,112,542 2 1.17%

Lemer EmeraldMerinaB ay LLC Resi eternal 92,625,257 3 0.72%

K a ser F airdaron H ealth Plan Indsn al 77,561,3C6 4 0.61% 44/071,2 2 10 0.37%

Richrrord Essex LP Resi eternal 74,326,827 5 0.58% 65,1 90,429 5 0.54%

Diccn Fibercpocs Indsn al 41,307,604 6 0.32%

US Bank National AseociancnTrusr CcmmeraaJ 40,545,369 7 0.32%

Ford Port LLC Indsn al 39,790,255 8 0.31%

BRE Piper MFTrctesCA LLC Resi eternal 38,668,907 9 o.m

DDRM Hilltop PI azaLP CcmmeraaJ 37,490/XO 10 0.29% 49,1 67,707 8 0.41%

B erl ex Labcraton es I rc Indiana! 162,744,992 2 1.35%

Lemer Emerald Resi eternal 127,646,779 3 1/00%

R ichrrord Partway Asscci aes Ccmmeraal 118/083,979 4 0.98%

Richmond Assccr aes LLC Indian al 63,284,300 6 0.53%

JanreE Patterscn Resi eternal 54,396,225 7 0.45%

Cherokee Simecn Venire I LLC Resi eternal 45/018,536 9 0.37%

Suttad $4,107,034,349 32.06% $3,71 61 46,390 30.85%

Total NaAssessedValuaocnFiscal Yeer 2915-3916Fiscal Yeer 2X&3997

$12,891,629,029 $12031,189000

Sara Conra Costa Cany Assesses Fiscal Y earCcmbinedTa* Roll sard theS BE NonUntary Tax Roll

234

Thou

sand

s

CITY OF RICHMONDPROPERTY TAX LEVI ES AND COLLECTIONS

LASTTENFISCALYEARS (I n Thousands)

BTaxCollecti cns(3)

FiscalYear

196 TaxRoll (1)

VoterApprove Debt Tax Rolls (2)

TotalTax

Collections (3)

Percent of Total Tax Collections toTax Le/y

2007 $58,024 $15,473 $73,497 10062008 34,269 13,983 48,252 10062009 34,096 16,172 50,268 10062010 28,147 15,155 43,3(32 10062011 25,573 11,900 37,473 10062012 27,669 14,377 42,046 10062013 31,638 14,718 46,356 10062014 27,289 13,267 40,556 10062015 29,392 14,225 43,617 10062016 31,490 18,071 49,561 1006

Source City of Richrmnd RecordsNOTES: (I) ThemaxirrumtaxrSeis 196 oftheassessedvalueor$l,$100oftheassessedvalue,excluding

thetaxrcte for dell.(2) Voterapprovedtax roll forctefct is inadditiontothe 196 rieshown innote( I).(3) Duringfiscalyearl995,theCartybeganprovidingtheCity 1006 ofitstaxle/yinderan

agreerrent which al lows the Canty to keep all interest and del inquency charges col leded.

235

CITY OF RICHMOND UTILITY USERS TAX COLLECTIONS

LASTTEN FISCAL YEARS

Fiscal Year EndedJ une302007 2008 2CC9 2010 2011 2012 2013 2014 2015 2016

CabeTV Users $334,347 $33^226 $824,723 $810,755 $SB,972 $983,465 $1,015552 $588,547G*(§ Electnc 12,325977 5919,561 5335362 9,660,557 8,943,183 5787,715 9,X3,928 9,966,042Tdadione 4,5S5CC9 5 510,933 5539,963 5473,445 5,685505 5 IS,418 4,807,499 4,093,128Operaions 18,733,671 20,032,999 19,305738 20,039,558 19,955 689 20,079,108 20,471,979 21,004,080UUT Settlement 13,OX, OX 15CX,X0 1QXQ0X 10,OX,OX 13, OX, OX 13,0X,X0 13,X0,OX 7, OX, OX

Prepad Wireless Comb ned (A) $27,007,410 $29,553,243

312,852

$27,007,410 $29,553,243 $43,953,004 $5} 255 719 $45C07,K6 $45584,315 $48,358*349 $4§033,706 $45299,958 $43,365,249

NOTES

(A) Components of col lections ty tyre a*e not a^ail dole, therefore anourtt reprserrts total U UT coll ©eta ons forthe fised year, andthse anourtts have been ex cl udad from dnegradi

SOURCE City of Richmond Fmaice Dqoanment(Re/enue)

236

CITY OF RICHMOND UTILITY USERSTAX DIRECT RATES

ON CHARGES FOR SERVICES LASTTEN FISCAL YEARS (A)

2015 2016

CableTV Users Gas& Electric Telephone Operations U UT Settlement

5%1C&

9.5CTo(B)(C)

5%1C&

9.5CTo(B)(C)

NOTES:(A) Historical inforrralion priorto2015 is notavailafcie(B) BasedcntheCapPrcvisionintheCitycf RichmondMunicipal Cocte

Section 13.52.100 -Maxi rrum Tax Payable(C) Annual amount is perageerrent signed ty a Major Taxpayer and theCity in 2010.

SOURCE: City of Richmond, FinanceDepartment(Revenu0

237

CITY OF RICHMOND TOP TEN UTILITY USERSTAXPAYERS

(ALPHABETICAL ORDER) Current Year (A)

Taxpayer Type of Business (B)

CheyronCOMCASTGTE Modlnet of California MarinClean Energy Metro PCSNew CingularWireless Pacific Bell Telephone Co PC & ESprint Speztrum T-Motile

I ndustrial Cade

Tel ecorrmmi cations Utility

T elecomruni cations Telecomruni cations Telecomruni cations

UtilityTelecomruni cations Telecomruni cations

NOTES:(A) lnforrraflonfor2C07isnotayailatle(B) Re/enie Laseinforrration by taxpayer is confidential.

SOURCE: City of Richrrmd, Finance Department (Reyenu^

238

CITY OF RICHMOND Ratio of Outstanding Debt by Type

Last Ten Fiscal Years

8

2007 2CC6 2C09 2010 2011 2012 2013 2014 2015 2016

gToel Co^rrrreriBl 9T0BIB isress


FiscalYear

T axAllocation

Bonds

PensionObligation

BoncfeRe/enueBonds

andNotesPa/able

CapitalLeases Total

2C07 $95079118 $143,575313 $33,630,0X1 $10,518963 $5111,871 $287,915 265208 168838368 146(453(616 99,619,143 10,578390 3,964296 429,'453,815209 16520399 150,493392 97,750,000 10,544,185 8300 966 432,2889422010 130,953599 152,059727 88 271,545 10,46),463 6536310 388 282,0442011 125899 S30 IS, 589314 87,908545 20,723,084 7,022284 395140,7572012 © 155060,554 87,526545 635646 (B) 8523072 251,7458172013 © 156(483,676 87,121,545 1,231,88) 8269494 2S3,1C65952014 © 157,555624 87,121,545 2, SI, 887 11,185685 2584957412015 © 156491,679 87,121,545 12,970,813 9,295123 265879,16)2016 © 155 070,539 115218619 2,143,560 7,944,891 29), 377,609

B usmess-Type Activiti es

W ast ©water Port Lease Loans Total PercentageFiscal Revenue Re/enue and Notes Primary of Personal PerYear Bonds Boncfe Payable Total Government Income (A) Capta(A)

207 $41,857327 $7,782675 $7,419,06 $57,05(011 $344,974276 1420% $3,376208 42,15240 5933,813 5427,429 S3,513722 482,967: S37 1898% 4,675209 41,93^902 3,203,312 4,971,846 50,11Q 06) 482,399002 1870% 4,6432010 41,418658 49,015199 4,501,732 94,933589 483,215633 1908% 4, SO2011 84,893(408 45(683747 4,016617 137,593772 532,73^ 529 21 12% 50432012 84,248892 48252294 3,516009 136015195 387,761,012 1S2SS 3, ©72013 90,09*5593 (C) 47,834,187 3,007,372 140,938152 394,04747 ISC^ 3,7332014 89,012056 44,944399 2,93 5 889 136892344 395388065 14 54% 3,7252015 85857:520 41,984610 2,851,189 131,713319 397,592479 1468% 3,7372016 84,637:9© 39,354 875 2,783,127 126775965 407,1 S3 594 1484% 3,689

Notes Debt amcunts exclude arty p'emurrs, dscounts, orotherarrorozaonarrounts.(A) See Demcgrat±ii c Sta so cs for personal 1 ncorre end populaion daa(B) Duetothedssolution of the Reds/el oprrent Agency, theTax All oca on Bonds endtheLoens andNctes Pa'abetha were

rejaedtoifte Redevelopment Agency were transferred to the Successor Agency es of February 1, 2012 and are no longer go/errmental commorients

(C) WnJithe irrplerrentaion of GASB StaemsntNo 65 the deemed amount on r^undrg pre/iously reported as a component of tdne I erg-term dsfct tel ance 1 s not reported as a cfef erred inflows of resources

Sources City of RichmondState of California Deperorentof Finance (populaon)US Department of corrmen: a Bureau of tdne Census (ircomS

239

CITY OF RICHMOND REVENUE BONDCOVERACE

1999, 2006, 200& 2010A AND 2010B WASTEWATER REVENUE BONDS LASTTEN FISCAL YEARS

_______ Debt Service RequirementsNd Revenue

FiscalYear

Grcss Revenue (1)

OperatingExpenses(2)

Availablefcr Debt Service Principal Interest Tctal Cover ace

2X7 $13,687,290 $8,799,108 $4,888,182 $1,480,000 $1,422,950 $2,9(2,950 1.682X6 14,421,345 9,991,039 4,430306 2,414,409 2,414,409 1.832X9 14,498,712 6287,431 6211,281 2,403 307 2,403307 2582X0 160 A 782 10362,653 5713129 865,000 2,146974 3,011,974 1.902X1 17,399,624 9,154,788 8,244,836 905,000 4,943012 5,848,012 1.412X2 17,697,208 8,956411 6740 797 975,000 4,399,406 5,374,406 1.632X3 17,840012 9,447,236 8,392,806 1,005,000 4,613635 5,616635 1.492X4 18,569,191 9,734,277 8,834,914 1,055,000 4,560528 5,615528 1.572X5 19,098,835 9,524,878 9,573957 2,115,000 4,536,302 6,651,3(2 1.442X6 19,843677 9,954,037 9,889,640 2,200,000 4.3933A 6,593 3A 1.50

Nctes: (I) Indudes all Muicipal Sewer Operating Revenues and Non-cperdinglntaest Revenue excludngDerivdiveI rvestnent I rterest

(2) Indudes all Muicipal Sewer Operating Expenses less Depreaatiai and Pensiai Expense reldedto GASB Staermt68,

Sarce: Gty of Ridirrxnd Annual Financial Staermts

240

CITY OF RICHMOND REVENUE BONDCOVERACE

1996 1999, 2004, 2007AND 2009 PORT TERM INAL LEASE REVENUE BONDS, NOTE ANDPOINTPOTRERO LEASE REVENUE BONDS

LASTTEN FISCALYEARS

________Debt Service RequirementsNa Revenue

FiscalYear

GrassRe/enue(l)

Operating Expenses (2)

Availablefcr Debt Service Prinapal l nterea Tctal C a/a ace

2X7 $5,621,403 $2,106,307 $3,515,093 $4,823,787 $643,463 $5,467,250 9642X6 6061,660 3,024,733 3,036,927 3,094,855 362,194 3,457,059 9862X9 5,292,239 3,129349 2,162,940 2,745,030 292,367 3,037,367 9712910 4,334,422 3,037,455 1,326,967 3,270,030 1,671,265 4,941,265 9272911 6 357,466 2,035,963 4,321,498 405,030 3,728 541 4,133,541 1.052912 7822,496 2,931,799 4,890,697 505,030 3,381,546 3,836546 1.262913 9138193 2,964,060 6174,133 525,030 3,348154 3,873,154 1.592914 10,283,894 3,189856 7091,028 2,955,030 3,255,221 6219221 1.142915 9431,315 3,389916 6103,399 3,025,030 3,077,165 6102,165 1.032916 10,031,074 4,533,796 5,547,278 2,723,455 2,869343 5,592,796 999

Nctes (1) includes all Pert of Ridrrond Operating Revenues and Ncn-cpaaing interest R avenue exdudngDaivative Investment Intaest

(2) includes all Pert of Ridrrond Operating Expenses, less Depreaaion and Pension Expenserelaedto GASB Staemait6S.

Source City of RidmcndAnnual Finanocl Staements

241

CITY OF RICHMONDBONDED DEBT PLEDGED REVENUE COVERAGE

TAX ALLOCATION BONDS AND REFUNDING BONDS (I) LASTTENFISCALYEARS

2C07 2CC6 2009 2010 2011 2012 2013 2014 2015 2016

BTax I re rerrent Revenue BDeCtService Payment

Debt Servi ce R equi rementsF iscaJYear

TaxRevenue Princi pal 1 merest Traal Coverage

2C07 $24,953,SX $2,250,00 $4,463,10 $6,713,106 3.722CC6 26,535,184 2,345/OX 4,359,236 6,704,236 3.962CC© 28,012,196 6,450/OX 9,589,715 16/039,715 1.752010 18,559,284 69,17000 (2) 7,220,349 76,390,349 0.242011 17,743,295 6,225/OX 5,905,703 12,130,703 1.462012 15,619,530 (3) (4) 6,285/OX 5,972,529 12,257,529 1.272013 16,320,481 (4) 6,5 65/OX 5,754,83 12,319,825 1.322014 16,776,169 (4) 5,030,000 5,461,989 10,491,989 1.002015 17,206,306 (4) 2,93O/0X 4,500,409 7,430,409 2.322016 19,953,196 (4) 6,190/0X 4,445,674 10,63,674 1.88

Note (1) I nd tides the 1991,1998, 2CC0, 2003,2C04, 2C07, 2010 and 2014 B onds.(2) I nd udes ament refund ng of the 2007 B onds of 164,275/090(3) The Redevel opment Agency was d ssdved efteaiveJ aruary 31, 2012, and its li abi liti eswere assumed

by a Successor A gercy. Amounts reported here i rcl ude tax revenue and debt service of boththe former Rectevel opnert Agency and the Successor Agency.

(4) B eg nning i n fiscaJ year 2012, tax i rcrement reported i n this table is the amount caJcul ated by the Ccunty Auditor-Control I er. Under the previ sj ors of the I aws d ssd ving the Redevelopment Agency, the S uccessor Agency orly receives the funds necessary to fulfi II its approved obli gallons.

Source City of Richmond A muaJ Financial Statements

242

CITY OF RICHMOND GENERAL BONDED DEBT

PENSION OBLIGATION BONDS (I) LASTTENFISCALYEARS

Ratio ofC eneral NetCenera)

FiscalYear

B ondsOut standi nq

RestrictedCash and

l rrvestmerits (2)

NetB onds

Out standi nqNet Assessed

Value of Property

Bonded Debt to Net Assessed Value

of Property

B onded Debt per Capita

2C07 $143,575,313 $11,013,589 $132,561,724 $10,048,259,00 1.336 $1,2972C08 146,453,616 6,291,336 140,162,290 10,457,437/OX 1.34% 1,3572C09 150,493,392 9,916,755 1 40,576,637 11,244,866/OX 1.3% 1,3532010 152/059,727 7,841,951 144,217,776 10,01 7,226/OX 1.44% 1,3792011 153,589,314 8,314,362 1 45,274,952 8,041,310,346 1.68% 1,3752012 155/060,554 8,617,952 146,442,602 9,242,647,000 1.55% 1,3962013 156,483,676 7,054,942 149,428,734 11,098,301 /OX 1.35% 1,4162014 157,555,624 8,069,647 149,465,977 8,230,209,000 1.836 1,4082015 156,491,679 8,148,1 21 148,343,558 9,943,913,000 1.49% 1,3942016 155/070,539 8,936,523 146,134,016 10,745,818/OX 1.36% 1,324

Note (1) Includes the 1999 B ords i ssued i n fi seal year 2CCO, ard the 3X15 B ords issued in fiscal year 3996.(2) Restricted cash is being held with the City's fiscal agert, Unon B ank, and i s resrn cted ferthe payment of the bonefe.

Source CityofRichmondAnnual Financial Statements

243

CITY OF RICHMONDCOMPUTATION OF Dl RECT AND OVERLAPPI NC DEBT

J UNE 30,2016

2015-2016 Assessed VaJ uao on $12,898,167,822

Taal Debt City'sShare of DebtOVERLAPPING TAX AND ASSESSMENT DEBT lure 99, 2916 % AodicaBedl line30, 2016B ay Area Rapid Transit Di aria $527,C65,OX 2.142% $11,283,732CortraCosraCcmmuntyCdlege Di aria 432,135£CO 7.511% 32,457,660WestCortraCcsaUnifiedSchcol District 1/995,061,999 48.3Ce% 528,997,628West Centra Ccaa Healthcare Diana Pa-cel Tax Obligations 58,040 £09 44.918% 26/970,407Eaa Bay Municipal utility District, Special Diana No. 1 7,345 £09 0.677% 49,726East B ay Regi cnal Park Di aria 149,945£C0 3.281% 4,919,695City cf Richmond Community Faa lines Diana Na 1998J 2,950/909 10J96 2,860/XOCity of Ri cbm end 1915 Aa B ends 12,225 £09 1CC96 12,225 £09CalifomiaStatewicte Ccmmunty Devel cpment Auhcrity 1915 Act B ords 1,820,592 1CC96 1,820,592

TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT 620,690,449

DIRECT AND OVERLAPPING GENERAL FUND DEBTCortraCcstaCcunty General Fund Obligations $253,71 5,5/0 7.4g3% $1&985,536CortraCcstaCcunty Pension Odigati ors 212,765 £09 7.4g3% 15,921,205A1 an eda-CcritraCoaa Transit DianctCertif caes of Parici pao on 21,285 £09 6.347% 1,350,959CortraCcsta Ccmmunty Cd 1 ege Di an ct Certi fi cates of Parti cipation 525 £09 7.511% 39,433WeaCortra Ccaa Unified School Distna Certificates of Parti cipation 6,250/300 48.3Ce% 3/919,250City ofRichmond General Fund Obligations 1 5 3,470£09 icc% 1 5 3,470£09City ofRichmond Pension Obligations 92,313,825 icc% 92,313,825City ofRichmond LoansPayable 2,143,569 icc% 2,143,560City ofRichmond Leases Payable 7,944,891 icc% 7,944,891

TOTAL DIRECT AND OVERLAPPING GENERAL FUND OB LIGATION DEBT 205,188,659Less ComtraCoaaCcumty general find od i gai ors supported by revenue finds 5,136,409

City of Richmond cbligaticnssuppcrted by port revenues 39,756/966TOTAL NET DIRECT AND OVERLAPPI NG GENERAL FUND OB LI GATION DEBT $250,296,184

OVERLAPPING TAX INCREMENT DEBT (Successor Aoenofi $55,233,605 icc% $85,203,605

TOTAL GROSS DIRECT DEBT $255,872,276TOTAL NET DIRECT DEBT $216,116,210TOTAL GROSS OVERLAPPING DEBT $745,210,428TOTAL NET OVERLAPPING DEBT $740,074,019

GROSS COMB 1 NED TOTAL DEBT $1 001,082,704

NET COMB 1 NED TOTAL DEBT $956190,229

(1) The percent^© of overleco rg d±t aedicable to tiie city is esomaed ua rg taxed e assessed pocety vdue Aed i cade cen: entages were eso rraedby cteterrnnirgthe poro on of tiie overlaep rg dsoict’s assessed valuetha i s within tine bcundanes of the city dvi cted by tdie dsoict’s total taxable assessedvalue

(3 Excl ucte tax and re/enue amocipaion notes enterpi se re/enue, rrongage re/enue andtax al locaoon bonds and non-bcncted captal

Ratios to 2015-16 Assessed Val uati onTotal N et Overlapping Tax and Assessment Debt 4.81%

Ratios to Adjusted Assessed V al uati onCrossCcmbined Direct Debt ($255,872,276) 1.96%Net Combined Direct Debt ($216,116,210) 1.6^6Combi red Total Debt 7.76%Net Comb ned Total Debt 7.41%

Ratios to S ucoesscr Agency Reda/el cement I rcremental V al uati cn ($2,055,810,543)Total Overl appi rg T ax I ncrement Debt 4.14%

Source HdL Coren & Cone, Centra Costa County Assessor aid Audi ter, City of Richmond Finance Department

244

CITY OF RICHMONDCOMPUTATION OF LEGAL BONDED DEBT MARGIN

JUNE 30,2016

ASSESSED VALUATION:

Secured property assessed value, na ofexempt real property ______ $12,801,629,000

$480,061,088

$480061,088

FiscalYear

DebtLimit

Total N3 Debt Applicableto

Limit

LegalDebt

Margin

Total na debt applicableto the limit

as a percentage of debt limit

2007 $451,169,588 $0 $451,169,588 0.0&62008 479670,300 0 479,670,300 o.cm2009 511,844,663 0 511,844,663 o.cm2010 44Q 766,450 0 440,766,450 o.cm2011 383834,888 0 383,834,888 o.cm2012 405,777,338 0 405,777,338 o.cm2013 474,620,025 0 474,620,025 o.cm2014 368,446,575 0 368,446,575 o.<m2015 440,390,400 0 440,390,400 o.<m2016 480,061,088 0 480,061,088 o.<m

NOTE(a) CaliforriaCcvemment Code, Section 43605 sasthedebt limit at 1596. The

Code section was erected prior to the change in basing assessed value to full rrarka value when it was previously 25% of rrarka value Tlus, the limt shown a> 3.75% is one-faith the limit to accart forthe adjustment of showing assessed valuation a fill I cash value

BONDED DEBT LIMIT (3.7596 OF ASSESSED VALU E) (a)

AMOUNT OF DEBT SUBJECTTO LIMIT:

Total Bonded Debt $0

LessTax Allocation Bonds and Sales Tax Re/enue Bends, CertificateofParticipationnotsLtojecttolimit 0

Amort of debt sitojed to limit

LEGAL BONDED DEBT MARGIN

245

CITY OF RICHMONDDEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDARYEARS

HOT.

1007=907=807=707=

607=

507=

icns

___ .. , _

m $1 5$1 0

$0 5$00

$5JCC0

S3QCC0

S2QCC0S1QCC0

$0 n n?, *---- *---- *---- «---- «---- «---- «---- «---- «-----3««" 2m■- 2mim 2mii :i'i: :mi5 :mij :mis

'rCapiB Pe*naJ Interne

Cal endar CityTad

PersonalYea Pcpjl 3101 Income

PerCaptaPersonalincare

Unerrp cyrrert Rae(%)

CcrtraCcsta Corny

Pcpjl 3101

CityPcpjl aicn

% ofCairty

20X2C07

208

2002010201120122013

2014

2015

102,182 37,4",;?:5,'XT.

103,30 Z'y^SXiJX:

103,895 7,5 OO104,602 2..7„,XX'

105,630 7,5‘7,5=‘,'XT.

104,887 Z>k^xSX.JX:105,562 7,- :;,~i7,or.10138 '.'..'■x.s/.Jc

10388 7,?07,;7H'X<7

110,378

$23,780

24,635

24,832

24,213

23,881

24,225

24,781

25,614

24,453

24,856

7.26 1,042,341

7.86 1,051,674

10.26 1,00,435

16. @6 1,073,055

17.96 1,049,025

16.76 1,05,117

11.06 1,079,597

10.156 1,094,205

7.156 1,089,291

5.86 1,126,745

9.80.

9.826OAO.10.00.

0.7:0.9 m

9926

Source: HcL, CorenA Cone

246

CITY OF RICHMOND Principal Employe's

Current Year and NineY ears Ago

Employe

2015-2016 2006-2007

Numbe of Employees Rank

Pecentage of Total City Employment

Numbe of Employees Rank

Peceitage of Total City Employment

Chexrcn Refiney 3,456 1 3.596 2461 1 2.5%

WestContraCostaUnifiedSchool District 1,689 2 1.7%

Social Security Achinistradon 1,259 3 1.3%

BlueApron, Inc. 1,200 4 1.296

U.S. Postal Sevice 1,047 5 1.196

Contra Costa County 844 6 0.996

City of Richmond 842 7 0.996

The Perranente Medcal Grcup 732 8 0.7% 786 2 0.896

Raise Fcundation Hospitals 506 9 0.5%

Costco Whdesale#482 405 10 0.496 278 4 0.396

Wal-MartStore 3455 350 3 0.4%

CaliforniaAutism Fcundation, Inc. 250 5 0.396

Macy's Hilltcp 242 6 0.296

The Home Dqx>t#643 209 7 0.296

Veiflo Division 185 8 0.296

Sealy Mattress Co 184 9 0.296

TPMC Regional Laboratory 176 10 0.296

Siiototal 11,980 12.296 5121 5.3%

Total City Day Population 98,236 97,391

Soiree: City of Richmond Corrmnity Develcpment Department

247

CITY OF RICHMONDFull-Time Equivalent City Government Employees by F unction

LastTen Fiscal Years

BCereraJ gouerrment bFÎic safety BFtblic uteris BCOrrmuiifydavelcerrient BCuburaJ and recreatcnal

DHouarg and redauelcemerit BRidvticnd HciairgAuf'orffy QPortof Richmcnd BRichmcnd Marina OM^mcipal Seuêr

(£torm Sewer BDabteTV BCenuentcn Center

Adopted for Fi seal Year E nded J une $0,2C07 206 2CC9 2010 2011 2012 2013 2014 2015 2016

FunctionGenereJ government 1040 1055 1072 1132 102 101 7 1029 1044 1052 998POdicsây 396.5 405 0 4C60 4070 3040 3850 388 0 3960 3900 3755PitJic works 1500 1540 1490 1460 1230 1160 1130 1160 1090 1120Corrrrunity ds/eloprrent 880 960 ©0 8D0 720 71 0 650 640 560 595Culiural endrecreaonal 1132 1304 1244 91 2 722 73 8 73 2 768 650 590Hcusirg end rectevejoprrert 390 41 0 400 34 0 190 196 130 120 100 59Richmond Houa rg Autfionty

endRHA Properties 365 33 0 33 0 33 0 320 32 0 250 290 250 23 0Pert of Ri chrrond 60 60 70 70 60 60 60 60 60 40Richmond Men na (i) cn (i) (i) a) (i) (i) (i) (i) (i)Municipal Sewer (i) cn (i) (i) (i) (i) (i) (i) (i) (i)StormSewer (i) cn (i) (i) a) (i) (i) (i) (i) (i)CeideW (i) cn (i) (3) (3) (3) (3) (3) (3) (3)Convert on Center (21 (21 (21 (31 (31 (31 (31 (31 (31 (31Total 933 2 9709 045.6 911 4 8184 801 7871 802 7672 7387

Scurce City cf Richmond Bucket Nctes

(1) These services ere trovictedby cuts cte comrators(2) Convertion Center closed dtnrg renova on and staff moved under culture! end recrea onel(3) Staff tJia perform ijiesefunco ens ere i nduefed under General Government endCultureJ end Recrea one!

248

CITY OF RICHMOND Operatirg Indicators by Furcticn,P regram

LastTsi Fiscal Years

Fuicticn/Pregram Ftblic safety

Pnmaryfire ifge:torsccnd.irted Nijti ter of fire filtersN i^nter of fi re filters and c iui! lars per fousnd pceulaticn

PoliceN ijn ter of police office rs per thcieaid pceulaticn 17 17N ijtiter of sac m officers 179 187

ailyaverapa ccra-mpton ingallcrsperfatiily

Scurce City of Ricbtcnd

249

CITY OF RICHMOND Capital Asset Statistics by Function^rcgram

LastTen Fiscal Years

2C07 2CC8 2009 2010 2011 2012 2013 2014 2015

Functi on/PrcgramPubic s^ev

Firestaions 7 7 7 7 7 7 7 7 7Police staons 6 6 6 6 4 4 4 4 4Library W of Locaons 1 3 * 3 3 3 3 3 3 3C two branch library sites were refurbshed

and oeened in J anuary 2CC®

Pubic worksMiles of stress 29D 28D 28D 28D 28D 28D 28D 28D 280Strea lights 7, COD 7, COD 7,000 7, COD 7, COD 7, COD 7, COD 6 543 S 343

Urban Forest(trees) 40,200 40,200 40,200 40,757 41,293 41,562 26CCO 21, O© 22,0©

Culture and recrea onCorrrrumty services

City parks 55 55 55 55 55 55 55 55 55City parks acreage 3366 3366 336 6 3366 3366 3366 3366 3366 3366Ore"$P=ce& Pubic Landscapes acreage 5100 5100 5100 5100 5100 5100 5100 5100 5100Lawn bowling 1 1 1 1 1 1 1 1 1Rare® on centers 8 8 8 8 8 8 8 8 8Audton urr/Theaer 1 1 1 1 1 1 1 1 1Gymnasiurrs 3 3 3 3 3 3 3 3 3Senior centers 2 2 2 2 2 2 2 2 2Headstart centers/day cares 6 6 6 6 6 6 6 6 6Putong green 1 1 1 1 1 1 1 1 1Baskaball courts 28 28 28 28 28 28 28 28 28Swimmrg pools 1 1 1 1 2 2 2 2 2Tennis courts 20 20 20 20 20 20 20 20 20Baseball /softball darrcncts 26 26 26 26 26 26 26 26 26Soccer^ocrtoall fields 17 17 17 17 17 17 17 17 17Cncketfields 2 2 2 2 2 2 2 2 2

WaterFi re hy darts 3,IS 3,IS 3,153 3,IS 3,IS 3,IS 3,IS 3,IS 3,IS

WastawaerMiles of sanitary sewers 230 230 230 230 230 230 230 230 230Miles of storm sewers 310 310 310 310 310 310 310 310 310

L and Area (square m 1 es) 33 7 33 7 33 7 33 7 33 7 33 7 33 7 33 7 33 7Miles of waerfront 32 32 32 32 32 32 32 32 32

S ource C ity of Ri chrrond

Trees managed by liie City for 2013 to pasentDataPnorco 2013 mductestrees managed by ctfiereniDties, such asEastBa1 Regional Perk Disdici; Naional Parks endPnvady owned

250

2016

43

a 543

35620

55336651001

813261

282

202617

2

3 [THIS PAGE INTENTIONALLY LEFT BLANK]

230310

33 7 32

APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

The following is a brief summary of certain previsions of the Indenture. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the I ndenture. Reference i s di rected to the I ndenture for the compl ete text thereof. Copi es of the I ndenture are available from the City Clerk of the City of Richmond.

Definitions

“Accreted Value” means, with respect to any Capital Appreciation Indebtedness, the principal amount thereof plus the interest accrued thereon, compounded at the interest rate thereon on each date as specified therein.

“Annual Debt Service” means, for any Bond Year, the aggregate amount of principal and interest on all Bonds and Parity Debt becoming due and payable during such Bond Year calculated using the principles and assumptions set forth under the definition of Debt Service.

“Applicable Credit Provider” means the Credit Provider providing a Credit Facility for a particular Series of Bonds.

“Average Annual Debt Service” means, as of any date of calculation, an amount equal to (i) the Annual Debt Service remaining to be paid on all Bonds and Parity Debt on the date of calculation, divided by (ii) the number of Bond Years (or partial years) commencing with the Bond Year of the date of calculation to and including the Bond Year which includes the first date on which none of such Bonds or Parity Debt remains Outstanding. Such interest and principal will be calculated on the assumption that no Bonds or Parity Debt at the date of calculation will cease to be Outstanding except by reason of the payment when due of each principal installment (including mandatory sinking account payments).

“Balloon Indebtedness” means any Series of Bonds or Parity Debt 50% or more of the principal of which matures or is payable on the same date and which is not required by the instrument pursuant to which such Bonds or Parity Debt were issued to be amortized by payment or redemption prior to such date.

“Bond Obligation” means, as of any given date of calculation, (1) with respect to any Current Interest Indebtedness, the principal amount thereof, and (2) with respect to any Capital Appreciation Indebtedness, the Accreted Value thereof.

“Bond Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period thereafter selected and designated as the official fiscal year period of the City which designation will be provided to the Trustee in a Certificate of the City.

“Bonds” means the City of Richmond, California Wastewater Revenue Bonds authorized by, and at any time Outstanding pursuant to, the Indenture, including Credit Provider Bonds.

“Business Day” means any day other than (1) a Saturday, Sunday, or a day on which banking institutions in the State or the State of New York or California are authorized or obligated by law or executive order to be closed, and (2) for purposes of payments and other actions relating to Bonds secured by a letter of credit or supported by a liquidity facility, a day upon which commercial banks in the city in

C-l

which is located the office of the issuing bank at which demands for payment under such letter of credit or liquidity facility are to be presented are authorized or obligated by law or executive order to be closed.

“Capital Appreciation Indebtedness” means Bonds and Parity Debt on which interest is compounded and paid less frequently than annually.

“Certificate,” “Statement,” “Request,” ‘Requisition” or “Order” of the City mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the City by its City Manager, Finance Director or any other person authorized by the City Manager or Finance Director to execute such instruments. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined will be read and construed as a single instrument. If and to the extent required by the Indenture, certificates and opinions will include the statements provided for in the Indenture.

“Charter” means the City Charter of the City, as amended from time to time.

“City” means the City of Richmond, California.

“City Council” means the City Council of the City or any other legislative body of the City thereafter provided for pursuant to law.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

“Continuing Disclosure Agreement” means any Continuing Disclosure Agreement executed and delivered by the City relating to any Series of Bonds.

“Corporate Trust Office” or “corporate trust office” means the corporate trust office of the Trustee at 400 South Hope Sheet, Suite 500, Los Angeles, California 90071, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee.

“Credit Agreement” means, with respect to a Credit Facility, the agreement among the City, and the Applicable Credit Provider, as originally executed or as it may from time to time be replaced, supplemented or amended in accordance with the provisions of the Indenture, providing for the issuance of the Credit Facility and the reimbursement of the Credit Provider for drawings thereunder, and any subsequent agreement pursuant to which a substitute Credit Facility is provided, together with any related pledge agreement, security agreement or other security document.

“Credit Facility” means any letter of credit, guarantee, standby purchase agreement, bond insurance or other support arrangement or security or any combination of the foregoing, if any, provided by the Credit Provider pursuant to any Supplemental Indenture.

“Credit Provider” means the issuer or other provider of a Credit Facility with respect any series of the Bonds as provided for in any Supplemental Indenture, and the respective successors and assigns of the business thereof and any surviving, resulting or transferee entity with or into which it may be consolidated or merged or to which it may transfer all or substantially all of its business.

“Credit Provider Bonds” means any Bonds purchased pursuant to a Credit Facility as provided in any Supplemental Indenture for so long as such Bonds are held by or for the account of, or are pledged to, the Applicable Credit Provider in accordance with such Supplemental Indenture.

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“Current Interest Indebtedness” means Bonds and Parity Debt on which interest is paid at least annually.

‘"Debt Service” means, during any period of computation, the amount of principal and interest becoming due and payable on all Bonds and Parity Debt for such period, determined by totaling the following amounts:

(a) The Bond Obligation of all Outstanding Serial Bonds and all Parity Debt coming due and payable by their terms in such period;

(b) The minimum Bond Obligation of all Outstanding Term Bonds and all Parity Debt scheduled to be redeemed by operation of mandatory sinking fund deposits in such period, together with any premium thereon; and

(c) The interest which would be due during such period on the aggregate principal amount of Bonds and Parity Debt which would be Outstanding in such period if the Bonds or Parity Debt are retired as scheduled, but deducting and excluding from such aggregate amount the amount of Bonds or Parity Debt no longer Outstanding;

provided, that for the purposes of determining compliance with the requirements for issuance of additional Bonds or Parity Debt, the rate covenant contained in the Indenture and the amount of the Reserve Fund Requirement, the following provisions apply:

(i) Generally. Except as otherwise provided in subparagraph (ii) below with respect to Variable Interest Rate Indebtedness, in subparagraph (iii) below with respect to Bonds or Parity Debt with respect to which a Public Finance Contract is in force, and in subparagraph (iv) below with respect to Balloon Indebtedness, interest on any Bond or Parity Debt will be calculated based on the actual amount of interest that is payable under such Bond or Parity Debt;

(ii) Interest on Variable Interest Rate Indebtedness. Interest deemed to be payable on any Variable Interest Rate Indebtedness for periods when the actual interest rate can be determined will be the actual Variable Interest Rates and for periods when the actual interest rate cannot yet be determined will be calculated on the assumption that the interest rate on such Variable Interest Rate Indebtedness would be equal to (a) the average rate that accrued on such Variable Interest Rate Indebtedness over the preceding twelve (12) months, or (b) if the Variable Interest Rate Indebtedness has not been accruing interest at a variable rate for twelve (12) months, the average interest rate that accrued on any outstanding Variable Interest Rate Indebtedness for which interest is computed on substantially the same basis during the preceding twelve (12) month period, or (c) if no such comparable Variable Interest Rate Indebtedness was outstanding during the twelve (12) months preceding the date of calculation, then (x) if the interest on such Variable Interest Rate Indebtedness is excluded from gross income for purposes of Federal income taxation, 90% of the average rate of interest for The Bond Buyer Revenue Bond Index over the preceding twelve (12) months, or, if that index is no longer published, an interest rate equal to 80% of the yield for outstanding United States Treasury Bonds having an equivalent maturity as the Variable Rate Interest Indebtedness, or if there are no such Treasury Bonds having equivalent maturities, 80% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States, ranked by assets, and (y) if interest on such Variable Interest Rate Indebtedness is not excluded from gross income for purposes of Federal income taxation, 110% of the yield

C-3

for outstanding United States Treasury Bonds having an equivalent maturity as the Variable Rate Interest Indebtedness, or if there are no such United States Treasury Bonds having equivalent maturities, 110% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States, ranked by assets;

(iii) Interest on Bonds or Parity Debt With Respect to Which a Public Finance Contract Is in Force. Interest deemed to be payable on any Bonds or Parity Debt with respect to which a Public Finance Contract is in force will be based on the net economic effect on the City expected to be produced by the terms of such Bonds or Parity Debt and such Public Finance Contract, including but not limited to the effects that (a) such Bonds or Parity Debt would, but for such Public Finance Contract, be treated as an obligation bearing interest at a Variable Interest Rate instead will be treated as an obligation bearing interest at a fixed interest rate, and (b) such Bonds or Parity Debt would, but for such Public Finance Contract, be treated as an obligation bearing interest at a fixed interest rate instead will be treated as an obligation bearing interest at a Variable Interest Rate; and accordingly, the amount of interest deemed to be payable on any Bonds or Parity Debt with respect to which a Public Finance Contract is in force will be an amount equal to the amount of interest that would be payable at the rate or rates stated in such Bonds or Parity Debt plus the Public Finance Contract Payments minus the Public Finance Contract Receipts, and for the purpose of calculating as nearly as practicable the Public Finance Contract Receipts and the Public Finance Contract Payments under such Bonds or Parity Debt, the following assumptions will be made:

(1) City Obligated to Pay Net Variable Payments. If a Public Finance Contract has been entered into by the City with respect to Bonds or Parity Debt resulting in the payment of a net variable interest rate with respect to such Bonds or Parity Debt and Public Finance Contract by the City, the interest rate on such Bonds or Parity Debt for future periods when the actual interest rate cannot yet be determined will be assumed (but only during the period the Public Finance Contract is in effect) to be equal to the sum of (x) the fixed rate or rates stated in such Bonds or Parity Debt, minus (y) the fixed rate paid by the Qualified Counterparty to the City, plus (z) the lesser of (A) the interest rate cap, if any, provided by a Qualified Counterparty with respect to such Public Finance Contract (but only during the period that such interest rate cap is in effect) and (B) the applicable Variable Interest Rate calculated in accordance with subparagraph (ii) above; and

(2) City Obligated to Pay Net Fixed Payments. If a Public Finance Contract has been entered into by the City with respect to Bonds or Parity Debt resulting in the payment of a net fixed interest rate with respect to such Bonds or Parity Debt and Public Finance Contract by the City, the interest on such Bonds or Parity Debt will be included in the calculation of Debt Service (but only during the period the Public Finance Contract is in effect) by including for each Bond Year or twelve (12) calendar month period an amount equal to the amount of interest payable at the fixed interest rate pursuant to such Public Finance Contract;

(iv) Interest on Balloon Indebtedness. If any outstanding Bonds or Parity Debt constitute Balloon Indebtedness (and such Bonds or Parity Debt do not constitute Short-Term Indebtedness excluded from the calculation of the Debt Service pursuant to clause (v), below) or if Bonds or Parity Debt proposed to be incurred would constitute

C-4

Balloon Indebtedness (and such Bonds or Parity Debt would not constitute Short-Term Indebtedness excluded from the calculation of the Debt Service pursuant to clause (v), below), then such Balloon Indebtedness will be treated as if the principal amount of such Bonds or Parity Debt were amortized from the date originally incurred in substantially equal installments of principal and interest over a term of thirty (30) years; provided, however, that the full principal amount of such Balloon Indebtedness will be included in making such calculation if such principal amount is due within ninety (90) days of the date such calculation is being made); and, if interest accrues under such Balloon Indebtedness at other than a fixed rate, the interest rate used for such computation will be (x) if the interest on such Bonds or Parity Debt is excluded from gross income for purposes of Federal income taxation, 90% of the average rate of interest for The Bond Buyer Revenue Bond Index over the preceding twelve (12) months, or if that index is no longer published, an interest rate equal to 80% of the yield for outstanding United States Treasury Bonds having an equivalent maturity as the Bonds or Parity Debt on the date incurred, or if there are no such United States Treasury Bonds having equivalent maturities, 80% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States, ranked by assets, and (y) if the interest on such Bonds or Parity Debt is not excluded from gross income for purposes of Federal income taxation, the rate equal to 110% of the yield for outstanding United States Treasury Bonds having an equivalent maturity as the Balloon Indebtedness, or, if there are no such United States Treasury Bonds having equivalent maturities, 110% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States, ranked by assets;

(v) Exclusion of Certain Short-Term Indebtedness. If any outstanding Bonds or Parity Debt constitute Short-Term Indebtedness or if the Bonds or Parity Debt proposed to be issued would constitute Short-Term Indebtedness, and such Short-Term Indebtedness are or will be payable only out of Net Revenues of the Fiscal Year in which such Short-Term Indebtedness are incurred, then such Short-Term Indebtedness will be disregarded and not included in calculating Debt Service;

(vi) Credit for Accrued and Capitalized Interest. If amounts constituting accrued interest or capitalized interest have been deposited with a trustee for such Bonds or Parity Debt, then the interest payable from such amounts with respect to such Bonds or Parity Debt will be disregarded and not included in calculating Debt Service.

“Debt Service Coverage Ratio” means, for any period, the ratio determined by dividing Net Revenues by Debt Service for such period.

“Defeasance Securities”means:

(1) Cash (insured at all times by the Federal Deposit Insurance Corporation),

(2) Obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S. including:

• U.S. treasury obligations• All direct or fully guaranteed obligations• Farmers Home Administration• General Services Administration• Guaranteed Title XI financing

C-5

• Government National Mortgage Association (GNMA)• State and Local Government Series

Any security used for defeasance must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date). Any reinvestment of any security used for defeasance must be reinvested in Defeasance Securities.

“Enterprise” means any and all facilities of the City for the disposal or reuse of wastewater, including sewage treatment plants, intercepting and collecting sewers, outfall sewers, force mains, pumping stations, ejector stations, pipes, valves, machinery and all other appurtenances necessary, useful or convenient for the collection, treatment, purification or disposal of sewage, and any necessary lands, rights or way and other real or personal property useful in connection therewith.

“Event of Default” means any of the events specified as such in the Indenture as described under the caption “Events of Default” below.

“Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period thereafter selected and designated as the official fiscal year period of the City which designation shall be provided to the Trustee in a Certificate of the City.

“Generally Accepted Accounting Principles Applicable to Governments” means generally accepted accounting principles applicable to governments as promulgated by the Governmental Accounting Standards Board or its successor.

“Gross Revenues” means all gross income and revenue received by the City from the ownership and operation of the Enterprise, including (a) all fees and charges received by the City for the services of the Enterprise, (b) all other income and revenue howsoever derived by the City from the ownership and operation of the Enterprise or arising from the Enterprise, (c) all sums deposited, or required under the Indenture to be deposited, in the Wastewater Fund, including Subsidy Receipts, and (d) amounts transferred to the Wastewater Fund from the Rate Stabilization Fund pursuant to the Indenture; but excluding (x) the proceeds of any ad valorem property taxes received by the City to pay debt service on any outstanding obligations of the City, and (y) any contributed capital (other than connection fees)

“Indenture” means the Master Indenture, as originally executed and as it may from time to time be supplemented or amended by any Supplemental Indenture delivered pursuant to the provisions thereof.

“Independent Accountant” means any accountant or firm of such accountants appointed and paid by the City, and who, or each of whom-

(a) is in fact independent and not under domination of the City;

(b) does not have any substantial interest, direct or indirect, with the City; and

(c) is not connected with the City as an officer or employee of the City, but who maybe regularly retained to make annual or other audits of the books of or reports to the City.

“Information Services” means national information services that disseminate securities redemption notices; or, in accordance with then current guidelines of the Securities and Exchange

C-6

Commission, such other services providing information with respect to called bonds, or no such services as the City may designate in a written request delivered to the Trustee.

“Interest Fund” means the fund by that name established with the Trustee pursuant to the Indenture.

“Interest Payment Date” means, with respect to the Series 2017A Bonds, each February 1 and August 1, commencing February 1, 2018.

“Investment Securities” means the following:

(A) (1) Cash (insured at all times by the Federal Deposit Insurance Corporation),

(2) Obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S. including:

• U.S. treasury obligations• All direct or fully guaranteed obligations• Farmers Home Administration• General Services Administration• Guaranteed Title XI financing• Government National Mortgage Association (GNMA)• State and Local Government Series

Any security used for defeasance must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date).

(B) (1) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including:

-Export-Import Bank-Rural Economic Community Development Administration-U.S. Maritime Administration-Small Business Administration-U.S. Department of Housing & Urban Development (PHAs)-Federal Housing Administration-Federal Financing Bank

(2) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:

-Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC).

-Obligations of the Resolution Funding Corporation (REFCORP)-Senior debt obligations of the Federal Home Loan Bank System-Senior debt obligations of other Government Sponsored Agencies approved by the Applicable

Credit Provider

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(3) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-l” or “A-1+” by S&P and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank);

(4) Commercial paper which is rated at the time of purchase in the single highest classification, ‘P-l” by Moody’s and “A-1+” by S&P and which matures not more than 270 calendar days after the date of purchase;

(5) Investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P;

(6) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and

(A) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or

(B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph A(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(7) Municipal Obligations rated “Aaa/AAA” or general obligations of States with a rating of “A2/A” or higher by both Moody’s and S&P.

(8) Investment Agreements approved in writing by the Applicable Credit Provider (supported by appropriate opinions of counsel); and

(9) other forms of investments (including repurchase agreements) approved in writing by the Applicable Credit Provider.

(C) The value of the above investments shall be determined as follows:

a) For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at fair market value. The Trustee shall determine the fair market value based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, Merrill Lynch, Citigroup Global Markets Inc., Bear Steams, or Lehman Brothers.

b) As to certificates of deposit and bankers’ acceptances: the face amount thereof, plus, accrued interest thereon; and

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c) As to any investment not specified above: the value thereof established by prior agreement among the Issuer, the Trustee, and the Applicable Credit Provider.

“Master Indenture” means the Indenture, dated as of October 1, 2006, by and between the City and the Trustee.

“Maximum Annual Debt Service” means the greatest amount of principal and interest becoming due and payable on all Bonds and Parity Debt in the Bond Year in which the calculation is made or any subsequent Bond Year using the principles and assumptions set forth under the definition of Debt Service.

“Moody’s” means Moody’s Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, then the term “Moody’s” will be deemed to refer to any other nationally recognized securities rating agency selected by the City.

“Net Revenues” means, with respect to any period, the amount of Gross Revenues received during such period less the amount of Operating Expenses becoming payable during such period.

“Opinion of Bond Counsel” means a written opinion of a law firm of national standing in the field of public finance selected by the City.

“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under the Indenture except (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds with respect to which all liability of the City will have been discharged in accordance with the Indenture, including Bonds (or portions of Bonds) for which money has been set aside for the payment of the interest, principal or Redemption Price due as provided in the Indenture; and (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds will have been authenticated and delivered by the Trustee pursuant to the Indenture.

“Owner” or “Bondholder” or “Bondowner,” whenever used in the Indenture with respect to a Bond, means the person in whose name such Bond is registered.

“Parity Debt” means any indebtedness, installment sale obligation, lease obligation or other obligation of the City for borrowed money or certain designated payments under a Parity Public Finance Contract having an equal lien and charge upon the Net Revenues, therefore payable on a parity with the Bonds (whether or not any Bonds are Outstanding).

“Parity Public Finance Contract” means a Public Finance Contract which is designated as Parity Debt.

“Parity Reserve Fund” means the fund by that name established with the Trustee pursuant to the Indenture.

“Person” means an individual, a corporation, a partnership, a trust, an unincorporated organization or a government or any agency or political subdivision thereof.

“Principal Fund” means the fund by that name established with the Trustee pursuant to the Indenture.

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‘Public Finance Contract” means a written agreement for the purpose of managing or reducing the City’s exposure to fluctuations in interest rates or for any other interest rate, investment, asset or liability managing purposes, entered into either on a current or forward basis by the City and a Qualified Counterparty as authorized under any applicable laws of the State in connection with, or incidental to, the issuance of Bonds or Parity Debt, that provides for an exchange of payments based on interest rates, ceilings or floors on such payments, options on such payments or any combination thereof, or any similar device.

“Public Finance Contract Insurance Policy” means a surety bond or insurance policy issued by an insurance company for the account of the City, as principal, and for the benefit of such insurance company, as beneficiary, relating to a Public Finance Contract.

“Public Finance Contract Payments” means the regularly scheduled amounts periodically required to be paid by the City (excluding termination payments) to all Qualified Counterparties under all Parity Public Finance Contracts.

“Public Finance Contract Receipts” means the amounts periodically required to be paid by all Qualified Counterparties to the City under all Parity Public Finance Contracts.

“Qualified Counterparty” means a party (other than the City or a party related to the City) who is the other party to a Public Finance Contract and (1) (A) who is rated at least “A2” from Moody’s and “A” from Standard & Poor’s, or (B) whose senior debt obligations are rated at least “A2” from Moody’s and “A” from Standard & Poor’s, or guaranteed by an entity so rated, or (C) whose obligations under the Public Finance Contract are guaranteed for the entire term of the Public Finance Contract by a bond insurer or other institution which has been assigned a credit rating at least equal to “A2” from Moody’s and “A” from Standard & Poor’s, or (D) whose obligations under the Public Finance Contract are collateralized in such a manner as to obtain a rating at least equal to the ratings assigned by each of the Rating Agencies to the Bonds or Parity Debt to which such Public Finance Contract relates, and (2) who is otherwise qualified to act as the other party to a Public Finance Contract under all applicable laws of the State.

“Rate Stabilization Fund” means the fund by that name established and maintained by the City pursuant to the Indenture.

“Rating Agency” means S&P Global Ratings (“S&P”), or in the event that S&P no longer maintains a rating on the Series 2017A Bonds, any other nationally recognized rating agency then maintaining a rating on such Series 2017A Bonds.

“Rating Category” means (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier.

“Rebate Fund” means the fund by that name established with the Trustee pursuant to the Indenture.

“Record Date” means, with respect to the Series 2017A Bonds, the fifteenth day of the month preceding an Interest Payment Date.

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“Redemption Fund” means the fund by that name established with the Trustee pursuant to the Indenture.

“Redemption Price” means, with respect to any Bond (or portion thereof) the Bond Obligation of such Bond (or portion thereof) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and the Indenture.

“Reserve Fund Requirement” means, as of any date of determination and excluding any Parity Debt for which no reserve fund is to be maintained or for which a separate reserve fund is to be maintained, the lesser of (a) the Maximum Annual Debt Service on all Bonds and Parity Debt to be secured by the Parity Reserve Fund, or (b) one hundred twenty-five percent (125%) of the Average Annual Debt Service on all Bonds and Parity Debt to be secured by the Parity Reserve Fund; provided that in no event shall the deposit to the Parity Reserve Fund with respect to any Series of Bonds or Parity Debt to be secured by the Parity Reserve Fund be an amount greater than ten percent (10%) of the initial offering price to the public of each Series of Bonds and any Parity Debt to be secured by the Parity Reserve Fund as determined under the Code, all as computed and determined by the City and specified in writing to the Trustee.

“Serial Bonds” means Bonds, maturing in specified years, for which no mandatory sinking fund payments are provided.

“Series” whenever used in the Indenture with respect to Bonds, means all of the Bonds designated as being of the same series, authenticated and delivered in a simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange or in lieu of or in substitution for (but not to refund) such Bonds as provided in the Indenture.

“Series 2017A Bonds” means the City of Richmond, California Wastewater Revenue Bonds, Series 2017A Bonds, as described in the Sixth Supplemental Indenture.

“Series 2017A Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement entered into by the City, the Trustee and Willdan Financial Services, as dissemination agent, on the date of issuance and delivery of the Series 2017A Bonds, as originally executed and as it may be amended or supplemented from time to time in accordance with the terms thereof.

“Series 2017A Costs of Issuance Fund” means the fund by that name established pursuant to the Sixth Supplemental Indenture.

“Series 2017A Project Fund” means the fund by that name established pursuant to the Sixth Supplemental Indenture.

“Short-Term Indebtedness” means Bonds or Parity Debt having an original maturity of less than or equal to one year and which are not renewable at the option of the City for a term greater than one year beyond the date of original incurrence.

“Standard & Poor’s” means Standard & Poor’s, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that if such corporation will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, then the term “Standard & Poor’s” will be deemed to refer to any other nationally recognized securities rating agency selected by the City.

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“State” means the State of California

“Sixth Supplemental Indenture” means the Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of August 1, 2017, by and between the City and the Trustee.

“Supplemental Indenture” means any indenture thereafter duly executed and delivered, supplementing, modifying or amending the Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indenture.

“Tax Certificate” means the Tax Certificate delivered by the City at the time of issuance and delivery of any Series of Bonds, as the same may be amended or supplemented in accordance with its terms.

“Term Bonds” means Bonds payable at or before their specified maturity date or dates from mandatory sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity date or dates.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., acting as trustee under the Indenture, or its successor, as Trustee, as provided in the Indenture.

“Variable Interest Rate” means any variable interest rate or rates to be paid under any Bonds or Parity Debt, the method of computing which variable interest rate will be as specified in the Supplemental Indenture providing for the issuance of the applicable Bonds or the instrument providing for the issuance of the Parity Debt, which Supplemental Indenture or other instrument will also specify either (i) the payment period or periods or time or manner of determining such period or periods or time for which each value of such variable interest rate will remain in effect, and (ii) the time or times based upon which any change in such variable interest rate will become effective, and which variable interest rate may, without limitation, be based on the interest rate on certain bonds or may be based on interest rate, currency, commodity or other indices.

“Variable Interest Rate Indebtedness” means, for any period of time, any Bonds or Parity Debt that bear a Variable Interest Rate during such period, except that no Bonds or Parity Debt will be treated as a Variable Interest Rate Indebtedness if the net economic effect of a Public Finance Contract with respect to any particular Bonds or Parity Debt is to produce obligations that bear interest at a fixed interest rate, and any Bonds or Parity Debt with respect to which a Public Finance Contract is in force will be treated as a Variable Interest Rate Indebtedness if the net economic effect of the Public Finance Contract is to produce obligations that bear interest at a Variable Interest Rate.

“Wastewater Fund” means the existing fund by that name established and held by the City with respect to the Enterprise.

Issuance of Bonds and Parity Debt

I ssuance of Bonds. The City may by Supplemental Indenture establish one or more Series of Bonds payable from Net Revenues and secured by the pledge made under the Indenture equally and ratably with Bonds previously issued, and the City may issue, and the Trustee may authenticate and deliver to the purchasers thereof, Bonds of any Series so established, in such principal amount as will be determined by the City, but only, with respect to each Series of Bonds, upon compliance by the City with the provisions of the Indenture described under the caption “Issuance of Bonds and Parity Debt- Proceedings for Issuance of Additional Series of Bonds” (except any Series of Bonds delivered under a Supplemental Indenture of even date therewith may be issued upon compliance by the City with the

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requirements of provision (c) of the Indenture described under the caption “Issuance of Bonds and Parity Debt-Proceedings for Issuance of Additional Series of Bonds” and without further condition) and any additional requirements set forth in said Supplemental Indenture and subject to the following specific conditions, which are thereby made conditions precedent to the issuance of any such additional Series of Bonds:

(a) no Event of Default shall have occurred and then be continuing;

(b) the aggregate principal amount of Bonds issued thereunder shall not exceed any limitation imposed by law or otherwise;

(c) there shall be deposited in the Parity Reserve Fund an amount of money so as to increase the amount on deposit therein to the Reserve Fund Requirement; and

(d) As demonstrated in a Certificate of the City delivered to the Trustee, either (i) the Debt Service Coverage Ratio for the most recent Fiscal Year for which audited financial statements for the Enterprise are available (based on the Debt Service payable during the Bond Year which commenced in such Fiscal Year), calculated as of the date of sale of such additional Series of Bonds and including the Bonds and Parity Debt then Outstanding and such additional Series of Bonds, will not be less than 1.25:1.0; provided that in calculating the Debt Service Coverage Ratio:

(1) if rates, fees and charges fixed and prescribed for the Enterprise in effect on the date upon which such additional Series of Bonds will become Outstanding will be greater than those in effect during the most recent Fiscal Year for which audited financial statements are available, then the Net Revenues for said Fiscal Year may be augmented by 100% of the estimated increase in Net Revenues computed to accrue to the Enterprise in the first twelve months during which such rates, fees and charges will be in effect; and

(2) Net Revenues may be augmented by 100% of the projected increase in annual Net Revenues to be provided by additional facilities under construction (financed from any source) or to be acquired with the proceeds of the additional Series of Bonds then being issued;

or (ii):

(1) the Debt Service Coverage Ratio for the most recent Fiscal Year for which audited financial statements are available (based on the Debt Service payable during the Bond Year which commenced in such Fiscal Year), including the Bonds and Parity Debt then Outstanding but not such additional Series of Bonds, was at least equal to 1.25:1.0; and

(2) the Debt Service Coverage Ratio for each of the three (3) full Fiscal Years (based on the Debt Service payable during the Bond Year which commenced in each such Fiscal Year) beginning with the first full Fiscal Year in which such additional Series of Bonds are issued (or, if later, the first full Fiscal Year in which less than ten percent (10%) of the interest coming due on such additional Series of Bonds is to be paid from the proceeds of such additional Series of Bonds) is projected (based on approved rates, fees and charges) to be at least equal to 1.25:1.0.

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Proceedings for Issuance of Additional Series of Bonds. Whenever the City shall determine to issue a Series of Bonds pursuant to the provisions of the Indenture described under the caption ‘Issuance of Bonds and Parity Debt-Issuance of Bonds,” the City shall authorize the execution of a Supplemental Indenture specifying the principal amount, and prescribing the form or forms of Bonds of such additional Series and providing the terms, conditions, distinctive designation, denominations, date, maturity date or dates, interest rate or rates (or the manner of determining the same), redemption provisions and place or places of payment of principal, Accreted Value or Redemption Price, if any, of and interest on such Bonds, and any other provisions respecting the Bonds of such Series not inconsistent with the terms of the Indenture.

Before such additional Series of Bonds shall be issued and delivered, the City shall file the following documents with the Trustee (upon which documents the Trustee may conclusively rely in determining whether the conditions precedent to the issuance of such Series of Bonds have been satisfied):

(a) an executed copy of the Supplemental Indenture authorizing such Series;

(b) a Certificate of the City stating that no Event of Default has occurred and is then continuing;

(c) an Opinion of Bond Counsel to the effect that the execution of the Supplemental Indenture has been duly authorized by the City in accordance with the Indenture; that such Series, when duly executed by the City and authenticated and delivered by the Trustee, will be valid and binding limited obligations of the City, and that upon the delivery of such Series the aggregate principal amount of Bonds then Outstanding will not exceed the amount permitted by law or otherwise; and

(d) the Certificate of the City required by provision (d) of the Indenture described under the caption “Issuance of Bonds and Parity Debt-Issuance of Bonds.”

I ssuance of Refunding Bonds. Notwithstanding any provisions in the Indenture, there will be no limitation on the ability of the City to issue any Bonds at any time to refund any outstanding Bonds or Parity Debt; provided, however, that the Maximum Annual Debt Service with respect to any such refunding Bonds will not exceed 1.10 times the Maximum Annual Debt Service with respect to the Bonds or Parity Debt being refunded.

Limitations on the Issuance of Obligations The City will not, so long as any of the Bonds are Outstanding, issue any obligations or securities, howsoever denominated, payable in whole or in part from Net Revenues, except the following:

(a) Bonds of any Series authorized pursuant to the Indenture as described under the captions “Issuance of Bonds and Parity Debt-Issuance of Bonds” and ‘Issuance of Bonds and Parity Debt-Proceedings for Issuance of Additional Series of Bonds” above;

(b) refunding Bonds authorized pursuant to the Indenture as described under “Issuance of Refunding Bonds” above.

(c) Parity Debt payable on a parity with the Bonds and which will have, when issued, an equal lien and charge upon the Net Revenues, provided that the following conditions to the issuance of such Parity Debt are satisfied:

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(1) such Parity Debt has been duly and legally authorized for any lawful purpose;

(2) no Event of Default shall have occurred and then be continuing, as evidenced in a Certificate of the City filed with the Trustee;

(3) unless such Parity Debt is for the refunding purposes, the City will have obtained and placed on file with the Trustee a Certificate of the City that (on the basis of calculations as of the date of delivery of such Parity Debt) the requirements of provision (d) of the Indenture as described under the caption “Issuance of Bonds and Parity Debt- Issuance of Bonds” with respect to additional Bonds have been met with respect to such Parity Debt;

(4) the City will have filed with the Trustee an Opinion of Bond Counsel to the effect that such Parity Debt has been duly authorized in accordance with law and constitutes a valid and binding obligation of the City payable from Net Revenues on a parity with the Bonds; and

(5) the Trustee will be designated as paying agent or trustee for such Parity Debt and the City will deliver to the Trustee a transcript of the proceedings providing for the issuance of such Parity Debt (but the Trustee will not be responsible for the validity or sufficiency of such proceedings or such Parity Debt); or

(d) Obligations which are junior and subordinate to the payment of the principal, Accreted Value, premium, interest and reserve fund requirements for the Bonds and all Parity Debt and which subordinated obligations are payable as to principal, Accreted Value, premium, interest and reserve fund requirements, if any, only out of Net Revenues, after the prior payment of all amounts then required to be paid under the Indenture from Net Revenues, for principal, Accreted Value, premium, interest and reserve fund requirements for the Bonds and all Parity Debt, as the same become due and payable and at the times and in the manner as required in the Indenture.

Net Revenues

Application of I nterest F und. All amounts in the Interest Fund will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it will become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to the Indenture). In addition if so directed by the City, the Trustee may deposit into the Interest Fund, Public Finance Contract Receipts of the City and may pay from the Interest Fund, Public Finance Contract Payments on behalf of the City.

Application of Principal Fund (A) All amounts in the Principal Fund will be used and withdrawn by the Trustee solely for the purposes of paying the Bond Obligation of the Bonds when due and payable, except that all amounts in the Sinking Accounts will be used and withdrawn by the Trustee solely to purchase or redeem or pay at maturity Term Bonds, as provided in the Indenture.

(B) The Trustee will establish and maintain within the Principal Fund a separate sinking account for the Term Bonds of each Series and maturity. On or before the Business Day prior to any date upon which a mandatory sinking fund payment is due, the Trustee will transfer the amount of such mandatory sinking fund payment (being the principal thereof, in the case of Current Interest Bonds and the Accreted Value, in the case of Capital Appreciation Bonds from the Principal Fund to the applicable

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Sinking Account. With respect to each Sinking Account, on each mandatory sinking fund payment date established for such Sinking Account, the Trustee will apply the mandatory sinking fund payment required on that date to the redemption of Term Bonds of such Series and maturity for which such Sinking Account was established, in the manner provided in the Supplemental Indenture pursuant to which such Series of Bonds was created; provided that, at any time prior to giving such notice of such redemption, the Trustee will, upon receipt of a Request of the City, apply moneys in such Sinking Account to the purchase of Term Bonds of such Series and maturity at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as is directed by the City, except that the purchase price (excluding accrued interest, in the case of Current Interest Bonds) will not exceed the principal amount or Accreted Value thereof If the Trustee has purchased Term Bonds of such Series and maturity with moneys in such Sinking Account, or purchased or redeemed Term Bonds of such Series and maturity at any time from the Redemption Fund and allocable to said mandatory sinking fund payment, or if the City has purchased or otherwise acquired Term Bonds and deposited such Term Bonds with the Trustee, such Term Bonds so purchased or deposited or redeemed by the Trustee or the City will be applied, to the extent of the full principal amount thereof, to reduce said mandatory sinking fund payment. All Term Bonds so purchased or deposited as described in the Indenture will be cancelled and destroyed by the Trustee. Any amounts remaining in a Sinking Account when all of the Term Bonds for which such account was established are no longer Outstanding will be withdrawn by the Trustee and transferred to the City to be deposited in the Wastewater Fund. All Term Bonds so purchased will be allocated first to the next succeeding mandatory sinking fund payment for such Series and maturity of Term Bonds, then as a credit against such future mandatory sinking fund payment for such Series and maturity of Term Bonds as may be specified in a Request of the City. All Term Bonds redeemed from the Redemption Fund will be credited to such future mandatory sinking fund payment for such Series and maturity of Term Bonds as may be specified in a Request of the City.

Application of Redemption Fund The Trustee will establish, maintain and hold in trust a special fund designated as the “Redemption Fund” when required. All moneys deposited by the City with the Trustee for the purpose of redeeming Bonds of any Series pursuant to optional redemption or special mandatory redemption provisions applicable to such Series of Bonds will, unless otherwise directed by the City, be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund will be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds of such Series, in the manner, at the times and upon the terms and conditions specified in the Supplemental Indenture pursuant to which such Series of Bonds was created; provided that, at any time prior to giving notice of such redemption, the Trustee will, upon receipt of a Request of the City, apply such amounts to the purchase of Bonds of such Series at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding, in the case of Current Interest Bonds, accrued interest, which is payable from the Interest Account) as is directed by the City, except that the purchase price (exclusive of such accrued interest) may not exceed the Redemption Price then applicable to such Bonds. All Term Bonds purchased or redeemed from the Redemption Fund will be allocated to mandatory sinking fund payments applicable to such Series and maturity of Term Bonds as may be specified in a Request of the City.

Parity Reserve Fund. (A) The Trustee will establish and maintain and hold in trust so long as Bonds or Parity Debt to be secured thereby remain outstanding, a special fund designated as the ‘"Parity Reserve Fund.” Amounts on deposit in the Parity Reserve Fund are pledged to the payment of the Bonds and any Parity Debt to be secured by the Parity Reserve Fund and will be applied only for such purposes as permitted in the Indenture. The Trustee will deposit in the Parity Reserve Fund, upon the direction of the City, the Reserve Fund Requirement and such other amounts transferred to the Trustee by the City pursuant to the Indenture. No deposit need be made in the Parity Reserve Fund so long as there will be on deposit therein a sum equal to at least the amount to be on deposit therein as described in this paragraph. Whenever the amount on deposit in the Parity Reserve Fund is less than the Reserve Fund

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Requirement, notice thereof will be provided by the City to the insurer of the Bonds, if any, and such amount will be increased by the City to the Reserve Fund Requirement as described in this paragraph not later than twelve months thereafter. Moneys on deposit in the Parity Reserve Fund (including all amounts that may be obtained from letters of credit and surety bonds and insurance policies, as provided below, on deposit in the Parity Reserve Fund) will be transferred by the Trustee to the Principal Fund and Interest Fund to pay principal of and interest on the Bonds on any interest payment date in the event amounts on deposit therein are insufficient for such purposes. The Trustee will also, from such amounts on deposit in the Parity Reserve Fund, transfer or cause to be transferred to any applicable debt service fund for any Parity Debt to be secured by the Parity Reserve Fund, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without discrimination or preference, that sum or sums, if any, equal to the amount required to be deposited therein pursuant to the documents under which any such Parity Debt to be secured by the Parity Reserve Fund is issued or incurred. Amounts on deposit in the Parity Reserve Fund in excess of the Reserve Fund Requirement will, at the written Request of the City, be withdrawn from the Parity Reserve Fund and transferred to the City.

(B) The City may provide for all or any part of the Reserve Fund Requirement by delivering to the Trustee an irrevocable letter of credit issued by a financial institution having unsecured debt obligations rated in one of the two highest Rating Categories of Moody’s and Standard & Poor’s, securing an amount, together with moneys, Investment Securities or surety bonds or insurance policies (as described in the succeeding paragraph under this caption “Net Revenues-Parity Reserve Fund” on deposit in the Parity Reserve Fund, equal to the Reserve Fund Requirement. Such letter of credit will have an original term of no less than three (3) years or, if less, the final maturity of the Bonds and such letter of credit will provide by its terms that it may be drawn upon as provided in the Indenture. At least one year prior to the stated expiration of such letter of credit, the City will either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year or, if less, the maturity of the Bonds or (iii) deliver to the Trustee a surety bond or an insurance policy satisfying the requirements described in the succeeding paragraph under this caption “Net Revenues-Parity Reserve Fund”. Upon delivery of such replacement letter of credit, extended letter of credit, or surety bond or insurance policy, the Trustee will deliver the then effective letter of credit to or upon the order of the City. If the City fails to deposit a replacement letter of credit, extended letter of credit, surety bond or insurance policy with the Trustee, the City will immediately commence to make monthly deposits with the Trustee so that an amount equal to the Reserve Fund Requirement will be on deposit in the Parity Reserve Fund no later than the stated expiration date of the letter of credit. If an amount equal to the Reserve Fund Requirement, calculated as of the date following the expiration of the letter of credit, is not on deposit in the Parity Reserve Fund one week prior to the stated expiration date of the letter of credit (excluding from such determination the letter of credit), the Trustee will draw on the letter of credit to fund the amount of any such deficiency in the Parity Reserve Fund.

(C) The City may also provide for all or any part of the Parity Reserve Fund by delivering to the Trustee a surety bond or an insurance policy securing an amount, together with moneys, Investment Securities or letters of credit on deposit in the Parity Reserve Fund, equal to the Reserve Fund Requirement. Such surety bond or insurance policy will be issued by an insurance company whose unsecured debt obligations (or obligations secured by such insurance company’s insurance policies) are rated in one of the two highest Rating Categories of Moody’s and Standard & Poor’s. Such surety bond or insurance policy will have a term of no less than the final maturity of the Bonds. In the event that such surety bond or insurance policy for any reason lapses or expires, the City will immediately implement the actions described in clause (i) or (iii) of the immediately preceding paragraph under this caption “Net Revenues-Parity Reserve Fund” above or make the required deposits to the Parity Reserve Fund. Repayment of any draw under any such surety bond or insurance policy, and any expenses and accrued interest related to such draw (collectively the “Policy Costs”) will commence in the first month following

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each such draw, and will be paid at the time specified in the first paragraph under this caption “Net Revenues-Parity Reserve Fund” above in an amount not less than one-twelfth (l/12th) of the aggregate of the Policy Costs related to such draw. If and to the extent that cash has also been deposited in the Parity Reserve Fund, all such cash will be used (including investments purchased with such cash, which will be liquidated and the proceeds thereof applied as required under the Indenture) prior to any drawing under surety bond or insurance policy, and repayment of any Policy Costs will be made prior to any replenishment of any such cash amounts. If the City fails to repay any Policy Costs in accordance with the Indenture, the insurance company issuing such surety bond or insurance policy will be entitled to exercise any and all remedies available at law or under the Indenture other than (i) an acceleration of the interest on or principal of the Bonds as provided in the Indenture or (ii) any other remedy that would adversely affect Bondholders. The Trustee will ascertain the necessity for a claim upon any surety bond or insurance policy provided pursuant to the provisions of the Indenture described under this caption “Net Revenues-Parity Reserve Fund” and provide notice to the insurance company issuing such bond or policy in accordance with the terms and conditions of such bond or insurance policy not less than two (2) Business Days prior to any interest payment date upon which such a claim should be paid.

(D) In the event of any deficiency in the Principal Fund or Interest Fund for the payment of principal and interest payments for the Bonds pursuant to clause (A) above, the Trustee will, after first applying all cash and Investment Securities held in the Parity Reserve Fund to pay the Bond Obligation of, any mandatory sinking fund payments with respect to, and interest on, the Bonds when due, on a pro rata basis with respect to the portion of the Parity Reserve Fund held in the form of letters of credit and amounts held in the form of surety bonds and insurance policies (calculated by reference to the maximum amounts of such letters of credit and surety bonds and insurance policies), draw under each letter of credit or surety bond or insurance policy issued with respect to the Parity Reserve Fund, in a timely manner and pursuant to the terms of such letter of credit or surety bond or insurance policy to the extent necessary in order to obtain sufficient funds on or prior to the date such funds are needed to pay the Bond Obligation of, any mandatory sinking fund payments with respect to, and interest on, the Bonds when due. In the event that the Trustee has written notice from the City or any Bondholder that any payment of principal of, or interest on, a Bond has been recovered from a Bondholder pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee, pursuant to and provided that the terms of the letter of credit or surety bond or insurance policy, if any, credited to the Parity Reserve Fund so provide, will so notify the issuer thereof and draw on such letter of credit or surety bond or insurance policy to the lesser of the extent required or the maximum amount of such letter of credit or surety bond or insurance policy in order to pay to such Bondholder the principal of and interest so recovered. All amounts in the Parity Reserve Fund (other than amounts that may be obtained from letters of credit and surety bonds and insurance policies on deposit in the Parity Reserve Fund) may be used and withdrawn by the Trustee, if so directed by the City, for the payment or redemption of all Bonds then Outstanding, or for the payment of the final principal and interest payments of the Bonds.

I nvestment of Moneys i n F unds and Accounts. All moneys in any of the funds and accounts held by the Trustee and established pursuant to the Indenture will be invested, as directed by the City, solely in Investment Securities; provided, however, that Investment Securities (other than those described in clauses (B)(8) or (B)(9) of the definition thereof) purchased with moneys held by the Trustee in the Parity Reserve Fund will have an average weighted term to maturity not greater than five years. All Investment Securities will, as directed by the City in writing or by telephone, promptly confirmed in writing, be acquired subject to the limitations as to maturities set forth in the Indenture and such additional limitations or requirements consistent with the foregoing as may be established by Request of the City. The Trustee may conclusively rely upon any investment direction from the City as a certification to the Trustee that such investment constitutes an Investment Security. If and to the extent the Trustee does not receive investment instructions from the City with respect to the moneys in the funds and accounts held

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by the Trustee pursuant to the Indenture, such moneys will be invested in Investment Securities described in clause (B)(5) of the definition thereof and the Trustee will thereupon request investment instructions from the City for such moneys.

Unless otherwise provided in the Indenture or in a Supplemental Indenture, all interest, profits and other income received from the investment of moneys in any fund or account, other than the Rebate Fund, will be transferred by the Trustee to the City for deposit in the Wastewater Fund when received. All interest, profits and other income received from the investment of moneys in the Rebate Fund will be deposited in the Rebate Fund, except as otherwise provided in the Indenture. Notwithstanding anything to the contrary contained in the Indenture, an amount of interest received with respect to any Investment Security equal to the amount of accrued interest, if any, paid as part of the purchase price of such Investment Security will be credited to the fund or account from which such accrued interest was paid.

The Trustee may commingle any of the funds or accounts established pursuant to the Indenture into a separate fund or funds for investment purposes only, provided that all funds or accounts held by the Trustee under the Indenture will be accounted for separately as required by the Indenture. The Trustee may act as principal or agent in the making or disposing of any investment and, with the prior written consent of the City, may impose its customary charge therefor. The Trustee may sell or present for redemption, any Investment Securities so purchased whenever it will be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Security is credited, and the Trustee will not be liable or responsible for any loss resulting from such investment.

The Trustee may make any investments under the Indenture through its own bond or investment department or trust investment department, or those of its parent or any affiliate.

The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee under the Indenture.

Covenants

Pursuant to the Indenture, the City has covenanted as follows:

Punctual Payment The City will punctually pay or cause to be paid the principal, Accreted Value or Redemption Price of and interest on all the Bonds, in strict conformity with the terms of the Bonds and of the Indenture, according to the true intent and meaning thereof, and will punctually pay or cause to be paid all mandatory sinking fund payments, but in each case only out of Net Revenues, as provided in the Indenture.

Operation of Enterprise in Efficient and Economical Manner. The City covenants and agrees to operate the Enterprise in an efficient and economical manner and to operate, maintain and preserve the Enterprise in good repair and working order.

Waiver of Laws. The City will not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time thereafter in force that may affect the covenants and agreements contained in the Indenture or in the Bonds, and all benefit or advantage of any such law or laws is expressly waived by the City to the extent permitted by law.

Further Assurances. The City will make, execute and deliver any and all such instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the

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performance of the Indenture and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in the Indenture.

Discharge of Claims. The City covenants that in order to fully preserve and protect the priority and security of the Bonds, the City will pay from the Gross Revenues and discharge all lawful claims for labor, materials and supplies furnished for or in connection with Enterprise which, if unpaid, may become a lien or charge upon the Gross Revenues or the Net Revenues prior or superior to the lien of the Bonds and impair the security of the Bonds. The City will also pay from the Gross Revenues all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect of the Enterprise or upon any part thereof or upon any of the Gross Revenues or the Net Revenues therefrom.

Against Sale, Eminent Domain. Except as provided in the Indenture or in any documents relating to Parity Debt, the City covenants that the property, facilities and improvements of the Enterprise will not be mortgaged or otherwise encumbered, sold, leased, pledged, any charge placed thereon, or disposed of as a whole or substantially as a whole unless: (a) the City will cause to be filed with the Trustee written evidence from each Rating Agency that such sale or other disposition will not cause a reduction or withdrawal of the rating then assigned to the Bonds by each such Rating Agency; (b) such sale or other disposition will be so arranged as to provide for a continuance of payments into the Wastewater Fund sufficient in amount to permit payment therefrom of the principal, Accreted Value and interest on and premiums, if any, due upon the call and redemption, thereof, of the Outstanding Bonds, and also to provide for such payments into the funds as are required under the terms of the Indenture and any Supplemental Indenture; and (c) the City will have filed with the Trustee an opinion of nationally- recognized bond counsel to the effect that such sale or other disposition will not adversely affect the exemption from federal income taxation of interest on the Bonds. The City further covenants that the Net Revenues or any other funds pledged or otherwise made available to secure payment of the principal, Accreted Value and interest on the Outstanding Bonds will not be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed of or used except as authorized by the terms of the Indenture. The City further covenants that it will not enter into any agreement which impairs the operation of the Enterprise or any part of it necessary to secure adequate Net Revenues to pay the principal, Accreted Value and interest of the Bonds or which otherwise would impair the rights of the Bond Owners with respect to the Net Revenues. If any substantial part of the Enterprise is sold the payment therefor will either be used for the acquisition and/or construction of improvements and extensions of the Enterprise or will be deposited with the Trustee and will be used to redeem the Outstanding Bonds and Parity Debt in respective amounts and on the respective dates identified by the City in writing.

The City covenants that any amounts received as awards as a result of the taking of all or any part of the Enterprise by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, will either (a) be used for the acquisition and or construction of improvements and extension of the Enterprise, or (b) be deposited with the Trustee (in an amount required to redeem the maximum amount of Outstanding Bonds and Parity Debt) to be used to pay or redeem the Outstanding Bonds and Parity Debt in respective amounts and on the respective dates identified by the City in writing.

I nsurance. The City covenants that it will at all times maintain with responsible insurers all such insurance on the Enterprise as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Enterprise is damaged or destroyed, such part will be restored to use. The money collected from insurance against accident to or destruction of the physical Enterprise will either (a) be used for repairing or rebuilding the damaged or destroyed Enterprise, and to the extent not so applied will be deposited with the Trustee (in an amount required to redeem the maximum amount of Outstanding Bonds and Parity

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Debt) to be used to pay or redeem the Outstanding Bonds and Parity Debt in respective amounts and on the respective dates identified by the City in writing.

Any such insurance will be in the form of policies or contracts for insurance with insurers of good standing and will be payable to the City, or may in the form of self-insurance by the City. The City will establish such fund or funds or reserves as are necessary to provide for its share of any such self- insurance. The City will file or cause to be filed with the Trustee, annually within one hundred twenty (120) days after the close of each Fiscal Year, a Certificate of the City (a) stating that the City is then in compliance with the requirements of the Indenture described under this caption “Covenants-Insurance”, and (b) stating whether during the preceding Bond Year any loss has been incurred with respect to the Enterprise and, it so, the amount of insurance proceeds, including the proceeds of any self-insurance fund covering such loss and specifying the reasonable and necessary costs of repair, reconstruction or replacement thereof.

Records and Accounts The City covenants that it will keep proper books of record and accounts of the Enterprise, separate from all other records and accounts, in which complete and correct entries will be made of all transactions relating to the Enterprise. Said books will, upon reasonable request, be subject to the inspection of the Owners of not less than ten percent (10%) of the Outstanding Bonds or their representatives authorized in writing.

The City covenants that it will cause the books and accounts of the Enterprise to be audited annually by an Independent Accountant and will make available for inspection by the Bond Owners at the Trust Office of the Trustee, upon reasonable request, a copy of the report of such Independent Accountant.

No Priority for Additional Obligations The City covenants that no additional bonds, notes or other indebtedness will be issued or incurred having any priority in payment of principal, Accreted Value or interest out of the Net Revenues over the Bonds. Nothing in the Indenture will prohibit or impair the authority of the City to issue bonds or other obligations which are unsecured or which are secured by a lien on Net Revenues which is subordinate to the lien established under the Indenture, upon such terms and in such principal amount as the City may determine.

Tax Covenants. In the Indenture, the City covenants with the Owners of the Bonds that, notwithstanding any other provisions of the Indenture, it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103 of the Code. The City will not, directly or indirectly, use or permit the use of proceeds of the Bonds or any of the property financed or refinanced with proceeds of the Bonds, or any portion thereof, by any person other than a governmental unit (as such term is used in Section 141 of the Code), in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest on the Bonds.

Events of Default and Remedies of Bondholders

Events of Default. The following events will be Events of Default under the Indenture:

(a) default in the due and punctual payment of the principal, Accreted Value or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise in the amounts and at the times provided therefor;

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(b) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable;

(c) failure by the City to observe or perform any covenant, condition, agreement or provision in the Indenture on its part to be observed or performed, other than as referred to in (a) or (b) under this caption ‘"Events of Default and Remedies of Bondholders-Events of Default”, for a period of thirty (30) days after written notice, specifying such failure and requesting that it be remedied, has been given to the City by the Trustee; except that, if such failure can be remedied but not within such thirty (30) day period and if the City has taken all action reasonably possible to remedy such failure within such thirty (30) day period, such failure shall not become an Event of Default for so long as the City shall diligently proceed to remedy the same in accordance with and subject to any directions or limitations of time established by the Trustee or any insurer of the Bonds;

(d) default by the City under any agreement governing any Parity Debt and the continuance of such default beyond the therein stated grace period, if any, with respect to such default;

(e) the filing by the City of a petition in voluntary bankruptcy for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or an assignment by the City for the benefit of creditors, or the admission by the City in writing to its insolvency or inability to pay debts as they mature, or the consent by the City in writing to the appointment of a trustee or receiver for itself;

(f) the entering by a court of competent jurisdiction of an order, judgment or decree declaring the City insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the City, or approving a petition filed against the City seeking reorganization of the City under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof; or

(g) the assumption, under the provisions of any other law for the relief or aid of debtors, by any court of competent jurisdiction of custody or control of the City or of the Net Revenues and such custody or control shall not be terminated within sixty (60) days from the date of assumption of such custody or control.

Application of Net Revenues and Other Funds After Default; Acceleration. If an Event of Default shall occur and be continuing, the City shall immediately transfer to the Trustee all Net Revenues held by it and received thereafter and the Trustee shall apply all Net Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of the Indenture (except as otherwise provided in the Indenture) as follows and in the following order:

(1) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Bonds and Parity Debt, including the costs and expenses of the Trustee and the Bondholders in declaring such Event of Default, and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its counsel and other agents) incurred in and about the performance of its powers and duties under the Indenture;

(2) To the payment of the whole amount of Bond Obligation then due on the Bonds and Parity Debt (upon presentation of the Bonds and Parity Debt to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of

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the Indenture, with interest on such Bond Obligation at the rate or rates of interest borne by the respective Bonds and Parity Debt, to the payment to the persons entitled thereto of all installments of interest then due and the unpaid principal or Redemption Price of any Bonds and Parity Debt which shall have become due, whether at maturity or by call for redemption, in the order of their due dates, with interest on the overdue Bond Obligation and Parity Debt at the rate borne by the respective Bonds and Parity Debt, and, if the amount available shall not be sufficient to pay in full all the Bonds and Parity Debt due on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal or interest or Accreted Value (plus accrued interest) due on such date to the persons entitled thereto, without any discrimination or preference.

(3) To the payment of the payment of fees and other amounts owed to any Credit Providers relating to Credit Facilities and any providers of any Public Finance Contract Insurance Policies.

In each and every such case during the continuance of such Event of Default (and subject to any rights granted to any insurer of the Bonds with respect to the enforcement of remedies upon an Event of Default pursuant to a Supplemental Indenture), the Owners of not less than a majority in aggregate amount of Bond Obligation of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the City, to declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, including accrued interest to the date of such payment, anything in the Indenture or in the Bonds contained to the contrary notwithstanding.

This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, the City shall pay to or shall deposit with the Trustee a sum sufficient to pay all principal on such Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, and the reasonable fees and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee, or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of not less than a majority in aggregate amount of Bond Obligation of the Bonds at the time Outstanding, by written notice to the City and to the Trustee, may, on behalf of the Owners of all the Bonds, rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

Trustee to Represent Bondholders. The Trustee is irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, the Indenture and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and upon the written request of the Owners of not less than twenty-five percent (25%) in aggregate amount of Bond Obligation of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power in the Indenture granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the Indenture or any other law;

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and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Net Revenues, and other assets pledged under the Indenture, pending such proceedings. All rights of action under the Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of the Indenture.

Bondholders’ Direction of Proceedings. Anything in the Indenture to the contrary notwithstanding, the Owners of a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee under the Indenture, provided that such direction shall not be otherwise than in accordance with law and the provisions of the Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders or holders of Parity Debt not parties to such direction.

Limitation on Bondholders’ Right to Sue No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Indenture or any other applicable law with respect to such Bond, unless (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five percent (25%) in aggregate amount of Bond Obligation of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted in the Indenture or to institute such suit, action or proceeding in its own name; (3) such Owner or said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary directions from the Owners of a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding.

Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Indenture or other applicable law with respect to the Bonds, except in the manner provided in the Indenture, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner provided in the Indenture and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of the Indenture.

Absolute Obligation of the City. Nothing in any other provision of the Indenture or in the Bonds contained shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal, Accreted Value or Redemption Price of and interest on the Bonds to the respective Owners of the Bonds at their respective due dates therefor or upon call for redemption, as provided in the Indenture, but only out of the Net Revenues and other assets pledged in the Indenture therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

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Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Bondholders on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Bondholders, then in every such case the City, the Trustee and the Bondholders, subject to any determination in such proceedings, shall be restored to their former positions and rights under the Indenture, severally and respectively, and all rights, remedies, powers and duties of the City, the Trustee and the Bondholders shall continue as though no such proceedings had been taken.

Remedies Not Exclusive No remedy conferred in the Indenture upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given under the Indenture or now or thereafter existing at law or in equity or otherwise.

No Waiver of Default No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by the Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient.

The Trustee

Appointrrent; Duties, Immunities and Liabilities of Trustee The Bank of New York Mellon Trust Company, N.A., is appointed as Trustee under the Indenture and accepts the trust imposed upon it as Trustee under the Indenture and to perform all the functions and duties of the Trustee under the Indenture, subject to the terms and conditions set forth in the Indenture. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in the Indenture and no implied covenants shall be read into the Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of the rights and powers vested in it by the Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it is a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company will be eligible under the Indenture, will be the successor to such Trustee without the execution or filing of any paper or any further act, anything in the Indenture to the contrary notwithstanding.

Liability ofTrustee. (A) The recitals of facts in the Indenture and in the Bonds contained will be taken as statements of the City, and the Trustee assumes no responsibility for the correctness of the same (other than the certificate of authentication of the Trustee on each Bond), and makes no representations as to the validity or sufficiency of the Indenture or of the Bonds or of any Investment Security, as to the sufficiency of the Net Revenues, or the priority of the lien of the Indenture thereon, or as to the financial or technical feasibility of the Enterprise and will not incur any responsibility in respect of any such matter, other than in connection with the duties or obligations expressly in the Indenture or in the Bonds assigned to or imposed upon it. The Trustee will, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee will not be liable in connection with the performance of its duties under the Indenture, except for its own negligence, willful misconduct or breach of the express terms and conditions of the Indenture. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in

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any action which any Owner of a Bond may be entitled to take, with like effect as if the Trustee was not the Trustee under the Indenture. The Trustee may in good faith hold any other form of indebtedness of the City, own, accept or negotiate any drafts, bills of exchange, acceptances or obligations of the City and make disbursements for the City and enter into any commercial or business arrangement therewith, without limitation.

(B) The Trustee will not be liable for any error of judgment made in good faith by a responsible officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers of the Indenture and perform the duties required of it under the Indenture by or through attorneys, agents, or receivers, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture, but the Trustee will be answerable for the negligence or misconduct of any such attorney, agent, or receiver selected by it; provided, however, that the Trustee will not be answerable for the negligence or misconduct of any attorney or certified public accountant selected by it with due care.

(C) The Trustee will not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than twenty-five percent (25%) in aggregate amount of Bond Obligation of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee under the Indenture.

(D) The Trustee is under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request, order or direction of any of the Bondholders pursuant to the provisions of the Indenture, including, without limitation, the provisions of the Indenture (other than acceleration as provided in the Indenture under the caption “Events of Default and Remedies of Bondholders-Application of Net Revenues and Other Funds After Default; Acceleration”), unless such Bondholders have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

(E) No provision of the Indenture will require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties under the Indenture.

(F) The Trustee is not to be deemed to have knowledge of and is not to be required to take any action with respect to, any Event of Default (other than an Event of Default described under (a) or (b) under the paragraph “Events of Default” above) or event which would, with the giving of notice, the passage of time or both, constitute an Event of Default, unless the Trustee has actual knowledge of such event or has been notified in writing of such event by the City, the Owners of twenty-five percent (25%) in aggregate amount of Bond Obligation of the Bonds at the time Outstanding or the Applicable Credit Provider. Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain, monitor or inquire as to the performance or observance by the City of the terms, conditions, covenants or agreements set forth in the Indenture (including, without limitation, the covenants of the City set forth in the Indenture), other than the covenants of the City to make payments with respect to the Bonds when due as set forth in the Indenture and to file with the Trustee when due, such reports and certifications as the City is required to file with the Trustee under the Indenture.

(G) No permissive power, right or remedy conferred upon the Trustee under the Indenture will be construed to impose a duty to exercise such power, right or remedy.

(H) The Trustee will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,

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bond, debenture, coupon or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee will determine to make such further inquiry or investigation, it will be entitled to examine the books, records and premises of the City, personally or by agent or attorney.

(1) The Trustee will not be responsible for:

(1) the application or handling by the City of any Net Revenues or other moneys transferred to or pursuant to any Requisition or Request of the City in accordance with the terms and conditions of the Indenture;

(2) the application and handling by the City of any other fund or account designated to be held by the City under the Indenture;

(3) any error or omission by the City in making any computation or giving any instruction pursuant to the Indenture and may rely conclusively on any computations or instructions furnished to it by the City in connection with the requirements of the Indenture and the Tax Certificate; or

(4) the construction, operation or maintenance of the Enterprise by the City.

(J) Whether or not therein expressly so provided, every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee will be subject to the provisions of the Indenture described under this caption “The Trustee”.

(K) The Trustee will have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.

Modification or Amendment of the Indenture

ArrendrrentS Permitted. (A)(1) The Indenture and the rights and obligations of the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the City and the Trustee may enter into with the written consent of the Owners of a majority in aggregate amount of Bond Obligation of the Bonds (or, if such Supplemental Indenture is only applicable to a Series of Bonds, such Series of Bonds) then Outstanding has been filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity remain Outstanding, the consent of the Owners of such Bonds will not be required and such Bonds will not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding described under this caption “Modification or Amendment of the Indenture”.

(2) For any Series of Bonds for which there is a letter of credit or policy of bond insurance in place securing such Series of Bonds, the written consents of each provider of a letter of credit or a policy of bond insurance, as well as the consent of any provider of a liquidity facility then in effect if the rights and security of such provider will be materially adversely affected, for such Series of Bonds filed with the Trustee shall be accepted in lieu of consent of the Owners of such Series of Bonds and shall be deemed to be the consent of all of the Owners of such Series of Bonds for purposes of satisfying the requirements described in the preceding paragraph, provided that, for all Outstanding Bonds of such Series that are insured by a policy or policies of municipal bond insurance, at the time such consent is given the provider of such policy or policies of municipal bond insurance will be a financial institution or association having

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unsecured debt obligations rated, or insuring or securing other debt obligations rated on the basis of such insurance, in one of the two highest Rating Categories of Moody’s or Standard & Poor’s.

(3) No such modification or amendment will (a) extend the fixed maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment or reduce the amount of any mandatory sinking fund payment provided for the payment of any Bond, or reduce the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof exclusively, without the consent of the Owner of each Bond so affected, or (b) reduce the aforesaid percentage of Bond Obligation the consent of the Owners of which is required to effect any such modification or amendment, or permit the creation of any lien on the Net Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture, or deprive the Owners of the Bonds of the lien created by the Indenture on such Net Revenues and other assets (in each case, except as expressly provided in the Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It will not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Indenture, but it will be sufficient if such consent will approve the substance thereof. Promptly after the execution and delivery by the Trustee and the City of any Supplemental Indenture under the provisions of the Indenture described under this caption “Modification or Amendment of the Indenture-Amendments Permitted”, the Trustee will mail a notice, setting forth in general terms the substance of such Supplemental Indenture to the Owners of the Bonds at the addresses shown on the registration books of the Trustee. Any failure to give such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such Supplemental Indenture.

(4) A copy of each Supplemental Indenture entered into by the City and the Trustee pursuant to the provisions described under this caption “Modification or Amendment of the Indenture- Amendments Permitted” will be sent by the City to Moody’s and Standard & Poor’s.

(B) The Indenture and the rights and obligations of the City, of the Trustee and of the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the City may adopt without the consent of any Bondholders but only to the extent permitted by law and only for any one or more of the following purposes:

(1) to add to the covenants and agreements of the City in the Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power reserved in the Indenture to or conferred upon the City;

(2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Indenture, or in regard to matters or questions arising under the Indenture, as the City may deem necessary or desirable, and which will not materially and adversely affect the interests of the Owners of the Bonds;

(3) to modify, amend or supplement the Indenture in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute thereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said Act or similar federal statute, and which will not materially and adversely affect the interests of the Owners of the Bonds;

(4) to make modifications or adjustments necessary, appropriate or desirable to provide for the issuance of Variable Rate Indebtedness, Capital Appreciation Indebtedness or

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Parity Debt with such interest rate, payment, maturity and other terms as the City may deem desirable; subject to the provisions of the Indenture;

(5) to provide for the issuance of Bonds in book-entry form or bearer form, provided that no such provision will materially and adversely affect the interests of the Owners of the Bonds;

(6) if the City agrees in a Supplemental Indenture to maintain the exclusion of interest on a Series of Bonds from gross income for purposes of federal income taxation, to make such provisions as are necessary or appropriate to ensure such exclusion;

(7) to provide for the issuance of an additional Series of Bonds pursuant to provisions of the Indenture; and

(8) for any other purpose that does not materially and adversely affect the interests of the Owners of the Bonds.

Defeasance

Discharge of I ndenture. Bonds of any Series or a portion thereof may be paid by the City in any of the following ways:

(a) by paying or causing to be paid the Bond Obligation of and interest on such Outstanding Bonds, as and when the same become due and payable;

(b) by depositing with the Trustee, an escrow agent or other fiduciary, in trust, at or before maturity, money or securities in the necessary amount and subject to the conditions as described under the caption “Defeasance-Deposit of Moneys or Securities with Trustee” to pay or redeem such Outstanding Bonds; or

(c) by delivering to the Trustee, for cancellation by it, such Outstanding Bonds.

If the City pays all Series for which any Bonds are Outstanding and also pay or cause to be paid all other sums payable under the Indenture by the City, as well as any amounts due and owing under any Credit Agreement then in effect, then and in that case (but subject to any additional requirements in connection therewith as may be imposed by any insurer of the Bonds and set forth in a Supplemental Indenture), at the election of the City (evidenced by a Certificate of the City filed with the Trustee signifying the intention of the City to discharge all such indebtedness and the Indenture), and notwithstanding that any Bonds have not been surrendered for payment, the Indenture and the pledge of Net Revenues and other assets made under the Indenture and all covenants, agreements and other obligations of the City under the Indenture will cease, terminate, become void and be completely discharged and satisfied. In such event, upon Request of the City, the Trustee will cause an accounting for such period or periods as may be requested by the City to be prepared and filed with the City and will execute and deliver to the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee will pay over, transfer, assign or deliver to the City all moneys or securities or other property held by it pursuant to the Indenture which, as evidenced by a verification report, upon which the Trustee may conclusively rely, from a firm of certified public accountants, are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption.

Discharge of Liability on Bonds. Upon the deposit with the Trustee, escrow agent or other fiduciary, in trust, at or before maturity, of money or securities in the necessary amount and subject to the

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conditions as described under the caption ‘"Defeasance-Deposit of Moneys or Securities with Trustee” to pay or redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to maturity, notice of such redemption has been given as in the Indenture provided or provision satisfactory to the Trustee have been made for the giving of such notice, then (but subject to any additional requirements with respect thereto as may be imposed by any insurer of the Bonds and set forth in a Supplemental Indenture) all liability of the City in respect of such Bond will cease, terminate and be completely discharged, provided that the Owner thereof will thereafter be entitled to the payment of the principal, Accreted Value and premium, if any, and interest on the Bonds, and the City will remain liable for such payment, but only out of such money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of the Indenture and the continuing duties of the Trustee under the Indenture.

The City may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the City may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, will be deemed to be paid and retired.

Deposit of Money or Securities With Trustee Whenever in the Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to the Indenture and will be:

(a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been given as in the Indenture provided or provision satisfactory to the Trustee has been made for the giving of such notice, the amount to be deposited or held will be the principal amount, Accreted Value or Redemption Price of such Bonds and all unpaid interest thereon to the redemption date; or

(b) Defeasance Securities, the principal of and interest on which when due will, in the opinion of an independent certified public accountant delivered to the Trustee (upon which opinion the Trustee may conclusively rely), provide money sufficient to pay the principal, Accreted V alue or Redemption Price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal, Accreted Value or Redemption Price and interest become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption has been given as in the Indenture provided or provision satisfactory to the Trustee has been made for the giving of such notice;

provided, in each case, that the Trustee has been irrevocably instructed (by the terms of the Indenture or by Request of the City) to apply such money to the payment of such principal, Accreted Value or Redemption Price and interest with respect to such Bonds.

Miscellaneous

Liability of City Limited to Net Revenues. Notwithstanding anything in the Indenture or in the Bonds contained, the City will not be required to advance any moneys derived from any source other than the Net Revenues and other assets pledged under the Indenture for any of the purposes in the Indenture mentioned, whether for the payment of the principal, Accreted Value or Redemption Price of or interest on the Bonds or for any other purpose of the Indenture.

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The Bonds are special, limited obligations of the City. The Bonds will not be deemed to constitute a debt or liability of the City, the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory provision, or a pledge of the faith and credit of the City, the State of California or of any political subdivision thereof, but will be payable, except to the extent of certain amounts held under the Indenture pledged therefor, solely from Net Revenues. Neither the faith and credit nor the taxing power of the City, the State of California or of any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or the interest on the Bonds. The issuance of the Bonds will not directly or indirectly or contingently obligate the City, the State of California or any political subdivision thereof to levy or to pledge any form of taxation whatsoever therefor or to make any appropriation for their payment.

The 2017A Bonds

Establishment and Application of Series 2017A Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Series 2017A Costs of Issuance Fund,” until such time as required under the Sixth Supplemental Indenture. The Trustee shall deposit to the Series 2017A Costs of Issuance Fund the amounts specified in the provisions of the Indenture regarding the Application of Proceeds of the Series 2017A Bonds. All money in the Series 2017A Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the Series 2017A Bonds upon receipt of Requisition(s) of the City filed with the Trustee, each of which shall be sequentially numbered and shall state the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. At the date designated in the Sixth Supplemental Indenture or upon the earlier Request of the City, any remaining balance in the Series 2017A Costs of Issuance Fund shall be transferred to the Series 2017 A Project Fund.

Establishment and Application of the Series 2017A Project Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Series 2017A Project Fund.” All money in the Series 2017A Project Fund shall be disbursed, upon the Request of the City, for the payment of the costs of the design, acquisition and construction of capital improvements to the Enterprise as determined by the City and the incidental costs and expenses related thereto (including reimbursement to the City for any such costs or expenses paid by it). Each such Request of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts.

When the design, acquisition and construction of all capital improvements determined by the City to be funded from the Series 2017A Project Fund have been completed (as evidenced by a Certificate of the City filed with the Trustee), the Trustee shall transfer any balance remaining in the Series 2017A Project Fund for deposit in the Wastewater Fund, unless the City provides an opinion of counsel to the effect that another use of such moneys will not cause the interest represented by the Series 2017A Bonds to be included in the gross income of the Owners thereof for federal income tax purposes, in which case such money may be expended by the City as provided in such opinion.

TermsofSeries2017ABondsSubjecttotheIndenture. Except as in the Sixth Supplemental Indenture expressly provided, every term and condition contained in the Indenture shall apply to the Sixth Supplemental Indenture and to the Series 2017A Bonds with the same force and effect as if the same were therein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to the Sixth Supplemental Indenture.

The Sixth Supplemental Indenture and all the terms and provisions therein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set

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forth in the Indenture. The Indenture is thereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as supplemented and amended thereby.

Continuing Disclosure. Under the Sixth Supplemental Indenture, the City covenants and agrees to comply with the Series 2017A Continuing Disclosure Agreement as it may from time to time thereafter be amended or supplemented. Notwithstanding any other provision of the Indenture, failure of the City to comply with the requirements of the Series 2017A Continuing Disclosure Agreement, as it may from time to time thereafter be amended or supplemented, shall not be considered an Event of Default and the Trustee shall have no right to accelerate amounts due under the Indenture as a result thereof; provided, however, that the Trustee and the Owners of not less than 25% in principal amount of the Outstanding Series 2017A Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations in this paragraph with respect to the Series 2017A Continuing Disclosure Agreement.

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APPENDIX D

PROPOSED FORM OF OPINION OF BOND COUNSEL

[Date of Issuance]

City of Richmond Richmond, California

City of Richmond, California Wastewater Revenue Bonds, Series 2017A

(Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel to the City of Richmond, California (the “Issuer”) in connection with the issuance of $33,530,000 aggregate principal amount of City of Richmond, California Wastewater Revenue Bonds, Series 2017A (the “Bonds”), issued pursuant to Charter of the City of Richmond and Chapter 13.56 of Article 13 of the Richmond Municipal Code (the “Bond Law”) and pursuant to the Master Indenture dated as of October 1, 2006, as previously supplemented and amended (the “Master Indenture”), and as supplemented by a Sixth Supplemental Indenture dated as of August 1, 2017 (the “Sixth Supplemental Indenture” and collectively with the Master Indenture, the ‘Indenture”) between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.

In such connection, we have reviewed the Indenture, the Tax Certificate, dated the date hereof (the “Tax Certificate”), certificates of the Issuer, the Trustee, and others, opinions of counsel to the Issuer and the Trustee and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent

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conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against a municipal corporation and chartered city in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Bonds constitute the valid and binding special, limited obligations of the Issuer.

2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Issuer. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Net Revenues and any other amounts held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture.

3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the Bonds is exempt from State of California personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.

Faithfully yours,

ORRICK, HERRINGTON & SUTCLIFFE LLP

per

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APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the ‘Disclosure Agreement”) is executed and delivered by the City of Richmond (the “City”), The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”) and Willdan Financial Services, as dissemination agent (the ‘Dissemination Agent”) in connection with the issuance by the City of $33,530,000 principal amount of City of Richmond Wastewater Revenue Bonds, Series 2017A (the “Series 2017A Bonds”). The Series 2017A Bonds are being issued pursuant to the terms of an Indenture of Trust, dated as of October 1, 2006 (the “Master Indenture”), as previously amended and supplemented, including as supplemented by the Third Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2008, as amended by the First Amendment to Wastewater Revenue Bond Indenture, dated as of November 1, 2009, as amended and supplemented by the Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2010, and the Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of July 1, 2017 and the Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of August 1, 2017 (collectively, the Indenture”), each by and between the City and the Trustee. The City, the Trustee and the Dissemination Agent hereby covenant and agree as follows:

SECTION 1. Purpose of this Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City, the Trustee and Dissemination Agent for the benefit of the Owners and Beneficial Owners of the Series 2017A Bonds and in order to assist the Participating Underwriters (as defined below) in complying with the Rule (as defined below).

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section 2, the following capitalized terms have the following meanings:

“Annual Report’ means any Annual Report of the City provided pursuant to, and as described in, Section 3 and Section 4 of this Disclosure Agreement.

“ Beneficial Owner” means any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2017A Bonds (including persons holding Series 2017A Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2017A Bonds for federal income tax purposes.

“ Cormission” means the Securities and Exchange Commission.

“ Disclosure Representative” means the Director of Finance of the City or any designee, or such other officer of employee as the City may designate in writing to the Trustee and the Dissemination Agent from time to time.

“Dissemination Agent” means initially Willdan Financial Services, or any successor Dissemination Agent designated in writing by the City and which has filed a written acceptance of such designation with the City and the Trustee.

“ MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

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http://emma.msrb.org

“Official Statement” means the Official Statement dated July 19, 2017 relating to the Series 2017A Bonds.

“Participating Underwriters” collectively means the original underwriters of the Series 2017A Bonds are required to comply with the Rule in connection with the offering of the Series 2017A Bonds.

“ Repository” means the Electronic Municipal Market Access website maintained by the MSRB at http://emma.msrb.org or any other entity designated or authorized by the Commission to receive reports pursuant to the Rule.

“ Rule” means paragraph (b) (5) of Rule 15c2-12 adopted by the Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“ Specified Events” means any of the events listed in Section 5(a) of this Disclosure Agreement.

SECTION 3. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to, not later than two hundred seventy (270) days after the end of the City’s Fiscal Year (currently June 30), commencing with the report for the City’s Fiscal Year ended June 30, 2017, provide to the Repository copies of an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report shall be submitted in electronic format, accompanied by such identifying information as is prescribed by the Repository, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of such Annual Report and later than the date required above for the filing of such Annual Report if they are not available by that date. If the City’s Fiscal Year changes, the City shall give notice of such change in the same manner as for a Listed Event under Section 5(c).

(b) Not later than fifteen (15) Business Days prior to the date specified in Section 3(a) for providing each Annual Report to the Repository, the City shall provide such Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent); provided, however, that the City may distribute the Annual Report to the Repository itself after providing written notice to the Dissemination Agent. If by said date, the Trustee and the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the City of such failure to receive the Annual Report.

(c) If the City is unable to provide to the Dissemination Agent an Annual Report by the date required in Section 3(a), the Dissemination Agent is irrevocably instructed to file a notice, in electronic format, to the Repository in substantially the form attached hereto as Exhibit A.

(d) The Dissemination Agent shall file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided.

SECTION 4. Content of Annual Reports. The Annual Report of the City shall contain or incorporate by reference the following:

(a) The audited financial statements of the City, for the Fiscal Year most recently ended, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the time the Annual Reports are required to be filed pursuant to Section 3(a) of this Disclosure Agreement, the Annual Reports shall contain unaudited

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http://emma.msrb.org

financial statements in a format similar to the financial statements contained in the final official statement relating to the Series 2017A Bonds, and the audited financial statements shall be filed in the same manner as the Annual Reports when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3(a), financial information and operating data with respect to the City and the Wastewater Enterprise for preceding Fiscal Year, substantially similar to that provided in the tables and charts in the statement, as follows:

(i) A maturity schedule for the outstanding Series 2017A Bonds, and a listing of Series 2017A Bonds redeemed prior to maturity during the prior Fiscal Year.

(ii) Information for the preceding Fiscal Year to update the following tables presented in the Official Statement:

(A) Table 3-Customers Served and Total Revenues;

(B) Table 4-Principal Wastewater Customers;

(C) Table 5-Average Monthly Dry Weather Flow;

(D) Table 6-Average Monthly Wet Weather Flow; and

(E) Table 10-Summary of Revenues, Expenses and Changes in Net Assets;

Any or all of the items listed above may be included by specific reference to other documents, including official statements or other disclosure documents of debt issues of the City or related public entities, which have been filed with the Repository or the Commission. If the document included by reference is a final official statement, it must be available from the Repository. The City shall clearly identify each such other document so included by reference.

The contents, presentation and format of the Annual Reports may be modified from time to time as determined in the judgment of the City to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the City or to reflect changes in the business, structure, operations, legal form of the City or any mergers, consolidations, acquisitions or dispositions made by or affecting the City; provided that any such modifications shall comply with the requirements of the Rule.

SECTION 5. Reporting of Specified Events.

(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2017A Bonds:

(i) Principal and interest payment delinquencies on the Series 2017A Bonds;

(ii) Non-payment related defaults, if material;

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;

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(v) Substitution of credit or liquidity providers, or their failure to perform;

(vi) Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed (Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2017A Bonds;

(vii) Modifications to rights of the Series 2017A Bondholders, if material;

(viii) Bond calls other than mandatory sinking fund redemptions;

(ix) Defeasances;

(x) Release, substitution, or sale of property, if any, securing repayment of the Series 2017A Bonds, if material; and

(xi) Rating changes.

(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.

(xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the Successor Agency or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.

(xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) The Trustee shall, promptly upon obtaining actual knowledge at its principal corporate trust office as specified in Section 12 hereof of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the City promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section (5); provided, that failure by the Trustee to so notify the Disclosure Representative and make such request shall not relieve the City of its duty to report Listed Events as required in this Section 5. For the purpose of this Disclosure Agreement “actual knowledge” means actual knowledge at the corporate trust office of the Trustee by an officer of the Trustee with responsibility for matters related to the administration of the Indenture.

(c) Wherever the City obtains knowledge of the occurrence of Listed Event, whether due to a notice form the Trustee or pursuant to Section 5(b) or otherwise, the city shall as soon as possible determine if such event would be material under applicable federal securities laws.

(d) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the City shall promptly file, or cause to be filed a notice of such event with the MSRB. Notwithstanding the foregoing, notice of Specified Event described in Sections 5(a)(viii) and (ix) need not be given under this subsection any earlier than when the notice, if any, of the underlying event is given to Owners of affected Series 2017A Bonds pursuant to the Indenture.

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(e) If in response to a request under Section 5(b), the City determines that the Listed Event would not be material under applicable federal securities laws, the City shall so notify the Trustee in writing and instruct the Dissemination Agent not to report the occurrence.

(f) If the Dissemination Agent has been instructed by the City to report the occurrence of a Specified Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Specified Events described in Section 5(a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Series 2017A Bonds pursuant to the Indenture.

(e) The Dissemination Agent may conclusively rely on an opinion of counsel that the City’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

SECTION 6. Termination of Reporting Obligation. The obligations of the City under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2017A Bonds. If such termination occurs prior to the final maturity of the Series 2017 Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

SECTION 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing sixty (60) days written notice to the City. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent.

The initial Dissemination Agent shall be Willdan Financial Services.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall consent to any amendment so requested by the City provided such amendment does not impose any greater duties, or risk of liability on the Trustee, as the case may be) and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Section 3(a), Section 4, or Section 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Series 2017A Bonds, or the type of business conducted;

(b) The undertakings, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Series 2017A Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) The amendment or waiver either (i) is approved by the Owners of the Series 2017A Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners of the Series 2017A Bonds, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Series 2017A Bonds.

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In the event of any amendment or waiver of a provision of this Disclosure Agreement, the City shall describe such amendment in its next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, including the information then contained in the City’s official statements or other disclosure documents relating to debt issuances, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Specified Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Specified Event in addition to that which is specifically required by the Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Specified Event.

SECTION 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Agreement, the Trustee may (and upon written request of at least 25% aggregate principal amount of Outstanding Series 2017A Bonds, with indemnification satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2017A Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the City, the Trustee or the Dissemination Agent, as the Case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture with respect to the Series 2017A Bonds, and the sole remedy under this Disclosure Agreement in the event of any failure of the City, the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance and no person or entity shall be entitled to recover monetary damages under this Disclosure Agreement.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees, to the extent permitted by law, to indemnify and save the Dissemination Agent and the Trustee, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section 11 shall survive resignation or removal of the Dissemination Agent and payment of the Series 2017A Bonds.

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SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

To the City: City of RichmondRichmond City Hall 450 Civic Center Plaza Richmond, California 94804 Attention: Finance Director Telephone: 510-620-6512 Fax: 510-620-6542

If to the Trustee: The Bank of New York Mellon Trust Company, N.A.400 South Hope Street, Suite 500 Fos Angeles, California 90071 Attention: Corporate Trust Services Phone: 213-630-6400 Fax: 213-630-6480

If to the Dissemination Agent: Willdan Financial Services27368 Via Industria, Suite 200 Temecula, California 92590 Attention: Manager Phone: 951-587-3500 Fax: 951-587-3510

SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters, the Owners and Beneficial Owners from time to time of the Series 2017A Bonds, and shall create no rights in any other person or entity.

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SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Dated: ______________,2017

CITY OF RICHMOND

By:____ .______ .____Finance Director

THE BANK OF NEW YORK MEEEON TRUST COMPANY, N.A., as Trustee

By:_________ ._________Authorized Officer

WIPED AN FINANCIAL SERVICES, as Dissemination Agent

By:_________ ._________Authorized Officer

E-8

EXHIBIT A

FORM OF NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: City of Richmond, California

Name of Bond Issue: City of Richmond, California Wastewater Revenue Bonds, Series 2017A

Date of Issuance: August 1, 2017

NOTICE IS HEREBY GIVEN that the City of Richmond, California (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by an Indenture of Trust, dated as of October 1, 2006, as previously supplemented and amended, as further supplemented and amended, by a Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of July 1, 2017 and the Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of August 1, 2017, each by and between the City and the Trustee. [The City anticipates the Annual Report will be filed by ____________________]

Dated:

By:____________ ._____ .__Authorized Officer

cc: City of Richmond

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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The information in this Appendix F concerning The Depository Trust Company, New York, New York (“DTC”) and DTC’s book-entry system has been obtained from DTC and the City takes no responsibility for the completeness or accuracy thereof. The City cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest or principal with respect to the Series 2017A Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Series 2017A Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Series 2017A Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “ Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “ Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2017A Bonds. The Series 2017A Bonds will be issued as fully-registered securities in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2017A Bond will be issued for the maturity and CUSIP number of the Series 2017A Bonds, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (‘DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (‘Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Series 2017A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2017A Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2017A Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2017A Bonds are to be accomplished by entries made on

F-l

http://www.dtcc.com

the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2017A Bonds, except in the event that use of the book-entry system for the Series 2017A Bonds is discontinued.

To facilitate subsequent transfers, all Series 2017A Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2017A Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2017A Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2017A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2017A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2017A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of the Series 2017A Bonds may wish to ascertain that the nominee holding the Series 2017A Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices will be sent to DTC. If less than all of the Series 2017A Bonds within an issue are being redeemed. DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in each issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2017A Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2017A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2017A Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

F-2

A Beneficial Owner shall give notice to elect to have its Series 2017A Bonds purchased or tendered, through its Participant, to Remarketing Agent, and shall effect delivery of such Series 2017A Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2017A Bonds, on DTC’s records, to Remarketing Agent. The requirement for physical delivery of the Series 2017A Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2017A Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered the Series 2017A Bonds to Remarketing Agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Series 2017A Bonds at any time, by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2017A Bonds certificates are required to be printed and delivered.

The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Series 2017A Bonds certificates will be printed and delivered.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

F-3

TABLE OF CONTENTS


FINAL PRICINGRefunding of 2006A Bonds +New Money Issuance

MarketConditionsasofJuly 19, 2017

Report Page

Disclaimer ........................................................................................................................................... 1Sourcesand Usesof Funds................................................................................................................... 2Bond Pricing ....................................................................................................................................... 3BondSummaryStatistics ................................................................................................................... 5Bond Debt Service ............................................................................................................................... 6Aggregate Debt Service ....................................................................................................................... 7Cost of I ssuance ................................................................................................................................... 8Underwriter's Discount ....................................................................................................................... 9Proof of Arbitrage Yield....................................................................................................................... 10Form 8038 Statistics ........................................................................................................................... 12

Refunding of Series 2006ABondSummaryStatistics ................................................................................................................... 14Bond Debt Service ............................................................................................................................... 15Summary of Refunding Results ........................................................................................................... 16Savings ............................................................................................................................................... 17Summary of Bonds Refunded............................................................................................................... 18Prior Bond Debt Service....................................................................................................................... 19Escrow Requirements........................................................................................................................... 20EscrowCost ....................................................................................................................................... 21Escrow Sufficiency............................................................................................................................... 22Escrow Statistics................................................................................................................................... 23

New Money IssuanceBondSummaryStatistics ................................................................................................................... 24Bond Debt Service ............................................................................................................................... 25

Jul 19,2017 10:05 am Prepared by Stifel, Nicolaus & Company, Inc.

DISCLAIMER




Stifel, Nicolaus & Company, Incorporated ('Stifel') has been engaged or appointed to serve as an underwriter or placement agent with respect to a particular issuance of municipal securities to which the attached material relates and Stifel is providing all information and advice contained in the attached material in its capacity as underwriter or placement agent for that particular issuance. As outlined in the SEC's Municipal Advisor Rule, Stifel has not acted, and will not act, as your municipal advisor with respect to the issuance of the municipal securities that is the subject to the engagement

Stifel is providing information and is declaring to the proposed municipal issuer and any obligated person that it has done so within the regulatory framework of MSRB RuleC-23asan underwriter (by definition also including the role of placement agent) and not as a financial advisor, as defined therein, with respect to the referenced proposed issuance of municipal securities. The primary role of Stifel, as an underwriter, is to purchase securities for resale to investors in an arm's-length commercial transaction. Serving in the role of underwriter, Stifel has financial and other interests that differ from those of the issuer. The issuer should consult with its' own financial and/br municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate.

These materials have been prepared by Stifel for the client or potential client to whom such materials are directly addressed and delivered for discussion purposes only. All terms and conditions are subject to further discussion and negotiation. Stifel does not express any view as to whether financing options presented in these materials are achievable or will be avail able at the time of any contemplated transaction. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Stifel to provide or arrange any financing for any transaction or to purchase any security in connection therewith and may not relied upon as an indication that such an offer will be provided in the future. Where indicated, this presentation may contain information derived from sources other than Stifel. While we believe such information to be accurate and complete, Stifel does not guarantee the accuracy of this information. This material is based on information currently available to Stifel or its sources and is subject to change without notice. Stifel does not provide accounting, tax or legal advice; however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or other implications that should be discussed with your advisors and fox counsel as you deem appropriate.

Jul 19,2017 10:05 am Prepared by Stifel, Nicolaus & Company, Inc. Page 1

SOURCES AND USES OF FUNDS




Dated Date 08/01/2017Delivery Date 08/01/2017

Sources:Refunding of Series 2006A

New Money Issuance Total

Bond Proceeds:Par Amount 6,575,000.00 26,955,000 00 33,530,000 00Premium 662,207.50 5,243,426.30 5,905,633.80

7,237,207.50 32,198,426.30 39,435,633.80

Uses:Refunding of Series 2006A

New Money Issuance Total

Project Fund Deposits:Project Fund 31,718,000 00 31,718,000 00

Refunding E screw Deposits:Cash Deposit 7,120,00000 7,120,00000

Delivery Date Expenses:Cost of 1 ssuance 82,359.08 337,64092 420,00000Underwriter's Discount 33,773.06 138,456.63 172,229.69

116,132.14 476,097.55 592,229.69

Other U ses of F unds:Additional Proceeds 1,075.36 4,32a 75 5,404.11

7,237,207.50 32,198,426.30 39,435,633.80


BONDPRICING


FINAL PRICINGRefunding of 2006A Bonds + New Money Issuance

Market Conditions as of July 19, 2017

Maturity Yield to Call Call PremiumBond Component Date Amount Rate Yield Price Maturity Date Price (-Discount) Takedown

Serial Bonds:08/01/201808/01/201908/01/202008/01/202108/01/2022

1,220,0001.255.0001.305.0001.365.0001.430.0006.575.000

2.000%4.000%4.000%5.000%5.000%

0.900%0.990%1.080%1.170%1.260%

101.092105.946108.596114.924118.068

13,322.4074,622.30

112,177.80203,712.60258,372.40662,207.50

3.5003.5003.5003.5003.500

2042Term Bond:08/01/2038 205,000 5.000% 2.960% 117.546 C 3.895% 08/01/2027 100.000 35,969.30 3.50008/01/2039 315,000 5.000% 2.960% 117.546 C 3.895% 08/01/2027 100.000 55,269.90 3.50008/01/2040 390,000 5.000% 2.960% 117.546 C 3.895% 08/01/2027 100.000 68,429.40 3.50008/01/2041 3,170,000 5.000% 2.960% 117.546 C 3.895% 08/01/2027 100.000 556,208.20 3.50008/01/2042 3.335.000

7.415.0005.000% 2.960% 117.546 C 3.895% 08/01/2027 100.000 585,159.10

1,301,035.903.500

2047Term Bond:08/01/2043 3,510,000 5.250% 2.910% 120.176 C 4.078% 08/01/2027 100.000 708,177.60 3.50008/01/2044 3,700,000 5.250% 2.910% 120.176 C 4.078% 08/01/2027 100.000 746,512.00 3.50008/01/2045 3,895,000 5.250% 2.910% 120.176 C 4.078% 08/01/2027 100.000 785,855.20 3.50008/01/2046 4,105,000 5.250% 2.910% 120.176 C 4.078% 08/01/2027 100.000 828,224.80 3.50008/01/2047 4,330,000

19,540,0005.250% 2.910% 120.176 C 4.078% 08/01/2027 100.000 873,620.80

3,942,390.403.500

33,530,000 5,905,633.80


BONDPRICING


FINAL PRICINGRefunding of 2006A Bonds + New Money Issuance

Market Conditions as of July 19, 2017

Dated Date Delivery Date First Coupon

Par Amount Premium

08/01/2017 08/01 /2017 02/01 /2018

33,530,000.005,905,633.80

Production 39,435,633.80 117.612985%Underwriter'sDiscount -172,229.69 -0.513658%

Purchase Price 39,263,404.11 117.099326%Accrued I nterest

Net Proceeds 39,263,404.11


BOND SUMMARY STATISTICS




Dated Date 08/01/2017Delivery Date 08/01/2017First Coupon 02,01/2018Last Maturity 08/31/2047

Arbitrage Yield 2.793607%T rue 1 nterest Cost (Tl C) 3.923167%Netlnterest Cost (NIC) 4.404424%AIMnTIC 4.003323%Average Coupon 5.169817%

Average L i fe (years) 22.341Weighted Average Maturity (years) 22.670Duration of 1 ssue (years) 13.723

Par Amount 33,530,000.00Bond Proceeds 39,435,633.80Total Interest 38,726,062.50Net Interest 32,992,658.39Total DebtService 72,256,062.50MaximumAnnual DebtService 4,444,450.00Average Annual DebtService 2,408,535.42

U nderwriter's Fees (per $1000)Average Takedown 3.500000Other Fee 1.636585

Total Underwriter'sDiscount 5.136585

Bid Price 117.099326

Bond ComponentPar

Value PriceAverageCoupon

AverageLife

PV of 1 bp change

2042 TermBond 7,415,000.00 117.546 5.000% 24.229 7,044.252047 TermBond 19,540,000.00 120.176 5.250% 28.105 18,758.40Serial Bonds 6,575,000.00 110.072 4.502% 3.081 2,135.60

33,530,000.00 22.341 27,938.25

TICAll-In

TICArbitrage

Yield

ParValue 33,530,000.00 33,530,000.00 33,530,000.00+Accrued 1 nterest+ Premi urn (D i scount)- U nderwri ter's D i scount -Cost of 1 ssuance E xpense

5,905,633.80-172,229.69

5,905,633.80-172,229.69^420,000.00

5,905,633.80

-Other Amounts

Target Value 39,263,404.11 38,843,404.11 39,435,633.80

Target Date 08/01/2017 08/01/2017 08/01 /2017Yield 3.923167% 4.003323% 2.793607%


BOND DEBTSERVICE




PeriodEnding Principal Coupon Interest Debt Service

06/30/2018 831,575.00 831,575.0006/30/2019 1,220,000 2.00Cfc 1,650i950.00 2,870,950 0006/30/2020 1,255,000 4.00C& 1,613,650.00 2,868,650 0006/30/2021 1,305,000 4.00C& 1,562,450.00 2,867,4500006/30/2022 1,365,000 5.00C& 1,502,225.00 2,867,225.0006/30/2023 1,430,000 5.00C& 1,432,350.00 2,862,3500006/30/2024 1,396,60000 1,396,6000006/30/2025 1,396,60000 1,396,6000006/30/2026 1,396,60000 1,396,6000006/30/2027 1,396,60000 1,396,6000006/30/2028 1,396,60000 1,396,6000006/30/2029 1,396,60000 1,396,6000006/30/2030 1,396,60000 1,396,6000006/30/2031 1,396,60000 1,396,6000006/30/2032 1,396,60000 1,396,6000006/30/2033 1,396,60000 1,396,6000006/30/2034 1,396,60000 1,396,6000006/30/2035 1,396,60000 1,396,6000006/30/2036 1,396,60000 1,396,6000006/30/2037 1,396,60000 1,396,6000006/30/2038 1,396,60000 1,396,6000006/30/2039 205,000 5.00CP6 1,391,475.00 1,596,475.0006/30/2040 315,000 5.00CP6 1,378,475.00 1,693,475.0006/30/2041 390,000 5.00CP6 1,360i850.00 1,750,850 0006/30/2042 3,170,000 5.00C& 1,271,850.00 4,441,850 0006/30/2043 3,335,000 5.00C& 1,109,225.00 4,444,225.0006/30/2044 3,510,000 5.25CP6 933,712.50 4,443,712.5006/30/2045 3,700,000 5.25CP6 744,450.00 4,444,450 0006/30/2046 3,895,000 5.25CP6 545,081.25 4,440,081.2506/30/2047 4,105,000 5.25CP6 335,081.25 4,440,081.2506/30/2048 4,330,000 5.25CP6 113,662.50 4,443,662.50

33,530,000 38,726,062.50 72,256,062.50

Notes:Refunding component amortized from FY 2019toFY 2023. New money component amortized from FY 2039 to FY 2048.


AGGREGATE DEBTSERVICE




PeriodEnding

Refunding of Series 200EA

New Money Issuance

U nrefunded Bonds

Aggregate Debt Service

06/30/2018 133,275 698,30000 6,682,498.42 7,514,073.4206/30/2019 1,474,350 1,396,60000 5,08Q 373.24 7,951,323.2406/30/2020 1,472,050 1,396,60000 5,062,736.93 7,931,386.9306/30/2021 1,470,850 1,396,60000 5,038,254.27 7,905,704.2706/30/2022 1,470,625 1,396,60000 5,014,357.77 7,881,582.7706/30/2023 1,465,750 1,396,60000 4,990; 751.52 7,853,101.5206/30/2024 1,396,60000 6,519,572.09 7,916,172.0906/30/2025 1,396,60000 6,477,857.12 7,874,457.1206/30/2026 1,396,60000 6,433,249.19 7,829,849.1906/30/2027 1,396,60000 6,384,285.42 7,78Q 885.4206/30/2028 1,396,60000 6,339,774.53 7,736,374.5306/30/2029 1,396,60000 6,286,942.73 7,683,542.7306/30/2030 1,396,60000 6,237,201.91 7,633,801.9106/30/2031 1,396,60000 6,177,781.18 7,574,381.1806/30/2032 1,396,60000 6,119,292.28 7,515,892.2806/30/2033 1,396,60000 6,056,133.21 7,452,733.2106/30/2034 1,396,60000 5,997,224.52 7,393,824.5206/30/2035 1,396,60000 5,927,541.58 7,324,141.5806/30/2036 1,396,60000 5,858,395.66 7,254,995.6606/30/2037 1,396,60000 5,787,456.67 7,184,056.6706/30/2038 1,396,60000 5,711,848.59 7,108,448.5906/30/2039 1,596,475.00 2,847,469.01 4,443,944.0106/30/2040 1,693,475.00 2,749,071.56 4,442,546.5606/30/2041 1,75Q85Q00 2,689,154.53 4,44Q 004.5306/30/2042 4,441,85000 4,441,8500006/30/2043 4,444,225.00 4,444,225.0006/30/2044 4,443,712.50 4,443,712.5006/30/2045 4,444,45000 4,444,4500006/30/2046 4,44Q 081.25 4,44Q 081.2506/30/2047 4,44Q 081.25 4,44Q 081.2506/30/2048 4,443,662.50 4,443,662.50

7,486,900 64,769,162.50 132,469,223.93 204,725,286.43

Notes:Unrefunded Bonds comprised of 2008A variable rate bonds with associated fixed-payer a/vap, 2010B Taxable BAB sand SRF loan.

Assumptions for 2008A bonds:1) Fixed a/vap rate for 2037term bond =3.897%2) Variable interest rate paid (bank placement) =63.42% of 1-month LIBOR (currently 085%) +100 bps3) Variable rate received on a/vap = 63.42% of 1-month LIBOR (currently 085%) +22 bps


COST OF ISSUANCE




Cost of 1 ssuance S/1000 Amount

Bond Counsel -Orrick, Herrington & Sutcliffe 5.96481 200,000.00Disclosure Counsel -Schiff Hardin 2.98240 100,000.00Financial Advisor -PRAC 2.25171 75,50000Rating Agency -S&P Q80525 27,000 00Trustee-BNY Mellon Q14166 4,75Q00Printer -Avia Q05219 1,75Q00Contingency Q32806 11,00000

12.52610 420,00000


UNDERWRITER'S DISCOUNT




Underwriter's Discount S/1000 Amount

Average Takedcwn 3.50000 117,355.00Management Fee 0.74560 25,000.00U nderwriter's Counsel 0.52192 17,500.00Continuing Disclosure Report 0.01789 600.00Out-of-Pocket/Marketing Expenses O.OM74 1,500.001 preo B ookrunni ng System 0.06180 2,072.15IpreoWire Fees 0.00268 90.001 preo Order Monitor/Dealer EOE (Lead-managed Only) Q 01500 502.95Blue Sky Survey 0.01491 500.00DTC Setup 0.02386 800.00CDIAC (CA Only) 0.14912 5,000.00CUSIP Numbers 0.00978 328.00Day Loan Q02927 981.59

5.13658 172,229.69


PROOF OF ARBITRAGE YIELD




Date Debt Service Total @

Present Value to 08/01/2017

> 2.7936067382%

02/01/2018 831,575.00 831,575.00 82Q119.5408/01/2018 2,051,575.00 2,051,575.00 1,995,440.9102/01/2019 819,375.00 819,375.00 785,977.1508/01/2019 2,074,375.00 2,074,375.00 1,962,412.1102/01/2020 794,275.00 794,275.00 741,053.5208/01/2020 2,099,275.00 2,099,275.00 1,931,629.1602/01/2021 768,175.00 768,175.00 697,092.3608/01/2021 2,133,175.00 2,133,175.00 1,909,116.2602/01/2022 734,050.00 734,05000 647,898.9408/01/2022 2,164,050.00 2,164,050 00 1,883,756.0202/01/2023 698,300.00 698,30000 599,480.6108/01/2023 698,300.00 698,30000 591,222.4002/01/2024 698,300.00 698,30000 583,077.9408/01/2024 698,300.00 698,30000 575,045.6902/01/2025 698,300.00 698,30000 567,124.0808/01/2025 698,300.00 698,30000 559,311.6002/01/2026 698,300.00 698,30000 551,606.7308/01/2026 698,300.00 698,30000 544,008.0102/01/2027 698,300.00 698,30000 536,513.9708/01/2027 27,653,300.00 27,653,300 00 2Q953,746.81

48,407,900.00 48,407,900 00 39,435,633.80

Proceeds Summary

Delivery date 08/01 /2017Par Value 33,530,000.00Premium (Discount) 5,905,633.80

T arget for y i el d cal cul ati on 39,435,633.80


PROOF OF ARBITRAGE YIELD




Assumed Call Computation Dates for Premium Bonds

BondComponent

MaturityDate Rate Yield

CallDate

CallPrice

Yield To Call/Maturity

TERM 20*2 08/01/2038 5.0006 2.9606 08/0111027 100.000 2.9600619%TERM 20*2 08/01/2039 5.0006 2.9606 08/01/2027 100.000 2.9600619%TERM 20*2 08/01/20*0 5.0006 2.9606 08/01/2027 100.000 2.9600619%TERM 20*2 08/01/20*1 5.0006 2.9606 08/0111027 100.000 2.9600619%TERM 20*2 08/01/20*2 5.0006 2.9606 08/01/2027 100.000 2.9600619%TERM20*7 08/01/20*3 5.2506 2.9106 08/01/2027 100.000 2.910072©6TERM20*7 08/01/20*4 5.2506 2.9106 08/0111027 100.000 2.910072©6TERM20*7 08/01/20*5 5.2506 2.9106 08/01/2027 100.000 2.910072©6TERM20*7 08/01/20*6 5.2506 2.9106 08/01/2027 100.000 2.910072©6TERM20*7 08/01/20*7 5.2506 2.9106 08/0111027 100.000 2.910072©6

Rejected Call Computation Dates for Premium Bonds

BondComponent

MaturityDate Rate Yield

CallDate

CallPrice

Yield To Call/Maturity

IncreasetoYield

TERM 20*2 08/01/2038 5.00C% 2.96C% 3.7817653% 08217033%TERM 20*2 08/01/2039 5.00C% 2.96C% 3.8143991% 08543372%TERM 20*2 08/01/20*0 5.00C% 2.96C% 3.8439867% 08839248%TERM 20*2 08/01/20*1 5.00C% 2.96C% 3.8709105% 09108486%TERM 20*2 08/01/20*2 5.00C% 2.96C% 3.8954917% 09354297%TERM20*7 08/01/20*3 5.25C% 2.91C% 3.9953226% 1.0852500%TERM20*7 08/01/20*4 5.25C% 2.91C% 4.0186324% 1.1085598%TERM20*7 08/01/20*5 5.25C% 2.91C% 4.0*00808% 1.1300082%TERM20*7 08/01/20*6 5.25C% 2.91C% 4.0598627% 1.1497901%TERM20*7 08/01/20*7 5.25C% 2.91C% 4.078147C% 1.1680744%


FORM 8038STATISTICS




Dated Date 08/01/2017Delivery Date 08/01/2017

B ond Component Date Principal Coupon Price Issue PriceRedemption at Maturity

Serial Bonds:08/01/2018 1,220,000.00 2.00CP6 101.092 1,233,322.40 1,220,0000008/01/2019 1,255,000.00 4.00CP6 105.946 1,329,622.30 1,255,000 0008/01/2020 1,305,000.00 4.00CP6 108.596 1,417,177.80 1,305,000 0008/01/2021 1,365,000.00 5.00CP6 114.924 1,568,712.60 1,365,000 0008/01/2022 1,430,000.00 5.00CP6 118.068 1,688,372.40 1,430,000 00

2042 Term Bond:08/01/2038 205,000.00 s.cxm 117.546 240,969.30 205,000.0008/01/2039 315,000.00 s.cxm 117.546 370,269.90 315,000.0008/01/2040 390,000.00 s.ocm 117.546 458,429.40 390,000.0008/01/2041 3,170,000.00 5.00CP6 117.546 3,726,208.20 3,170,000 0008/01/2042 3,335,000.00 5.00CP6 117.546 3,920,159.10 3,335,00000

2047Term Bond:08/01/2043 3,510,000.00 5.25CP6 12Q176 4,218,177.60 3,510,000.0008/01/2044 3,700,000.00 5.25CP6 12Q176 4,446,512.00 3,700,000.0008/01/2045 3,895,000.00 5.25CP6 12Q176 4,680,855.20 3,895,000.0008/01/2046 4,105,000.00 5.25CP6 12Q176 4,933,224.80 4,105,000.0008/01/2047 4,330,000.00 5.25CP6 12Q176 5,203,620.80 4,330,000.00

33,530,000.00 39,435,633.80 33,530,000.00

MaturityDate

1 nterest Rate

IssuePrice

Stated Redemption at Maturity

WeightedAverageMaturity Yield

Final Maturity Entire Issue

08/01/2047 5.25G& 5,203,620.8039,435,633.80

4,330,000.00 33,530;000.00 22.6701 2.7936$)

Proceeds used for accrued interest 0.00Proceeds used for bond issuance costs (including underwriters' discount) 592,229.69Proceeds used for credit enhancement 0.00Proceeds allocated to reasonably required reserve or replacement fund 0.00Proceeds used to currently refund prior issues 7,12Q00Q00Proceeds used to advance refund prior issues 0.00Remaining weighted average maturity of the bonds to be currently refunded 3.0897Remaining weighted average maturity of the bonds to be advance refunded Q0000


FORM 8038STATISTICS




Refunded B onds

BondComponent Date Principal Coupon Price Issue Price

Wastewater Revenue Refunding Bonds, Series 2006A:SERIALS 08/01/2018 1,315,00000 4.00C% 100.000 1,315,00000SERIALS 08/01/2019 1,365,00000 4.00C% 99.205 1,354,14825SERIALS 08/01/2020 1,42000000 4.ocm 98.640 1,40068a 00SERIALS 08/01/2021 1,480100000 4.125% 98.850 1,462,98000SERIALS 08/01/2022 1,54Q00Q00 4.625% 102.563 1,579,47020

7,12000000 7,112,286.45

RemainingLast WeightedCall Issue AverageDate Date Maturity

Wastewater Revenue Refunding Bonds, Series 2006AAll Refunded Issues

08/01/201708/01/2017

10/26/2006 3.08973.0897




FINAL PRICING Refunding of 2006A Bonds


Dated Date 08/01/2017Delivery Date 08/01/2017First Coupon 02/01/2018Last Maturity 08/01/2022

Arbitrage Yield 2.793607%T rue 1 nterest Cost (Tl C) 1.307663%Net 1 nterest Cost (NIC) 1.399484%All-In TIC 1.70121CKAverage Coupon 4.502098%

Average Life (years) 3.081Weighted Average Maturity (years) 3.159Duration of 1 ssue (years) 2.948

Par Amount 6,575,000.00Bond Proceeds 7,237,207.50Total Interest 911,900.00Net Interest 283,465.56Total Debt Service 7,486,900.00Maximum Annual DebtService 1,474,350.00Average Annual DebtService 1,497,38000

Underwriter's Fees (per $1000)Average Takedcwn 3.500000Other Fee 1.636587

Total Underwriter's Discount 5.136587


Par Average Average PV of 1 bpB ond Component Value Price Coupon Life change

Serial Bonds 6,575,00000 11Q072 4.502% 3.081 2,135.60

6,575,00000 3.081 2,135.60

All-In ArbitrageTIC TIC Yield

Par Value 6,575,00000 6,575,00000 6,575,00000+Accrued Interest +Premium (Discount) 662,207.50 662,207.50 662,207.50-Underwriter's Discount -33,773.06 -33,773.06-Cost of 1 ssuance Expense -Other Amounts

-82,359.08

Target Value 7,203,434.44 7,121,075.36 7,237,207.50

Target Date 08/01/2017 08/01/2017 08/01/2017Yield 1.307663% 1.701210% 2.793607%


BOND DEBTSERVICE




PeriodEnding Principal Coupon Interest

DebtService

06/30/201806/30/2019 1,220,000 2.00Cfc

133,275254,350

133,2751,474,350

06/30/2020 1,255,000 4.00C& 217,050 1,472,05006/30/2021 1,305,000 4.ocm 165,850 1,470,85006/30/2022 1,365,000 5.ocm> 105,625 1,470,62506/30/2023 1,430,000 5.ocm> 35,750 1,465,750

6,575,000 911,900 7,486,900


SUMMARY OF REFUNDING RESULTS




Dated Date 08/01/2017Delivery Date 08/01/2017Arbitrage yield 2.793607%E screw yield 0.00000C%V al ue of N egati ve A rbi trage

Bond Par Amount 6,575,000.00T rue 1 nterest Cost 1.307663%Net Interest Cost 1.399484%All-In TIC 1.701210%Average Coupon 4.502098%Average Life 3.081

Par amount of refunded bonds 7,120,000.00Average coupon of refunded bonds 4.25325C%Average life of refunded bonds 3.079

PV of prior debt to 08/01 /2017 @ 2.793607% 7,421,173.14Net PV Savings 522,953.34Percentage savings of refunded bonds 7.34485C%


SAVINGS




Present Value

DatePrior

Debt ServiceRefunding

Debt Service Savings @to 08/01/2017

> 2.7936067%

06/30/2018 148,137.50 133,275.00 14,862.50 14,657.7606/30/2019 1,584,975.00 1,474,35000 110625.00 107,587.9206/30/2020 1,581,375.00 1,472,05000 109,325.00 103,443.0006/30/2021 1,580,675.00 1,4701850 00 109,825.00 101,101.8706/30/2022 1,581,75000 1,470625.00 111,125.00 99,454.6406/30/2023 1,575,612.50 1,465,75000 109,862.50 95,632.79

8,052,525.00 7,486,90000 565,625.00 521,877.98

Savings Summary

PV of savings from cash flow 521,877.98Plus: Refunding funds on hand 1,075.36

Net PV Savings 522,953.34


SUMMARY OF BONDS REFUNDED




MaturityBond Date

1 nterestRate

ParAmount

CallDate

CallPrice

Wastewater Revenue Refunding Bonds, Series 2006A: SERIALS 08/01/2018 4.00C% 1,315,000.00 08/01/2017 100.000

08/01/2019 4.00C% 1,365,000.00 08/01/2017 100.00008/01/2020 4.ocm 1,420,000.00 08/01/2017 100.00008/01/2021 4.125% 1,480,000.00 08/01/2017 100.00008/01/2022 4.625% 1,540,000.00 08/01/2017 100.000

7,120,000.00


PRIOR BONDDEBTSERVICE





06/30/201806/30/2019 1,315,000 4.00C%

148,137.50269,975.00

148,137.501,584,975.00

06/30/2020 1,365,000 4.00C% 216,375.00 1,581,375.0006/30/2021 1,420,000 4.ocm 16Q675.00 1,580,675.0006/30/2022 1,480,000 4.125% 101,750.00 1,581,7500006/30/2023 1,540,000 4.625% 35,612.50 1,575,612.50

7,120,000 932,525.00 8,052,525.00


ESCROW REQUIREMENTS




Period PrincipalEnding Redeemed Total

08/01/2017 7,120,000.00 7,120,000.00

7,120,000.00 7,120,000.00


ESCROW COST




Purchase Cost of Cash TotalDate Securities Deposit Escrow Cost

08/01/2017 7,120;000.00 7,120,000.00

0 7,120,000.00 7,120,000.00


ESCROW SUFFICIENCY




E screw Net Escrow Excess ExcessDate Requirement Receipts Receipts Balance

08/01/2017 7,12Q00Q00 7,120,000.00

7,12Q00Q00 7,120,000.00 0.00


ESCROW STATISTICS




Total Escrow Cost

ModifiedDuration

(years)

Yield to Receipt

Date

Yield to Disbursement

Date

PerfectE screw

Cost

Value of Negative

ArbitrageCost of

Dead Time

Global Proceeds Escrow: 7,120;000.00 7,120,000.00

7,120;000.00 7,120,000.00 0.00 0.00

Delivery date 08/01 /2017Arbitrage yield 2.793607%




FINAL PRICING New M oney I ssuance


Dated Date 08/01/2017Delivery Date 08/01/2017First Coupon 02,01/2018Last Maturity 08/31/2047

Arbitrage Yield 2.793607%T rue 1 nterest Cost (Tl C) 4.027058%Netlnterest Cost (NIC) 4.487935%AIMnTIC 4.095351%Average Coupon 5.188373%

Average L i fe (years) 27.039Weighted Average Maturity (years) 27.056Duration of 1 ssue (years) 15.849

Par Amount 26,955,000.00Bond Proceeds 32,198,426.30Total Interest 37,814,162.50Net Interest 32,709,192.83Total DebtService 64,769,162.50MaximumAnnual DebtService 4,444,450.00Average Annual DebtService 2,158,972.08

U nderwriter's Fees (per $1000)Average Takedown 3.500000Other Fee 1.636584

Total Underwriter'sDiscount 5.136584


Bond ComponentPar

Value PriceAverageCoupon

AverageLife

PV of 1 bp change

2042 TermBond 7,415,000.00 117.546 5.000% 24.229 7,044.252047 TermBond 19,540,000.00 120.176 5.250% 28.105 18,758.40

26,955,000.00 27.039 25,802.65

All-In ArbitrageTIC TIC Yield

ParValue 26,955,000.00 26,955,000.00 26,955,000.00+Accrued 1 nterest+ Premi urn (D i scount) 5,243,426.30 5,243,426.30 5,243,426.30- U nderwri ter's D i scount -138,456.63 -138,456.63-Cost of 1 ssuance E xpense -337,640.92-Other Amounts

Target Value 32,059,969.67 31,722,328.75 32,198,426.30

Target Date 08/31/2017 08/31/2017 08/31 /2017Yield 4.027058% 4.095351% 2.793607%


BOND DEBTSERVICE


FINAL PRICING New M oney I ssuance



06/30/2018 698,30000 698,300.0006/30/2019 1,396,60000 1,396,6000006/30/2020 1,396,60000 1,396,6000006/30/2021 1,396,60000 1,396,6000006/30/2022 1,396,60000 1,396,6000006/30/2023 1,396,60000 1,396,6000006/30/2024 1,396,60000 1,396,6000006/30/2025 1,396,60000 1,396,6000006/30/2026 1,396,60000 1,396,6000006/30/2027 1,396,60000 1,396,6000006/30/2028 1,396,60000 1,396,6000006/30/2029 1,396,60000 1,396,6000006/30/2030 1,396,60000 1,396,6000006/30/2031 1,396,60000 1,396,6000006/30/2032 1,396,60000 1,396,6000006/30/2033 1,396,60000 1,396,6000006/30/2034 1,396,60000 1,396,6000006/30/2035 1,396,60000 1,396,6000006/30/2036 1,396,60000 1,396,6000006/30/2037 1,396,60000 1,396,6000006/30/2038 1,396,60000 1,396,6000006/30/2039 205,000 5.00CP6 1,391,475.00 1,596,475.0006/30/20*0 315,000 5.00CP6 1,378,475.00 1,693,475.0006/30/20*1 390,000 5.00CP6 1,36Q850.00 1,750,850 0006/30/20*2 3,170,000 5.00C& 1,271,850.00 4,441,850 0006/30/20*3 3,335,000 5.00C& 1,109,225.00 4,444,225.0006/30/20*4 3,510,000 5.25CP6 933,712.50 4,443,712.5006/30/20*5 3,700,000 5.25CP6 744,450.00 4,444,450 0006/30/20*6 3,895,000 5.25CP6 545,081.25 4,440,081.2506/30/20*7 4,105,000 5.25CP6 335,081.25 4,440,081.2506/30/20*8 4,330,000 5.25CP6 113,662.50 4,443,662.50

26,955,000 37,814,162.50 64,769,162.50


$33,530,000City of Richmond, California Wastewater Revenue Bonds,

Series 2017A

BOND PURCHASE AGREEMENT

July 19, 2017

City of Richmond 450 Civic Center Plaza Richmond, California 94804

Ladies and Gentlemen:

The undersigned, Stifel, Nicolaus & Company, Incorporated (the “Representative”), acting for and on behalf of itself and Barclays Capital, Inc. (collectively, the “Underwriters”), offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Richmond, California (the “City”), which will be binding upon the City and the Underwriters upon the acceptance hereof by the City. This offer is made subject to its acceptance by the City by execution of this Purchase Agreement and its delivery to the Representative on or before 5:00 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture (as hereafter defined).

1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriters hereby agree to purchase from the City for offering to the public, and the City hereby agrees to sell to the Underwriters for such purpose, all (but not less than all) of the $33,530,000 aggregate principal amount of the City’s Wastewater Revenue Bonds, Series 2017A (the “Bonds”), at a purchase price equal to $39,263,404.11, being the aggregate principal amount thereof less an underwriters’ discount of $172,229.69 and plus original issue premium of $5,905,633.80.

2. Description of Bonds; Purpose of the Bonds; Security for the Bonds.

(a) Description of the Bonds. The Bonds shall be issued pursuant to (i) a Wastewater Revenue Bond Indenture, dated as of October 1, 2006, as supplemented and amended pursuant to (i) a First Supplemental Wastewater Revenue Bond Indenture, dated as of October 1,2006, (ii) a Second Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2006, (iii) a Third Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2008, (iv) a Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of October 1, 2010,(v) a Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of July 1, 2017 and (vi) a Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of August 1,2017 (as so supplemented and amended, the “Indenture”), each by and between the City and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”), and (ii) pursuant to the City's Charter and Chapter 13.56 of Article 13 of the

Richmond Municipal Code. The Bonds shall be as described in the Indenture and the Official Statement (described below).

(b) Purpose of the Bonds. The Bonds are being issued by the City to provide funds to (i) finance capital improvements to the City’s wastewater treatment and collection facilities (the “Enterprise”), (ii) refund all of the outstanding Wastewater Revenue Refunding Bonds, Series 2006A (the “Prior Bonds”) issued by the City in the original aggregate principal amount of $16,570,000 and (ii) pay costs of issuance relating to the Bonds.

(c) Security for the Bonds. Under the Indenture, the Bonds are secured by and payable from “Net Revenues” (as such term is defined in the Indenture) of the Enterprise and amounts on deposit in certain funds and accounts established by the Indenture.

(d) Additional Obligations. The City may issue additional obligations on a parity with the Bonds, in accordance with Section 3.05 of the Indenture.

3. Public Offering.

The Underwriters agree to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) set forth on Appendix A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriters reserve the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriters shall not change the interest rates set forth on Appendix A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices.

The Bonds will be subject to redemption as set forth on Appendix A.

4. Preliminary Official Statement; Delivery of Official Statement; Continuing Disclosure Agreement.

(a) Preliminary Official Statement. The City has delivered or caused to be delivered to the Underwriters prior to the execution of this Purchase Agreement, copies of the Preliminary Official Statement relating to the Bonds (the “Preliminary Official Statement”). Such Preliminary Official Statement is the official statement deemed final by the City for purposes of the Rule and approved for distribution by resolution of the City Council of the City. The City executed and delivered to the Underwriters a certification to such effect in the form attached hereto as Appendix B.

(b) Delivery of Official Statement. Within seven (7) business days from the date hereof, or such earlier date identified by the Underwriters to meet their obligation under Municipal Securities Rulemaking Board Rule G-32, the City shall deliver to the Underwriters a final Official Statement, executed on behalf of the City by authorized representatives of such entities and dated the date of delivery thereof to the Underwriters, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the City and the Underwriters (the “Final Official Statement”) and such additional conformed copies thereof as the Underwriters may reasonably request in sufficient quantities to comply with the Rule and to meet potential customer requests for copies of the Official Statement. The Preliminary Official Statement and the Final Official Statement, including the cover pages, the appendices thereto and all

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information incorporated therein by reference are hereinafter referred collectively to as the“Official Statement.”

The Underwriters agree to comply with the Rule and applicable rules of the Municipal Securities Rulemaking Board with respect to the Preliminary Official Statement and the Official Statement.

(c) Continuing Disclosure Agreement. In order to enable the Underwriters to comply with Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”), the City will execute and deliver a Continuing Disclosure Agreement, dated as of August 1, 2017 (the ‘‘Continuing Disclosure Agreement”), by and between the City and Willdan Financial Services, as dissemination agent (the ‘‘Dissemination Agent”).

5. The Closing. At 8:00 a.m., California time, on August 1,2017, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the City and the Underwriters (the ‘‘Closing Date”), the City will deliver (i)the Bonds in definitive form to the Underwriters in such city as the Underwriters shall request, and (ii)the closing documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, San Francisco, California (‘‘Bond Counsel”), or another place to be mutually agreed upon by the City and the Underwriters. The Underwriters will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof in immediately available funds to the order of the Trustee on behalf of the City. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the ‘‘Closing.” The Bonds will be delivered in such denominations and deposited in the account or accounts specified by the Underwriters pursuant to written notice given by the Underwriters not later than five business days prior to Closing. The Bonds will be made available to the Underwriters for inspection and packaging not less than 48 hours prior to the Closing.

6. City Representations, Warranties and Covenants. The City represents, warrants and covenants to the Underwriters that:

(a) Due Organization, Existence and Authority. The City is a municipal corporation and chartered city, duly organized and existing under the Constitution and the laws of the State, with full right, power and authority to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Agreement and the Indenture (collectively, the ‘‘City Documents”) and to carry out and consummate the transactions contemplated by the City Documents and described in the Official Statement.

(b) Due Authorization and Approval. By all necessary official action of the City, the City has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations contained in, the Preliminary Official Statement, the Official Statement and the City Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the City Documents will constitute the valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. The City has complied, and will at the Closing be in compliance in all respects, with the terms of the City Documents.

(c) Official Statement Accurate and Complete. The Preliminary Official Statement (excluding information about The Depository Trust Company and its book-entry only system, as

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to which no opinion is expressed) was as of its date, and the Official Statement (excluding information about The Depository Trust Company and its book-entry only system, as to which no opinion is expressed) is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement (excluding information about The Depository Trust Company and its book- entry only system, as to which no opinion is expressed) contained and the Official Statement (excluding information about The Depository Trust Company and its book-entry only system, as to which no opinion is expressed) contains, and up to and including the Closing will contain, no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.

(d) Underwriters’ Consent to Amendments and Supplements to Official Statement. Until the date which is twenty-five (25) days after the end of the underwriting period (as defined above), if any event shall occur of which the City is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official Statement (excluding information about The Depository Trust Company and its book-entry only system, as to which no opinion is expressed), in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the Underwriters of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriters’ opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriters a reasonable number of copies of such supplement. As used herein, the term “end of the underwriting period” means the later of such time as (i) the City delivers the Bonds to the Underwriters, or (ii) the Underwriters do not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Representative gives notice to the contrary, the “end of the underwriting period” shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period.”

(e) No Breach or Default. To the best knowledge of the City, as of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the City is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the City’s performance under the City Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the City Documents and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States, or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any

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nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents.

(f) No Litigation. To the best knowledge of the City, as of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the collection of Net Revenues pledged under the Indenture, or in any way contesting or affecting the validity of the Bonds or the City Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation; (iii) which may result in any material adverse change relating to the City or relating to the financial condition of the City; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.

(g) Preliminary Official Statement. For purposes of the Rule, the City has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriters, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule.

(h) Continuing Disclosure. Except as disclosed in the Preliminary Official Statement and the Official Statement, the City has not failed in any material respect to comply with any undertaking under the Rule in the past five years.

(i) Representation to Underwriters. Any certificate signed by any official of the City and delivered to the Underwriters shall be deemed to be a representation and warranty by the City to the Underwriters as to the statements made therein.

(j) Relationship to Underwriters. The City acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction among the City and the Underwriters; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriters are and have been acting solely as a principal and is not acting as a Municipal Advisor (as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the Underwriters have not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or is currently providing other services to the City on other matters); (iv) the City has consulted its own legal, accounting, tax, financial and other advisors to the extent it has deemed appropriate; (v) the Underwriters have financial and other interests that may differ from and be adverse to those of the City, and (vi) the Underwriters have provided the City with certain disclosures required under the rules of the MSRB.

(k) Cooperation with Blue Sky. The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters

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may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate; provided, however, that the City shall not be required to register as a dealer or broker or foreign corporation in any such state or jurisdiction or consent to service of process therein.

7. Closing Conditions. The Underwriters have entered into this Purchase Agreement in reliance upon the representations, warranties and covenants herein and the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriters’ obligations under this Purchase Agreement to purchase and pay for the Bonds shall be subject to the following additional conditions:

(a) Bring-Down Representation. The representations, warranties and covenants of the City contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing.

(b) Executed Agreements and Performance Thereunder. At the time of the Closing (i) the City Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriters and (ii) there shall be in full force and effect such ordinances and resolutions (the “Resolutions”) as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated by the Official Statement and the City Documents.

(c) Termination Events. The Underwriters shall have the right to terminate this Purchase Agreement, without liability therefor, by notification to the City if at any time at or prior to the Closing:

(i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or

(ii) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriters, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or

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State authority materially adversely affecting the federal or State tax status of the City, or the interest on bonds or notes or obligations of the general character of the Bonds; or

(Hi) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State of California or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriters, materially adversely affects the market price of the Bonds; or

(iv) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or

(v) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriters’ ability to trade the Bonds; or

(vi) a general banking moratorium shall have been established by federal or State authorities; or

(vii) there shall have occurred any outbreak of hostilities or other local, national or international calamity or crisis, or a default with respect to the debt obligations of, or the institution of proceedings under the federal bankruptcy laws by or against, any state of the United States or agency thereof, or any city in the United States having a population of over one million, the effect of which on the financial markets of the United States will be such as in the Underwriters’ reasonable judgment, makes it impracticable for the Underwriters to market the Bonds or enforce contracts for the sale of the Bonds; or

(viii) any rating of the Bonds shall have been downgraded, suspended or withdrawn by a national rating service, which, in the Underwriters’ reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or

(ix) the commencement of any action, suit or proceeding described in Paragraph 6(f) hereof which, in the judgment of the Underwriters, materially adversely affects the market price of the Bonds; or

(x) there shall be in force a general suspension of trading on the New York Stock Exchange; or

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(xi) there shall have been any materially adverse change in the affairs of the City which in the Underwriters’ reasonable judgment materially adversely affects the ability of the Underwriters to market the Bonds.

(d) Closing Documents. At or prior to the Closing, the Underwriters shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents:

(1) Bond Opinion. An approving opinion of Bond Counsel dated the date of the Closing and substantially in the form appended to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Underwriters, to the effect that the foregoing opinion addressed to the City may be relied upon by the Underwriters to the same extent as if such opinion were addressed to them.

(2) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriters, in form and substance acceptable to the Underwriters, and dated the date of the Closing substantially to the following effect:

(i) This Purchase Contract has been duly executed and delivered by the City and is a valid and binding agreement of the City, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and to the exercise of judicial discretion in appropriate cases;

(ii) The statements contained in the Official Statement under the captions, “The Series 2017A Bonds,” “Security and Sources of Payment for the Series 2017A Bonds” (excluding information as provided under subheading “Outstanding Parity Debt and Reserve Funds Security Other Parity Debt”) and “Tax Matters” and contained in Appendix C-“Summary of Certain Provisions OF THE INDENTURE” and APPENDIX D-“PROPOSED FORM OF OPINION OF BOND Counsel” excluding any material that may be treated as included under such captions by cross-reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture and the form and content of the approving opinion of Bond Counsel, are accurate in all material respects;; and

(iii) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended.

(3) City Attorney Opinion. An opinion of the City Attorney, dated the date of the Closing and addressed to the Underwriters, in form and substance acceptable to the Underwriters, substantially to the following effect:

(i) The City is a municipal corporation and chartered city, duly organized and validly existing under the Constitution and the laws of the State of California;

(ii) The resolutions of the City (the “City Resolutions”) approving and authorizing the execution and delivery of the City Documents and approving the Preliminary Official Statement and the Official Statement, were duly adopted at a meeting of the City Council called and held pursuant to law and with all public

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notice required by law and at which a quorum was present and acting throughout and the City Resolutions are in full force and effect and have not been modified, amended or rescinded;

(iii) The City Documents have been duly authorized, executed and delivered by the City and constitute the valid and binding agreements of the City enforceable against the City in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(iv) The sewer charge which will provide the security for the payment of the Bonds was validly imposed by the City;

(v) To the best knowledge of the City Attorney after due investigation, the execution and delivery of the City Documents and compliance with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with, or constitute on the part of the City a breach of or default under, any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject;

(vi) No additional authorization, approval, consent, waiver or any other action by any person, board or body, public or private, not previously obtained is required as of the date of the Closing for the City to enter into the City Documents, or to perform its obligations thereunder;

(vii) Except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or, to the best knowledge of such counsel after due investigation, threatened against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or seeking to restrain or enjoin the City’s obligations under the City Documents or in any way contesting or affecting the validity of the City Documents or any of the transactions referred to therein or contemplated thereby or contesting the authority of the City to enter into or perform its obligations under any of the City Documents, or under which a determination adverse to the City would have a material adverse effect upon the financial condition or the revenues of the City, or which, in any manner, questions the right of the City to issue the Bonds or to use the Net Revenues for repayment of the Bonds; and

(viii) Without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Official Statement, nothing has come to the attention of the City Attorney which would lead the City Attorney to believe that the Preliminary Official Statement and the Official Statement as of their respective dates or the Closing Date (excluding therefrom the financial information and the statistical data included thereon included in the Preliminary Official Statement and the Official Statement, as to which no opinion is expressed) contain any untrue statement of a material fact or

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omits to state any material fact necessary to make the statements therein, in the light of the circumstance under which they were made, not misleading.

(4) Disclosure Counsel Letter. A letter of Schiff Hardin LLP, San Francisco, California (“Disclosure Counsel”), dated the date of the Closing, addressed to the Underwriters substantially to the following effect:

(i) On the basis of the information made available to such firm in the course of its participation in the preparation of the Preliminary Official Statement and the Official Statement (but without having undertaken to determine or verify independently, or assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Preliminary Official Statement and the Official Statement), no facts have come to the attention of the personnel in such firm directly involved in rendering legal advice and assistance to the City in connection with the preparation of the Preliminary Official Statement and the Official Statement which cause such firm to believe that the Preliminary Official Statement or Official Statement as of their respective dates (excluding therefrom financial, engineering and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions, including without limitation, the descriptions of the City’s finances and operation; information relating to the Depository Trust Company and the book-entry only system; as to all of which such firm expresses no view as Disclosure Counsel) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended.

(5) Trustee Counsel Opinion. The opinion of counsel to Trustee, dated the date of the Closing, addressed to the Underwriters, to the effect that:

(i) The Trustee is a national banking association, duly organized and validly existing under the laws of the United States of America, having full power to enter into, accept and administer the trusts created under the Indenture;

(ii) The Indenture has been duly authorized, executed and delivered by the Trustee, and constitutes the legal, valid and binding obligations of the Trustee, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought; and

(iii) Except as may be required under Blue Sky or other securities laws of any state, no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Indenture, or the consummation of the transactions contemplated thereby.

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(6) Underwriters’ Counsel Opinion. An opinion of Jones Hall, A Professional Law Corporation, counsel to the Underwriters, dated the Closing Date, and addressed to the Underwriters, to the effect that:

(i) During the course of serving as Underwriters’ Counsel in connection with the issuance of the Bonds and without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Official Statement, no information came to the attention of the attorneys in such firm rendering legal services in connection with the issuance of the Bonds that would lead them to believe that the Preliminary Official Statement and the Official Statement (excluding therefrom the financial statements, any financial or statistical data, or forecasts, charts, numbers, estimates, projections, assumptions or expressions of opinion included in the Preliminary Official Statement and the Official Statement, information regarding The Depository Trust Company and its book-entry only system, and the appendices to the Official Statement as to which no opinion need be expressed), as of their respective dates or the Closing Date, contain any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended.

(7) Trustee Certificate. A certificate of the Trustee, dated the date of Closing, in form and substance acceptable the Underwriters, to the following effect:

(i) The Trustee is duly organized and existing as a national banking association in good standing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture;

(ii) The Trustee has duly and validly executed the Indenture, and the Indenture constitutes the legal, valid and binding agreement of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and to the exercise of judicial discretion in appropriate cases; and

(iii) To the Trustee’s best knowledge after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body served on the Bank or threatened against the Bank which in the reasonable judgment of the Bank would affect the existence of the Bank or in any way contesting or affecting the validity or enforceability of the Trustee/Escrow Agent Agreements or contesting the powers of the Bank or its authority to enter into, accept and perform its obligations under the Trustee/Escrow Agent Agreements.

(8) City Certificate. A certificate of the City, dated the date of the Closing, signed on behalf of the City by a duly authorized officer of the City to the effect that:

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(i) The representations, warranties and covenants of the City contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the City has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the City at or prior to the date of the Closing; and

(ii) The best knowledge of the City after due investigation, no event affecting the City has occurred since the date of the Preliminary Official Statement or the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Preliminary Official Statement or the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(9) Documents. Executed copies of each of the City Documents.

(10) Resolutions. Certified copies of the City Resolutions.

(11) Form 8038-G. Evidence that the federal tax information form 8038-G has been prepared for filing.

(12) Nonarbitrage Certificate. A tax and nonarbitrage certificate in form satisfactory to Bond Counsel.

(13) Continuing Disclosure Agreement A Continuing Disclosure Agreement executed by the City, the Trustee and the Dissemination Agent in order to assist the Underwriters’ compliance with Rule 15c2-12.

(14) Ratings. Evidence that the Bonds have been given the ratings shown in the Official Statement.

(15) Additional Documents. Such additional certificates, instruments and other documents as Bond Counsel, the City or the Underwriters may reasonably deem necessary.

If the City shall be unable to satisfy the conditions contained in this Purchase Agreement, or if the obligations of the Underwriters shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriters nor the City shall be under further obligation hereunder, except as further set forth in Section 9 hereof.

8. Expenses. The Underwriters shall be under no obligation to pay and the City shall pay or cause to be paid the expenses incident to the performance of the obligations of the City hereunder including but not limited to (a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the City Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, (b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants retained by the City, (c) the fees and disbursements of Bond Counsel and its financial advisor (if any), (d) the fees and disbursements of Disclosure Counsel, (e) the cost of preparation and printing of the Preliminary Official Statement and any supplements and amendments thereto

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and the cost of preparation and printing of the Official Statement, including the requisite number of copies thereof for distribution by the Underwriters, and (f) charges of rating agencies for the rating of the Bonds.

The Underwriters shall pay and the City shall not be under an obligation to pay all expenses incurred by it, the fees and expenses of its counsel, the CUSIP Service Bureau charge for the assignment of said numbers, and the costs of qualifying the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate.

9. Notice. Any notice or other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to such entity at the address set forth above. Any notice or other communication to be given to the Underwriters under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, CA 94104, Attention: Jim Cervantes, Managing Director.

10. Establishment of Issue Price.

(a) The Representative, on behalf of the Underwriters, agrees to assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

(b) The City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Representative shall report to the City the price or prices at which the Underwriters have sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Representative agrees to promptly report to the City the prices at which Bonds of that maturity have been sold by the Underwriters to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.

(c) The Representative confirms that:

(i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the Representative is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each Underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Representative and as set forth in the related pricing wires, and

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(ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each Underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative or the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Representative or the Underwriter and as set forth in the related pricing wires.

(d) The Underwriters acknowledge that sales of any Bonds to any person that is a related party to an Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:

(i) “public” means any person other than an underwriter or a related party,

(ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public),

(iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and

(iv) “sale date” means the date of execution of this Purchase Agreement by all parties.

11. Entire Agreement. This Purchase Agreement, when accepted by the City, shall constitute the entire agreement among the City and the Underwriters and is made solely for the benefit of the City and the Underwriters (including the successors or assigns of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the City’s representations, warranties and agreements in this Purchase Agreement shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriters, until the earlier of (a) delivery of and payment for the Bonds hereunder, and (b) any termination of this Purchase Agreement.

14

12. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

13. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

14. State of California Law Governs. The validity, interpretation and performance of this Purchase Agreement shall be governed by the laws of the State of California.

15

15. No Assignment. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriters or the City without the prior written consent of the other parties hereto.

STi£EL, NICOLAUS & COMPANY, ‘ORATED, acting for and on

behaV of itself and Baitdays CapitaI\fncT

Qs' Authorized Representative

Accepted as of the date first stated above at____ a.m,.


Authorized Representative

16

15. No Assignment. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriters or the City without the prior written consent of the other parties hereto.

STIFEL, NICOLAUS & COMPANY, INCORPORATED, acting for and on behalf of itself and Barclays Capital, Inc.

By:_______________________Authorized Representative

Accepted as of the date first stated above at tfiik a.m./p.m.:


16

APPENDIX A

MATURITY SCHEDULE

Maturity Date Principal Interest(Auaust 1) Amount Rate Yield Price

2018 $ 1,220,000 2.000% 0.900% 101.0922019 1,255,000 4.000 0.990 105.9462020 1,305,000 4.000 1.080 108.5962021 1,365,000 5.000 1.170 114.9242022 1,430,000 5.000 1.260 118.0682042 7,415,000 5.000 2.960 117.546 C2047 19,540,000 5.250 2.910 120.176 C

C: Term Bonds; priced to first optional redemption date of August 1,2027 at par.

Redemption Provisions

Optional Redemption.

The Bonds maturing on August 1, 2042 and August 1, 2047 shall be subject to redemption prior to maturity on or after August 1, 2027, at the option of the City, from any source of available funds, as a whole or in part on any date (by such maturities as may be specified by the City and by lot within a maturity), on any Business Day, at a Redemption Price equal to 100% of the principal amount of Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium.

Mandatory Redemption

(i) The Trustee shall establish and maintain with the Principal Fund a Sinking Account for the Bonds maturing on August 1, 2042. The Bonds maturing on August 1, 2042 shall be redeemed (or paid at maturity, as the case may be) by the application of mandatory Sinking Account installments in the amounts and upon the Sinking Account Payment Dates hereby established for the Bonds maturing on August 1,2042, as follows:

2042Term Bond Sinking Account


(August 1)2038203920402041 2042*


$ 205,000315.000390.000

3.170.0003.335.000

* Maturity

A-1

(ii) The Trustee shall establish and maintain with the Principal Fund a Sinking Account for the Bonds maturing on August 1, 2047. The Bonds maturing on August 1, 2047 shall be redeemed (or paid at maturity, as the case may be) by the application of mandatory Sinking Account installments in the amounts and upon the Sinking Account Payment Dates hereby established for the Bonds maturing on August 1,2047, as follows:

2047 Term Bond Sinking Account


(August 1)Mandatory Sinking

Account Installments2043204420452046 2047*

$3,510,0003.700.0003.895.0004.105.0004.330.000

Maturity

A-1

APPENDIX B

FORM OF RULE 15c2-12 CERTIFICATE

City of Richmond, California Wastewater Revenue Bonds,

Series 2017A

The undersigned hereby certifies to Stifel, Nicolaus & Company, Incorporated and Barclays Capital, Inc. (collectively, the “Underwriters”) that I am an authorized representative of the City of Richmond, California (the “City”), and as such, I am authorized to execute and deliver this Certificate and further hereby certify and reconfirm on behalf of the City to the Underwriters as follows:

(1) This Certificate is delivered to enable the Underwriters to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”) in connection with the offering and sale of the above-captioned bonds (the “Bonds”).

(2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the City (the “Preliminary Official Statement”).

(3) As used herein, “Permitted Omissions” means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the Underwriters, all with respect to the Bonds.

(4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule and has been, and the information therein is, accurate and complete except for the Permitted Omissions.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of this___day of_________, 2017.


By:__________________________Authorized Representative

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APPENDIX C

FORM OF ISSUE PRICE CERTIFICATION

City of Richmond, California Wastewater Revenue Bonds,

Series 2017A

The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the “Representative”), acting for and on behalf of itself and Barclays Capital, Inc. (collectively, the “Underwriting Group”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).

1. Bond Purchase Agreement On July 19, 2017 (the “Sale Date”), the Representative and the Issuer executed a Bond Purchase Agreement (the “Purchase Agreement”) in connection with the sale of the Bonds. The Representative has not modified the Purchase Agreement since its execution on the Sale Date.

2. Price. As of the date of this Certificate, for each Maturity of the Bonds, the first price at which at least 10% of each such Maturity of the Bonds was sold to the Public (the “10% Test”) was the respective price for such Maturity listed in Schedule A attached hereto.

3. Defined Terms.

(a) "Issuer” means the City of Richmond, California.

(b) "Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.

(c) "Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly.

(d) "Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Representative’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Federal Tax Certificate of the Issuer dated August 1,2017 and with respect to compliance with

C-1

the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

STIFEL, NICOLAUS & COMPANY, INCORPORATEDacting for and on behalf of itself and Barclays Capital, Inc.

By:_________[Title]

By:_________[Title]

Dated: [Closing Date]

C-2

SCHEDULE A TO

ISSUE PRICE CERTIFICATE

Maturity/CUSIP

Actual Sales Information as of Closing Date

Coupon Date Sold Time Sold Par Amount Sale Price

C-3

RESOLUTION NO. 72-17

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RICHMOND,CALIFORNIA PROVIDING FOR THE ISSUANCE OF THE CITY’S WASTEWATER REVENUE BONDS, SERIES 21)17/4; AUTHORIZING THE EXECUTION AND DELIVERY OF A SIXTH SUPPLEMENTAL INDENTURE, A BONO PURCHASEagreement; an escrow agreement; a com inline imsclosoreAGREEMENT AND AN OFFICIAL STATEMENT; APPROVING A FORM OF PRELIMINARY OFFICIAL STATEMENT IN CONNECTION THEREWITH; AND A1JTH0MI/JNG CLH i’AIN OTHER ACTIONS LN CONNECT'!ON 'I HIOUAVI’I JH.

VY HER LAS. purser.! ro die ch3.ic.-i c yf the Oly rvl: Richmond. t'THforyiia (the ~TjUf') ;-ind Chapter 13.56 of Artkk 13 of \h'c Richmond Municipal Code (the “Bond Law”), the Cny is mirhovred to issue revenue bends to fma-tee Mu acquisition- con’1 nidi on. improvement, furnishing, equipping, remodeling, repair, reconstruction or rehabilit&uon of the wastewater iremmem and collection foci! Ties cf the Coy (the "?vnOoviseM or for the purpose of refunding; bonds issued for such purposes purrmmt to the City's charter and the Acme! Law; and

WHEREAS, the City has entered into a Wastewater Revenue Bend Indenture, dated us of October I. /.s>06 {Hie '‘Master lad arturo'"']. as amended and siipnierr.erred. irdudirg as amended and supplemented by a First Supplemental Wastewater Revenue Bond Indenture. dived ?i* of October 1, 2fi0f> Oi e 'Viosf SuppR-mcr-vai Intjcnturem. a Second Suppienenrat Wnsrevvater Revenue Bond Indenture, dated as of October I. 2006 uhe “Second Supplemental Indent urefo. u I bird Supplemental Wastewater Revenue- Bond Mdeiitere. dated as of October L /00X (the ■'Third Supplemental. Indenture’*), a First Amendment to Wastewater Revenue Bond hdeiUmc., dated as of Novemhci i, 2004* (the "First Aincnomcnt to indenture^, and a fourth Supplement'd Wastewater Revenue Bond Indenture, cl,lied as of October I. 2010 ('.he “Fourth Supplements indenture^ ouch by and between the City and the Bank of New York Mellon Trust Company, N.A. a::, successor trustee (ihe "Trustee''}: and

WHEREAS, in accordance with the Bond 1 aw. fie Master Indenture and the Pirn: SuppicuicriLti indcnluvc. the CUy has previously issued its Wastewater Revenue Refunding Bonds, >ene!- '.h.lOoA (the "Pr.or Bonds") in an aggj’Cialr; piincipfo amounl of .SI 6A70 IK!l; "o defease a portion of the City's Wastewater Revenue Bonds. Series 1999, to fund improvements to the buterpi Be. to fund a debt service reserve surety old to pay costs of issuance: ki-u

WHEREAS, voneiuTvnU) berewiiii. the Ciiv das determined to execute and deliver a 'wth Supplemental Was-owatcr Revenue Bond Ir-.deno.irc, -dated as of July ], '?(}}'/ (tlic "Ktxh Supplemental Indenture") by and between the City and- the Trustee for the purpose of amending and supplemeiuing Hie vlester Inrlcmmo enn ihi: 'ilimi Supplem/mirf Indenture ex enured m connection with the City's Wastewater Revenue Refunding Bonds, Series 2008A (the ■'■Series 2008A Bonds''): and

WHEREAS, ihe City, aile: due investigation end deliberation, has dmerrrtined that it is in Me iiHctesls of die City at ibis Lme to issue its Wasn. vvuiei Revenue Bonds. Series 2017A. Uhe “Bonds") pvrmutn: to the ?vmslcr hdemure nod a Six-h Supplemental WYstewater Revenue Borid LnetT.iiirc. dated as of August 1.2017 (the “Sixth S'-ipp'ativnAj Indenture'' and k;geih.:r > v i 1 h die Mrsier Indenture. the First Suppi emcntnl I nd emu re he Second Supjdemenml Indenrurc. the Third Supplemental indenture, a Pirsrc Amendmeu-. M b.idenltire, the- fourth Supplement.! Indenture, and die Fifth Supplemental indennav. roliectivdy, referred to herein as the ‘'indenture"', between rf e City and the '11 usie-c, ibr the purpose of Finding capital i./ipj overrents to the Enterprise, refunding the Prior Bonds, iundirg j rsfaree fund for the Bond- and paying costs of issuance reiaiing to die Bundy hsifiudir# rcimBurs'-munl of certain costs as piovidcd in vhe substitution of the letter of ere rib for the Scries Bonds: a-id

WHEREAS, the Cry desires i\) to enier bin the SNrh Supplemenlal Indenture, a Rond Purchase Agreement (ihe “Bund Purchase Agrcciricnfrt. an Escrow fiprecmont (the “jNerow Agyeemenfh and a O'ontmning Disclosure AgrcemcrP (the “Conti-miry Disclosure Agreement"'N and iii) to deliver a Prdi'riimrv Olliciuj SUitemenl ('the ^Preliminary Official Staternc-TiO me a fha' Official htatenem (the "Official Sinieme-ifA with -espi-urt to the Runes: and

72-17Page 1 of5

WHEREAS, in furtherance of implanenlmg the issuance of the Bonds, the following documents have teen prepared reviewed and approved as to form by City staff, and presented atthis meeting;

1. Sixth Sappienrejiuii Indenture;

2. Bond Purchase Agreement;

3. Preliminary Official Statement (form);

4. Continuing Disclosure Agreement; end

5. hserovv Agree; ueuL

WHEREAS, the City :n«y seek eoirmiim seats from fmoicial institutions or municipal bond insurance companies to provide credit support for the Bonds: and

WHEREAS, the City has full legal right, power and authority under the Constitution antithe laws of the State of California to enter into the transactions hereinafter authorized.

!»W THERE FORK, BE IT RESOLVED by the City Council of the City ofRichmond. as follows;

Section ! The foregoing recitals arc true and correct and this City Councilhereby so finds and determines.

Section 2. The issuance of the Roods, on the terms and conditions set forth in, and subject to the limitations spcoilicti herein and in the Indenture us JimUly zxceui.cc, is hereby authorized and approved. The aggregate ini tie” principal amount of the Ronds shall not exceed S45.000,000 and the true interest cosl on :he Bonds shall not exceed seven percent (7.00%). The rent's of me Ronds find! be finally determiner, by the Director of finance or the Cdy Manager (iv.ch. an “Authorized Representative*'’).

Section 3. The fc-rni of the Sixfo Supplemental Indenture on tile with the City Clerk of the Ciry mid incorporated into tins Resolution by reference is hereby approved. The Authorized Representatives are each hereby authorized and directed, severally. any such oliker’s designee, for and on behalf of the City, to execute anti deliver the Sixth Supplement 'Indenture in substantially the form on file wirh the City Clerk and presented to this meeting. wirh such additions thereto or changes or insertions ihiit hereafter become necessary in the interest of the City and which are approved by stici- Am-Nvfoeti Rcprosomativo. in eonsuirsuon with, the City's bond counsel and municipal advisor, such approval to be conclusively evidenced by such execution and delivery.

Section 4, The form of Bond Purchases Agreement by and among Stifei, Nicolaus &. Company, mcoroomiccl Barclays Capita* Lie. (collectively, lire "UjKlci'wntcrs''') and the City, on tile with the City Clerk and incorpomred imo '-.his Resolution by reforenee is hereby appreved. The .AuLnori/.ec Representatives. or their designees, are each hereby authorized and directed, severally, for and on behalf of the City to accept the offer of the Lode-writers to purchase die Ronds ks tol-eeled in the Bond Purchase Agreement and .o execute and deliver the Bond Purchase Agreement in substantially the form on file with the Cftty Clerk and presented to this meeting. with such additions thereto or changes or insertions that hereafter become necessary in the interest of the City and which are approved by such Authorized Representative, ;n consultation with the CiiyT. mumfopal ativlior sr.ti bond ceuiscl, snick approval to be conclusive!;-' evidenced by the execution and delivery of the Bond Purchase Agreement, provided, however, then such additions, changes or insertions in the Bend Purchase Agreement shad not specify an undonvrko-’s discount in excess of 0,8% of The principal amount of Tic Bonds.

Section 5, ’The lorn of Continuing Disclosure Agreement by and between theCity and Willdan Financial Services, as dissemination agent, on file with the City Clerk and incorporated into this Resolution by reference is hereby approved. The Authorized Representatives, or their designees, arc each hereby authorized and directed, severally, for andon behalf of the City to execute and deliver the Continuing Disclosure Agreement in

Reso. 72-1? Page 2 of 5

substantially the tbrot on file with the City Clerk with such additions thereto or changes or insertions that hereafter become teeesxaiy :u the irnorcsi c-hho City end wheh are approved by sticl' Authorized Representative, in consultation with the City's municipal adviser and disclosure counsel, such approval to be conclusively evidenced by die execution and delivery oh die Confirming Disclosure Agreement.

Section 6, The foim of the Escrow Atuccmcni by acid between die City and Bank of New York Mellon Trust Company. N.A., ns or,crow agent on die with the City Clerk of ihe City ar.d incorporated into this Resolution by reference is hereby approved. The Amhorizeu Represciuatives. cv: their designees, aic cadi hereby authorized and cLrccted severally, or any such officer's designee, for and on behalf of the City, to execute and deliver the escrow Ary cement i,i subsmotiahy the (brut on Ale with the City Clerk unci orusem'ep ro tjfs meeting, with such additions thereto or changes or Insertions that hereafter become necessary in the Interest of the City and v\ hi eh arc approved by such Authorized RcprcSuir.ri'.ivcc in consultation with die City's bond counsel ar.d municipal advisor, such approval to be conclusively evidenced by .such execution arid delivery.

Section. 7 1'he :bim of droiiininary Official Statement' lehting te the Konds on file with the City Clerk and incorporated into mis resolution by reference, is hereby approved. Too Authorized Rqxomnrm'ives. cv their designees, ore c?-ch hereby authorized and dbooted, severally, for and on behalf of the City, to execute a certificate deeming the Preliminary Oflkial SUatomciU m sold tool fis;«l as obits dale, except for ee.tum linal pricing ami related :nformation, pursuant to Securities exchange ("osv.vmssiori Rule i5e2-I2. The Underwriters are hereby aulhorUcb. to bklrmute the IVeliimnary Oilieial Statement in said ibrru as so deemed Tina! to prospective purchasers of fire Ronds, .he Authorized Representative^. or their designees, are each hereby authorized and directed, severally, Per and on bchail'of the City, io execute the !:md Official Statement, relating to- nc Ronds In sukslnimmly the form of such deemed llii.-h

•w <e

Preliminary Oflieiul Statemer/u including such linal pricing and related mibrnialion and with such sud ikons thereto or changes therein ;;•$ hereafter hr come necessary in the interest of the City and which are approved by such .Authorized Representative, in consultation with disclosure cotarsd. such approval lu be conclusively ev idenced by the exceiLliou acid delivery oj’ such Official Sunernent. The underwriter? ore hereby a an-or. zed in di^rribure copie- of said linal Official Statement to all actual purchasers of .ho Bonds.

Sec-dor. 8. The officers ana agents of the City arc. and each of then: hereby h. aoiboi'Acd aod directed to oo any and all things and to execute and deliver any wd mi documents which they or any of them deem necessary or advisable in order to consummate the sa-o of trio Bonds, including, hut not limited to. the cxeci-tioi: and ddivery of a rax ccnjtleatc, and to do ?.ny and all things and lake any and all actions which may be necessary or advisable, in their discretion, to oifcciimle die acikxn.s which ihe City ha.-, approved in tins RexuluToo inclinTng obtTufitr.g creak suppuri: in mo fern nf n municipal bond insurance policy, n surely bond, or such odier form as the Autnorizec Representatives may rtr.d acceptable. The Anlho'fzed Representrrnvrsi r-c hnoby nuthonzocl to ei-gone oddirionni ondenv"i\r*s shmid they deem it necessary or desirable. All actions heretofore taken by die officers and agents of the C;!> with respect to the sale, execution and ddivery of the Bondu and the other transactions aediOnzei.! and contemplated herein are hereby approved, eoulirmod and funded. Notwithstanding any provision of this resolution authorizing an Authorized Representative to take any action or ext cute ar.y document lo .he contrary. hi the absence of such A-iUinrized Representative or in lieu of such Authorized Represervr.ive, die person designated in writing by such Authorized Representative, may lake such acaon or execute inch document widi like el Tec l as fl.lly as though named in this resolution instead of such Authorized Representative.

Section 9. This resolution shall take effect immediately upon its passage.

# # » #r * ^ # # «. * ^ :£ * * * * *

Res#. No, 72-17 Page 3 of 5

F cerdiy that the foregoing resolution was passed and adopted by 'he Council of the City of Richmond a; a regular meeting thereof held June 20, 201“, by the following vote;

AYES; CouncLraembers Choi, Martinez, McLaughlin, Myrick, Willis, andMayor Butt.

NOES: None.

ABSTENTIONS: None.

ABSENT: Vice Mayor Beck les.

PAMELA CHRISTIANCLERK OP THE CITY OF RICHMOND

(SEAL)

Approved:

TOM BUTTMayor

Approved as to form:

BRLCH 0003MIL.LBRCity Attorney

State of California |County of Contra Costa : ss.Ctly of Richmond }

i certify that the foregoing is a true copy of Resolution No. 72-17, finally passed midadopted by the City Council of the City of Richmond al a regular meeting held on June 20,2011.

Pamela Christian, Clerk of the City of Richmond

Reso. No. 72-1? Page 4 of 5

CLERK’S CERTIFICATE

I9 Pamela Christian, City Clerk of the City of Richmond, do hereby certify asfollows;

The foregoing Resolution No. 72-17 is a full, true and correct copy of a resolution duly adopted at a regular meeting of the City Council of said City duly and regularly held at the regular meeting place thereof on lire 2 Dili day of June, 2017, of which meeting all of the members of said City Council had due notice and at which a maforr.y thereof were presen*: and thiil at said meeting said resolution was adopted by -he following vote;

AYES: Counedmcsimers Oku. Martinez, McLaughlin, Myrickj, Willis, andMayor Hup.

HOES: None.

ABSTENTIONS: Norte.

ABSENT: Vice Mayor Beetles.

An agejxla of said meeting was posted before said meeting al City Hall, d 50 Civic Center Plaza in the City of Richmond. California, a location freely accessible to member of the public, and a brief description of said resolution appeared on said agenda.

I have carefully compared the foregoing with the original on rile and of record inmy oflke, ark the foregoing is a fill!, true and correct copy of the original resolution adopted atsfkl meeting.

Said resolution has not teen amended, modified or rescinded since the date of itsadoption and the same is now in full force and effect

City Clerk of the City of Richmond

Reso. No, 72-17 Pag*5 of 5

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