$11,235,000 successor agency to the redevelopment agency of the city of san leandro...

The date of this Official Statement is September 30, 2014.

NEW ISSUE — BOOK-ENTRY

RATING: S&P: “AA-”See “CONCLUDING INFORMATION — Rating”

In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described in this Official Statement, under existing law, the interest on the 2014 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.”

$11,235,000SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

OF THE CITY OF SAN LEANDRO 2014 TAX ALLOCATION REFUNDING BONDS

(REDEVELOPMENT PROJECTS)

Dated: Delivery Date Due: September 1, as shown on the inside front coverPurpose of the 2014 Bonds. The captioned bonds (the “2014 Bonds”) are being issued by the Successor Agency to the

Redevelopment Agency of the City of San Leandro (the “Successor Agency”) to prepay two outstanding series of bonds payable from tax increment revenue generated in the Plaza Project Area and the West San Leandro/MacArthur Boulevard Project Area (together, the “Project Areas”).

Book-Entry. The 2014 Bonds will be delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to ultimate purchasers (“Beneficial Owners”) in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of bonds representing their ownership interest in the 2014 Bonds. Semiannual interest on the 2014 Bonds due March 1 and September 1 of each year, commencing March 1, 2015, and annual principal and premium, if any, on the 2014 Bonds due on September 1 of each year, commencing September 1, 2015, will be payable by U.S. Bank National Association, as Trustee, to DTC for subsequent disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the 2014 Bonds (see “THE 2014 BONDS — Book-Entry System”). See “THE 2014 BONDS.”

Redemption. The 2014 Bonds are subject to optional redemption and mandatory sinking account redemption prior to maturity. See “THE 2014 BONDS — Redemption.”

Security for the 2014 Bonds. The 2014 Bonds are payable from and secured by a pledge of Tax Revenues (as defined in this Official Statement) to be derived from the Project Areas and moneys in certain funds and accounts established under the Indenture of Trust, dated as of October 1, 2014 (the “Indenture”), by and between the Successor Agency and U.S. Bank National Association, as trustee of the 2014 Bonds, as further described in this Official Statement. See “SECURITY FOR THE 2014 BONDS.”

The Successor Agency will fund a reserve fund for the 2014 Bonds, by purchasing and depositing into the Reserve Account a municipal bond debt service reserve insurance policy for the 2014 Bonds to be issued by Build America Mutual Assurance Company simultaneously with the issuance of the 2014 Bonds. See “SECURITY FOR THE 2014 BONDS – Debt Service Reserve Account.”

Additional Bonds. Other than certain refunding bonds, as provided in the Indenture (see “THE 2014 BONDS — Additional Bonds”), the Indenture does not authorize the Successor Agency to issue other bonds that are secured by and payable from Tax Revenues on a senior or parity basis to the 2014 Bonds.

Cover is a Summary. This cover page of the Official Statement contains information for quick reference only. It is not a complete summary of the 2014 Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Attention is hereby directed to certain risk factors more fully described in this Official Statement. See “RISK FACTORS.”

Limited Obligations. The 2014 Bonds are special obligations of the Successor Agency and are secured by an irrevocable pledge of, and are payable as to principal, interest and premium, if any, from Tax Revenues and other funds described in this Official Statement. The 2014 Bonds, interest and premium, if any, thereon are not a debt of the City of San Leandro (the “City”), the County of Alameda (the “County”), the State of California (the “State”) or any of their political subdivisions except the Successor Agency, and none of the City, the County, the State nor any of their political subdivisions except the Successor Agency is liable thereon. The 2014 Bonds, interest thereon and premium, if any, are not payable out of any funds or properties other than those set forth in the Indenture. Neither the members of the Successor Agency, the Oversight Board of the Successor Agency, the County Board of Supervisors nor any persons executing the 2014 Bonds are liable personally on the 2014 Bonds.

The 2014 Bonds are offered, when, as and if issued, subject to the approval of Jones Hall, A Professional Law Corporation, San Francisco, Bond Counsel to the Successor Agency. Jones Hall, A Professional Law Corporation, is also acting as Disclosure Counsel to the Successor Agency. Certain legal matters will be passed on for the Successor Agency by Meyers, Nave, Riback, Silver & Wilson and for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, Underwriter’s Counsel. It is anticipated that the 2014 Bonds will be available for delivery through the facilities of DTC in New York, New York, on or about October 30, 2014.

MATURITY SCHEDULE

$11,235,000 SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY



Maturity Date (September 1)

Principal Amount*

Interest Rate

Yield

Price

CUSIP† (Base 798455)

2019 $405,000 5.000% 1.320% 117.184 AB7 2020 485,000 5.000 1.650 118.564 AC5 2021 675,000 5.000 1.950 119.429 AD3 2022 720,000 5.000 2.240 119.731 AE1 2023 740,000 5.000 2.440 120.234 AF8 2024 765,000 5.000 2.570 120.998 AG6 2025 785,000 5.000 2.750 119.271C AH4 2026 805,000 5.000 2.880 118.043C AJ0 2027 825,000 5.000 3.010 116.829C AK7 2028 845,000 5.000 3.130 115.722C AL5 2029 870,000 5.000 3.200 115.082C AM3 2030 890,000 5.000 3.270 114.446C AN1 2031 830,000 5.000 3.330 113.905C AP6

$1,595,000 3.500% Term Bond due September 1, 2034 Yield: 3.740% Price: 96.656 CUSIP†: AQ4

C: Priced to the first optional redemption date of September 1, 2024 at par. † Copyright 2014, CUSIP Global Services, and a registered trademark of the American Bankers Association. CUSIP data is provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S&P Capital IQ. Neither the Successor Agency nor the Underwriter assumes any responsibility for the accuracy of the CUSIP data.

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO

SAN LEANDRO, CALIFORNIA

CITY COUNCIL

Stephen H. Cassidy, Mayor Benny Lee, Vice Mayor

Pauline Russo Cutter, Council Member Michael J. Gregory, Council Member

Jim Prola, Council Member Ursula Reed, Council Member

Diana M. Souza, Council Member

SUCCESSOR AGENCY STAFF

Chris Zapata, City Manager/Executive Director David Baum, Finance Director/Treasurer

Carla Rodriguez, Deputy Finance Director Marian Handa, City Clerk/Secretary

Richard Pio Roda, City Attorney

SPECIAL SERVICES

Financial Advisor Public Financial Management, Inc.

San Francisco, California

Bond and Disclosure Counsel Jones Hall, A Professional Law Corporation


Fiscal Consultant Urban Analytics, LLC


Trustee U.S. Bank National Association


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TABLE OF CONTENTS

Page Page INTRODUCTION .................................................... 1

Authority and Purpose ........................................ 1 The City and the Successor Agency .................. 2 The Redevelopment Plans and the Project

Areas ............................................................. 3 Tax Allocation Financing .................................... 3 Authority to Issue Refunding Bonds ................... 4 Security for the 2014 Bonds ............................... 4 Limited Obligation .............................................. 5 Debt Service Reserve Account .......................... 5 Professionals Involved in the Offering ................ 5 Further Information ............................................. 6

REFUNDING PLAN ............................................... 7 Refunding of the 2002 Bonds ............................. 7 Refunding of the 2004 Bonds ............................. 7 Estimated Sources and Uses of Funds .............. 8 Debt Service Schedule ....................................... 9

THE 2014 BONDS ............................................... 10 Authority for Issuance ...................................... 10 Description of the 2014 Bonds ......................... 10 Redemption ...................................................... 10 Additional Bonds .............................................. 12

THE DISSOLUTION ACT .................................... 14 SECURITY FOR THE 2014 Bonds ...................... 16

Pledge Under the Indenture ............................. 16 Tax Revenues .................................................. 16 Flow of Funds Under the Indenture .................. 17 Debt Service Reserve Account ........................ 19 Limited Obligation ............................................ 22 Recognized Obligation Payment Schedules .... 22 Pass-Through Agreements .............................. 25 Section 33676 Payments ................................. 26 Statutory Pass-Through Payments .................. 26 Housing Set-Aside ........................................... 27

PROPERTY TAXATION IN CALIFORNIA ........... 28 Property Tax Collection Procedures ................ 28 Teeter Plan ....................................................... 29 Unitary Property ............................................... 30 Article XIIIA of the State Constitution ............... 30 Appropriations Limitation - Article XIIIB ............ 32 Proposition 87 .................................................. 32 Appeals of Assessed Values ............................ 32 Proposition 8 .................................................... 33 Propositions 218 and 26 .................................. 34 Future Initiatives ............................................... 34

THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY ......................... 35

OF THE CITY OF San Leandro ........................... 35 Successor Agency Powers .............................. 35 Status of Compliance with Dissolution Act ...... 35

THE PROJECT AREAS ....................................... 37 Project Areas in the Aggregate ........................ 37 Summary of Assessed Value History in the

Project Areas ............................................... 38 Unitary Property ............................................... 39 The Redevelopment Plan for the Plaza

Project Area ................................................. 39 The Redevelopment Plan for the West San

Leandro/MacArthur Boulevard Project Area ............................................................. 42

Low and Moderate Income Housing Set-Aside ........................................................... 43

Tax Rates ........................................................ 43 Appeals of Assessed Values; Proposition 8 .... 44 Historical and Estimated Taxable Valuation

and Available Net Tax Increment ................ 47 Projected Available Net Tax Increment and

Estimated Debt Service Coverage .............. 48 RISK FACTORS .................................................. 50

Recognized Obligation Payment Schedule ..... 50 Challenges to Dissolution Act .......................... 52 Reduction in Taxable Value ............................. 52 Risks to Real Estate Market ............................ 53 Plan Limits ....................................................... 53 Concentration of Property Ownership ............. 54 Reduction in Inflationary Rate ......................... 54 Development Risks .......................................... 55 Levy and Collection of Taxes........................... 55 Bankruptcy and Foreclosure ............................ 55 Estimated Revenues ....................................... 56 Hazardous Substances ................................... 56 Natural Disasters ............................................. 56 Changes in the Law ......................................... 57 Loss of Tax-Exemption .................................... 57 Secondary Market ........................................... 57

TAX MATTERS .................................................... 58 CONCLUDING INFORMATION .......................... 59

Underwriting .................................................... 59 Legal Opinion .................................................. 59 Litigation .......................................................... 60 Rating .............................................................. 60 Continuing Disclosure ...................................... 60 Audited Financial Statements .......................... 61 Miscellaneous .................................................. 61

APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B – FORM OF BOND COUNSEL OPINION APPENDIX C – BOOK-ENTRY ONLY SYSTEM APPENDIX D – FORM OF SUCCESSOR AGENCY CONTINUING DISCLOSURE CERTIFICATE APPENDIX E – SUCCESSOR AGENCY FINANCIAL STATEMENTS FOR FISCAL YEAR 2012-13 APPENDIX F – STATE DEPARTMENT OF FINANCE APPROVAL LETTER APPENDIX G – SUPPLEMENTAL INFORMATION-CITY OF SAN LEANDRO APPENDIX H – FISCAL CONSULTANT’S REPORT

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the 2014 Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2014 Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the Successor Agency or the Project Areas since the date of this Official Statement. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2014 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 a contract with the purchasers of the 2014 Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Document References and Summaries. All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents. Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain the market price of the 2014 Bonds at a level above that which might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the 2014 Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter. Bonds are Exempt from Securities Laws Registration. The issuance and sale of the 2014 Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934. Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH 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 SUCCESSOR AGENCY 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. Website. The City maintains an Internet website, but the information on the website is not incorporated in this Official Statement.

Reserve Insurer. Build America Mutual Assurance Company (the “Reserve Insurer”) makes no representation regarding the 2014 Bonds or the advisability of investing in the 2014 Bonds. In addition, the Reserve Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Reserve Insurer, supplied by the Reserve Insurer and presented under the caption “SECURITY FOR THE 2014 BONDS—Debt Service Reserve Fund — The Reserve Insurer.”

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OFFICIAL STATEMENT

$11,235,000 SUCCESSOR AGENCY TO THE

REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO 2014 TAX ALLOCATION REFUNDING BONDS


INTRODUCTION

This Official Statement, including the cover page, is provided to furnish information in

connection with the sale by the Successor Agency to the Redevelopment Agency of the City of San Leandro (the “Successor Agency”) of the captioned bonds (the “2014 Bonds”).

Authority and Purpose

The Successor Agency is issuing the 2014 Bonds pursuant to authority granted by

Part 1 (commencing with Section 33000) and Part 1.85 of Division 24 (commencing with Section 34170) of the California Health and Safety Code (the “Law”), Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Refunding Law”) and an Indenture of Trust dated as of October 1, 2014 (the “Indenture”) by and between the Successor Agency and U.S. Bank National Association, as trustee (the “Trustee”). See “THE 2014 BONDS – Authority for Issuance.”

The Successor Agency is issuing the 2014 Bonds in order to redeem and defease the

following two outstanding series of bonds (collectively, the “Prior Bonds”) of the former Redevelopment Agency of the City of San Leandro (the "Former Agency").

(i) Redevelopment Agency of the City of San Leandro Plaza Redevelopment

Project Tax Allocation Bonds, Series 2002, in the initial principal amount of $15,935,000 (the “2002 Bonds”) and currently outstanding in the principal amount of $10,375,000; and

(ii) Redevelopment Agency of the City of San Leandro West San

Leandro/MacArthur Boulevard Project Tax Allocation Bonds, Series 2004, in the initial principal amount of $5,500,000 (the “2004 Bonds”) and currently outstanding in the principal amount of $4,720,000.

The proceeds of the Prior Bonds were used to finance or refinance redevelopment

activities in two separate redevelopment project areas: the Plaza Project Area (which is composed of the Plaza 1 Project Area and the Plaza 2 Project Area) and the West San Leandro/MacArthur Boulevard Project Area (which are together referred to as the “Project Areas” in this Official Statement) of the Former Agency.

The remaining proceeds of the 2014 Bonds will be used to pay the costs of issuing the

2014 Bonds, including the premium on a municipal bond debt service reserve insurance policy

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with respect to the 2014 Bonds to be issued by Build America Mutual Assurance Company as further described below.

The City and the Successor Agency

City and County. The City of San Leandro (the "City"), which comprises approximately

15.5 square miles, is located in central Alameda County (the "County"), approximately 20 miles southeast of San Francisco and 35 miles north of San Jose. The City is a well-diversified community with residential, commercial and industrial development within the City. The City is served by Interstate 880 and Interstate 580, connecting freeways to Highway 101 and Interstate 5 which run north/south through California.

See “APPENDIX G – Supplemental Information – City of San Leandro.” Former Agency. The Former Agency was a redevelopment agency with all of the

powers vested in such entities under the Community Redevelopment Law (which is referred to in this Official Statement as the “Redevelopment Law”). The City Council of the City was the governing board of the Former Agency.

Dissolution Act. On June 29, 2011, Assembly Bill No. 26 (“AB 1X 26”) was enacted

together with a companion bill, Assembly Bill No. 27 (“AB 1X 27”). The provisions of AB 1X 26 provided for the dissolution of all redevelopment agencies statewide as of February 1, 2012. The provisions of AB 1X 27 permitted redevelopment agencies to avoid such dissolution by the payment of certain amounts. A lawsuit was brought in the California Supreme Court, California Redevelopment Association, et al., v. Matosantos, et al., 53 Cal. 4th 231 (Cal. Dec. 29, 2011), challenging the constitutionality of AB 1X 26 and AB 1X 27. On December 19, 2012, the California Supreme Court largely upheld AB 1X 26, invalidated AB 1X 27, and held that AB 1X 26 may be severed from AB 1X 27 and enforced independently. As a result of AB 1X 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies.

The primary provisions enacted by AB 1X 26 relating to the dissolution and wind down of

former redevelopment agency affairs are found in Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No. 1484 (“AB 1484”), enacted as Chapter 26, Statutes of 2012 (as amended from time to time, the “Dissolution Act”).

Successor Agency. Pursuant to Section 34173 of the Dissolution Act, the City acts as the Successor Agency to the Former Agency. Subdivision (g) of Section 34173 of the Dissolution Act, added by AB 1484, expressly affirms that the Successor Agency is a separate public entity and legal entity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City.

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The Redevelopment Plans and the Project Areas Redevelopment Plans.

The City Council of the City adopted the Plaza Project Area Redevelopment Plan for the

Plaza Project Area on May 15, 2000 (the “Original Plaza Project Area Redevelopment Plan” and, as amended from time to time, the “Plaza Project Area Redevelopment Plan”). The Plaza Project Area was created through the merger of the Plaza 1 Project Area and Plaza 2 Project Area. The Plaza 1 Redevelopment Plan was adopted on December 28, 1960 and the Plaza 2 Redevelopment Plan was adopted on December 26, 1967. Both plans were subsequently amended several times.

The City Council of the City adopted the Redevelopment Plan for the West San

Leandro/MacArthur Boulevard Redevelopment Area on July 19, 1999 (the “Original West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan” and, as amended from time to time, the “West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan”).

The Plaza Project Area Redevelopment Plan and the West San Leandro/MacArthur

Boulevard Redevelopment Plan are sometimes referred to collectively in this Official Statement as the “Redevelopment Plans.”

See “THE PROJECT AREAS – The Redevelopment Plan for the Plaza Project Area” and “– The Redevelopment Plan for the West San Leandro/MacArthur Boulevard Project Area” for a description of amendments to the Redevelopment Plans and related limitations.

Project Areas. The Project Areas account for two of three redevelopment project areas

of the Successor Agency. See “THE PROJECT AREAS” for additional information on land use, assessed valuation and property ownership within the Project Areas. The third project area, the Alameda County – City of San Leandro Redevelopment Project Area (the “Joint Project Area”), is a joint area consisting of land in both the City and unincorporated areas of the County and has a separate Redevelopment Property Tax Trust Fund (the “Joint Project RPTTF”). Although, property tax revenues from the Joint Project Area are shared by the Successor Agency and the County, the 2014 Bonds are not secured by a pledge, or lien on, property tax revenues allocated to the Successor Agency from the Joint Project Area of the Joint Project RPTTF. See “SECURITY FOR THE 2014 BONDS - Tax Revenues.” Additionally, the Former Agency’s Alameda County - City of San Leandro Redevelopment Project Tax Allocation Bonds, Series 2008 (the “2008 Joint Project Bonds”) are not secured by the Tax Revenues (as defined herein) or amounts on deposit in the Redevelopment Property Tax Trust Fund (as defined below).

Tax Allocation Financing

Prior to the enactment of AB 1X 26, the Redevelopment Law authorized the financing of

redevelopment projects through the use of tax increment revenues. This method provided that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopted the redevelopment plan became the base year valuation. Assuming the taxable valuation never dropped below the base year level, the taxing agencies receiving property taxes thereafter received only that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency was allocated the remaining portion of property taxes produced by

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applying then current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency were authorized to be pledged to the payment of redevelopment agency obligations.

Authority to Issue Refunding Bonds

The Dissolution Act authorizes the Successor Agency to issue refunding bonds secured

by a pledge of, and lien on, and repaid from property tax revenues (the “Tax Revenues”) deposited with respect to the Project Areas from time to time in the Redevelopment Property Tax Trust Fund (the “Redevelopment Property Tax Trust Fund”) established and held by the Alameda County Auditor-Controller (the “County Auditor-Controller”). See “SECURITY FOR THE 2014 BONDS - Tax Revenues” for the definition of “Tax Revenues.” Section 34177.5(a)(1) authorizes the issuance of such refunding bonds to provide savings to the Successor Agency, provided that (i) the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness does not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded, and (ii) the principal amount of the refunding bonds or other indebtedness does not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance. See “SECURITY FOR THE 2014 BONDS.” Security for the 2014 Bonds

The Dissolution Act requires the County Auditor-Controller to determine the amount of

property taxes that would have been allocated to the Former Agency from the Project Areas had the Former Agency not been dissolved pursuant to the operation of AB 1X 26, using current assessed values on the last equalized roll on August 20, and to deposit that amount in the Redevelopment Property Tax Trust Fund. The Dissolution Act provides that any bonds authorized thereunder to be issued by the Successor Agency will be considered indebtedness incurred by the dissolved Former Agency, with the same lien priority and legal effect as if the 2014 Bonds had been issued prior to effective date of AB 1X 26, in full conformity with the applicable provisions of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency’s Recognized Obligation Payment Schedules (see “SECURITY FOR THE 2014 BONDS – Recognized Obligation Payment Schedules”).

The Dissolution Act further provides that property tax revenues pledged to any bonds

authorized under the Dissolution Act, such as the 2014 Bonds, are taxes allocated to the successor agency pursuant to the provisions of the Redevelopment Law and the State Constitution.

Property tax revenues will be allocated to the Successor Agency on a semi-annual basis

based on a Recognized Obligation Payment Schedule submitted by the Successor Agency to an oversight board established for the Successor Agency (the “Oversight Board”) and the State Department of Finance (the “DOF”). The County Auditor-Controller will distribute funds from the Redevelopment Property Tax Trust Fund for each six-month period in the order specified in the Dissolution Act. See “SECURITY FOR THE 2014 BONDS – Recognized Obligation Payment Schedules.”

Successor agencies have no power to levy property taxes and must rely on the allocation of taxes as described above. See “RISK FACTORS.”

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Limited Obligation The 2014 Bonds are special obligations of the Successor Agency and are secured by an

irrevocable pledge of and lien on, and are payable as to principal, interest and premium, if any, from Tax Revenues and other funds. The 2014 Bonds, interest and premium, if any, are not a debt of the City, the County, the State or any of their political subdivisions except the Successor Agency, and none of the City, the County, the State nor any of their political subdivisions (except the Successor Agency) are liable thereon. The 2014 Bonds, interest thereon and premium, if any, are not payable out of any funds or properties other than those set forth in the Indenture. No member, officer, agent, or employee of the Successor Agency, the Oversight Board, the County Board of Supervisors or any person executing the 2014 Bonds is liable personally on the 2014 Bonds by reason of their issuance. Debt Service Reserve Account

The Successor Agency will fund a debt service reserve account (the “Reserve

Account”) for the 2014 Bonds by depositing into the Reserve Account a municipal bond debt service insurance policy (the “Reserve Policy”) to be issued by Build America Mutual Assurance Company (the “Reserve Insurer”) in the amount of $1,121,077.64, which amount is equal to the initial “Reserve Requirement” (as defined below). The Reserve Insurer has committed to issue, simultaneously with the issuance of the 2014 Bonds, the Reserve Policy in the principal amount of the Reserve Requirement for deposit in the Reserve Account.

Professionals Involved in the Offering

Public Financial Management, Inc., San Francisco, California, has served as financial

advisor to the Successor Agency and has advised the Successor Agency with respect to the financial structure of the refinancing and as to other financial aspects of the transaction. Payment of the fees and expenses of the financial advisor is contingent upon the sale and delivery of the 2014 Bonds.

Urban Analytics, LLC, San Francisco, California, has acted as fiscal consultant to the

Successor Agency (the “Fiscal Consultant”) and advised the Successor Agency as to the taxable values and Tax Revenues projected to be available to pay debt service on the 2014 Bonds as referenced in this Official Statement. The report prepared by the Fiscal Consultant is referred to as the “Fiscal Consultant’s Report” and is attached as Appendix H.

U.S. Bank National Association, San Francisco, California, will act as Trustee with

respect to the 2014 Bonds. All proceedings in connection with the issuance of the 2014 Bonds are subject to the

approval of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the Successor Agency. Jones Hall is also acting as Disclosure Counsel. Meyers, Nave, Riback, Silver & Wilson, as City Attorney and Successor Agency counsel, will render certain opinions on behalf of the Successor Agency. Certain legal matters will be passed on for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel is contingent upon the sale and delivery of the 2014 Bonds.

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Further Information Brief descriptions of the Redevelopment Law, the Dissolution Act, the Refunding Law,

the 2014 Bonds, the Indenture, the Successor Agency, the Former Agency and the City are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references in this Official Statement to the Redevelopment Law, the Dissolution Act, the Refunding Law, the 2014 Bonds, the Indenture, the Constitution and the laws of the State as well as the proceedings of the Former Agency, the Successor Agency, the County and the City are qualified in their entirety by reference to such documents and laws. References in this Official Statement to the 2014 Bonds are qualified in their entirety by the form included in the Indenture and by the provisions of the Indenture. Capitalized terms used in this Official Statement and not otherwise defined shall have the meanings given to such terms as set forth in the Indenture.

During the period of the offering of the 2014 Bonds, copies of the forms of all documents

are available from the City Clerk, City of San Leandro, 835 East 14th Street, San Leandro, California 94577.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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REFUNDING PLAN

Refunding of the 2002 Bonds Pursuant to the Irrevocable Refunding Instructions (the “2002 Bonds Refunding

Instructions”), by and between the Successor Agency and U.S. Bank National Association, as trustee of the 2002 Bonds (in such capacity, the “2002 Bonds Escrow Bank”), the Successor Agency will deliver a portion of the proceeds of the 2014 Bonds, along with other available amounts, to the 2002 Bonds Escrow Bank for deposit in an escrow account established under the 2002 Bonds Refunding Instructions (in such capacity, the “2002 Bonds Escrow Account”).

The 2002 Bonds Escrow Bank will hold such amounts uninvested. From the moneys on

deposit in the 2002 Bonds Escrow Account, the 2002 Bonds Escrow Bank will pay, on October 30, 2014, the outstanding principal amount of the 2002 Bonds and the accrued interest on the 2002 Bonds to the redemption date.

The amounts held by the 2002 Bonds Escrow Bank in the 2002 Bonds Escrow Account

are pledged solely to the amounts due and payable by the Successor Agency under the 2002 Bonds Indenture. Neither the funds deposited in the 2002 Bonds Escrow Account nor any interest on the invested funds, if any, will be available for the payment of debt service with respect to the 2014 Bonds.

Refunding of the 2004 Bonds

Pursuant to the Irrevocable Refunding Instructions (the “2004 Bonds Refunding

Instructions”), by and between the Successor Agency and U.S. Bank National Association, as trustee of the 2004 Bonds (in such capacity, the “2004 Bonds Escrow Bank”), the Successor Agency will deliver a portion of the proceeds of the 2014 Bonds, along with other available amounts, to the 2004 Bonds Escrow Bank for deposit in an escrow account established under the 2004 Bonds Refunding Instructions (in such capacity, the “2004 Bonds Escrow Account”).

The 2004 Bonds Escrow Bank will hold such amounts uninvested. From the moneys on

deposit in the 2004 Bonds Escrow Account, the 2004 Bonds Escrow Bank will pay, on October 30, 2014, the outstanding principal amount of the 2004 Bonds and the accrued interest on the 2004 Bonds to the redemption date.

The amounts held by the 2004 Bonds Escrow Bank in the 2004 Bonds Escrow Account

are pledged solely to the payment of amounts due and payable by the Successor Agency under the 2004 Bonds Indenture. Neither the funds deposited in the 2004 Bonds Escrow Account nor any interest on the invested funds, if any, will be available for the payment of debt service with respect to the 2014 Bonds.

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Estimated Sources and Uses of Funds The estimated sources and uses of funds are summarized below.

Amount Sources: Principal Amount of 2014 Bonds $11,235,000.00 Plus: 2002 Bonds - Available Funds 2,383,302.91 Plus: 2004 Bonds - Available Funds 400,807.50 Less: Underwriter’s Discount (61,201.69) Plus: Net Original Issue Premium 1,633,277.00 Total Sources 15,591,185.72 Uses: 2002 Bonds Escrow Account $10,474,758.76 2004 Bonds Escrow Account 4,762,662.33 Costs of Issuance Fund (1) 353,764.63 Total Uses 15,591,185.72

_______________ (1) Costs of Issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Financial Advisor, Fiscal

Consultant, Trustee, premium for the Reserve Policy, City, Successor Agency administrative staff, Successor Agency Counsel, printing expenses, rating fee, agency fees, and other costs related to the issuance of the 2014 Bonds.

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Debt Service Schedule The following table shows the annual debt service schedule for the 2014 Bonds,

assuming no optional redemption of the 2014 Bonds.

Bond Year Ending

September 1

Principal

Interest

Total

Debt Service 2015 -- $449,681.46 $449,681.46 2016 -- 537,825.00 537,825.00 2017 -- 537,825.00 537,825.00 2018 -- 537,825.00 537,825.00 2019 $405,000 537,825.00 942,825.00 2020 485,000 517,575.00 1,002,575.00 2021 675,000 493,325.00 1,168,325.00 2022 720,000 459,575.00 1,179,575.00 2023 740,000 423,575.00 1,163,575.00 2024 765,000 386,575.00 1,151,575.00 2025 785,000 348,325.00 1,133,325.00 2026 805,000 309,075.00 1,114,075.00 2027 825,000 268,825.00 1,093,825.00 2028 845,000 227,575.00 1,072,575.00 2029 870,000 185,325.00 1,055,325.00 2030 890,000 141,825.00 1,031,825.00 2031 830,000 97,325.00 927,325.00 2032 845,000 55,825.00 900,825.00 2033 370,000 26,250.00 396,250.00 2034 380,000 13,300.00 393,300.00 Total $11,235,000 $6,555,256.46 $17,790,256.46

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THE 2014 BONDS Authority for Issuance

The issuance of the 2014 Bonds and the execution and delivery of the Indenture were

authorized by the Successor Agency pursuant to Resolution No. 2014-002 SA adopted on June 16, 2014 (the “Resolution”), and approved by the Oversight Board pursuant to Resolution No. 2014-002 OB adopted on June 25, 2014 (the “Oversight Board Resolution”).

Pursuant to the Dissolution Act, written notice of the Oversight Board Resolution was

provided to the DOF. On August 29, 2014, the DOF provided a letter to the Successor Agency stating that based on the DOF’s review and application of the law, the Oversight Board Resolution approving the 2014 Bonds is approved by the DOF. See “APPENDIX F – State Department of Finance Approval Letter.”

Section 34177.5(f) of the Dissolution Act provides that when, as here, a successor

agency issues refunding bonds with the approval of the oversight board and the DOF, the oversight board may not unilaterally approve any amendments to or early termination of the bonds, and the scheduled payments on the bonds shall be listed in the Recognized Obligation Payment Schedule and are not subject to further review and approval by the DOF or the California State Controller.

Description of the 2014 Bonds

The 2014 Bonds will be issued and delivered in fully-registered form without coupons in

the denomination of $5,000 or any integral multiple thereof for each maturity, initially in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York, as registered owner of all 2014 Bonds. The initially executed and delivered Bonds will be dated the date of delivery (the “Closing Date”) and mature on September 1 in the years and in the amounts shown on the inside cover page of this Official Statement.

Interest on the 2014 Bonds will be calculated on the basis of a 360-day year of twelve

30-day months at the rates shown on the inside cover page of this Official Statement, payable semiannually on March 1 and September 1 in each year, commencing on March 1, 2015, by check mailed to the registered owners thereof or upon the request of the Owners of $1,000,000 or more in principal amount of 2014 Bonds, by wire transfer to an account in the United States which shall be designated in written instructions by such Owner to the Trustee on or before the Record Date preceding the Interest Payment Date. “Record Date” as defined in the Indenture means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day.

One fully-registered bond will be issued for each maturity of the 2014 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. See “APPENDIX C – Book-Entry Only System.”

Redemption

Optional Redemption. The 2014 Bonds maturing on or before September 1, 2024, are

not subject to optional redemption prior to maturity. The 2014 Bonds maturing on or after September 1, 2025, are subject to redemption, at the option of the Successor Agency, on any

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date on or after September 1, 2024, as a whole or in part, by such maturities as will be determined by the Successor Agency and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium.

Sinking Account Redemption. The 2014 Bonds maturing on September 1, 2034 are subject to redemption in whole, or in part by lot, on September 1 in each of the years as set forth in the following table, from Sinking Account payments made by the Successor Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the succeeding paragraph, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of such 2014 Bonds have been redeemed, the total amount of all future Sinking Account payments will be reduced by the aggregate principal amount of such 2014 Bonds so redeemed, to be allocated among such Sinking Account payments on a pro rata basis in integral multiples of $5,000 as determined by the Successor Agency.

2014 Bonds Maturing September 1, 2034

Sinking Account

Redemption Date (September 1)

Principal Amount To Be Redeemed

2032 $845,000 2033 370,000 2034 (maturity) 380,000

In lieu of such redemption, amounts on deposit in the Sinking Account or the

Redevelopment Obligation Retirement Fund (to the extent not required to be transferred to the Trustee pursuant to the Indenture) may also be used and withdrawn by the Successor Agency at any time for the purchase of such 2014 Bonds at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Successor Agency may in its discretion determine. The par amount of any of such 2014 Bonds so purchased by the Successor Agency in any twelve-month period ending on July 1 in any year will be credited towards and will reduce the par amount of such Bonds required to be redeemed on the next succeeding September 1.

Notice of Redemption. The Trustee on behalf of and at the expense of the Successor

Agency will mail (by first class mail, postage prepaid) notice of any redemption at least 30 but not more than 60 days prior to the redemption date, to (i) the Owners of any 2014 Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) to the Securities Depositories and to the Information Services; but such mailing will not be a condition precedent to a redemption and neither failure to receive a redemption notice nor any defect in the redemption notice will affect the validity of the proceedings for the redemption of such 2014 Bonds or the cessation of the accrual of interest on the 2014 Bonds to be redeemed.

The redemption notice will state the redemption date and the redemption price, will state

that such redemption is conditioned upon the timely delivery of the redemption price by the Successor Agency to the Trustee for deposit in the Redemption Account, will designate the CUSIP number of the 2014 Bonds to be redeemed, state the individual number of each Bond to

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be redeemed or state that all Bonds between two stated numbers (both inclusive) or all of the 2014 Bonds Outstanding are to be redeemed, and will require that such Bonds be then surrendered at the Principal Corporate Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on the 2014 Bonds to be redeemed will not accrue from and after the redemption date.

The Successor Agency has the right to rescind any notice of the optional redemption of

Bonds by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the 2014 Bonds then called for redemption, and such cancellation will not constitute an Event of Default. The Successor Agency and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.

Upon the payment of the redemption price of 2014 Bonds being redeemed, each check

or other transfer of funds issued for such purpose will, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the 2014 Bonds being redeemed with the proceeds of such check or other transfer.

Partial Redemption of Bonds. In the event only a portion of any 2014 Bond is called

for redemption, then upon surrender of such Bond the Successor Agency will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Successor Agency, a new 2014 Bond or 2014 Bonds of the same interest rate and maturity, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.

Effect of Redemption. From and after the date fixed for redemption, if funds available

for the payment of the redemption price of and interest on the 2014 Bonds so called for redemption have been duly deposited with the Trustee, the 2014 Bonds so called will cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest will accrue thereon from and after the redemption date specified in such notice.

Manner of Redemption. Whenever any 2014 Bonds or portions thereof are to be

selected for redemption by lot, the Trustee will make the selection, in such manner as the Trustee deems appropriate.

Additional Bonds

Parity Debt. The Indenture defines “Parity Debt” as any loan, bonds, notes, advances

or indebtedness payable from Tax Revenues on a parity with the 2014 Bonds as authorized by the Indenture.

The Indenture authorizes the issuance of Parity Debt to refund the 2014 Bonds. The

Indenture does not allow the Successor Agency to issue obligations on a senior basis to refund the 2014 Bonds.

With respect to any such refunding, annual debt service on such Parity Debt must be

lower than annual debt service on the obligations being refunded during every year such obligations would otherwise be outstanding.

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Subordinate Debt. The Indenture permits the Successor Agency to issue and sell

Subordinate Debt. Such Subordinate Debt may be payable from any assets or property of the Successor Agency, including Tax Revenues on a subordinate basis to the payment of debt service on the 2014 Bonds.


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THE DISSOLUTION ACT The Dissolution Act requires the County Auditor-Controller to determine the amount of

property taxes that would have been allocated to the Former Agency (pursuant to subdivision (b) of Section 16 of Article XVI of the State Constitution) had the Former Agency not been dissolved pursuant to the operation of AB 1X 26, using current assessed values on the last equalized roll on August 20, and to deposit that amount in the Redevelopment Property Tax Trust Fund for the Successor Agency established and held by the County Auditor-Controller pursuant to the Dissolution Act.

The Dissolution Act provides that any bonds authorized thereunder to be issued by the

Successor Agency will be considered indebtedness incurred by the Former Agency, with the same lien priority and legal effect as if the bonds had been issued prior to effective date of AB 1X 26, in full conformity with the applicable provisions of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency’s Recognized Obligation Payment Schedule (see “SECURITY FOR THE 2014 BONDS – Recognized Obligation Payment Schedules”).

The Dissolution Act further provides that bonds authorized by the Dissolution Act to be

issued by the Successor Agency will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund, and that property tax revenues pledged to any bonds authorized to be issued by the Successor Agency under the Dissolution Act, including the 2014 Bonds, are taxes allocated to the Successor Agency pursuant to subdivision (b) of Section 33670 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution. As described above under “INTRODUCTION – The Redevelopment Plan and The Project Areas – Project Areas,” the County Auditor-Controller has established the Joint Project RPTTF separate from the Redevelopment Property Tax Trust Fund established for the Project Areas, and amounts on deposit in the Joint Project RPTTF are not available to pay debt service on the 2014 Bonds. Additionally, the 2008 Joint Project Bonds are not secured by Tax Revenues or amounts on deposit in the Redevelopment Property Tax Trust Fund.

Pursuant to subdivision (b) of Section 33670 of the Redevelopment Law and Section 16

of Article XVI of the State Constitution and as provided in the Redevelopment Plan for each Project Area, taxes levied upon taxable property in the Project Areas each year by or for the benefit of the State, any city, county, city and county, district, or other public corporation (herein sometimes collectively called “taxing agencies”) after the effective date of the ordinance approving the applicable Redevelopment Plan, or the respective effective dates of ordinances approving amendments to the applicable Redevelopment Plan that added territory to the Project Areas, as applicable, are to be divided as follows:

(a) To Taxing Agencies: That portion of the taxes which would be

produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Project Areas as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to the effective date of the ordinance adopting the applicable Redevelopment Plan, or the respective effective dates of ordinances approving amendments to the applicable Redevelopment Plan that added territory to the Project Areas, as applicable (each, a “base year valuation”), will be allocated to, and when

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collected will be paid into, the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and

(b) To the Former Agency/Successor Agency: Except for that portion

of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989 for the acquisition or improvement of real property, which portion shall be allocated to, and when collected shall be paid into, the fund of that taxing agency, that portion of the levied taxes each year in excess of such amount, annually allocated within limitations established by the applicable Redevelopment Plan, following the date of issuance of the 2014 Bonds, when collected will be paid into a special fund of the Successor Agency. Section 34172 of the Dissolution Act provides that, for purposes of Section 16 of Article XVI of the State Constitution, the Redevelopment Property Tax Trust Fund shall be deemed to be a special fund of the Successor Agency to pay the debt service on indebtedness incurred by the Former Agency or the Successor Agency to finance or refinance the redevelopment projects of the Former Agency. That portion of the levied taxes described in paragraph (b) above, less amounts

deducted pursuant to Section 34183(a) of the Dissolution Act for permitted administrative costs of the County Auditor-Controller, constitute the amounts required under the Dissolution Act to be deposited by the County Auditor-Controller into the Redevelopment Property Tax Trust Fund. In addition, Section 34183 of the Dissolution Act effectively eliminates the January 1, 1989 date from paragraph (b) above.

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SECURITY FOR THE 2014 BONDS

The County Auditor-Controller will deposit property tax revenues into the Redevelopment Property Tax Trust Fund pursuant to the requirements of the Dissolution Act, including inter alia Health and Safety Code sections 34183 and 34170.5(b). The 2014 Bonds are payable from and secured by the Tax Revenues to be derived from the Project Areas consisting of the property tax revenues deposited in the Redevelopment Property Tax Trust Fund.

Pledge Under the Indenture

Except as described in “- Redevelopment Obligation Retirement Fund” below and as required to compensate or indemnify the Trustee, the 2014 Bonds and any Parity Debt are equally secured by a pledge of, security interest in and lien on all of the Tax Revenues including all of the Tax Revenues in the Redevelopment Obligation Retirement Fund and by a first and exclusive pledge and lien upon all of the moneys in the Debt Service Fund (including the Interest Account, the Principal Account, the Sinking Account, and the Redemption Account) without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. The 2014 Bonds and all Parity Debt are additionally secured by a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Reserve Account or the particular subaccount within the Reserve Account established for the 2014 Bonds or such Parity Debt as set forth in the Indenture or any Parity Debt Instrument. The 2014 Bonds are also equally secured by the pledge and lien created with respect to the 2014 Bonds by Section 34177.5(g) of the Dissolution Act on moneys deposited from time to time in the Redevelopment Property Tax Trust Fund (but not moneys on deposit in the Joint Project RPTTF). Except for the Tax Revenues and such moneys, no funds or properties of the Successor Agency are pledged to, or otherwise liable for, the payment of principal of or interest on the 2014 Bonds, including, without limitation, any property tax revenues from the Joint Project Area.

In consideration of the acceptance of the 2014 Bonds by purchasers of the 2014 Bonds,

the Indenture will be deemed to be and will constitute a contract between the Successor Agency and the Trustee for the benefit of the Owners from time to time of the 2014 Bonds, and the covenants and agreements set forth in the Indenture to be performed on behalf of the Successor Agency are for the equal and proportionate benefit, security and protection of all Owners of the 2014 Bonds without preference, priority or distinction as to security or otherwise of any of the 2014 Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture.

Tax Revenues

Definition. “Tax Revenues” is defined in the Indenture to mean all taxes that were eligible for allocation to the Former Agency with respect to the Project Areas and are allocated to the Successor Agency pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws and that are deposited in the Redevelopment Property Tax Trust Fund and transferred to the Successor Agency for deposit into the Redevelopment Obligation Retirement Fund, excluding (i) amounts payable pursuant to the Pass-Through Agreements (as such term is defined below), but only to the extent such amounts are payable from property tax revenues allocated with respect to the Plaza Project Area and (ii) amounts required to be paid to taxing entities pursuant to Sections 33607.5 and 33607.7 of the Redevelopment Law. Tax Revenues do not include property tax revenues from the Joint Project Area and the 2014 Bonds

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are not secured by a pledge, or lien on, property tax revenues allocated to the Successor Agency from the Joint Project Area. Additionally, the 2008 Joint Project Bonds are not secured by the Tax Revenues or amounts on deposit in the Redevelopment Property Tax Trust Fund.

Flow of Funds Under the Indenture

General. The Successor Agency previously established the Redevelopment Obligation

Retirement Fund pursuant to Section 34170.5(a) of the Dissolution Act and agrees to hold and maintain the Redevelopment Obligation Retirement Fund as long as any of the 2014 Bonds are Outstanding.

Deposit in Redevelopment Obligation Retirement Fund; Transfer to Debt Service

Fund. The Indenture provides that the Successor Agency shall deposit all of the Tax Revenues received with respect to any Bond Year into the Redevelopment Obligation Retirement Fund promptly upon receipt thereof by the Successor Agency. All Tax Revenues received by the Successor Agency in excess of the amount required to pay debt service on the 2014 Bonds and any Parity Debt in any Bond Year, and except as may be provided to the contrary in the Indenture or Parity Debt Instrument, shall be released from the pledge and lien under the Indenture and shall be applied in accordance with the Law, including but not limited to the payment of debt service on any Subordinate Debt. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the 2014 Bonds and the payment in full of all other amounts payable under the Indenture and under any Supplemental Indentures, the Successor Agency shall not have any beneficial right or interest in the moneys on deposit in the Redevelopment Obligation Retirement Fund, except as may be provided in the Indenture and in any Supplemental Indenture.

Deposit of Amounts by Trustee. There is established a trust fund to be known as the

Debt Service Fund, which will be held by the Trustee under the Indenture in trust. Concurrently with transfers with respect to Parity Debt pursuant to Parity Debt Instruments, moneys in the Redevelopment Obligation Retirement Fund shall be transferred by the Successor Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are established in the Debt Service Fund, and in the following order of priority:

Interest Account. On or before the fourth Business Day preceding each Interest

Payment Date, the Successor Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Interest Account an amount which when added to the amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds and any Parity Debt on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds and any Parity Debt. All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the 2014 Bonds and any Parity Debt as it becomes due and payable.

Principal Account. On or before the fourth Business Day preceding the date on

which principal on the Bonds and any Parity Debt becomes due and payable at maturity, the Successor Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Principal Account an amount which,

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when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Bonds and any Parity Debt on such date. All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the 2014 Bonds and any Parity Debt as it becomes due and payable.

Sinking Account. No later than the fourth Business Day preceding each March 1

or September 1, as applicable, on which any Outstanding Term Bonds are subject to mandatory redemption, or otherwise for purchase pursuant to the provisions of a Supplement Indenture, the Successor Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required to be redeemed on such March 1 or September 1, as applicable. All moneys on deposit in the Sinking Account will be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it becomes due and payable upon redemption or purchase in lieu of redemption.

Reserve Account. In the event that the amount on deposit in the Reserve

Account at any time because of a draw thereon becomes less than the Reserve Requirement, the Trustee will promptly notify the Successor Agency of such fact. Upon receipt of any such notice and as promptly as is permitted by the Law, the Successor Agency shall transfer to the Trustee an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. The Reserve Requirement for the 2014 Bonds shall be satisfied by the delivery of the Reserve Policy by the Reserve Insurer to the Trustee on the Closing Date. The Trustee shall draw on the Reserve Policy in accordance with its terms and conditions and the terms of this Indenture.

The amounts available under the Reserve Policy shall be used and withdrawn by

the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account in such order of priority, in the event of any deficiency at any time in any of such accounts.

The Trustee shall comply with all documentation relating to the Reserve Policy as

shall be required to maintain the Reserve Policy in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Indenture.

The amount on deposit in the Reserve Account will be maintained at the Reserve

Requirement at all times prior to the payment of the 2014 Bonds and any Parity Debt in full. If there are insufficient Tax Revenues to maintain the Reserve Requirement, the Successor Agency is obligated under the Indenture to continue making transfers as Tax Revenues become available until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need be made to the Reserve Account so long as there is on deposit therein a sum at least equal to the Reserve Requirement. See “- Debt Service Reserve Account” below.

The Reserve Account may be maintained in the form of one or more separate

sub-accounts which are established for the purpose of holding the proceeds of separate issues of the 2014 Bonds and any Parity Debt in conformity with applicable provisions of the Code to the extent directed by the Successor Agency in writing to the Trustee.

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Additionally, the Successor Agency may, in its discretion, combine amounts on deposit in the Reserve Account and on deposit in any reserve account relating to any (but not necessarily all) Parity Debt in order to maintain a combined reserve account for the Bonds and any (but not necessarily all) Parity Debt.

Redemption Account. On or before the Business Day preceding any date on

which Bonds are to be redeemed pursuant to the optional redemption provisions of the Indenture, other than mandatory Sinking Account redemption of Term Bonds, the Trustee will withdraw from the Debt Service Fund any amount transferred by the Successor Agency for deposit in the Redemption Account, such amount being the amount required to pay the principal of and premium, if any, on the 2014 Bonds to be redeemed on such date. All moneys in the Redemption Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the 2014 Bonds to be redeemed pursuant to an optional redemption on the date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds. Interest due on Bonds to be redeemed on the date set for redemption will, if applicable, be paid from funds available therefor in the Interest Account.

Debt Service Reserve Account Initial Deposit into the Reserve Account. On the date of issuance of the 2014 Bonds,

the Successor Agency will deposit into the Reserve Account the Reserve Policy in the amount of $1,121,077.64, which is equal to the initial “Reserve Requirement” for the 2014 Bonds.

Definition of Reserve Requirement. The Indenture defines “Reserve Requirement”

to mean, with respect to the 2014 Bonds and any Parity Debt issued as Bonds pursuant to a Supplemental Indenture, the lesser of (i) 125% of the average Annual Debt Service with respect to the 2014 Bonds and Parity Debt, as applicable or (ii) Maximum Annual Debt Service with respect to the 2014 Bonds Parity Debt, as applicable; provided, that in no event may the Successor Agency, in connection with the issuance of Parity Debt in the form of Bonds pursuant to a Supplemental Indenture be obligated to deposit an amount in the Reserve Account which is in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, in the event the amount of any such deposit into the Reserve Account is so limited, the Reserve Requirement is required to, in connection with the issuance of such Parity Debt issued in the form of Bonds, be increased only by the amount of such deposit as permitted by the Code; and, provided further that the Successor Agency may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Account Credit Instrument meeting the requirements of the Indenture.

“Qualified Reserve Account Credit Instrument” is defined in the Indenture to mean an

irrevocable standby or direct-pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Trustee, provided that all of the following requirements are met at the time of acceptance thereof by the Trustee: (a) S&P or Moody’s have assigned a long-term credit rating to such bank or insurance company of “A” (without regard to modifier) or higher; (b) such letter of credit, insurance policy or surety bond has a term of at least 12 months; (c) such letter of credit, insurance policy or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released; and (d) the Trustee is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account or the Principal Account

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for the purpose of making payments required pursuant to the Indenture. The Reserve Policy constitutes a Qualified Reserve Account Credit Instrument.

Relationship to Parity Debt. The Indenture provides that the Reserve Account is security for payments payable by the Successor Agency pursuant to the Indenture and pursuant to any other Parity Debt Instrument, which shall be held by the Trustee in trust for the benefit of the Owners of the 2014 Bonds and any Parity Debt.

Use of Moneys in the Reserve Account. All money in the Reserve Account will be

used and withdrawn by the Trustee solely for the purpose of making transfers pursuant to any Parity Debt Instrument and to the Interest Account, the Principal Account and the Sinking Account, in the event of any deficiency at any time in any of such accounts or for the retirement of all the 2014 Bonds then Outstanding, except that so long as the Successor Agency is not in default under the Indenture or under any Parity Debt Instrument, any amount in the Reserve Account in excess of the Reserve Requirement will be withdrawn from the Reserve Account semiannually on or before two Business Days preceding each March 1 and September 1 by the Trustee and deposited in the Interest Account or be applied pro rata in accordance with any applicable provision of a Parity Debt Instrument. All amounts in the Reserve Account on the Business Day preceding the final Interest Payment Date will be withdrawn from the Reserve Account and will be transferred to the Interest Account and the Principal Account, in such order, to the extent required to make the deposits then required to be made from the Reserve Account or will be applied pro rata as required by any Parity Debt Instrument, as applicable.

The Successor Agency will have the right at any time to direct the Trustee to release

funds from the Reserve Account, in whole or in part, by (i) tendering to the Trustee a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Bonds or any Parity Debt the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Successor Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee will transfer such funds from the Reserve Account to the Successor Agency to be applied in accordance with the Redevelopment Law. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Indenture. Upon the expiration of any Qualified Reserve Account Credit Instrument, the Successor Agency is required to either (i) replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserve Requirement, to be derived from the first legally available Tax Revenues. If the Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the cash will be first used to meet any deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indenture. If the Reserve Requirement is being maintained with two or more Qualified Reserve Account Credit Instruments, any draw to meet a deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indenture will be pro-rata with respect to each such instrument.

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The Reserve Insurer. The information under this caption has been prepared by the Reserve Insurer for inclusion in this Official Statement. None of the Successor Agency, the City or the Underwriter has reviewed this information, nor do the Successor Agency, the City or the Underwriter make any representation with respect to the accuracy or completeness thereof.

The Reserve Insurer is a New York domiciled mutual insurance corporation. The Reserve Insurer provides credit enhancement products solely to issuers in the U.S. public finance markets. The Reserve Insurer will only provide credit enhancement products for obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of the Reserve Insurer is liable for the obligations of the Reserve Insurer.

The address of the principal executive offices of the Reserve Insurer is 1 World Financial Center, 27th Floor, 200 Liberty Street, New York, New York 10281, its telephone number is: 212-235-2500, and its website is located at: www.buildamerica.com.

The Reserve Insurer is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law.

The Reserve Insurer’s financial strength is rated “AA/Stable” by Standard and Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”). An explanation of the significance of the rating and current reports may be obtained from S&P at www.standardandpoors.com. The rating of the Reserve Insurer should be evaluated independently. The rating reflects the S&P’s current assessment of the creditworthiness of the Reserve Insurer and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the 2014 Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of the Reserve Insurer in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the 2014 Bonds. The Reserve Insurer does not guarantee the market price or liquidity of the 2014 Bonds, nor does it guarantee that the rating on the 2014 Bonds will not be revised or withdrawn.

The Reserve Insurer’s total admitted assets, total liabilities, and total capital and surplus, as of June 30, 2014 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $477.8 million, $17.9 million and $459.9 million, respectively.

The Reserve Insurer is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by the Reserve Insurer, subject to certain limitations and restrictions.

The Reserve Insurer’s most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on the Reserve Insurer’s website at www.buildamerica.com, is incorporated herein by reference and may be obtained, without charge, upon request to the Reserve Insurer at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published.

The Reserve Insurer makes no representation regarding the 2014 Bonds or the advisability of investing in the 2014 Bonds. In addition, the Reserve Insurer has not independently verified, makes no representation regarding, and does not accept any

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responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Reserve Insurer, supplied by the Reserve Insurer and presented under the caption “—The Reserve Insurer.”

The Reserve Insurer receives compensation (a premium) for the Reserve Surety that it is providing with respect to the 2014 Bonds. Neither the Reserve Insurer nor any affiliate of the Reserve Insurer has purchased, or committed to purchase, any of the 2014 Bonds, whether at the initial offering or otherwise.

Limited Obligation

The 2014 Bonds are not a debt of the City, the County, the State or any of their political

subdivisions except the Successor Agency, and none of the City, the County, the State or any of their political subdivisions except the Successor Agency are liable therefor. The 2014 Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. No member of the Successor Agency, the Oversight Board or the Board of Supervisors of the County shall be individually or personal liable for the payment of the principal of or interest or redemption premium (if any) on the 2014 Bonds; but nothing contained in the Indenture relieves any such member, officer, agent or employee from the performance of any official duty provided by law.

Recognized Obligation Payment Schedules

Submission of Recognized Obligation Payment Schedule. Not less than 90 days

prior to each January 2 and June 1, the Dissolution Act requires successor agencies to prepare, and submit to the successor agency’s oversight board and the DOF for approval, a Recognized Obligation Payment Schedule (the “Recognized Obligation Payment Schedule”) pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation.

Payment of Amounts Listed on the Recognized Obligation Payment Schedule. As

defined in the Dissolution Act, “enforceable obligation” includes bonds, including the required debt service, reserve set-asides, and any other payments required under the indenture or similar documents governing the issuance of the outstanding bonds of the former redevelopment agency or the successor agency, as well as other obligations such as loans, judgments or settlements against the former redevelopment agency or the successor agency, any legally binding and enforceable agreement that is not otherwise void as violating the debt limit or public policy, contracts necessary for the administration or operation of the successor agency, and, under certain circumstances, amounts borrowed from the successor agency’s low and moderate income housing fund.

A reserve may be included on the Recognized Obligation Payment Schedule and held

by the successor agency when required by a bond indenture or when the next property tax allocation will be insufficient to pay all obligations due under the provisions of the bonds for the next payment due in the following half of the calendar year.

Sources of Payments for Enforceable Obligations. Under the Dissolution Act, the

categories of sources of payments for enforceable obligations listed on a Recognized Obligation Payment Schedule are the following: (i) the low and moderate income housing fund, (ii) bond proceeds, (iii) reserve balances, (iv) administrative cost allowance (successor agencies are

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entitled to receive not less than $250,000, unless that amount is reduced by the oversight board), (v) the Redevelopment Property Tax Trust Fund (but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or otherwise required under the Dissolution Act), or (vi) other revenue sources (including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived from the redevelopment agency, as approved by the oversight board).

The Dissolution Act provides that only those payments listed in the Recognized

Obligation Payment Schedule may be made by a successor agency and only from the funds specified in the Recognized Obligation Payment Schedule.

As noted above, amounts on deposit in the Joint Project RPTTF are not available to pay

debt service on the 2014 Bonds, and Tax Revenues on deposit in the Redevelopment Property Tax Trust Fund are not pledged to the payment of debt service on the 2008 Joint Project Bonds.

Order of Priority of Distributions from Redevelopment Property Tax Trust Fund.

Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the Dissolution Act, a county auditor-controller is to distribute funds for each six-month period in the following order specified in Section 34183 of the Dissolution Act:

(i) first, subject to certain adjustments for subordinations to the extent

permitted under the Dissolution Act (if any, as described above under “SECURITY FOR THE 2014 BONDS - Statutory Pass-Through Payments” and “- Pass-Through Agreements”) and no later than each January 2 and June 1, to each local successor agency and school entity, to the extent applicable, amounts required for pass-through payments such entity would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011, including negotiated pass-through agreements and statutory pass-through obligations;

(ii) second, on each January 2 and June 1, to the successor agency for

payments listed in its Recognized Obligation Payment Schedule, with debt service payments scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule;

(iii) third, on each January 2 and June 1, to the successor agency for the

administrative cost allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing entities any moneys

remaining in the Redevelopment Property Tax Trust Fund after the payments and transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity’s share of property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass-through obligations that were established under the Redevelopment Law). Failure to Submit a Recognized Obligation Payment Schedule. The Recognized

Obligation Payment Schedule must be approved by the oversight board and must be submitted by a successor agency to the county administrative office, the county auditor-controller, the DOF, and the State Controller by 90 days before the date of the next January 2 or June 1 property tax distribution. If the successor agency does not submit a Recognized Obligation Payment Schedule by the applicable deadline, the city or county that established the former

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redevelopment agency will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the DOF. Additionally, the successor agency’s administrative cost allowance is reduced by 25% if the successor agency did not submit a Recognized Obligation Payment Schedule by the 80th day before the date of the next January 2 or June 1 property tax distribution, as applicable, with respect to the Recognized Obligation Payment Schedule for the subsequent six-month period. For additional information regarding procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and implications thereof on the 2014 Bonds, see “RISK FACTORS – Recognized Obligation Payment Schedule.”

Recognized Obligation Payment Schedule Covenant. In this regard, the Successor

Agency covenants in the Indenture that it will comply with all of the requirements of the Redevelopment Law and the Dissolution Act. Pursuant to Section 34177 of the Dissolution Act, not less than 90 days prior to each January 2 and June 1, the Successor Agency will submit to the Oversight Board and the DOF, a Recognized Obligation Payment Schedule.

The Successor Agency further covenants to take all actions required under the

Redevelopment Law and the Dissolution Act to include in the Recognized Obligation Payment Schedule for each Semiannual Period debt service on the 2014 Bonds and any Parity Debt, so as to enable the County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund for deposit in the Redevelopment Obligation Retirement Fund on each January 2 and June 1, as applicable, amounts required to enable the Successor Agency to pay timely principal of, and interest on, the Bonds coming due in the applicable Semiannual Period, as such amounts of debt service are set forth in the Recognized Obligation Debt Service Schedule attached as Exhibit B to the Indenture, or as such Schedule may be amended. Notwithstanding the foregoing, not fewer than 90 days prior to each January 2, commencing January 2, 2015, the Successor Agency is required to submit an Oversight Board-approved Recognized Obligation Payment Schedule to the DOF and to the County Auditor-Controller which shall include the following: (i) all scheduled interest payments on all Outstanding Bonds that are due and payable during the next calendar year, (ii) all scheduled principal and mandatory sinking fund redemption payments on all Outstanding Bonds that are due and payable during the next calendar year, and (iii) any amount required to cure any deficiency in the Reserve Account pursuant to this Indenture (including any amounts required due to a draw on the Qualified Reserve Account Credit Instrument. The Recognized Obligation Debt Service Schedule shall not be amended except by Supplemental Indenture entered into pursuant to the Indenture.

In addition, the Successor Agency covenants that it will, on or before December 1 of each year, file a Notice of Insufficiency with the County Auditor-Controller if the amount of Tax Revenues available to the Successor Agency from the Redevelopment Property Tax Trust Fund for transfer to the Redevelopment Obligation Retirement Fund on the upcoming January 2 is insufficient to fully fund all required amounts payable from the Redevelopment Obligation Retirement Fund during the next succeeding Semiannual Period. The Successor Agency also covenants that on or before May 1 of each year, it will file a Notice of Insufficiency with the County Auditor-Controller if the amount of Tax Revenues available to the Successor Agency from the Redevelopment Property Tax Trust Fund for transfer to the Redevelopment Obligation Retirement Fund on the upcoming July 1 is insufficient to fully fund all required amounts payable from the Redevelopment Obligation Retirement Fund during the next succeeding Semiannual Period.

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The Successor Agency has no power to levy and collect taxes, and various factors beyond its control could affect the amount of Tax Revenues available in any six-month period to pay the principal of and interest on the 2014 Bonds (see “RISK FACTORS”).

History of Submission of the Recognized Obligation Payment Schedules. The

Successor Agency has procedures in place to ensure full and timely compliance with the above-described covenant. Under the direction of the Office of Business Development, the Successor Agency has submitted its Recognized Obligation Payment Schedules on a timely basis, as described below.

Funding Period

ROPS Approved by Oversight Board

Approved ROPS

Submitted to DOF

Deadline to Submit

ROPS to DOF

ROPS Submitted On Time

ROPS I Jan. 1 – June 30, 2012 4/6/2012 4/6/2012 NA Y ROPS II July 1 – Dec. 31, 2012 5/10/2012 5/10/2012 5/11/2012 Y ROPS III Jan. 1 – June 30, 2013 7/18/2012 7/18/2012 9/4/2012 Y ROPS 2013-14A June 1 – Dec. 31, 2013 2/27/2013 2/27/2013 3/1/2013 Y ROPS 2013-14B Jan. 1 – June 30, 2014 9/18/2013 9/18/2013 10/1/2013 Y ROPS 2014-15A July 1 – Dec. 31, 2014 2/26/2014 2/26/2014 3/1/2014 Y ROPS 2014-15B Jan. 1 - June 30, 2015 9/24/2014 9/25/2014 10/3/2014 Y

In addition, there are strong incentives for the Successor Agency to submit Recognized

Obligation Payment Schedules on time. If the Successor Agency does not submit a Recognized Obligation Payment Schedule to the Oversight Board and the DOF at least 90 days prior to each January 2 and June 1, then the City of San Leandro will be subject to a $10,000 per day civil penalty for every day the schedule is late. Additionally, if the Successor Agency does not submit a Recognized Obligation Payment Schedule to the Oversight Board and the DOF at least 80 days prior to each January 2 and June 1, then the Successor Agency’s administrative cost allowance may be reduced by up to 25%. For additional information regarding procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and implications for the 2014 Bonds, see “RISK FACTORS – Recognized Obligation Payment Schedule.”

Pass-Through Agreements

The Redevelopment Law authorized the Former Agency to enter into negotiated pass-

through agreements with taxing agencies whose territory was located within a project area to alleviate the financial burden or detriment caused by the applicable redevelopment project. The Former Agency entered into three negotiated pass-through agreements regarding the Plaza 2 Project Area (collectively, the “Pass-Through Agreements”):

(i) Fiscal Agreement, dated as of August 1, 1988, by and between the Former

Agency and the County;

(ii) Fiscal Agreement, dated as of August 1, 1988, by and between the Former Agency and the Alameda County Superintendent of Schools; and

(iii) Fiscal Agreement, dated as of August 1, 1988, by and between the Former Agency and the East Bay Regional Parks District.

The terms of the Pass-Through Agreements are essentially the same. Amounts payable

pursuant thereto from tax increment are effectively senior to the payment of debt service on the

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2014 Bonds, but only to the extent such amounts are payable from tax increment derived from the Plaza 2 Project Area. Under these agreements, an assessed valuation is established representing the valuation in the Plaza 2 Project Area at the time of the adoption of Ordinance 88-013 (June 20, 1988) establishing the Plaza 2 Project Area. Without regard to actual growth rates, the taxing entities receive their share of tax increment equal to a two percent annual growth above the valuation at the time of adoption of Ordinance 88-013 and commencing in 2003-04 the annual growth is set at three percent. Section 33676 Payments

Taxing entities are also able to separately receive their share of the growth in valuation

due to inflation, known as Section 33676 payments or the 2% payments, pursuant to the Sections 33676 of the Redevelopment Law. The Successor Agency is subject to this tax sharing arrangement with the Flood Control District, the Mosquito Abatement District, the Bay Area Rapid Transit District and the City of San Leandro. Additionally, as a result of the court’s decision in Santa Ana Unified School District v. Orange County Development Agency, the Successor Agency is also required to make, and is currently making, such payments to the San Leandro Unified School District and the Chabot-Las Positas Community College District. See Appendix H - “FISCAL CONSULTANT’S REPORT” for further information.

Statutory Pass-Through Payments

In certain circumstances, Sections 33607.5 and 33607.7 of the Redevelopment Law

require redevelopment agencies and successor agencies to make statutory pass-through payments to taxing agencies whose territory is located within a project area, to alleviate the financial burden or detriment caused by the redevelopment project. As required by the Redevelopment Law as modified by the Dissolution Act, the County Auditor-Controller is responsible for administering all negotiated and statutory pass-through payment calculations and payments.

The Former Agency began making statutory tax sharing payments with respect to the

Plaza 1 Project Area in fiscal year 1996-97 and the West San Leandro/MacArthur Boulevard Project Area in 2000-01, to those taxing entities with which the Former Agency did not already have tax sharing agreements.

Those taxing entities that had entered into a Pass-Through Agreement with the Former

Agency (see “-Pass-Through Agreements” above) will continue to receive tax sharing payments in accordance with the terms of that agreement.

Taxing entities that do not have tax sharing agreements in place receive statutory pass-

through payments in accordance with the three-tiered formula for statutory tax sharing payments set forth in the Redevelopment Law. These statutory tax-sharing payments began in fiscal year 2004-05 and utilize the assessed values for fiscal year 2003-04 as an adjusted base year value for the first tier. These taxing entities receive their prorated shares of a tax sharing amount that is defined as being 25% of the revenue derived from the difference in assessed value in the current year and the assessed value in the adjusted base year and net of a calculated amount equal to the former 20% housing set-aside requirement.

In the eleventh year after initiation of the statutory tax sharing payments (fiscal year

2014-15), a second tier of tax sharing payments will be initiated using the assessed values of year 10 (fiscal year 2013-14) as an adjusted base year value. These taxing entities will then begin to additionally receive their prorated shares of a tax sharing amount that is defined as

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being 21% of the revenue derived from the difference in assessed value in the current year and the assessed value in the second adjusted base year and net of a calculated amount equal to the former 20% housing set-aside requirement.

See Appendix H - “FISCAL CONSULTANT’S REPORT” for further information about statutory pass-through payments.

Although the Dissolution Act authorizes the Successor Agency to seek subordination of

its statutory pass-through payment obligations to payment of debt service on the 2014 Bonds, the Successor Agency did not do so. Accordingly, payment of debt service on the 2014 Bonds from Tax Revenues is subordinate to the payment of statutory pass-through payment obligations. Housing Set-Aside

Before it was amended by the Dissolution Act, the Redevelopment Law required the

Former Agency to set aside not less than 20% of all tax increment generated in the Project Areas into a low and moderate income housing fund to be used for the purpose of increasing, improving and/or preserving the supply of low and moderate income housing. These tax increment revenues were commonly referred to as “Housing Set-Aside.”

The Dissolution Act eliminated the Housing Set-Aside requirement. As a result, and

because the Successor Agency has no obligations that are payable from Housing Set-Aside, the former Housing Set-Aside is available to pay debt service on the 2014 Bonds; the projection of Tax Revenues prepared by the Fiscal Consultant and set forth in the section of this Official Statement entitled “THE PROJECT AREAS – Projected Available Net Tax Increment and Estimated Debt Service Coverage,” assumes the availability of the former Housing Set-Aside for this purpose.

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PROPERTY TAXATION IN CALIFORNIA

Property Tax Collection Procedures Classification. In the State, property which is subject to ad valorem taxes is classified

as “secured” or “unsecured.” Secured and unsecured property are entered on separate parts of the assessment roll maintained by the County assessor. The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens on the secured property arising pursuant to State law, regardless of the time of the creation of other liens.

Generally, ad valorem taxes are collected by a county (the “Taxing Authority”) for the

benefit of the various entities (e.g., cities, schools and special districts) that share in the ad valorem tax (each a taxing entity) and successor agencies eligible to receive distributions from the respective Redevelopment Property Tax Trust Funds.

Collections. Secured and unsecured property are entered separately on the

assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured personal property taxes: (i) initiating a civil action against the taxpayer, (ii) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer, (iii) filing a certificate of delinquency for record in the county recorder’s office to obtain a lien on certain property of the taxpayer, and (iv) seizing and selling personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent.

Penalty. A 10% penalty is added to delinquent taxes which have been levied with

respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in default by operation of law and declaration of the tax collector on or about June 30 of each fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning on varying dates related to the tax bill mailing date.

Delinquencies. The valuation of property is determined as of the January 1 lien date as

equalized in August of each year and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31.

Supplemental Assessments. California Revenue and Taxation Code Section 75.70

provides for the reassessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Such reassessment is referred to as the Supplemental Assessment and is determined by applying the current year's tax rate to the amount of the increase or decrease in a property's value and prorating the resulting property

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taxes to reflect the portion of the tax year remaining as determined by the date of the change in ownership or completion of new construction. Supplemental Assessments become a lien against real property. Prior to the enactment of this law, the assessment of such changes was permitted only as of the next tax lien date following the change, and this delayed the realization of increased property taxes from the new assessments for up to 14 months. Since fiscal year 1984-85, revenues derived from Supplemental Assessments have been allocated to redevelopment agencies and taxing entities in the same manner as the general property tax. The receipt of Supplemental Assessment revenues by taxing entities typically follows the change of ownership by a year or more. This statute provides increased revenue to the Redevelopment Property Tax Trust Fund to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such supplemental assessments occur within the Project Areas, tax increment may increase. Revenues resulting from Supplemental Assessments have not been included in the Fiscal Consultant’s projections of tax increment available to pay debt service on the 2014 Bonds.

Property Tax Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions in proportion to the tax-derived revenues allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. For fiscal year 2013-14, the County collection charges and charges relating to the dissolution of the Former Agency were 1.00% of gross tax increment within the Project Areas. Based on the collection charges for fiscal year 2013-14, the Fiscal Consultant projected the charge for fiscal year 2014-15 as a percentage of gross tax increment to remain at 1.00%. For purposes of the Fiscal Consultant’s projections of tax increment available to pay debt service on the 2014 Bonds, the Fiscal Consultant assumed that the County will continue to charge the Successor Agency for property tax administration and that such charge will increase proportionally with any increases in revenue.

In addition, Sections 34182(e) and 34183(a) of the Dissolution Act allow administrative

costs of the County Auditor-Controller for the cost of administering the provisions of the Dissolution Act, as well as the foregoing SB 2557/SB 1559 amounts, to be deducted from property tax revenues before monies are deposited into the Redevelopment Property Tax Trust Fund. The County’s administrative charge relating to the dissolution of the Former Agency was $14,529 for the June 1, 2013 and the January 2, 2014 distributions from the Redevelopment Property Tax Trust Fund. The County’s administrative charge relating to the distribution of property tax revenues to the Successor Agency was $64,782 for the same period.

Teeter Plan

The County has adopted the Alternative Method of Distribution of Tax Levies and

Collections and of Tax Sale Proceeds (the “Teeter Plan”). Consequently, property tax revenues in the Project Areas do not reflect actual collections because the County allocates property tax revenues to the Successor Agency as if 100% of the calculated property taxes were collected without adjustment for delinquencies, redemption payments or roll adjustments. The County could elect to terminate this policy and, in such event, the amount of the levy of property tax revenue that could be allocated to the Successor Agency would depend upon the actual collections of the secured taxes within the Project Areas. Substantial delinquencies in the payment of property taxes could impair the timely receipt by the Successor Agency of Tax Revenues, although the Tax Revenues provide substantial debt service coverage on the 2014

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Bonds. See “- Projected Available Net Tax Increment and Estimated Debt Service Coverage” below.

Unitary Property

Assembly Bill (“AB”) 2890 (Statutes of 1986, Chapter 1457) provides that, commencing

with fiscal year 1988-89, tax revenues derived from unitary property and assessed by the State Board of Equalization are accumulated in a single Tax Rate Area for the County. The tax revenues are then to be allocated to each taxing entity county-wide as follows: (i) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to 2%; (ii) if utility tax revenues are insufficient to provide the same amount as in the previous year, each taxing entity's share would be reduced pro rata county wide; and (iii) any increase in revenue above 2% would be allocated in the same proportion as the taxing entity's local secured taxable values are to the local secured taxable values of the County.

AB 454 (Statutes of 1987, Chapter 921) further modified Chapter 1457 regarding the

distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in each county. Chapter 921 further provides for a new method of establishing tax rates on State-assessed property and distribution of property tax revenue derived from State-assessed property to taxing jurisdictions within each county in accordance with a new formula. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.

The County includes the taxable value of utilities as part of the reported taxable values

of a project area. Consequently, the base year values of redevelopment projects are increased by the amount of utility value that existed originally in the base year. The Auditor-Controller allocated a total of $1,073,537 to the West San Leandro/MacArthur Boulevard Project Area for fiscal year 2013-14. The Auditor-Controller did not allocate any value for utilities in the Plaza Project Area for fiscal year 2013-14.

Article XIIIA of the State Constitution

Article XIIIA limits the amount of ad valorem taxes on real property to 1% of “full cash

value” of such property, as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the County Assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” Furthermore, the “full cash value” of all real property may be increased to reflect the rate of inflation, as shown by the consumer price index, not to exceed 2% per year, or may be reduced.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value”

base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances.

Article XIIIA (i) exempts from the 1% tax limitation taxes to pay debt service on (a)

indebtedness approved by the voters prior to July 1, 1978 or (b) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition; (ii) requires a vote of two-thirds of the

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qualified electorate to impose special taxes, or certain additional ad valorem taxes; and (iii) requires the approval of two-thirds of all members of the State Legislature to change any State tax laws resulting in increased tax revenues.

The validity of Article XIIIA has been upheld by both the California Supreme Court and

the United States Supreme Court. In the general election held November 4, 1986, voters of the State approved two

measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to provide that the terms “purchase” and “change of ownership,” for the purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. This amendment to Article XIIIA may reduce the rate of growth of local property tax revenues.

Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over the

age of 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence assessed value to the new residence. As a result of the Legislature’s action, the growth of property tax revenues may decline.

Legislation enacted by the Legislature to implement Article XIIIA provides that all taxable

property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value (except as noted). Tax rates for voter-approved bonded indebtedness and pension liabilities are also applied to 100% of assessed value.

Each year the Board of Equalization announces the applicable adjustment factor. Since

the adoption of Proposition 13, inflation has, in most years, exceeded 2% and the announced factor has reflected the 2% cap. The changes in the California Consumer Price Index from October of one year and October of the next year are used to determine the adjustment factor for the January assessment date. Through fiscal year 2010-11 there were six occasions when the inflation factor was less than 2%. Until fiscal year 2010-11 the annual adjustment never resulted in a reduction to the base year values of individual parcels; however, the factor that was applied to real property assessed values for the January 1, 2010 assessment date was -0.237% and this resulted in a reductions to the adjusted base year value of parcels. The table below reflects the inflation adjustment factors for the current fiscal year, 10 prior fiscal years and the adjustment factor for fiscal year 2014-15. The projections of Tax Revenues in Table 5 below assume an annual growth factor of 2% per year commencing fiscal year 2015-16. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage.”

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Historical Inflation Adjustment Factors Fiscal Year Inflation Adj. Factor

2003-04 2.000% 2004-05 1.867 2005-06 2.000 2006-07 2.000 2007-08 2.000 2008-09 2.000 2009-10 2.000 2010-11 -0.237 2011-12 0.753 2012-13 2.000 2013-14 2.000 2014-15 0.454

Appropriations Limitation - Article XIIIB

Article XIIIB limits the annual appropriations of the State and its political subdivisions to

the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity. The “base year” for establishing such appropriations limit is the 1978/79 fiscal year, and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies.

Section 33678 of the Redevelopment Law provides that the allocation of taxes to a

redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by a redevelopment agency of proceeds of taxes levied by or on behalf of a redevelopment agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678 has been upheld in two California appellate court decisions. On the basis of these decisions, the Successor Agency has not adopted an appropriations limit.

Proposition 87

On November 8, 1988, the voters of the State approved Proposition 87, which amended

Article XVI, Section 16 of the State Constitution to provide that property tax revenue attributable to the imposition of taxes on property within a redevelopment project area for the purpose of paying debt service on certain bonded indebtedness issued by a taxing entity (not the Former Agency or the Successor Agency) and approved by the voters of the taxing entity after January 1, 1989 will be allocated solely to the payment of such indebtedness and not to redevelopment agencies.

Appeals of Assessed Values

Pursuant to California law, a property owner may apply for a reduction of the property

tax assessment for such owner’s property by filing a written application, in a form prescribed by

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the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board.

In the County, a property owner desiring to reduce the assessed value of such owner’s

property in any one year must submit an application to the County Assessment Appeals Board (the “Appeals Board”). Applications for any tax year must be submitted by September 15 of such tax year. Following a review of each application by the staff of the County Assessor’s Office, the staff makes a recommendation to the Appeals Board on each application which has not been rejected for incompleteness or untimeliness or withdrawn. The Appeals Board holds a hearing and either reduces the assessment or confirms the assessment. The Appeals Board generally is required to determine the outcome of appeals within two years of each appeal’s filing date. Any reduction in the assessment ultimately granted applies only to the year for which application is made and during which the written application is filed. The assessed value increases to its pre-reduction level for fiscal years following the year for which the reduction application is filed. However, if the taxpayer establishes through proof of comparable values that the property continues to be overvalued (known as “ongoing hardship”), the Assessor has the power to grant a reduction not only for the year for which application was originally made, but also for the then current year as well. Appeals for reduction in the “base year” value of an assessment, which generally must be made within three years of the date of change in ownership or completion of new construction that determined the base year, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. Moreover, in the case of any reduction in any one year of assessed value granted for “ongoing hardship” in the then current year, and also in any cases involving stipulated appeals for prior years relating to base year and personal property assessments, the property tax revenues from which Tax Revenues are derived attributable to such properties will be reduced in the then current year. In practice, such a reduced assessment may remain in effect beyond the year in which it is granted.

See “THE PROJECT AREAS” for information regarding historical and pending appeals

of assessed valuations by property owners in the Project Areas.

Proposition 8 Proposition 8, approved in 1978 (California Revenue and Taxation Code Section 51(b)),

provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions under this code section may be initiated by the County Assessor or requested by the property owner.

After such reductions in value are implemented, the County Assessor is required to

review the property’s market value as of each subsequent lien date and adjust the value of real property to the lesser of its base year value as adjusted by the inflation factor pursuant to Article XIIIA of the California Constitution or its full cash value taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Reductions made under Proposition 8 to residential properties are normally initiated by the County Assessor but may also be requested by the property owner. Reductions of value for commercial, industrial and other land use types under Proposition 8 are normally initiated by the property owner as an assessment appeal.

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After a roll reduction is granted under this code section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

For a summary of the recent history of Proposition 8 reductions in the Project Areas, see

“THE PROJECT AREAS – Appeals of Assessed Values; Proposition 8.”

Propositions 218 and 26 On November 5, 1996, California voters approved Proposition 218—Voter Approval for

Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. On November 2, 2010, California voters approved Proposition 26, the “Supermajority Vote to Pass New Taxes and Fees Act.” Proposition 26 amended Article XIIIC of the California Constitution by adding an expansive definition for the term “tax,” which previously was not defined under the California Constitution.

Tax Revenues securing the 2014 Bonds are derived from property taxes that are outside

the scope of taxes, assessments and property-related fees and charges which are limited by Proposition 218 and Proposition 26.

Future Initiatives

Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID and certain other propositions

affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California’s initiative process. From time to time other initiative measures could be adopted, further affecting Successor Agency revenues or the Successor Agency’s ability to expend revenues.

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THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO

As described in “INTRODUCTION,” the Dissolution Act dissolved the Former Agency as

of February 1, 2012. Thereafter, pursuant to Section 34173 of the Dissolution Act, the City became the Successor Agency to the Former Agency. Subdivision (g) of Section 34173 of the Dissolution Act, added by AB 1484, expressly affirms that the Successor Agency is a separate public entity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City.

Successor Agency Powers

All powers of the Successor Agency are vested in its five members who are elected

members of the City Council. Pursuant to the Dissolution Act, the Successor Agency is a separate public body from the City and succeeds to the organizational status of the Former Agency but without any legal authority to participate in redevelopment activities, except to complete any work related to an approved enforceable obligation. The Successor Agency is tasked with expeditiously winding down the affairs of the Former Agency, pursuant to the procedures and provisions of the Dissolution Act. Under the Dissolution Act, substantially all Successor Agency actions are subject to approval by the Oversight Board, as well as review by the DOF.

Status of Compliance with Dissolution Act

The Dissolution Act requires a due diligence review to determine the unobligated

balances of each successor agency that are available for transfer to taxing entities. The due diligence review involves separate reviews of each successor agency’s low and moderate income housing fund and of all other funds and accounts. Once a successor agency completes the due diligence review and any transfers to taxing entities, the DOF will issue a finding of completion that expands the authority of each successor agency in carrying out the wind down process. A finding of completion allows a successor agency to, among other things, retain real property assets of the dissolved redevelopment agency and utilize proceeds derived from bonds issued prior to January 1, 2011.

After receiving a finding of completion, each successor agency is required to submit a

Long Range Property Management Plan detailing what it intends to do with its inventory of properties. Successor agencies are not required to immediately dispose of their properties but are limited in terms of what they can do with the retained properties. Permissible uses include: sale of the property, use of the property to satisfy an enforceable obligation, retention of the property for future redevelopment, and retention of the property for governmental use. These plans must be filed by successor agencies within six months of receiving a finding of completion, and the DOF will review these plans as submitted on a rolling basis.

In 2013, the City commenced an action in the Superior Court of California against the

DOF regarding the DOF’s rejection or disallowance during the due diligence review process of certain loans and agreements involving the Former Agency. At issue in such litigation are (i) a promissory note executed by the Former Agency in favor of the City in the principal amount of approximately $4.3 million evidencing a loan by the City to the Former Agency to finance redevelopment activities within the Joint Project Area (the “2004 Note”), (ii) payments made by the Former Agency to the City of approximately $2.9 million on account of loans that were made

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by the City to the Former Agency to finance redevelopment activities within the Plaza Project Area and the Joint Project Area (the “Pre-Dissolution Loan Payments”) and (iii) a cooperative agreement for infrastructure projects estimated to be worth approximately $8.9 million (the “Cooperative Agreement”). The Superior Court has issued a ruling in favor of City with respect to the 2004 Note and the Cooperative Agreement, and against the City with respect to the Pre-Dissolution Loan Payments. The City anticipates that DOF will appeal the ruling in favor of the City with respect to the 2004 Note and the Cooperative Agreement. The City is uncertain whether it will appeal the ruling against the City with respect to the Pre-Dissolution Loan Payments. In any event, the Successor Agency anticipates that the resolution of such litigation will not affect its ability to pay debt service on the 2014 Bonds. Once such litigation is finally resolved, the Successor Agency will submit its application to DOF for a finding of completion and thereafter will submit its Long Range Property Management Plan as required under the Dissolution Act.


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THE PROJECT AREAS

Project Areas in the Aggregate Although this Official Statement includes separate information about each of the Project

Areas because of their unique characteristics and their independent redevelopment plan limits, the Tax Revenues pledged as security for the 2014 Bonds consists of property tax revenues allocated to the Successor Agency from both of the Project Areas. Consequently, this Official Statement also shows aggregate information about the Project Areas. In order to understand the nature of the aggregate Project Areas, investors should be aware that, for fiscal year 2014-15, (i) the assessed secured value of the Plaza Project Area was approximately 23% of the aggregate assessed secured value of the Project Areas and approximately 40% of the aggregate incremental assessed secured value, and (ii) the assessed secured value of the West San Leandro/MacArthur Boulevard Project Area was approximately 77% of the aggregate assessed secured value of the Project Areas and 60% of the aggregate incremental assessed secured value.

Land Use. The following table summarizes the current land use in the Project Areas in

the aggregate, by the number of parcels and by assessed secured value for fiscal year 2014-15. As shown, the majority of land within the Project Areas (approximately 67.8% in terms of assessed secured valuation) is currently used for industrial purposes. The assessed values shown do not include non-homeowner exemptions.

These land use categories are based on land use designations placed on individual

parcels by the County Assessor’s Office and may not, in every case, coincide with the actual uses found on the parcels.

TABLE 1


Project Areas Land Use by Net Taxable Secured Assessed Value

Fiscal Year 2014-15

Category Secured Assessed

Valuation(1)

% of Total Secured Valuation

Number of Parcels

% of Total Number of

Parcels Commercial $303,179,976 22.5% 191 17.3% Industrial 915,477,291 67.8 327 29.6 Single-Family Residential 12,024,152 0.9 36 3.3 Condominiums 49,210,853 3.6 252 22.8 Other Residential 43,388,093 3.2 45 4.1 Vacant 24,134,637 1.8 55 5.0 Other 3,035,530 0.2 197 17.9

Total $1,350,450,532 100.0% 1,103 100.0%

(1) Net of Homeowner Exemptions. These exemptions are reimbursed by the County Auditor-Controller prior to disbursement of tax increment to the Redevelopment Property Tax Trust Fund. Source: County Assessor; Urban Analytics, LLC.

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See “Appendix H – Fiscal Consultant's Report” for information regarding land use within each Project Area.

Major Taxable Property Owners. The following table lists the ten largest taxable

property owners within the Project Areas in the aggregate for fiscal year 2014-15. Based on fiscal year 2014-15 locally assessed taxable valuations, the top 10 taxable property owners in the Project Areas represent approximately 24.30% of the total taxable value of the Project Areas of $1,550,310,190 and 42.44% of the fiscal year 2014-15 incremental value of $888,851,016.

AMB Property Company, the largest property owner in the Project Areas, owns property

with a total assessed value of approximately $63.2 million. AMB US Logistics Fund LP is the second-largest owner, and together with an affiliated company, owns twelve properties in the West San Leandro/MacArthur Project Area with a total assessed value of approximately $62.9 million. The third largest owner, Safeway, owns a warehouse located in the West San Leandro/MacArthur Project Area with a total assessed value of approximately $54.6 million.

TABLE 2 SUCCESSOR AGENCY TO THE

REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO Project Areas

Ten Largest Taxable Property Owners Fiscal Year 2014-15

Property Owner Secured and

Utility Unsecured Total

Valuation % of Total Valuation

% of Incremental Valuation

Principal Use(1)

AMB Property Corp. $63,237,699 - $63,237,699 4.08% 7.12% Warehouse

AMB US Logistics Fund LP* 62,934,944 - 62,934,944 4.06 7.09 Warehouse

Safeway 54,574,647 - 54,574,647 3.52 6.15 Industrial

Creekside Plaza Partners LLC* 43,594,448 - 43,594,448 2.81 4.91 Office

World Savings & Loan Association 30,284,070 - 30,284,070 1.95 3.41 Office

BRCP San Leandro Industrial LLC* 29,413,024 - 29,413,024 1.90 3.31 Industrial

KTR Bay East IV LLC 28,150,000 - 28,150,000 1.82 3.17 Industrial Heritage Gateway LP & Heritage San Leandro LP 23,505,516 - 23,505,516 1.52 2.65 Residential

Doolittle Williams LLC 20,894,733 - 20,894,733 1.35 2.35 Industrial LBA CPT Industrial Co V A LLC 20,090,800 - 20,090,800 1.30 2.26 Warehouse

Total, Top Ten: $376,679,881 - $376,679,881 24.30% 42.44%

Total Fiscal Year 2014-15 AV: $1,550,310,190(1) Total Fiscal Year 2014-15 Incremental AV: $888,851,016

(1) Excludes homeowner exemptions. * Property owner had pending appeals with respect one or more fiscal years as of June 30, 2014.

Source: County Assessor; State Board of Equalization

See “Appendix H – Fiscal Consultant's Report” for information regarding the largest

taxable property owners within each Project Area. Summary of Assessed Value History in the Project Areas

Taxable values are prepared and reported by the County Auditor-Controller each fiscal

year and represent the aggregation of all locally assessed properties that are part of the Project

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Areas. The assessments are assigned to Tax Rate Areas, which have the same boundaries as the Project Areas.

The Fiscal Consultant reviewed the historic reported taxable values for the Project Areas

to ascertain the rate of taxable property valuation growth over the 5 most recent fiscal years beginning with fiscal year 2010-11. Assessed values within the Project Areas have increased steadily since fiscal year 2010-11, with increases in fiscal year 2010-11 of 0.58%, fiscal year 2011-12 of 3.06%, fiscal year 2012-13 of 2.27%, fiscal year 2013-14 of 1.37% and fiscal year 2014-15 of 7.36%. The growth in fiscal year 2014-15 was attributed primarily to an increase in the West San Leandro/MacArthur Boulevard Project Area, which posted an increase in assessed valuation of $79.4 million. The following table summarizes the taxable values for the Project Areas in the aggregate for the current and past 9 fiscal years:

Fiscal Year Total Assessed Value % Change

2005-06 $1,105,915,073 -- 2006-07 1,189,154,465 7.53% 2007-08 1,217,164,713 2.36 2008-09 1,287,494,345 5.78 2009-10 1,343,801,569 4.37 2010-11 1,351,619,469 0.58 2011-12 1,393,020,148 3.06 2012-13 1,424,585,855 2.27 2013-14 1,444,034,606 1.37 2014-15 1,550,310,190 7.36

Source: County Assessor; Urban Analytics, LLC.

See “Appendix H – Fiscal Consultant's Report” for information regarding history of

assessed values within each Project Area. Unitary Property

The amount of unitary revenues to be allocated to the Successor Agency from the Plaza

Project Area for fiscal year 2014-15 is estimated to be $3,531. The amount of unitary revenues to be allocated to the Successor Agency from the West

San Leandro/MacArthur Boulevard Project Area for fiscal year 2014-15 is estimated to be $17,561.

The Fiscal Consultant assumes these allocations of unitary revenues will remain constant for purposes of projecting tax increment available to pay debt service on the 2014 Bonds.

The Redevelopment Plan for the Plaza Project Area

Plaza Project Area Original Redevelopment Plan. The City Council of the City

adopted the Plaza Project Area Redevelopment Plan for the Plaza Project Area on May 15, 2000 pursuant to its Ordinance No. 2000-09. The Plaza Project Area was created through the merger of the Plaza 1 Project Area and Plaza 2 Project Area. The Plaza 1 Redevelopment Plan was adopted on December 28, 1960 by Ordinance No. 1295 N.S. and the Plaza 2 Redevelopment Plan was adopted on December 26, 1967 by Ordinance No. 67-62. Both plans were subsequently amended several times. See "Appendix H – Fiscal Consultant's Report."

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The City first established a redevelopment project in 1960 to deal with the inadequacies

and deterioration of public and private buildings and facilities in the heart of the City. The original redevelopment project area was designated as the “Downtown Plaza Redevelopment Project Area” which later became the “Plaza 1 Project Area.” In 1967, the City established the Plaza 2 Project Area. The original Plaza 2 Project Area was expanded by the addition of territory in 1974 and has been amended several times over the years to add more territory to the Plaza 2 Project Area. The Plaza 1 Project Area encompasses approximately 18 acres and the Plaza 2 Project Area has approximately 137 acres, for a total of 155 acres for the Plaza Project Area.

AB 1290; AB 1290 Amendment. In 1993, the California Legislature enacted Assembly

Bill 1290 (“AB 1290”), which made several significant changes to the Redevelopment Law. Among other changes, AB 1290 requires redevelopment plans to include limits on the period of time for incurring and repaying loans, advances and indebtedness payable from tax increment revenues.

On December 18, 1995, the City Council adopted Ordinance No. 95-042, which adopted

a series of plan limits related to the original Plaza Project Area Redevelopment Plan to comply with AB 1290.

SB 211; SB 1045; SB 211 and SB 1045 Amendments. Senate Bill 211 (“SB 211”)

allowed redevelopment agencies to amend their redevelopment plans to eliminate the time limit for incurring debt with respect to project areas formed before 1994, but required them to begin sharing tax increment revenues pursuant to a statutory formula to the extent that revenues were not already shared by a pre-existing tax sharing agreement.

Pursuant to Senate Bill 104 (“SB 1045”) in connection with the adoption of statutes

requiring an Educational Revenue Augmentation Fund (“ERAF”) shift for fiscal year 2003-04, the State Legislature authorized the City Council to amend the Plaza Project Area Redevelopment Plan to extend by one year the time limit of the effectiveness of the plan and the time limit to repay indebtedness and receive tax increment.

In compliance with SB 211 and SB 1045, the City Council adopted an amendment of the Plaza Project Area Redevelopment Plan for the Plaza Project Area pursuant to Ordinance No. 2003-019 on December 1, 2003.

SB 1096. Pursuant to Senate Bill 1096 (“SB 1096”) in connection with the adoption of statutes requiring an ERAF shift for fiscal years 2004-05 and 2005-06, the State Legislature authorized amendments of redevelopment plans to extend by one year for each ERAF shift the time limit of the effectiveness of the plan and the time limit to repay indebtedness and receive tax increment.

Pursuant to SB 1096, the Plaza Project Area Redevelopment Plan was further amended

pursuant to Ordinance No. 2005-009, adopted July 18, 2005. As the limit on the effectiveness of the Plaza Project Area Redevelopment Plan was greater than twenty years at the time the ERAF payments were made, the time limit of the effectiveness of the Plaza Project Area Redevelopment Plan and the time limit to repay indebtedness and receive tax increment were not effectively extended for the Plaza Project Area Redevelopment Plan.

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AB 26. Pursuant to Assembly Bill 26 4x, the State Legislature authorized amendments of redevelopment plans in connection with the payment of Supplemental Educational Revenue Augmentation Fund (“SERAF”) shifts for fiscal years 2009-10 and 2010-11.

The Former Agency made a SERAF payment of $4,255,866 in fiscal year 2009-10 and a

SERAF payment of $876,208 in fiscal year 2010-11, but did not adopt any related amendments to the Plaza Project Area Redevelopment Plan.

Plan Limits for the Plaza Project Area. As amended, the Plaza Project Area

Redevelopment Plan includes the following limits:

Project Area Component

Tax Increment

Limit

Tax IncrementReceived thru

2012/13

Limit on Total Indebtedness

Plaza 1 $9,422,071 $8,449,968 Not Limited Plaza 2 $87,500,000 (1) $50,622,063 $50,000,000

________________________ (1) Applies to Plaza 2 Project Area and all sub-areas therein.

The Plaza Project Area Redevelopment Plan also contains limitations on the time for

payment of debt with tax increment. Since the Plaza Project Area is comprised of two formerly separate project areas and various subareas created by amendments to the former redevelopment plans, various limits apply to the Plaza Project Area subareas with respect to the final dates for incurring new debt or repaying debt with tax increment. These are summarized as follows.

Project AreaSub-Area

Plan Expiration

Final Date to Repay Debt

With Tax Increment

Plaza 1 1/1/2009 12/28/2025(1) Plaza 2 Area 1 1/1/2009 1/1/2019 Area 2 12/17/2019 12/17/2029 Area 3 3/30/2021 3/30/2031 Area 4 11/29/2022 11/29/2032 Area 5 7/5/2028 7/5/2038

________________________ (1) Applies to debt incurred before January 1, 1994 only; final date to repay all other debt is December

28, 2025. According to the records of the County Auditor-Controller, through fiscal year 2013-14,

the Successor Agency had received a cumulative total of $8,449,968 and $50,622,063 in tax increment revenue with respect to the Plaza 1 Project Area and Plaza 2 Project Area, respectively. Based on the Fiscal Consultant’s projection of property tax revenues to be allocated to the Successor Agency with respect to the Plaza Project Area (which assume 2% annual real property growth beginning in fiscal year 2015-16), the Successor Agency expects to reach the tax increment limit with respect to the Plaza 1 Project Area in 2016-17 and the Plaza 2 Project Area in fiscal year 2026-27, in each case prior to the final maturity date of the 2014 Bonds. Should growth of taxable values exceed projections, such project areas will reach their

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respective tax increment limits earlier. Once the limits on cumulative tax increment are reached, such project areas may not receive additional tax increment revenue. See “RISK FACTORS - Plan Limits.”

The DOF has expressed the opinion that the tax increment limits within former redevelopment plans that had not been reached prior to redevelopment dissolution are inconsistent with the purpose and intent of the Dissolution Act and, therefore, should no longer apply. Although this opinion has no force of law, it is possible that the tax increment limits contained in the Redevelopment Plans related to the Plaza Project Area may not be applied by the County Auditor-Controller.

See APPENDIX H - “FISCAL CONSULTANT’S REPORT” for more detail about the tax

increment limits.

The Redevelopment Plan for the West San Leandro/MacArthur Boulevard Project Area West San Leandro/MacArthur Boulevard Project Area Original Redevelopment

Plan. The City Council of the City adopted the Redevelopment Plan for the West San Leandro/MacArthur Boulevard Project Area on July 19, 1999 pursuant to its Ordinance No. 99-025. As discussed above, shortly after formation of the West San Leandro/MacArthur Boulevard Project Area, the Former Agency agreed to remove 17 parcels from the initial West San Leandro/MacArthur Boulevard Project Area in response to concerns raised by the County. The Former Agency and the County signed a Memorandum of Understanding dated November 30, 1999, which identified the 17 parcels to be removed. Pursuant thereto, the Former Agency amended the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan and removed the parcels pursuant to Ordinance 2000-014 dated June 26, 2000. The County Auditor-Controller subsequently removed the parcels from both the base year assessed valuation and the annual tax increment.

AB 1290. The West San Leandro/MacArthur Boulevard Project Area was established

after the effective date of AB1290 and as such, the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan does not contain a “cap” or dollar limit on the amount of tax increment that can be collected thereunder. Instead, the Successor Agency is required to make statutory pass-through payments and the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan contains a statutory time limit on the receipt of tax increment and repayment of indebtedness of 45 years after the date of plan adoption. This limit was extended by one year to July 19, 2045 as a result of a state-mandated payment to the ERAF fund. The West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan includes a limitation of $750 million on the amount of indebtedness that may be outstanding at any time. Redevelopment activity can occur for thirty years, until July 19, 2029.

SB 1045 Amendments. Pursuant to SB 1045, the City Council further amended the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan by Ordinance No. 2003-020, which it adopted on December 15, 2003.

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Plan Limits for the West San Leandro/MacArthur Boulevard Project Area. As amended, the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan includes the following limits:

Limitation Detail

Plan Life: July 19, 2045 Final Date to Collect Tax Increment and Repay Debt: July 19, 2045 Limit on Outstanding Bonded Indebtedness: $750 million

As noted above, the DOF has expressed the opinion that the tax increment limits within

former redevelopment plans that had not been reached prior to redevelopment dissolution are inconsistent with the purpose and intent of the Dissolution Act and, therefore, should no longer apply. Although this opinion has no force of law, it is possible that the tax increment limits contained in the West San Leandro/MacArthur Boulevard Project Area Redevelopment Plan may not be applied by the County Auditor-Controller. Low and Moderate Income Housing Set-Aside

As described in “SECURITY FOR THE 2014 BONDS - Housing Set-Aside,” the

Dissolution Act eliminated the distinction between Housing Set-Aside and non-Housing Set-Aside property tax revenues. The housing fund into which these set-aside amounts were formerly deposited has been eliminated and any unencumbered amounts remaining in that fund have been paid to the County and these funds have been allocated to the taxing entities within the Project Areas. As a result, and because the Successor Agency has no obligations that are payable from Housing Set-Aside, the former Housing Set-Aside is available to pay debt service on the 2014 Bonds; the projection of Tax Revenues prepared by the Fiscal Consultant and set forth in the section of this Official Statement entitled “THE PROJECT AREAS – Projected Available Net Tax Increment and Estimated Debt Service Coverage,” assumes the availability of the former Housing Set-Aside for this purpose.

Tax Rates

Tax rates will vary from area to area within the State, as well as within a community and

a redevelopment project area. The tax rate for any particular parcel is based upon the jurisdictions levying the tax rate for the area where the parcel is located. The tax rate consists of the general levy rate of $1.00 per $100 of taxable value and any over-ride tax rate. The over-ride rate is that portion of the tax rate that exceeds the general levy tax rate and is levied to pay voter approved indebtedness or contractual obligations that existed prior to the enactment of Proposition XIII.

Section 34183(a)(1) of the Dissolution Act requires the County Auditor-Controller to

allocate all revenues attributable to tax rates levied to make annual repayments of the principal of and interest on any bonded indebtedness for the acquisition or improvement of real property to the taxing entity levying the tax rate. The Fiscal Consultant reports that Section 34183(a)(1) has been interpreted by the County to include all of the revenues resulting from over-ride tax rates that were previously allocated to redevelopment agencies based on the County’s determination that these tax rates are being levied for repayment of indebtedness for acquisition or improvement of real property. As a result, the tax increment revenues being deposited into the Redevelopment Property Tax Trust Fund include only revenues derived from the general 1% levy and includes no revenues derived from over-ride tax rates that had been included in tax

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increment revenues prior to the dissolution of redevelopment agencies. The Fiscal Consultant's projections of tax increment available to pay debt service on the 2014 Bonds are based only on revenue derived from the general levy tax rate.

Appeals of Assessed Values; Proposition 8

Pursuant to California law, property owners may apply for a reduction of their property

tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board.

After the applicant and the assessor have presented their arguments, the Appeals Board

makes a final decision on the proper assessed value. The Appeals Board may rule in the assessor’s favor, in the applicant’s favor, or the Board may set their own opinion of the proper assessed value, which may be more or less than either the assessor’s opinion or the applicant’s opinion.

Any reduction in the assessment ultimately granted applies to the year for which the

application is made and may also affect the values in subsequent years. Refunds for taxpayer overpayment of property taxes may include refunds for overpayment of taxes in years after that which was appealed. Current year values may also be adjusted as a result of a successful appeal of prior year values. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downward will require a refund for overpayment.

Appeals for reduction in the “base year” value of an assessment, if successful, reduce

the assessment for the year in which the appeal is made and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

Appeals may also be filed under Section 51 of the Revenue and Taxation Code, which

requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions have taken place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the County Assessor or requested by a property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and it may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. See “PROPERTY TAXATION IN CALIFORNIA” above.

The Fiscal Consultant reviewed assessment appeals data from the County for the past seven fiscal years, 2006-07 through 2013-14, to determine the potential impact that pending appeals may have on the projected tax increment available to pay debt service on the 2014 Bonds. According to the Fiscal Consultant, since fiscal year 2006-07, owners of land within the Project Areas have filed a total of 321 appeals. Of the 321 appeals, 255 resulted in reductions

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in assessed value totaling approximately $88 million; representing a 7% reduction in assessed value or a 93% assessed value retention rate.

As of June 30, 2014, there were 14 appeals pending within the Plaza Project Area and

35 appeals pending within the West San Leandro/MacArthur Boulevard Project Area, with respect to total assessed value of approximately $377 million. The Fiscal Consultant notes that, assuming a 7% reduction in assessed value (based on actual reductions in fiscal years 2006-7 through 2013-14) the Successor Agency could experience a loss of $27.1 million or approximately $271,000 in tax increment revenue on the pending appeals in assessed value in the Project Areas. Were the full amount of disputed valuation granted, the reduction in assessed value would be $153.3 million or approximately $1.53 million in tax increment revenue.

The projections of Tax Revenues from the Project Areas on an aggregate basis

prepared by the Fiscal Consultant and set forth in the section of this Official Statement entitled “THE PROJECT AREAS – Projected Available Net Tax Increment and Estimated Debt Service Coverage” do not take into account any reductions in assessed value related to any pending appeals. See APPENDIX H - “FISCAL CONSULTANT’S REPORT.”

As discussed in “PROPERTY TAXATION IN CALIFORNIA – Proposition 8” above,

Proposition 8 allows a temporary reduction in assessed value when the current market value of a property is less than the current assessed value as of the lien date.

The Fiscal Consultant reports that with respect to the Plaza Project Area, 128 parcels, largely residential, posted an increase in valuation above the inflation rate for fiscal 2014-15 with no change in ownership, thereby indicating a restoration of Proposition 8 values. These parcels gained $9.1 million in assessed valuation in fiscal year 2014-15. Ten parcels, mainly commercial, posted decreases in valuation in the Plaza Project Area with no change in ownership, resulting in a $2 million decrease in valuation in fiscal year 2014-15. Over half of that amount was from a property owned by World Savings whose decrease in valuation is attributable to the removal of a business fixture assessment from the property rather than to a Proposition 8 reduction. See APPENDIX H - “FISCAL CONSULTANT’S REPORT.”

With regard to the West San Leandro/MacArthur Boulevard Project Area, the Fiscal Consultant reports that the assessed valuation of 48 parcels increased above the inflation rate for fiscal year 2014-15 with no change in ownership, thereby indicating a restoration of Proposition 8 values. These parcels gained $39.7 million in assessed valuation in fiscal year 2014-15. In addition, the Fiscal Consultant reports that seventeen, mainly commercial, parcels had decreases in assessed valuation totaling $2.7 million with no change in ownership, which may include some Proposition 8 reductions. See APPENDIX H - “FISCAL CONSULTANT’S REPORT.”

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The following table shows the number of appeals that are pending, that have been resolved, the values under appeal and the property owners’ opinion of value for the Project Areas in the aggregate for fiscal years 2006-07 through 2013-14.

TABLE 3


Project Areas Assessment Appeals As of June 30, 2013

Roll Year

Status

No.

of Appeals

County

Valuation

Owner’s Opinion of

Value

Valuation

After Appeal

Retention

Rate(1) 2013-14 Resolved 1 $5,351,300 $ 2,675,651 $5,351,300 100% 2013-14 Pending 49 267,138,716 166,612,729 - - 2012-13 Resolved 33 173,830,832 115,259,666 167,468,809 96% 2012-13 Pending 26 117,068,072 71,769,622 - - 2011-12 Resolved 58 284,994,763 173,347,256 266,626,463 94% 2011-12 Pending 15 62,735,125 32,566,207 - - 2010-11 Resolved 71 271,635,889 172,252,501 247,031,991 91% 2010-11 Pending 1 676,338 250,000 - - 2009-10 Resolved 73 333,648,705 227,911,477 317,445,987 95% 2009-10 Pending - - - - - 2008-09 Resolved 35 83,003,518 58,612,303 79,838,642 96% 2008-09 Pending - - - - - 2007-08 Resolved 18 5,706,174 2,568,572 3,603,649 63% 2007-08 Pending - - - - - 2006-07 Resolved 33 150,063,814 75,514,558 134,542,789 90% 2006-07 Pending - - - - -

All Years Resolved 255 $1,232,306,024 $777,202,873 $1,143,933,817 93%

All Years Pending 66 $377,391,168 $224,098,525 - - (1) Retention Rate is the proportion of value retained after resolution of an appeal. The rate is calculated by dividing the “Valuation After Appeal” by “County Valuation.” For withdrawn and denied appeals, the “Valuation After Appeal” is the original County valuation. Source: Alameda County Assessment Appeals Board; Urban Analytics, LLC

See “Appendix H – Fiscal Consultant's Report” for information regarding appeals within

each Project Area.

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Historical and Estimated Taxable Valuation and Available Net Tax Increment A calculation of available net tax increment in the Project Areas in the aggregate for

each of the past four years plus an estimate of fiscal year 2014-15 available net tax increment is shown in the following table. Net tax increment available is the amount of tax increment available to be allocated from the Redevelopment Property Tax Trust Fund to the Successor Agency to pay debt service on the 2014 Bonds.



Historical and Estimated Tax Revenues

2010-11 2011-12 2012-13 2013-14 2014-15

Secured

- Land $401,075,337 $413,367,396 $438,141,778 $457,957,288 $480,384,028

- Improvements 767,710,214 788,698,471 796,290,020 805,103,509 870,386,858

- Personal Property 12,782,188 11,377,510 15,743,991 16,583,376 14,126,011

- Exemptions (22,804,534) (21,167,061) (20,927,868) (21,476,355) (14,446,365)

Secured Total $1,158,763,205 $1,192,276,316 $1,229,247,921 $1,258,167,818 $1,350,450,532

Unsecured

- Land $406,325 $ 375,450 $232,596 $2,094,548 $442,216

- Improvements 64,460,229 68,878,826 74,769,753 65,672,964 77,302,682

- Personal Property 127,345,173 130,684,740 120,511,575 118,385,245 121,466,974

- Exemptions (429,000) (268,721) (1,249,527) (1,359,506) (425,751)

Unsecured Total $191,782,727 $199,670,295 $194,264,397 $184,793,251 $198,786,121

Utility

- Land $1,073,537 $1,073,537 $1,073,537 $1,073,537 $1,073,537

- Improvements - - - - -

- Personal Property - - - - -

- Exemptions - - - - -

Utility Total $1,073,537 $1,073,537 $1,073,537 $1,073,537 $1,073,537

Total Assessed Value $1,351,619,469 $1,393,020,148 $1,424,585,855 $1,444,034,606 $1,550,310,190

Percent Change 0.58% 3.06% 2.27% 1.37% 7.36%

Plus: HOPTR(1) 1,293,600 1,316,000 1,302,000 1,288,000 1,239,000

Less: Base AV (662,698,174) (662,698,174) (662,698,174) (662,698,174) (662,698,174)

Taxable Value Over Base $690,214,895 $731,637,974 $763,189,681 $782,624,432 $888,851,016

Gross Revenues $6,902,149 $7,316,380 $7,631,897 $7,826,244 $8,888,510

Plus: Unitary Revenue 19,166 25,000 25,000 25,000 21,092

Less: County Admin (61,361) (61,048) (63,742) (65,365) (88,711)

Less: Pass-Through Payments (1,089,925) (1,158,453) (1,273,157) (1,371,875) (1,653,461)

Net Tax Increment Available $5,770,030 $6,121,878 $6,319,998 $6,414,004 $7,167,431

(1) Represents the Homeowner’s Property Tax Relief Exemption which is reimbursed by the State. Source: County Assessor; State Board of Equalization; Urban Analytics, LLC

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Projected Available Net Tax Increment and Estimated Debt Service Coverage The Fiscal Consultant prepared projections of available net tax increment individually for

each of the Project Areas and in the aggregate. Net available tax increment is the amount of tax increment available to be allocated from the Redevelopment Property Tax Trust Fund to the Successor Agency to pay debt service on the 2014 Bonds. Table 5 below shows available net tax increment from the Project Areas in the aggregate together with estimated debt service coverage on the 2014 Bonds. The projections assume 2% annual real property assessed value growth beginning in fiscal year 2015-16. Table 5 assumes that the tax increment cap with respect to the Plaza 1 Project Area and the Plaza 2 Project Area are reached in fiscal year 2016-17 and fiscal year 2026-27, respectively, and that the Successor Agency will not receive Tax Revenues derived from the Plaza 1 Project Area and the Plaza 2 Project Area after such dates. See “RISK FACTORS - Plan Limits.” Other assumptions made by the Fiscal Consultant in calculating the projected available net tax increment are described in the Fiscal Consultant’s Report. See “APPENDIX H – Fiscal Consultant’s Report” for further information regarding projected available net tax increment, including projections for each Project Area.


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Projection of Incremental Value, Tax Increment Revenue and Debt Service

Fiscal Year

Gross Tax Increment

Administration Fees

Pass-Through Payments

Net Tax Revenue

Debt Service

2014 Bonds(1)

Debt

Service Coverage

2014-15 $8,909,602 ($88,711) ($1,653,461) $7,167,430 $449,681 15.94

2015-16 9,177,329 (91,377) (1,743,946) 7,342,007 537,825 13.65

2016-17 9,400,533 (93,599) (1,835,905) 7,471,029 537,825 13.89

2017-18 9,374,954 (93,344) (1,892,635) 7,388,975 537,825 13.74

2018-19 9,652,175 (96,105) (1,986,872) 7,569,198 942,825 8.03

2019-20 9,934,940 (98,920) (2,083,199) 7,752,821 1,002,575 7.73

2020-21 10,223,361 (101,792) (2,181,658) 7,939,912 1,168,325 6.80

2021-22 10,517,550 (104,721) (2,282,303) 8,130,527 1,179,575 6.89

2022-23 10,217,630 (101,735) (2,385,183) 7,730,712 1,163,575 6.64

2023-24 10,511,817 (104,664) (2,490,349) 7,916,804 1,151,575 6.87

2024-25 10,811,888 (107,652) (2,597,851) 8,106,385 1,133,325 7.15

2025-26 8,523,780 (84,869) (2,707,745) 5,731,166 1,114,075 5.14

2026-27 8,194,010 (81,586) (2,260,606) 5,851,818 1,093,825 5.35

2027-28 8,449,624 (84,131) (2,348,999) 6,016,494 1,072,575 5.61

2028-29 8,710,350 (86,727) (2,439,159) 6,184,463 1,055,325 5.86

2029-30 8,976,290 (89,375) (2,531,123) 6,355,792 1,031,825 6.16

2030-31 9,247,549 (92,076) (2,651,293) 6,504,181 927,325 7.01

2031-32 9,524,233 (94,831) (2,773,866) 6,655,537 900,825 7.39

2032-33 9,806,451 (97,641) (2,898,891) 6,809,920 396,250 17.19

2033-34 10,094,313 (100,507) (3,026,416) 6,967,391 393,300 17.72 Total $190,258,379 ($1,894,363) ($46,771,460) $141,592,562 $17,790,256

Source: Urban Analytics, LLC (1) Represents debt service on the 2014 Bonds payable from Tax Revenues generated in the respective fiscal years, not actual debt service on the 2014 Bonds payable in such fiscal years.

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RISK FACTORS The following information should be considered by prospective investors in evaluating

the 2014 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 2014 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

The various legal opinions to be delivered concurrently with the issuance of the 2014

Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of general application affecting the enforcement of creditors’ rights, including equitable principles.

Recognized Obligation Payment Schedule

The Dissolution Act provides that only those payments listed in a Recognized Obligation

Payment Schedule may be made by a successor agency from the funds specified in the Recognized Obligation Payment Schedule. Pursuant to Section 34177 of the Dissolution Act, not less than 90-days prior to each January 2 and June 1, the Successor Agency shall submit to the Oversight Board and the DOF, a Recognized Obligation Payment Schedule. For each Semiannual Period, the Dissolution Act requires each successor agency to prepare and approve, and submit to the successor agency’s oversight board and the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. Consequently, Tax Revenues will not be withdrawn from the Redevelopment Property Tax Trust Fund by the county auditor-controller and remitted to the Successor Agency without a duly approved and effective Recognized Obligation Payment Schedule to pay debt service on the 2014 Bonds and to pay other enforceable obligations. See “SECURITY FOR THE 2014 BONDS – Recognized Obligation Payment Schedule.” In the event the Successor Agency were to fail to file a Recognized Obligation Payment Schedule with respect to a six-month period and, if applicable, the following half of the calendar year, the availability of Tax Revenues to the Successor Agency could be adversely affected for such period. See “SECURITY FOR THE 2014 BONDS - Recognized Obligation Payment Schedules.”

Under the Redevelopment Property Tax Trust Fund distribution provisions of the

Dissolution Act, a county auditor-controller is to distribute funds for each six-month period in the following order specified in Section 34183 of the Dissolution Act:

(i) first, subject to certain adjustments for subordinations to the extent

permitted under the Dissolution Act (if any, as described above under “SECURITY FOR THE 2014 BONDS - Pass-Through Agreements” and “-Statutory Pass-Through Agreements”) and no later than each January 2 and June 1, to each local agency and school entity, to the extent applicable, amounts required for pass-through payments such entity would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011, including negotiated pass-through agreements and statutory pass-through obligations;

(ii) second, on each January 2 and June 1, to the successor agency for

payments listed in its Recognized Obligation Payment Schedule, with debt service

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payments scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule;

(iii) third, on each January 2 and June 1, to the successor agency for the

administrative cost allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing entities any moneys

remaining in the Redevelopment Property Tax Trust Fund after the payments and transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity’s share of property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass-through obligations that were established under the Redevelopment Law). If a successor agency does not submit a Recognized Obligation Payment Schedule

within five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations and the DOF does not provide a notice to the county auditor-controller to withhold funds from distribution to taxing entities, amounts in the Redevelopment Property Tax Trust Fund for such six-month period would be distributed to taxing entities pursuant to clause (iv) above.

For a description of the covenants made by the Successor Agency in the Indenture

relating to the obligation to submit Recognized Obligation Payment Schedules on a timely basis, and the Successor Agency’s history of submissions of Recognized Obligation Payment Schedules, see “SECURITY FOR THE 2014 BONDS – Recognized Obligation Payment Schedules”.

AB 1484 also added new provisions to the Dissolution Act implementing certain

penalties in the event a successor agency does not timely submit a Recognized Obligation Payment Schedule for a six-month period. Specifically, a Recognized Obligation Payment Schedule must be submitted by the successor agency to the oversight board, to the county administrative officer, the county auditor-controller, the DOF, and the State Controller no later than 90 days before the date of the next January 2 or June 1 property tax distribution with respect to each subsequent six-month period. If a successor agency does not submit a Recognized Obligation Payment Schedule by such deadlines, the city or county that established the redevelopment agency will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the DOF. Additionally, a successor agency’s administrative cost allowance is reduced by 25% if the successor agency does not submit an oversight board-approved Recognized Obligation Payment Schedule by the 80th day before the date of the next January 2 or June 1 property tax distribution, as applicable, with respect to the Recognized Obligation Payment Schedule for subsequent six-month periods.

As described above under “INTRODUCTION – The Redevelopment Plan and The

Project Areas – Project Areas,” the County Auditor-Controller has established the Joint Project RPTTF separate from the Redevelopment Property Tax Trust Fund established for the Project Areas, and amounts on deposit in the Joint Project RPTTF are not available to pay debt service on the 2014 Bonds. Additionally, the 2008 Joint Project Bonds are not secured by Tax Revenues or amounts on deposit in the Redevelopment Property Tax Trust Fund.

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Challenges to Dissolution Act Several successor agencies, cities and other entities have filed judicial actions

challenging the legality of various provisions of the Dissolution Act. One such challenge is an action filed on August 1, 2012, by Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, “Syncora”) against the State, the State Controller, the State Director of Finance, and the Auditor-Controller of San Bernardino County on his own behalf and as the representative of all other County Auditors in the State (Superior Court of the State of California, County of Sacramento, Case No. 34-2012-80001215). Syncora are monoline financial guaranty insurers domiciled in the State of New York, and as such, provide credit enhancement on bonds issued by state and local governments and do not sell other kinds of insurance such as life, health, or property insurance. Syncora provided bond insurance and other related insurance policies for bonds issued by former California redevelopment agencies.

The complaint alleged that the Dissolution Act, and specifically the “Redistribution

Provisions” thereof (i.e., California Health and Safety Code Sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188) violate the “contract clauses” of the United States and California Constitutions (U.S. Const. art. 1, §10, cl.1; Cal. Const. art. 1, §9) because they unconstitutionally impair the contracts among the former redevelopment agencies, bondholders and Syncora. The complaint also alleged that the Redistribution Provisions violate the “Takings Clauses” of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 § 19) because they unconstitutionally take and appropriate bondholders’ and Syncora’s contractual right to critical security mechanisms without just compensation.

After hearing by the Sacramento County Superior Court on May 3, 2013, the Superior

Court ruled that Syncora’s constitutional claims based on contractual impairment were premature. The Superior Court also held that Syncora’s takings claims, to the extent based on the same arguments, were also premature. Pursuant to a Judgment stipulated to by the parties, the Superior Court on October 3, 2013, entered its order dismissing the action. The Judgment, however, provides that Syncora preserves its rights to reassert its challenges to the Dissolution Act in the future. The Successor Agency does not guarantee that any reassertion of challenges by Syncora or that the final results of any of the judicial actions brought by others challenging the Dissolution Act will not result in an outcome that may have a material adverse effect on the Successor Agency’s ability to timely pay debt service on the 2014 Bonds.

Reduction in Taxable Value

Tax increment revenue available to pay principal of and interest on the 2014 Bonds are

determined by the amount of incremental taxable value in the Project Areas and the current rate or rates at which property in the Project Areas is taxed. The reduction of taxable values of property in the Project Areas caused by economic factors beyond the Successor Agency’s control, such as relocation out of the Project Areas by one or more major property owners, sale of property to a non-profit corporation exempt from property taxation, or the complete or partial destruction of such property caused by, among other eventualities, earthquake or other natural disaster, could cause a reduction in the tax increment available to pay debt service on the 2014 Bonds. Such reduction of tax increment available to pay debt service on the 2014 Bonds could have an adverse effect on the Successor Agency’s ability to make timely payments of principal of and interest on the 2014 Bonds; this risk could be increased by the significant concentration of property ownership in the Project Areas (see “THE PROJECT AREAS – Major Taxable Property Owners”).

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As described in greater detail under the heading “PROPERTY TAXATION IN CALIFORNIA – Article XIIIA of the State Constitution,” Article XIIIA provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described above). Such measure is computed on a calendar year basis. Any resulting reduction in the full cash value base over the term of the 2014 Bonds could reduce tax increment available to pay debt service on the 2014 Bonds.

In addition to the other limitations on, and required application under the Dissolution Act

of Tax Revenues on deposit in the Redevelopment Property Tax Trust Fund, the State electorate or Legislature could adopt a constitutional or legislative property tax reduction with the effect of reducing Tax Revenues allocated to the Redevelopment Property Tax Trust Fund and available to the Successor Agency. Although the federal and State Constitutions include clauses generally prohibiting the Legislature’s impairment of contracts, there are also recognized exceptions to these prohibitions. There is no assurance that the State electorate or Legislature will not at some future time approve additional limitations that could reduce the tax increment available to pay debt service on the 2014 Bonds and adversely affect the source of repayment and security of the 2014 Bonds.

Risks to Real Estate Market

The Successor Agency’s ability to make payments on the 2014 Bonds will be dependent

upon the economic strength of the Project Areas. The general economy of the Project Areas will be subject to all of the risks generally associated with urban real estate markets. Real estate prices and development may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Areas could be adversely affected by limitations of infrastructure or future governmental policies, including governmental policies to restrict or control development. In addition, if there is a significant decline in the general economy of the Project Areas, the owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing a delay or interruption in the receipt of Tax Revenues by the Successor Agency from the Project Areas. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage” for a description of the debt service coverage on the 2014 Bonds.

Plan Limits

The final maturity date of the 2014 Bonds is September 1, 2034. The Fiscal Consultant

projects that the Plaza 1 Project Area and Plaza 2 Project Area will reach their respective cumulative tax increment limits in fiscal year 2016-17 and 2026-27, respectively (assuming a 2% annual growth in assessed property values).

Consequently, there will be a period prior to the final maturity date of the 2014 Bonds

during which the Successor Agency will be able to pay debt service on the 2014 Bonds only from property tax revenues allocated to the Successor Agency from the West San Leandro/MacArthur Boulevard Project Area. In addition, it is possible that the Plaza 1 Project Area and Plaza 2 Project Area will reach their respective cumulative tax increment limits sooner if actual annual growth in assessed property values exceeds 2%. In such instance, debt service

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coverage on the 2014 Bonds in any year in which actual annual growth exceeds 2% would be greater than that projected in Table 5 and lower in any year thereafter. Nevertheless, based on the projections provided herein, the Successor Agency expects Tax Revenues from the West San Leandro/MacArthur Boulevard Project Area alone to be sufficient to pay debt service on the 2014 Bonds.

Concentration of Property Ownership

General. Based on fiscal year 2014-15 locally assessed taxable valuations, the

following property owners represent the largest concentrations of ownership within the Project Areas:

Project Area

Property Owner % of

Total Value % of

Incr. Value West San Leandro/MacArthur Boulevard Project Area AMB Property Corp. 4.08% 7.12% West San Leandro/MacArthur Boulevard Project Area AMB US Logistics Fund LP 4.06% 7.09% West San Leandro/MacArthur Boulevard Project Area/

Plaza Project Area Safeway 3.52% 6.15% Plaza Project Area Creekside Plaza Partners LLC 2.81% 4.91% Plaza Project Area World Savings & Loan Association 1.95% 3.41% Plaza Project Area BRCP San Leandro Industrial LLC 1.90% 3.31%

Some of these property owners have pending assessed value appeals with respect to

their property in the Project Areas as previously discussed. The bankruptcy, termination of operations or departure from one of the Project Areas by one of the largest property owners from the Project Areas could adversely impact the availability of Tax Revenues to pay debt service on the 2014 Bonds.

Change in Concentration. As described in “- Change in Source of Tax Revenues”

above, there is likely to be a period prior to the final maturity date of the 2014 Bonds during which the Successor Agency will be able to pay debt service on the 2014 Bonds only from property tax revenues allocated to the Successor Agency from the West San Leandro/MacArthur Boulevard Project Area.

Four of the ten largest property taxpayers in the Project Areas for fiscal year 2014-15 are

located in the Plaza Project Area. Therefore, the concentration of taxable property ownership in the Project Areas will significantly change prior to the final maturity date of the 2014 Bonds. Reduction in Inflationary Rate

As described in greater detail below, Article XIIIA of the State Constitution provides that

the full cash value of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%.

Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the

2% limitation several times; in fiscal year 2010-11, the inflationary value adjustment was negative for the first time at -0.237%. In fiscal year 2011-12, the inflationary value adjustment

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was 0.753%. For fiscal years 2012-13 and 2013-14, the inflationary value adjustment is 2.00%, which is the maximum permissible increase under Article XIIIA. The fiscal year 2014-15 inflationary value adjustment is 0.454%.

The Successor Agency is unable to predict if any adjustments to the full cash value of

real property within the Project Areas, whether an increase or a reduction, will be realized in the future.

Development Risks

The general economy of a redevelopment project area will be subject to all the risks

generally associated with real estate development. Projected development within a redevelopment project area may be subject to unexpected delays, disruptions and changes. Real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development operations within a redevelopment project area could be adversely affected by future governmental policies, including governmental policies to restrict or control development. If projected development in a redevelopment project area is delayed or halted, the economy of the redevelopment project area could be affected. If such events lead to a decline in assessed values they could cause a reduction in incremental property tax revenues.

The Successor Agency believes that a decline in development activity in the Project

Areas is unlikely to adversely impact its ability to pay debt service on the 2014 Bonds in light of the debt service coverage provided by fiscal year 2013-14 Tax Revenues. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage.”

Levy and Collection of Taxes

The Successor Agency has no independent power to levy or collect property taxes. Any

reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the tax increment available to pay debt service on the 2014 Bonds.

Although delinquencies in the payment of property taxes by the owners of land in the

Project Areas, and the impact of bankruptcy proceedings on the ability of taxing agencies to collect property taxes, could have an adverse effect on the Successor Agency’s ability to make timely payments on the 2014 Bonds, the Successor Agency believes any such adverse impact is unlikely in light of the debt service coverage provided by fiscal year 2013-14 net tax increment. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage” for a description of the debt service coverage on the 2014 Bonds.

Bankruptcy and Foreclosure

The payment of the property taxes from which Tax Revenues are derived and the ability

of the County to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the 2014 Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization,

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moratorium, or other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the liens to become extinguished,

bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Although such delay would increase the possibility of delinquent tax installments not being paid in full and thereby increase the likelihood of a delay or default in payment of the principal of and interest on the 2014 Bonds, the Successor Agency believes any such adverse impact is unlikely in light of the debt service coverage provided by fiscal year 2013-14 net tax increment. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage” for a description of the debt service coverage on the 2014 Bonds.

Estimated Revenues

In estimating that net tax increment will be sufficient to pay debt service on the 2014

Bonds, the Successor Agency has made certain assumptions with regard to present and future assessed valuation in the Project Areas, future tax rates and percentage of taxes collected. The Successor Agency believes these assumptions to be reasonable, but there is no assurance these assumptions will be realized and to the extent that the assessed valuation and the tax rates are less than expected, the net tax increment available to pay debt service on the 2014 Bonds will be less than those projected and such reduced net tax increment may be insufficient to provide for the payment of principal of, premium (if any) and interest on the 2014 Bonds.

See “THE PROJECT AREAS – Projected Available Net Tax Increment and Estimated

Debt Service Coverage” above.

Hazardous Substances An additional environmental condition that may result in the reduction in the assessed

value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Areas. In general, the owners and operators of property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Areas be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition.

Natural Disasters

The value of the property in the Project Areas in the future can be adversely affected by

a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on property and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides and floods and climatic conditions such as droughts. In the event that one or more of such conditions occur, such occurrence could cause damages of varying seriousness to the land and improvements and the value of property in the Project Areas could be diminished in

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the aftermath of such events. A substantial reduction of the value of such properties and could affect the ability or willingness of the property owners to pay the property taxes.

Seismic. The City, like much of California, is subject to seismic activity. Earthquake

faults exist in many parts of Northern California, including in areas near to San Leandro, particularly the Hayward Fault, which is within the vicinity of the Project Areas. Most new construction is required to be built in accordance with the Uniform Building Code which contains standards designed to minimize structural damage caused by seismic events however, the occurrence of severe seismic activity affecting the Project Areas could result in substantial damage to property located in the Project Areas, and could lead to successful appeals for reduction of assessed values of such property.

Changes in the Law

There can be no assurance that the California electorate will not at some future time

adopt initiatives or that the Legislature will not enact legislation that will amend the Dissolution Act, the Redevelopment Law or other laws or the Constitution of the State resulting in a reduction of tax increment available to pay debt service on the 2014 Bonds.

Loss of Tax-Exemption

As discussed under the caption “TAX MATTERS,” interest on the 2014 Bonds could

become includable in gross income for purposes of federal income taxation retroactive to the date the 2014 Bonds were issued, as a result of future acts or omissions of the Successor Agency in violation of its covenants in the Indenture.

In addition, current and future legislative proposals, if enacted into law, may cause

interest on the 2014 Bonds to be subject, directly or indirectly, to federal income taxation by, for example, changing the current exclusion or deduction rules to limit the aggregate amount of interest on state and local government bonds that may be treated as tax exempt by individuals.

Should such an event of taxability occur, the 2014 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 Market

There can be no guarantee that there will be a secondary market for the 2014 Bonds, or,

if a secondary market exists, that the 2014 Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances.

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TAX MATTERS In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California,

Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 2014 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings.

The opinions set forth in the preceding paragraph are subject to the condition that the

Successor Agency comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the 2014 Bonds. The Successor Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the 2014 Bonds.

If the initial offering price to the public (excluding bond houses and brokers) at which a

Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal

gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2014 Bonds who purchase the 2014 Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes.

Under the Tax Code, original issue premium is amortized on an annual basis over the

term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not

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deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

In the further opinion of Bond Counsel, interest on the 2014 Bonds is exempt from

California personal income taxes. Owners of the 2014 Bonds should also be aware that the ownership or disposition of, or

the accrual or receipt of interest on, the 2014 Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the 2014 Bonds other than as expressly described above.

CONCLUDING INFORMATION

Underwriting The 2014 Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the

“Underwriter”). The Underwriter has agreed to purchase the 2014 Bonds at a price of $12,807,075.31 (being the principal amount of the 2014 Bonds plus a net original issue premium of $1,633,277.00 and less an Underwriter’s discount of $61,201.69). The Underwriter will purchase all of the 2014 Bonds if any are purchased.

The Underwriter may offer and sell Bonds to certain dealers and others at a price lower

than the offering price stated on the inside cover page of this Official Statement. The offering price may be changed from time to time by the Underwriter.

Legal Opinion

The final approving opinion of Jones Hall, A Professional Law Corporation, San

Francisco, California, Bond Counsel, will be furnished to the purchaser at the time of delivery of the 2014 Bonds.

A copy of the proposed form of Bond Counsel’s final approving opinion with respect to

the 2014 Bonds is attached hereto as Appendix B. In addition, certain legal matters will be passed on by Jones Hall, A Professional Law

Corporation, as Disclosure Counsel and Stradling Yocca Carlson & Rauth, A Professional Corporation, as Underwriter’s Counsel.

Certain legal matters will be passed on for the Successor Agency by the Meyers, Nave,

Riback, Silver & Wilson, as City Attorney and Successor Agency counsel. Compensation paid to Bond Counsel, Disclosure Counsel and Underwriter’s Counsel is

contingent upon the sale and delivery of the 2014 Bonds.

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Litigation There is no action, suit or proceeding known to the Successor Agency to be pending and

notice of which has been served upon and received by the Successor Agency, or threatened, restraining or enjoining the execution or delivery of the 2014 Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any proceedings of the Successor Agency taken with respect to any of the foregoing. See, however, “RISK FACTORS- Challenges to Dissolution Act”.

Rating

Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies,

Inc. (“S&P”) has assigned its municipal bond rating of “AA-” to the 2014 Bonds. This rating reflects only the view of S&P, and an explanation of the significance of the

rating, and any outlook assigned to or associated with the rating, should be obtained from the S&P.

Generally, a rating agency bases its rating on the information and materials furnished to

it and on investigations, studies and assumptions of its own. The Successor Agency has provided certain additional information and materials to S&P (some of which does not appear in this Official Statement).

There is no assurance that this rating will continue for any given period of time or that

this rating will not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of any rating on the 2014 Bonds may have an adverse effect on the market price or marketability of the 2014 Bonds.

Continuing Disclosure

The Successor Agency will covenant for the benefit of owners of the 2014 Bonds to

provide certain financial information and operating data relating to the Successor Agency by not later than March 31 after the end of each fiscal year of the Successor Agency (currently June 30th), commencing not later than March 31, 2015 with the report for the 2013-14 fiscal year (the “Annual Report”), and to provide notices of the occurrence of certain listed events. The specific nature of the information to be contained in the Annual Report or the notices of listed events is summarized in “APPENDIX D - FORM OF SUCCESSOR AGENCY CONTINUING DISCLOSURE CERTIFICATE,” attached to this Official Statement. These covenants have been made in order to assist the Underwriter (as defined below) in complying with Securities Exchange Commission Rule 15c2 12(b)(5) (the “Rule”).

The City and its related governmental entities, including the Successor Agency, have

previously entered into numerous disclosure undertakings under the Rule in connection with the issuance of long-term obligations. See “APPENDIX E - SUCCESSOR AGENCY FINANCIAL STATEMENTS FOR FISCAL YEAR 2012-13.” During the past five years, the City and the City's affiliated governmental entities have failed to comply in all material respects with their undertakings. In particular, the City determined that certain filings relating to three issuances of tax allocation bonds of the Former Agency failed to include budget information and financial reports required by the related undertakings. The City’s has further determined that previous filings relating to three issuances of certificates of participation of the City also omitted certain fund balance amounts and statements of tax increment received as required by the related

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undertakings. Specifically, with respect to one fiscal year, the City failed to file the audited financial statements and the annual reports for several series of the City's bonds on a timely basis and did not provide proper notice of delay. In addition, in 2007, the audited financial statements filed by the City were not properly attributed to three outstanding bond issuances of the City and reported therewith. Further, the City and the City's affiliated governmental entities failed to file material event notices regarding changes to the ratings of certain of the City's obligations as a result of changed underlying bond ratings and downgrades of the ratings of bond insurance companies that insured their bonds. As of the date hereof, the City has completed remedial filings to correct such failures. The City will adopt policies and procedures to ensure compliance with their continuing disclosure undertakings in the future.

Audited Financial Statements

The City of San Leandro’s Comprehensive Annual Financial Report for Fiscal Year

Ended June 30, 2013 (the “City CAFR”) is attached as Appendix E. The City CAFR includes the Successor Agency’s audited financial statements for the fiscal year ended June 30, 2013. The Successor Agency’s audited financial statements were audited by Maze & Associates (the “Auditor”). The Auditor has not been asked to consent to the inclusion of the Successor Agency’s audited financial statements in this Official Statement and has not reviewed this Official Statement.

As described in “SECURITY FOR THE 2014 BONDS - Limited Obligation,” the 2014

Bonds are payable from and secured by a pledge of Tax Revenues and the 2014 Bonds are not a debt of the City. The City CAFR is attached as Appendix E to this Official Statement only because it includes the Successor Agency’s audited financial statements.

Miscellaneous

All of the preceding summaries of the Indenture, the Redevelopment Law, the

Dissolution Act, other applicable legislation, the Redevelopment Plans for the Project Areas, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Successor Agency for further information in connection therewith.

This Official Statement does not constitute a contract with the purchasers of the 2014

Bonds. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

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The execution and delivery of this Official Statement by its Executive Director has been duly authorized by the Successor Agency.

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO By: /s/ David Baum Finance Director of the City of San Leandro

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APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following is a brief summary of certain provisions of the Indenture of Trust (the

“Indenture”) authorizing the 2014 Bonds that are not otherwise described in the text of this Official Statement. Such summary is not intended to be definitive, and reference is made to the actual Indenture (copies of which may be obtained from the Trustee) for the complete terms thereof.

Definitions

Except as otherwise defined in this summary, the terms previously defined in this Official

Statement have the respective meanings previously given. In addition, the following terms have the following meanings when used in this summary:

“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest payable

on the Outstanding Bonds and Parity Debt in such Bond Year, assuming that the Outstanding Serial Bonds are retired as scheduled and that the Outstanding Term Bonds are redeemed from mandatory sinking account payments as scheduled (b) the principal amount of the Outstanding Serial Bonds and Parity Debt payable by their terms in such Bond Year, and (c) the principal amount of the Outstanding Term Bonds scheduled to be paid or redeemed from mandatory sinking account payments in such Fiscal Year.

“Bond” or “Bonds” means the 2014 Bonds and, if the context requires, any additional

Parity Debt issued pursuant to a Supplemental Indenture pursuant to the Indenture. “Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other

attorney or firm of attorneys appointed by or acceptable to the Successor Agency, of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code.

“Bond Proceeds Fund” means the fund by that name established and held by the

Trustee pursuant to the Indenture. “Bond Year” means, any twelve-month period beginning on September 2 in any year and

ending on the next succeeding September 1, both dates inclusive, except that the first Bond Year shall begin on the Closing Date, and end on September 1, 2015.

“Business Day” means a day of the year on which banks in San Francisco, California, or

the city where the Principal Corporate Trust Office is located are not required or permitted to be closed and on which the New York Stock Exchange is not closed.

“City” means the City of San Leandro, California, a municipal corporation and chartered

city duly organized and existing under the laws of the State. “Closing Date” means, with respect to the 2014 Bonds, the date on which the 2014

Bonds are delivered by the Trustee to the original purchaser thereof. “Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of

the Bonds or (except as otherwise referenced herein) as it may be amended to apply to

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obligations issued on the date of issuance of the Bonds, together with applicable, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.

"Continuing Disclosure Certificate" means the Continuing Disclosure Certificate

executed by the Successor Agency dated as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

"Costs of Issuance" means all items of expense directly or indirectly payable by or

reimbursable to the Successor Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to City and Successor Agency administrative staff costs, printing expenses, bond insurance and surety bond premiums, rating agency fees, filing and recording fees, initial fees and charges and first annual administrative fee of the Trustee and fees and expenses of its counsel, fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds.

"Costs of Issuance Account" means the account by that name within the Bond Proceeds

Fund established and held by the Trustee pursuant to the Indenture. "County" means the County of Alameda, a county duly organized and existing under the

Constitution and laws of the State. "Debt Service Fund" means the fund by that name established and held by the Trustee

pursuant to the Indenture. “Defeasance Obligations” means (i) cash, (ii) Federal Securities and (iii) Permitted

Investments listed under subsection (b) of the definition thereof excluding Permitted Investments listed under (b) (iv) and (b) (vi).

“Dissolution Act” means Part 1.85 (commencing with Section 34170) of Division 24 of

the California Health and Safety Code. "Event of Default" means any of the events described in the Indenture. “Federal Securities” means any direct, noncallable general obligations of the United

States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and CATS and TGRS), or obligations the payment of principal of and interest on which are unconditionally guaranteed by the United States of America.

“Fiscal Year” means any twelve-month period beginning on July 1 in any year and

extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the Successor Agency to the Trustee in writing as its official fiscal year period.

“Former Agency” means the Redevelopment Agency of the City of San Leandro, a public

body corporate and politic duly organized and existing under the Law and dissolved in accordance with the Dissolution Act.

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“Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice as such under the laws of the State, appointed by the Successor Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Successor Agency; (b) does not have any substantial interest, direct or indirect, with the Successor Agency; and (c) is not connected with the Successor Agency as an officer or employee of the Successor Agency, but who may be regularly retained to make reports to the Successor Agency.

“Independent Redevelopment Consultant” means any consultant or firm of such

consultants appointed by the Successor Agency and who, or each of whom: (a) is judged by the Successor Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Successor Agency; (c) does not have any substantial interest, direct or indirect, with the Successor Agency; and (d) is not connected with the Successor Agency as an officer or employee of the Successor Agency, but who may be regularly retained to make reports to the Successor Agency.

“Interest Account” means the account by that name established and held by the Trustee

pursuant to the Indenture. "Interest Payment Date" means March 1 and September 1 in each year, commencing

March 1, 2015, so long as any of the Bonds remain Outstanding under the Indenture. “Law” or “Redevelopment Law” means the Community Redevelopment Law, constituting

Part 1 of Division 24 of the California Health and Safety Code, together with the Dissolution Act, and the acts amendatory thereof and supplemental thereto.

“Maximum Annual Debt Service” means, as of the date of calculation, the largest Annual

Debt Service for the current or any future Bond Year, including payments on any Parity Debt, as certified in writing by the Successor Agency to the Trustee.

“Notice of Insufficiency” means the report described in Health and Safety Code Section

34183(b) of the Dissolution Act. "Outstanding" when used as of any particular time with reference to Bonds, means

(subject to the provisions of the Indenture) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of the Indenture; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Successor Agency pursuant to the Indenture.

“Oversight Board” means the Oversight Board of the Successor Agency to the

Redevelopment Agency of the City of San Leandro duly constituted from time to time pursuant to Section 34179 of the California Health and Safety Code.

“Owner” or “Bondowner” means, with respect to any Bond, the person in whose name

the ownership of such Bond shall be registered on the Registration Books. “Parity Debt” means any loan, bonds, notes, advances or indebtedness payable from

Tax Revenues on a parity with the 2014 Bonds as authorized by the provisions of the Indenture.

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“Parity Debt Instrument” means any resolution, indenture of trust, loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt, including, without limitation, a Supplemental Indenture authorized by the Indenture.

"Participating Underwriter" has the meaning ascribed thereto in the Continuing

Disclosure Certificate. “Pass-Through Agreements” means, collectively, (a) that certain Fiscal Agreement,

dated as of August 1, 1988, by and between the Former Agency and the County, (b) that certain Fiscal Agreement, dated as of August 1, 1988, by and between the Former Agency and the Alameda County Superintendent of Schools, and (c) that certain Fiscal Agreement, dated as of August 1, 1988, by and between the Former Agency and the East Bay Regional Parks District.

“Permitted Investments” means any of the following which at the time of investment are

legal investments under the laws of the State for the moneys proposed to be invested therein:

(a) Federal Securities; (b) bonds, debentures, notes or other evidence of indebtedness issued or

guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) obligations of the Federal Financing Bank; (iv) debentures of the Federal Housing Administration; (v) participation certificates of the General Services Administration; (vi) guaranteed mortgage-backed bonds or guaranteed pass-through obligations of the Government National Mortgage Association; (vii) guaranteed Title XI financings of the U.S. Maritime Administration; (viii) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development;

(c) bonds, debentures, notes or other evidence of indebtedness issued or

guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation; (iii) mortgaged-backed securities and senior debt obligations of the Federal National Mortgage Association (excluding stripped mortgage securities which are valued greater than par on the portion of unpaid principal); (iv) senior debt obligations of the Student Loan Marketing Association; (v) obligations (but only the interest component of stripped obligations) of the Resolution Funding Corporation; and (vi) consolidated system wide bonds and notes of the Farm Credit System;

(d) money market funds (including funds of the Trustee or its affiliates) registered

under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of “AAAm-G”, “AAAm”, or “AAm”, including funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services;

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(e) certificates of deposit secured at all times by collateral described in (a) or (b) above, which have a maturity of one year or less, which are issued by commercial banks, including affiliates of the Trustee, savings and loan associations or mutual savings banks, and such collateral must be held by a third party, and the Trustee on behalf of the Bond Owners must have a perfected first security interest in such collateral;

(f) certificates of deposit, savings accounts, deposit accounts or money market

deposits (including those of the Trustee and its affiliates) which are fully insured by the Federal Deposit Insurance Corporation;

(g) investment agreements, including guaranteed investment contracts, which,

are general obligations of an entity whose long term debt obligations, or claims paying ability, respectively, which are rated in one of the two highest rating categories by S&P or which are collateralized so as to be rated in one of the two highest rating categories by S&P;

(h) commercial paper rated, at the time of purchase, ““A-1” or better by S&P; (i) bonds or notes issued by any state or municipality which are rated by S&P in

one of the two highest rating categories assigned by such agencies; (j) federal funds or bankers acceptances with a maximum term of one year of any

bank which has an unsecured, uninsured and unguaranteed obligation rating of “A-1” or “A” or better by S&P;

(k) repurchase agreements for thirty (30) days or less (more than thirty (30) days

which provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date, which satisfy the following criteria:

(i) repurchase agreements must be between the Trustee and (A) a

primary dealer on the Federal Reserve reporting dealer list which falls under the jurisdiction of the Securities Investors Protection Corporation and which are rated “A” or better by S&P, or (B) a bank rated “A” or better by S&P;

(ii) the written repurchase agreement contract must include the following:

(A) securities acceptable for transfer, which may be direct U.S. government obligations, or federal agency obligations backed by the full faith and credit of the U.S. government; (B) the term of the repurchase agreement may be up to 30 days; (C) the collateral must be delivered to the Trustee or a third party acting as agent for the Trustee simultaneous with payment (perfection by possession of certificated securities); (D) the Trustee must have a perfected first priority security interest in the collateral; (E) the collateral must be free and clear of third-party liens and, in the case of a broker which falls under the jurisdiction of the Securities Investors Protection Corporation, are not subject to a repurchase agreement or a reverse repurchase agreement; (F) failure to maintain the requisite collateral percentage, after a two day restoration period, will require the Trustee to liquidate the collateral; (G) the securities must be valued weekly, marked-to-market at current market price plus accrued interest and the value of

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collateral must be equal to 104% of the amount of cash transferred by the Trustee to the dealer bank or securities firm under the repurchase agreement plus accrued interest (unless the securities used as collateral are obligations of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, in which case the collateral must be equal to 105% of the amount of cash transferred by the Trustee to the dealer bank or securities firm under the repurchase agreement plus accrued interest). If the value of securities held as collateral falls below 104% of the value of the cash transferred by the Trustee, then additional cash and/or acceptable securities must be transferred; and

(iii) a legal opinion must be delivered to the Trustee to the effect that the

repurchase agreement meets guidelines under state law for legal investment of public funds;

(l) pre-refunded municipal bonds rated “AAA” by S&P; and (m) the Local Agency Investment Fund of the State of California, created

pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to deposit and withdraw from such investment directly in its own name.

“Plan Limits” means, collectively, the limitations contained in the Plaza 1 Project

Redevelopment Plan, the Plaza 2 Project Redevelopment Plan and the West San Leandro/MacArthur Boulevard Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the Former Agency with respect to such Project Areas pursuant to such redevelopment plans, as such limitations are prescribed by Section 33333.4 of the Law.

“Plaza Project Area” means, collectively, the Plaza 1 Project Area and Plaza 2 Project

Area. “Plaza 1 Project Area” means the area of the undertaking pursuant described in the

Plaza 1 Project Redevelopment Plan. “Plaza 1 Project Redevelopment Plan” means the Redevelopment Plan for the Plaza 1

Redevelopment Project, approved by Ordinance No. 1295 N.S., adopted by the City Council of the City on December 28, 1960, as amended by (i) Ordinance No. 61-63, adopted by the City Council of the City on December 26, 1967, (ii) Ordinance No. 71-29, adopted by the City Council of the City on October 26, 1971, (iii) Ordinance No. 75-39, adopted by the City Council of the City on August 4, 1975, (iv) Ordinance No. 80-34, adopted by the City Council of the City on July 14, 1980, (v) Ordinance No. 82-094, adopted by the City Council of the City on November 29, 1982, (vi) Ordinance No. 86-038, adopted by the City Council of the City on December 15, 1986, (vii) Ordinance No. 94-018 adopted by the City Council of the City on September 6, 1994, (viii) Ordinance No. 95-042 adopted by the City Council of the City on December 18, 1995, and (ix) Ordinance No. 2000-09 adopted by the City Council of the City on June 5, 2000, together with any additional amendments thereof at any time duly authorized pursuant to the Law.

“Plaza 2 Project Area” means the project area described in the Plaza 2 Redevelopment

Plan.

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“Plaza 2 Project Redevelopment Plan” means the Redevelopment Plan for the Plaza 2 Redevelopment Project, approved by Ordinance No. 67-62, adopted by the City Council of the City on December 26, 1967, as amended by (i) Ordinance No. 71-28, adopted by the City Council of the City on October 26, 1971, (ii) Ordinance No. 74-14, adopted by the City Council of the City on February 25, 1974, (iii) Ordinance No. 79-39, adopted by the City Council of the City on December 17, 1979, (iv) Ordinance No. 81-019, adopted by the City Council of the City on March 30, 1981, (v) Ordinance No. 82-093, adopted by the City Council of the City on November 29, 1982, (vi) Ordinance No. 83-026, adopted by the City Council of the City on October 10, 1983, (vii) Ordinance No. 85-049, adopted by the City Council of the City on January 6, 1986, (viii) Ordinance No. 86-039, adopted by the City Council of the City on December 15, 1986, (ix) Ordinance No. 88-013, adopted by the City Council of the City on July 5, 1988, (x) Ordinance No. 94-019, adopted by the City Council of the City on September 6, 1994, (xi) Ordinance No. 94-029, adopted by the City Council of the City on December 19, 1994, (xii) Ordinance No. 95-05, adopted by the City Council of the City on March 3, 1995, (xiii) Ordinance No. 95-06, adopted by the City Council of the City on March 20, 1995, (xiv) Ordinance No. 97-025, adopted by the City Council of the City on September 2, 1997 and (xv) Ordinance No. 2000-09, adopted by the City Council of the City on June 5, 2000, together with any additional amendments thereof at any time duly authorized pursuant to the Law.

"Principal Account" means the account by that name established and held by the

Trustee pursuant to the Indenture. "Principal Corporate Trust Office" means such corporate trust office of the Trustee as

may be designated from time to time by written notice from the Trustee to the Successor Agency. Except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the corporate trust office of U.S. Bank National Association in St. Paul, Minnesota or such other office or agency of the Trustee at which at any particular time, its corporate trust agency shall be conducted.

“Project Areas” means, collectively, the Plaza Project Area and the West San

Leandro/MacArthur Boulevard Project Area. "Qualified Reserve Account Credit Instrument" means the Reserve Policy and an

irrevocable standby or direct-pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Trustee, provided that all of the following requirements are met at the time of acceptance thereof by the Trustee: (a) S&P or Moody’s have assigned a long-term credit rating to such bank or insurance company of “A” (without regard to modifier) or higher; (b) such letter of credit, insurance policy or surety bond has a term of at least 12 months; (c) such letter of credit, insurance policy or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released; and (d) the Trustee is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indenture.

“Recognized Obligation Payment Schedule” means the schedule by that name prepared

before each six-month fiscal period in accordance with the requirements of Section 34177(l) of the California Health and Safety Code.

"Redemption Account" means the account by that name established and held by the

Trustee pursuant to the Indenture.

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“Redevelopment Obligation Retirement Fund” means the fund established and held by

the Successor Agency pursuant to Section 34170.5(a) of the California Health and Safety Code. “Redevelopment Property Tax Trust Fund” means the fund established for the Project

Areas pursuant to Section 34170.5(b) of the California Health and Safety Code and administered by the Alameda County Auditor–Controller.

"Registration Books" means the records maintained by the Trustee pursuant to the

Indenture for the registration and transfer of ownership of the Bonds. “Refunding Law” means Article 11 (commencing with Section 53580) of Chapter 3 of

Part 1 of Division 2 of Title 5 of the Government Code of the State, and the acts amendatory thereof and supplemented thereto.

“Report” means a document in writing signed by an Independent Redevelopment

Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of the Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and(c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.

“Reserve Account” means the account by that name established and held by the Trustee

pursuant to the Indenture. “Reserve Account Agreement” means the Debt Service Reserve Fund Agreement, by

and between the Successor Agency and the Reserve Insurer. “Reserve Insurer” means Build America Mutual Assurance Company, its successors and

assigns, as issuer of the Reserve Policy. “Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance Policy

issued by the Reserve Insurer guaranteeing payments to be applied to the payment of principal and interest on the 2014 Bonds as provided in the Reserve Account Agreement.

“Reserve Requirement” means, with respect to the 2014 Bonds and any Parity Debt

issued as Bonds pursuant to a Supplemental Indenture, the lesser of (i) 125% of the average Annual Debt Service with respect to the 2014 Bonds and Parity Debt, as applicable or (ii) Maximum Annual Debt Service with respect to the 2014 Bonds Parity Debt, as applicable; provided, that in no event shall the Successor Agency, in connection with the issuance of Parity Debt in the form of Bonds pursuant to a Supplemental Indenture be obligated to deposit an amount in the Reserve Account which is in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, in the event the amount of any such deposit into the Reserve Account is so limited, the Reserve Requirement shall, in connection with the issuance of such Parity Debt issued in the form of Bonds, be increased only by the amount of such deposit as permitted by the Code; and, provided further that the Successor Agency may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Account Credit Instrument meeting the requirements of the Indenture.

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“S&P” means Standard & Poor’s Ratings Services and its successors. “Semiannual Period” means (a) each six-month period beginning on January 1 of any

calendar year and ending on June 30 of such calendar year, and (b) each six-month period beginning on July 1 of any calendar year and ending on December 31 of such calendar year.

"Serial Bonds" means all Bonds other than Term Bonds. "Sinking Account" means the account by that name established and held by the Trustee

pursuant to the Indenture. "State" means the State of California. “Subordinate Debt” means any Loan, advances or indebtedness issued or incurred by

the Successor Agency, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues, including revenue bonds and other debts and obligations scheduled for payment pursuant to Section 34183(a)(2) of the Law; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to (i) the pledge of and lien upon the Tax Revenues under the Indenture for the security of the Bonds, (ii) the Successor Agency’s obligation to pay Policy Costs to the Reserve Insurer pursuant to the Indenture and (iii) the Successor Agency’s obligation to reimburse the provider of a letter of credit, surety bond or similar instrument for the debt service reserve account for any Parity Debt.

“Successor Agency” means the Successor Agency to the Redevelopment Agency of the

City of San Leandro, a public entity duly organized and existing under the Law. “Supplemental Indenture” means any resolution, agreement or other instrument which

has been duly adopted or entered into by the Successor Agency, but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indenture.

“Tax Revenues” means all taxes that were eligible for allocation to the Former Agency

with respect to the Project Areas and are allocated to the Successor Agency pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws and that are deposited in the RPTTF and transferred to the Successor Agency for deposit into the Redevelopment Obligation Retirement Fund, excluding (i) amounts payable pursuant to the Pass-Through Agreements, but only to the extent such amounts are payable from the Plaza Project Area and (ii) amounts required to be paid to taxing entities pursuant to Sections 33607.5 and 33607.7 of the Law unless such payments are subordinated to payments on the 2014 Bonds or any additional Bonds or to the payments owed under any Parity Debt Instrument pursuant to Section 33607.5(e) of the Law and 34177.5(c) of the Dissolution Act.

“Term Bonds” means, collectively, (i) the 2014 Bonds maturing on September 1, 2034,

and (ii) any Parity Debt issued pursuant to a Supplemental Indenture pursuant to the Indenture and payable from amounts in the Sinking Account established pursuant to the Indenture.

"Trustee" means U.S. Bank National Association, as trustee under the Indenture, or any

successor thereto appointed as trustee in accordance with the provisions of the Indenture. "West San Leandro/MacArthur Boulevard Redevelopment Plan" means the

redevelopment plan for the West San Leandro/MacArthur Boulevard Redevelopment Project of

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the Former Agency in San Leandro, California, titled "Redevelopment Plan for the West San Leandro/MacArthur Boulevard Redevelopment Area" adopted and approved as the Redevelopment Plan for the West San Leandro/MacArthur Boulevard Redevelopment Project by Ordinance No. 99-025, adopted by the Council of the City of San Leandro, California on July 19, 1999, as amended by Ordinance No. 2000-014 adopted by the City Council of the City on June 26, 2000, together with all amendments thereto hereafter made in accordance with the Law.

“West San Leandro/MacArthur Boulevard Project Area” means the area of the

undertaking pursuant to the West San Leandro/MacArthur Boulevard Redevelopment Plan. "Written Request of the Successor Agency" or "Written Certificate of the Successor

Agency" means a request or certificate, in writing signed by the Mayor, the City Manager or the Finance Director of the City, on behalf of the Successor Agency or by any other officer of the Successor Agency duly authorized by the Successor Agency for that purpose.

“2002 Bonds” means the Redevelopment Agency of the City of San Leandro Plaza

Redevelopment Project Tax Allocation Bonds, Series 2002, in the initial principal amount of $15,935,000, issued by the Former Agency.

"2002 Bonds Refunding Instructions" means those Irrevocable Refunding Instructions

dated the date of issuance and delivery of the 2014 Bonds relating to the defeasance and refunding of the 2002 Bonds, executed by the Successor Agency and delivered to U.S. Bank National Association, as trustee of the 2002 Bonds.

“2004 Bonds” means the Redevelopment Agency of the City of San Leandro West San

Leandro/MacArthur Boulevard Project Tax Allocation Bonds, Series 2004, in the initial principal amount of $5,500,000, issued by the Former Agency.

"2004 Bonds Refunding Instructions" means those Irrevocable Refunding Instructions

dated the date of issuance and delivery of the 2014 Bonds relating to the defeasance and refunding of the 2004 Bonds, executed by the Successor Agency and delivered to U.S. Bank National Association, as trustee of the 2004 Bonds.

"2014 Bond" or "2014 Bonds" means the Successor Agency to the Redevelopment Agency of the City of San Leandro 2014 Tax Allocation Refunding Bonds (Redevelopment Projects).

Pledge of Tax Revenues

Except as provided in the Indenture, the Bonds and any Parity Debt shall be equally secured by a pledge of, security interest in and lien on all of the Tax Revenues, including all of the Tax Revenues in the Redevelopment Obligation Retirement Fund and a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account and the Redemption Account, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. The Bonds and all Parity Debt shall be additionally secured by a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Reserve Account established by the Indenture. The Bonds shall be also equally secured by the pledge and lien created with respect to the Bonds by Section 34177.5(g) of the Law on moneys deposited from time to time in the Redevelopment Property Tax Trust Fund. Except for the Tax Revenues and

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such moneys, no funds or properties of the Successor Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds. Notwithstanding the foregoing, the payment of debt service on the Bonds shall be subordinate to the payment of amounts payable pursuant to the Pass-Through Agreements, but only to the extent such amounts are payable from the Plaza Project Area.

In addition, the obligation of the Successor Agency to pay Policy Costs is secured by a

lien on the Tax Revenues as provided in the Indenture.

Establishment of Funds and Accounts; Flow of Funds Costs of Issuance Account. A separate fund to be known as the "Bond Proceeds Fund",

shall be established pursuant to the Indenture, which shall be held by the Trustee in trust, and within such Fund there shall be established a separate Costs of Issuance Account. The moneys in the Costs of Issuance Account shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Successor Agency stating 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. On the date which is six (6) months following the Closing Date, or upon the earlier Written Request of the Successor Agency, all amounts (if any) remaining in the Costs of Issuance Account shall be withdrawn therefrom by the Trustee and transferred to the Interest Account of the Debt Service Fund and the Trustee shall close the Costs of Issuance Account.

Redevelopment Obligation Retirement Fund; Deposit of Tax Revenues. The Successor

Agency has established the Redevelopment Obligation Retirement Fund pursuant to Section 34170.5(a) of the Law which the Successor Agency shall continue to hold and maintain so long as any of the Bonds are Outstanding.

The Successor Agency shall deposit all of the Tax Revenues received with respect to

any Bond Year into the Redevelopment Obligation Retirement Fund promptly upon receipt thereof by the Successor Agency. All Tax Revenues received by the Successor Agency in excess of the amount required to pay debt service on the Bonds and any Parity Debt in any Bond Year, and except as may be provided to the contrary in the Indenture or Parity Debt Instrument, shall be released from the pledge and lien under the Indenture and shall be applied in accordance with the Law, including but not limited to the payment of debt service on any Subordinate Debt. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the Bonds and the payment in full of all other amounts payable under the Indenture and under any Supplemental Indentures, the Successor Agency shall not have any beneficial right or interest in the moneys on deposit in the Redevelopment Obligation Retirement Fund, except as may be provided in the Indenture and in any Supplemental Indenture.

Debt Service Fund; Transfer of Amounts to Trustee. A separate trust fund to be known

as the Debt Service Fund, shall be established pursuant to the Indenture, which shall be held by the Trustee under the Indenture in trust. Concurrently with transfers with respect to Parity Debt pursuant to Parity Debt Instruments, moneys in the Redevelopment Obligation Retirement Fund shall be transferred by the Successor Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are hereby established in the Debt Service Fund, and in the following order of priority:

(a) Interest Account. On or before the fourth (4th) Business Day preceding each

Interest Payment Date, the Successor Agency shall withdraw from the Redevelopment

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Obligation Retirement Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds and any Parity Debt on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds and any Parity Debt. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds and any Parity Debt as it shall become due and payable.

(b) Principal Account. On or before the fourth (4th) Business Day preceding the

date on which principal on the Bonds and any Parity Debt becomes due and payable at maturity, the Successor Agency shall withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Bonds and any Parity Debt on such date. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds and any Parity Debt as it shall become due and payable.

(c) Sinking Account. No later than the fourth (4th) Business Day preceding each

March 1 or September 1, as applicable, on which any Outstanding Term Bonds are subject to mandatory redemption or otherwise for purchase pursuant to the provisions of a Supplemental Indenture, the Successor Agency shall withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required to be redeemed on such March 1 or September 1, as applicable, pursuant to the Indenture. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon redemption or purchase pursuant to the Indenture.

(d) Reserve Account. In the Debt Service Fund a separate account known as

the “Reserve Account” will be established by the Indenture, solely as security for payments payable by the Successor Agency pursuant to the Indenture and pursuant to any other Parity Debt Instrument, which shall be held by the Trustee in trust for the benefit of the Owners of the Bonds and any Parity Debt. In the event that the amount on deposit in the Reserve Account at any time becomes less than the Reserve Requirement, the Trustee shall promptly notify the Successor Agency of such fact. Upon receipt of any such notice and as promptly as is permitted by the Law, the Successor Agency shall transfer to the Trustee an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. The Reserve Requirement for the 2014 Bonds shall be satisfied by the delivery of the Reserve Policy by the Reserve Insurer to the Trustee on the Closing Date. The Trustee shall draw on the Reserve Policy in accordance with its terms and conditions and the terms of the Indenture.

The amounts available under the Reserve Policy shall be used and withdrawn by

the Trustee solely for the purpose of making transfers to the Interest Account and the

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Principal Account in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the 2014 Bonds then Outstanding.

The Trustee shall comply with all documentation relating to the Reserve Policy as

shall be required to maintain the Reserve Policy in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Indenture

The amount on deposit in the Reserve Account shall be maintained at the

Reserve Requirement at all times prior to the payment of the Bonds and any Parity Debt in full. If there shall then not be sufficient Tax Revenues to transfer an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account, the Successor Agency shall be obligated to continue making transfers as Tax Revenues become available until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need be made to the Reserve Account so long as there shall be on deposit therein a sum at least equal to the Reserve Requirement. All money in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers pursuant any Parity Debt Instrument and under the Indenture to the Interest Account, the Principal Account and the Sinking Account, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then Outstanding, except that so long as the Successor Agency is not in default under the Indenture or under any Parity Debt Instrument, any amount in the Reserve Account in excess of the Reserve Requirement shall be withdrawn from the Reserve Account semiannually on or before two (2) Business Days preceding each March 1 and September 1 by the Trustee and deposited in the Interest Account or be applied pro rata in accordance with any applicable provision of a Parity Debt Instrument. All amounts in the Reserve Account on the Business Day preceding the final Interest Payment Date shall be withdrawn from the Reserve Account and shall be transferred to the Interest Account and the Principal Account, in such order, to the extent required to make the deposits then required to be made pursuant to the Indenture or shall be applied pro rata as required by any Parity Debt Instrument, as applicable.

The Successor Agency shall have the right at any time to direct the Trustee to

release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: (i) a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Bonds or any Parity Debt the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Successor Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account to the Successor Agency to be applied in accordance with the Law. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Indenture. Upon the expiration of any Qualified Reserve Account Credit Instrument, the Successor Agency shall either (i) replace such Qualified Reserve Account Credit Instrument with a

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new Qualified Reserve Account Credit Instrument, or (ii) deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserve Requirement, to be derived from the first legally available Tax Revenues. If the Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the cash shall be first used to meet any deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indenture. If the Reserve Requirement is being maintained with two or more Qualified Reserve Account Credit Instruments, any draw to meet a deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indenture shall be pro-rata with respect to each such instrument.

The Reserve Account may be maintained in the form of one or more separate

sub-accounts which are established for the purpose of holding the proceeds of separate issues of the Bonds and any Parity Debt in conformity with applicable provisions of the Code to the extent directed by the Successor Agency in writing to the Trustee. Additionally, the Successor Agency may, in its discretion, combine amounts on deposit in the Reserve Account and on deposit in any reserve account relating to any (but not necessarily all) Parity Debt in order to maintain a combined reserve account for the Bonds and any (but not necessarily all) Parity Debt.

(e) Redemption Account. On or before the Business Day preceding any date

on which Bonds are to be redeemed pursuant to the Indenture, other than mandatory Sinking Account redemption of Term Bonds, the Trustee shall withdraw from the Debt Service Fund any amount transferred by the Successor Agency pursuant to the Indenture for deposit in the Redemption Account, such amount being the amount required to pay the principal of and premium, if any, on the Bonds to be redeemed on such date pursuant to the Indenture. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds to be redeemed on the date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds. Interest due on Bonds to be redeemed on the date set for redemption shall, if applicable, be paid from funds available therefor in the Interest Account.

Investment of Funds

Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the

Sinking Account, the Reserve Account and the Costs of Issuance Account shall be invested by the Trustee in Permitted Investments as directed by the Successor Agency in the Written Request of the Successor Agency filed with the Trustee at least two (2) Business Days in advance of the making of such investments. In the absence of any such Written Request of the Successor Agency, the Trustee shall invest any such moneys in Permitted Investments described in clause (d) of the definition thereof, which by their terms mature prior to the date on which such moneys are required to be paid out under the Indenture. The Trustee shall be entitled to rely conclusively upon the written instructions of the Successor Agency directing investments in Permitted Investments as to the fact that each such investment is permitted by the laws of the State, and shall not be required to make further investigation with respect thereto. Moneys in the Redevelopment Obligation Retirement Fund may be invested by the Successor Agency in any obligations in which the Successor Agency is legally authorized to invest its funds. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. All interest or gain derived from the investment of

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amounts in any of the funds or accounts held by the Trustee under the Indenture shall be deposited in the Interest Account. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made at the direction of the Successor Agency or otherwise made pursuant to the Indenture.

Other Covenants of the Successor Agency

Limitation on Additional Indebtedness. The Successor Agency covenants that, so long

as the Bonds are Outstanding, the Successor Agency shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case payable from all or any part of the Tax Revenues, excepting only as provided in the Indenture. The Successor Agency will not otherwise encumber, pledge or place any charge or lien upon any of the Tax Revenues or other amounts pledged to the Bonds superior or on parity to the pledge and lien herein created for the benefit of the Bonds; provided, that the Successor Agency may issue and sell refunding bonds as Parity Debt payable from Tax Revenues on a parity with Outstanding Bonds (as determined by the Successor Agency, in its sole discretion) to refund a portion of the Outstanding Bonds; provided further that, with respect to any such refunding, annual debt service on such Parity Debt, as applicable, is lower than annual debt service on the obligations being refunded during every year the refunded obligations would otherwise be outstanding. Nothing in the Indenture prevents the Successor Agency from issuing and selling Subordinate Debt. Any Subordinate Debt that is issued as bonds or incurred in the form of a loan shall be payable on the same dates as the Bonds.

Extension of Payment. The Successor Agency will not, directly or indirectly, extend or

consent to the extension of the time for the payment of any Bond or claim for interest on any of the Bonds and will not, directly or indirectly, be a party to or approve any such arrangement by purchasing or funding the Bonds or claims for interest in any other manner. In case the maturity of any such Bond or claim for interest shall be extended or funded, whether or not with the consent of the Successor Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Payment of Claims. The Successor Agency shall promptly pay and discharge, or cause

to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Successor Agency or upon the Tax Revenues or other amounts pledged to the payment of the Bonds, or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds. Nothing contained in the Indenture shall require the Successor Agency to make any such payment so long as the Successor Agency in good faith shall contest the validity of said claims.

Books and Accounts; Financial Statements. The Successor Agency shall at all times

keep, or cause to be kept, proper and current books and accounts in which accurate entries are made of the financial transactions and records of the Successor Agency, which shall be subject to inspection by the Reserve Insurer at all times during normal business hours and upon reasonable notice by the Reserve Insurer to the Successor Agency. Within one hundred eighty (180) days after the close of each Fiscal Year an Independent Certified Public Accountant shall prepare an audit of the financial transactions and records of the Successor Agency for such Fiscal Year. To the extent permitted by law, such audit may be included within the annual

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audited financial statements of the City. The Successor Agency shall furnish a copy of such financial statements to any Owner upon reasonable request of such Owner and at the expense of such Owner. The Trustee shall have no duty to review such audits. The Successor Agency agrees, consents and will cooperate in good faith to provide information reasonably requested by the Reserve Insurer and will further provide appropriately designated individuals and officers to discuss the affairs, finances and accounts of the Successor Agency or any other matter as the Reserve Insurer may reasonably request.

Payments of Taxes and Other Charges. The Successor Agency will pay and discharge,

or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may be lawfully imposed upon the Successor Agency or the properties then owned by the Successor Agency in the Project Areas, or upon the revenues therefrom when the same shall become due. Nothing contained in the Indenture requires the Successor Agency to make any such payment so long as the Successor Agency in good faith shall contest the validity of said taxes, assessments or charges. The Successor Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Project Areas or any part thereof.

Compliance With Redevelopment Law; Recognized Obligation Payment Schedules.

The Successor Agency shall comply with all of the requirements of the Law. Pursuant to Section 34177 of the Law, not less than 90-days prior to each January 2 and June 1, the Successor Agency shall submit to the Oversight Board and the State Department of Finance, a Recognized Obligation Payment Schedule. The Successor Agency shall take all actions required under the Law to include in the Recognized Obligation Payment Schedule for each Semiannual Period debt service on the Bonds, so as to enable the Alameda County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund for deposit in the Redevelopment Obligation Retirement Fund on each January 2 and June 1, as applicable, amounts required to enable the Successor Agency to pay timely principal of, and interest on, the Bonds coming due in the applicable Semiannual Period, as such amounts of debt service are set forth in the Recognized Obligation Debt Service Schedule attached as Exhibit B to the Indenture or as such Schedule may be amended. Notwithstanding the foregoing, not fewer than 90 days prior to each January 2, commencing January 2, 2015, the Successor Agency shall submit an Oversight Board-approved Recognized Obligation Payment Schedule to the State Department of Finance and to the Alameda County Auditor-Controller which shall include the following: (i) all scheduled interest payments on all Outstanding Bonds that are due and payable during the next calendar year, (ii) all scheduled principal and mandatory sinking fund redemption payments on all Outstanding Bonds that are due and payable during the next calendar year, and (iii) any amount required to cure any deficiency in the Reserve Account pursuant to the Indenture (including any amounts required due to a draw on the Qualified Reserve Account Credit Instrument. The Recognized Obligation Debt Service Schedule shall not be amended except by Supplemental Indenture entered into pursuant to the Indenture.

In addition, the Successor Agency covenants that it shall, on or before December 1 of

each year, file a Notice of Insufficiency with the Alameda County Auditor-Controller if the amount of Tax Revenues available to the Successor Agency from the Redevelopment Property Tax Trust Fund for transfer to the Redevelopment Obligation Retirement Fund on the upcoming January 2 is insufficient to fully fund all required amounts payable from the Redevelopment Obligation Retirement Fund during the next succeeding Semiannual Period. The Successor Agency covenants that on or before May 1 of each year, it shall file a Notice of Insufficiency with the Alameda County Auditor-Controller if the amount of Tax Revenues available to the Successor Agency from the Redevelopment Property Tax Trust Fund for transfer to the

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Redevelopment Obligation Retirement Fund on the upcoming July 1 is insufficient to fully fund all required amounts payable from the Redevelopment Obligation Retirement Fund during the next succeeding Semiannual Period.

Dissolution Act Invalid; Maintenance of Tax Revenues. In the event that the applicable

property tax revenues provisions of the Dissolution Act are determined by a court in a final judicial decision to be invalid and, in place of the invalid provisions, provisions of the Law or the equivalent become applicable to the Bonds, the Successor Agency shall comply with all requirements of the Law or the equivalent to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and, in the case of amounts payable by the State, appropriate officials of the State.

Tax Covenants Relating to the Bonds. The Successor Agency shall assure that the

proceeds of the 2014 Bonds are not so used as to cause the 2014 Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. The Successor Agency shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2014 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code. The Successor Agency shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the 2014 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2014 Bonds, would have caused the 2014 Bonds to be “arbitrage bonds” within the meaning of section 148 of the Code. The Successor Agency shall take all actions necessary to assure the exclusion of interest on the 2014 Bonds from the gross income of the Owners of the 2014 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the 2014 Bonds. The Successor Agency shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2014 Bonds.

Continuing Disclosure. The Successor Agency covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of the Indenture, failure of the Successor Agency to comply with the Continuing Disclosure Certificate shall not be an Event of Default thereunder. However, any Participating Underwriter or any holder or beneficial owner of the 2014 Bonds may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Successor Agency to comply with its obligations with respect to continuing disclosure. Amendment of Indenture

The Indenture and the rights and obligations of the Successor Agency and of the

Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding with the consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor Agency to pay the principal, interest or redemption premium, (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond or, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification.

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In no event shall any Supplemental Indenture modify any of the rights or obligations of the Trustee without its prior written consent. In addition, the Trustee shall be entitled to an opinion of counsel concerning the Supplemental Indenture’s lack of any material adverse effect on the Owners.

The Indenture and the rights and obligations of the Successor Agency and of the

Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption and without the consent of any Owners, to the extent permitted by law and only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Successor Agency in the

Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers in the Indenture reserved to or conferred upon the Successor Agency; or

(b) to make such provisions for the purpose of curing any ambiguity, or of curing,

correcting or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever as the Successor Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not, in the reasonable determination of the Successor Agency, materially adversely affect the interests of the Owners; or

(c) to amend any provision of the Indenture relating to the requirements of or

compliance with the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exemption from federal income taxation of interest on any of the Bonds, in the opinion of Bond Counsel; or

(d) to amend the Recognized Obligation Debt Service Payment Schedule set

forth in Exhibit B to the Indenture to take into account the redemption of any Bond prior to its maturity; or

(e) to provide for the issuance of Parity Debt pursuant to a Supplemental

Indenture, as such issuance is authorized pursuant to the Indenture.

Events of Default and Remedies Events of Default. The following events shall constitute Events of Default under the

Indenture:

(a) if default shall be made by the Successor Agency in the due and punctual payment of the principal of or interest on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise;

(b) if default shall be made by the Successor Agency in the observance of any of

the covenants, agreements or conditions on its part in the Indenture or in the Bonds or any Parity Debt Instrument contained, other than a default described in the preceding clause (a), and such default shall have continued for a period of 30 days following receipt by the Successor Agency of written notice from the Trustee or any Owner of the occurrence of such default provided that if in the reasonable opinion of the Successor Agency the failure stated in the notice can be corrected, but not within such 30 day period, such failure will not constitute an event of default if corrective action is instituted

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by the Successor Agency within such 30 day period and the Successor Agency thereafter diligently and in good faith cures such failure in a reasonable period of time; or

(c) If the Successor Agency files a petition seeking reorganization or

arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction will approve a petition seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will approve a petition, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will assume custody or control of the Successor Agency or of the whole or any substantial part of its property.

Remedies. Upon the occurrence and during the continuance of any Event of Default,

the Trustee may, or, if requested in writing by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, the Trustee shall, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in the Indenture or in the Bonds to the contrary notwithstanding, and (b) the Trustee shall, subject to the provisions of the Indenture, exercise any other remedies available to the Trustee and the Bond Owners in law or at equity.

Immediately upon receiving notice or actual knowledge of the occurrence of an Event of

Default, the Trustee shall give notice of such Event of Default to the Successor Agency by telephone promptly confirmed in writing. Such notice shall also state whether the principal of the Bonds shall have been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (c) above the Trustee shall, and with respect to any Event of Default described in clause (b) above the Trustee in its sole discretion may, also give such notice to the Owners by mail, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).

The foregoing is subject to the condition that if, at any time after the principal of the

Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Successor Agency shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law), and the reasonable fees and expenses of the Trustee, (including the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel) 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 Trustee shall promptly give written notice of the foregoing to the Owners of all Bonds then Outstanding, and the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Successor Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences.

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However, no such rescission and annulment extends to or affects any subsequent default, or impairs or exhausts any right or power consequent thereon.

Application of Funds Upon Acceleration. If an Event of Default has occurred and is

continuing, all Tax Revenues and all sums in the funds and accounts established and held by the Trustee under the Indenture upon the date of the declaration of acceleration and all sums thereafter received by the Trustee under any of the provisions of the Indenture will be applied by the Trustee as follows and in the following order upon presentation of the several Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid:

(a) To the payment of the fees, costs and expenses of the Trustee in declaring

such Event of Default and in exercising the rights and remedies set forth in the Indenture, including reasonable compensation to its agents, attorneys (including the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel) and counsel and any outstanding fees, expenses of the Trustee; and

(b) To the payment of the whole amount then owing and unpaid upon the Bonds

for principal and interest, with interest on the overdue principal and installments of interest at the net effective rate then borne by the Outstanding Bonds (to the extent that such interest on overdue installments of principal and interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest.

Power of Trustee to Control Proceedings. If the Trustee, upon the happening of an

Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

Limitation on Owners’ Right to Sue. No Owner of any Bond issued under the Indenture

shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under the Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding, have made written request upon the Trustee to exercise its powers under the Indenture granted or to institute such action, suit or proceeding in its own name; (c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee has refused or omitted to comply with such

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request for a period of sixty (60) days after such written request has been received by the Trustee and said tender of indemnity is made to the Trustee.

Defeasance of Bonds

The Successor Agency shall pay and discharge the entire indebtedness on all Bonds

or any portion thereof in any one or more of the following ways:

(a) by well and truly paying or causing to be paid the principal of and interest on all or the applicable portion of Outstanding Bonds, as and when the same become due and payable; or

(b) by irrevocably depositing with the Trustee or an escrow agent, in trust, at or

before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indenture, is fully sufficient to pay all or a portion of Outstanding Bonds, including all principal and interest; or

(c) by irrevocably depositing with the Trustee or an escrow agent, in trust,

Defeasance Obligations in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit of the funds and accounts established pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on all Bonds or a portion thereof (including all principal and interest) at or before maturity; or

(iv) by purchasing such Bonds prior to maturity and tendering such Bonds to the

Trustee for cancellation;

then, at the election of the Successor Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in the Indenture and all other obligations of the Trustee and the Successor Agency under the Indenture shall cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been paid and discharged, except only (a) the covenants of the Successor Agency under the Indenture with respect to the Code, (b) the obligation of the Trustee to transfer and exchange Bonds thereunder, (c) the obligations of the Successor Agency under the Indenture, and (d) the obligation of the Successor Agency to pay or cause to be paid to the Owners, from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee all fees, expenses and costs of the Trustee. In the event the Successor Agency shall, pursuant to the foregoing provision, pay and discharge any portion or all of the Bonds then Outstanding, the Trustee shall be authorized to take such actions and execute and deliver to the Successor Agency all such instruments as may be necessary or desirable to evidence such discharge, including, without limitation, selection by lot of Bonds of any maturity of the Bonds that the Successor Agency has determined to pay and discharge in part.

In the case of a defeasance or payment of all of the Bonds Outstanding, any funds thereafter held by the Trustee which are not required for said purpose or for payment of amounts due the Trustee pursuant to the Indenture shall be paid over to the Successor Agency for deposit in the Redevelopment Obligation Retirement Fund.

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APPENDIX B

FORM OF BOND COUNSEL OPINION

October 30, 2014

Successor Agency to the Redevelopment Agency of the City of San Leandro 835 E. 14th Street San Leandro, California 94577 OPINION: $11,235,000 Successor Agency to the Redevelopment Agency of the City of

San Leandro 2014 Tax Allocation Refunding Bonds (Redevelopment Projects) Members of the Successor Agency:

We have acted as bond counsel in connection with the issuance by the Successor

Agency to the Redevelopment Agency of the City of San Leandro (the “Successor Agency”), of its $11,235,000 Successor Agency to the Redevelopment Agency of the City of San Leandro 2014 Tax Allocation Refunding Bonds (Redevelopment Projects) (the “Bonds”), under the Community Redevelopment Law (being Part 1 of Division 24 of the California Health and Safety Code) (the “Law”), under Part 1.85 (commencing with Section 34170) of Division 24 of the California Health and Safety Code (the “Dissolution Act”), under the provisions of Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the “Refunding Law”), and under an Indenture of Trust dated as of October 1, 2014, by and between the Successor Agency and U.S. Bank National Association, as trustee (the “Indenture”). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of

the Successor Agency contained in the Indenture and in certified proceedings and other certifications of public officials furnished to us, without undertaking to verify such facts by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Successor Agency is a public entity validly existing under the laws of the

State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

2. The Indenture has been duly approved by the Successor Agency and constitutes a

valid and binding obligation of the Successor Agency enforceable upon the Successor Agency.

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Successor Agency to the Redevelopment Agency of the City of San Leandro October 30, 2014 Page 2

3. Pursuant to the Law, the Dissolution Act and the Refunding Law, the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds, subject to no prior lien granted under the Law.

4. The Bonds have been duly authorized, executed and delivered by the Successor

Agency and are valid and binding special obligations of the Successor Agency, payable solely from the sources provided therefor in the Indenture.

5. Interest on the Bonds is excluded from gross income for federal income tax

purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentences are subject to the condition that the Successor Agency comply with all requirements of the Internal Revenue Code of 1986 which must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Successor Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by the

State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the

Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted, A Professional Law Corporation

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APPENDIX C

BOOK-ENTRY ONLY SYSTEM

The information in this Appendix C concerning The Depository Trust Company (“DTC”), New York, New York, and DTC’s book-entry system has been obtained from DTC and the Successor Agency takes no responsibility for the completeness or accuracy thereof. The Successor Agency cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2014 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2014 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2014 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 2014 Bonds. The 2014 Bonds will be issued as fully-registered securities registered 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 certificate will be issued for each maturity of the 2014 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities 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 Successor 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 the 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. The information set forth on such website is not incorporated herein by reference.

Purchases of Bonds under the DTC system must be made by or through Direct

Participants, which will receive a credit for the 2014 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on

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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 2014 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the 2014 Bonds is discontinued.

To facilitate subsequent transfers, all 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 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 2014 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2014 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2014 Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 2014 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 shall be sent to DTC. If less than all of the 2014 Bonds within a

maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with

respect to 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 Successor Agency 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium (if any), and interest payments on the 2014 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 Successor Agency 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

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Successor Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respect to the 2014 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Successor Agency 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.

DTC may discontinue providing its services as depository with respect to the 2014

Bonds at any time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates representing the 2014 Bonds are required to be printed and delivered.

The Successor Agency may decide to discontinue use of the system of book-entry-only

transfers through DTC (or a successor securities depository). In that event, representing the 2014 Bonds will be printed and delivered to DTC in accordance with the provisions of the Indenture.

The information in this section concerning DTC and DTC’s book-entry system has been

obtained from sources that the Successor Agency believes to be reliable, but the Successor Agency takes no responsibility for the accuracy thereof.

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APPENDIX D

FORM OF SUCCESSOR AGENCY CONTINUING DISCLOSURE CERTIFICATE

$11,235,000 SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY


(REDEVELOPMENT PROJECTS) This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is

executed and delivered by the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO (the “Successor Agency”) in connection with the execution and delivery of the bonds captioned above (the “Bonds”). The Bonds are being issued pursuant to an Indenture of Trust, dated as of October 1, 2014 (the “Indenture”), by and between the Successor Agency and U.S. Bank National Association, as trustee.

The Successor Agency covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being

executed and delivered by the Successor Agency for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture,

which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the Successor Agency pursuant

to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is nine months after the end of the Successor

Agency’s fiscal year (currently March 31 based on the Successor Agency’s fiscal year end of June 30).

“Dissemination Agent” means the Successor Agency, or any successor Dissemination

Agent designated in writing by the Successor Agency and which has filed with the Successor Agency a written acceptance of such designation.

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure

Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated

by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.

“Official Statement” means the final official statement executed by the Successor

Agency in connection with the issuance of the Bonds.

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“Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission

under the Securities Exchange Act of 1934, as it may be amended from time to time. Section 3. Provision of Annual Reports. (a) The Successor Agency shall, or shall cause the Dissemination Agent to, not later

than the Annual Report Date, commencing March 31, 2015, with the report for the 2013-14 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the Successor Agency shall provide the Annual Report to the Dissemination Agent (if other than the Successor Agency). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the Successor Agency) has not received a copy of the Annual Report, the Dissemination Agent shall contact the Successor Agency to determine if the Successor Agency is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Successor Agency may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the Successor Agency’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The Successor Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Successor Agency hereunder.

(b) If the Successor Agency does not provide (or cause the Dissemination Agent to

provide) an Annual Report by the Annual Report Date, the Successor Agency shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.

(c) With respect to each Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) if the Dissemination Agent is other than the Successor Agency, file a

report with the Successor Agency certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The Successor Agency’s Annual Report shall

contain or incorporate by reference the following: (a) The Successor Agency’s audited financial statements 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 Successor Agency’s audited financial statements are not available by the Annual Report Date, the Annual Report

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shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or before

the Annual Report Date, financial information and operating data with respect to the Successor Agency for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement:

(i) Principal amount of Bonds outstanding as of June 30 of the most recently-

completed fiscal year. (ii) Balance in the Reserve Account and a statement of the Reserve Requirement as

of June 30 of the most recently-completed fiscal year. (iii) The information in the following tables of the Official Statement for the most

recently completed fiscal year: Tables 1, 2, and 4 (except that no projections are required).

(c) In addition to any of the information expressly required to be provided under this

Disclosure Certificate, the Successor Agency shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

(d) Any or all of the items listed above may be included by specific reference to other

documents, including official statements of debt issues of the Successor Agency or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The Successor Agency shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events. (a) The Successor Agency shall give, or cause to be given, notice of the occurrence

of any of the following Listed Events with respect to the Bonds:

(1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial

difficulties. (4) Unscheduled draws on credit enhancements reflecting financial

difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, 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

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respect to the tax status of the security, or other material events affecting the tax status of the security.

(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the

securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the Successor

Agency or other obligated person. (13) The consummation of a merger, consolidation, or acquisition involving the

Successor Agency 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.

(14) Appointment of a successor or additional trustee or the change of name

of a trustee, if material.

(b) Whenever the Successor Agency obtains knowledge of the occurrence of a Listed Event, the Successor Agency shall, or shall cause the Dissemination Agent (if not the Successor Agency) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.

(c) The Successor Agency acknowledges that the events described in

subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier "material" with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The Successor Agency shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the Successor Agency obtains knowledge of the occurrence of any of these Listed Events, the Successor Agency will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the Successor Agency will cause a notice to be filed as set forth in paragraph (b) above.

(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12)

above is considered to occur when any of the following occur: the appointment of a receiver,

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fiscal agent, or similar officer for the Successor Agency in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Successor Agency, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Successor Agency.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to

the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The Successor Agency’s obligations

under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Successor Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 8. Dissemination Agent. The Successor Agency may, from time to time, appoint

or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Successor Agency. Any Dissemination Agent may resign by providing 30 days’ written notice to the Successor Agency.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure

Certificate, the Successor Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or

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 Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in

the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of

the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report

is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

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If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Successor Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same

manner as for a Listed Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed

to prevent the Successor Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Successor Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Successor Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the Successor Agency fails to comply with any provision of this

Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Successor Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Successor Agency to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The

Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Successor Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they 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 Dissemination Agent shall have no duty or obligation to review any information provided to it by the Successor Agency hereunder, and shall not be deemed to be acting in any fiduciary capacity for the Successor Agency, the Bond holders or any other party. The obligations of the Successor Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

(b) The Dissemination Agent shall be paid compensation by the Successor Agency for

its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Successor Agency, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several

counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: ___________, 2014


By: Name: Title:

AGREED AND ACCEPTED: SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO, as Dissemination Agent By: Name: Title:

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EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Successor Agency to the Redevelopment Agency of the City of

San Leandro Name of Issue: Successor Agency to the Redevelopment Agency of the City of

San Leandro 2014 Tax Allocation Refunding Bonds Date of Issuance: _________, 2014 NOTICE IS HEREBY GIVEN that the Successor Agency has not provided an Annual

Report with respect to the above-named Bonds as required by the Indenture of Trust, dated as of October 1, 2014, by and between the Successor Agency and U.S. Bank National Association, as trustee. The Successor Agency anticipates that the Annual Report will be filed by ________________.

Dated:

DISSEMINATION AGENT: ___________________________

By: Its:

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APPENDIX E

SUCCESSOR AGENCY FINANCIAL STATEMENTS THROUGH JUNE 30, 2013

Comprehensive Annual Financial ReportC I T Y O F S A N L E A N D R O • C A L I F O R N I A

Fiscal Year Ended June 30, 2013

CITY OF SAN LEANDRO, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED

JUNE 30, 2013

PREPARED BY: City of San Leandro – Finance Department David Baum, Finance Director

City of San Leandro Comprehensive Annual Financial Report For the year ended June 30, 2013

Table of Contents

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INTRODUCTORY SECTION Table of Contents ...................................................................................................................................................... i Letter of Transmittal ................................................................................................................................................. v Government Finance Officers Association (GFOA) Award .................................................................................. xii Principal Officers .................................................................................................................................................. xiii Organizational Chart ............................................................................................................................................. xiv Location Map. ........................................................................................................................................................ xv FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................................. 1 Management’s Discussion and Analysis ............................................................................................................... 3 Basic Financial Statements: Government-Wide Financial Statements:

Statement of Net Assets ..................................................................................................................... 23 Statement of Activities and Changes in Net Assets ........................................................................... 24 Fund Financial Statements: Government Funds Financial Statements:

Balance Sheet ..................................................................................................................................... 30 Reconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Statement of Net Assets ...................................................................... 31 Statement of Revenues, Expenditures and Changes in Fund Balances ............................................. 32 Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets .................................................................... 33

Proprietary Funds Financial Statements: Statement of Net Assets ..................................................................................................................... 36 Statement of Revenues, Expenses and Changes in Net Assets .......................................................... 37 Statement of Cash Flows ................................................................................................................... 38

Fiduciary Fund Financial Statement: Statement of Fiduciary Net Assets – Agency Funds ......................................................................... 40 Combining Statement of Changes in Fiduciary Net Assets – Successor Agency .............................. 41


Table of Contents, Continued

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FINANCIAL SECTION, Continued Basic Financial Statements, Continued:

Index to Notes to Basic Financial Statements ................................................................................................. 43 Notes to Basic Financial Statements ............................................................................................................... 45

Required Supplementary Information:

Budget and Budgetary Accounting Statement of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual –

Major Fund – General Fund ................................................................................................................ 89 Pension Plans Schedule of Funding Progress .................................................................................................. 90

Supplementary Information: Non-Major Governmental Funds:

Combining Balance Sheet ......................................................................................................................... 98 Combining Statement of Revenue, Expenditures and Changes in Fund Balances .................................. 102 Schedule of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual – Non-Major Funds ............................................................................................ 106

Non-Major Enterprise Funds: Combining Statement of Net Assets ........................................................................................................ 130

Combining Statement of Revenues, Expenses, and Changes in Net Assets ........................................... 131 Combining Statement of Cash Flows ...................................................................................................... 132

Internal Service Funds: Combining Statement of Net Assets ........................................................................................................ 134

Combining Statement of Revenues, Expenses and Changes in Net Assets ............................................ 135 Combining Statement of Cash Flows ...................................................................................................... 136

Fiduciary Fund Financial Statements: Combining Statement of Fiduciary Net Assets ........................................................................................ 138 Combining Statement of Changes in Assets and Liabilities – Agency Funds ......................................... 139

STATISTICAL SECTION

Net Position by Component – Last Ten Fiscal Years .................................................................................... 143

Program Revenue by Function/Program – Last Ten Fiscal Years ................................................................. 144

Changes in Net Positions – Last Ten Fiscal Years ........................................................................................ 145

Fund Balance of Governmental Funds – Last Ten Fiscal Years .................................................................... 146

Changes in Fund Balance of Governmental Funds – Last Ten Years ........................................................... 147


Table of Contents, Continued

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General Governmental Revenues by Source - Last Ten Fiscal Years ........................................................... 148

Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years .............................................................................................................................. 149

Property Tax Rates - All Direct and Overlapping Governments - Last Ten Fiscal Years .............................................................................................................................. 150

Principal Property Tax Payers – Current Year and Ten Years Ago .............................................................. 151

Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................................... 152

Sales Tax Remittance by Category – Last Ten Calendar Years .................................................................... 153

Sewer Rate – Last Ten Fiscal Years .............................................................................................................. 154

Computation of Direct and Overlapping Debt ............................................................................................... 155

Pledged-Revenue Coverage – Last Ten Fiscal Years .................................................................................... 156

Computation of Legal Debt Margin – Last Ten Fiscal Years ........................................................................ 157

Demographic Statistics - Last Ten Fiscal Years ............................................................................................ 158

Principals Employers – Current Year and Ten Years Ago ............................................................................ 159

Full-Time and Part-Time City Employees by Function – Last Ten Fiscal Years .......................................... 160

Operating Indicators by Function – Last Ten Fiscal Years ........................................................................... 161

Capital Asset Statistics by Function – Last Ten Fiscal Years ........................................................................ 162

Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years .......................................................... 163

December 30, 2013 Honorable Mayor and Members of the City Council City of San Leandro San Leandro, CA 94577 Dear Mayor and Members of the City Council: It is a pleasure to submit for your consideration the City of San Leandro’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2013. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City’s management. To the best of my knowledge and belief, the enclosed information is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various activities of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. The City’s Charter requires an annual audit by an independent audit firm selected by the City Council of the books of account and financial records and reports of the City and that the City publish a complete set of audited financial statements after the close of each fiscal year. This report is published to fulfill this requirement for the fiscal year ended June 30, 2013. This report presents management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the City’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 generally accepted accounting principles (GAAP). Because the costs of internal controls should not outweigh the 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 material misstatement. Maze & Associates, a public accounting firm fully licensed and qualified to perform audits of local governments within California, has audited the City’s basic financial statements. The goal of the independent audit is to provide reasonable assurance that the basic financial statements for the fiscal year ended June 30, 2013 are free of material misstatement. The independent audit involved examining, on a test 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 auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City’s basic financial statements for the fiscal year ended June 30, 2013 are fairly presented in

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conformity with accounting principles generally accepted in the United States. The independent auditor’s report is presented as the first component of the financial section of this report. In addition to the annual financial audit, the City provides for a federally mandated Single Audit designed to meet the special needs of Federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report on the audited government’s internal controls and compliance with legal requirements, with special emphasis on the administration of Federal awards. These reports are available in the City’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statement in the form of Management’s Discussion and Analysis (MD&A). The MD&A compliments this letter of transmittal and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors in the financial section of the CAFR. CITY PROFILE The City of San Leandro was incorporated in 1872 and is one of the oldest communities in the San Francisco Bay Area. The City occupies fifteen square miles between the cities of Oakland and Hayward and is bordered on the west by the San Francisco Bay. San Leandro offers its approximately 86,053 residents the quiet charm and character of a community that has been established for more than 140 years. Once an agricultural community, the City has been successful in attracting significant industrial, manufacturing and retail development to the area. City Structure The City functions under a Mayor-Council-Manager form of government and is governed by a seven-member council elected by City residents. Municipal services provided include public safety, streets and roads, recreation and cultural services, library, health services, public infrastructure improvements, planning and zoning, and general administrative services. The scope of the City Council’s power and influence includes, but is not limited to the following: The authority to establish and modify operating and capital budgets The power to appoint voting members to other governing authorities The power to appoint the City Manager and City Attorney The ability to plan and direct operations The authority to veto, modify, and overrule decisions Another significant example of control is the nature of financial interdependency between the various City funds. Manifestations of financial interdependency include taking responsibility for financing deficits, being entitled to operating surpluses, and giving implied guarantees (moral responsibility) for debt obligations.

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Component Units As of June 30, 2013, there were no discretely reportable component units. The City’s blended component units include operations of the San Leandro Parking Authority, the San Leandro Public Financing Authority, and the San Leandro Economic Development Agency. The CAFR for the year ending June 30, 2013 provides a financial account of those activities, organizational elements, and City functions for which the City Council provides policy direction and general oversight. It presents financial information on the activities of the City itself and the component units of the City upon which the City Council is authorized to impose its will. The operating nature of the City’s component units determines how they are reported in the financial statements. The activities of component units that provide financial benefit or create financial burden for the City are blended within the City’s general financial statements. Component units that have no discernable financial impact upon the City are presented separately. ECONOMIC CONDITION OF THE CITY The City of San Leandro has a diverse and strong economy, with its business community comprised of varied businesses ranging from neighborhood coffee houses and fine restaurants, large food processing centers, and regional shopping opportunities, to cutting edge technology. While the economic base has dramatically changed from its agricultural early years, San Leandro continues to expand on its sound business base with the ongoing development of such projects as a new downtown parking structure, a multi-family housing development, a new regional hospital, and the continuing revitalization of downtown San Leandro. The recession resulting from the global financial and credit market meltdown in late 2008 has had a direct and dramatic impact on the City’s local revenues. However, recent data indicate partial recovery, median home prices are $400,000, 25% more than the median price in 2012. The unemployment rate has now dropped to 7.4%. The City’s General Fund supports many of the City’s key services, such as public safety, library and parks and recreation. Revenue to this critical fund, generated largely from sales and property taxes, has started to rebound to levels not seen since 2006-07. Lower mortgage rates have spurred investment in housing. The improving housing market, which represents 63% of the City’s tax roll, resulted in a 4.9% increase in assessed value for Fiscal year 2012-13. Lower interest rates have also boosted purchases of large ticket items, such as automobiles and home improvements, which boosted sales tax revenue by 9% in the City. With the passage of Measure Z (0.25% sales tax increase) effective January 1, 2011, the extra quarter cent sales tax added $4.3 million sales tax revenue in the fiscal year. City operations are also supported by other funds, including enterprise funds. Key enterprise funds include the Water Pollution Control Plant and Shoreline Enterprise Funds. Both of these funds have seen revenues slightly improving over the last year. The Water Pollution Control Plant Enterprise fund was established to account for the City’s sewers, which protect public health and preserve water quality through collection, treatment, and disposal of the community’s wastewater and wastewater solids. Program revenues to this fund in 2012-13 totaled $11.3 million, a 1% increase from the prior

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year. The Shoreline Enterprise Fund was established in 2002-03 and combined the Marina Enterprise and the Golf Course Enterprise Funds. Program revenues to this fund in 2012-13 totaled $1.8 million, a 6% decrease from the prior year. While the City has implemented considerable expenditure/service reductions to balance its budget, it continues to face increased operating costs. For example, the City’s contribution rates for employee pensions continue to rise due to prior portfolio losses and a change in actuarial assumptions by CalPERS, with additional increases projected in future years. The City has offset some of these increases with staff reductions in recent years, and will be working with employee groups over the next couple of years to address this growing cost. Partially mitigating the double digit increases in annual CalPERS funding is the refinancing of a Police pension fund unfunded liability through lower interest cost bonds and loans totaling $24 million guaranteed by the General Fund, which were completed in 2011-12. The State of California is forecasting a balanced budget over the next 18 months. The State’s savings and borrowings from special funds, property tax shifts, restructuring of the state-local government relationship that shifts funding responsibility to local government for certain services results in a shift of cost being transferred to cities and counties. State lawmakers’ dissolution of redevelopment agencies eliminates funding for redeveloping, improving and revitalizing project and blighted areas in the city. Passage of Prop 30 in November 2012 will generate additional tax revenue for the State to mitigate recent deficits. Local governments remain alert about how the State will balance its budget and how it might impact local government. Long-term perspective The City adopts an annual budget, but employs long-term planning as the framework for its fiscal decisions. While San Leandro’s underlying economy is viewed as positive in the long-term, today’s economic challenges, notably in the General Fund, must be dealt with now to ensure long-term fiscal stability. The City Council has implemented various cost cutting measures after operating expenditures peaked in 2008-09 to produce recurring budget savings. Such actions result in unwanted, but unavoidable reductions in service to the community. To help buffer the immediate impacts of additional service reductions, the City has used some of its one-time reserves. City Council unassigned reserves, total $14.8 million in the General Fund at June 30, 2013. The reserve balance is comprised of $5 million for Major Emergencies, $4.9 million for Economic Uncertainty, $4.4 million from other unassigned balance, and $466,834 for compensated absences. It is anticipated that in FY 2013-14, the City will continue to rebuild its reserve balance. MAJOR INITIATIVES AND ACCOMPLISHMENTS In its role of providing policy direction and general oversight, the City Council establishes major goals for City service delivery. These goals are identified and quantified in the City’s annual budget. The City can boast of an impressive list of major initiatives and accomplishments during 2012-13 that helped achieve the City’s mission of serving the public and enhancing the quality of life in San Leandro. Some of these major initiatives and accomplishments include:

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Capital Improvements Lit San Leandro Fiber Loop The City is working with OSIsoft, a local software company, to license a 10 mile loop of City conduit to install fiber optic cable. The loop will provide high-speed internet connectivity data communications for businesses that opt to tie in to the system. The City applied for and received a $2 million EDA grant to augment this project during the past year. Water Pollution Control Plant A $50 million expansion is underway to upgrade the Plant, which was constructed in 1939. Scheduled date of completion is July 2014. Streets and Road Projects As part of the City’s overall Pavement Management strategy, the rehabilitation of city streets through the construction of overlay, pothole repairs, and various street resurfacing treatments, continue to improve the streets and roads that enhances the City’s road quality and durability. Downtown Parking Garage Key to development plans for the downtown is a four story parking garage. A November grand opening in November culminated the construction of the 384 space, LEED certified, four-story parking garage. The new garage will replace an outdated Estudillo garage and is scheduled to install a parking revenue system in early 2013. The garage, which is funded with redevelopment tax increment dollars and constructed by Webcor Builders, is a critical component of the City’s award winning Transit Oriented Development (TOD) strategy. Centralized parking encourages downtown retail patrons to park once, walk to multiple destinations and promotes the downtown. The added capacity from the new garage will also facilitate additional mixed use development. San Leandro Kaiser Medical Center, Phase I The initial phase of development consists of a replacement for the existing Kaiser Permanente Hayward hospital with a new San Leandro Kaiser Medical Center. Phase 1 of the Medical Center is under construction and includes a 436,000 square foot, six-story hospital containing up to 264 licensed beds, a 275,000 square foot support building, a central utility plant, and 2,100 surface parking. Construction of the new hospital began in 2010 and will generate 3,000 new construction jobs. The hospital is expected to open in 2014. When complete, the state-of the art hospital will include ten operating rooms, 24-hour emergency services with forty treatment rooms, and a newborn intensive care nursery. A medical office building will house 116 offices for primary care and specialty physicians, an outpatient procedure suite with six rooms, a pharmacy, a laboratory, and radiology services. This is the largest development project in San Leandro’s history.

COUNCIL FINANCIAL POLICIES Over the years, the San Leandro City Council has followed a series of Financial Values that provide guidance to budget administration, capital financing and debt management - which are also used to guide the budget process. In addition, the City Council adopted, by resolution, specific budget administration guidelines which set out guidance for fund balance designations and reserves management.

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The budget administration guidelines recommend sufficient fund balance to provide for: a) Economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy, b) contingencies for unforeseen operating or capital needs and c) cash flow requirements. Further, the guidelines call for such designated fund balances to be at least 20% of General Fund operating expenditures (budgeted expenditures for the following year). Consequently, based on the General Fund’s budgeted operating expenditures for 2013-14 the guideline requirement is approximately $16 million. Even during these difficult economic times, the unassigned fund balance reported in the accompanying financial statements is a step toward meeting these guidelines. For example, the 2011-12 financial statements reflect Council designations that total $14.8 million. While these designations do not fully meet the guideline amount of $16 million, the unassigned fund balance does represent substantial progress. FINANCIAL INFORMATION City Budget & Budgetary Controls The City Council is required to adopt a final budget through the passage of a resolution no later than June 30, the close of the fiscal year, following a public hearing process conducted to obtain taxpayer comments. This annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, function (e.g., public safety) and department (e.g., police). The legal level of budgetary control is at the fund level. The City Manager is authorized to transfer budgeted amounts between departments and line items within any fund; however, any revisions which alter the total expenditures of any fund must be approved by the City Council. Transfers between funds must be approved by the City Council. At the end of the fiscal year, encumbered appropriations are carried forward and become part of the following year’s budget while appropriations that have not been encumbered lapse, unless otherwise authorized by the City Council and the City Manager. Accounting System The City’s accounting records for general government operations are maintained on a modified accrual basis, with the revenues being recorded when measurable and available. Expenditures are recorded when the services or goods are received and the liabilities incurred. Accounting records for the City’s proprietary activities are maintained on the full accrual basis, with revenues recorded when earned and expenses when incurred. In maintaining the City’s accounting system, consideration is given to the adequacy of internal controls. Internal controls are designed to provide reasonable assurance regarding the safeguarding of assets and to ensure the reliability of financial records and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived. The evaluation of costs and benefits requires continuing estimates and judgments by City management. We believe that the City’s system of internal accounting controls continues to adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded.

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Risk Management The City maintains a program of commercial insurance combined with self-insurance for substantially all of its governmental operations, except for major construction projects and contractor-supplied services. In such circumstances, insurance to protect the City is provided by each contractor. The City is a member of the Local Agency Workers’ Compensation Excess Joint Powers Authority (LAWCX). The City is also a member of California Joint Powers Risk Management Authority (CJPRMA), which provides annual general liability coverage in an aggregate up to $40 million. Additional information on the City’s risk management activity can be found in the notes to the financial statements. OTHER INFORMATION Certificate of Achievement 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 of San Leandro for its comprehensive annual financial report for the fiscal year ended June 30, 2012. This was the 17th consecutive year that the City of San Leandro has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. 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 This CAFR represents the culmination of numerous hours of hard work expended by the dedicated staff in the Accounting Division of the Finance Department. In particular, I would like to express appreciation to Carla Rodriguez, Christine Galvin, Robert Topete, and Sally Perez whose support and dedication made the report possible. Furthermore, I would like to thank Maze & Associates for their professional assistance and cooperation. Finally, I want to thank Chris Zapata, City Manager, and the City Council for their continued interest and support in planning and conducting the City’s financial operations. Respectfully submitted, David Baum Finance Director

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Government Finance Officers Association

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

The City of San Leandro

California

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

June 30, 2012

Executive Director/CEO

PRINCIPAL OFFICERS

CITY OF SAN LEANDRO For Fiscal Year Ended June 30, 2013

CITY COUNCIL

Mayor Stephen H. Cassidy Vice Mayor Jim Prola Councilmember Pauline Russo Cutter Councilmember Michael J. Gregory Councilmember Benny Lee Councilmember Diana M. Souza Councilmember Ursula Reed

COUNCIL APPOINTEES

City Manager Chris Zapata City Attorney Richard Pio Roda

APPOINTED OFFICIALS

Assistant City Manager Lianne Marshall City Clerk Marian Handa Police Chief Sandra R. Spagnoli Community Development Director Cynthia Battenberg Finance Director David Baum Recreation and Human Services Director Carolyn Knudtson Engineering – Transportation Director Uchenna Udemezue Public Works Services Director Debbie Pollart

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City Clerk

PlanningCommission

Board ofZoning

Adjustments

LibraryHistorical

Commission

Mayor andCity Council

Citizens ofSan Leandro

SeniorCommission

Rent ReviewBoard

This organizational chart reflects relationships between policy-making responsibility(Mayor, City Council, and Advisory Boards and Commissions)

and administrative officers and departments.

PersonnelRelations Board

HumanServices

Commission

Recreationand Parks

Commission

YouthAdvisory

Commission

FinanceLibrary

Services

City Manager

(City Manager’sOffice)

FireEngineering

andTransportation

City Attorney

Public WorksRecreationand Human

ServicesPolice

CommunityDevelopment

HumanResources

xiv

SAN LEANDRO

S a n F r a n c i s c o B a y

Oakland

Alameda

San Jose

BerkeleyWalnut Creek

San Francisco

±5 0 52.5

Miles

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MAZE &ASSOCIATES

INDEPENDENT AUDITOR'S REPORT

To the City Council City of San Leandro, California

Report 011 Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each roajor fund, and the aggregate remaining fund infonnation of the City of San Leandro (City) as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents.

Manageme11~S Responsibility for tlte Fimmcial Statements

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

Auditor's Responsibility

Our responsibility is to e>..'J)ress opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement

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

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

Accountancy Corporation

34 78 3uskirk Avenue. Sutte 215 Pleasant IIIII. CA 94523

T 925.930.0902 F 025.930.0135

! [email protected] w mazeassociates.com

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Opinions

In our opinion, the fmancial statements referred to above present fairly, in all material respects, the respective fmancial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of San Leandro as of June 30, 2013 and the results of its operations and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 10E, net positions as of July 1, 2012, for the Government-Wide Statement of Activities and Fiduciary Private-purpose Trust Fund were restated and reduced by $24,475,910 and $969,906, respectively.

Management adopted the prov1s1ons of the following Governmental Accounting Standards Board Statement 63 - Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which became effective during the year ended June 30, 2013 and required certain nomenclature changes to the fmancial statements.

The emphasis of these matters does not constitute a modification to our opinions.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and budgetary comparison information be presented to supplement the basic fmancial statements. Such information, although not a part of the basic fmancial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of fmancial reporting for placing the basic fmancial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fmancial statements, and other knowledge we obtained during our audit of the basic fmancial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise the City of San Leandro's basic fmancial statements as a whole. The Introductory Section, Supplemental Information, and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic fmancial statements.

The Supplemental Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic fmancial statements. The information has been subjected to the auditing procedures applied in the audit of the fmancial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the fmancial statements or to the fmancial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplemental Information is fairly stated in all material respects in relation to the basic fmancial statements as a whole.

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

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2013, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.

Pleasant Hill, California December 13, 2013

CITY OF SAN LEANDRO, CALIFORNIA Management’s Discussion and Analysis

For the Fiscal Year Ended June 30, 2013

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The Management’s Discussion and Analysis (MD&A) provides an overview of the City of San Leandro’s activities and financial performance for the fiscal year ended June 30, 2013. To obtain a complete picture of the City’s financial condition, this document should be read in conjunction with the accompanying Transmittal Letter and Basic Financial Statements. FINANCIAL HIGHLIGHTS Information about net position is presented in the summary schedule, below:

At the close of the most recent fiscal year, the net position of the City exceeded its liabilities at the

close of the fiscal year end by $325.4 million (net position). Of this amount, $253 million was invested in capital assets. Of the remaining $72.7 million balance $24.2 million is restricted for other purposes leaving $48.5 million unrestricted.

As of June 30, 2013, the City’s total net position decreased by $5.8 million; representing a $9.9

million decrease in governmental activities and a $4.1 million increase in Business Type activities.

In 2012-13, as required by the Governmental Accounting Standard Board (GASB), governments are obligated to enhance the financial reporting of the fund balance categories. Fund balances are described and presented in Note 10 which details the classifications of the City’s new fund balance categories. The City’s governmental funds include the general, special revenue, debt service, and capital projects, with a combined ending fund balance of $41.1 million, a decrease of $1.1 million from the prior fiscal year. The decrease is primarily due to the loss of the Redevelopment Loan in the amount of $2.3 million which was accrued as the City disputes the findings and is pursuing litigation.

a) Approximately 25% of the amount ($10.1 million) is Nonspendable because the funds are

both legally and contractually required to be maintained and are not available or spendable such as advances and loans to other funds.

b) Approximately 42.5% of the amount ($17.5 million) is Restricted due to the constraints placed on the use of resources or imposed by law through constitutional provisions or enabling legislation. This includes capital projects and debt service payments.

c) Approximately 0.5% or $264,000 is assigned which are General fund encumbrances from

prior fiscal year.

d) Approximately 32% of the amount ($13.2 million) is Unassigned and available for spending in the future. These include Compensated Absences, Major Emergencies and Economic Uncertainties and funds that have deficit fund balances.

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OVERVIEW OF THE BASIC FINANCIAL STATEMENTS Management’s Discussion and Analysis gives an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The report also contains other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers a broad overview of the City’s finances, in a manner similar to statements of a private-sector business. The Statements are comprised of the Statement of Net Position and Statement of Activities and Changes in Net Position. The Statement of Net Position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over a period of time, increases or decreases in net position may serve as a useful indicator of changes in the City’s financial reporting. The Statement of Activities and Changes in Net Position presents information showing how the government’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave and other compensated absences). The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). Both of the above financial statements have separate sections for three different types of programs or activities. These three types of activities are: Governmental Activities - The activities in this section are mostly supported by taxes and charges for services. The governmental activities of the City include General Government, Public Safety, Engineering & Transportation, Recreation and Culture, Library, and Community Development. Business-Type Activities – These functions normally are intended to recover all or a significant portion of their costs through user fees and charges to external users of goods and services. The business-type activities of the City include the Water Pollution Control Plant, Environmental Services, Shoreline Enterprise, and Storm Water Utility. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

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Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial capacity. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for government funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These reconciliations are presented on the page immediately following each governmental fund financial statement. The City has twenty-four governmental funds, of which three are considered major funds for presentation purposes. Each major 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 two major funds include - the General Fund and the Affordable Housing Asset Fund. Individual fund data for each of the on-major governmental funds are provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General Fund, Affordable Housing Asset Fund and all non-major funds. Budgetary comparison statements are elsewhere in this report to demonstrate compliance with the adopted budget. Proprietary Funds - The City maintains two different types of proprietary funds, enterprise funds and internal service funds. Enterprise funds are used to report the functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its Water Pollution Control Plant, Shoreline, Storm Water Utility, and Environmental Services. Internal service funds are used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for the fleet of vehicles, building and facilities maintenance, insurance services and information systems. Because these services primarily benefit governmental rather than business-type functions, these are included within governmental activities in the governmental-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, but in great detail. The proprietary fund financial statements provide separate information for the entire City’s proprietary funds. Conversely, internal service funds are combined into a single, aggregated presentation in the proprietary financial statements. Individual fund data for the proprietary and internal service funds are provided in the form of combining statements elsewhere in the report. Fiduciary Funds – Fiduciary funds, consisting solely of trust and agency funds, are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the

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government-wide financial statements because the resources of these funds are not available to support the City’s own programs. The accounting used for these funds is much like that used for governmental funds. These funds are reported in a separate statement of fiduciary assets. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements follow the basic financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplemental information. This information includes budgetary comparison schedules, as well as more detailed information about the City’s agreement with the California Public Employees Retirement System (CalPERS) for the defined benefit pension plan.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS Net Position. As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. In the case of the City, total assets exceeded liabilities by $325.4 million at the close of fiscal year 2012-13, a decrease of $5.8 million.

Governmental Activities Business-Type Activities

2013 2012Amount change 2013 2012

Amount change 2013 2012

Amount change

Current Assets 62,938$ 66,191$ (3.3)$ 24,384 19,486$ 4.9$ 87,322$ 85,677$ 1.6$ Non-Current Assets 16,787 14,934 1.9 (1,529) (1,106) (0.4) 15,258 13,828 1.4 Capital Assets 271,213 283,137 (11.9) 56,406 39,716 16.7 327,619 322,853 4.8

Total assets 350,938 364,262 (13.3) 79,261 58,096 21.2 430,199 422,358 7.8

Current and other liabilities 16,120 17,868 (1.7) 7,533 4,882 2.7 23,653 22,750 0.9 Long-term liabilities 57,430 59,084 (1.7) 23,746 9,379 14.4 81,176 68,463 12.7 Total liabilities 73,550 76,952 (3.4) 31,279 14,261 17.0 104,829 91,213 13.6

Net position:Invested in capital assets,

net of related debt 219,702 251,253 (31.6) 32,979 30,737 2.2 252,681 281,990 (29.3) Restricted 24,162 29,895 (5.7) - - - 24,162 29,895 (5.7) Unrestricted 33,524 6,162 27.4 15,003 13,097 1.9 48,527 19,259 29.3 Total net position 277,388$ 287,310$ (9.9) 47,982$ 43,834$ 4.1 325,370$ 331,144$ (5.8)$

Total

City of San Leandro

Net Position at June 30, 2013

(in thousands)

By far the largest portion of the City’s net position (78%) reflects its investment in capital assets (e.g., infrastructure, land, buildings, machinery, and equipment), less any outstanding related debt used to acquire those assets. Because the City uses these capital assets to provide services to citizens, these assets are not available for future spending. Although the City investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay must be provided from other sources (future income), since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City’s net position, 7%, represents resources that are subject to external restriction on how they may be used. The remaining balance of $48.5 million or 15% represents unrestricted net position which may be used to meet the City’s ongoing obligations to citizens and creditors within the restrictions set forth by various funding sources. Total governmental activities assets decreased by $9.9 million compared to fiscal year 2011-12 for a combination of reasons. The reduction of $13.3 million in net capital asset due to the annual depreciation of assets and an increase of $2.2 million in sales tax are the major contributors to the change in the 2012-13 net position.

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The City’s total net position for both governmental and business-type activities decreased by $5.8 million during the current fiscal year. Information about changes in net position is presented in the summary schedule below:

City of San LeandroChanges in Net Position

Year Ended June 30, 2013(in thousands)

Amount Change

Amount Change Amount Change

2013 2012 2013 2012 2013 2012RevenuesProgram revenues: Charges for Services 13,736$ 12,201$ 1.5 14,813$ 14,896$ (0.1) 28,549$ 27,097$ 1.5 Operating grants and 5,673 5,585 0.1 - - - 5,673 5,585 0.1 contributions Capital grants and 7,216 11,416 (4.2) - - - 7,216 11,416 (4.2) contributions

General revenues: Property taxes 17,632 22,357 (4.7) - - - 17,632 22,357 (4.7) Sales tax 26,305 24,126 2.2 - - - 26,305 24,126 2.2 Franchise Fee 4,444 4,231 0.2 - - - 4,444 4,231 0.2 Utility users Tax 9,888 9,969 (0.1) - - - 9,888 9,969 (0.1) Property Transfer Tax 2,956 2,982 (0.0) - - - 2,956 2,982 (0.0) 911 communication 2,723 2,685 0.0 - - - 2,723 2,685 0.0 Access Tax Motor Vehicle License Fees 44 42 0.0 - - 44 42 0.0 Other taxes 591 556 0.0 360 323 0.0 951 879 0.1 Investment Earnings 919 1,099 (0.2) 210 142 0.1 1,129 1,241 (0.1) Gain or loss on sale of assets 394 3 0.4 - (1,290) 1.3 394 (1,287) 1.7 Extraordinary Items - 21,123 (21.1) - - - 0 21,123 (21.1) Miscellaneous 962 988 (0.0) 208 418 (0.2) 1,170 1,406 (0.2)

Total Revenues 93,483 119,363 (25.9) 15,591 14,489 1.1 109,074 133,852 (24.8)

Expenses General Government 13,167 10,239 2.9 - - - 13,167 10,239 2.9 Public safety 45,465 68,545 (23.1) - - - 45,465 68,545 (23.1) Engineering & Transportation 25,662 23,904 1.8 - - - 25,662 23,904 1.8 Recreation and Culture 11,586 9,894 1.7 - - - 11,586 9,894 1.7 Community Development 4,905 7,682 (2.8) - - - 4,905 7,682 (2.8) Interest on Long-Term Debt 2,548 2,318 0.2 - - - 2,548 2,318 0.2 Water Pollution Control - - - 7,500 8,396 (0.9) 7,500 8,396 (0.9) Shoreline - - - 1,862 1,848 0.0 1,862 1,848 0.0 Storm Water Utility - - - 979 920 0.1 979 920 0.1 Environmental Services - - - 1,175 1,222 (0.0) 1,175 1,222 (0.0)

Total Expenses 103,333 122,582 (19.2) 11,516 12,386 (0.9) 114,849 134,968 (20.1)

Excess(deficiency)of revenues over expenses before transfer (9,850) (3,219) (6.6) 4,075 2,103 2.0 (5,775) (1,116) (4.7) Transfer (72) 234 (0.3) 72 (234) 0.3 - - -

Increase in net assets (9,922) (2,985) (6.9) 4,147 1,869 2.3 (5,775) (1,116) (4.7) - - -

Beginning net position 287,310 290,295 (3.0) 43,835 41,966 1.9 331,145 332,261 (1.1) - - - Ending net position 277,388 287,310 (9.9) 47,982 43,835 4.1 325,370 331,145 (5.8)

Governmental Activities Business-Type Activities Total

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Revenues: Property tax shows a decrease of $4.7 million compared to the 2011-12 fiscal year mainly due to the

$5.3 million loss in Incremental Property Tax from the dissolution of the San Leandro Redevelopment Agency in January 2012. As discussed in the General fund section, property tax increased by $1.8 million (11.6%) from fiscal year 2011-12.

Sales tax revenue continues to increase. Compared to the 2011-12 fiscal year, sales tax grew by $2.2 million (9%) which can be attributed to the continued growth of consumer confidence in the city. Largest sales tax increases came from new and used vehicles and the parts to repair automobiles. However, manufacturing, sales of construction equipment, agricultural equipment and diesel truck engines were contributors as well.

The overall decrease of $24.8 million (18.5%) in 2012-13 is largely due to the prior fiscal year extra-

ordinary items accounted for the former Redevelopment Agency dissolution in the amount of $21 million.

Charges for services in Governmental activities are primarily fees for recreation, building, fire,

planning and engineering. The overall increase of $1.5 million is mainly due to the increase in building permits for community improvements which includes the new permit for Preferred Freezer with 247,462 square feet freezer storage to be used as a cold storage food warehouse.

Operating grants, capital grants and contributions include Federal and State grants and other governments and private contributions, including impact fees. Capital grants and contributions were lower by $4.2 million in 2012-13 for engineering projects.

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Program Expenditures: Overall, expenses, for both governmental and business type activities increased by $4.4 million compared to the prior fiscal year. Total program expenditures for governmental activities increased by 5% to $103 million in the current fiscal year. However, expenditures for business type activities decreased by $871,000 at Water Pollution Control Plant. For each governmental and business-type activity, the total costs are the expenses associated with that activity.

2013 2012Amount Change

General Government 13,167$ 10,239$ 2.93$ Public safety 45,465 68,545 (23.08) Engineering & Transportation 25,662 23,904 1.76 Recreation and Culture 11,586 9,894 1.69 Community Development 4,905 7,682 (2.78) Interest on Long-Term Debt 2,548 2,318 0.23 Governmental Activities 103,333 122,582 (19.25)

Water Pollution Control 7,500 8,396 (0.90)$ Shoreline 1,862 1,848 0.01 Storm Water Utility 979 920 0.06 Environmental Services 1,175 1,222 (0.05) Business Type Activities 11,516 12,386 (0.87)

Total Expenses 114,849$ 134,968$ (20.12)

(in thousands)Change in expense

General government expenses include City Council, City Clerk, City Manager, City Attorney,

Human Resources, Finance, and Information Technology departments. General government expenses increased by $3.3 million. The City accrued the Successor Agency Plaza loan in the amount of $2.3 million while the City disputes the finding and continues to pursue litigation. The other increases were due to critical positions that were vacant in fiscal year 2011-12 and were filled as needs arise in promoting new innovation and ideas for the cities future.

Public Safety expenses for both Police and Fire services decreased by $23.1 million from the prior

fiscal year due to the restatement discussed in Note 10E.

Community Development expenses include planning, building, housing neighborhood improvements, code enforcement, and economic development decreased by $3.3 million due to increased business development and housing services that were previously funded by the San Leandro Redevelopment Agency.

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Engineering and transportation expenses include professional engineering services for traffic and transportation, planning and design, administration and implementation of the City’s capital improvement program and technical support for various public improvements. Engineering and transportation expenses increased by $1.7 million compared to the prior year due to the increase in capital improvement projects for continued street rehabilitation around downtown BART area and Marina Blvd.

Recreation and culture expenses cover the operation and maintenance of Library, community

centers, pools as well as providing essential connection to people and their needs in the community and meeting the educational, cultural and informational needs of citizens of the City. Cost attributed to this function increased by $1.69 million from the prior year due to irrigation repairs and improvements at the Marina Park and the construction of a new park restroom.

Business-Type Activities. The City’s business-type activities include the Water Pollution Control Plant, Shoreline, Storm Water Utility and Environmental Services. Business-Type activities net position increased by $4.1 million from prior fiscal year due the continuation of the Water Pollution Control Plant expansion project funded by a loan from the State Water Resource Control Board. Expenses by Function - Business-Type Activities Revenues by Source – Business-Type Activities

FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. However, it should be noted that most of the unassigned amounts are designated by the City Council for specific uses.

Shoreline 16%

Storm Water Utility 9% Water

Pollution Control Plant

65%

Environmental Services

13%

Charges for Services

95%

Others 5%

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At the end of fiscal year 2012-13, the City’s governmental funds reported combined ending fund balances of $41 million, a decrease of $1.1 million in comparison with the prior year. Approximately 24.7% ($10.1 million) of the fund balance represents Non-Spendable; Restricted fund balance represents 42.5% or $17.5 million; Assigned fund balance of $265,000 and 32% or $13.2 million is Unassigned and is available for spending at the government’s discretion, this amount represents the General Fund Reserve balance. General Fund The General Fund, by definition, is a major governmental fund and represents all funds not required to be accounted for in other funds. The General Fund accounted for 86.6% of the total governmental revenues and 76.5% of the total expenditures. A number of primary City services are accounted for in the General Fund, including General government, public safety, development services, library and community services, and maintenance services. At the end of fiscal year 2012-13, the unassigned fund balance of the General Fund was $14.8 million, while the total fund balance was $25.3 million. As a measure of the General Fund’s liquidity, it may be useful to compare the unassigned fund balance to total of fund expenditures. The unassigned fund balance represents 18.5% of total General Fund expenditures of $80.3 million (including Transfers Out). The unassigned fund balance of $14.8 million has been designated for the following purposes:

$ 5.0 million for major emergencies

$4.9 million for economic uncertainty

$4.9 million for liquidity At the end of fiscal year 2012-13 the General Fund ending balance increased by $829,000 compared to prior fiscal year. General fund revenues increased by $3.9 million primarily due to the increase of $1.8 million (11.6%) in property tax plus an increase of $2.2 million (9%) in sales tax. These increases are good measurements of the economic improvement in the City. Although the General fund revenue for property and other taxes grew from the prior fiscal year, the loss of $6.5 million in property tax from the previous dissolution of the City of San Leandro Redevelopment Agency reflects a major impact to the City. The expenditures show a decrease of $17.8 million which is mainly due to the refunding of the Public Safety side fund in the amount of $18 million from previous fiscal year. However, except for that anomaly, the expenditures for fiscal year 2012-13 had a slight decrease compared to prior fiscal year which demonstrates fiscal responsibility in building back the fund balance of the City.

Affordable Housing Asset Fund - The Affordable Housing Asset Fund was established from the low/moderate housing activities from the former Redevelopment Agency’s Low/Moderate Housing Fund. At the end of 2012-13, the restricted fund balance is $469,000 an increase of $319,000. Non-major Governmental Funds - The City’s non-major funds are presented in the basic financial statements in the aggregate. At June 30, 2013, non-major funds had a total fund balance of $15.3 million of which all are legally restricted for specific purposes by external funding. More information about these aggregate non-major funds can be found in the combining statements immediately following the required supplementary information.

15

Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements but in greater detail. The total net position of the enterprise funds increased by $4.1 million, mainly reflected in the Water Pollution Control Plant’s net income of $3.8 million. Net position for internal service funds at June 30, 2013 amounted to $8.4 million, a loss of $330,000. Water Pollution Control Plant Enterprise Fund – The Water Pollution Control Plant Enterprise Fund was established to account for the City’s sewers, which protect public health and preserve water quality through collection, treatment, and disposal of wastewater and wastewater solids. As of June 30, 2013, the fund’s net position totaled nearly $49 million, an increase of $3.8 million (8.5%). The Water Pollution Control Plant completed a waste water rate study and increased fees by 5% and the reduction in operating expenditures due to some cost savings measures. Shoreline Enterprise Fund - The Shoreline Enterprise Fund was established in 2002-03 by combining the Marina Enterprise and the Golf Course Enterprise Funds. The fund accounts for the operation of recreational berthing, food service facilities, and the public golf course. As of June 30, 2013, the fund’s net position totaled ($2.5) million. The deficit has accumulated over many years and includes the transfer of golf course assets in 2003 pursuant to the City’s lease with American Golf Company. The deficit will be eliminated over the next several years through cost containment and revenue enhancement. GENERAL FUND BUDGETARY HIGHLIGHTS The General Fund had a net increase of General Fund revenues over the final budget projections of about $4.8 million, largely attributed to the increase in property and sales tax revenues. Current General Fund revenues grew 5% compared to the previous year. Actual revenues received totaled $80 million, an increase of 6% from the budgeted amount. As previously discussed, the increase in property and sales taxes positively impacted the City’s General Fund revenues. The City continues to be fiscally responsible and continues to maintain fiscal sustainability. The expenditures decreased by $17.8 million which is mainly due to the refunding of the Public Safety side fund in the amount of $18 million from previous fiscal year. However, except for that anomaly, the expenditures for fiscal year 2012-13 had a slight decrease compared to prior fiscal year which demonstrates fiscal responsibility in building back the fund balance of the city. Despite an increase in revenues, active management of expenditures allowed the General fund to end the fiscal year with net change of $829,000 compared to the $1.2 million loss from the prior fiscal year. Unemployment continues to remain moderately high and adversely impacts the labor market. There is a dynamic improvement in consumer confidence as seen in the increased property and sales tax revenues. There are encouraging developments in the City of San Leandro that paint a colorful picture of economic growth specifically with the new Kaiser Hospital, OSI broadband, and an increase in new industrial companies. It is important for the City to build the reserves that have been utilized in the past for future economic uncertainties.

16

Variance withfinal budget

Actual positive/Adopted Final (budget basis) (negative)

Revenue Property and other taxes 60,759$ 60,759$ 64,650$ 3,891$ Licenses and permits 6,021 6,021 6,015 (6) Fines and forfeitures 1,240 1,240 1,237 (3) Service charges 2,661 2,676 2,785 109 Intergovernmental 917 917 966 49 Use of money and property 1,051 1,051 919 (132) Interdepartment charges 2,002 2,002 2,002 - Other 447 544 1,414 870

Total Revenues 75,098 75,210 79,988 4,778

ExpendituresGeneral government 9,945 10,008 12,772 (2,764) Public safety 44,220 44,475 45,087 (612) Engineering and transportation 6,753 6,848 6,605 243 Recreation and culture 8,670 8,870 8,410 460 Community development 3,851 4,018 3,493 525

Debt Service:Principal 1,343 1,343 998 345 Interest and Fees 1,050 1,050 1,159 (109)

Total Expenditures 75,832 76,612 78,524 (1,912)

Total excess (deficiency of revenues) over expenditures (734) (1,402) 1,464 2,866

Other financing sources (uses) Transfers in - - - - Transfers out (257) (1,607) (1,607) - Issuance of capital lease - - 972 972 Total other financing sources (uses) (257) (1,607) (635) 972 Net change in fund balance (991)$ (3,009)$ 829$ 3,838$

CITY OF SAN LEANDROSummary Analysis of General Fund Budget, Fiscal Year 2012-13

(in thousands)

Budget Amounts

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental and business type activities as of June 30, 2013, amounts to $327 million (net of accumulated depreciation), a slight increase of $4.7 million. Investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress. Infrastructure assets are items that are normally immovable and of value only to the City such as roads, bridges, streets and sidewalks, drainage systems, lighting systems, and similar infrastructure. Major Capital asset activity during the current fiscal year included the following: Downtown Parking Garage and the Water Pollution Control Plant Expansion Projects.

17

The following is a summary of the City’s capital assets:

City of San LeandroCapital Assets (net of depreciation)

Year Ended June 30,2013(in thousands)

2013 2012 2013 2012 2013 2012Land $14,566 $14,367 5,234$ 5,234$ 19,800$ 19,601$ Construction in progress 10,691 8,326 36,770 22,485 47,461 30,811 Total non-depreciable assets 25,257 22,693 42,004 27,719 67,261 50,412

Depreciable asets (net of depreciation)Buildings 53,991 55,469 5,304 4,386 59,295 59,855 Improvements other than buildings 314 375 - - 314 375 Machinery and equipment 2,686 2,663 5,909 6,097 8,595 8,760 Licensed Vehicles 3,176 2,365 8 11 3,184 2,376 Infrastructure 185,789 199,572 3,181 1,503 188,970 201,075 Total depreciable assets 245,956 260,444 $14,402 $11,997 260,358 272,441

Total capital assets 271,213$ 283,137$ 56,406$ 39,716$ 327,619$ 322,853$


Additional information on the City’s capital assets can be found in Note 6 of the notes to the financial statements.

18

Debt Administration. At the end of the current fiscal year, the City’s total long-term debt outstanding is $48.9 million, a decrease of $1.6 million from the prior fiscal year. The net decrease reflects the new lease purchase of the fire truck equipment and refinancing of the 2003 Certificates of participation at the lower interest rate. Additional information on the City’s long-term debt obligations can be found in Note 7 of the notes to the financial statements. The following is a summary of the City’s outstanding debt:

City of San LeandroOutstanding Debt

Year Ended June 30,2013 (in thousands)

2013 2012 2013 2012 2013 2012

Revenue bonds and notes 26,468$ 18,305$ -$ -$ 26,468$ 18,305$ (backed by specific tax and fee revenues)Certificates of participation 19,250 29,515 - - 19,250 29,515 Other loans 3,218 3,153 23,228 8,979 26,446 12,132

Total 48,936$ 50,973$ 23,228$ 8,979$ 72,164$ 59,952$


ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The economy of the City and major initiative are discussed in the Transmittal Letter located in the Introductory Section of the CAFR. 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 for additional information should be addressed to the City of San Leandro, Finance Department, 835 East 14th Street, San Leandro, CA 94577.

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

City of San LeandroStatement of Net PositionJune 30, 2013

Governmental Business-TypeActivities Activities Total

ASSETSCurrent assets:

Cash and investments (Note 2) 50,530,754$ 20,363,726$ 70,894,480$ Cash and investments with fiscal agent (Note 2) 146,883 2,278,000 2,424,883 Receivables:

Property taxes 181,715 - 181,715 Accounts 11,441,606 1,709,010 13,150,616 Interest 161,896 31,237 193,133 Special assessments 98,227 - 98,227

Inventory and prepaid items 125,592 - 125,592 Other assets 251,137 1,871 253,008

Total current assets 62,937,810 24,383,844 87,321,654 Noncurrent assets:Loans receivable (Note 3) 13,216,472 - 13,216,472 Internal balances (Note 5) 1,529,165 (1,529,165) - Advances to Successor Agency (Note 5) 2,040,768 - 2,040,768

Capital assets (Note 6):Non Depreciable 25,257,045 42,004,511 67,261,556 Depreciable 476,025,884 24,753,573 500,779,457 Less accumulated depreciation (230,069,562) (10,352,198) (240,421,760) Capital assets, net 271,213,367 56,405,886 327,619,253 Total noncurrent assets 287,999,772 54,876,721 342,876,493 Total Assets 350,937,582 79,260,565 430,198,147

LIABILITIESCurrent liabilities:

Accounts payable and accruals: 9,902,794 4,529,148 14,431,942 Interest payable 257,484 86,320 343,804 Unearned revenue (Note 9): 2,021,854 394,694 2,416,548 Other liabilities: - 2,278,000 2,278,000 Compensated absences payable - due within one year (Note 8) 487,478 45,533 533,011 Claims and judgments payable - due within one year (Note 12) 1,170,645 - 1,170,645 Long-term debt - due within one year (Note 12) 2,279,333 198,842 2,478,175

Total current liabilities 16,119,588 7,532,537 23,652,125

Noncurrent liabilities:Deposits - 57,865 57,865 Compensated absences payable - due in more than one year (Note 8) 2,968,586 460,394 3,428,980 Claims and judgments payable - due in more than one year (Note 12) 5,527,479 - 5,527,479 Net OPEB (Note 15) 2,128,999 - 2,128,999 Long-term debt - due in more than a year (Note 7) 46,804,572 23,227,809 70,032,381

Total noncurrent liabilities 57,429,636 23,746,068 81,175,704 Total Liabilities 73,549,224 31,278,605 104,827,829

NET POSITION (Note 10)Net invested in capital assets 219,701,797 32,979,235 252,681,032 Restricted for:

Capital projects 3,996,299 - 3,996,299 Debt service 832,200 - 832,200 Engineering and transportation 7,949,042 - 7,949,042 Recreation and culture 8,842,705 - 8,842,705 Community Development 1,735,968 - 1,735,968 Public Safety 805,902 - 805,902

Total restricted 24,162,116 - 24,162,116 Unrestricted 33,524,445 15,002,725 48,527,170

277,388,358$ 47,981,960$ 325,370,318$

See accompanying Notes to Basic Financial Statements.

Total Net Position

23

City of San LeandroStatement of ActivitiesFor the year ended June 30, 2013

Indirect Operating CapitalExpenses Charges for Grants and Grants and

Functions/Programs Expenses Allocation Services Contributions Contributions Total

Primary government:Governmental activities: General government 13,166,855$ (281,735)$ 6,559,362$ -$ 877,556$ 7,436,918

Public safety 45,465,294 - 3,152,910 1,329,436 - 4,482,346 Engineering and transportation 25,662,305 281,735 737,259 1,512,019 4,474,625 6,723,903

Recreation and culture 11,586,223 - 1,679,546 478,973 1,863,933 4,022,452 Community development 4,904,402 - 1,606,679 2,352,501 - 3,959,180

Interest on long-term debt 2,548,119 - - - - -

Total governmental activities 103,333,198 - 13,735,756 5,672,929 7,216,114 26,624,799

Business-type activities:Water Pollution Control Plant 7,499,555 - 11,266,178 - - 11,266,178 Shoreline 1,861,532 - 1,846,750 - - 1,846,750 Storm Water Utility 978,816 - 1,086,070 - - 1,086,070 Environmental Services 1,175,257 - 614,213 - - 614,213

Total business-type activities 11,515,160 - 14,813,211 - - 14,813,211

Total primary government 114,848,358$ -$ 28,548,967$ 5,672,929$ 7,216,114$ 41,438,010$

General revenues:Taxes:

Property taxesSales taxesFranchise FeesUtility Users TaxProperty Transfer Tax911 Communication Access TaxMotor vehicle license fees (unrestricted)Other taxes

Total taxes

Investment earningsMiscellaneousGain or loss on sale of assets

Transfers (Note 5)

Total general revenues and transfers

Change in net position

Net position - beginning of year, as restated (Note 10E)

Net position - end of year


Program Revenues

24

Governmental Business-TypeActivities Activities Total

(5,448,202)$ -$ (5,448,202)$ (40,982,948) - (40,982,948) (19,220,137) - (19,220,137)

(7,563,771) - (7,563,771) (945,222) - (945,222)

(2,548,119) - (2,548,119)

(76,708,399) - (76,708,399)

- 3,766,623 3,766,623 - (14,782) (14,782) - 107,254 107,254 - (561,044) (561,044)

- 3,298,051 3,298,051

(76,708,399) 3,298,051 (73,410,348)

17,631,582 - 17,631,582 26,304,583 - 26,304,583

4,444,251 - 4,444,251 9,888,123 - 9,888,123 2,956,419 - 2,956,419 2,723,255 - 2,723,255

44,112 - 44,112 591,016 360,246 951,262

64,583,341 360,246 64,943,587

919,213 209,659 1,128,872 962,356 207,795 1,170,151 393,741 - 393,741 (72,135) 72,135 -

66,786,516 849,835 67,636,351

(9,921,883) 4,147,886 (5,773,997)

287,310,241 43,834,074 331,144,315

277,388,358$ 47,981,960$ 325,370,318$

Net (Expense) Revenue and Changes in Net Assets

25

FUND FINANCIAL STATEMENTS

Proprietary Fund Financial StatementsFiduciary Fund Financial Statements

Governmental Fund Financial Statements

GOVERNMENTAL FUND FINANCIAL STATEMENTS

The General Fund - Accounts for all general revenues of the City not specifically levied orcollected for other City funds and the related expenditures. The General Fund accounts for allfinancial resources of a governmental unit which are not accounted for in other funds.

Affordable Housing Asset Fund - This fund accounts for assets received from affordablehousing activities from the former Redevelopment Agency's Low/Moderate Housing Fund andacts as it's Successor Agency.

29

City of San LeandroGovernmental FundsBalance SheetJune 30, 2013

Affordable Non-MajorHousing Governmental

General Asset Fund Funds TotalASSETS

Cash and investments (Note 2) 20,354,040$ 466,559$ 17,661,756$ 38,482,355$ Cash and investments with fiscal agent (Note 2) - - 146,883 146,883 Receivables:

Property taxes 181,715 - - 181,715 Accounts 7,387,685 2,624 221,784 7,612,093 Federal, State, and local grants - - 3,244,392 3,244,392 Interest 52,562 854 83,228 136,644 Special Assessment 61,742 - 36,485 98,227 Loans (Note 3) 1,250,139 8,748,892 4,549,484 14,548,515

Due from other funds (Note 5) 2,073,461 - - 2,073,461 Other assets 10,785 - 239,948 250,733 Advances to other funds (Note 5) 8,106,392 - - 8,106,392 Advance to Successor Agency (Note 5) 2,040,768 - - 2,040,768

Total Assets 41,519,289$ 9,218,929$ 26,183,960$ 76,922,178$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable and accruals 8,805,333$ 74$ 795,391$ 9,600,798$ Due to other funds (Note 5) - - 2,073,461 2,073,461 Advances from other funds (Note 5) 5,577,227 - 1,150,000 6,727,227

Total Liabilities 14,382,560 74 4,018,852 18,401,486

DEFERRED INFLOW OF RESOURCES

Unavailable revenue - grants receivable - 2,075,328 2,075,328 Unavailable revenue - loans receivable - 8,748,891 4,789,088 13,537,979 Unavailable revenue - miscellaneous receivables 1,838,450 - 1,838,450

Total Deferred Inflow of resoruces 1,838,450 8,748,891 6,864,416 17,451,757

Fund Balances: (Note 10)

Nonspendable 10,147,160$ -$ -$ 10,147,160$ Restricted 50,000 469,964 16,947,282 17,467,246 Assigned 264,275 - - 264,275 Unassigned 14,836,844 - (1,646,590) 13,190,254

Total Fund Balances (Deficit) 25,298,279 469,964 15,300,692 41,068,935

Total Liabilities, Deferred Inflow of Resources and Fund Balances 41,519,289$ 9,218,929$ 26,183,960$ 76,922,178$


Major Funds

30

City of San LeandroReconciliation of the Governmental Funds Balance Sheet

with the Statement of Net AssetsJune 30, 2013

Total fund balances reported on the governmental funds balance sheet 41,068,935$

Amounts reported for Governmental Activities in the Statement of Net Assets aredifference from those reported in the Govbernmental Funds above because of the following:

CAPITAL ASSETS Capital assets used in governmental activities are not current financial resources andtherefore are not reported in the Governmental Funds Balance Sheet. 268,287,172

ALLOCATION OF INTERNAL SERVICE FUND NET ASSETSInternal service funds are used by management to charge the costs of certain activities toindividual funds. The assets and liabilities of the internal service funds are included ingovernmental activities in the Government-Wide Statement of Net Assets. 8,391,460

ACCRUAL OF NON-CURRENT REVENUES AND EXPENSERevenues which are deferred on the Fund Balance Sheet because they are not available currently are taken into revenue in the Statement of Activities, (Net allowance for uncollectableloans $1,332,043) 12,262,532

LONG-TERM ASSETS AND LIABILITIESThe assets and liabilities below are not due and payable in the current period and thereforeare not reported in the Funds:

NET OPEB Liability (2,128,999) Long-term Debt (49,083,905) Interest Payable (257,484) Compensated absences (3,226,681) Recognition of grants receivable 2,075,328

NET ASSETS OF GOVERNMENTAL ACTIVITIES 277,388,358$


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City of San LeandroStatement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the year ended June 30, 2013

Affordable Non-MajorHousing Governmental

General Asset Fund Funds Total

REVENUES:

Property and other taxes 64,650,124$ -$ 475,440$ 65,125,564$ Licenses and permits 6,014,499 - 468,403 6,482,902 Fines and forfeitures 1,237,354 - - 1,237,354 Service charges 2,784,752 - 45,897 2,830,649 Intergovernmental 966,454 - 8,266,666 9,233,120 Use of money and property 918,581 20,321 2,506,202 3,445,104 Interdepartmental charges 2,001,928 - - 2,001,928 Other 1,414,435 299,954 295,440 2,009,829

Total Revenues 79,988,127 320,275 12,058,048 92,366,450

EXPENDITURES:

Current:General government 12,771,955 - 221,223 12,993,178 Public safety 45,086,614 - 1,351,346 46,437,960 Engineering and transportation 6,605,096 - 7,944,989 14,550,085 Recreation and culture 8,409,590 - 1,864,906 10,274,496 Community development 3,493,089 1,233 816,872 4,311,194

Debt service:Principal 998,060 - 578,991 1,577,051 Interest and fees 1,159,417 - 1,446,344 2,605,761

Total Expenditures 78,523,821 1,233 14,224,671 92,749,725

REVENUES OVER (UNDER) EXPENDITURES 1,464,306 319,042 (2,166,623) (383,275)

OTHER FINANCING SOURCES (USES):Transfers in (Note 5) - - 577,000 577,000 Transfers (out) (Note 5) (1,606,599) - - (1,606,599) Issuance of DebtIssuance of long-term debt (Note 7) 971,090 - 8,883,000 9,854,090 Payment to escrow agent - - (9,817,009) (9,817,009) Issuance of Debt (Note 7)Premium from issuance of debt - - 298,315 298,315

Total Other Financing Sources (Uses) (635,509) - (58,694) (694,203)

NET CHANGE IN FUND BALANCES 828,797 319,042 (2,225,317) (1,077,478)

FUND BALANCES:

Beginning of year 24,469,482 150,922 17,526,009 42,146,413

End of year 25,298,279$ 469,964$ 15,300,692$ 41,068,935$


Major Funds

32

City of San LeandroReconciliation of the Net Change in Fund Balances - Total Government Funds with

the Statement of ActivitiesFor the year ended June 30, 2013

The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement ofRevenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and currentliabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in theStatement of Activities, whch is prepared on the full accrual basis.

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS (1,077,478)

Amounts reported in the governmental activities in the Statement of Activities are diffferent becauseof the following:

CAPITAL ASSET TRANSACTIONS

Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assetsis capitalized and allocated over their estimated useful lives and reported as depreciation expense. The capital outlay and other expenditures are therefore added back to fund balance. 5,257,770 Depreciation expense is deducted from the fund balance. The amount excludes the depreciation of $969,820 (15,731,793) Net retirements are deducted from fund balance (919,260)

ACCRUAL OF NON-CURRENT ITEMS

The amounts below included in the Statement of Activities do not provide or (require) the use ofcurrent financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Unearned Revenue (241,772) Long-term debt 1,577,051 Bond discount (12,383) Bond premium 393,794 Proceeds for the issuance of debt (9,854,090) Premium on the issuance of debt (298,315) Issuance of capital lease 9,817,009 Interest payable 36,287 Cost of issuance (138,134) Compensated absences 732,018 Net OPEB Liability (489,974) Grants receivable 1,117,000

ALLOCATION OF INTERNAL SERVICE ACTIVITY

Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds. The portion of the new revenue (expense) of these Internal Servic Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities. Change in Net Assets - All Internal Service Funds (89,613)

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES (9,921,883)$


33

Internal Service Funds - These funds are used to account for special activities and servicesperformed by a designated City department for other departments on a cost reimbursement basis.

PROPRIETARY FUND FINANCIAL STATEMENTS

Water Pollution Control Plant - This fund accounts for the City’s sewers which protect publichealth and preserve water quality through the collection, treatment and disposal of thecommunity’s wastewater and wastewater solids.

Shoreline - The City operates various recreational facilities which include golf and marinaberthing as well as providing food service facilities for the general public in an area connected tothe San Francisco Bay.

35

City of San LeandroStatement of Net PositionProprietary FundsJune 30, 2013

GovernmentalWater Non-Major Activities

Pollution Enterprise InternalControl Plant Shoreline Funds Total Service Funds

ASSETS

Current assets:Cash and investments (Note 2) 18,288,317$ 385,507$ 1,689,902$ 20,363,726$ 12,048,399$ Cash with Fiscal Agent (Note 2) 2,278,000 - - 2,278,000 - Receivables:

Accounts 1,363,850 216,305 128,855 1,709,010 585,121 Interest 35,144 303 (4,210) 31,237 25,252

Other assets 1,452 - 419 1,871 404 Inventory - - - - 125,592

Total current assets 21,966,763 602,115 1,814,966 24,383,844 12,784,768

Noncurrent assets:Loans receivable-

- - - - Advance to other fund (Note 5) 5,577,227 5,577,227 150,000 Capital assets (Note 6): Non-Depreciable 38,426,701 3,577,810 - 42,004,511 -

Depreciable 18,975,321 5,778,252 - 24,753,573 12,089,349 Less accumulated depreciation (7,376,530) (2,975,668) - (10,352,198) (9,163,154)

Total capital assets, net 50,025,492 6,380,394 - 56,405,886 2,926,195

Total noncurrent assets 55,602,719 6,380,394 - 61,983,113 3,076,195

Total Assets 77,569,482 6,982,509 1,814,966 86,366,957 15,860,963

LIABILITIES

Current liabilities:Accounts payable 4,458,406 30,849 39,893 4,529,148 541,996 Unearned revenue 382,130 - 12,564 394,694 - Interest payable - 86,320 - 86,320 - Other liabilities 2,278,000 - - 2,278,000 - Claims and judgments - due in one year (Note 12) - - - - 1,170,645 Compensated absences - due in one year (Note 8) 24,709 7,728 13,096 45,533 20,645 Notes payable - due in one year (Note 7) - 198,842 - 198,842 -

Total current liabilities 7,143,245 323,739 65,553 7,532,537 1,733,286

Noncurrent liabilities:Deposits payable 3,000 54,865 - 57,865 - Advances from other funds (Note 5) - 7,106,392 - 7,106,392 - Claims and judgments - due in more than one year (Note 12) - - - - 5,527,479 Compensated absences - due in more than one year (Note 8) 249,835 78,143 132,416 460,394 208,738 Notes Payable - due in more than one year (Note 7) 21,336,055 1,891,754 - 23,227,809 -

Total noncurrent liabilities 21,588,890 9,131,154 132,416 30,852,460 5,736,217

Total liabilities 28,732,135 9,454,893 197,969 38,384,997 7,469,503

NET POSITION (Note 10)

Invested in capital assets, net of related debt 28,689,437 4,289,798 - 32,979,235 3,076,195 Unrestricted 20,147,910 (6,762,182) 1,616,997 15,002,725 5,315,265

Total Net Position (Deficit) 48,837,347$ (2,472,384)$ 1,616,997$ 47,981,960$ 8,391,460$


Major Enterprise Funds

36

City of San LeandroStatement of Revenues, Expenses, and Changes in Fund Net PositionProprietary FundsFor the year ended June 30, 2013



OPERATING REVENUES:

Charges for services 10,612,343$ 533,156$ 1,394,688$ 12,540,187$ 11,675,767$ Licenses and permits 234,389 - 289,922 524,311 - Rents and concessions - 1,259,865 - 1,259,865 - Other operating revenues 419,446 53,729 15,673 488,848 268,523

Total Operating Revenues 11,266,178 1,846,750 1,700,283 14,813,211 11,944,290

OPERATING EXPENSES:Salaries and benefits 3,785,315 660,587 1,294,147 5,740,049 3,341,987 Contractual and other services 1,552,481 281,373 331,402 2,165,256 6,775,351 Materials and supplies 431,784 31,407 34,633 497,824 889,504 Depreciation 337,898 114,389 - 452,287 969,820 Other operating costs 1,392,077 311,888 493,891 2,197,856 1,276,060

Total Operating Expenses 7,499,555 1,399,644 2,154,073 11,053,272 13,252,722

OPERATING INCOME (LOSS) 3,766,623 447,106 (453,790) 3,759,939 (1,308,432)

NONOPERATING REVENUES (EXPENSES):Property and other taxes - 360,246 - 360,246 - Intergovernmental - - 207,795 207,795 - Investment income 209,526 133 - 209,659 21,355 Interest expense - (461,888) - (461,888) -

Total Nonoperating Revenues (Expenses) 209,526 (101,509) 207,795 315,812 21,355

INCOME BEFORE TRANSFERS 3,976,149 345,597 (245,995) 4,075,751 (1,287,077)

TRANSFERS:

Transfers in (Note 5) - - 338,917 338,917 977,464 Transfers (out) (Note 5) (132,782) - (134,000) (266,782) (20,000)

Total operating transfers (132,782) - 204,917 72,135 957,464

Change in net assets 3,843,367 345,597 (41,078) 4,147,886 (329,613)

NET POSITION (DEFICIT):

Net Position -Beginning of the year 44,993,980 (2,817,981) 1,658,075 43,834,074 8,721,073

Net Position End of the year 48,837,347$ (2,472,384)$ 1,616,997$ 47,981,960$ 8,391,460$



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City of San LeandroStatement of Cash FlowsProprietary FundsFor the year ended June 30, 2013



CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers 10,716,582$ 1,909,840$ 1,810,741$ 14,437,163$ 249,439$ Receipts from interfund charges - - - - 11,695,979 Cash payments to suppliers and service providers 547,093 (304,546) (387,670) (145,123) (7,864,627) Cash payments to employees for services (3,836,453) (649,145) (1,279,622) (5,765,220) (3,375,451) Cash payments to other funds for services provided (1,392,077) (311,888) (492,901) (2,196,866) (1,276,060)

Net cash provided (used) by operating activities 6,035,145 644,261 (349,452) 6,329,954 (570,720)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Property and other taxes received - 360,246 - 360,246 - Intergovernmental revenue received - - 207,795 207,795 - Interfund Loan 422,773 - - 422,773 (150,000) Transfers in from other funds - - 338,917 338,917 - Transfers out to other funds (132,782) - (134,000) (266,782) 957,464

Net cash provided (used) by noncapital financing activities 289,991 360,246 412,712 1,062,949 807,464

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Principal paid on capital debt - (190,280) - (190,280) - Acquisition of capital assets (17,141,951) - - (17,141,951) (439,594) Issuance of long-term debt 14,637,777 - - 14,637,777 - Interest payments on bonds and notes payable - (469,737) - (469,737) -

Net cash provided (used) by capital and related financing activates (2,504,174) (660,017) - (3,164,191) (439,594)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest income/(expense) 329,188 (170) 15,425 344,443 25,620

Net cash provided (used) by investing activities 329,188 (170) 15,425 344,443 25,620

Net increase (decrease) in cash and cash equivalents 4,150,150 344,320 78,685 4,573,155 (177,230)

CASH AND CASH EQUIVALENTS:Cash and investments beginning of year 16,416,167 41,187 1,611,217 18,068,571 12,225,629

Cash and investments at end of year 20,566,317$ 385,507$ 1,689,902$ 22,641,726$ 12,048,399$

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

Operating income (loss) 3,766,623$ 447,106$ (453,790)$ 3,759,939$ (1,308,432) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation expense 337,898 114,389 - 452,287 969,820 Changes in assets and liabilities: (Increase) decrease in accounts receivable (575,991) 73,559 110,458 (391,974) (19,084) (Increase) decrease in special assessment receivable 26,395 - - 26,395 - (Increase) decrease in inventories - - - - (1,163) (Increase) decrease in prepaid items (855) - 990 135 18,510 (Decrease) increase in accounts payable 1,049,213 8,234 (21,635) 1,035,812 176,192 (Decrease) increase in deposits payable - (10,469) - (10,469) -

(Decrease) increase in accrued liabilities - - - - - (Decrease) increase claims and judgements payable 1,483,000 - - 1,483,000 (373,099) (Decrease) increase in compensated absences (51,138) 11,442 14,525 (25,171) (33,464)

Total adjustments 2,268,522 197,155 104,338 2,570,015 737,712

Net cash provided (used) by operating activities 6,035,145$ 644,261$ (349,452)$ 6,329,954$ (570,720)$



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FIDUCIARY FUND FINANCIAL STATEMENTS

Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurementof results of operations. They are used to account for assets held in an agency capacity for othersand therefore cannot be used to support the City's programs.

Private Purpose Trust Funds are fiduciary fund types used to report all trust arrangements, otherthan those properly reported in pension trust funds or investment trust funds, under whichprincipal and income benefit individuals, private organizations, or other governments.

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City of San LeandroStatement of Fiduciary Net PositionFiduciary FundsJune 30, 2013

Agency Private PurposeFunds Trust Fund

ASSETS

Current assets:

Cash and investments (Note 3) 2,047,907$ 8,753,425$ Cash and investments with fiscal agents (Note 3) 448,960 6,963,245 Accounts Receivable 4,407 5,930 Interest Receivable - 15,686 Deferred Charges - 608,831 Other Assets - 68,327 Total current assets 2,501,274$ 16,415,444$

Noncurrent assets: Capital assets (Note 18)

Land Land - 2,949,885 Land held for resale - 2,170,000 Depreciable assets, net - 1,409,592 Total noncurrent assets - 6,529,477

Total Assets 2,501,274$ 22,944,921$

LIABILITIESCurrent Liabilities: Accounts payable 15,441$ 61,312$ Deposits payable 1,047,674 - Interest payable - 769,849 Advances from General Fund (Note18b) - 2,040,768 Long-term debt - due within one year (Note 18e) - 2,996,049 Due to bondholders 1,438,159 -

Other liabilities - 447,258 Total current liabilities 2,501,274$ 6,315,236$

Noncurrent Liabilities: Long-term debt - due in more than one year (Note 18e) 52,523,291 Total noncurrent liabilities 52,523,291

Total Liabilities 58,838,527$

NET POSITION Held in trust for private purpose (35,893,606)$


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City of San LeandroSuccessor Agency to the Redevelopment AgencyCombining Statement of Changes in Fiduciary Net PositionFor the year ended June 30, 2013

Private Purpose

Trust Funds

Additions:Property Taxes 7,194,965$ Use of money and property 29,730 Other Revenue 340,140

Total additions 7,564,835

Deductions: Community Development 12,776,465 Depreciation 34,282 Loss in value of land held for resale 3,980,000

Interest and Fees 2,776,957 AB1484 True Up Payment -

Total deductions 19,567,704

Change in net position (12,002,869)

NET ASSETS HELD IN TRUST

Net Position - beginning of year (as restated Note 10E) (23,890,737)

Net Position - End of Year (35,893,606)$


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City of San Leandro Index to Notes to Basic Financial Statements For the year ended June 30, 2013

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES ........................................................................................ 45 A. Financial Reporting Entity ............................................................................................................................. 45 B. Government-Wide Financial Statements ....................................................................................................... 46 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation ....................................... 46 D. Recognition of Interest Liability .................................................................................................................... 48 E. Use of Restricted and Unrestricted Net Assets .............................................................................................. 48 F. Cash, Cash Equivalents and Investments ....................................................................................................... 48 G. Inventory ........................................................................................................................................................ 49 H. Capital Assets ................................................................................................................................................. 49 I. Long-Term Debt ............................................................................................................................................. 50 J. Compensated Absences .................................................................................................................................. 50 K. Property Taxes ............................................................................................................................................... 50 L. Use of Estimates ............................................................................................................................................. 50 N. Implementation of New GASB Pronouncements .......................................................................................... 50

NOTE 2 - CASH AND INVESTMENTS................................................................................................................. 51 A. Cash Deposits ................................................................................................................................................. 51 B. Investments ..................................................................................................................................................... 52 NOTE 3 – LOANS RECEIVABLE ......................................................................................................................... 55 NOTE 4 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES................................................................. 56 NOTE 5 - INTERFUND TRANSACTIONS ........................................................................................................... 57 A. Fund Financial Statements – Interfund Receivables and Payables ................................................................ 57 B. Fund Financial Statements – Long Term Advances ...................................................................................... 57 C. Fund Financial Statements – Due from Successor Agency ........................................................................... 58 D. Fund Financial Statements – Transfers .......................................................................................................... 58 E. Fund Financial Statements – Internal Balances ............................................................................................. 59 NOTE 6 – CAPITAL ASSETS ................................................................................................................................. 59 A. Government-Wide Financial Statements ....................................................................................................... 59 B. Fund Financial Statements ............................................................................................................................. 61 NOTE 7 - LONG-TERM DEBT OBLIGATIONS ................................................................................................. 62 A. Governmental Activities Long-Term Debt .................................................................................................... 62 B. Long-Term Debt of Business-Type and Proprietary Funds ........................................................................... 65 C. Debt Covenants and Restrictions ................................................................................................................... 66

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NOTE 8 – COMPENSATED ABSENCES ............................................................................................................. 66 NOTE 9 – UNEARNED REVENUE ........................................................................................................................ 67 A. Government-Wide Financial Statements ....................................................................................................... 67 B. Fund Financial Statements ............................................................................................................................. 67 NOTE 10 – NET ASSETS AND FUND BALANCES ............................................................................................ 67

A. Net Assets ....................................................................................................................................................... 67 B. Fund Balances ................................................................................................................................................ 68 C. Encumbrances ................................................................................................................................................ 69 D. Contingency Arrangements ............................................................................................................................ 69 E. Beginning Net Position Restatement ............................................................................................................. 71 NOTE 11 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY ..................................................... 71

A. Fund Deficits .................................................................................................................................................. 71 B. Expenditures in Excess of Appropriations ..................................................................................................... 72

NOTE 12 - INSURANCE .......................................................................................................................................... 72 NOTE 13 - COMMITMENTS AND CONTINGENCIES ..................................................................................... 73 NOTE 14 - EMPLOYEE RETIREMENT PLANS ................................................................................................ 73 NOTE 15 – OTHER POST EMPLOYMENT BENEFITS ................................................................................... 75

A. Plan Description ............................................................................................................................................. 75 B. Funding Policy ............................................................................................................................................... 77 C. Plan Funded Status Information ..................................................................................................................... 77 D. Actuarial Methods and Assumptions ............................................................................................................. 77

NOTE 16 – JOINTLY GOVERNED ORGANIZATIONS ................................................................................... 78 NOTE 17 – SUCCESSOR AGENCY ACTIVITIES .............................................................................................. 78

A. Cash and Investments ..................................................................................................................................... 78 B. Advances from the City .................................................................................................................................. 79 C. Capital Assets ................................................................................................................................................. 80 D. Property Held for Resale ................................................................................................................................ 81 E. Long-Term Debt Obligations ......................................................................................................................... 82 F. Commitments and Contingencies ................................................................................................................... 87

City of San Leandro Notes to Basic Financial Statements For the year ended June 30, 2013

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of San Leandro, California, (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies in the United States. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Financial Reporting Entity The City of San Leandro, California (City) was incorporated in 1872 and is situated between the cities of Oakland and Hayward in the East Bay of the San Francisco Bay Area. The City operates under the Mayor-Council-Manager form of government created by charter in 1978 and provides the following services: public safety (police, fire, disaster preparedness and hazardous waste disposal), highways and streets, sanitation, health services, public improvements, planning and zoning and general administration services. The City is governed by a seven-member council elected by City residents. The City is legally separate and fiscally independent, which means it can issue debt, set and modify budgets and fees and sue or be sued. As required by generally accepted accounting principles, the financial statements include the financial activities of the City - the primary government - and its component units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The blended component units discussed below are included in the City of San Leandro’s basic financial statements in which the City Council functions as the governing board:

The City of San Leandro Parking Authority (Parking Authority) was established to issue debt for downtown parking structures and lots. There are no financial activities to be accounted for in the Parking Authority Debt Service Fund in this fiscal year. The San Leandro Public Financing Authority (Financing Authority) was established to issue debt for the Seismic Retrofitting capital project and other community related financing programs. The financial activities are accounted for in the San Leandro Public Financing Authority Debt Service Fund in the accompanying basic financial statements.

The above component units are included in the City’s basic financial statements using the blended method since the governing body of these component units are substantially the same as the governing body of the City and these component units provide services entirely to the City.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government–Wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its components units. For the most part, the effect of interfund activity has been removed from these statements except in the case of interfund services provided and used, which are not eliminated in the consolidation process. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to allocate indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements or a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government–wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. The City considers sales taxes and property taxes as available if they are collected within 60 days after year end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) Sales taxes, property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds:

The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Affordable Housing Asset Fund accounts for the low to moderate housing and neighborhood improvement program.

The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. The City also reports the following major proprietary funds:

Water Pollution Control Plant Fund accounts for the City’s sewers which protect public health and preserve water quality. Shoreline Fund accounts for various recreational facilities which include golf and marina berthing as well as providing food service facilities for the general public in an area connected to the San Francisco Bay.

A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements. The City’s Internal Service Funds account for Information Systems Management, Building Maintenance, Self-Insurance and Equipment Maintenance which provides service to other departments of the City on a cost reimbursement basis. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) The Fiduciary fund financial statements normally include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City's fiduciary funds represent a private purpose trust fund and agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. As a result, a statement of Changes in Fiduciary Net Position is not presented in this report. The City’s Fiduciary Funds includes the Deposits Fund which accounts for all deposits held on behalf of other persons and businesses and the Cherrywood Fund accounts for monies accumulated for payments of special assessment bonds. D. Recognition of Interest Liability In the government-wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for governmental fund types as wells as proprietary fund types. In the fund financial statements, the Governmental fund types do not recognize the interest payable when the liability is incurred. Interest on long-term debt is recorded in the fund statement when payment is made. Proprietary fund types recognize the interest payable when the liability is incurred. E. Use of Restricted and Unrestricted Net Position When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first. F. Cash, Cash Equivalents and Investments The City pools cash and investments from all sources, except the fiscal agent cash and investments, for the purpose of increasing income through investment activities. Interest income on investments is allocated on the basis of average month-end cash and investment balances in each fund. Cash and cash equivalents represent cash and investments and restricted cash and investments with an original maturity term of three months or less. Pooled cash and investments allocated to proprietary fund types are considered cash and cash equivalents since specific investments held in the City’s pooled cash and investments are not allocated to each fund. The City invests in the California Local Agency Investment Fund (“LAIF”), which is part of the Pooled Money Investment Account operated by the California State Treasurer. LAIF funds are invested in high quality money market securities and are managed to insure the safety of the portfolio. A portion of LAIF’s investments are in structured notes and asset-backed securities. LAIF determines fair value on its investment portfolio based on market quotations for these securities where market quotations are readily available, and on amortized cost or best estimate for those securities where market value is not readily available. In accordance with GASB Statement No. 31, highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Inventory Inventory is held for consumption and is valued at average cost. Internal service fund supplies consist of materials and supplies for the various City vehicles (tires, batteries, etc.) and building maintenance, which are used for replacement parts for vehicle service and to maintain City buildings. Information management service inventory consists of postage for department use and a monthly count is performed to adjust this account to actual at the appropriate month-end. H. Capital Assets Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated capital assets are valued at their estimated fair market value on the date donated. City policy has set the capitalization threshold for reporting capital assets at $5,000. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:

Buildings 50 years Improvements other than buildings 20 years Machinery and equipment 5-20 years Licensed Vehicles 7 years Infrastructure 20-50 years

In June 1999, the GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. In accordance with GASB Statement No. 34, the City included all infrastructures into the 2012-13 Basic Financial Statements. The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, sewer, and park lands. Each major infrastructure system can be divided into subsystems. For example the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost. For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. Original costs were developed in one of three ways: (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, un-recovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Long-Term Debt In Government-Wide Financial Statements, long-term debt and other financed obligations are reported as liabilities in the appropriate activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds Payable are reported net of the applicable premium or discount. Issuance costs are reported as deferred charges and amortized over the term of the related debt. In Fund Financial Statements long-term debt is not presented but is instead shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. J. Compensated Absences Vested vacation, sick leave, compensatory time, and related benefits are accrued as appropriate. For governmental funds, compensated absence obligations are recorded in the appropriate governmental funds when due. The portion not currently due is recorded in the government-wide financial statements. For enterprise funds, compensated absences are expensed when earned by employees. At year-end, the accrued but unpaid compensated absence obligations are recorded as current and non-current liabilities in the appropriate enterprise funds. K. Property Taxes Property taxes are liened on January 1st for the following fiscal year. Taxes are payable in two installments, due on November 1 and February 1, becoming delinquent on December 10 (for November) and April 10 (for February), respectively. The Alameda County Tax Collector bills and collects property taxes and allocates a portion to the City as billed. Property tax revenues are recognized in the fiscal year, for which the taxes have been levied, provided they become available. In January, 1994, the City elected to continue collection of interest and penalties on delinquent taxes and recognizes these revenues when available. Available means when due or past due and collected within the current period, or expected to be collected soon thereafter, and to be used to pay liabilities of the current period. L. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires City management to make estimates and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from those estimates. M. Implementation of New GASB Pronouncements

GASB Statement No. 60 – In November 2010, the GASB issued Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The objective of this Statement is to improve financial reporting by addressing issues related to service concession arrangements (SCAs), which are a type of public-private or public-public partnerships. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement had no impact on the City’s June 30, 2013 financial statements.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) GASB Statement No. 61 – In November 2010, the GASB issued Statement No. 61, The Financial Reporting Entity: Omnibus – an amendment of GASB Statements No. 14 and No. 34. The objective of this Statement is to improve financial reporting for a governmental financial reporting entity. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2012. This Statement had no material impact to the City’s financial statements. GASB Statement No. 62 – In December 2010, the GASB issued Statement No. 62, Codification of Accounting and Financial Reporting guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The objective of this Statement is to incorporate into the GASB’s authoritative literature certain accounting and financial reporting guidance that is included in the FASB and AICPA pronouncements, which does not conflict with or contradict GASB pronouncements. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement had no material impact to the City’s financial statements. GASB Statement No. 63 – In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement required certain financial statement titles and classification of fund equity to be changed in the financial statements for the fiscal year ending June 30, 2013. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement changed certain financial statement titles and nomenclature on the City’s financial statements for fiscal year ending June 30, 2013.

NOTE 2 - CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds, which the Finance Director invests to enhance interest earnings. The pooled interest earned is allocated to the funds based on average daily cash and investment balance in these funds. A. Cash Deposits The carrying amount of the City’s cash deposits were $5,584,296 at June 30, 2013. Bank balances before reconciling items were $5,364,691 at that date, the total amount of which was insured or collateralized with securities held by the pledging financial institutions in the City’s name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.


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NOTE 2 - CASH AND INVESTMENTS (Continued) The fair value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B. Investments

Under the provisions of the City’s investment policy, and in accordance with California Government Code, the City’s Cash and investments as of June 30, 2013, are classified as follows:

Statement of net assets:Cash and Investments $70,894,480Cash and Investments held by trustee 2,424,883 Fiduciary Funds:

Cash and Investments 10,801,332 Cash with fiscal agents 7,412,205

Total cash and investments $91,532,900

Cash and investments as of June 30, 2013, are classified as follows:Deposits with financial institutions $5,584,296Investments 85,948,604


Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, there is a greater sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flow from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide cash flow and liquidity needed for operations. In accordance with the Policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to 5 years or less. The City is in compliance with this provision of the Policy.


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NOTE 2 - CASH AND INVESTMENTS (Continued) Information about the sensitivity of the fair values of the City’s Investments to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investment by maturity:

Investment Type Fair Value 12 Months or

Less 13 to 24 Months

25 to 60 Months

$19,900,612 $3,193,605 $7,163,418 $9,543,589Money Market 22,256 22,256U.S. Treasury Notes 6,061,697 2,413,850 2,049,223 1,598,624Local Agency Investment Fund (LAIF) 46,321,747 46,321,747Commercial paper 673,913 673,913Corporate bonds 6,665,689 2,294,883 1,782,298 2,588,508Held by Bond Trustee: U.S. Treasury Money Market Funds 6,302,690 6,302,690

Total $85,948,604 $61,222,944 $10,994,939 $13,730,721

Federal agency securities

Investments Authorized by the City’s Investment Policy and California Government Code The table below identifies the investment types that are authorized for the City by the City’s Investment Policy. The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of the related bond documents.

Investment Type Maximum Maturity Maximum Percentage of *PortfolioU.S. Treasury Obligations 5 years NoneU.S. Agency Securities 5 years NoneLocal Agency bonds 5 years NoneBankers Acceptances 180 days 40%Commercial Paper 270 days 30%Negotiable Certificate of Deposit 5 years 30%Repurchase Agreements 1 year 20%Reverse Repurchase Agreements 92 days 20% of base valueMedium Term Notes 5 years 10%Mutual Funds N/A 20%Money Market Mutual Funds N/A 20%Mortgage Pass-Through Securities 5 years 20%County Pooled Investment Funds N/a NoneLocal Agency Investment Fund (LAIF) N/A $40 million per accountOther investment pools N/A None

*excluding amounts held by bond trustee that are not subject to California Government Code Investments in Local Agency Investment Fund The City invests in the Local Agency Investment Fund (LAIF), a State of California external investment pool. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available.


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NOTE 2 - CASH AND INVESTMENTS (Continued) The City valued its investments in LAIF as of June 30, 2013, at the market value. The fair value is calculated by multiplying the account balance with LAIF times a fair value factor of 1.0002732 which is determined by LAIF. This fair value factor was determined by dividing all LAIF participants’ total aggregate amortized cost by total aggregate fair value. The City’s investments with Local Agency Investment Funds (LAIF) at June 30, 2013, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following:

Structured Notes are debt securities (other than asset-backed securities) whose cash-flow

characteristics (coupon rate, redemption amount, or stated maturity) depend on one or more indices and/or that have embedded forwards or options.

Asset-backed Securities, the bulk of which are mortgage-backed securities, entitle their

purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as CMOs) or credit card receivables.

Concentration of Credit Risk The City’s Policy states that the investment portfolio shall be designed with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints and the cash flow characteristic of the portfolio. Purchases of mutual funds must not exceed 20% of the value of the portfolio. Investments in U.S. agencies exceed 5% of total portfolio, and Federal agency investments exhibited below exceeded 5% percent or more of the total investments in any one issuer:

U.S. AgenciesAmount Invested

Percentage of Investments

Federal Home Loan Banks (FHLB) $6,137,436 7.33%Federal Home Loan Mortgage Corporation 5,017,010 6.00%Federal National Mortgage Association (FNMA) 4,268,179 5.10%

Total $15,422,625 18.43%

Federal agency securities:

Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the Entity’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.


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NOTE 2 - CASH AND INVESTMENTS (Continued) The City’s policy requires that the management company of mutual funds must have attained the highest rating provided by not less than two of the three largest nationally recognized rating organizations.

Fair Minimum

Legal Exempt From Investment Type Value Rating Disclosure AA- AA+ Not Rated

Federal agency securities $19,900,612 N/A $19,900,612Money Market 22,256 N/A 22,256U.S. Treasury Notes 6,061,697 N/A $6,061,697Local Agency Investment Fund 46,321,747 N/A $46,321,747Commercial paper 673,913 A $673,913Corporate bonds 6,665,689 A 6,665,689Held by Bond Trustee: U.S. Treasury Money Market Funds 6,302,690 A 6,302,690Total $85,948,604 $6,061,697 $673,913 $32,891,247 $46,321,747

Rating as of Year End

Rating as of Year End

NOTE 3 – LOANS RECEIVABLE At June 30, 2013, the City had the following loans receivable reported in its Fund Financial Statements:

Governmental Funds:

General Fund $1,250,139

Special Revenue Funds:

Major Funds:

Affordable Housing Asset Fund 8,748,892

Non Major Funds:

Community Development Block Grant (CDBG) 773,949

HOME Fund 3,182,014

Housing In-Lieu 593,521

Total Governmental Funds 14,548,515

Less: Community Development Block Grant (CDBG) 718,675

Less: Affordable Housing Asset Fund 613,368 Total Government-Wide Financials $13,216,472

At June 30, 2013, the City was owed, in the General Fund, $139 for assistance to close escrow related to property acquisition. At June 30, 2013, the City was owed, in the General Fund, $1,250,000 for a loan made by the City to the San Leandro Unified School District related to property acquisition. The loan is for purchase of a property in the City that will be used to directly support the educational and administrative function of the District. The loan is evidenced by a promissory note with a term of 15 years and is to be repaid in full on August 1, 2028. The interest rates range from 1.5% to a maximum of 5%.


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NOTE 3 – LOANS RECEIVABLE (Continued) At June 30, 2013, the City was owed, in its Low/Moderate Asset Housing Fund, $8,748,892 which includes (1) loans made to the City property owners who meet the HUD requirements for financial assistance for property improvements and first time home buyer loans; (2) a loan made to Ruth Rogers and Sara Bagwell; (3) a loan made to Eden Housing, Inc.; (4) a loan made to San Leandro Senior Housing; (5) a loan made to Citizens’ Housing Corporation for property improvements; and (6) a loan made to Mercy Housing for the construction of the Casa Verde. Because the notes do not meet the City’s availability criteria for revenue recognition, the City has deferred the revenue related to these loans. Revenues are recognized in the year of repayment. Loans are secured by trust deeds. In the Government-Wide Financial Statement, $613,368 of the receivable was eliminated. At June 30, 2013, the City was owed, in its Community Development Block Grant Special Revenue Fund, $773,949 for various housing assistance loans made by the City. The terms of repayment vary. Because the notes do not meet the City’s availability criteria for revenue recognition, the City has deferred the revenue related to these loans. Revenue is recognized in the year of repayment. The loans are secured by trust deeds. In the Government-Wide Financial Statement, $718,675 of the receivable was eliminated. At June 30, 2013, the City was owed, in its HOME Special Revenue Fund, $3,182,014 for a housing assistance loan made by the City to Citizens’ Housing Corporation. The terms of repayment vary. Because the note does not meet the City’s availability criteria for revenue recognition, the City has deferred the revenue related to this loan. Revenue is recognized in the year of repayment. The loan is secured by trust deeds. At June 30, 2013, the City was owed, in its Housing In-Lieu Special Revenue Fund, $593,521 for a housing assistance loan made by the City to the Estabrook Senior Housing for low-moderate housing construction. The terms of repayment vary. Because the note does not meet the City’s availability criteria for revenue recognition, the City has deferred the revenue related to this loan. Revenue is recognized in the year of repayment. The loan is secured by trust deeds. NOTE 4 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.


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NOTE 5 - INTERFUND TRANSACTIONS A. Interfund Receivables and Payables At June 30, 2013, the City had the following short-term receivables and payables:

Receivable Fund Amount

General Fund Non-Major Governmental Funds $2,073,461

Total $2,073,461

Payable Fund

The City has recorded due to/due from all funds requiring cash at the end of June 30, 2012 to the funds that had deficit year-end balances which will be repaid back to the General Fund during the 2012-13 fiscal year. B. Long-Term Advances Long-term advances to be repaid out of future earnings or charges at June 30, 2013, consisted of:


General Non-Major Governmental Funds $1,000,000Enterprise Funds:

Shoreline 7,106,392

8,106,392

Internal Service Fund Non-Major Governmental Funds 150,000

Water Pollution Control Plant General Fund 5,577,227

Total $13,833,619

Payable Fund

The City Council authorized a loan to the Capital Improvement Project fund for the improvement project on Davis Street. The loan accrues interest annually at the pooled cash investment rate. The balance as of June 30, 2013, was $1,000,000. The City Council authorized loans to the Shoreline Enterprise Fund for capital improvements at the Marina and Golf Course. The loans are to be paid over 30 years with an annual interest accrual rate of 5%. Principal payments are made annually provided the fund has sufficient resources. The balance as of June 30, 2013, was $3,160,152 and $3,946,240 for the Marina and the Golf Course, respectively, for a total of $7,106,392. The City Council authorized a loan to the Public Education & Government Fund for the Council Chambers upgrade to provide televised meetings. The balance as of June 30, 2013, was $150,000. The City Council authorized loan to the General Fund from the Water Pollution Control Plant for the partial payment of the Public Safety Side Fund Obligation. The $6,000,000 loan was to pay-down the CalPERS Public Safety Side Fund with a long term adjustable rate of 4% or less annually for 13 years. The balance as of June 30, 2013, was $5,577,227.


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NOTE 5 - INTERFUND TRANSACTIONS (Continued) C. Due from Successor Agency The City Council authorized various loans to the Private Purpose Trust Fund from the General Fund for operating and capital improvement purposes. Interest accrues annually at the rate of 6%. The balance as of June 30, 2013, was $2,040,768. D. Transfers Transfers during the fiscal year ended June 30, 2013, comprised the following:

Governmental Funds Total

Water Internal Non-majorGeneral Pollution Service EnterpriseFund Control Plant Fund Funds

Special Revenue Fund $20,000 $20,000Capital Improvement Projects 537,000 $20,000 557,000

Internal Service Funds 977,464 977,464

72,135 $132,782 $134,000 338,917

Total $1,606,599 $132,782 $20,000 $134,000 $1,893,381

Transfers Out:Enterprise Funds

Transfer In:

Non-major Enterprise Funds

The City Council authorized transfers from the General Fund to various funds for fiscal year 2012-2013 to the following accounts and projects:

Special Grants Fund $20,000 Project Literacy Funding

Capital Improvement Fund 537,000 Capital Improvement Projects

Building Maintenance Fund 540,000 Building Capital Improvements

Self Insurance Fund 400,000 Settlement Payment

Information Technology 37,464 Permits System Replacement

Environmental Service Fund 72,135 Refuse Contract

$1,606,599


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NOTE 5 - INTERFUND TRANSACTIONS (Continued) E. Internal Balances

Internal balances are presented only in the government-wide financial statements. They represent the net interfund receivables and payables remaining after the elimination of all such balances within government and business-type activities.

NOTE 6 – CAPITAL ASSETS

A. Government-Wide Financial Statements At June 30, 2013, the City’s capital assets consisted of the following:

Governmental Business-Type

Activities Activities Total

Non-depreciable assets:Land $14,566,850 $5,234,310 $19,801,160Construction in Progress 10,690,195 36,770,201 47,460,396

Total non-depreciable assets 25,257,045 42,004,511 67,261,556

Depreciable assets:Buildings 73,780,162 11,012,283 84,792,445Improvements 4,951,451 113,416 5,064,867Machinery and Equipment 8,661,976 9,551,808 18,213,784Licensed Vehicles 9,479,338 84,923 9,564,261Infrastructure:

Park Irrigation Systems 3,720,181 3,720,181Medians Irrigation 10,145,502 10,145,502Park Structures 2,848,650 2,848,650Roadway 250,075,231 250,075,231Sidewalk 74,895,578 74,895,578Curb and Gutter 37,447,790 37,447,790

Underground Piping and Storm Drain 20,025 3,991,143 4,011,168 Total depreciable assets 476,025,884 24,753,573 500,779,457Less accumulated depreciation (230,069,562) (10,352,198) (240,421,760)

Total depreciable assets, net 245,956,322 14,401,375 260,357,697

Total capital assets $271,213,367 $56,405,886 $327,619,253


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NOTE 6 – CAPITAL ASSETS (Continued)

The following is a summary of capital assets for governmental activities:

Balance Additions and Deletions and Balance

July 1, 2012 Transfers Transfers June 30, 2013

Non-Depreciable Assets:Land $14,367,638 $475,542 ($276,330) $14,566,850Construction In Progress 8,325,712 2,668,110 (303,627) 10,690,195

Total Non-Depreciable Assets 22,693,350 3,143,652 (579,957) 25,257,045

Depreciable Assets:

Buildings 73,850,205 303,627 (373,670) 73,780,162

Improvements 4,951,451 4,951,451

Machinery and equipment 7,930,996 772,613 (41,633) 8,661,976

Licensed Vehicles 8,154,283 1,493,195 (168,140) 9,479,338

Infrastructure 379,152,957 379,152,957

Total Depreciable Assets 474,039,892 2,569,435 (583,443) 476,025,884

Accumulated Depreciation:

Buildings (18,380,887) (1,442,951) 34,877 (19,788,961)

Improvements (4,576,718) (61,609) (4,638,327)

Machinery and equipment (5,268,364) (748,481) 41,122 (5,975,723)

Licensed Vehicles (5,788,973) (666,050) 152,417 (6,302,606)

Infrastructure (179,581,423) (13,782,522) (193,363,945)

Total Accumulated Depreciation (213,596,365) (16,701,613) 228,416 (230,069,562)

Depreciable Assets, Net 260,443,527 (14,132,178) (355,027) 245,956,322

Total Governmental Activities

Capital Assets, Net $283,136,877 ($10,988,526) ($934,984) $271,213,367

Governmental activities depreciation expenses for capital assets for the year ended June 30, 2013, are as follows:

General Government $353,965

Public Safety 479,820

Transportation 13,019,632

Recreation and Human services 1,563,740

Community Development 314,636

Subtotal 15,731,793

Capital assets held by the City's Internal Service Funds 969,820

Total Depreciation Expense $16,701,613


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NOTE 6 – CAPITAL ASSETS (Continued) The following is a summary of capital assets for business-type activities:

Balance Additions and Deletions and BalanceJuly 1, 2012 Transfers Transfers June 30, 2013

Non-Depreciable Assets:Land $5,234,310 $5,234,310Construction in Progress 22,485,215 $17,091,382 ($2,806,396) 36,770,201

Total Non-Depreciable Assets 27,719,525 17,091,382 (2,806,396) 42,004,511

Depreciable Assets:Buildings 10,090,798 1,094,178 (172,693) 11,012,283Improvements 113,416 113,416Machinery and equipment 9,508,650 43,158 9,551,808Licensed Vehicles 84,923 84,923Infrastructure 2,271,514 1,719,629 3,991,143

Total Depreciable Assets 22,069,301 2,856,965 (172,693) 24,753,573

Accumulated Depreciation:Buildings (5,704,486) (175,933) 172,693 (5,707,726)Improvements (113,416) (113,416)Machinery and equipment (3,411,329) (232,097) (3,643,426)Licensed Vehicles (74,657) (2,666) (77,323)Infrastructure (768,716) (41,591) (810,307)

Total Accumulated Depreciation (10,072,604) (452,287) 172,693 (10,352,198)

Total Business-Type Activities Capital Assets, Net $39,716,222 $19,496,060 ($2,806,396) $56,405,886

B. Funds Financial Statements The Funds Financial Statements do not present General Government Capital Assets but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.


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NOTE 7 - LONG-TERM DEBT A. Governmental Activities Long-Term Debt Summary of changes in governmental activities long-term debt for the year ended June 30, 2013, follows:

Balance Balance Due within Due in moreGovernmental Activity Debt: June 30, 2012 Additions Retirements June 30, 2013 one year than one year

Certificates of Participation Bonds:2003 Certificates of Participation $9,490,000 ($9,490,000)2007 Certificates of Participation 20,025,000 (775,000) $19,250,000 $805,000 $18,445,000

Lease Revenue Bonds:2013 Refunding Lease Revenue Bonds

City portion $8,883,000 8,883,000 140,000 8,743,0002012 Taxable Pension Obligation Bonds 18,305,000 (720,000) 17,585,000 910,000 16,675,000

Total Governmental Activity Debt 47,820,000 8,883,000 (10,985,000) 45,718,000 1,855,000 43,863,000

Capital Leases:2010 Pumper Truck 287,790 (92,202) 195,588 95,881 99,7072011 Fire Truck 971,090 (185,858) 785,232 189,947 595,285

Total Capital Leases 287,790 971,090 (278,060) 980,820 285,828 694,992

Other DebtHUD 108 Loan - Guarantee Loan -

Senior Center 2,369,000 (131,000) 2,238,000 131,000 2,107,000

Total Other Debt 2,369,000 (131,000) 2,238,000 131,000 2,107,000

Total Government Activity Debt $50,476,790 $9,854,090 ($11,394,060) $48,936,820 $2,271,828 $46,664,992

Plus unamortized:

Discount (2007 TAB) ($38,483) $2,264 ($36,219) ($2,264) ($33,955)Discount (2012 POB) (120,158) 10,119 (110,039) (10,119) (99,920)Premium (2003 TAB) 388,822 (388,822)Premium (2013 RLRB) $298,315 (4,972) 293,343 19,888 273,455

Total General Long-term Obligations $50,706,971 $10,152,405 ($11,775,471) $49,083,905 $2,279,333 $46,804,572

2003 Certificates of Participation In 2003, the City issued $12,550,000 principal amount of 2003 Certificates of Participation (2003 COPs). The purpose of the 2003 COPs was to refund the City’s 1993 COPs and raise capital funds for a new aquatics center. The 2003 COPs bear interest rates ranging from 2.5% to 5.00% and are payable semiannually on each June 1 and December 1. Principal payments are payable annually on June 1. The COPs evidence fractional interests of the owners in lease payments to be made by the City for use and occupancy of the San Leandro City Hall. The 2003 COPs resulted in a present value of savings of $1,166,751 or 11.75% of the refunded bonds. Through a five-year extension of debt service on the outstanding COPs, the city was able to generate $2,750,000 of capital improvement funds and a slight reduction in the annual debt service payment. In fiscal year 2013, the City issued $8,883,000 principal amount of 2013 Refunding Lease Revenue Bonds (2013 RLRBs) and refunded the 2003 COPs. The outstanding principal amount of $9,490,000 for the 2003 COPs was defeased in fiscal year 2013.


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NOTE 7 - LONG-TERM DEBT (Continued) 2007 Certificates of Participation In 2007, the City issued $23,435,000 principal amount of 2007 Certificates of Participation (2007 COPs). The purpose of the 2007 COPs was to provide funds to refund the outstanding 1999 Certificates of Participation (Library and Fire Stations Project) of the City of San Leandro and the San Leandro Public Financing Authority. Interest rates vary from 4.00% to a maximum of 4.375% and are payable semiannually on each May 1 and November 1. Principal payments are payable annually on November 1. The COPs evidence fractional interest of the owners in lease payments to be made by the City for use and occupancy of San Leandro Libraries and San Leandro Fire Stations. At June 30, 2013, future debt service requirements for the 2007 COPs follows:

Ending June 30 Principal Interest Total

2014 $805,000 $792,219 $1,597,2192015 840,000 759,319 1,599,3192016 870,000 725,119 1,595,1192017 910,000 689,519 1,599,5192018 945,000 652,418 1,597,418

2019-2023 5,320,000 2,648,970 7,968,9702024-2028 6,535,000 1,399,627 7,934,6272029-2030 3,025,000 133,766 3,158,766

$19,250,000 $7,800,957 $27,050,957

The proceeds from the 1999 COP refunding issue were placed in irrevocable escrow account overseen by independent bank fiscal agents. The proceeds are generally invested in U.S. Treasury Securities, which together with earned interest, will provide amounts sufficient for future payment of interest, principal, and redemption premium on the defeased bond in the amount of $27,257,815. The escrow account is not included as assets of the City. The defeased bonds are excluded from the City’s long-term obligations because the arrangement satisfies requirements of defeasance. 2013 Refunding Lease Revenue Bonds In April 2013, the City issued $8,883,000 principal amount of 2013 Refunding Lease Revenue Bonds (2013 RLRB). The purpose of the 2013 RLRBs was to refund the City’s 2003 COPs and 2001 COPs. The 2013 RLRBs bear interest rates ranging from 2.0% to 5.00% and are payable semiannually on each June 1 and December 1. Principal payments are payable annually on December 1. The refunding of the 2003 COPs resulted in a present value of savings of $928,703 of the refunded bonds.


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NOTE 7 - LONG-TERM DEBT (Continued) At June 30, 2013, future debt service requirements for the City’s portion of the 2013 RLRB follows:

For The Year Ending June 30 Principal Interest Total

2014 $140,000 $351,737 $491,7372015 140,000 304,366 444,3662016 140,000 300,866 440,8662017 587,000 289,961 876,9612018 601,000 272,141 873,141

2019-2023 3,314,000 1,059,855 4,373,8552024-2028 3,961,000 412,792 4,373,792

$8,883,000 $2,991,718 $11,874,718

2012 Taxable Pension Obligation Bonds In 2012, the City issued $18,305,000 principal amount of 2012 Taxable Pension Obligation Bonds (2012 POB). The purpose of the 2012 POB is to save the City money, the interest rate, including the cost of issuance, must be significantly less than the interest rate the CalPERS charges to amortize the public safety side fund which is distinct from the City’s other CalPERS plans. Side funds are retired over a fixed term with a fixed amortization schedule based on CalPERS actuarial earnings assumption rate (7.75%). Principal is due annually on December 1 and the interest is due semi-annually on June 1 and December 1 through June 2024. Debt service is payable from available City resources. For fiscal year 2013, principal and interest paid was $1,615,144.

For The Year


2014 $910,000 $742,962 $1,652,9622015 1,120,000 729,404 1,849,4042016 1,210,000 708,124 1,918,1242017 1,305,000 678,236 1,983,2362018 1,415,000 636,868 2,051,868

2019-2023 9,240,000 2,144,156 11,384,1562024 2,385,000 132,127 2,517,127

$17,585,000 $5,771,877 $23,356,877

2010 Master Equipment Lease/Purchase Agreement On November 23, 2009, the City entered into a Lease/Purchase Agreement with Oshkosh Capital to Lease/Purchase Equipment in the amount of $461,717. The Equipment was for the Fire Department’s 2010 Triple Combination Pumper Truck. The interest rate is 3.99% payable in five (5) years.


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NOTE 7 - LONG-TERM DEBT (Continued) At June 30, 2013, future debt service requirements for the 2010 Master Equipment Lease Purchase Agreement follows:


2014 $95,881 $7,804 $103,6852015 99,707 3,978 103,685

$195,588 $11,782 $207,370

2011 Fire Truck Lease On November 9, 2011, the City entered into a Lease/Purchase Agreement with Oshkosh Capital to Lease/Purchase Equipment in the amount of $971,090. The Equipment was for the Fire Department’s 2010 Triple Combination Pumper Truck. The interest is 2.20% payable in five (5) years. At June 30, 2013, future debt service requirements for the 2012 Lease Purchase Agreement follows:


2014 $189,947 $17,275 $207,2222015 194,126 13,096 207,2222016 198,397 8,825 207,2222017 202,762 4,461 207,223

$785,232 $43,657 $828,889

HUD 108 Guarantee Loan In 2000, the City received a $1,000,000 20-year federal loan from Housing and Urban Development (HUD), at an interest rate of 5.6% to finance the acquisition and construction of affordable housing for seniors within the City of San Leandro. The loan is secured and payable from the Agency’s 20% Housing Set-Aside Fund. As of June 30, 2013 the outstanding loan balance of $496,000 and debt was assumed by the Successor Agency. Future debt service repayments will be made by the Successor Agency from the former Redevelopment Property Tax Trust Fund allocation (See Note 17). HUD 108 Guarantee Loan In 2011, the City received a $2,500,000 20-year federal loan from HUD, at an interest rate of 3% to finance the acquisition and construction of senior center facility within the City of San Leandro. The loan is secured and payable from the Community Development Block Grant Fund.


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NOTE 7 - LONG-TERM DEBT (Continued) At June 30, 2013 future debt service requirements for the HUD 108 Guarantee loan follows:

For The Year


2014 $131,000 $75,093 $206,0932015 131,000 73,037 204,0372016 131,000 70,417 201,4172017 131,000 67,233 198,2332018 131,000 63,584 194,584

2019-2023 659,000 253,523 912,5232024-2028 660,000 126,892 786,8922029-2030 264,000 11,604 275,604

$2,238,000 $741,383 $2,979,383

B. Long-Term Debt of Business-Type and Proprietary Funds Summary of changes in long-term debt of business-type and proprietary funds for the year ended June 30, 2013:

Balance Balance Due within Due in more thanJune 30, 2012 Additions Retirements June 30, 2013 one year one year

Marina Note $2,280,876 $190,280 $2,090,596 $207,791 $1,882,805State Water Resources

Control Board 6,698,278 $14,637,777 21,336,055 21,336,055

Total $8,979,154 $14,637,777 $190,280 $23,426,651 $207,791 $23,218,860

State Water Resources Control Board On August 4, 2011, the City entered into a Finance Agreement with the State Water Resources Control Board in the total principal amount of $43,000,000, for the purpose of financing the Wastewater System Expansion and Improvement Project. The loan bears an interest rate of 2.6%. Principal and interest payments are payable annually on July 1. The debt is secured by the WPCP Enterprise Fund operating revenues. At June 30, 2013, the City has drawn down $21.3 million from the State Water Resource Control Board and the remaining balance of $21.7 million is expected to be drawn down in fiscal year 2013-14. There was no debt service payment in fiscal year 2012-13, with the first debt service payment of $4.2 million due in fiscal year ending 2015-16. Future debt service is expected to average $3 million per year through fiscal year 2034-35 for a total $58.8 million.

Marina Cal Boating Notes Payable The City entered into various construction loan agreements with the California Department of Boating and Waterways in the total principal amount of $5,331,032. The loans bear an average interest rate of 4.50%. Principal and interest payments are payable annually on each August 1. The debt is secured by Shoreline Enterprise Fund operating revenues.


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NOTE 7 - LONG-TERM DEBT (Continued) At June 30, 2013, future debt service requirements for the Marina Cal Boating Notes Payable follows:


2014 $198,843 $94,167 $293,0102015 207,791 85,219 293,0102016 217,141 75,868 293,0092017 226,911 66,098 293,0092018 237,124 55,887 293,011

2019-2023 915,930 117,969 1,033,8992024-2027 86,856 10,217 97,073

$2,090,596 $505,425 $2,596,021

C. Debt Covenants and Restrictions For June 30, 2013, the City complied with all general and specific covenants regarding debt proceeds usage and debt repayment. In accordance with bond official statements, the City also maintained adequate reserves for all debt issues. NOTE 8 – COMPENSATED ABSENCES The City’s compensated absences consist of accrued vacation pay, sick leave, and accrued compensatory time. The total amount of the accrued liability is recorded in the Government-wide Financial Statements and charges for compensated absences expense is charged to the various program activities in the Governmental funds, primarily General fund and Internal Service funds, and all Proprietary funds. Summary of changes in compensated absences for the year ended June 30, 2013, follows:

Balance Balance Due within Due in moreJuly 1, 2012 Additions Retirements June 30, 2013 one year than one year

Governmental Activities $4,221,546 $530,507 ($1,295,989) $3,456,064 $487,478 $2,968,586Business-type Activities 531,098 56,933 (82,104) 505,927 45,533 460,394

Total $4,752,644 $587,440 ($1,378,093) $3,961,991 $533,011 $3,428,980


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NOTE 9 – UNEARNED REVENUE A. Governmental-Wide Financial Statements Unearned revenue in the Government-Wide Financial Statements represents amounts for which revenues have not been earned. At June 30, 2013, unearned revenues in the Government-Wide Financial Statements follows:

B. Fund Financial Statements

At June 30, 2013 the following deferred inflow of resources were recorded in the Fund Financial Statements because either the revenues had not been earned or the funds were not available to finance expenditures of the current period: Governmental Funds:

General Fund

Affordable Housing Asset

Fund Non-Major

Funds TotalAccounts receivable $1,838,450 $1,838,450

Grants receivable $2,075,328 2,075,328Long-term housing loans $8,748,891 4,605,683 13,354,574Special Assessments 183,405 183,405

Total $1,838,450 $8,748,891 $6,864,416 $17,451,757

NOTE 10 – NET POSITION AND FUND BALANCES A. Net Position Net Position is the excess of all the City’s assets and deferred outflows of resources over all its liabilities, and deferred inflows of resources regardless of fund. Net Position is divided into three captions. These captions apply only to Net Position, which is determined only at the Government-wide level, and are described below: Net investment in capital assets describes the portion of Net Position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted net position describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include capital projects, debt service requirements, and special revenue programs restricted to special revenue purposes such as Measure B, special Gas Tax, Grant funds, and other special revenue funds.

Governmental Activities Total

Unearned Revenue $2,021,854 $2,021,854


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NOTE 10 – NET POSITION AND FUND BALANCES (Continued) Unrestricted describes the portion of Net Position which is not restricted to use. B. Fund Balances

Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities. The City’s fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendable represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaid, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources. As of June 30, 2013, the City does not have committed fund balance. Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its City Manager. This category includes encumbrances; Nonspendable, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.


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NOTE 10 – NET POSITION AND FUND BALANCES (Continued)

C. Encumbrances

The City uses an encumbrance system as an extension of normal budgetary accounting for governmental funds. Under this system, purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of applicable appropriations. Encumbrances outstanding at year-end are recorded as restricted, committed or assigned fund balance, depending on the classification of the resources to be used to liquidate the encumbrance, since they do not constitute expenditures or liabilities. Outstanding encumbrances at year-end are automatically reappropriated for the following year. Unencumbered and unexpended appropriations lapse at year-end. Encumbrances outstanding as of June 30, 2013 were as listed below:

General Fund $264,275Non-major funds 7,343,806

Total $7,608,081

D. Contingency Arrangements The City’s annual budget requires the City to implement and maintain fund balance to handle any unforeseen contingencies in the future, rather than continued reliance on the City’s operating General Fund reserves. These unforeseen contingencies include Economic Uncertainty, major Emergencies and Contingencies. As of June 30, 2013, the following are reported within the unassigned fund balance of the General Fund:

Major Emergencies $5,000,000Economic Uncertainty 4,946,571 Other 4,423,439 Compensated Absences 466,834

Total $14,836,844


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NOTE 10 – NET POSITION AND FUND BALANCES (Continued) Detailed classifications of the City’s Fund Balances, as of June 30, 2013, are below:

Affordable Non-MajorGeneral Housing Governmental

Fund Asset Fund Funds Total

Nonspendables: Advances to Other Funds [Enter nonspendable item] $8,106,392 $8,106,392 Loan to Successor Agency [Enter nonspendable item] 2,040,768 2,040,768

Total Nonspendable Fund Balances 10,147,160 10,147,160

Restricted for: [Enter major restricted purpose] Internship 50,000 50,000

Affordable Housing $469,964 469,964 Subtotal 50,000 469,964 519,964

Debt Service [Enter major restricted purpose] Special Assessment District $65,231 65,231 San Leandro Public Financing Authority 690,783 690,783 -

Subtotal 756,014 756,014 Capital Projects

Capital Improvement Projects 3,980,626 3,980,626 GHAD 15,673 15,673 Subtotal 3,996,299 3,996,299

Non-Major Governmental Funds Street/ Traffic Improvements 1,159,594 1,159,594 Park Development Fees 410,066 410,066 Underground Utility 1,311,502 1,311,502 Parking [Enter major restricted purpose] 31,413 31,413 Special Gas Tax [Enter major restricted purpose] 2,309,345 2,309,345 Cherrywood Maintenance [Enter major restricted purpose] 295,829 295,829 Measure B - Paratransit [Enter major restricted purpose] 76,186 76,186 Asset Seizure [Enter major restricted purpose] 805,902 805,902 Heron Bay [Enter major restricted purpose] 742,988 742,988 Proposition 1B - Local Streets & Roads [Enter major restricted purpose] 55,068 55,068 Measure B 3,488,986 3,488,986 Measure F [Enter major restricted purpose] 829,658 829,658 CDBG 85,317 85,317 HOME [Enter major restricted purpose] 49,941 49,941 Housing In- Lieu 45,678 45,678 Business Improvement District 46,251 46,251 Public Education and Government [Enter major restricted purpose] 451,245 451,245

Subtotal [Enter major restricted purpose] 12,194,969 12,194,969

Total Restricted Fund Balances 50,000 469,964 16,947,282 17,467,246

Assigned to: [Enter major assignment purpose] Encumbrances [Enter major assignment purpose] 264,275 264,275

Total Assigned Fund Balances 264,275 264,275

Unassigned: General fund - Compensated Absences 466,834 466,834 General fund - Major Emergencies 5,000,000 5,000,000 General fund - Economic Uncertainty 4,946,571 4,946,571 General fund - Other 4,423,439 4,423,439

Special Grants Fund - Deficit (1,646,590) (1,646,590)

Total Unassigned Fund Balances 14,836,844 (1,646,590) 13,190,254

Total Fund Balances $25,298,279 $469,964 15,300,692 $41,068,935

Major Funds


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NOTE 10 – NET POSITION AND FUND BALANCES (Continued) E. Beginning Net Position Restatement

During fiscal year 2012-2013, the City made the following prior period adjustments and restated the beginning position as follows: During the current year, the City determined the previously reported $24,971,910 prepaid asset for CalPERS side fund payment, should have been recorded as an expense. Accordingly, beginning net position was reduced by $24,971,910. During the current year the City determined that the HUD 108 loan payable in the amount of $496,000 should have been transferred to the Successor Agency in prior year. As a result, beginning net position for the City was increased by $496,000. Beginning net position for the Successor Agency Private Purpose Trust Fund was reduced by $496,000. The City determined that in prior year, during transfer of capital assets to the Successor Agency Private-Purpose Trust Fund, the amount transferred in was overstated by $473,906. The results of these restatements are as follows:

Government-Wide Financial Statements

Governmental Activities Net Position As previously reported $311,786,151

Payment to CalPERs Safety Side Fund (24,971,910)Transfer of HUD 108 loan payable to Successor Agency 496,000

Beginning net position as restated $287,310,241

Fiduciary Funds Financial Statements

Private-Purpose Trust Funds As previously reported ($22,920,831)

Transfer of HUD 108 loan payable to Successor Agency (496,000)Capital asset transfer (473,906)

Beginning net position as restated ($23,890,737)

NOTE 11 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Fund Deficits At June 30, 2013, the following funds had fund balance deficit or net position deficit:

Shoreline Enterprise Fund $2,472,384 Special Grants Special Revenue Fund 1,646,590

At June 30, 2013, the Special Grants Fund had a deficit fund balance of $1,646,590. The deficit is due to the increase in expenditures and will be reviewed and controlled in the next fiscal year.


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NOTE 11 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. Expenditures in Excess of Appropriations Excess of expenditures over appropriations approved by the City Council occurred in individual funds during the fiscal year 2012-13 as follows:

Fund/Department Expenditure Appropriation Excess

General FundGeneral Government $12,771,955 $10,008,347 ($2,763,608)Public Safety 45,086,614 44,475,197 (611,417)Interest and Fees 1,159,417 1,049,722 (109,695)

Special Revenue FundsCherry Wood Maintenance District

Engineering and Transportation 437 (437)Asset Seizure

Public Safety 209,515 183,348 (26,167)Debt Service Funds

Special Assessment DistrictInterest and Fees 11,216 996 (10,220)

San Leandro Public Financing AuthorityGeneral Government 221,223 (221,223)Interest and Fees 1,358,594 1,298,319 (60,275)

NOTE 12 - INSURANCE The City provides workers’ compensation benefits under self-insurance programs. Claims outstanding, including claims incurred but not reported, are estimated and recorded as liabilities in the Self Insurance Internal Service Fund. The City’s self-insured retention limit for workers’ compensation is $250,000 per claim. The City is a member of the Local Agency Workers’ Compensation Excess Joint Powers Authority (LAWCX). This coverage includes a limit of $25 million for excess workers compensation and $4.75 million for employer’s liability. The City is a member of California Joint Powers Risk Management Authority (CJPRMA), which provides annual general liability coverage in an aggregate up to $40 million. The City is self-insured for the first $500,000 in property and liability losses. The City has had no settlements which exceed insurance coverage in the last five fiscal years, and no changes in insurance coverage from the prior year. The City’s deposits in the CJPRMA equal the ratio of the City’s payroll to the total payrolls of all entities participating in the same layer of each program in each program year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Estimated claims liabilities, as shown below, are presented on a basis of actuarial value as determined by the City’s actuary, who determines the expected value of the overall claim based upon certain criteria of the claim.


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NOTE 12 – INSURANCE (Continued) The following provides a reconciliation of claims and judgments:

Current Year Claims forLiability Claims and Payments in LiabilityBalance Changes in Current and Prior BalanceJuly 1 Estimates Fiscal Years June 30

2010-2011 $5,569,852 $5,339,930 ($2,978,689) $7,931,0932011-2012 7,931,093 1,219,327 (2,079,197) 7,071,223 2012-2013 7,071,223 4,316,045 ($4,689,144) 6,698,124

NOTE 13 - COMMITMENTS AND CONTINGENCIES The City participates in several Federal and State grant programs. These programs have been audited by the City’s independent accountants in accordance with the provisions of the Federal Single Audit Act as amended and applicable State requirements. No cost disallowances were proposed as a result of these audits. However, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. The City is a defendant in a number of lawsuits which have arisen in the normal course of business. While substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty. In the opinion of the City Attorney, these actions when finally adjudicated will not have a material adverse effect on the financial position of the City. As discussed in Note 12 to the Financial Statement, the City maintains a Self Insurance Fund which has reserves of $1,752,614 at the end of June 30, 2012. These reserves are available to satisfy any future liability.

NOTE 14 - EMPLOYEE RETIREMENT PLANS Plan Description - The City of San Leandro Miscellaneous Plan is an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. The City of San Leandro Safety Plan is in a cost-sharing multiple-employer plan which is a single plan with pooling (cost-sharing) arrangements for the participating employers. All risks, rewards, and costs, including benefit costs, are shared and are not attributed individually to the employers. A single actuarial valuation covers all plan members and the same contribution rate(s) applies for each employer. A menu of benefit provisions and other requirements are established by State statutes within the Public Employee’s Retirement Law. The City of San Leandro selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local resolutions. The City of San Leandro participates in separate Safety and Miscellaneous (Police, and Miscellaneous) Employee Plans.


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NOTE 14 - EMPLOYEE RETIREMENT PLANS (Continued) Funding Policy - Active plan members are required by state statute to contribute 8% for miscellaneous employees hired before January 1, 2010 and 9% for safety employees of their annual covered salary. The City makes the contributions required for most City employees on their behalf and for their account, which amounted to $2,568,172 for the year ended June 30, 2013. The city is required to contribute at an actuarially determined rate; the fiscal year 2012-13 rate for miscellaneous employees is 21.78%. As previously mentioned the safety fund is in a cost-sharing multiple-employer plan and the city’s current employer contribution rate required is 26.42% of annual covered payroll. In 2003-04, CalPERS combined the retirement plans for all public agencies with less than 100 active members to reduce the volatility of employer contribution rates. CalPERS also created for each member a side fund to amortize each agency’s June 30, 2003 unfunded liabilities, amortized over a closed period that depends on the plan date of entry into CalPERs. A negative side fund, which the city incurred at the time causes the required employer contribution rate to be increased by the amortization of the side fund. The safety side fund is distinct from the City’s other CalPERS plans and liabilities. The public safety side fund employer contribution rate is 22.63% which is amortized at 7.5% and scheduled to be fully amortized by June 30, 2024. The total required contribution rate in fiscal year 2012-13 for public safety is 49.04% of annual covered payroll for both side fund and multiple-employer plan, an increase of 5% from prior fiscal year. The safety side fund is distinct from the City’s other CalPERS plans. Side funds are retired over a fixed term with a fixed amortization schedule based on CalPERS actuarial earnings assumption rate (7.5%). The City’s plan has the side fund scheduled to be fully amortized by June 30, 2024. The City’s actuary has measured the amortization pay off of the side fund balance to amount to $24,000,000 as of June 30 2011. In March 2012, the City issued $18,305,000 taxable Pension Obligation Bonds to save the City money with lower interest rate significantly less than the interest rate the CalPERS charges to amortize the side fund. These bonds are not tax exempt under Federal regulations. The taxable bonds true interest cost rate was 4.72%, which is significantly less than the 7.75% charged by CalPERS, represents an expected savings over the life of the bonds. During fiscal year 2011-12, the City deposited $24,971,910 with CalPERS to pay off the side fund. The 13-year amortization period for the City’s side fund frames the savings opportunity being considered. Annual Pension Cost - For fiscal year 2012-13 the City’s annual pension costs of $6,798,060 for CalPERS was equal to the City’s required and actual contribution. The required contribution rate for the fiscal year 2012-13 was determined as a part of the June 30, 2012, actuarial valuation which used the entry age normal actuarial cost method with the contributions determined as a percent of pay. The actuarial assumptions included (a) 7.50% investment rate of return (net of administrative expenses); (b) projected salary increases that range from 3.30% to 14.20% for miscellaneous members, and from 3.30% to 14.20% for safety members; (c) an inflation component of 2.75%, and (d) 3% per year cost-of-living adjustments for retirees. The actuarial values of the Miscellaneous and Safety Plans’ assets were determined using a technique that smooths the effect of short-term volatility in the market value of investments over a three-year period. Initial unfunded liabilities are amortized over a closed period that depends on the plan’s date of entry into CALPERS. CalPERS unfunded actuarial accrued liability is being amortized at a fixed percentage of projected payroll. The remaining amortization period at June 30, 2013 was 16 years.


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NOTE 14 - EMPLOYEE RETIREMENT PLANS (Continued)

Annual PercentagePension Cost of APC

Fiscal Year (APC) Contributed

6/30/2011 $4,162,075 100%6/30/2012 4,106,138 100%6/30/2013 2,675,983 100%

Annual PercentagePension Cost of APC

Fiscal Year (APC) Contributed6/30/2011 $2,790,203 100%6/30/2012 3,598,318 100%6/30/2013 4,122,077 100%

Three-Year Information for City of San Leandro Safety Plan

Three-Year Information for City of San Leandro Miscellaneous Plan

NOTE 15 – OTHER POST EMPLOYMENT BENEFITS The City implemented the provisions of GASB 45. Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, in fiscal year 2008-09. This Statement establishes uniform financial reporting standards for employers providing postemployment benefits other than pension. The provisions of this Statement are applied prospectively and do not affect prior financial statements. Required disclosures are presented below. A. Plan Description The City’s defined benefit Other Post Employment Benefit (OPEB) Plan, which was established by City Council in fiscal year 2009-10 in accordance with GASB Statement No. 45, provides reimbursements to retirees for qualified expenses. Retirees who have at least ten years of service and meet certain criterion based upon retirement date, household income in the most recent calendar year and age are entitled to reimbursements for qualified expenses. Annual maximum reimbursement amounts differ depending on when an employee retired from City service. The majority of retirees may be eligible for a maximum of $4,320 in annual reimbursements. Amendments to benefit provisions are negotiated by various bargaining units at the City and must be approved by Council. In fiscal year 2008-09, the City established an irrevocable exclusive agent multi-employer benefit trust which is administered by Public Agency Retirement Services (PARS). The trust will be used to accumulate and invest assets necessary to reimburse retirees. Separate financial reports are issued by PARS for the OPEB plan. The report can be obtained by writing to PARS at 5141 California Avenue, Suite 150, Irvine, CA. 92617-069, or by calling 800-540-6369.


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NOTE 15 – OTHER POST EMPLOYMENT BENEFITS (Continued) B. Funding Policy Annual required contributions (ARC) are based upon actuarial valuations. The contribution requirements of the ARC are established and may be amended by the City Council. Plan members do not make contributions to the plan; the plan is funded entirely by the employer contributions. The City’s annual OPEB cost is calculated based upon the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation:

Annual required contribution $1,448,000Interest on net OPEB obligation 84,000 Adjustment to the annual required contribution (129,000) Annual OPEB cost 1,403,000 Less: Contributions made (913,026) Increase in net OPEB obligation 489,974 NET OPEB obligation - beginning year 1,639,025 NET OPEB obligation - end of year $2,128,999

The City’s annual OPEB cost, equal to the ARC, the percentage of OPEB cost contributed to the plan and the net OPEB obligation for 2013 and the preceding years were as follows:

Fiscal Year Ended June

30,Annual OPEB

CostContributions

Made

Percentage of Annual OPEB Cost

ContributedNet OPEB Obligation

2009 $1,791,000 $1,411,315 79% $379,6852010 1,870,000 1,359,742 73% 510,258 2011 1,387,000 920,415 66% 466,585 2012 1,452,000 1,169,503 81% 282,497 2013 1,403,000 913,026 65% 489,974

Total Net OPEB Obligation $2,128,999


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NOTE 15 – OTHER POST EMPLOYMENT BENEFITS (Continued) C. Plan Funded Status Information As of June 30, 2011, the latest valuation date, the funded status of the plan, was as follows:

Actuarial accrued liability (AAL) $17,281,000Actuarial value of plan assets 1,102,000 Unfunded actuarial accrued liability (UAAL) 16,179,000Funded ratio (actuarial value of plan assets/AAL) 6%Covered payroll (active plan members) 29,276,000 UAAL as percentage of covered payroll 55.3%

Actuarial Valuations

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual requires contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, present multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

D. Actuarial Methods and Assumptions Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and the plan members to the point. The methods assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the June 30, 2011 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions include 5.5% investment rate of return, compared to the City’s own year to date investment yield 1.37%. Assets in the plan are invested in a moderately conservative portfolio that will provide current income with capital appreciation as a secondary objective. A 3.0% general rate of inflation was used, as well as 3.25% aggregate payroll increases. The unfunded actuarial accrued liability (UAAL) is being amortized as a level percentage of projected payroll over a 30 year closed amortization period. There is no assumed post retirement benefit increase.

Healthcare costs trends utilized actual premium rates for 2013. Future years were reduced to an ultimate rate 5% for both HMO and PPO plans by 2021.

The CPI was assumed to be a constant at 3% per year. Assets in the plan will be invested in a moderately conservative money market portfolio that

will provide current income with capital appreciation as a secondary objective. 5.15% Investment rate of return (net of administrative expenses).


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NOTE 16 – JOINTLY GOVERNED ORGANIZATIONS The City of San Leandro participates in the East Bay Dischargers Authority established on February 15, 1974. The Agency Members of the Joint Powers are the City of Hayward, City of San Leandro, Oro Loma Sanitary District, Castro Valley Sanitary District, and Union Sanity District. The authority has the powers to plan for, acquire, construct, manage, maintain, operate, and control facilities for the collection, transmission, treatment, reclamation, sale and disposal of waste water. No debt, liability, or obligation of the Authority shall constitute a debt, liability or obligation of any Agency. The Authority is governed by the East Bay Dischargers Commission (Commission). The Commission consists of five members, one from each Agency. The ownership of the Joint Facilities is as follows: 18.6 %, City of San Leandro; 29.7% Oro Loma/Castro Valley; 33.0% City of Hayward; and 18.7% Union Sanitary District. The City’s shares of the expenses are recorded as expenses of the Water Pollution Control Fund.

NOTE 17 – SUCCESSOR AGENCY ACTIVITIES

A. Cash and Investments

Cash and Investments at June 30, 2013, consisted of the following:

Statement of net assets:Cash and Investments $8,753,425Cash and Investments held by trustee 6,963,245


The Successor Agency pools its cash and investment with the City in order to achieve a higher return on investment. Certain restricted funds, which are held and invested by independent custodians through contractual agreements, are not pooled. These restricted funds include cash with fiscal agents.


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued)

B. Advances from the City


General Successor Agency $2,040,768

$2,040,768

Payable Fund

Plaza Project Area General Fund Loan: On March 7, 2011, the former San Leandro Redevelopment Agency made a scheduled debt service payment of $171,761 in principal and $128,236 in interest for a loan due to the City of San Leandro General Fund from the Plaza Project Area. Subsequently, on March 7, 2011, the Executive Board of the former Agency authorized a payment of $2,137,273 to the City of San Leandro to retire the full remaining balance of this loan. The loan had an initial balance of $2,887,617 and was secured by a Promissory Note executed on December 5, 2002. Although the loan was made for legitimate redevelopment purposes and the repayment was consistent with the requirements of the Promissory Note, the State Department of Finance has asserted that these payments were not made for an approved enforceable obligation and that the funds must be remitted to the Alameda County Auditor-Controller. The City disputes this finding and is pursuing litigation to resolve this issue. If those efforts are unsuccessful, the possibility exists that the City could be required to return these funds to the Successor Agency. If the payments are ultimately reversed, the City, as a taxing entity itself, would receive approximately 12% of the funds. Joint Project Area General Fund Loan: On February 1, 2012, the date the former San Leandro Redevelopment Agency was dissolved, the Agency owed the City of San Leandro a balance of $2,040,767 on a loan made to the City of San Leandro – Alameda County (Joint ) Redevelopment Project Area. The loan had an initial balance of $4,372,774 and was secured by a Promissory Note executed on April 8, 2004. The balance due was included as an enforceable obligation on the Successor Agency’s Enforceable Obligation Payment Schedule (EOPS) and each subsequent Recognized Obligation Payment Schedule (ROPS). On April 11, 2012 the California Department of Finance (DOF) informed the Successor Agency of its objection to this item, citing a prohibition on agreements between RDA’s and their sponsoring cities. On May 10, 2012 the Successor Agency Oversight Board approved, by resolution, an Amended and Restated Promissory Note under the authority provided under California Health and Safety Code Section 34781 (a). Notification of this action was provided to the DOF on May 10, 2012. According to Health and Safety Code Section 34179 (h), the DOF had three business day to notify the Successor Agency if it elected to review this action and no such notification was provided. Nevertheless, the DOF has subsequently denied this loan. Therefore, it is not clear at this time if the loan obligation can be enforced. The Successor Agency is pursing litigation.


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued) LMIHF Balance / Housing Due Diligence Review: Pursuant to Health and Safety Code Section 34179.6 (c), the San Leandro Successor Agency submitted an Oversight Board approved Low and Moderate Income Housing Fund (LMIHF) Due Diligence Review (DDR) to the California Department of Finance (DOF) on October 12, 2012. The DDR found that the City, in its capacity as Housing Successor maintains a LMIHF balance of $3,923,774 and that those funds are fully encumbered through an Owner Participation Loan Agreement with Alameda Housing Associates. That Agreement, executed in April 2009, pledged $9.1million in former Redevelopment Agency funds to the completion of The Alameda, an affordable housing project in Downtown San Leandro. The DOF indicated in a November 7, 2012 letter that the Housing Successor is required to remit the entirety of the LMIHF balance to the Alameda County Auditor-Controller for redistribution to the taxing entities. This finding was based on a DOF determination from October 19, 2012 that the Alameda Housing Associates agreement does not constitute an enforceable obligation of the former Redevelopment Agency. The Successor Agency disagrees with this determination and has requested a meet-and-confer process with the DOF. No funds are required to be remitted pending the results of the meet and confer process. The Successor Agency initiated litigation to challenge the DOF determination and ultimately reached a favorable settlement. The DOF ultimately issued a letter on July 11, 2013 which recognized the validity of this obligation and allowing the Successor Agency to use the $3.9 million balance for its intended purpose of supporting the loan agreement. The Successor Agency will need to fund the remainder of the loan agreement using approximately $3 million for the Redevelopment Property Tax Trust Fund (RPTTF). Those expenditures have been approved by the DOF on the most recent Successor Agency ROPS submittals and all funds are expected to be on hand by January 2014.

C. Capital Assets

The Successor Agency assumed the capital assets of the former Redevelopment Agency as of February 1, 2012. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. The Successor Agency’s policy is to capitalize all assets with costs exceeding certain minimum thresholds and with useful lives exceeding two years.

All capital assets with limited useful lives are depreciated over their estimated useful lives. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the balance sheet as a reduction in the book value of capital assets.



BalanceJune 30, 2012 Balance

as restated Additions Deletions June 30, 2013

Non-depreciable Assets:Land $2,949,885 $2,949,885Land held for resale 6,150,000 ($3,980,000) 2,170,000

Total Non-depreciable Assets 9,099,885 (3,980,000) 5,119,885

Depreciable Assets:Buildings and Improvements 1,713,996 1,713,996

Total Depreciable Assets 1,713,996 1,713,996

Accumulated Depreciation:Buildings and Improvements (270,122) ($34,282) (304,404)

Total Accumulated Depreciation (270,122) (34,282) (304,404)

Depreciable Assets, Net 1,443,874 (34,282) 1,409,592

Total Private PurposeTrust Fund Activity

Capital Assets, Net $10,543,759 ($34,282) ($3,980,000) $6,529,477

D. Property Held For Resale

The Successor Agency assumed the property held for resale of the former Redevelopment Agency as of February 1, 2012. The former Redevelopment Agency had purchased parcels of land as part of its efforts to develop or redevelop blighted properties within the former Redevelopment areas. Such land parcels are accounted for at the lower of cost or net realizable value or agreed-upon sales price if a disposition agreement has been made with a developer. During the current fiscal year, the successor agency wrote down the value of the property held for resale to the amount of $2,170,000.

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E. Long-Term Debt Obligations At June 30, 2013, future debt service requirements for the Successor Agency were as follows:

Balance Debt assumed Balance Current June 30, 2012 From City Additions Retirements June 30, 2013 Portion

2001 Certificates of Participation $3,610,000 ($3,610,000)2002 Tax Allocation Bonds 12,385,000 (635,000) $11,750,000 $670,0002004 Tax Allocation Bonds 5,090,000 (115,000) 4,975,000 125,0002008 Tax Allocation Bonds 26,235,000 (510,000) 25,725,000 530,0002013 Refunding Lease Revenue Bonds

Successor Agency Portion $3,112,000 3,112,000 175,000Bayfair Mall Debt 200,000 (200,000)Owner Participation Agreements 2,008,746 (123,730) 1,885,016 95,000San Leandro USD - 9th Grade 988,288 (327,072) 661,216 327,072King Property Settlement 7,750,000 (1,000,000) 6,750,000 1,000,000HUD 108 Guarantee Notes

Affordable Housing $496,000 (63,000) 433,000 63,000

Total $50,517,034 $496,000 $10,862,000 ($6,583,802) $55,291,232 $2,985,072

Plus (Less) unamortized:Discount (2002 TAB) ($69,822) $4,107 ($65,715) ($4,107)Premium (2008 TAB) 182,612 (6,522) 176,090 6,522Premium (2013 LRRB) $119,874 (2,141) 117,733 8,562

Total Government Activity Debt $50,629,824 $496,000 $10,981,874 ($6,588,358) $55,519,340 $2,996,049 2001 Certificates of Participation In 2001, principal amount of $5,020,000 was issued for the Certificates of Participation (2001 COPs). The purpose of the 2001 COPs was to assist the Successor Agency of the City finance redevelopment activities within the Joint Project Area. The 2001 COPs bear interest rates ranging from 2.10% to 5.10% and are payable semiannually on each June 1 and December 1. Principal payments are payable annually on December 1. The 2001 Certificates of Participation were defeased with the issuance of the 2013 Refunding Lease Revenue Bonds.

2002 Tax Allocation Bonds In fiscal year 2004, the former Redevelopment Agency issued $15,935,000 principal amount of Tax Allocation Bonds (2002 TABs) to refund the 1993 Tax Allocation Bonds (1993 TABs) used to finance the redevelopment activities within the Plaza Project Area (which have been completed) and to finance new redevelopment projects as set forth in the former Redevelopment Plan. The bonds consist of serial bonds that mature annually through 2018 in amounts ranging from $305,000 to $860,000 and term bonds maturing in 2020 in the amount of $1,200,000, 2025 in the amount of $2,355,000 and 2033 in the amount of $3,520,000. Interest rates vary from 2.90% to a maximum of 6% and are payable semiannually on September 1 and March 1.


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued) The refunding of the outstanding 1993 TABs resulted in a present value loss of $70,679 or 1.1% of the principal amount of the refunded bonds. The nominal economic loss was necessary in order to raise the $8,015,000 of new money that was generated through the financing. Because of a prohibitively high additional bonds test on the 1993 TABs (225%) it was necessary to refund the outstanding bonds in order to most efficiently raise the new money. According to the analysis completed by the City’s financial advisor, the Agency raised $321,000 more through using the refunding than they could have raised using a subordinate lien new money only issue. At June 30, 2013, future debt service requirements for the 2002 Tax Allocation Bonds were as follows:


2014 $670,000 $663,482 $1,333,4822015 705,000 627,380 1,332,3802016 745,000 588,583 1,333,5832017 790,000 546,348 1,336,3482018 835,000 500,430 1,335,430

2019-2023 2,510,000 1,566,016 4,076,0162024-2028 2,410,000 1,291,966 3,701,9662029-2033 3,085,000 545,850 3,630,850

$11,750,000 $6,330,055 $18,080,055

2004 Tax Allocation Bonds In 2004, the City issued $5,500,000 principal amount of 2004 Tax Allocation Bonds (2004 TABs). The purpose of the 2004 TABs was to assist the former Redevelopment Agency of the City finance redevelopment activities within the West San Leandro/MacArthur Boulevard former Redevelopment Project Area of the City. The 2004 TABs bear interest rates ranging from 5.00% to 5.75% and are payable semiannually on each March 1 and September 1. Principal payments are payable annually on September 1. The debt is secured and payable from the tax increment revenues from the West San Leandro/MacArthur Boulevard former Redevelopment Project area within the City. At June 30, 2013, future debt service requirements for the 2004 Tax Allocation Bonds were as follows:


2014 $125,000 $271,056 $396,0562015 130,000 263,887 393,8872016 140,000 256,637 396,6372017 145,000 249,337 394,3372018 155,000 241,760 396,760

2019-2023 890,000 1,077,917 1,967,9172024-2028 1,150,000 806,217 1,956,2172029-2033 1,510,000 436,226 1,946,2262034-2035 730,000 42,550 772,550

$4,975,000 $3,645,587 $8,620,587


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued) 2008 Tax Allocation Bonds In 2008, $27,530,000 principal amount of 2008 Tax Allocation Bond (2008 TABs) was issued. The purpose of the 2008 TABs was to provide funds to finance capital projects in the Alameda County-City of San Leandro former Redevelopment Project Area. A portion of the 2008 TABs were used to finance projects that meet the goals and objectives set forth in the former Redevelopment Plan. These include, but not limited to, design and construction of a senior center, a proposed parking garage, and infrastructure improvements on East 14th Street. Interest rates vary from 4.70% to a maximum of 5.00% and are payable annually. Principal payments are payable annually on November 1.

At June 30, 2013, future debt service requirements for the 2008 Tax Allocation Bonds were as follows:


2014 $530,000 $1,314,438 $1,844,4382015 550,000 1,287,438 1,837,4382016 570,000 1,259,437 1,829,4372017 595,000 1,230,313 1,825,3132018 620,000 1,199,938 1,819,938

2019-2023 3,530,000 5,510,907 9,040,9072024-2028 4,440,000 4,546,019 8,986,0192029-2033 5,715,000 3,257,790 8,972,7902034-2038 7,445,000 1,513,485 8,958,485

2039 1,730,000 46,710 1,776,710$25,725,000 $21,166,475 $46,891,475

2013 Refunding Lease Revenue Bonds

In 2013, the City issued $11,995,000 principal amount of 2013 Refunding Lease Revenue Bonds (2013 RLRB) was issued. The purpose of the 2013 RLRBs was to refund the 2003 COPs and 2001 COPs. The 2013 RLRBs bear interest rates ranging from 2.0% to 5.00% and are payable semiannually on each June 1 and December 1. Principal payments are payable annually on December 1. The refunding resulted in a present value of savings of $1,348,397 or 11.24% of the refunded bonds. Through a five-year extension of debt service on the outstanding COPs, $2,750,000 of capital improvement funds and a slight reduction was generated in the annual debt service payment. At June 30, 2013, future debt service requirements for the Successor Agency’s portion of the 2013 Refunding Lease Revenue Bonds were as follows:


2014 $175,000 $116,174 $291,1742015 175,000 97,790 272,7902016 175,000 93,415 268,4152017 203,000 87,745 290,7452018 204,000 81,640 285,640

2019-2023 1,131,000 305,375 1,436,3752024-2027 1,049,000 88,683 1,137,683

$3,112,000 $870,822 $3,982,822


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued) Bay Fair Mall Debt with Agency Commitment On June 15, 1998, the City committed $4,000,000 to renovate the Bayfair Mall. This debt had 0% interest and has installments ranging between $200,000 and $400,000 per year over a 15 year period beginning in July 1998. During the current year the Bay Fair Mall Debt was retired in full.

Owner Participation Agreements with Agency Commitment The Agency entered into the following agreements which represent contingency liabilities for the Agency:

Balance Balance June 30, 2012 Retirements June 30, 2013

Ford Motor Company $2,008,746 ($123,730) $1,885,016

Total $2,008,746 ($123,730) $1,885,016

Ford Motor Company Owner Participation Agreement - The agreement required the Agency to make annual payment equivalent to 50% of the sales tax generated above a base of $277,000 by the sale of vehicles as part of the Ford Store San Leandro development. The amount due is paid over several years depending on the volume of auto sales at no interest. 2009 San Leandro Unified School District In February 2009, the City entered into a joint use agreement with the San Leandro Unified School District which provides for the City use of the 9th grade gymnasium during non-school hours and the San Leandro former Redevelopment Agency (Agency) agreed to provide for financial contribution to the project from the Agency in the amount of $2,170,800 with no interest payable by June 30, 2017. During the fiscal year ended June 30, 2010, annual payments for the 2009-10 and 2010-11 fiscal years were reduced from $327,072 to $160,000 as a consequence of the State SERAF requirement, consistent with the terms of the financing agreement between the Agency and the school district. Assuming no additional payments are required by the State in subsequent years, the terms of the agreement was extended to Fiscal 2019 with payments at $167,072 each fiscal year beginning fiscal year 2015.

For The Year Ending June 30 Principal

2014 $327,0722015 327,0722016 7,072

$661,216


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NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued) King Property Settlement The Successor Agency of the former Redevelopment Agency of the City of San Leandro had agreements with the King parties who are owners of a 3.7 acre parcel on East 14th Street which is a portion of the Bayfair Shopping Center. The King had demanded payment from the Successor Agency of the City of San Leandro as a guarantor of the lease payments. During the fiscal year 2013, the Successor Agency entered into a settlement in the amount of $7,750,000. At June 30, 2013, future debt service requirements for the 2013 King Property Settlement were as follows:

For The Year Ending June 30 Principal

2014 $1,000,0002015 1,500,0002016 1,500,0002017 1,500,0002018 1,250,000

$6,750,000

HUD 108 Guarantee Notes In 2000, the City received a $1,000,000 20-year federal loan from Housing and Urban Development (HUD 108 Guarantor loan), at an interest rate of 5.6% to finance the acquisition and construction of affordable housing for seniors within the City of San Leandro. The loan is secured and payable from the Agency’s 20% Housing Set-Aside Fund. The debt was assumed by the Successor Agency. Future debt service payments for the HUD 108 Guarantee loan were as follows:


2014 $63,000 $10,232 $73,2322015 63,000 9,243 72,2432016 63,000 7,983 70,9832017 63,000 6,452 69,4522018 63,000 4,697 67,697

2019-2020 118,000 3,706 121,706$433,000 $42,313 $475,313


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F. Commitments and Contingencies Cornerstone at San Leandro Crossings The Cornerstone at San Leandro Crossings, a 200-unit affordable rental housing project which was developed by the nonprofit BRIDGE Housing Corporation, proposal in the San Leandro Crossings development. The former Redevelopment Agency approved a development loan of $9.1 million in Set-Aside Funds in April 2009. Due to unforeseen factors beyond the developers’ control, the Cornerstone was delayed in April 2011. BRIDGE is expected to apply for low income rental housing tax credits from the State $22 million grant funds are expected from the state to complete this project.

REQUIRED SUPPLEMENTARY INFORMATION

City of San LeandroRequired Supplementary InformationFor the year ended June 30, 2013

1. BUDGETS AND BUDGETARY ACCOUNTING

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Major FundGeneral Fund

Over/(Under)Variance with

Adopted Final Actual Final Budget

REVENUES:

Property and other taxes 60,759,000$ 60,759,000$ 64,650,124$ 3,891,124$ Licenses and permits 6,020,560 6,020,560 6,014,499 (6,061) Fines and forfeitures 1,240,000 1,240,000 1,237,354 (2,646) Service charges 2,661,000 2,675,568 2,784,752 109,184 Intergovernmental 917,255 917,255 966,454 49,199 Use of money and property 1,051,455 1,051,455 918,581 (132,874) Interdepartment charges 2,002,140 2,002,140 2,001,928 (212) Other 447,000 544,162 1,414,435 870,273

Total Revenues 75,098,410 75,210,140 79,988,127 4,777,987

EXPENDITURES:

Current:General government 9,945,231 10,008,347 12,771,955 (2,763,608) Public safety 44,219,695 44,475,197 45,086,614 (611,417) Engineering and transportation 6,753,419 6,847,586 6,605,096 242,490 Recreation and culture 8,670,190 8,869,963 8,409,590 460,373 Community development 3,851,125 4,017,744 3,493,089 524,655

Debt service:Principal 1,343,061 1,343,061 998,060 345,001 Interest and fees 1,049,722 1,049,722 1,159,417 (109,695)

Total Expenditures 75,832,443 76,611,620 78,523,821 (1,912,201)

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (734,033) (1,401,480) 1,464,306 2,865,786 OTHER FINANCING SOURCES (USES):Transfers (out) (257,135) (1,606,599) (1,606,599) - Issuance of capital lease - - 971,090 971,090

Total other financing sources (uses) (257,135) (1,606,599) (635,509) 971,090

NET CHANGE IN FUND BALANCE (991,168) (3,008,079) 828,797 3,836,876 FUND BALANCES:Beginning of year 24,469,482

End of year 25,298,279$

Budgeted Amounts

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City of San Leandro Required Supplementary Information For the year ended June 30, 2013

91

1. BUDGETS AND BUDGETARY ACCOUNTING The City adopts a budget annually for all governmental fund types. This budget is effective July 1 for the ensuing fiscal year. From the effective date of the budget, which is adopted and controlled at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year. The City Manager is authorized to transfer budgeted amounts between departments and line items within any fund; however, any revisions which alter the total expenditures of any fund must be approved by the City Council. Transfers between funds must be approved by the City Council. All appropriations lapse at year-end, unless otherwise authorized by the City Council and the City Manager, except for capital improvement funds for which appropriations endure until the project is completed. The City does not budget for the Affordable Housing Asset Fund. Annual budgets are adopted on a basis consistent with generally accepted accounting principles except for capital projects funds, which are adopted on a project length basis, which means budgets, are used until the project’s completion for the entire project amount. Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditures of monies are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of the formal budgetary process. Encumbrances outstanding at year-end are carried over to the next fiscal year as part of that year’s budget resolution. GAAP serves as the budgetary basis of accounting. 2. PENSION PLANS SCHEDULE OF FUNDING PROGRESS – PERS Public Employees Retirement System Pension plan consist of annual actuarial valuation of assets for both safety and miscellaneous employees of the City. Note 14 describes the Employee Retirement Plans including plan description, funding policy and annual pension cost. Since the City has less than 100 active members in the Safety plans since 06/30/2003, the City is required to participate in a risk pool. An actuarial valuation was performed with other participants within the same risk pool. The Plans’ actuarial values, which differ from fair values, and funding progress over the most recent past three years available, are set forth below at their actuarial valuation date of June 30:

Unfunded

Entry Age Actuarial Liability Annual UAAL

Valuation Actuarial Accrued Value of Unfunded Funded Covered as a % of

Date Liability Assets Liability Status Payroll Payroll

Miscellaneous:

6/30/2010 $214,152,551 $183,903,259 $30,249,292 85.9% $19,694,872 153.6%

6/30/2011 226,836,862 190,211,455 36,625,407 83.9% 19,739,792 185.5%

6/30/2012 232,429,659 189,028,548 43,401,111 81.3% 20,167,441 215.2%

Safety:

6/30/2011 $222,794,853 $156,573,929 $66,220,924 70.3% $10,125,853 654.0%

6/30/2012 227,421,062 167,707,671 59,713,391 73.7% 10,058,373 593.7%

* Effective with the 6/30/03 valuation, CalPERS established risk pools for plans containing less than 100 active members. The City’s plan is included of the cost-sharing multiple-employer defined benefit variety.

City of San Leandro Required Supplementary Information For the year ended June 30, 2013

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3. SCHEDULE OF FUNDING PROGRESS – OTHER POST RETIREMENT BENEFIT PLAN The Plans’ actuarial values, which differ from fair values, and funding progress over the most recent past three years available, are set forth below at their actuarial valuation date of June 30:

Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability

(AAL) Entry Age (b)

Unfunded AAL (UAAL)

(b-a)Funded Ratio

(a/b)

Annual Covered Payroll

(c)

UAAL as a Percentage of

Covered Payroll ([b-a]/c)

6/30/2007 $20,977,000 $20,977,000 $32,564,000 64.4%6/30/2009 $500,000 16,853,000 16,353,000 3% 29,408,000 55.6%6/30/2011 1,102,000 17,281,000 16,179,000 6% 29,276,000 55.3%

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SUPPLEMENTARY INFORMATION

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Street/Traffic Improvements - This fund accounts for development fee assessments levied to provide forpartial funding of street and traffic improvements associated with commercial and residential growth.

Park Development Fee - This fund accounts for park development fee assessments levied to provide for partialfunding for park development needs associated with residential growth.

Underground Utility Fees - This fund accounts for utility conversion project assessments levied to provide forthe placement of overhead utilities underground. Assessments shall be expended only for expansion of,maintenance of or construction of Underground Utility Districts and facilities.

Parking - This fund accounts for parking meter and parking lot collections for maintenance of downtownparking facilities and other public parking locations.

Special Gas Tax - This fund accounts for revenues and expenditures received from the State of Californiaunder Street and Highways Code. The allocations must be spent for street maintenance and construction and alimited amount for engineering.

Cherrywood Maintenance District - This fund is used to account for the special assessment funding for the on-going maintenance of public facilities at the Cherrywood development.

Measure B Paratransit - This fund accounts for the City’s share of proceeds of a one-half cent sales taxincrease originally approved by the voters in November 1986. The program is administered by the AlamedaCounty Transportation Authority. The tax provides funds for AC transit and paratransit operations.

Asset Seizure - This fund accounts for funds received from asset forfeiture and used for public safety purposes.Asset Seizure funds previously reported under General Fund and spearated as of FY 2010-11.

Heron Bay - This fund accounts for maintenance assessments to fund ongoing maintenance of wetlandsimpacted by residential growth.

Proposition IB Local Streets & Roads - This fund accounts for Proposition IB funds for safety improvementsand repairs to local streets and roads.

Special Grants - This fund accounts for various grants from the State of California and the FederalGovernment to be expended for a specific purpose, activity or facility.

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Measure B - This fund accounts for the City's share of proceeds on a one-half cent sales tax increase originallyapproved by the voters in November 1986. The program is administered by the Alameda County TransportationAuthority. The tax provides funds for eight specific projects within Alameda County including major freewayimprovements and a major rail extention.

Measure F - This fund accounts for the City's share of proceeds on a $10 increase in Vehicle Registration feesoriginally approved by the voters in November 2010. The program is administered by the Alameda CountyTransportation Authority. The tax provides funds for projects to reduce traffic congestion and vehicle relatedpollution.

C.D.B.G. - This fund accounts for Federally funded grants through the Community Development Block GrantProgram from the U.S. Department of Housing and Urban Development.

HOME - This fund accounts for Federally funded grants from the U.S. Department of Housing and UrbanDevelopment to provide for community housing renovation programs.

Housing In-Lieu - This fund accounts for Housing In-Lieu assessments levied to provide for partial funding oflow/moderate housing projects.

Business Improvement District - This fund accounts for service fees charged to business owners to provide ashuttle service from BART to the downtown business district.

Public Education & Government (PEG) Fund - This fund accounts for the Digital Infrastructure and VideoCompetition Act (DIVCA) of 2006, collecting 1% of gross revenues from state franchise holders. The fundaccounts for user fees charged to cable television customers to provide public education on governmentprograms.

DEBT SERVICE FUNDS

Special Assessment District - This fund accumulates monies for payments of special assessment bonds whichare financed by assessments placed on the Alameda County tax roll.

San Leandro Public Financing Authority Debt Service Fund - Accounts for certificates of participationissued in 1993 for the Seismic Retrofit project. The debt will be repaid through receipt of tax increment infuture years and includes a sale and leaseback agreement between the City of San Leandro and theRedevelopment Agency. This fund also accounts for the Certificates of Participation issued for the library andfire stations seismic retrofit. The debt will be paid back pursuant to lease agreements between the City of SanLeandro and the San Leandro Public Finance Authority.

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CAPITAL PROJECTS FUNDS

Capital Improvement Projects Capital Projects Fund - This fund accounts monies for major capitalimprovement projects not provided for in one the the other capital improvement projects fund.

San Leandro Hillside Geological Hazardous Abatement District - This fund is used to account for thefinances of the collaborative between the City of San Leandro and the Geological Hazardous AbatementDistrict (GHAD).

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City of San Leandro

Combining Balance SheetNon-Major Governmental FundsJune 30, 2013

Park Underground

Street/Traffic Development Utility Special

Improvements Fee Fee Parking Gas Tax

ASSETS

Cash and investments 1,156,746$ 408,862$ ` 1,308,442$ 30,624$ 2,336,645$ Cash and investments with fiscal agent - - - - -

Receivables:

Accounts - - - 1,392 -

Federal, State, and local grants - - - - -

Interest 2,964 1,204 3,060 111 6,068

Special assessments - - - - -

Other assets - - - - -

Loans - - - - -

Total Assets 1,159,710$ 410,066$ 1,311,502$ 32,127$ 2,342,713$

LIABILITIES

Liabilities:

Accounts payable 116$ -$ -$ 714$ 33,368$

Due to other funds - - - - -

Advances from other funds - - - - -

Total Liabilities 116 - - 714 33,368


Unavailable revenue - grants receivable - - - - -

Unavailable revenue - loans receivable - - - - - Total Deferred Inflow of Resources - - - - -

Fund Balances:

Restricted 1,159,594 410,066 1,311,502 31,413 2,309,345

Unassigned - - - - -

Total Fund Balances 1,159,594 410,066 1,311,502 31,413 2,309,345

Total Liabilities, Deferred Inflow of Resources and Fund Balances 1,159,710$ 410,066$ 1,311,502$ 32,127$ 2,342,713$

Special Revenue

98

Cherrywood Proposition IB

Maintenance Measure B Asset Local Streets Special

District Paratransit Seizure Heron Bay & Roads Grants Measure B Measure F C.D.B.G

259,195$ -$ 755,891$ 750,557$ 54,893$ -$ 3,341,252$ 755,606$ -$ - - - - - - - - -

- - 48,313 773 - - 9,240 74,052 43,528

- 48,060 - - - 2,826,516 369,816 - -

562 - 1,698 1,704 175 - 7,178 - 56,199

36,072 - - - - - 317 - -

- 70,963 - - - - - - 168,985

- - - - - - - - 773,949

295,829$ 119,023$ 805,902$ 753,034$ 55,068$ 2,826,516$ 3,727,803$ 829,658$ 1,042,661$

-$ 18,356$ -$ 10,046$ -$ 434,822$ 238,817$ -$ 41,172$

- 24,481 - - - 1,962,956 - - 86,024

- - - - - - - - -

- 42,837 - 10,046 - 2,397,778 238,817 - 127,196

- - - - - 2,075,328 - - -

- - - - - - - - 830,148 - - - - - 2,075,328 - - 830,148

295,829 76,186 805,902 742,988 55,068 - 3,488,986 829,658 85,317

- - - - - (1,646,590) - - -

295,829 76,186 805,902 742,988 55,068 (1,646,590) 3,488,986 829,658 85,317

295,829$ 119,023$ 805,902$ 753,034$ 55,068$ 2,826,516$ 3,727,803$ 829,658$ 1,042,661$

(Continued) (Continued)

Special Revenue Special Revenue

99

City of San LeandroCombining Balance SheetNon-Major Governmental Funds, (Continued)June 30, 2012

Debt Service

Business Public Special

Housing Improvement Education and Assessment

HOME In-Lieu District Government District

ASSETS

Cash and investments 49,827$ 45,484$ 45,922$ 556,075$ 248,063$ Cash and investments with fiscal agent - - - - -

Receivables:

Accounts - - 130 44,356 -

Federal, State, and local grants - - - - -

Interest 116 194 103 814 573

Special assessments - - 96 - -

Other assets - - - - -

Loans 3,182,014 593,521 - - -

Total Assets 3,231,957$ 639,199$ 46,251$ 601,245$ 248,636$

LIABILITIES

Liabilities:

Accounts payable 2$ -$ -$ -$ -$

Due to other funds - - - - -

Advances from other funds - - - 150,000 -

Total Liabilities 2 - - 150,000 -


Unavailable revenue - grants receivable - - - - -

Unavailable revenue - loans receivable 3,182,014 593,521 - - 183,405 Total Deferred Inflow of Resources 3,182,014 593,521 - - 183,405

Fund Balances:

Restricted 49,941 45,678 46,251 451,245 65,231

Unassigned - - - - -

Total Fund Balances 49,941 45,678 46,251 451,245 65,231

Total Liabilities, Deferred Inflow of Resources and Fund Balances 3,231,957$ 639,199$ 46,251$ 601,245$ 248,636$

(Continued) (Continued)

Special Revenue

100

Debt ServiceCapital Total

San Leandro Improvement Non-MajorPublic Financing Projects Governmental

Authority Capital Projects GHAD Funds

635,059$ 4,906,980$ 15,633$ 17,661,756$ 55,259 91,624 - 146,883

- - - 221,784 - - - 3,244,392

465 - 40 83,228 - - - 36,485 - - - 239,948 - - - 4,549,484

690,783$ 4,998,604$ 15,673$ 26,183,960$

-$ 17,978$ -$ 795,391$ - - - 2,073,461 - 1,000,000 - 1,150,000

- 1,017,978 - 4,018,852

- - - 2,075,328 - - - 4,789,088 - - - 6,864,416

690,783 3,980,626 15,673 16,947,282 - - - (1,646,590)

690,783 3,980,626 15,673 15,300,692

690,783$ 4,998,604$ 15,673$ 26,183,960$

(Concluded)

Capital Projects

101

City of San LeandroCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNon-Major Governmental FundsFor the year ended June 30, 2012

Park Underground Cherrywood

Street/Traffic Development Utility Special Maintenance

Improvements Fee Fee Parking Gas Tax District

REVENUES:

Property and other taxes -$ -$ -$ -$ -$ 21,219$

Licenses and permits 106,165 - - 233,814 - -

Service charges - - - - - -

Intergovernmental - - - - 2,025,315 -

Use of money and property 2,899 1,211 2,801 108 5,532 -

Other - 28,793 - - - -

Total Revenues 109,064 30,004 2,801 233,922 2,030,847 21,219

EXPENDITURES:

Current:

General government - - - - - -

Public safety - - - - - -

Engineering and transportation 306,396 - 91,343 284,548 1,855,223 437

Recreation and culture - 192,167 - - - -

Community development - - - - - -

Debt service:

Principal - - - - - - Interest and fees - - - - - -

Total Expenditures 306,396 192,167 91,343 284,548 1,855,223 437

REVENUES OVER (UNDER) EXPENDITURES (197,332) (162,163) (88,542) (50,626) 175,624 20,782

OTHER FINANCING SOURCES (USES):

Transfers in - - - - - - Proceeds from the issuance of debt - - - - - - Payment to escrow ageny - - - - - - Permium from the issuance of debt - - - - - -

Total Other Financing Sources (Uses) - - - - - -

NET CHANGE IN FUND BALANCE (197,332) (162,163) (88,542) (50,626) 175,624 20,782

FUND BALANCES:

Beginning of year 1,356,926 572,229 1,400,044 82,039 2,133,721 275,047

End of year 1,159,594$ 410,066$ 1,311,502$ 31,413$ 2,309,345$ 295,829$

(Continued)

Special Revenue

102

Proposition IB

Measure B Asset Local Streets Special

Paratransit Seizure Heron Bay & Roads Grants Measure B Measure F C.D.B.G

-$ -$ 278,325$ -$ -$ -$ -$ -$

- - - - - - - -

- - - - - - - -

349,410 314,615 - - 2,805,211 1,556,786 410,515 686,393

- 1,408 1,518 - 178 6,038 - 8,823

6,500 - - - 10,041 131,132 - 5,123

355,910 316,023 279,843 - 2,815,430 1,693,956 410,515 700,339

- - - - - - - -

- 209,515 - - 1,139,990 - - -

- - 298,033 89,095 1,885,421 1,068,838 6,135 -

347,837 - - - 1,324,760 - - -

- - - - - - - 464,699

- - - - - - - 131,000

- - - - - - - 76,534

347,837 209,515 298,033 89,095 4,350,171 1,068,838 6,135 672,233

8,073 106,508 (18,190) (89,095) (1,534,741) 625,118 404,380 28,106

- - - - 20,000 - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - 20,000 - - -

8,073 106,508 (18,190) (89,095) (1,514,741) 625,118 404,380 28,106

68,113 699,394 761,178 144,163 (131,849) 2,863,868 425,278 57,211

76,186$ 805,902$ 742,988$ 55,068$ (1,646,590)$ 3,488,986$ 829,658$ 85,317$

(Continued)

Special Revenue

103

City of San LeandroCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNon-Major Governmental Funds, (Continued)For the year ended June 30, 2013

Business Public Special San Leandro

Housing Improvement Education and Assessment Public Financing

HOME In-Lieu District Government District Authority

REVENUES: Property and other taxes -$ -$ -$ 175,896$ -$ -$

Licenses and permits - - 128,424 - - -

Service charges - - - - - -

Intergovernmental 8,463 - 109,958 - - -

Use of money and property - 276 - 633 - 2,474,777

Other 52,986 43,479 - - - -

Total Revenues 61,449 43,755 238,382 176,529 - 2,474,777

EXPENDITURES:

Current:

General government - - - - - 221,223

Public safety - - - - - -

Engineering and transportation - - - - - -

Recreation and culture - - - - - -

Community development 10,756 65,000 247,524 28,893 - -

Debt service:

Principal - - - - - 447,991 Interest and fees - - - - 11,216 1,358,594

Total Expenditures 10,756 65,000 247,524 28,893 11,216 2,027,808

REVENUES OVER (UNDER) EXPENDITURES 50,693 (21,245) (9,142) 147,636 (11,216) 446,969


Transfers in - - - - - - Proceeds from the issuance of debt - - - - - 8,883,000 Payment to escrow ageny - - - - - (9,817,009) Premium from the issuance of debt - - - - - 298,315

Total Other Financing Sources (Uses) - - - - - (635,694)

NET CHANGE IN FUND BALANCE 50,693 (21,245) (9,142) 147,636 (11,216) (188,725)

FUND BALANCES:

Beginning of year (752) 66,923 55,393 303,609 76,447 879,508

End of year 49,941$ 45,678$ 46,251$ 451,245$ 65,231$ 690,783$

(Continued)

Special Revenue Debt Service

104

Capital Total Improvement Non-Major

Projects GovernmentalCapital Projects GHAD Funds

-$ -$ 475,440$ - - 468,403

45,897 - 45,897 - - 8,266,666 - - 2,506,202

17,386 - 295,440

63,283 - 12,058,048

- - 221,223 1,841 - 1,351,346

2,056,617 2,903 7,944,989 142 - 1,864,906

- - 816,872

- - 578,991

- - 1,446,344 -

2,058,600 2,903 14,224,671

(1,995,317) (2,903) (2,166,623)

557,000 - 577,000 - - 8,883,000 - - (9,817,009) - - 298,315

557,000 - (58,694)

(1,438,317) (2,903) (2,225,317)

5,418,943 18,576 17,526,009

3,980,626$ 15,673$ 15,300,692$

(Concluded)

Capital Projects

105

City of San LeandroSchedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -

Non Major Governmental FundStreet/Traffic Improvements Special Revenue FundFor the year ended June 30, 2013

Over/(Under)

Budgeted Amounts Variance with


REVENUES:

Licenses and permits 90,000$ 90,000$ 106,165$ 16,165$

Use of money and property 10,750 10,750 2,899 (7,851)

Total revenues 100,750 100,750 109,064 8,314

EXPENDITURES:

Current:

Engineering and transportation 91,528 990,071 306,396 683,675

Total expenditures 91,528 990,071 306,396 683,675

NET CHANGE IN FUND BALANCES 9,222 (889,321) (197,332) 691,989 FUND BALANCES:

Beginning of year 1,356,926

End of year 1,159,594$

106


Non Major Governmental FundPark Development Fee Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Use of money and property 6,000$ 6,000$ 1,211$ (4,789)$

Licenses and permits 25,000 25,000 28,793 3,793

Total revenues 31,000 31,000 30,004 (996)

EXPENDITURES:

Current:

Recreation and culture 17,946 402,665 192,167 210,498


NET CHANGE IN FUND BALANCES 13,054 (371,665) (162,163) 209,502

FUND BALANCES:

Beginning of year 572,229

End of year 410,066$

107


Non Major Governmental FundUnderground Utility Fees Special Revenue FundFor the year ended June 30, 2013

Over/(Under)Budgeted Amounts Variance with


REVENUES:

Use of money and property 1,500$ 1,500$ 2,801$ 1,301$

Charges for current services 106,000 106,000 - (106,000)

Total revenues 107,500 107,500 2,801 (104,699)

EXPENDITURES:

Current:Engineering and transportation - 413,956 91,343 322,613

Total expenditures - 413,956 91,343 322,613

NET CHANGE IN FUND BALANCES - (306,456) (88,542) 217,914

FUND BALANCES:



108


Non Major Governmental FundParking Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Licenses and permits 274,540$ 274,540$ 233,814$ (40,726)$

Use of money and property 700 700 108 (592)

Total revenues 275,240 275,240 233,922 (41,318)

EXPENDITURES:

Current:



NET CHANGE IN FUND BALANCES (45,152) (45,152) (50,626) (5,474)

FUND BALANCES:


End of year 31,413$

109


Non Major Governmental FundSpecial Gas Tax Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 2,163,214$ 2,163,214$ 2,025,315$ (137,899)$


Total revenues 2,178,214 2,178,214 2,030,847 (147,367)

EXPENDITURES:

Current:

Engineering and transportation 2,862,112 4,607,611 1,855,223 2,752,388

Total expenditures 2,862,112 4,607,611 1,855,223 2,752,388

NET CHANGE IN FUND BALANCES (683,898) (2,429,397) 175,624 2,605,021

FUND BALANCES:



110


Non Major Governmental FundMeasure F - (Vehicle Registration Fees)For the year ended June 30, 2013

Over/(Under)



REVENUES:

Use of money and property -$ -$ -$

Intergovernmental - - 410,515 410,515

Other - - - -

Total revenues - - 410,515 410,515

EXPENDITURES:

Current

Engineering and transportation - 770,902 6,135 764,767


NET CHANGE IN FUND BALANCES - (770,902) 404,380 1,175,282

FUND BALANCES:



111


Non Major Governmental FundMeasure BFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 1,696,718$ 1,696,718$ 1,556,786$ (139,932)$


Other 65,000 65,000 131,132 66,132

Total revenues 1,784,818 1,784,818 1,693,956 (90,862)

EXPENDITURES:

Current

Engineering and transportation 2,188,356 6,928,996 1,068,838 5,860,158


NET CHANGE IN FUND BALANCES (403,538) (5,144,178) 625,118 5,769,296

FUND BALANCES:



112


Non Major Governmental FundAsset Seizure FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental -$ -$ 314,615$ 314,615$


Total revenues 6,000 6,000 316,023 310,023

EXPENDITURES:

Current:

Public Safety - 183,348 209,515 (26,167)

Total expenditures - 183,348 209,515 (26,167)

NET CHANGE IN FUND BALANCES 6,000 (177,348) 106,508 283,856 FUND BALANCES:



113


Non Major Governmental FundHeron Bay Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Property and other taxes 325,093$ 325,093$ 278,325$ (46,768)$


Other - - - -

Total revenues 329,814 329,814 279,843 (49,971)

EXPENDITURES:

Current:



NET CHANGE IN FUND BALANCES (108,231) (386,792) (18,190) 368,602

FUND BALANCES:



114


Non Major Governmental FundCherrywood Maintenance District Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Property and other taxes 20,265$ 20,265$ 21,219$ 954$

Use of money and property 1,490 1,490 - (1,490)

Total revenues 21,755 21,755 21,219 (536)

EXPENDITURES:

Current:

Engineering and transportation - - 437 (437)

Total expenditures - - 437 (437)

NET CHANGE IN FUND BALANCES 21,755 21,755 20,782 (973)

FUND BALANCES:



115


Non Major Governmental FundProposition IB - Local Streets & Roads FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental -$ -$ -$ -$

Other - - - -

Total revenues - - - -

EXPENDITURES:

Current:

Engineering and transportation - 132,619 89,095 43,524



FUND BALANCES:


End of year 55,068$

116


Non Major Governmental FundMeasure B - Paratransit Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 329,752$ 329,752$ 349,410$ 19,658$ Other 7,500 7,500 6,500 (1,000)

Total revenues 337,252 337,252 355,910 18,658

EXPENDITURES:

Current:

Recreation and Culture 399,358 399,358 347,837 51,521


NET CHANGE IN FUND BALANCES (62,106) (62,106) 8,073 70,179 FUND BALANCES:


End of year 76,186$

117


Non Major Governmental FundSpecial Grants Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 1,461,658$ 4,530,697$ 2,805,211$ (1,725,486)$

Use of money and property - - 178 178

Other 91,942 110,942 10,041 (100,901)

Total revenues 1,553,600 4,641,639 2,815,430 (1,826,209)

EXPENDITURES:

Current:

Public safety 836,698 1,154,801 1,139,990 14,811

Engineering and transportation 66,202 9,371,363 1,885,421 7,485,942

Community Development - - - -

Recreation and culture 624,534 3,276,025 1,324,760 1,951,265


REVENUES OVER (UNDER) EXPENDITURES 26,166 (9,160,550) (1,534,741) 7,625,809


Transfers in - 20,000 20,000 -

Total other financing sources (uses) - 20,000 20,000 -

NET CHANGE IN FUND BALANCES 26,166 (9,140,550) (1,514,741) 7,625,809 FUND BALANCES:

Beginning of year (131,849)

End of year (1,646,590)$

118


Non Major Governmental FundC.D.B.G Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 560,739$ 560,739$ 686,393$ 125,654$

Use of money and property - - 8,823 8,823

Other - - 5,123 5,123

Total revenues 560,739 560,739 700,339 139,600

EXPENDITURES:

Current:

Community development 538,996 764,884 464,699 300,185

Debt service:

Principal - 131,000 131,000 -

Interest and fees - 76,535 76,534 1

Total expenditures 538,996 972,419 672,233 (300,186)

NET CHANGE IN FUND BALANCES 21,743 (411,680) 28,106 439,786

FUND BALANCES:


End of year 85,317$

119


Non Major Governmental FundHOME Special Revenue FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Intergovernmental 141,409$ 141,409$ 8,463$ (132,946)$ Use of money and property - - - - Others - - 52,986 52,986

Total revenues 141,409 141,409 61,449 (79,960)

EXPENDITURES:

Current:



NET CHANGE IN FUND BALANCES 131 (771,200.00) 50,693 821,893

FUND BALANCES:

Beginning of year (752)

End of year 49,941$

120


Non Major Governmental FundHousing In-Lieu FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Use of money and property -$ -$ 276$ 276$

Other 43,479 43,479

Total revenues - - 43,755 43,755

EXPENDITURES:

Current:

Community development - 65,000 65,000 -

Total expenditures - 65,000 65,000 -


FUND BALANCES:


End of year 45,678$

121


Non Major Governmental FundBusiness Improvement District FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Licenses and permits 130,000$ 130,000$ 128,424$ (1,576)$

Intergovernmental 168,440 168,440 109,958 (58,482)

Use of money and property - - - -

Other - - - -

Total revenues 298,440 298,440 238,382 (60,058)

EXPENDITURES:

Current:



NET CHANGE IN FUND BALANCES 1,520 1,520 (9,142) (10,662)

FUND BALANCES:


End of year 46,251$

122


Non Major Governmental FundPublic Education and Government FundFor the year ended June 30, 2013

Over/(Under)Budgeted Amounts Variance with


REVENUES:

Property and other taxes 150,000$ 150,000$ 175,896$ 25,896$ Use of money and property - - 633 633

Total revenues 150,000 150,000 176,529 26,529

EXPENDITURES:

Current:General Government 150,000 504,262 28,893 475,369


NET CHANGE IN FUND BALANCES - (354,262) 147,636 501,898

FUND BALANCES:



123


Non Major Governmental FundSpecial Assessment District Debt Service FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Use of money and property -$ -$ -$ -$

Other - - - -


EXPENDITURES:

Current:

Debt service:

Interest and fees 996 996 11,216 (10,220)

Total expenditures 996 996 11,216 (10,220)

NET CHANGE IN FUND BALANCES (996) (996) (11,216) (10,220)

FUND BALANCES:


End of year 65,231$

124


Non Major Governmental FundSan Leandro Public Financing AuthorityFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Use of money and property 2,474,319$ 2,474,319$ 2,474,777$ 458$

Total revenues 2,474,319 2,474,319 2,474,777 458

EXPENDITURES:

Current

General Government - - 221,223 (221,223)

Debt service: Principal 1,175,000 1,175,000 447,991 727,009 Interest and fees 1,298,319 1,298,319 1,358,594 (60,275)

Total expenditures 2,473,319 2,473,319 2,027,808 445,511

REVENUES OVER (UNDER) EXPENDITURES 1,000 1,000 446,969 (445,969)


Proceeds from the issuance of debt - - 8,883,000 8,883,000 Payment to escrow agencies (9,817,009) (9,817,009) Premium from the issuance of debt - - 298,315 298,315

Total other financing sources (uses) - - (635,694) (635,694)

NET CHANGE IN FUND BALANCE 1,000 1,000 (188,725) (189,725)

FUND BALANCES:



125


Non Major Governmental FundCapital Improvement Projects FundFor the year ended June 30, 2013

Over/(Under)



REVENUES:

Service Charges - - 45,897 45,897 Use of money and property - - - - Other - - 17,386 17,386

Total revenues - - 63,283 63,283

EXPENDITURES:

Current:

General government - - - -

Public safety - 91,749 1,841 89,908

Engineering and transportation 185,000 6,805,448 2,056,617 4,748,831

Community Development - - - -

Recreation and culture - 142 142 -

Total expenditures 185,000 6,897,339 2,058,600 4,838,739

NET CHANGE IN FUND BALANCES (185,000) (6,897,339) (1,995,317) 4,902,022


Transfers in 185,000 557,000 557,000 -

Total other financing sources (uses) 185,000 557,000 557,000 -

NET CHANGE IN FUND BALANCES - (6,340,339) (1,438,317) 4,902,022

FUND BALANCES:



126


Non Major Governmental FundSan Leandro Hillside Geological Abatement Fund (GHAD)For the year ended June 30, 2013

Over/(Under)



REVENUES:

Service Charges -$ -$ -$ -$

Use of money and property - - - -


EXPENDITURES:

Current:

Engineering & Transportation 179 18,952 2,903 16,049

Total expenditures 179 18,952 2,903 16,049

NET CHANGE IN FUND BALANCES (179) (18,952) (2,903) 16,049

FUND BALANCES:


End of year 15,673$

127

NON-MAJOR ENTERPRISE FUNDS

Environmental Services - Accounts for the regulation of hazardous materials, wastewaterdischarge, storm water runoff, solid waste and recycling, and the landfill at the Marina.

Storm Water Utility - Provides for the City’s storm water program in conjunction with theNational Pollutant Discharge and Emissions Services Act.

129

City of San LeandroCombining Statement of Net PositionNon-Major Enterprise FundsJune 30, 2013

TotalNon-Major

Storm Water Environmental EnterpriseUtility Services Funds

ASSETS

Current assets:Cash and investments 283,731$ 1,406,171$ 1,689,902$ Receivables:

Accounts 10,412 113,950 124,362 Interest 283 - 283 Other assets - 419 419

Total current assets 294,426 1,520,540 1,814,966

Total Assets 294,426 1,520,540 1,814,966

LIABILITIES

Current liabilities:Accounts payable 7,854 32,039 39,893 Unearned revenue - 12,564 12,564 Compensated absences - due in one year 3,808 9,288 13,096

Total current liabilities 11,662 53,891 65,553

Noncurrent liabilities:

Compensated absences - due in more than one year 38,502 93,914 132,416

Total noncurrent liabilities 38,502 93,914 132,416

Total Liabilities 50,164 147,805 197,969

NET POSITION

Unrestricted 244,262 1,372,735 1,616,997

Total Net Position 244,262$ 1,372,735$ 1,616,997$

130

City of San LeandroCombining Statement of Revenues, Expenses, and Changes in Net PositionNon-Major Enterprise FundsFor the year ended June 30, 2013

TotalNon-Major


OPERATING REVENUES:

Charges for services 1,084,084$ 310,604$ 1,394,688$ Licenses and permits - 289,922 289,922 Other operating revenue 1,986 13,687 15,673

Total operating revenues 1,086,070 614,213 1,700,283

OPERATING EXPENSES:

Salaries and benefits 527,727 766,420 1,294,147 Contractual and other services 220,443 110,959 331,402 Materials and supplies 11,433 23,200 34,633 Other operating costs 219,213 274,678 493,891

Total operating expenses 978,816 1,175,257 2,154,073 OPERATING INCOME (LOSS) 107,254 (561,044) (453,790) NONOPERATING REVENUES (EXPENSES):

Investment income - - - Intergovernmental - 207,795 207,795

Total nonoperating revenues (expenses) - 207,795 207,795

INCOME (LOSS) BEFORE TRANSFERS 107,254 (353,249) (245,995)

Transfers in - 338,917 338,917 Transfers out (134,000) - (134,000)

Total transfers (134,000) 338,917 204,917

Change in net assets (26,746) (14,332) (41,078) NET POSITION:

Beginning of year 271,008 1,387,067 1,658,075

End of year 244,262$ 1,372,735$ 1,616,997$

131

City of San LeandroCombining Statement of Cash FlowsNon-Major Enterprise FundsFor the year ended June 30, 2013

TotalNon-Major


CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 1,075,708$ 735,033$ 1,810,741 Cash payments to suppliers and service providers (248,621) (139,049) (387,670) Cash payments to employees for services (504,982) (774,640) (1,279,622) Cash payments to other funds for service provided (219,213) (273,688) (492,901)

Net cash provided (used) by operating activities 102,892 (452,344) (349,452)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Intergovernmental revenue received - 207,795 207,795 Transfers in from other funds - 338,917 338,917 Transfers out to other funds (134,000) - (134,000)

Net cash provided (used) by noncapital financing activities (134,000) 546,712 412,712

CASH FLOWS FROM INVESTING ACTIVITIES:Interest received (207) 15,632 15,425

Net cash provided (used) by investing activities (207) 15,632 15,425

Net increase (decrease) in cash and cash equivalents (31,315) 110,000 78,685

CASH AND CASH EQUIVALENTS:

Beginning of year 315,046 1,296,171 1,611,217

End of year 283,731$ 1,406,171$ 1,689,902$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NETCASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) 107,254$ (561,044)$ (453,790)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Changes in assets and liabilities: (Increase) decrease in accounts receivable (10,362) 120,820 110,458 (Increase) decrease in prepaid items - 990 990 (Decrease) increase in accounts payable (16,745) (4,890) (21,635) (Decrease) increase in compensated absences 22,745 (8,220) 14,525

Total adjustments (4,362) 108,700 104,338

Net cash provided (used) by operating activities 102,892$ (452,344)$ (349,452)$

132

Equipment Maintenance - This fund accounts for the maintenance and replacement of vehiclesand equipment used by all City departments. Source of revenue for this fund is reimbursement ofcosts for services and supplies purchased by other departments.

INTERNAL SERVICE FUNDS

Internal Service Funds are used to account for special activities and services performed by adesignated City department for other departments on a cost reimbursement basis.

Building Maintenance - This fund accounts for the City’s custodial maintenance and minorbuilding modifications performed on various City complexes. The source of revenue isreimbursement of costs for services performed to the departments.

Information Management Services - This fund accounts for centralized data processing and themaintenance, acquisition and replacement of computerized systems. Source of revenue for thisfund is reimbursement of costs for services and equipment purchased by other departments.

Self-Insurance - This fund accounts for the administration of the City’s self-insurance programs,payment of workers' compensation and liability claims payments.

133

City of San LeandroCombining Statement of Net PositionAll Internal Service FundsJune 30, 2013

InformationBuilding Management Self- Equipment

Maintenance Services Insurance Maintenance Total

ASSETS

Cash and investments 2,093,380$ 1,402,092$ 7,391,491$ 1,161,436$ 12,048,399$ Receivables:

Accounts - - 585,121 - 585,121

Interest 4,398 2,908 15,436 2,510 25,252 Inventory 11,627 9,268 - 104,697 125,592

Other assets 404 - 404

Total current assets 2,109,405 1,414,672 7,992,048 1,268,643 12,784,768

Loans to other funds - 150,000 - - 150,000

Capital assets: Depreciable 14,764 5,568,867 - 6,505,718 12,089,349

Less accumulated depreciation (4,863) (4,304,900) - (4,853,391) (9,163,154)

Total Net capital assets 9,901 1,263,967 - 1,652,327 2,926,195 Total nocurrent assets 9,901 1,413,967 - 1,652,327 3,076,195

Total Assets 2,119,306 2,828,639 7,992,048 2,920,970 15,860,963

LIABILITIES

Current Liabilities:Accounts payable 169,964 65,813 270,403 35,816 541,996 Claims and judgments - due in one year - - 1,170,645 - 1,170,645 Compensated absences payable - due in one year 5,803 9,037 231 5,574 20,645

Total current liabilities 175,767 74,850 1,441,279 41,390 1,733,286

Noncurrent liabilities:Claims and judgements - due in more than one year - - 5,527,479 - 5,527,479 Compensated absences - due in more than one year 58,672 91,376 2,335 56,355 208,738

Total noncurrent liabilities 58,672 91,376 5,529,814 56,355 5,736,217

Total Liabilities 234,439 166,226 6,971,093 97,745 7,469,503

NET POSITION

Net investments in capital assets 9,901 1,263,967 - 1,652,327 2,926,195

Unrestricted 1,874,966 1,398,446 1,020,955 1,170,898 5,465,265

Total Net Position 1,884,867$ 2,662,413$ 1,020,955$ 2,823,225$ 8,391,460$

134

City of San LeandroCombining Statement of Revenues, Expenses and Changes in Fund Net PositionAll Internal Service FundsFor the year ended June 30, 2013



OPERATING REVENUES:

Service charges 2,856,139$ 3,680,221$ 3,293,940$ 1,845,467$ 11,675,767$ Other operating revenues 530 68,337 169,348 30,308 268,523

Total operating revenues 2,856,669 3,748,558 3,463,288 1,875,775 11,944,290

OPERATING EXPENSES:

Salaries and benefits 871,946 1,731,506 190,431 548,104 3,341,987 Contractual and other services 1,330,335 1,055,403 4,316,045 73,568 6,775,351 Materials and supplies 206,110 67,723 816 614,855 889,504 Depreciation 537 552,177 - 417,106 969,820 Other operating costs 337,015 558,633 100,284 280,128 1,276,060

Total operating expenses 2,745,943 3,965,442 4,607,576 1,933,761 13,252,722

OPERATING INCOME (LOSS) 110,726 (216,884) (1,144,288) (57,986) (1,308,432)

NONOPERATING REVENUES (EXPENSES):Interest income 3,946 2,521 12,629 2,259 21,355

Total nonoperating revenues (expenses) 3,946 2,521 12,629 2,259 21,355

INCOME (LOSS) BEFORE TRANSFERS 114,672 (214,363) (1,131,659) (55,727) (1,287,077)

TRANSFERS:

Transfers in 540,000 37,464 400,000 - 977,464 Transfers out (20,000) - - - (20,000)

Total transfers 520,000 37,464 400,000 - 957,464

Net income (loss) 634,672 (176,899) (731,659) (55,727) (329,613)

NET ASSETS:

Beginning of the year 1,250,195 2,839,312 1,752,614 2,878,952 8,721,073

End of the year 1,884,867$ 2,662,413$ 1,020,955$ 2,823,225$ 8,391,460$

135

City of San LeandroCombining Statement of Cash FlowsAll Internal Service FundsFor the year ended June 30, 2013



CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers 530$ 68,436$ 150,165$ 30,308$ 249,439$ Receipts from interfund charges 2,854,077 3,684,840 3,311,595 1,845,467 11,695,979 Cash payments to suppliers and service providers (1,491,265) (1,181,782) (4,511,600) (679,980) (7,864,627) Cash payments to employees for services (889,173) (1,742,987) (193,088) (550,203) (3,375,451) Cash payments to other funds for services provided (337,015) (558,633) (100,284) (280,128) (1,276,060)

Net cash provided (used) by operating activities 137,154 269,874 (1,343,212) 365,464 (570,720)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Interfund Loan - (150,000) - (150,000) Transfers out to other funds 520,000 37,464 400,000 - 957,464

Net cash provided (used) by noncapital .financing activities 520,000 (112,536) 400,000 - 807,464

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition of fixed assets - (179,038) - (260,556) (439,594)

Net cash provided (used) by capital and related financing activities - (179,038) - (260,556) (439,594)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest Income 3,314 2,683 17,343 2,280 25,620

Cash Flows from Investing Activities 3,314 2,683 17,343 2,280 25,620

Net Cash Flows 660,468 (19,017) (925,869) 107,188 (177,230)

CASH AND CASH EQUIVALENTS:

Cash and investments at beginning of year 1,432,912 1,421,109 8,317,360 1,054,248 12,225,629

Cash and investments at end of year 2,093,380$ 1,402,092$ 7,391,491$ 1,161,436$ 12,048,399$

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

Operating income (loss) 110,726$ (216,884)$ (1,144,288)$ (57,986)$ (1,308,432)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 537 552,177 - 417,106 969,820 Changes in assets and liabilities:

(Increase) decrease in accounts receivable 99 (19,183) (19,084) (Increase) decrease in inventory (2,062) 3,764 (2,865) (1,163) (Increase) decrease in other assets 855 17,655 18,510 (Decrease) increase in accounts payable 45,180 (58,656) 178,360 11,308 176,192 (Decrease) increase in claims and judgements payable - (373,099) (373,099) (Decrease) increase in compensated absences (17,227) (11,481) (2,657) (2,099) (33,464)

Total cash provided (used) by operating activities 137,154$ 269,874$ (1,343,212)$ 365,464$ (570,720)$

136

AGENCY FUNDS

Cherrywood - Accounts for monies accumulated for payments of special assessment bondswhich are financed by assessments placed on the Alameda County tax roll for the Cherrywoodhousing development.

FIDUCIARY FUND FINANCIAL STATEMENTS

Deposits Fund - Accounts for all deposits held on behalf of other persons and businesses underthe control of City departments.

137

City of San LeandroCombining Statement of Fiduciary Net PositionFiduciary FundsJune 30, 2013

Deposits Cherrywood Total

ASSETS

Cash and investments 1,063,035$ 486,997$ 1,550,032$ Cash and investments with fiscal agents - 946,835 946,835 Accounts receivable 80 4,327 4,407

Total assets 1,063,115$ 1,438,159$ 2,501,274$

LIABILITIES

Accounts payable 15,442$ -$ 15,442$ Deposits payable 1,047,673 - 1,047,673 Due to bondholders - 1,438,159 1,438,159

Total liabilities 1,063,115$ 1,438,159$ 2,501,274$

138

City of San LeandroCombining Statement of Changes in Assets and LiabilitiesFiduciary FundsFor the year ended June 30, 2013

Balance BalanceDeposits July 1, 2012 Additions Deductions June 30, 2013

Assets:Cash and investments 1,041,796$ 1,661,845$ (1,640,606)$ 1,063,035$ Accounts receivable - 157 (77) 80

Total assets 1,041,796$ 1,662,002$ (1,640,683)$ 1,063,115$

Liabilities:Accounts payable 32,601$ 810,185$ (827,345)$ 15,441$ Deposits payable 1,009,195 1,163,423 (1,124,944) 1,047,674

Total liabilities 1,041,796$ 1,973,608$ (1,952,289)$ 1,063,115$

Cherrywood

Assets:Cash and investments 962,314$ 2,811,337$ (2,788,779)$ 984,872$ Cash and investments with fiscal agent 448,960 - - 448,960 Accounts receivable 758 3,601 (32) 4,327 Special assessments receivable - 953,686 (953,686) -

Total assets 1,412,032$ 3,768,624$ (3,742,497)$ 1,438,159$

Liabilities:Due to bondholders 1,412,032$ 3,768,624$ (3,742,497)$ 1,438,159$


All Agency Funds

Assets:Cash and investments 2,004,110$ 4,473,182$ (4,429,385)$ 2,047,907$ Cash and investments with fiscal agent 448,960 - - 448,960 Accounts receivable 758 3,758 (109) 4,407 Special assessments receivable - 953,686 (953,686) -

Total assets 2,453,828$ 5,430,626$ (5,383,180)$ 2,501,274$

Liabilities:Accounts payable 32,601$ 810,185$ (827,345)$ 15,441$ Deposits payable 1,009,195 1,163,423 (1,124,944) 1,047,674 Due to bondholders 1,412,032 3,768,624 (3,742,497) 1,438,159


139

STATISTICAL SECTION

Contents Page

Financial Trends 143

Revenue Capacity 148

Debt Capacity 150

Demographic and Economic Information 158

Operating Information 160These schedules contain service and infrastructure data to help the reader understand how the information in the city's financial report relates to the services the city provides and the activities it performs.

This section of the City of San Leandro's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health.

These schedules contain trend information to help the reader understand how the city's financial performance and well-being have changed over time.

These schedules contain information to help the reader assess the city's most significant local revenue sources, sales tax and property tax.

These schedules present information to help the reader assess the affordability of the city's current levels of outstanding debt and the city's ability to issue additional debt in the future.

These schedules offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place.

141

City of San LeandroNet Position by ComponentLast Ten Fiscal Years(accrual basis of accounting)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Governmental activities: Net investment in capital assets 282,335,707$ 271,398,035$ 291,400,560$ 287,403,594$ 288,812,935$ 281,144,018$ 268,302,013$ 256,542,629$ 251,252,877 219,701,797 Restricted 44,389,814 41,926,633 31,717,316 36,307,422 39,410,231 32,178,863 31,353,698 37,489,289 17,947,666 24,162,116 Unrestricted 2,785,163 9,245,677 9,290,497 20,105,122 10,029,629 1,326,448 (2,174,686) (3,737,046) 42,585,608 33,524,445 Total governmental activites net position 329,510,684$ 322,570,345$ 332,408,373$ 343,816,138$ 338,252,795$ 314,649,329$ 297,481,025$ 290,294,873$ 311,786,151$ 277,388,358$

Business-Type Activities: Net investment in capital assets 9,445,171$ 14,040,265$ 11,028,943$ 11,074,087$ 11,197,748$ 12,992,419$ 20,162,046$ 26,832,033$ 30,737,068$ 32,979,235$ Restricted - - - - - - - - - - Unrestricted 6,222,818 6,406,958 13,364,147 16,526,068 20,001,036 20,122,930 17,044,724 15,133,537 13,097,006 15,002,725 Total business-type activities net position 15,667,989$ 20,447,223$ 24,393,090$ 27,600,155$ 31,198,784$ 33,115,349$ 37,206,770$ 41,965,570$ 43,834,074$ 47,981,960$

Primary government: Net investment in capital assets 291,780,878$ 285,438,300$ 302,429,503$ 298,477,681$ 300,010,683$ 294,136,437$ 288,464,059$ 283,374,662$ 281,989,945$ 252,681,032$ Restricted 44,389,814 41,926,633 31,717,316 36,307,422 39,410,231 32,178,863 31,353,698 37,489,289 17,947,666 24,162,116 Unrestricted 9,007,981 15,652,635 22,654,644 36,631,190 30,030,665 21,449,378 14,870,038 11,396,491 55,682,614 48,527,170 Total primary government net position 345,178,673$ 343,017,568$ 356,801,463$ 371,416,293$ 369,451,579$ 347,764,678$ 334,687,795$ 332,260,443$ 355,620,225$ 325,370,318$

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144

City of San LeandroChanges in Net PositionLast Ten Fiscal Years(accrual basis of accounting)

Expenses: 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Governmental activities: General government 25,530,287$ 22,013,602$ 22,864,200$ 11,546,534$ 17,379,663$ 16,572,072$ 11,989,774 10,759,754 10,238,787 13,166,855 Public safety 33,414,314 35,819,441 37,415,908 41,972,128 44,061,645 44,229,183 45,063,334 45,936,832 43,574,011 45,465,294 Engineering & Transportation 7,592,091 9,108,518 2,260,498 11,989,696 16,292,698 15,101,806 18,209,182 22,720,292 23,903,746 25,662,305 Recreation & Culture 10,720,541 11,688,705 12,714,017 15,937,218 15,064,531 11,416,088 9,906,448 11,042,582 9,894,015 11,586,223 Community Development 9,212,795 7,509,785 11,238,106 9,351,983 15,725,787 28,119,209 24,202,918 17,541,521 8,178,377 4,904,402 Interest on long-term debt 4,217,408 3,766,213 3,924,447 4,275,336 3,237,381 5,349,826 4,525,710 4,182,409 2,317,753 2,548,119 Total governmental activities expenses 90,687,436 89,906,264 90,417,175 95,072,895$ 111,761,705$ 120,788,184$ 113,897,366$ 112,183,390$ 98,106,689$ 103,333,198$

Business-type activities: Water Pollution Control 7,759,280 7,467,822 6,979,509 9,247,290 9,093,554 9,248,677 6,231,639 5,856,452 8,395,692 7,499,555 Shoreline 1,910,506 3,025,760 2,470,221 2,139,089 2,355,311 2,244,002 2,180,794 1,997,753 1,848,428 1,861,532 San Leandro Housing Finance Corp 600,094 669,147 946,776 - - - - - - - Storm Water Utility 1,030,222 1,056,165 921,120 928,752 896,951 993,330 886,379 844,604 919,998 978,816 Environmental Services 1,235,675 1,171,903 1,453,306 1,189,664 1,460,466 1,544,564 1,348,181 1,333,145 1,222,543 1,175,257

Total business-type activities expenses 12,535,777 13,390,797 12,770,932 13,504,795 13,806,282 14,030,573 10,646,993 10,031,954 12,386,661 11,515,160

Total primary government expenses 103,223,213 103,297,061 103,188,107 108,577,690 125,567,987 134,818,757 124,544,359 122,215,344 110,493,350 114,848,358

Program revenues:Governmental activities: General government Property taxes 15,456,837 18,883,832 21,167,178 24,742,722 26,200,221 27,654,817 27,087,224 26,720,790 22,357,186 17,631,582 Sales taxes 20,089,952 20,704,782 22,144,559 23,407,407 22,251,900 19,095,799 17,594,934 21,811,494 24,126,105 26,304,583 Franchise Fees 3,605,261 3,597,465 3,362,681 4,496,415 4,142,284 4,125,705 4,005,464 4,124,846 4,231,420 4,444,251 Utility Users Tax 9,531,377 10,018,039 10,383,676 10,175,460 10,420,171 10,103,090 9,783,055 9,932,893 9,968,546 9,888,123 Property Transfer Tax 5,106,985 5,891,509 6,417,694 4,539,402 2,924,656 2,870,441 2,297,145 2,528,604 2,981,685 2,956,419 911 Communication Access Tax 2,711,671 2,694,149 2,684,591 2,723,255 Other taxes 311,522 323,466 315,382 322,160 361,261 294,496 333,079 381,122 555,988 591,016 Motors Vehicle License Fees 3,705,763 530,076 530,525 472,542 320,508 278,615 242,416 506,280 42,294 44,112 Investment 2,033,764 2,506,853 3,150,513 4,498,742 3,836,259 3,025,658 1,419,378 1,300,123 1,098,406 919,213 Community Impact Reimbursement - - - - - - 3,100,000 - - - Miscellaneous 2,750,995 1,920,545 826,816 873,742 657,731 1,597,574 599,189 1,158,044 988,126 962,356 Gain on sale of assets - - 516,633 11,621 - - - 20,914 3,353 393,741 Transfers (79,051) (147,114) (50,594) (82,214) (182,509) 85,874 (67,942) 240,484 234,349 (72,135) Charges for Service 9,734,159 10,899,821 12,501,369 16,452,204 20,126,325 15,971,619 12,568,443 17,062,792 12,200,726 13,735,756 Capital grants and contributions 11,114,089 8,944,136 13,005,869 11,455,259 9,303,323 8,590,057 10,830,576 6,581,532 11,416,356 7,216,114 Operating grants and contributions 10,963,348 2,470,325 4,603,121 5,115,198 5,836,232 3,490,973 4,224,429 3,783,171 5,585,461 5,672,929 Total Governmental activities program revenues 94,325,001 86,543,735 98,875,422 106,480,660 106,198,362 97,184,718 96,729,061 98,847,238 98,474,592 93,411,315

Business-type activities: Charges for services 11,971,492 13,360,589 15,100,992 14,626,541 14,832,288 14,275,135 13,716,608 14,267,658 14,895,604 14,813,211 Other taxes 282,372 213,520 299,126 298,633 342,189 296,184 233,880 257,977 323,430 360,246 Investment Earnings 795,829 577,242 723,250 1,378,939 1,616,038 928,796 454,893 167,407 141,980 209,659 Miscellaneous 444,232 293,756 542,837 325,532 431,887 532,897 265,091 338,196 418,969 207,795 Gain or loss on sale of assets - - - - - - - - (1,290,470) - Transfers 79,051 147,114 50,594 82,214 182,509 (85,874) 67,942 (240,484) (234,349) 72,135 Total Business activities program revenues 13,572,976 14,592,221 16,716,799 16,711,859 17,404,911 15,947,138 14,738,414 14,790,754 14,255,164 15,663,046 Total primary government program revenues 107,897,977 101,135,956 ` 115,592,221 123,192,519 123,603,273 113,131,856 111,467,475 113,637,992 112,729,756 109,074,361

Extraordinary Items 21,123,375 Net revenues (expenses): Governmental Activities 3,637,565 (3,362,529) 8,458,247 11,407,765 (5,563,343) (23,603,466) (17,168,305) (13,336,152) 367,903 (9,921,883) Business-type activities 1,037,199 1,201,424 3,945,867 3,207,064 3,598,629 1,916,565 4,091,421 4,758,800 1,868,503 4,147,886 Total net revenues (expenses) 4,674,764$ (2,161,105)$ 12,404,114$ 14,614,829$ (1,964,714)$ (21,686,901)$ (13,076,884)$ (8,577,352)$ 2,236,406$ (5,773,997)$

Notes: The City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation is not available.145

City of San LeandroFund Balance of Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

General Fund: Reserved 19,132,113$ 18,843,168$ 19,835,830$ 17,904,586$ 18,149,255$ 14,614,515$ 13,730,510$ -$ -$ -$ Unreserved 15,528,675 13,936,704 16,962,489 25,319,167 19,152,403 15,074,450 12,672,277 - - - Nonspendable - - - - - - - 10,377,840 10,147,160 10,147,160 Restricted - - - - - - - 50,000 50,000 50,000 Assigned - - - - - - - 3,437,827 3,555,009 264,275 Unassigned - - - - - - - 11,814,319 10,717,313 14,836,844 Total General Fund 34,660,788 32,779,872 36,798,319 43,223,753 37,301,658 29,688,965 26,402,787 25,679,986 24,469,482 25,298,279

All other governmental funds: Reserved 32,703,722 15,974,817 20,344,382 21,797,518 20,775,067 33,916,323 21,700,213 - - - Unreserved, designated 300,000 4,842,210 491,396 - - - - - - - Unreserved, undesignated, reported in: Special revenue funds 6,333,411 4,028,438 4,684,942 7,013,915 6,907,672 5,760,645 6,827,714 - - - Capital projects funds - 14,935,095 - 333,153 337,211 3,973,218 4,803,372 - - - Nonspendable - - - - - - - 2,475,000 - - Restricted - - - - - - - 33,274,967 17,809,532 17,417,246 Assigned - - - - - - - (948,387) - - Unassigned - - - - - - - - (132,601) (1,646,590)

Total all other governmental funds 39,337,133$ 39,780,560$ 25,520,720$ 29,144,586$ 28,019,950$ 43,650,186$ 33,331,299$ 34,801,580$ 17,676,931$ 15,770,656$

146

City of San LeandroChanges in Fund Balance of Governmental FundsLast Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Revenues: Property and other taxes 55,045,102$ 60,174,541$ 64,418,048$ 68,452,345$ 66,945,559$ 64,771,891$ 64,359,726$ 68,879,116 67,388,968 65,125,564 Licenses and permits 3,863,441 4,333,781 4,612,703 7,884,927 6,461,407 6,768,204 6,027,904 6,585,076 6,940,678 6,482,902 Fines and forfeitures 704,309 685,984 837,602 1,431,689 1,418,732 1,296,568 1,149,193 1,377,230 1,110,669 1,237,354 Service charges 2,883,357 4,163,570 5,885,823 5,732,825 4,965,783 4,977,492 2,627,851 2,593,610 3,051,084 2,830,649 Intergovernmental 14,285,821 8,929,406 13,635,816 9,798,718 10,224,260 7,106,997 12,853,697 8,351,105 10,246,859 9,233,120 Use of money and property 4,789,470 5,528,100 6,351,559 8,102,189 6,841,974 5,244,637 4,558,887 4,152,296 3,645,827 3,445,104 Intergovernmental 1,750,728 1,675,142 1,783,790 1,746,385 1,799,108 1,858,477 2,272,568 2,295,293 2,401,869 2,001,928 Other 4,149,621 2,595,829 2,117,855 3,734,825 3,824,523 5,542,756 4,012,703 1,294,092 5,054,650 2,009,829 Total revenues 87,471,849 88,086,353 99,643,196 106,883,903 102,481,346 97,567,022 97,862,529 95,527,818 99,840,604 92,366,450

Expenditures: Current: General government 11,504,089 10,480,346 10,242,278 10,027,035 10,996,927 10,866,088 10,353,861 9,684,293 9,943,871 12,993,178 Public safety 33,942,876 37,694,476 39,807,817 41,571,598 44,084,646 45,409,707 45,420,060 43,727,641 68,789,652 46,437,960 Engineering and transportation 11,791,157 13,805,174 15,798,762 12,329,183 16,521,818 15,641,026 18,203,786 12,231,307 9,778,421 14,550,085 Recreation and culture 14,205,666 13,316,923 19,367,598 15,968,022 15,408,155 12,100,517 9,854,633 9,560,878 8,373,427 10,274,496 Community development 9,434,428 7,460,908 12,120,215 9,528,638 16,002,716 27,126,823 24,397,598 11,342,937 9,236,773 4,311,194 Capital Outlay 3,945,005 3,274,784 6,952,452 1,781,883 232,636 - - - 5,763,826 - Debt service: Principal 2,535,740 2,485,071 2,959,219 2,150,594 2,610,861 3,372,481 3,305,968 3,175,797 3,511,866 1,577,051 Interest and fees 3,896,137 3,837,316 3,947,868 4,403,856 3,448,347 4,917,152 4,578,463 4,247,973 3,043,070 2,605,761

Total expenditures 91,255,098 92,354,998 111,196,209 97,760,809 109,306,106 119,433,794 116,114,369 93,970,826 118,440,906 92,749,725

Excess (deficiency of revenues over (under) expenditures (3,783,249) (4,268,645) (11,553,013) 9,123,094 (6,824,760) (21,866,772) (18,251,840) 1,556,992 (18,600,302) (383,275)

Other financing Sources (uses): Issuance of capital lease - 3,048,260 - - - - - - - - Proceeds from refunding of bonds 5,500,000 - - 23,425,000 - - - - - (9,817,009) Payment to refunded bonds escrows agents - - - (24,731,033) - - - - - - Transfers in 15,033,258 6,738,067 3,240,998 4,693,117 5,895,216 11,774,023 8,598,106 8,290,220 6,029,970 577,000 Transfers out (15,146,268) (6,955,181) (3,309,159) (4,405,832) (6,117,186) (9,615,363) (6,913,048) (9,099,736) (5,775,621) (1,606,599) Bonds Proceeds - - - - - 27,725,655 - - - - Loan Proceeds - - - - - - 2,500,000 - - - Lease Proceeds - - - - - - 461,717 - - - Issuance of Debt - - - - - - - - 18,305,000 10,152,405

Total other financing sources (uses) 5,386,990 2,831,146 (68,161) (1,018,748) (221,970) 29,884,315 4,646,775 (809,516) 18,559,349 (694,203)

Prior period restatement - - 1,379,781 1,944,954 - - - - - -

Net change in fund balances 1,603,741$ (1,437,499)$ (10,241,393)$ 10,049,300$ (7,046,730)$ 8,017,543$ (13,605,065)$ 747,476$ (40,953)$ (1,077,478)$

Debt Services as a percentage of noncapital expenditures 8.9% 8.0% 8.30% 7.52% 5.94% 7.52% 7.73% 8.09% 5.82% 4.78%

147

147

City of San LeandroGeneral Governmental Revenues By SourceAll Government Fund TypesLast Ten Fiscal Years

Fiscal Year

Property & OtherTaxes

Licenses & Permits

Fines & Forfeitures

Service Charges

Intergovern- mental

Use of Money & Property Other Revenue Total

2004 55,045,012 3,863,441 704,309 2,883,357 14,285,821 4,789,470 5,900,349 87,471,759 2005 60,174,541 4,333,781 685,984 4,163,570 8,929,406 5,528,100 4,270,971 88,086,353 2006 64,418,048 4,612,703 837,602 5,885,823 13,635,816 6,351,559 3,901,645 99,643,196 2007 68,452,345 7,884,927 1,431,689 5,732,825 9,798,718 8,102,189 5,481,210 106,883,903 2008 66,945,559 6,461,407 1,418,732 4,965,783 10,224,260 6,841,974 5,623,631 102,481,346 2009 64,771,891 6,768,204 1,296,568 4,977,492 7,106,997 5,244,637 46,900,911 137,066,700 2010 64,359,726 6,027,904 1,149,193 2,627,851 12,853,697 4,558,887 6,285,271 97,862,529 2011 68,879,116 6,585,076 1,377,230 2,593,610 8,351,105 4,152,296 3,589,385 95,527,818 2012 67,388,968 6,940,678 1,110,669 3,051,084 10,246,859 3,645,827 7,456,519 99,840,604 2013 65,125,564 6,482,902 1,237,354 2,830,649 9,233,120 3,445,104 4,011,757 92,366,450

Source: City of San Leandro Comprehensive Annual Financial Report

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Property & Other Taxes

Licenses & Permits

Fines & Forfeitures

Services Charges

Intergovernmental

Use of Money &Property

148

City of San LeandroAssessed Value of Taxable PropertyLast Ten Fiscal Years(In Thousands)

Fiscal Year Taxable Taxable TotalEnded Less Assessed Less Assessed Direct Tax

June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value Rate

2004 6,676,341 536,497 (166,799) 7,046,038 2,534,206 358,306 (42,206) 2,850,306 1.00%

2005 7,221,647 526,799 (182,526) 7,565,920 2,738,684 346,422 (63,818) 3,021,288 1.00%

2006 7,752,095 538,060 (201,155) 8,089,000 2,902,768 357,620 (73,877) 3,186,511 1.00%

2007 8,490,385 577,326 (193,142) 8,874,569 3,174,542 396,648 (65,057) 3,506,133 1.00%

2008 9,065,717 568,195 (180,546) 9,453,366 3,337,069 396,034 (66,847) 3,666,256 1.00%

2009 9,525,308 556,811 (207,657) 9,874,462 3,593,007 393,869 (87,613) 3,899,263 1.00%

2010 9,102,245 570,588 (218,845) 9,453,988 3,599,645 395,243 (110,812) 3,884,076 1.00%

2011 9,094,918 559,970 (238,681) 9,416,207 3,568,829 406,084 (208,631) 3,766,282 1.00%

2012 9,109,542 532,437 (224,006) 9,417,973 3,570,284 382,532 (123,831) 3,828,985 1.00%

2013 10,264,814 512,808 (322,596) 10,455,025 4,365,737 359,508 (139,085) 4,586,160 1.00%

Notes: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of the property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to limitations described above.

Source: Alameda County Tax Assessor's Office

City Redevelopment

149

City Of San LeandroDirect and Overlapping Property Tax Rates(Rate per $1,000 of assessed value)Last Ten Fiscal Years

City Direct Rates

ChabotBay Area East Bay Las-Positas San Leandro

Fiscal Alameda County Rapid Transit Regional Community Unified SchoolYear Wide Levy District Park District College Bonds District Bonds Total

2004 1.0000 0.0000 0.0057 0.0000 0.0331 1.0388

2005 1.0000 0.0000 0.0057 0.0186 0.0363 1.0606

2006 1.0000 0.0048 0.0057 0.0158 0.0358 1.0621

2007 1.0000 0.0076 0.0080 0.0164 0.0767 1.1087

2008 1.0000 0.0076 0.0080 0.0164 0.0767 1.1087

2009 1.0000 0.0090 0.0100 0.0183 0.0699 1.1072

2010 1.0000 0.0057 0.0108 0.0195 0.0771 1.1131

2011 1.0000 0.0031 0.0084 0.0211 0.0897 1.1223

2012 1.0000 0.0041 0.0071 0.0214 0.1108 1.1434

2013 1.0000 0.0043 0.0051 0.0219 0.1085 1.1398

Notes:In 1978 California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00%is shared by all taxing agencies for which the property tax resides within. In addition to the 1.00% fixed amount, propertyowners are charged taxes as a percentage of assessed property values for the payment of San Leandro Unified SchoolDistrict and Chabot/Las Positas Community College bonds.

Source: Alameda County Auditor-Controller's Office

Overlapping Rates

150

City of San LeandroPrincipal Property Tax PayersJune 30, 2013Current Year and Ten Years Ago

Percent of Percent ofTotal City Total City

Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed

Taxpayer Value Rank Valuation Value Rank Valuation

Kaiser Foundation Hospitals 423,750,118$ 1 4.48%

Standard Lakeside LP 110,098,160 2 1.16%

Ghiradelli Chocolate Company 95,011,663 3 1.00% 45,667,709 3 0.75%

AMB-SGP CIF-California LLC 77,850,000 4 0.82% 114,867,163 1 1.87%

Madison Bay Fair LLC 77,705,138 5 0.82%

BCI Coca Cola Bottling Co 76,996,927 6 0.81% 27,831,813 10 0.45%

General Foods Corp 65,885,235 7 0.70% 45,621,504 4 0.74%

AMB US Logistics Fund LP 59,606,982 8 0.63%

SKB Westgate Investments LLC 48,230,278 9 0.51%

Waste Mgmt of Alameda Cty Inc 47,257,951 10 0.50%

Safeway Stores Inc 45,424,117 - 0.48% 36,796,371 6 0.60%

Anthony A Batarse, Jr. Trust 37,090,289 - 0.39% 21,103,354 13 0.34% Gateway Buena Park, Inc. 36,440,413 - 0.39%

AMB Property LP 34,719,654 - 0.37% Georgia Pacific Corrugated LLC 31,098,118 - 0.33% Peterson Power Systems, Inc 30,202,134 - 0.32%

Emerald Properties 29,939,527 - 0.32% 32,793,173 8 0.54%

Totals 1,082,392,452$ 11.44% 233,988,189$ 3.82%

Source: Alameda County Tax Assessor's Office

Notes: 2012-13 Gross, Total, Secured City Assessed Valuation, less all exemptions except for the homeowner exemption.

2013 2003

151

City of San LeandroProperty Tax Levies and CollectionsLast Ten Fiscal Years

Fiscal Taxes Levied Collections in

Year Ended for the Percent Subsequent Residual Percent June 30 Fiscal Year Amount of Levy Years Distribution Amount of Levy

2004 7,629,957 7,255,988 95.10% - - 7,255,988 95.10%

2005 8,151,531 7,610,802 93.37% 165,308 - 7,776,110 95.39%

2006 8,720,537 8,105,748 92.95% 210,562 - 8,316,310 95.36%

2007 9,483,392 8,908,943 93.94% 393,199 - 9,302,142 98.09%

2008 10,093,368 9,370,261 92.84% 424,812 - 9,795,074 97.04%

2009 10,425,968 9,686,655 92.91% 322,758 - 10,009,413 96.00%

2010 9,857,438 9,303,586 94.38% 378,646 - 9,682,232 98.22%

2011 9,800,011 9,307,532 94.97% 230,948 - 9,538,480 97.33%

2012 9,676,693 9,190,945 94.98% 261,132 266,242 9,718,319 100.43%

2013 9,959,351 10,142,627 101.84% 287,147 222,507 10,652,282 106.96%

Source: Alameda County Auditor-Controller's Office

Collected within theFiscal Year of Levy Total Collections to Date

152

City of San LeandroSales Tax Remittance By CategoryLast Ten Calendar Years(in thousands)

Tax Remitter 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Department Stores 3,759$ 3,541$ 3,253$ 3,158$ 2,847$ 3,161$ 3,093$ 3,149$ 3,194$ 824$ Auto Sales - New 2,443 2,557 2,440 2,171 1,957 1,343 1,476 1,882 2,055 280 Building Materials - Wholesale 2,255 2,557 2,643 2,171 1,779 1,150 1,192 1,393 1,340 236 Light Industry 1,503 1,377 1,830 1,777 1,246 809 708 766 756 145 Building Materials - Retail 1,128 1,180 1,220 987 890 901 886 918 1,021 232 Heavy Industry 940 983 1,220 1,184 1,246 1,138 1,156 1,374 1,194 195 Restaurants 940 983 1,016 1,184 1,068 1,097 1,100 1,150 1,232 319 Miscellaneous Retail 564 590 813 790 712 680 605 642 713 231 Apparel Stores 564 983 1,016 987 1,068 1,057 1,157 1,232 1,351 344 Service Stations 940 787 1,016 987 1,068 865 1,007 1,178 1,321 357 Food Markets 564 - 407 - 534 453 437 452 537 120 Leasing - 590 - - - 281 120 187 324 121 Auto Parts/Repair - - - 592 - 479 540 587 821 156 All Others 3,195 3,541 3,456 3,751 3,381 2,550 2,828 2,829 2,667 700

18,794$ 19,670$ 20,330$ 19,740$ 17,794$ 15,964$ 16,305$ 17,739$ 18,526$ 4,259$

Source: Muni Financial Services

Notes: For Calendar year 2013 information is only available for the first quarter.

153

City of San LeandroSewer RatesLast Ten Fiscal Years

Fiscal Single Multi-Year Family Family Institutional

2004 19.99 14.18 2.45 - 5.02 1.93

2005 22.32 15.84 2.70 - 5.52 2.42

2006 24.93 17.69 2.97 - 6.07 2.33

2007 26.29 18.65 3.13 - 6.40 2.45

2008 26.29 18.65 3.13 - 6.40 2.45

2009 26.29 18.65 3.13 - 6.40 2.45

2010 27.60 19.59 3.04 - 6.36 2.50

2011 26.29 18.65 2.45 - 6.40 2.45

2012 28.97 20.56 3.19 - 6.67 2.62

2013 29.98 21.28 3.30 - 6.90 2.71

Notes: Commercial and Institutional charge is based upon the volume of water used.

Source: City of San Leandro Public Works Department

Sewer Non-Residential

Commercial

154

Direct and Overlapping DebtJune 30, 2013

2012-13 Assessed Valuation $9,986,261,007Redevelopment Incremental Valuation 1,824,683,279 Adjusted Assessed Valuation $8,161,577,728

Total Debt % City’s Share ofOVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2013 Applicable (1) Debt 6/30/13Bay Area Rapid Transit District $410,689,985 1.987 $8,160,410Chabot-Las Positas Community College District 438,355,959 11.605 50,871,209 San Leandro Unified School District 162,436,387 91.880 149,246,552 San Lorenzo Unified School District 93,820,002 21.823 20,474,339 East Bay Municipal Utility District, Special District No. 1 21,650,000 0.014 3,031 East Bay Regional Park District 137,390,000 3.070 4,217,873 City of San Leandro Cherrywood Community Facilities District 3,850,000 100.000 3,850,000 TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $236,823,414

Ratios to 2012-13 Assessed Valuation:Total Overlapping Tax And Assessment Debt…………….2.37%

DIRECT GENERAL FUND DEBT: %City of San Leandro General Fund Obligations $32,180,000 100.000 $32,180,000City of San Leandro Pension Obligations 18,305,000 100.000 18,305,000 TOTAL DIRECT GENERAL FUND DEBT $51,430,000

OVERLAPPING GENERAL FUND DEBT:Alameda County General Fund Obligations $639,498,000 5.051 $32,301,044Alameda County Pension Obligations 109,277,608 5.051 5,519,612 Alameda-Contra Costa Transit District Certificates of Participation 31,380,000 5.900 1,851,420 San Leandro Unified School District Certificates of Participation 19,730,000 21.823 4,305,678 TOTAL OVERLAPPING GENERAL FUND DEBT $43,977,754

SUB-TOTAL DIRECT DEBT $54,335,000 SUB-TOTAL OVERLAPPING DEBT 276,951,168

$331,286,168 (2)GRAND TOTAL DIRECT AND OVERLAPPING DEBT (2)

1. Percentage of overlapping agency's assessed valuation located within boundaries of the city.

2. Exclude tax and revenue anticiapation notes, enterprise reveune, mortgage revenue and tax allocations bonds and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity.

Ratios to Adjueted Assessed Valuation:Total Direct Debt ($50,485,000) 0.51%Combined Total Debt 3.63%

Source: California Municipal Statistics

City of San Leandro

155

City of San LeandroPledged-Revenue CoverageLast Ten Fiscal Years

Special Fiscal AssessmentYear Collections Principal Interest Coverage

2004 429,881 466,915 216,647 1.59 2005 239,560 230,000 61,698 1.22 2006 92,235 250,000 49,338 3.25 2007 175,866 130,000 35,775 0.94 2008 80,036 135,000 26,441 2.02 2009 66 145,000 16,416 2,445.70 2010 - 155,000 5,592 -2011 - - - -2012 - - - -2013 - - - -

Notes: The City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation is not available. During Fiscal Year 2009-10 no assessments were necessary due to the availability of funds to pay the debt.Source: City of San Leandro

Special Assessment Bonds

Debt Service

156

City of San LeandroComputation of Legal Debt MarginLast Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Assessed Valuation:

Secured property assessed value 7,043,305,510$ 7,554,407,513$ 8,300,642,672$ 8,886,531,894$ 9,318,787,490$ 8,890,723,914$ 8,864,732,304$ 8,893,409,893$ 9,359,287,988$ 9,951,536,608$ Addback: exempt real property 178,341,424 197,687,046 190,742,425 179,186,095 206,520,301 211,520,769 230,185,749 216,131,933 226,783,107 313,277,049

Total Assessed Valuation 7,221,646,934$ 7,752,094,559$ 8,491,385,097$ 9,065,717,989$ 9,525,307,791$ 9,102,244,683$ 9,094,918,053$ 9,109,541,826$ 9,586,071,095$ 10,264,813,657$

Bonded debt (15% of Assessed Value) 1,083,247,040$ 1,162,814,184$ 1,273,707,765$ 1,359,857,698$ 1,428,796,169$ 1,365,336,702$ 1,364,237,708$ 1,366,431,274$ 1,437,910,664$ 1,539,722,049$

Total Bonded Debt 64,605,000 66,183,260 64,234,740 62,180,004 60,138,458 85,302,265 82,973,241 80,112,833 98,071,722 95,407,754 Less: Special assessment bonds (1,045,000) (815,000) (565,000) (435,000) (300,000) (155,000) - Certificates of Participation (42,125,000) (41,200,000) (40,245,000) (39,085,000) (38,015,000) (37,015,000) (35,660,000) (34,420,000) (29,515,000) (19,250,000) Lease CAD/RMS/Fire Truck - (3,048,260) (2,609,740) (2,175,004) (1,683,458) (1,237,265) (1,238,241) (772,883) (287,790) (980,819)

Amount of Debt subject to Limit 21,435,000 21,120,000 20,815,000 20,485,000 20,140,000 46,895,000 46,075,000 44,919,950 68,268,932 75,176,935

Legal Debt Margin 1,061,812,040$ 1,141,694,184$ 1,252,892,765$ 1,339,372,698$ 1,408,656,169$ 1,318,441,702$ 1,318,162,708$ 1,321,511,324$ 1,369,641,732$ 1,464,545,114$

Notes: The City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation is not available.

Source: County of Alameda office of Auditor-Controller

157

City of San LeandroDemographic and Economic StatisticsLast Ten Fiscal Years

PerPersonal Capita Consumer

Calendar Income Personal Median School Median Price UnemploymentYear Population Million of Dollars Income Age Enrollment Home Price Index Rate

2004 81,352 204,246 49,276 38.40 8,654 450,000 199.000 6.0%

2005 81,013 215,791 51,964 40.00 8,727 527,500 201.200 5.1%

2006 80,928 233,248 59,600 37.70 8,724 552,500 209.100 4.6%

2007 81,273 259,428 62,000 36.70 8,729 477,500 216.120 5.0%

2008 81,851 265,954 62,500 37.70 8,722 363,000 225.180 6.9%

2009 82,472 259,043 57,600 38.00 8,855 305,000 225.692 10.3%

2010 83,183 265,969 59,300 38.90 8,801 334,194 227.697 10.8%

2011 85,490 269,588 61,395 39.54 9,000 309,800 232.082 10.0%

2012 85,941 - - 37.60 8,776 320,000 228.110 9.3%

2013 86,666 - - 8,769 400,000 245.935 7.4%

Notes: Personal and Per Capita Bureau of Economic- San Francisco -Oakland-Fremont Metropolitan Statistical Area 2012-2013 are not availableThe City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation is not available.

Sources: Population provided by the State Department of Finance. Personal income provided by the Bureau of Economic Analysis.Median Age provided by the US Census Bureau. Median Home Price provided by Trulia the Unemployment Rate provided by the Bureau of Labor Statistics.

158

City of San LeandroPrincipal EmployersCurrent Year and Ten Years Ago

Percent of Percent ofNumber of Total Number of Total

Employer Employees Rank Employment Employees Rank Employment

San Leandro Unified School District 1,095 1 3.36% 891 1 3.27%

City of San Leandro 406 2 1.24% 495 7 1.82%

Ghirardelli Chocolate, Co. 392 3 1.20% 283 1.04%

Wal - Mart Store 2648 330 4 1.01% 419 1.54%

OSI Soft, LLC 310 5 0.95% - 0.00%

BCI Coca-Cola Bottling Co-Service 285 6 0.87% 275 1.01%

Target Store T-1428 280 7 0.86% 265 0.97%

Costco Wholesale 277 8 0.85% 282 10 1.04%

Paramedics Plus LLC 262 9 0.80% - 0.00%

Kindred Hopital-SF Bay Area 259 10 0.79% 246 0.90%

MV Public Transportation 231 - 0.71% 200 0.73%

BCI Coca-Cola Bottling Co-Mftg 213 - 0.65% - 0.00%

Wal - Mart Store 5434 206 - 0.63% - 0.00%

Splay Inc 203 - 0.62% - 0.00%

Kennerley-Spratling, Inc 200 - 0.61% - 0.00%

Georgia Pacific Corrugated LLC 194 - 0.59% - 0.00%

Notes: San Leandro Hospital not included.

Source: City of San Leandro, San Leandro Unified School District

2013 2003

159

City of San LeandroFull-Time and Part-Time City Employees by FunctionLast Ten Fiscal Years

Function 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

General Government 62 58 59 57 59 62 55 49 51 50

Police 150 151 142 141 147 150 142 133 136 136

Engineering & Transportation 29 32 31 30 29 30 30 25 25 27

Development Services 34 24 24 24 24 23 19 18 19 21

Public Works Services 119 121 123 118 120 122 113 104 103 102

Other Agencies 6 6 6 8 9 8 9 8 8.5 0

Library 40 37 37 45 46 49 40 33 33 33

Recreation & Human Services 54 54 54 57 73 57 45 35 33 37

Total 494 483 476 480 507 501 453 405 409 406

Notes:Numbers represent Full-Time equivalents. Fire Services contracted with the Alameda County Fire Department.

Source: City of San Leandro

160

City of San LeandroOperating Indicators by FunctionLast Ten Fiscal years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Police Department: Arrests 4,853 4,775 4,769 3,769 3,939 4,026 3,722 3,486 3,299 3,279

Building Department: Permits Issued 3,976 3,957 4,014 2,791 3,569 2,541 2,507 2,446 2,503 2,564

Public Works Department: Street resurfacing (miles) 2 2 3 - 2 2 3 4.5 1.54 0

Parks and Recreation: Number of registrants 20,372 17,848 13,203 18,033 21,850 18,413 16,584 17,099 20,236 21,324 Number of facility rentals 645 634 542 602 746 752 705 1,190 1,282 1,999

Golf Course: Golf rounds played 112,000 109,000 106,000 110,104 102,182 101,760 98,000 98,000 97,310 95,995

Notes: Fire Services are contracted with the Alameda County Fire Department.

Source: City of San Leandro Recreation Department, Police Department, and Building Regulations.

161

City of San LeandroCapital Asset Statistics by FunctionLast Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Police: Stations 1 1 1 1 1 1 1 1 1 1

Fire: Fire Stations 5 5 5 5 5 5 5 5 5 5

Park and Recreation: Parks 16 16 16 16 16 16 16 16 16 16 Community Center 1 1 1 1 1 1 2 2 2 2

Public works: Streets (miles) 175 180 180 180 180 180 180 180 180 180 Streetlights 5,000 5,000 5,000 5,000 5,005 5,005 5,005 5,005 5005 5205 Traffic signals 8,500 8,500 8,500 8,500 8,600 8,600 8,600 8,600 8600 8650

Wastewater: Sanitary Sewer Lines (miles) 130 130 130 130 130 130 130 130 130 130 Storm Drainage Lines In the City (miles) 175 175 175 175 175 175 175 175 175 175

Golf Course: Courses 2 2 2 2 2 2 2 2 2 2

Sources: City of San Leandro: Public Works Department, Engineering & Transportation Department, Recreation

162

City of San LeandroRatios of General Bonded Debt OutstandingLast Ten Fiscal Years

(A) Percentage ofGeneral (A) Redevolpment Actual Taxable

Fiscal Year Obligation Redevelopment Owners Value of Per Ended Bonds Bonds Participation Total Property Capita

2004 37,360,000 26,200,000 4,016,345 67,576,345 0.68% 830.67

2005 36,565,000 25,765,000 3,699,287 66,029,287 0.62% 815.05

2006 35,745,000 25,315,000 5,256,610 66,316,610 0.59% 819.45

2007 34,720,000 24,850,000 4,490,020 64,060,020 0.52% 788.21

2008 33,790,000 24,365,000 3,964,006 62,119,006 0.47% 758.93

2009 32,780,000 51,130,000 3,505,859 87,415,859 0.63% 1,059.95

2010 31,730,000 50,005,000 4,688,993 86,423,993 0.65% 1,038.96

2011 30,645,000 48,695,000 4,436,553 83,776,553 0.64% 979.96

2012 47,820,000 47,320,000 3,693,035 98,833,035 0.75% 1,150.01

2013 45,718,000 45,562,000 2,979,232 94,259,232 0.55% 1,087.61

Note: (A) As of February 1, 2012, These are no longer City of San Leandro's debt; these debts have been absorbed by the Successor Agency Private-purpose Trust Fund.

Sources: Taxable value of property provided by the Alameda County Tax Collector. All other informationprovided by the City of San Leandro.

General Bonded Debt Outstanding

163

F-1

APPENDIX F

STATE DEPARTMENT OF FINANCE APPROVAL LETTER

F-2

~~T 0~:-..,.. "" f " ~\

"' 0 0 ,

• DEPARTMENT OF EDMUND G. BROWN JR .• GOVERNOR

~-~1.,,-o!>t"'~ F I NAN C E------9-1_5_L_5-TR-E-ET_•_s_A_<::R_A_M-EN_T_o_C:_A_•_9_5_8_1 4---3-7_0_5_•_w_w_w-.o-o-F"-.G-A-.G-ov

August 29, 2014

Mr. Jeff Kay, Business Development Manager City of San Leandro 835 East 14th Street San Leandro, CA 94577

Dear Mr. Kay:

Subject: Approval of Oversight Board Action

The City of San Leandro Successor Agency (Agency) notified the California Department of Finance (Finance) of its June 25, 2014 Oversight Board (OB) resolution on June 25, 2014. Pursuant to Health and Safety Code (HSC) section 34179 (h), Finance has completed its review of the OB action.

Based on our review and application of the law, OB Resolution No. 2014-002 OB, approving the issuance of tax allocation refunding bonds, is approved.

The Agency is planning to achieve $3,500,000 in savings over the remaining life of the bonds. Finance's approval is limited to only the refunding and is based on our understanding that no refunding bonds will be issued unless such bonds meet the requirements outlined in HSC section 34177.5 (a). Following the issuance, the payments for the refunding bonds should be placed on future Recognized Obligation Payment Schedule (ROPS) for Finance's review.

In addition, this resolution states the Agency is authorized to recover its costs related to the issuance of the refunding bonds from the proceeds. While Finance does not object to these actions, any associated costs must be placed on a subsequent ROPS for Finance's review and approval before they can be considered enforceable.

Please direct inquiries to Beliz Chappuis, Supervisor, or Todd Vermillion, Lead Analyst at (916) 445-1546.

DAVID BOTELHO Program Budget Manager

cc: Mr. David Baum, Finance Director, City of San Leandro Ms. Carol S. Orth, Tax Analysis, Division Chief, Alameda County California State Controller's Office

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APPENDIX G

SUPPLEMENTAL INFORMATION - CITY OF SAN LEANDRO The following information concerning the City of San Leandro and surrounding areas is

included only for the purpose of supplying general information regarding the community. The 2014 Bonds are not a debt of the City, the County, the State or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor. General

The City of San Leandro (the “City”) encompasses 15.5 square miles located in central Alameda County (the “County”), about 20 miles southeast of San Francisco and 35 miles north of San Jose. The City is a well diversified community with residential, commercial, and industrial development within the City. The industrial makeup of the City has been changing, moving away from its traditional manufacturing base toward more of an emphasis on services and warehousing industries.

The median temperatures for January and July are 48.6 degrees Fahrenheit and 63.1

degrees Fahrenheit respectively. Rainfall averages 18.69 inches per year.

Municipal Government Incorporated in 1872, the City is a charter city organized under a Mayor, Council, City

Manager form of government. The City Council consists of six Members from six districts and a Mayor. The Mayor and Councilmembers are nominated by district and elected at large. Each may serve a maximum of two consecutive four year terms.

The City Council appoints the City Manager, who is the City’s Chief Administrative

Officer. The City Manager directs and supervises all City departments, prepares and administers the annual City budget, and plans and implements key projects.

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Population

Population figures for the City and the County for the last five years are shown in the following table.

ALAMEDA COUNTY

Population Estimates Calendar Years 2008 through 2012 as of January 1

2008 2009 2010 2011 2012

Alameda 72,598 73,166 73,717 74,052 74,640 Albany 17,298 18,196 18,481 18,345 18,488 Berkeley 109,762 110,982 112,363 113,925 114,821 Dublin 44,321 45,104 45,681 46,207 46,785 Emeryville 9,362 9,702 9,795 10,110 10,200 Fremont 209,257 211,506 213,524 215,391 217,700 Hayward 141,495 142,642 143,921 145,101 147,113 Livermore 79,890 80,482 80,932 81,547 82,400 Newark 42,327 42,429 42,592 42,700 43,041 Oakland 387,554 389,913 391,475 392,333 395,341 Piedmont 10,601 10,638 10,674 10,710 10,807 Pleasanton 68,796 69,579 70,135 70,537 71,269 San Leandro 83,069 83,951 84,831 85,364 86,053Union City 68,884 69,108 69,625 69,746 70,646 Unincorporated County 138,871 140,401 141,494 141,688 142,833 County Total 1,484,085 1,497,799 1,509,240 1,517,756 1,532,137 Source: State Department of Finance estimates (as of January 1).

Employment and Industry

The City is included in the Oakland-Fremont-Hayward Metropolitan Division, which includes Alameda and Contra Costa Counties.

The unemployment rate in the Oakland-Fremont-Hayward MD was 5.9 percent in April

2014, down from a revised 6.8 percent in March 2014, and below the year-ago estimate of 7.2 percent. This compares with an unadjusted unemployment rate of 7.3 percent for California and 5.9 percent for the nation during the same period. The unemployment rate was 5.7 percent in Alameda County, and 6.1 percent in Contra Costa County

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OAKLAND-FREMONT-HAYWARD METROPOLITAN DIVISION

ALAMEDA, CONTRA COSTA COUNTIES Civilian Labor Force, Employment and Unemployment; Employment by Industry

(Annual Averages)

2008 2009 2010 2011 2012

Civilian Labor Force (1) 1,282,100 1,285,800 1,284,600 1,285,000 1,299,200 Employment 1,203,000 1,152,700 1,140,600 1,151,600 1,181,500 Unemployment 79,100 133,100 143,900 133,400 117,800 Unemployment Rate 6.2% 10.4% 11.2% 10.4% 9.1%Wage and Salary Employment: (2) Agriculture 1,400 1,400 1,400 1,600 1,600 Mining and Logging 1,200 1,200 1,200 1,200 1,200 Construction 64,900 53,500 47,400 46,300 48,500 Manufacturing 93,100 82,800 79,700 79,000 77,600 Wholesale Trade 47,600 43,700 41,800 42,000 43,800 Retail Trade 109,400 102,100 100,300 100,300 101,500 Transportation, Warehousing, Utilities 35,900 33,200 31,500 31,600 32,200 Information 27,800 25,300 23,600 22,700 22,900 Finance and Insurance 36,200 32,500 33,000 32,600 31,600 Real Estate and Rental and Leasing 16,500 15,500 15,200 14,700 14,200 Professional and Business Services 162,400 148,700 152,100 154,200 158,200 Educational and Health Services 133,000 137,200 136,400 137,500 143,300 Leisure and Hospitality 89,100 85,100 85,800 87,300 88,600 Other Services 36,100 34,700 35,000 35,900 36,700 Federal Government 17,100 16,700 15,700 14,600 14,200 State Government 39,100 39,000 38,100 38,400 39,100 Local Government 121,100 116,900 111,500 109,500 109,200 Total, All Industries (3) 1,031,800 969,400 949,700 949,300 964,400 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic

workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic

workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department.

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Largest Employers The following table shows the ten largest major employers in the City and the County.

CITY OF SAN LEANDRO Major Employers

2013

Employer Number of Employees

% of Total Employment

San Leandro Unified School District 1,095 3.36% City of San Leandro 406 1.24 Ghirardelli Chocolate, Co. 392 1.20 Wal-Mart Store 2648 330 1.01 OSI Soft, LLC 310 0.95 BCI Coca-Cola Bottling Co-Service 185 0.87 Target Store T-1428 280 0.86 Costco Wholesale 277 0.85 Paramedics Plus LLC 262 0.80 Kindred Hospital - SF Bay Area 259 0.79

Source: San Leandro Comprehensive Annual Fiscal Report Year Ended June 30, 2013.

ALAMEDA COUNTY

Major Employers (Listed alphabetically) January 2014

Employer Name Location Industry Alameda County Law Enforcement Oakland Sheriff Alameda County Sheriff's Department Hayward Sheriff Alameda County Sheriff's Office Oakland Sheriff Alta Bates Summit Medical Center Oakland Hospitals Alta Bates Summit Medical Center Berkeley Hospitals Bayer Corp Berkeley Drug Millers (Mfrs) Berkeley Coin & Stamp Berkeley Coin Dealers Supplies & Etc California State-East Bay Hayward Schools-Universities & Colleges Academic Childrens Hospital Health Library Oakland Special Interest Libraries Cooper Vision Inc Pleasanton Physicians & Surgeons Equip & Supls-Mfrs East Bay Water Oakland Transit Lines Highland Hospital Oakland Hospitals Intel Corp Fremont Semiconductor Devices (Mfrs) Kaiser Permanente Hospital Hayward Hospitals Kaiser Permanente Medical Center Oakland Hospitals Lawrence Berkeley National Lab Berkeley Physicians & Surgeons Lawrence Livermore National Lab Livermore Small Arms Ammunition (Mfrs) Oakland Police Patrol Division Oakland Police Departments Residential & Student Svc Program Berkeley Schools-Universities & Colleges Academic Safeway Inc Pleasanton Grocers-Retail Tesla Motors Fremont Automobile Repairing & Service Transportation Dept-California Oakland State Government-Transportation Programs University of Ca-Berkeley Berkeley Schools-Universities & Colleges Academic Washington Hospital Fremont Hospitals Waste Management Oakland Garbage Collection Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database.

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Effective Buying Income

“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”

The following table summarizes the total effective buying income for the County of

Alameda, the State and the United States for the period 2008 through 2012. Effective Buying Income data is not yet available for year 2013.

CITY OF SAN LEANDRO; ALAMEDA COUNTY

Effective Buying Income As of January 1, 2008 through 2012

Year

Area

Total Effective Buying Income (000’s Omitted)

Median Household Effective Buying

Income

2008 City of San Leandro $ 1,825,223 $ 51,503 Alameda County 38,889,500 55,987 California 832,531,445 48,952 United States 6,443,994,426 42,303

2009 City of San Leandro 1,916,318 52,973 Alameda County 40,053,865 57,997

California 844,823,319 49,736 United States 6,571,536,768 43,252

2010 City of San Leandro 1,777,668 49,045 Alameda County 38,097,873 54,734 California 801,393,028 47,177 United States 6,365,020,076 41,368

2011 City of San Leandro 1,831,193 48,748 Alameda County 39,064,683 54,542 California 814,578,458 47,062 United States 6,438,704,664 41,253

2012 City of San Leandro 1,886,158 48,664 Alameda County 43,677,855 55,396 California 864,088,828 47,307 United States 6,737,867,730 41,358 Source: The Nielson Company Inc.

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Commercial Activity During calendar year 2012, total taxable transactions in the City were reported to be

$1,867,865,000, a 4.66% increase over the total taxable transactions of $1,775,210,000 that were reported in the City during calendar year 2011. A summary of historic taxable sales within the City during the past five years for which itemized data is available is shown in the following table. Annual figures are not yet available for 2013.

CITY OF SAN LEANDRO

Taxable Transactions Number of Permits and Valuation of Taxable Transactions

(Dollars in Thousands)

Retail Stores Total All Outlets

Number

of Permits

Taxable

Transactions

Number

of Permits

Taxable

Transactions 2008 1,154 $1,212,699 2,506 $1,787,282 2009 (1) 1,336 1,074,706 2,351 1,598,739 2010 (1) 1,414 1,110,136 2,448 1,663,900 2011 (1) 1,312 1,203,146 2,309 1,775,210 2012 (1) 1,341 1,273,883 1,322 1,867,865 (1) Retail Stores sales not comparable to prior years. “Retail” category now includes “Food Services”. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

Total taxable transactions during calendar year 2012 in the County were reported to be

$25,181,571,000, a 7.5% increase over the total taxable transactions of $23,430,799,000 reported during calendar year 2011. The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions within the County is presented in the following table. Annual figures are not yet available for 2013.

COUNTY OF ALAMEDA Taxable Transactions

Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

Retail Stores Total All Outlets

Number

of Permits

Taxable

Transactions

Number

of Permits

Taxable

Transactions 2008 20,186 $14,547,749 41,783 $23,862,947 2009 (1) 24,596 12,641,415 38,663 20,430,195 2010 (1) 24,596 12,641,415 38,663 20,430,195 2011 (1) 24,809 14,519,756 38,577 23,430,799 2012 (1) 26,027 15,781,349 39,706 25,181,571 (1) Retail Stores sales not comparable to prior years. “Retail” category now includes “Food Services”. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

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Construction Provided below are the building permits and valuations for the City of San Leandro for

calendar years 2008 through 2012.

CITY OF SAN LEANDRO Total Building Permit Valuations

(Valuations in Thousands)

2008 2009 2010 2011 2012 Permit Valuation New Single-family $954.9 $976.5 $2,758.1 $905.9 $1,665.7 New Multi-family 558.2 10,500.0 0.0 0.0 0.0 Res. Alterations/Additions 9,055.8 5,517.1 4,666.9 7,716.9 13,600.4

Total Residential 10,569.0 16,993.6 7,424.9 8,622.8 15,266.1

New Commercial 6,617.0 9,000.0 0.0 89,173.0 2,020.0 New Industrial 6,900.0 0.0 0.0 4,400.0 375.0 New Other 1,245.3 906.8 2,068.9 330.0 0.0 Com. Alterations/Additions 26,108.7 21,813.1 12,201.7 11,016.3 7,108.2

Total Nonresidential $40,871.0 31,719.9 14,270.6 104,919.3 9,503.2 New Dwelling Units Single Family 6 3 7 4 4 Multiple Family 2 51 0 0 0 TOTAL 8 54 7 4 4 Source: Construction Industry Research Board, Building Permit Summary.

Provided below are the building permits and valuations for the County for calendar years

2008 through 2012.

ALAMEDA COUNTY Total Building Permit Valuations

(Valuations in Thousands)

2008 2009 2010 2011 2012 Permit Valuation New Single-family $238,743.0 $227,982.5 $276,660.5 $269,312.8 $372,939.4New Multi-family 201,122.3 96,518.0 157,459.3 249,684.1 343,669.8Res. Alterations/Additions 285,782.4 229,873.2 243,289.9 273,631.8 235,264.8

Total Residential $725,647.7 554,373.7 677,409.6 792,628.7 951,874.0

New Commercial 197,181.1 72,055.6 14,689.1 261,804.2 94,705.8New Industrial 60,200.0 89,535.4 82,475.8 17,485.7 29,808.2New Other 95,640.7 45,100.3 69,060.1 37,504.6 6,764.1Com. Alterations/Additions 457,412.5 391,295.8 398,430.5 392,163.7 352,261.1

Total Nonresidential $810,434.3 $597,987.1 $564,655.4 $708,958.2 483,539.2 New Dwelling Units Single Family 761 802 907 817 1,119 Multiple Family 1,296 536 936 1,352 1,508 TOTAL 2,057 1,338 1,843 2,169 2,627 Source: Construction Industry Research Board, Building Permit Summary.

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Education The City is served by two school districts. The San Leandro Unified School District is

composed of 12 public schools consisting of eight elementary schools, two middle schools, one continuation high school, and one comprehensive high school. The San Lorenzo Unified School District also serves a portion of San Leandro students at two elementary schools, one middle school, and one high school. Attuned to the varied needs of today's students, the school boards have developed a broad and comprehensive core curriculum from kindergarten to 12th grade. The schools feature state-of-the-art technology and computer labs, subjects as diverse as ocean studies, advanced science and math programs, award-winning language arts programs, and outstanding programs sponsored by the Lawrence Hall of Science, University of California. In addition, the schools also offer school-to-work and mentor academy programs. San Leandro also has a number of parochial schools located within the city and in adjacent communities. Higher education opportunities are available nearby at some of the nation’s best educational institutions. These include the University of California at Berkeley, Stanford University in Palo Alto, California State University East Bay in Hayward, and Chabot Community College in Hayward.

Recreation and Leisure

The Main Library is located in the downtown area and includes a senior meeting facility,

lecture hall, and meeting rooms. The Main Library is the hub for many community recreational activities, including leisure classes for all ages, special events, and programs such as the Trivia Bee and Project Literacy. The community is also served by three neighborhood branch libraries. The community enjoys a variety of celebrations such as a Holiday Tree Lighting event, the Miracle on East 14th Street festival, and a variety of multicultural celebrations. The Marina Community Center, located in the western part of the City, is available to the community for celebrations, meetings, and leisure classes. The Shoreline Recreation Area offers opportunities for outdoor enthusiasts. This destination spot includes 27 holes of nationally acclaimed Bayside golf with a full service clubhouse and an all-weather practice facility, a 131-room hotel, two restaurants overlooking the Bay, a 455-slip yacht harbor, a sheltered sailing lagoon, and a marina. There is also a 20-acre park with a sand volleyball court, picnic tables with barbeques, two playgrounds, an exercise par course, and the San Francisco Bay trail for hiking and bicycling.

Transportation

Interstate Highway 580 (east-west), Interstate Highway 680 (north-south) and Highway

61 provide access to the nearby cities of Oakland, San Francisco, Sacramento, San Jose, and the Central Valley.

San Leandro is located 7 miles from the Oakland International Airport, 35 miles from San

Jose Municipal Airport and 25 miles from San Francisco International Airport. Deep water shipping facilities are available at the Port of Oakland and the Port of San Francisco, 10 miles and 20 miles from the City, respectively.

A.C. Transit provides regional bus service and connects with the Greyhound Terminal

and two San Leandro Bay Area Rapid Transit (BART) stations. Two Bay Area Rapid Transit (BART) stations in the city connect San Leandro with San Francisco and cities in four county areas. San Leandro LINKS is a shuttle bus program for transporting employees in west San Leandro to and from the Downtown BART station. Three nearby international airports link San

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Leandro residents and businesses with every destination in the world. Oakland International Airport is just minutes away. The Port of Oakland, one of the West Coast’s largest containerized cargo shipping facilities, is just 10 miles north of San Leandro. The Port’s deep-water container terminal is the fourth largest and busiest in the nation, one of the top 40 container ports globally, and is served by over 35 shipping lines. San Leandro’s prime location in the Bay Area benefits both the residents and the business community.

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APPENDIX H

FISCAL CONSULTANT’S REPORT

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U r b a n A n a l y t i c s

F I S C A L C O N S U L T A N T R E P O R T

F O R T H E

S U C C E S S O R A G E N C Y T O T H E R E D E V E L O P M E N T A G E N C Y O F T H E

C I T Y O F S A N L E A N D R O

2 0 1 4 T A X A L L O C A T I O N R E F U N D I N G B O N D S

( R E D E V E L O P M E N T P R O J E C T S )

S E P T E M B E R 1 8 , 2 0 1 4

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San Leandro SA Fiscal Consultant Report 1

I N T R O D U C T I O N

In preparation for the issuance of the Successor Agency to the San Leandro Redevelopment Agency 2014 Tax Allocation Refunding Bonds (Redevelopment Projects) (the “Bonds”), the Successor Agency to the Redevelopment Agency of the City of San Leandro (the “Agency”) has retained Urban Analytics as fiscal consultant (the “Consultant”) to evaluate available tax revenue for the Agency’s Plaza 1 Project Area (the “Plaza 1 Project Area”), the Plaza 2 Project Area (the “Plaza 2 Project Area” and, together with the Plaza 1 Project Area, the “Plaza Project Area”), and the West San Leandro/MacArthur Boulevard Project Area (the “West San Leandro Project Area” and, together with the Plaza Project Area, the “Project Areas”) and provide a Fiscal Consultant Report. The Agency also has an additional project area, the Alameda County-City of San Leandro Project Area also known as the Joint Project Area, that is not pledged to the Bonds.

This Fiscal Consultant Report (the “Report”) is based in part on assessed valuation information provided by the County of Alameda (the “County”), on the County’s assessment and apportionment practices, on base year assessed valuation for the Project Areas as reported by the County, and on information regarding passthrough agreements and redevelopment plan terms provided by Agency staff.

The Report provides a review of various matters affecting the Agency’s receipt of tax increment in the Project Areas. The Report also presents projections of tax increment available to the Agency over the life of the Project Areas, incorporating the Agency’s obligations toward other taxing jurisdictions and projecting assessed valuation at a two percent growth rate.

S U M M A R Y O F F I N D I N G S

The Project Areas are expected to generate a total of $7,167,430 in property tax increment in FY 2014-15, after deductions for County administration fees and non-subordinated obligations. The Series 2014 Bonds will refund the Agency’s outstanding 2002 Tax Allocation Bonds (the “2002 TABs”) and the 2004 Tax Allocation Bonds (the “2004 TABs” and, together with the 2002 TABs the “Prior Bonds”). The Agency also has outstanding 2008 Tax Allocation Bonds that are not subject to this refunding. The Bonds will be secured by a pledge of tax increment revenue, including revenue formerly deposited in the low-moderate income housing fund, from the Project Areas, subject to certain senior obligations. The Agency’s ability to collect tax increment from the Project Areas will cease on July 15, 2035.

T H E A L L O C A T I O N O F T A X I N C R E M E N T R E V E N U E T O T H E A G E N C Y

As described further under “Redevelopment Dissolution”, tax revenue derived from assessed valuation in a redevelopment project area in excess of the base year assessed valuation is allocated semi-annually by the county’s auditor-controller to a Redevelopment Property Tax Trust Fund (the “RPTTF”). This allocation of tax increment is the maximum that a successor agency may receive in a fiscal year. The tax increment in the RPTTF is applied, in order of priority, to administrative costs of the state’s Department of Finance, to the administrative costs of the county’s auditor-controller, to passthrough payments, to debt service and contractual obligations of the successor agency, and to administrative costs of the successor agency. To the extent the funds in the RPTTF are insufficient to meet these

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September 18, 2014


obligations, the county auditor-controller will withhold successor agency administrative costs; if an insufficiency remains, subordinated passthrough payments would then be deferred.

Successor agency annual debt service and contractual obligations are identified on a Recognized Obligation Payment Schedule (ROPS) that is approved by the successor agency’s Oversight Board and by the state Department of Finance. Each successor agency prepares two ROPS each year, one covering payments due in the January to June period and the other covering payments due in the July to December period. In order to have sufficient funds in a subsequent period, the successor agency may identify on its ROPS, subject to approval by the State Department of Finance, an amount necessary to be retained in the RPTTF to be applied to obligations shown on a subsequent ROPS. The county auditor-controller deposits funds into the RPTTF twice each year, once on January 2 and again on June 1. Any amount remaining in the RPTTF after payment of administrative costs, passthrough payments and ROPS obligations is immediately distributed to other taxing entities.

The Alameda County’s Auditor-Controller’s Office (ACO) maintains one RPTTF (the “Agency RPTTF”) for the Plaza Project Area and the West San Leandro Project Area (the two project areas exclusively controlled by the Agency) and a separate RPTTF (the “Joint RPPTF”) for the Joint Project Area controlled jointly by the Agency and the successor agency to the County of Alameda’s redevelopment agency. Debt service on the Bonds will be paid exclusively from the Agency RPTTF and not from the Joint RPTTF. The County Auditor-Controller allocates to the Agency RPTTF all locally assessed secured and unsecured property tax revenue and state-assessed utility revenue collected within the Plaza Project Area and the West San Leandro Project Area above each project area’s base year assessed valuation. The County also apportions to each RPTTF a share of state-assessed unitary revenue as well as revenue from supplemental assessments.

Tax revenue deriving from the base year assessed valuation is distributed to all other taxing jurisdictions within the tax rate areas comprising the Project Areas. The distribution of the base year tax revenue is accomplished using the same apportionment process used to allocate property tax revenue in non-redevelopment tax rate areas.

With some exceptions described further under “Assessment Appeals”, it has been the practice of the ACO not to deduct current appeal refunds from redevelopment agency tax increment; these refunds are instead apportioned to other taxing entities using the normal apportionment mechanism.

The County also apportions to the Agency a share of state-assessed unitary revenue. This property tax revenue, generally from utility companies, is collected on a countywide basis and distributed to redevelopment agencies and taxing entities under an apportionment formula set out in AB454, the 1986 legislation that established the unitary tax mechanism. The Agency receives approximately $37,000 in unitary revenue annually in the Project Areas.

The State Board of Equalization assesses utility properties in the Project Areas on a separate roll from locally-assessed secured and unsecured properties. The total valuation of state- assessed utility properties in the Project Areas has not yet been fully reported for FY 2014-15 but is estimated to be $1,073,537 based on FY 2013-14 valuation..

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The Teeter Plan (Section 4701 et seq. of the California Revenue and Taxation Code) allows the County to distribute secured property tax revenue to all jurisdictions, including the Agency, without regard to delinquencies. This mechanism allows the County to maintain a reserve fund to cover delinquencies and allocate revenue based on the original secured roll, while retaining all delinquent tax payments and penalties. Consequently, the Agency is not affected by delinquent tax payments. The County does have the right, at its option, to terminate its use of the Teeter Plan.

The County charges an administration fee to recover property tax administration costs from the Agency and other jurisdictions under the Revenue and Taxation Code, Section 95.3. The fee is based on County costs that vary from year to year so that the amount charged to each jurisdiction annually is variable. The ACO also charges a fee for the costs of administering the RPTTF. The combined administration fees are estimated to be $88,711 in FY2014-15, or approximately 1.00% of the gross tax increment revenue from the Project Areas. For purposes of this Report, the administrative fee is projected to remain constant at 1.00% of gross tax increment.

Tax increment calculations made in this Report use revenue from the secured and unsecured rolls along with revenue from unitary assessments. Supplemental roll revenues are considered when calculating cumulative tax increment caps but are not otherwise included in tax increment calculations used in the Report.

F O R M E R R E D E V E L O P M E N T H O U S I N G S E T - A S I D E

Prior to the Redevelopment Dissolution Law (as defined below), California redevelopment law required agencies to maintain a low- and moderate-income housing fund, depositing into the fund 20% of gross tax increment revenues annually. The Agency reports that it has no outstanding obligations secured by deposits into the low- and moderate-income housing fund. As a result, the funds previously deposited into the low-moderate income housing fund are available for debt service on the Bonds.

L A N D U S E , R E D E V E L O P M E N T P L A N S A N D P L A N L I M I T S

The Project Areas consists primarily of industrial uses, with over two-thirds of the valuation – $915.5 million – in that category as seen in Table 1. Commercial properties account for 22.5% of the Project Areas valuation with residential uses comprising most of the remainder. The industrial land uses are spread across warehouse properties ($487.3 million, or 36.1% of valuation in the Project Areas), and light industrial uses ($316.9 million, or 23.5% of valuation in the Project Areas). Industrial uses are located mainly within the West San Leandro Project Area (detail for the individual project areas is provided in the Appendix to this report). Within the commercial land use category, office properties accounted for $303.2 million of assessed valuation in the Project Areas, or 22.5% of total valuation. Commercial properties are principally in the Plaza Project Area.

Each of the Agency’s project areas was established by a separate redevelopment plan, governing the duration of the project area, the collection of tax increment and other matters. The two redevelopment plans governing the project areas securing the Bonds are described below.

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Table 1 Land Use in the Project Areas, FY2014-15

Land Use Secured Assessed

Valuation

Pct. of Total Secured Valuation

Number of Parcels

Pct. of Total Number of

Parcels

Commercial 303,179,976 22.5% 191 17.3% Industrial 915,477,291 67.8% 327 29.6% Single-Family Residential 12,024,152 0.9% 36 3.3% Condominiums 49,210,853 3.6% 252 22.8% Other Residential 43,388,093 3.2% 45 4.1% Vacant 24,134,637 1.8% 55 5.0% Other 3,035,530 0.2% 197 17.9%

Total 1,350,450,532 100.0% 1,103 100.0%

Valuations are net of Homeowner Exemptions. These exemptions are restored by the Controller prior to disbursement of tax increment to the RPTTF.

Source: County of Alameda Assessor, Urban Analytics

P l a z a P r o j e c t A r e a R e d e v e l o p m e n t P l a n s

The Plaza Project Area was created through the merger of two separate project areas, Plaza One and Plaza Two. Plaza One encompasses 18 acres and Plaza Two has 137 acres. The Plaza Project Area is largely comprised of commercial and residential properties (detail is provided in the Appendix). Commercial properties represent approximately one-quarter of the number of parcels and two-thirds of the secured assessed valuation in the Plaza Project Area.

The redevelopment plan for the older of the two sub-areas, Plaza One, was originally adopted December 28, 1960 under Ordinance 1295. The Plaza One plan was subsequently amended nine times including four amendments establishing key fiscal limits, as listed in Table 2.

The Plaza One sub-area’s tax increment cap was established by Ordinance 86-038 (adopted December 15, 1986) at $7,537,657, with the cap applying to tax increment exclusive of the housing set-aside. Projections used in this report have assumed a proportionate cap on the full amount of tax increment, calculated by dividing $7,537,657 by 80% (the share of tax increment formerly represented by the housing set-aside), resulting in a cap on total tax increment received under the plan of $9,422,071. The cap continued to apply to the Plaza One tax increment after the Plaza One and Plaza Two sub-areas were merged. It is estimated that the Plaza One sub-area would reach its tax increment cap in FY2016-17.

Ordinance 94-018, adopted September 6, 1994, established December 28, 2005 as the last date for the receipt of tax increment in the Plaza One sub-area except to repay indebtedness established prior to January 1, 1994; tax increment required to repay such indebtedness can be received until December 28, 2025.

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Table 2 Plaza Project Area – Plaza One Sub-Area Ordinances

Ordinance Number

Date of Adoption

General Purpose

1295 12/28/1960 Plan adoption 67-63 12/26/1967 Owner participation, business relocation, residential occupancy 71-29 10/26/1971 Owner participation, business relocation, residential occupancy 71-39 8/4/1975 Owner participation, business relocation, residential occupancy 80-34 7/14/1980 Land use and fiscal amendments

82-094 11/29/1982 Land use and fiscal amendments 86-038 12/15/1986 Land use and fiscal amendments 94-018 9/6/1994 Fiscal amendments for AB1290 conformance 95-042 12/18/1995 Amendment of plan duration

2000-09 5/15/2000 Merger of Plaza One and Plaza One to form Plaza Project Area Source: The Agency

The Agency adopted Ordinance 95-042 on December 18, 1995 setting the redevelopment plan duration at January 1, 2009. This date had been the last date on which the Agency could undertake redevelopment activities within the Plaza One sub-areas, prior to dissolution.

On May 15, 2000 the Agency adopted Ordinance 2000-09, under which the Plaza One and Plaza Two sub-areas were merged into the Plaza Redevelopment Plan.

The Plaza Two sub-area was adopted with Ordinance 67-62 on December 26, 1967, and subsequently amended seventeen times, as listed in Table 3. Four of the amendments added new areas to the redevelopment plan, while two made substantive changes to fiscal time limits.

Table 3 Plaza Project Area – Plaza Two Sub-Area Ordinances

Ordinance Number

Date of Adoption

General Purpose

67-62 12/26/1967 Plan adoption 71-28 10/26/1971 Owner participation, business relocation, residential occupancy 74-14 2/25/1974 Owner participation, business relocation, residential occupancy 79-39 12/17/1979 Added Area 2

81-019 3/30/1981 Added Area 3 82-093 11/29/1982 Added Area 4 83-026 10/10/1983 Land use, owner participation 85-049 1/6/1986 Land use 86-039 12/15/1986 Fiscal amendments 88-013 7/5/1988 Added Area 5 94-019 9/6/1994 Fiscal amendments for AB1290 conformance 94-029 12/19/1994 Land use 95-05 2/27/1995 Land use 95-06 3/20/1995 Land use

97-025 8/18/1997 Land use 2000-09 5/15/2000 Merger of Plaza One and Plaza OneI to form Plaza Project Area

2000-010 5/15/2000 Extension of emininent domain time limit 2001-021 10/15/2001 Land use

Source: The Agency

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Two Ordinances – 86-039 and 94-019 – were adopted to bring the Plaza Two redevelopment plan into conformance with redevelopment law current at the time. Ordinance 88-013 adopting Area 5 also established the tax increment cap for the Plaza Two project area as a whole at $87,500,000, a limit inclusive of the housing set-aside. Ordinance 88-013 also excluded a group of thirteen parcels from the allocation of tax increment to the Agency. Tax increment from these parcels is deducted from the Agency’s annual tax increment allocation by the ACO and from all calculations in this Report.

Ordinance 94-019 set the time limit on establishing indebtedness in Areas 2 through 4 at January 4, 2004, and in Area 5 at July 5, 2008, with some exceptions for housing-related indebtedness. Ordinance 94-019 also established varying dates for the termination of the plan – including the ability to repay indebtedness – at varying dates for the sub-areas (shown in Table 4 below).

Plaza Project Area Redevelopment Plan Limits The Agency cannot receive tax increment or repay indebtedness beyond certain dates, set forth in the redevelopment plans and their amendments and shown in Table 4 below.

Table 4 Plaza Project Area Redevelopment Plan Limits

Sub-Area

Plan Expiration

Last Date to Incur

New Debt

Last Date to Repay Debt

With Tax Increment

Tax Increment Limit

Limit on Total Outstanding

Bonded Indebtedness

Plaza One 1/1/2009 1/1/2009 * 12/28/2005 ** $9,422,071 *** None

Plaza Two $87,500,000 **** $50,000,000 ****

- Area 1 1/1/2009 1/1/2004 1/1/2019

- Area 2 12/17/2019 1/1/2004 12/17/2029

- Area 3 3/30/2021 1/1/2004 3/30/2031

- Area 4 11/29/2022 1/1/2004 11/29/2032

- Area 5 7/5/2028 7/5/2008 7/5/2038

* Due to the 12/28/2005 limitation on repayment of new debt, the practical limit on incurring new debt was some time prior to the last date to repay new debt. ** Post-1993 debt only; for debt established before January 1, 1994 the last date for repayment is 12/28/2025. The limitation on post-1993 debt repayment was established under Ordinance 94-018 *** Inclusive of the housing set-aside. Excluding the 20% set-aside the tax increment limit is $7,537,657. **** Applies to Plaza Two sub-area as a whole. Time limits apply separately to each of the added areas.

Source: The Agency

Under AB1290, redevelopment plans were required to include a final date for the establishment of debt and for the repayment of debt. These were generally tied to the dates on which the plans were originally adopted or when area was added to the project area, although AB1290 permitted redevelopment agencies to set January 1, 2004 as the last date to establish new debt in some cases (redevelopment dissolution legislation eliminated the issuance of new debt other than for refunding purposes except in certain circumstances not applicable to the Agency).

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In the Plaza One sub-area, the plan expiration is set at January 1, 2009. Under Ordinance 94-018, the Agency could repay indebtedness incurred on or after January 1, 1994 until December 28, 2005; indebtedness incurred before January 1, 1994 can be repaid with tax increment until December 28, 2025 although, as noted above, the tax increment cap in the Plaza One sub-area is expected to be reached prior to that date.

In the Plaza Two sub-area, the tax increment cap of $87,500,000 applies to all of the areas added to the original project area; the cap is inclusive of the housing set-aside. The Agency can collect tax increment in each of the areas added to the plan for a ten-year period following the expiration of the plan for the area. The Plaza Two plan contains a limit on outstanding bonded indebtedness of $50,000,000.

Plaza Project Area Tax Increment Caps Under California redevelopment law, redevelopment plans adopted prior to January 1, 1995 were required to contain a limitation on the total amount of tax increment revenue the Agency could collect over the life of the redevelopment plan. Although AB1290 eliminated this requirement for plans adopted after that date in favor of time limits on the collection of tax increment, both the Plaza One and Plaza Two Redevelopment Plans currently remain subject to the tax increment cap requirement.

As noted above, the Redevelopment Plan tax increment cap for Plaza One is $7,537,657, an amount exclusive of the twenty percent housing set-aside, with the cap on total tax increment calculated as $9,422,071. The cap for Plaza Two is $87,500,000, and is inclusive of the housing set-aside.

The total amount of tax increment received in years prior to FY2014-15 is calculated to be $8,449,968 in the Plaza One sub-area and $50,622,063 in the Plaza Two sub-area. Projected annual tax increment is added to the historic figures to obtain a cumulative total of tax increment collected throughout the life of the redevelopment plan.

The Agency’s ability to collect tax increment is limited by a combination of these caps on tax increment and by the temporal plan limits on repayment of debt for the Plan’s sub-areas (described further in the following section). As a more rapid rate of tax increment growth may result in the Agency’s tax increment cap being reached prior to the time limits on debt repayment, tax increment projections were prepared using differing rates of growth.

Applying a growth rate of 5%, the Agency is estimated to reach its tax increment cap in Plaza One in FY2016-17 and in Plaza Two in FY2022-23. With the exception of the Area One portion of the Plaza Two sub-area with a limit on debt repayment of January 1, 2019, the caps are reached prior to the time limits on the repayment of debt.

At a lower growth rate of 1% the tax increment cap is also reached in Plaza One in FY2016-17 and in Plaza Two in FY2025-26. Under this rate of growth, four of the of the Plaza Two sub-area reach the time limit on debt repayment prior to reaching the tax increment cap.

The State Department of Finance has indicated that it considers that tax increment caps not reached prior to the dissolution of redevelopment agencies in 2012 should not be used to prevent payment of enforceable obligations, and that they advise county auditor-controllers to not apply tax increment caps in cases where doing so would prevent payment of enforceable obligations. It is not clear whether this advice will be followed by county auditor-controllers, or that it would withstand any legal challenges. For the purposes of this Report it is assumed that tax increment caps will remain in effect.

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W e s t S a n L e a n d r o P r o j e c t A r e a R e d e v e l o p m e n t P l a n

The West San Leandro Project Area is comprised of two separate geographic areas, both of which generate tax increment. The West San Leandro area, the larger of the two, is a primarily industrial 1,024-acre area located to the west of Interstate 880. The MacArthur Boulevard portion is an approximately 16-acre, largely commercial area bordering MacArthur Boulevard near Interstate 580.

Established by Ordinance 99-025 on July 19, 1999, the West San Leandro Project Area is subject to the statutory provisions of redevelopment law. As the project area was established after the effective date of AB1290 (a major revision of redevelopment law that took effect in 1994) the redevelopment plan does not contain a ‘cap’, or dollar limit, on the amount of tax increment that can be collected under the plan. Instead, the plan contains a statutory time limit on the receipt of tax increment and repayment of indebtedness of 45 years after the date of plan adoption. This limit was extended by one year to July 19, 2045 as a result of a state-mandated payment to the ERAF fund. The West San Leandro Project Area redevelopment plan includes a limitation of $750 million on the amount of indebtedness that may be outstanding at any time.

Seventeen parcels were removed from the original configuration of the West San Leandro Project Area as a result of negotiations with the County. These were primarily warehouse and industrial properties that the County contended were not sufficiently blighted to warrant inclusion in the project area; the largest property was a facility owned by Lucky Stores and was subsequently developed as a Kaiser medical facility. The Agency amended the Redevelopment Plan to exclude these parcels on June 26, 2000.

Table 5 Seventeen Parcels Excluded From the West San Leandro Project Area

Parcel Number Owner Name Property Location FY2014-15 Assessed

Value 077A-0647-009-37 KAISER FOUNDATION HOSPITALS MARINA BLVD - 077A-0647-009-48 KAISER FOUNDATION HOSPITALS 2500 MERCED ST 207,462 077A-0647-010-00 DELTA PROPERTIES 1803 MARINA BLVD 821,212 077A-0647-011-00 DELTA PROPERTIES 1899 MARINA BLVD 1,018,987 077A-0647-012-02 DELTA PROPERTIES 872-1-116AT-POR 7 MERCED ST - 077A-0647-012-03 DELTA PROPERTIES 2300 MERCED ST 2,399,177 077A-0647-014-00 KAISER FOUNDATION HOSPITALS MERCED ST 40,974,597 077A-0647-015-00 KAISER FOUNDATION HOSPITALS MERCED ST 26,399,527 077A-0745-040-01 BIGGE DEVELOPMENT CO 10750 BIGGE ST 1,146,613 077A-0745-041-01 BIGGE DEVELOPMENT COMPANY 10700 BIGGE ST 758,945 077A-0745-043-01 MCLELLAN ESTATE CO 10850 BIGGE ST 7,785,185 077A-0745-045-06 PENSKE TRUCK LEASING CO 10755 BIGGE ST 610 6,942,796 077A-0745-049-01 BIGGE STREET INVESTORS 10901 BIGGE ST 7,167,383 079A-0395-006-14 CITY OF SAN LEANDRO 1919 DAVIS ST - 079A-0395-006-15 WAL-MART REAL ESTATE BUSINESS TRUST 1919 DAVIS ST 13,683,577 079A-0395-006-16 CITY OF SAN LEANDRO 1933 DAVIS ST - 079A-0395-006-17 SKB WESTGATE INVESTMENTS LLC 1933 DAVIS ST 49,417,641 Source: County of Alameda Assessor, Urban Analytics

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The parcels have been excluded from the Agency’s tax increment receipts for the West San Leandro Project Area since FY2000-01. The excluded parcels were removed from both the base year valuation of the project area and from the assessed valuation calculated annually for the West San Leandro Project Area by the ACO. The parcels are listed in Table 5 below.

The Controller maintains the base year assessed valuation by secured, unsecured and utility roll, although tax increment is calculated on a combined basis. The incremental assessed valuation – and thus tax increment – is derived primarily from increases on the secured roll. The secured roll exceeds the base year valuation by $537.1 million while the unsecured and utility rolls exceed their base year valuations by $10.6 million and $1.0 million, respectively. Total FY2014-15 incremental valuation is $548.7 million.

The West San Leandro Project Area is largely industrial with warehouse and industrial land uses comprising 41% of the total secured assessed valuation in the project area (see Appendix). Commercial properties account for 24% of the project area’s valuation.

P A S S T H R O U G H P A Y M E N T S A N D T A X - S H A R I N G A G R E E M E N T S

Under redevelopment law at the time of the adoption of certain sub-areas of the Plaza Project Area, taxing jurisdictions that would experience a fiscal burden caused by the existence of the redevelopment plan could enter into fiscal agreements with redevelopment agencies to alleviate that burden. Such agreements, known as fiscal agreements or contractual passthrough agreements and authorized under Section 33401 of the Health and Safety Code, generally provide that redevelopment agencies pay to a taxing entity some or all of that entity’s share of the tax increment received by the agency. The agreements were the product of negotiations between the taxing entities and a redevelopment agency. Taxing entities could separately receive their share of the growth in valuation due to inflation, known as Section 33676 payments or the 2% payments.

Redevelopment law in effect at the time of plan adoption for the West San Leandro Project Area did not permit negotiated fiscal agreements. Instead, the law established by AB1290 provided taxing entities with their share of twenty-five percent of incremental tax revenues, with the remainder available for other Agency obligations. New thresholds are established ten and thirty years beyond the first year of tax increment receipt and a portion of tax increment above these new thresholds are also paid to taxing entities.

Under the 1994 amendments to redevelopment law known as AB1290, any extension of certain fiscal limits in those existing plans triggered a statutory passthrough payment schedule for entities with which the Agency did not already have a contractual passthrough agreement. The extension of the time limit on plan activities, including the incurrence of debt, in the Plaza One sub-area (Ordinance 95-042 dated December 18, 1995) caused the AB1290 statutory passthrough payments to commence in the Plaza One sub-area with the 1996-97 fiscal year using the 1995-96 assessed valuation as a base.

While the Plaza Two sub-area was also amended in 1994 to comply with AB1290; the fiscal limits that were changed in that amendment resulted in reductions, rather than extensions, of the time limits and so did not trigger the AB1290 requirements for statutory passthrough payments. Subsequent amendments of the Plaza Two redevelopment plan identified by the Agency have not changed the fiscal limits of the plan governing the Plaza Two sub-area.

The ACO makes all passthrough calculations and apportions the revenue among taxing entities as part of the semi-annual RPTTF process. All payments of contractual and

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statutory passthroughs, payments made under Section 33676 and the Joint Project Area revenue-sharing agreement are senior to debt service on the Bonds. A description of the contractual passthrough and revenue sharing agreements in each of the Project Areas follows.

P l a z a P r o j e c t A r e a R e v e n u e - S h a r i n g A g r e e m e n t s

Statutory Passthroughs The Plaza One sub-area has been subject to the statutory passthrough payment requirements of AB1290 since December 1995. These payments are in three tiers, beginning with a twenty-five percent share of tax increment above a 1995-96 base apportioned among all of the taxing entities in the project area. In year eleven (2005-06) an additional base was established and twenty-one percent of tax increment above that base was apportioned among the taxing entities in addition to the payment from the first tier. A third and final tier of payments would be established in year thirty were the project area to remain in existence.

The statutory passthrough payments in the Plaza One sub-area are incorporated into the projections of tax increment used in this Report.

Contractual Agreements The Agency has entered into passthrough agreements under Section 33401 with three taxing entities in the Plaza Two sub-area: the County, the County Superintendent of Schools, and the East Bay Regional Parks District. The terms of the fiscal agreements for these three taxing entities are essentially the same.

Under the Plaza Two fiscal agreements an assessed valuation is established representing the valuation in the Plaza Two sub-area at the time of the adoption of Ordinance 88-013 establishing Area 5 (June 20, 1988). The taxing entities received their share of tax increment equal to a two percent annual growth above that amount through 2002-03; in 2003-04 and later the annual growth is three percent.

An additional assessed valuation figure is established to reflect the value of the area added to the Plaza Two sub-area by the 1988 ordinance; this assessed valuation was also inflated at a two percent rate until 2002-03 and three percent from 2003-04 onward, and the taxing entities also receive their share of that amount. Under the terms of the fiscal agreements the payments from the 1988 added area are made in a similar manner to those calculated under Section 33676.

33676 (2%) Payments Several taxing entities elected to receive statutory payments under Section 33676, known as two percent elections. These payments are the taxing entities shares of the rate of real property growth over a base valuation, limited to a maximum 2% annually and determined by the California Consumer Price Index in October of each year. The taxing entities receiving payments under Section 33676 are the Flood Control District, the Mosquito Abatement District, the Bay Area Rapid Transit District and the City of San Leandro.

A court decision involving the Santa Ana School District and the County of Orange determined that Section 33676 payments were required to be made to school districts whether they had made an election or not. Two districts in the Plaza Two sub-area – the San Leandro Unified School District and the Chabot-Las Positas Community College District – had not originally elected to receive payments under Section 33676 but are now paid under the Santa Ana School District decision.

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W e s t S a n L e a n d r o P r o j e c t A r e a R e v e n u e - S h a r i n g A g r e e m e n t s

As noted previously, the West San Leandro Project Area was established under the AB1290 legislation that took effect January 1, 1994. Consequently the West San Leandro Project Area is subject to the statutory passthrough requirements of that legislation and does not have any contractual revenue-sharing agreements.

L E G I S L A T I O N A N D C O U R T A C T I O N S

R e d e v e l o p m e n t D i s s o l u t i o n

The state’s redevelopment program was fundamentally changed as part of the 2011-12 budget package. Legislation dissolving redevelopment agencies and replacing them with successor agencies, AB1x26, took effect June 29, 2011, with the dissolution of all redevelopment agencies in the state effective as of February 1, 2012. Additional clarifying legislation, AB1482, became effective on June 28, 2012 and together with AB1x26, is referred to here as the Redevelopment Dissolution Law.

The legislation created successor agencies to pay off existing debt of the former redevelopment agencies and to wind down the former agency’s operations. Successor agencies are governed by seven-member oversight boards representing the taxing entities that share in the property tax revenues of an agency (the city, county, schools, community college districts and special districts) as well as an employee representative of the former redevelopment agency. Successor agencies are subject to a number of proscriptions intended to limit the scope of their actions, including incurring new debt (as noted below, subsequent legislation added the ability to refund existing debt).

The Redevelopment Dissolution Law did not change the constitutional basis for the collection of property tax increment revenue in California contained in Article 16, Section 16. Property tax increment revenue continues to be calculated and allocated to a special fund of the successor agency (now termed the Redevelopment Property Tax Trust Fund, or RPTTF). As noted previously, the County Auditor-Controller has established two RPTTFs for the Agency, one for the Plaza and West San Leandro project areas and the other for the Joint Project Area.

The Redevelopment Dissolution Law substantially changed the mechanism used to distribute tax increment revenue to the successor agencies. Successor agencies are now required to create a schedule of payments (Recognized Obligation Payment Schedule, or ROPS), which serves as the basis for the distribution of property tax increment revenue to the successor agencies. The obligations appearing on the ROPS are limited to items deemed to be “enforceable” under the legislation. These include debt service and contractual obligations entered into prior to June 29, 2011; it explicitly excludes contracts and agreements between the former redevelopment agency and its sponsoring city or county except those that were entered into prior to January 1, 2011 for purposes of securing debt obligations and those established in the first two years of an agency’s existence. The ROPS is prepared twice each year and covers obligations coming due in the January-June period and the July-December period.

The distribution of funds from the RPTTF is limited to the obligations listed on the ROPS for each period. Distributions of RPTTF property tax increment revenue are made twice each year, on January 2 and June 1, with the January distribution applied to obligations due in the January-June period and the June distribution applied to obligations due in the July- December period.

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Passthrough payments are now calculated and paid by the county auditor-controller rather than by the Agency. The Redevelopment Dissolution Law established a hierarchy of payments to be made from an RPTTF in each six-month period, a mechanism informally referred to as “the waterfall”.

The first payment from the RPTTF is made to the county controller to recover the cost of administering the Redevelopment Dissolution Law; this payment is not subordinated to the Agency’s outstanding bonds. The second tier of payments is passthrough payments to taxing entities. The third payment tier is to the successor agency for the obligations on the ROPS for the payment period. A hierarchy of payments within the ROPS obligations is specified in the law, with debt service on tax allocation bonds first, revenue bonds second, and all other obligations third. The fourth payment is an administrative cost allowance for the successor agency, specified in the legislation as the greater of $250,000 or three percent of the property tax revenue allocated to the successor agency. The fifth and final payment is a distribution of all remaining property tax increment revenue in the RPTTF to the local taxing entities. No funds are retained in the RPTTF.

In the event that there are insufficient funds available in the RPTTF to meet the successor agency’s obligations for a given period, the legislation requires the controller to, first, reduce or eliminate the residual payments to taxing entities; second, reduce or eliminate the administrative cost allowance to the successor agency; and third, deduct from any subordinated passthrough payments the debt service obligations to which they were made subordinate. If there is still an insufficiency, the legislation permits, but does not require, a loan to be made from the county treasury to the successor agency.

There is a complex system of oversight and approvals in the legislation. The oversight boards are charged with approving ROPS of the successor agency, which are then submitted to the county auditor-controller and State Department of Finance for review. The Department of Finance can reject some or all of the obligations on the ROPS, which then returns to the successor agency and the oversight board for revision. Since the county controller cannot make a payment to the successor agency without an approved ROPS, this approval process is a critical element in the process. Additional oversight is provided by the State Controller, charged with overseeing the actions of the county auditor-controllers.

Prior to the passage of the Redevelopment Dissolution Law, a minimum of twenty percent of the tax increment revenue received by redevelopment agencies was required to be set aside and utilized to increase, improve and preserve the community’s supply of very low-, low- and moderate- income housing (the “Low and Moderate Income Housing Fund” or “Housing Fund”). The Redevelopment Dissolution Law eliminated this requirement, and the Agency reports that it has no outstanding obligations secured by a pledge of the Housing Fund.

Prior to the Redevelopment Dissolution Law, the allocation of tax increment revenue to redevelopment agencies was dependent on each agency demonstrating that it requires the tax increment revenue to repay its indebtedness through an annual Statement of Indebtedness filed by all agencies with their County Controller. As described above, redevelopment agencies are now required to list all obligations payable from tax increment revenue on a Recognized Obligation Payment Schedule and may only receive in bi-annual payments the amount of tax increment revenue required to meet those listed obligations. The Agency had regularly filed the previously-required Statement of Indebtedness showing sufficient debt to claim its full amount of tax increment revenue. Since passage of the Redevelopment Dissolution Law it has filed the required ROPS showing its obligations,

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including annual debt service on the Prior Bonds, and expects to continue filing the ROPS so in a timely manner.

The County charges an administration fee to recover property tax administration costs from the Agency and other jurisdictions under the Revenue and Taxation Code Section 95.3. The fee is based on County costs that vary from year to year so that the amount charged to each jurisdiction annually is variable. This fee is in addition to the administration fee authorized under the Redevelopment Dissolution Law. The combined property tax and AB1x26 administration fees are estimated to amount to approximately $88,700 in FY2014-15, or approximately 1.00% of the tax increment revenue from the project area.

Roll corrections include adjustments made to the roll after the equalized roll is released in July and before tax bills are generated in October. These corrections include Proposition 8 adjustments to the roll made by the Assessor as well as corrections to assessments including application of exemptions. Assessment appeal refunds are refunds paid to property owners who have had their assessed valuations reduced in the appeals process and are entitled to a refund of the property taxes paid on the amount reduced. As the appeals process can take two years to complete, the tax refunds paid in a given year may include taxes paid several years prior.

Tax increment revenue calculations made in this Report use revenue from the secured, unsecured, utility and unitary rolls. As noted, supplemental roll revenues are considered when calculating cumulative tax increment caps.

E R A F L e g i s l a t i o n

State budget legislation (ABX4-26) for 2009 required redevelopment agencies to make a contribution to the Supplemental Educational Revenue Augmentation Fund (SERAF) for the 2009-10 and 2010-11 fiscal years.

Agencies that did not make their SERAF payments were subject to sanctions including prohibitions on incurring additional debt and adding or expanding project areas, limitations on the encumbrance and expenditure of funds, and an increase in the percentage of tax increment required to be paid into the Housing Fund from 20% to 25% for the remaining life of the project areas. Agencies were permitted to borrow from their housing fund and apply those funds to the SERAF payment, provided that they repay those funds by June 30, 2015 (June 30, 2016 for the payment due May 10, 2011); agencies that do not repay housing funds by that date would be required, under the law in effect at the time, to increase their contribution to the Housing Fund through the remaining duration of the project area by 5% for non-repayment of the 2009-10 SERAF obligation by June 30, 2015 and an additional 5% for non-repayment of the 2010-11 SERAF obligation by June 30, 2016.

The San Leandro Redevelopment Agency (the “Former Agency”) met its FY2009-10 and FY2010-11 SERAF obligations through a combination of tax increment funds, funds previously designated for projects, and other sources available to the Former Agency; a portion of the SERAF payment was deducted from the revenue paid to the County’s Economic Development Agency under the agreement between the two agencies

Under ERAF-related legislation (SB1045 and SB1096), redevelopment agencies may deduct from tax increment caps the amounts paid into the ERAF fund during fiscal years 2002-03, 2003-04, 2004-05 and 2005-06. Agencies may also, by passage of a local ordinance, extend by one year the time limits on the repayment of indebtedness for payments made

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during 2003-04 and, if certain conditions are met, payments made during fiscal years 2004-05 and 2005-06. The City has adopted the necessary ordinance to extend the time limits on the repayment of indebtedness by one year for the FY2003-04 ERAF payment for each of the Project Areas. As both of the Project Areas’ limits on the effectiveness of the redevelopment plan were greater than twenty years at the time the payments were made, the plan extensions provided for under SB1096 for the FY2004-05 and FY2005-06 ERAF payments are not applicable to the Project Areas.

O t h e r L e g i s l a t i o n

AB2670, passed September 29, 2006 and taking effect with the 2007-08 fiscal year, removed certain utility properties from both the Project Areas’ tax rate areas and from the base year valuation and placed them in a countywide tax rate area for distribution to districts other than redevelopment agencies. The Alameda County Controller removed approximately $1.4 million in railroad valuation from tax rate areas assigned to the Project Area for 2007-08 while also removing $597,593 from the utility portion of the base assessed valuation for the Project Areas. The net loss to the Agency from the reassignment of railroad properties under AB2670 was approximately $800,000 in valuation or $8,000 in tax revenue.

Among other legislation relating to redevelopment, SB211 (effective January 1, 2002) permitted redevelopment agencies to extend the time limit on their receipt of tax increment by ten years. This applies to project areas formed before 1994, and requires agencies extending time limits to meet certain requirements. The bill also permitted agencies, after January 1, 2002, to eliminate the time limit on the establishment of indebtedness. The City has not adopted an ordinance under the provisions of SB211.

P R O P O S I T I O N 1 3 A D J U S T M E N T A N D 2 0 1 4 - 1 5 R O L L V A L U A T I O N S

Under Section 51 of the Revenue and Taxation Code the annual increase in assessed valuation for real property is limited to the lesser of two percent or the October-to-October change in the California Consumer Price Index (CCPI) preceding the January 1 lien date. The State Board of Equalization reports the figure annually in late December. Since 1976-77 the CCPI has been above two percent in all but seven years, with the lowest CCPIs being a negative 0.237 percent for FY2010-11, a positive 0.753% for FY2011-12 and a positive 0.454% for FY2014-15. The factor applied to the FY2012-13 and FY2013-14 rolls was 2.00%. This factor, referred to at times in this Report as the Proposition 13 inflation factor, is applied to land and improvements where the property has not been sold or, in the case of improvements, newly constructed. Properties whose valuations have been reduced under Proposition 8 continue to receive an inflationary adjustment under Proposition 13 on the reduced valuation.

T A X R A T E S

The tax rate applicable to redevelopment incremental assessed valuation includes the basic one percent levy. In addition, former redevelopment agencies received tax revenue from debt service override levies except those that are imposed to repay indebtedness approved by voters on or after January 1, 1989. However, the Redevelopment Dissolution Law provided that successor agencies will no longer receive overrides in effect prior to January 1, 1989 except to the extent such overrides are pledged to debt service. The Agency has no

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power to levy a property tax itself. For the purposes of calculating the tax increment used in this report, only the one percent levy was used.

A S S E S S M E N T A P P E A L S A N D P R O P O S I T I O N 8 R E D U C T I O N S

Appeals of assessments by property owners in the Project Area can result in future reductions in assessed valuations that affect the Agency. It has been the practice of the County of Alameda not to deduct current appeal refunds from redevelopment agency tax increment; these refunds are instead apportioned to other taxing entities using the normal apportionment mechanism.

The Controller has made exception to this general practice in at least one instance where a major shopping center in the Agency’s Joint Project Area received substantial retroactive assessment reductions over several years. In that case the Controller notified the Agency of its intention to collect from the Agency the taxes repaid to the property owner and worked with Agency staff to establish the amount and method of recovery, spread out over several years. The recovered taxes were split between the Agency and the County Economic Development Agency using a modification of the revenue sharing formula in effect between the two entities. In addition, the Agency and the County acted to remove the shopping center from the project area in order to have the valuation removed from the base year valuation; the removal and the corresponding new base year valuation took effect with the 2002-03 roll year.

The most common type of appeal filed is known as a Proposition 8 appeal, in which the property owner seeks a reduction in a particular year’s assessment based on the current economic value of the property (the assessor may also adjust valuations unilaterally based on Proposition 8 criteria). Assessment reductions resulting from such appeals are generally temporary in nature and are usually restored in one or two years.

Property owners may also appeal the Proposition 13 base assessment of a property. Although less frequently filed, such appeals, if successful, can permanently reduce the enrolled valuation of a property and consequently affect the Agency’s annual revenue. The annual filing period for all appeals extends from July 2 to September 15.

Based on information provided by the County Assessment Appeals Board and shown in Table 6 and in the Appendix, there have been 321 appeals filed in the Project Area since FY2006-07. Of these, 255 have been resolved resulting in valuation reductions of $88 million. Pending appeals include a number of appeals filed by owners who have filed on the same property in prior years.

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September 18, 2014


Table 6 Assessment Appeals in the Project Areas

Roll Year Status

Number of

Appeals County Valuation Applicant Opinion

of Value Valuation After

Appeal Retention

Rate *

2013-14 Resolved 1 5,351,300 2,675,651 5,351,300 100% 2013-14 Pending 49 267,138,716 166,612,729 TBD TBD 2012-13 Resolved 33 173,830,832 115,259,666 167,468,809 96% 2012-13 Pending 26 117,068,072 71,769,622 TBD TBD 2011-12 Resolved 58 284,994,763 173,347,256 266,626,463 94% 2011-12 Pending 15 62,735,125 32,566,207 TBD TBD 2010-11 Resolved 71 271,635,889 172,252,501 247,031,991 91% 2010-11 Pending 1 676,338 250,000 TBD TBD 2009-10 Resolved 73 333,648,705 227,911,477 317,445,987 95% 2009-10 Pending - - - - - 2008-09 Resolved 35 83,003,518 58,612,303 79,838,642 96% 2008-09 Pending - - - - - 2007-08 Resolved 18 5,706,174 2,568,572 3,603,649 63% 2007-08 Pending - - - - - 2006-07 Resolved 33 150,063,814 75,514,558 134,542,789 90% 2006-07 Pending - - - - - All Years Resolved 255 1,232,306,024 777,202,873 1,143,933,817 93% All Years Pending 66 377,391,168 224,098,525 TBD TBD

• Retention Rate is the proportion of value retained after resolution of an appeal. The rate is calculated by

dividing the 'Valuation After Appeal' into the 'County Valuation'. For withdrawn and denied appeals, the 'Valuation After Appeal' is the original County valuation. Data is current as of 6/30/2014. Source: Alameda County Assessment Appeals Board; Urban Analytics

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September 18, 2014


A number of appeals have been filed by large property owners in the Project Area, shown on Table 7 and in detail by project area in the Appendix. AMB US Logistics Fund LP, AMG-SGP_CIF_I LLC and AMB Property LP are owners of warehouse properties in the West San Leandro Project Area; each have appealed their properties’ valuations over the past several years with some reductions in valuation. BRCP San Leandro Industrial is the owner of three warehouse properties in the West San Leandro Project Area, with pending appeals in each of the past three years; an appeal of a property’s valuation in FY2010-11 by that owner resulted in a reduction in valuation.

Table 7 Assessment Appeals by Large Owners in the Project Area

Roll Year Owner Name Status County

Valuation

Applicant Opinion of

Value

Valuation After

Appeal 2013-14 AMB US LOGISTICS FUND LP 6 Pending 60,919,472 41,000,000 TBD 2013-14 AMB-SGP CIF-CALIFORNIA LLC 4 Pending 28,407,000 21,000,000 TBD 2013-14 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 29,280,303 15,000,000 TBD 2013-14 CREEKSIDE PLAZA PARTNERS LLC 1 Pending 11,053,654 8,921,605 TBD 2012-13 AMB PROPERTY LP 1 Resolved 21,542,364 18,000,000 0 2012-13 AMB US LOGISTICS FUND LP 1 Pending 8,550,000 6,600,000 TBD 2012-13 AMB US LOGISTICS FUND LP 5 Resolved 51,056,982 34,500,000 49,599,538 2012-13 AMB-SGP CIF-CALIFORNIA LLC 6 Resolved 39,850,000 32,200,000 0 2012-13 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 23,235,674 15,000,000 TBD 2011-12 AMB PROPERTY LP 2 Resolved 33,990,932 23,800,000 32,293,945 2011-12 AMB US LOGISTICS FUND LP 5 Resolved 32,235,000 23,250,000 30,180,000 2011-12 AMB-SGP CIF-CALIFORNIA LLC 2 Resolved 13,993,378 10,000,000 12,950,000 2011-12 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 22,717,752 14,300,000 TBD 2011-12 KTR BAY EAST IV LLC 2 Resolved 9,688,537 7,212,110 0 2011-12 WORLD SAVINGS & LOAN ASSN 1 Resolved 22,750,000 6,824,000 0 2010-11 AMB PROPERTY LP 1 Resolved 20,899,678 16,320,000 18,275,000 2010-11 AMB US LOGISTICS FUND LP 4 Resolved 28,575,000 20,590,000 24,170,000 2010-11 AMB-SGP CIF-CALIFORNIA LLC 3 Resolved 16,405,675 12,605,000 14,716,762 2010-11 BRCP SAN LEANDRO INDUSTRIAL LLC 1 Resolved 1,781,295 1,200,000 1,360,000 2010-11 KTR BAY EAST IV LLC 2 Resolved 9,616,206 7,212,110 0 2010-11 WORLD SAVINGS & LOAN ASSN 6 Resolved 24,080,875 8,602,000 0 2013-14 AMB US LOGISTICS FUND LP 6 Pending 60,919,472 41,000,000 TBD 2013-14 AMB-SGP CIF-CALIFORNIA LLC 4 Pending 28,407,000 21,000,000 TBD

Appeals filed on properties owned by the ten largest owners for 2014-15. Data is current as of June 30, 2014. Source: Alameda County Board of Assessment Appeals

An indicator of the potential exposure of Agency tax increment revenue to appeals – were the County Auditor-Controller either to change its policy of deducting appeal-related tax refunds solely from supplemental revenue and not from regular tax increment or were the Assessor to continue Proposition 8 reductions on future rolls for properties granted prior-year reductions – may be seen by applying the retention rate shown in Table 6 to the amount of valuation in dispute in pending appeals.

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September 18, 2014


Applying the 93% retention rate for resolved appeals to the $377 million in total valuation for parcels with appeals pending indicates a potential valuation reduction of $27.1 million or approximately $271,000 in tax revenue. If the full amount of disputed valuation were granted, the reduction in valuation would be $153.3 million or approximately $1.5 million in tax revenue. As noted below under “Tax Increment Projection”, no assumptions are made regarding any potential appeal-related adjustments to Project Area valuation.

The Assessor may also apply temporary reductions under Proposition 8 without an appeal being filed, in circumstances where a decline in market value warrants such a reduction. These Proposition 8 reductions may be in response to an informal request from a property owner for a review of a property’s value, or through reviews initiated by the Assessor’s office. The Assessor’s office does not identify individual parcels subject to Proposition 8 reductions on the annual roll nor does it provide summary information regarding Proposition 8 reductions in general.

An analysis of parcel valuations in the Plaza Project Area shows 128 parcels, largely residential, that posted an increase in valuation above the inflation rate for FY 2014-15 with no change in ownership, an indicator of restoration of Proposition 8 values. These parcels gained $9.1 million in valuation. Ten mainly commercial parcels posted decreases in valuation in the Plaza Project Area with no change in ownership, resulting in a $2.0 million decrease in valuation. Over half of that amount was from a World Savings property whose decrease in valuation is attributable to the removal of a business fixture assessment from the property rather than to a Proposition 8 reduction.

Similarly, an analysis of parcel valuations in the West San Leandro Project Area shows 48 parcels with gains in valuation above the inflation rate for FY 2014-15 and no change in ownership, posting valuation increases of $39.7 million. A mix of commercial and residential parcels, the pattern of increases suggests most were gaining valuation following decreases in valuation in prior years, indicating the restoration of previous Proposition 8 reductions. Seventeen mainly commercial parcels had decreases in valuation totaling $2.7 million with no change in ownership, which may include some Proposition 8 reductions.

P R O P E R T Y T A X D E L I N Q U E N C I E S

As of November 9, 2013, the delinquency rate on FY2012-13 secured property taxes in the Project Area was 1.0%. For FY2011-12 secured property taxes the delinquency rate had been 1.6% on October 20, 2012 while the FY20101-11 secured property taxes posted a delinquency rate of 1.8% as of October 8, 2011. As noted previously, the Agency’s tax increments are paid under the Teeter Plan and are consequently not affected by tax delinquencies.

H I S T O R I C A N D C U R R E N T A S S E S S E D V A L U A T I O N

Based on assessment roll data provided by the County Assessor, the total assessed valuation in the Project Area is $1.56 billion in FY2014-15, after deducting all exemptions (see Table 8 and detail by project area in the Appendix). This represents an increase of 7.4% over FY2013-14 valuation, and follows a gain of 1.4% in FY2013-14 and increases in prior years.

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September 18, 2014


Table 8 Historical Assessed Valuations in the Project Areas

Roll 2010-11 2011-12 2012-13 2013-14 2014-15 Secured - Land 401,075,337 413,367,396 438,141,778 457,957,288 480,384,028 - Improvements 767,710,214 788,698,471 796,290,020 805,103,509 870,386,858 - Personal Property 12,782,188 11,377,510 15,743,991 16,583,376 14,126,011 - Exemptions (22,804,534) (21,167,061) (20,927,868) (21,476,355) (14,446,365)

Secured Total

1,158,763,205

1,192,276,316 1,229,247,921 1,258,167,818 1,350,450,532 Unsecured - Land 406,325 375,450 232,596 2,094,548 442,216 - Improvements 64,460,229 68,878,826 74,769,753 65,672,964 77,302,682 - Personal Property 127,345,173 130,684,740 120,511,575 118,385,245 121,466,974 - Exemptions (429,000) (268,721) (1,249,527) (1,359,506) (425,751) Unsecured Total 191,782,727 199,670,295 194,264,397 184,793,251 198,786,121 Utility - Land 1,073,537 1,073,537 1,073,537 1,073,537 1,073,537 - Improvements - - - - - - Personal Property - - - - - - Exemptions - - - - - Utility Total 1,073,537 1,073,537 1,073,537 1,073,537 1,073,537

Totals

1,351,619,469

1,393,020,148 1,424,585,855 1,444,034,606 1,550,310,190 Percent Change 0.58% 3.06% 2.27% 1.37% 7.36% Plus: HOPTR AV* 1,293,600 1,316,000 1,302,000 1,288,000 1,239,000

Less: Base AV

(662,698,174)

(662,698,174) (662,698,174) (662,698,174) (662,698,174) Incremental AV 690,214,895 731,637,974 763,189,681 782,624,432 888,851,016 Incremental Revenue 6,902,149 7,316,380 7,631,897 7,826,244 8,888,510

* The Homeowner's Property Tax Relief exemption, reimbursed by the state. Source: Alameda County Assessor, State Board of Equalization, Urban Analytics

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September 18, 2014


The secured roll accounted for 87% of the total valuation in the Project Area in FY2014-15, with the unsecured roll comprising 13%. There was a small amount of non-unitary utility roll valuation (the unitary utility roll is based on countywide assessments and is not reported by project area).

The FY2014-15 assessed valuation in the Project Areas increased by $106.3 million over FY2013-14. Of this gain, $92.3 million was from the secured roll and $13.4 million from the unsecured roll. Over one-third of the secured valuation gain - $37.9 million – was caused by gains in improvement valuation in excess of the inflation adjustment for 176 properties. These secured improvement valuation gains included a $17.0 million increase on a Safeway property in the West San Leandro Project Area.

The growth was primarily in the West San Leandro Project Area which posted an increased in assessed valuation of $79.4 million; the Plaza Project Area added $26.8 million in valuation.

By land use, industrial properties contributed $65 million in valuation gains for FY2014-15, including the Safeway property noted above and a property sold to KTR Bay East that posted an increase of $15 million. Residential properties increased by $11 million.

T E N L A R G E S T A S S E S S E E S

The ten largest assessees in the Project Areas are shown in Table 9 for FY2014-15 (detail for individual project areas is provided in the Appendix). The table includes the total valuations for the top twenty and top hundred property owners, and the total valuations for the area as a whole (valuations include deductions for homeowner’s exemptions). The percentage of total valuation accounted for by each owner is calculated by dividing the owner’s valuation into the total valuation for the Project Areas. Similarly, the percentage of incremental valuation is calculated by dividing the owner’s valuation into the total incremental valuation for the Project Areas.

AMB Property Company, the largest property owner in the Project Areas, has a total property valuation of $63.2 million. Together with a related entity, AMB US Logistics Fund LP, listed as the second-largest owner with $62.9 million, the two entities have twelve properties in the West San Leandro Project Area.

The Safeway property is a warehouse facility on Adams Avenue in the West San Leandro Project Area. Creekside Plaza Partners owns five office properties at Davis Street and San Leandro Boulevard in the Plaza Project Area. World Savings and Loan Association is the owner of six commercial properties, five of which are reported as vacant land, in the Plaza Project Area; most of the valuation comes from a commercial building on Davis Street. BRCP San Leandro LLC has three light industrial properties on Williams Street in the West San Leandro Project Area, while KTR Bay East IV LLC owns two light industrial properties in the same project area. As noted previously under “Assessment Appeals”, properties owned by AMB, Creekside and BRCP have pending assessment appeals.

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September 18, 2014


Table 9 Large Owners in the Project Areas, FY2014-15

Property Owner Secured and

Utility Unsecured Total Pct Of Total Valuation

Pct Of Incremental Valuation Principal Use

AMB PROPERTY CORPORATION 63,237,699 - 63,237,699 4.08% 7.12% Warehouse AMB US LOGISTICS FUND LP 62,934,944 - 62,934,944 4.06% 7.09% Warehouse SAFEWAY 54,574,647 - 54,574,647 3.52% 6.15% Industrial CREEKSIDE PLAZA PARTNERS LLC 43,594,448 - 43,594,448 2.81% 4.91% Office WORLD SAVINGS & LOAN ASSOCIATION 30,284,070 - 30,284,070 1.95% 3.41% Office BRCP SAN LEANDRO INDUSTRIAL LLC 29,413,024 - 29,413,024 1.90% 3.31% Industrial KTR BAY EAST IV LLC 28,150,000 - 28,150,000 1.82% 3.17% Industrial HERITAGE GATEWAY LP & HERITAGE SAN LEANDRO LP 23,505,516 - 23,505,516 1.52% 2.65% Residential DOOLITTLE WILLIAMS LLC 20,894,733 - 20,894,733 1.35% 2.35% Industrial LBA CPT INDUSTRIAL CO V A LLC 20,090,800 - 20,090,800 1.30% 2.26% Warehouse

Total, Top Ten: 376,679,881 - 376,679,881 24.30% 42.44% Total, Top Twenty: 538,605,215 - 538,605,215 34.74% Total, Top Hundred: 953,142,240 71,384,953 1,024,527,193 66.09% Totals for the Area: 1,351,524,069 198,786,121 1,550,310,190 100.00%

Source: Alameda County Assessor, State Board of Equalization.

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September 18, 2014


T A X I N C R E M E N T R E V E N U E E S T I M A T E S

The tax increment revenue estimate for FY2014-15 is shown in Table 10 for the Project Areas. As noted above, the gross tax increment includes revenue from secured and unsecured assessments after exemptions (other than the homeowner’s exemption), and after deduction of the base year valuations.

Net tax increment is calculated by adding in an estimate of $21,092 in unitary revenue, based on the FY2013-14 actual amount, deducting the County’s property tax administration fee, the statutory 33676 payment and passthrough payments. Net tax increment for the Project Areas is estimated to be $7.2 million for FY2014-15. Revenue from supplemental assessments is not included in this total as it is a highly variable revenue source and not subject to precise calculation. Supplemental revenues are separately estimated and factored into calculations regarding tax increment caps. The Agency received $709,174 in supplemental revenue in FY2013-14.

The 20% low- and moderate-income housing set-aside was eliminated with the Dissolution Act. Were the set-aside still in effect, the amount of tax increment deposited in the Low and Moderate Income Housing Fund would have been $1.8 million in FY2014-15.

Table 10 Tax Increment Estimate for the Project Areas, FY2014-15

West San Leandro

Project Area Plazas Project Area Combined Project

Areas

Assessed Valuation Secured AV 1,018,855,463 332,834,069 1,351,689,532 Unsecured AV 167,094,238 31,691,883 198,786,121

SBE-Assessed Utilities 1,073,537 - 1,073,537

Total AV 1,187,023,238 364,525,952 1,551,549,190

Less Base Year AV (638,295,280) (24,402,894) (662,698,174)

Incremental AV 548,727,958 340,123,058 888,851,016 Tax Rate 1.00% 1.00% Gross Revenue 5,487,280 3,401,231 8,888,510

Plus Unitary Revenue 3,531 17,561 21,092 Less 33676 (2%) Statutory Pmt - (116,628) (116,628) Less Passthrough Payments (1,325,827) (211,007) (1,536,833) Less Administrative Payments (54,671) (34,040) (88,711)

Gross Tax Increment 4,110,313 3,057,117 7,167,430

Source: Alameda County Assessor, San Leandro Successor Agency and Urban Analytics

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September 18, 2014


T A X I N C R E M E N T P R O J E C T I O N

Tax increment is projected over the duration of the constituent redevelopment plans in the Project Areas, as shown in Table 11. The projection assumes a constant inflation adjustment under Proposition 13 of 2.0% for real property from FY2015-16 forward. The projection does not take into consideration any changes in assessed valuation due to new construction, property sales, Proposition 8 reductions, assessment appeals or other factors. The actual growth rate may be less than the projected rate in the Project Areas. Secured personal property and unsecured valuations are assumed to remain constant throughout.

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September 18, 2014


Table 11

Tax Increment Projection for the Project Areas

Fiscal Year Gross Tax Increment

Administration Fees

Passthrough Payments

Net Tax Increment

2014/15 8,909,602 (88,711) (1,653,461) 7,167,430

2015/16 9,177,329 (91,377) (1,743,946) 7,342,007

2016/17 9,400,533 (93,599) (1,835,905) 7,471,029

2017/18 9,374,954 (93,344) (1,892,635) 7,388,975

2018/19 9,652,175 (96,105) (1,986,872) 7,569,198

2019/20 9,934,940 (98,920) (2,083,199) 7,752,821

2020/21 10,223,361 (101,792) (2,181,658) 7,939,912

2021/22 10,517,550 (104,721) (2,282,303) 8,130,527

2022/23 10,217,630 (101,735) (2,385,183) 7,730,712

2023/24 10,511,817 (104,664) (2,490,349) 7,916,804

2024/25 10,811,888 (107,652) (2,597,851) 8,106,385

2025/26 8,523,780 (84,869) (2,707,745) 5,731,166

2026/27 8,194,010 (81,586) (2,260,606) 5,851,818

2027/28 8,449,624 (84,131) (2,348,999) 6,016,494

2028/29 8,710,350 (86,727) (2,439,159) 6,184,463

2029/30 8,976,290 (89,375) (2,531,123) 6,355,792

2030/31 9,247,549 (92,076) (2,651,293) 6,504,181

2031/32 9,524,233 (94,831) (2,773,866) 6,655,537

2032/33 9,806,451 (97,641) (2,898,891) 6,809,920

2033/34 10,094,313 (100,507) (3,026,416) 6,967,391

2034/35 10,387,933 (103,430) (3,156,492) 7,128,011

2035/36 10,687,425 (106,412) (3,289,169) 7,291,843

2036/37 10,992,907 (109,454) (3,424,500) 7,458,953

2037/38 11,304,498 (112,556) (3,562,538) 7,629,404

2038/39 11,622,321 (115,721) (3,703,336) 7,803,264

2039/40 11,946,501 (118,949) (3,846,950) 7,980,602

2040/41 12,277,164 (122,241) (3,993,437) 8,161,487

2041/42 12,614,441 (125,599) (4,142,853) 8,345,989

2042/43 12,958,463 (129,025) (4,295,258) 8,534,181

2043/44 13,309,366 (132,518) (4,450,711) 8,726,137

2044/45 13,667,286 (136,082) (4,609,272) 8,921,932

2045/46 14,032,365 (139,717) (4,771,005) 9,121,643

2046/47 0 0 0 0

Total 336,059,053 (3,346,065) (94,016,981) 238,696,007

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September 18, 2014


L I M I T A T I O N S O F R E P O R T

The calculation of assessed valuations and tax increment shown in this Report are based on information believed to be complete, current and reliable at the time of this Report. Projections of tax increment are based on reasonable assumptions and may not reflect actual future revenue received by the Agency. Information regarding the practices and methods used by the County in assessing and allocating property tax revenue has been obtained from County staff and analysis of County records, while information concerning the Project Area, its constituent redevelopment plan, amendments and passthrough agreements has been obtained through discussions with Agency staff and through review of the plan documents made available to the Consultant.

While the Consultant has made reasonable efforts to verify the accuracy of the figures and information presented in this Report and presumes that the information relied upon is correct, the Consultant makes no warranty as to its accuracy.

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September 18, 2014

San Leandro SA Fiscal Consultant Report

A P P E N D I X – P R O J E C T A R E A D E T A I L

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September 18, 2014


L A N D U S E

H-29

Land Use Within The West San Leandro/MacArthur Boulevard Project Area, FY2014-15

Land UseSecured Assessed

Valuation *


Number of Parcels


ParcelsCommercial 77,278,485 7.6% 98 16.1%Industrial 907,386,531 89.1% 314 51.6%Single-Family Residential 8,047,745 0.8% 23 3.8%Condominiums - 0.0% - 0.0%Other Residential 7,708,592 0.8% 18 3.0%Vacant 16,237,211 1.6% 42 6.9%Other 2,091,899 0.2% 114 18.7%Total 1,018,750,463 100.0% 609 100.0%

* Net of Homeowner Exemptions. These exemptions are restored by the Controller prior todisbursement of tax increment to the RPTTF.


H-30

Land Use Within The Plaza Project Area, FY2014-15

Land UseSecured Assessed

Valuation *


Number of Parcels


ParcelsCommercial 225,901,491 68.1% 93 18.8%Industrial 8,090,760 2.4% 13 2.6%Single-Family Residential 3,976,407 1.2% 13 2.6%Condominiums 49,210,853 14.8% 252 51.0%Other Residential 35,679,501 10.8% 27 5.5%Vacant 7,897,426 2.4% 13 2.6%Other 943,631 0.3% 83 16.8%Total 331,700,069 100.0% 494 100.0%

* Net of Homeowner Exemptions. These exemptions are restored by the Controller prior to

disbursement of tax increment to the RPTTF.


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September 18, 2014


L A R G E S T O W N E R S

H-32

Large Owners, West San Leandro Project Area, FY 2014-15

Property Owner Secured and Utility Unsecured TotalPct Of Total Valuation Principal Use

AMB PROPERTY CORPORATION 63,237,699 - 63,237,699 5.33% WarehouseAMB US LOGISTICS FUND LP 62,934,944 - 62,934,944 5.30% WarehouseSAFEWAY 46,012,718 - 46,012,718 3.88% IndustrialBRCP SAN LEANDRO INDUSTRIAL LLC 29,413,024 - 29,413,024 2.48% IndustrialKTR BAY EAST IV LLC 28,150,000 - 28,150,000 2.37% IndustrialDOOLITTLE WILLIAMS LLC 20,894,733 - 20,894,733 1.76% IndustrialLBA CPT INDUSTRIAL CO V A LLC 20,090,800 - 20,090,800 1.69% WarehouseOLSON PROPERTIES LP 19,605,684 - 19,605,684 1.65% IndustrialGEORGIA PACIFIC GYPSUM LLC 17,036,470 - 17,036,470 1.44% IndustrialFAIRWAY SAN LEANDRO LLC 16,731,565 - 16,731,565 1.41% WarehouseTotal, Top Ten: 324,107,637 - 324,107,637 27.31%Total, Top Twenty: 465,661,417 - 465,661,417 39.23%Total, Top Hundred: 780,873,334 82,585,034 863,458,368 72.75%Totals for the Area: 1,019,824,000 167,094,238 1,186,918,238 100.00% Source: Alameda County Assessor, State Board of Equalization.

H-33

Large Owners, Plaza Project Area, FY 2014-15

Property OwnerSecured and

Utility Unsecured TotalPct Of Total Valuation Principal Use

CREEKSIDE PLAZA PARTNERS LLC 43,594,448 - 43,594,448 12.00% OfficeWORLD SAVINGS & LOAN ASSOCIATION 30,284,070 - 30,284,070 8.33% OfficeHERITAGE GATEWAY LP & HERITAGE SAN LEANDRO LP23,505,516 - 23,505,516 6.47% ApartmentsPRICE COMPANY 19,839,743 - 19,839,743 5.46% RetailSARA KENNEDY LLC 11,150,000 - 11,150,000 3.07% OfficeREGENCY REALTY CORP & REGENCY CENTERS LP 8,919,836 - 8,919,836 2.45% RetailSAFEWAY 8,561,929 - 8,561,929 2.36% SupermarketMARYMOUNT VILLA LLC 8,213,969 - 8,213,969 2.26% Nursing homeLONGS DRUG STORES INC 7,770,698 - 7,770,698 2.14% SupermarketCREEKSIDE PARTNERS 6,991,566 - 6,991,566 1.92% Parking lotsTotal, Top Ten: 168,831,775 - 168,831,775 46.46%Total, Top Twenty: 202,418,381 12,334,400 214,752,781 59.10%Total, Top Hundred: 278,130,877 23,652,242 301,783,119 83.05%Totals for the Area: 331,700,069 31,691,883 363,391,952 100.00% Source: Alameda County Assessor, State Board of Equalization.

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September 18, 2014


A P P E A L S

H-35

Assessment Appeals in the West San Leandro Project Area

Roll Year Status Number of Appeals County Valuation Applicant Opinion of

ValueValuation After

AppealRetention

Rate *2013-14 Resolved 1 5,351,300 2,675,651 5,351,300 100%2013-14 Pending 35 225,375,638 136,739,297 TBD TBD2012-13 Resolved 25 169,267,517 111,995,450 162,923,840 96%2012-13 Pending 19 97,102,359 60,323,021 TBD TBD2011-12 Resolved 49 249,495,635 159,606,256 231,227,335 93%2011-12 Pending 12 54,913,171 27,036,207 TBD TBD2010-11 Resolved 48 231,283,385 153,460,560 208,304,264 90%2010-11 Pending - - - - - 2009-10 Resolved 52 279,181,910 187,131,477 264,849,307 95%2009-10 Pending - - - - - 2008-09 Resolved 20 54,871,945 36,363,184 53,044,902 97%2008-09 Pending - - - - - 2007-08 Resolved 13 2,366,507 693,770 1,175,049 50%2007-08 Pending - - - - - 2006-07 Resolved 26 133,665,107 67,751,617 118,650,734 89%2006-07 Pending - - - - - 2005-06 Resolved 21 106,822,718 57,524,908 98,407,086 92%2005-06 Pending - - - - - All Years Resolved 255 1,232,306,024 777,202,873 1,143,933,817 93%All Years Pending 66 377,391,168 224,098,525 TBD TBD

* Retention Rate is the proportion of value retained after resolution of an appeal. The rate is calculated by dividing the'Valuation After Appeal' into the 'County Valuation'. For withdrawn and denied appeals, the 'Valuation After Appeal' is the original County valuation.

Data is current as of 6/30/2014.Source: Alameda County Assessment Appeals Board; Urban Analytics

H-36

Assessment Appeals in the Plaza Project Area

Roll Year Status Number of Appeals County Valuation Applicant Opinion

of ValueValuation After

AppealRetention

Rate *2013-14 Resolved - - - - -2013-14 Pending 14 41,763,078 29,873,432 TBD TBD2012-13 Resolved 8 4,563,315 3,264,216 4,544,969 100%2012-13 Pending 7 19,965,713 11,446,601 TBD TBD2011-12 Resolved 9 35,499,128 13,741,000 35,399,128 100%2011-12 Pending 3 7,821,954 5,530,000 TBD TBD2010-11 Resolved 23 40,352,504 18,791,941 38,727,727 96%2010-11 Pending 1 676,338 250,000 TBD TBD2009-10 Resolved 21 54,466,795 40,780,000 52,596,680 97%2009-10 Pending - - - - - 2008-09 Resolved 15 28,131,573 22,249,119 26,793,740 95%2008-09 Pending - - - - - 2007-08 Resolved 5 3,339,667 1,874,802 2,428,600 73%2007-08 Pending - - - - - 2006-07 Resolved 7 16,398,707 7,762,941 15,892,055 97%2006-07 Pending - - - - - 2005-06 Resolved 3 15,169,527 10,000,000 15,169,527 100%2005-06 Pending 2 2,520,438 892,192 - - All Years Resolved 91 197,921,216 118,464,019 191,552,426 97%All Years Pending 27 72,747,521 47,992,225 TBD TBD

* Retention Rate is the proportion of value retained after resolution of an appeal. The rate is calculated by dividing the'Valuation After Appeal' into the 'County Valuation'. For withdrawn and denied appeals, the 'Valuation After Appeal' is the original County valuation.

Data is current as of 6/30/2014.Source: Alameda County Assessment Appeals Board; Urban Analytics

H-37

September 18, 2014


A P P E A L S B Y L A R G E O W N E R S

H-38

Assessment Appeals By Large Owners, West San Leandro Project Area

Roll Year Owner Name StatusCounty

Valuation


ValueValuation

After Appeal2013-14 AMB US LOGISTICS FUND LP 6 Pending 60,919,472 41,000,000 TBD2013-14 AMB-SGP CIF-CALIFORNIA LLC 4 Pending 28,407,000 21,000,000 TBD2013-14 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 29,280,303 15,000,000 TBD2012-13 AMB PROPERTY LP 1 Resolved 21,542,364 18,000,000 21,542,3642012-13 AMB US LOGISTICS FUND LP 1 Pending 8,550,000 6,600,000 TBD2012-13 AMB US LOGISTICS FUND LP 5 Resolved 51,056,982 34,500,000 49,599,5382012-13 AMB-SGP CIF-CALIFORNIA LLC 6 Resolved 39,850,000 32,200,000 39,850,0002012-13 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 23,235,674 15,000,000 TBD2011-12 AMB PROPERTY LP 2 Resolved 33,990,932 23,800,000 32,293,9452011-12 AMB US LOGISTICS FUND LP 5 Resolved 32,235,000 23,250,000 30,180,0002011-12 AMB-SGP CIF-CALIFORNIA LLC 2 Resolved 13,993,378 10,000,000 12,950,0002011-12 BRCP SAN LEANDRO INDUSTRIAL LLC 3 Pending 22,717,752 14,300,000 TBD2011-12 KTR BAY EAST IV LLC 2 Resolved 9,688,537 7,212,110 9,688,5372011-12 LBA CPT INDUSTRIAL CO V A LLC 3 Resolved 11,341,340 5,670,671 11,341,3402010-11 AMB PROPERTY LP 1 Resolved 20,899,678 16,320,000 18,275,0002010-11 AMB US LOGISTICS FUND LP 4 Resolved 28,575,000 20,590,000 24,170,0002010-11 AMB-SGP CIF-CALIFORNIA LLC 3 Resolved 16,405,675 12,605,000 14,716,7622010-11 BRCP SAN LEANDRO INDUSTRIAL LLC 1 Resolved 1,781,295 1,200,000 1,360,0002010-11 KTR BAY EAST IV LLC 2 Resolved 9,616,206 7,212,110 9,616,206

Appeals filed on properties owned by the ten largest owners for 2014-15. Data is current as of June 30, 2014.Source: Alameda County Board of Assessment Appeals

H-39

Assessment Appeals By Large Owners, Plaza Project Area

Roll Year Owner Name StatusCounty

Valuation


ValueValuation

After Appeal2013-14 CREEKSIDE PARTNERS PARKING LLC 2 Pending 13,920,040 10,855,877 TBD2013-14 CREEKSIDE PLAZA PARTNERS LLC 1 Pending 11,053,654 8,921,605 TBD2013-14 LONGS DRUG STORES INC 1 Pending 7,084,888 4,900,000 TBD2012-13 CREEKSIDE PARTNERS PARKING LLC 1 Pending 6,823,564 4,500,000 TBD2012-13 LONGS DRUG STORES INC 1 Pending 6,946,001 3,400,000 TBD2011-12 CREEKSIDE PARTNERS PARKING LLC 1 Pending 6,689,794 4,980,000 TBD2011-12 LONGS DRUG STORES INC 1 Resolved 6,809,823 3,400,000 6,809,8232011-12 WORLD SAVINGS & LOAN ASSOCIATION 1 Resolved 22,750,000 6,824,000 22,750,0002010-11 WORLD SAVINGS & LOAN ASSOCIATION 6 Resolved 24,080,875 8,602,000 24,080,875

Appeals filed on properties owned by the ten largest owners for 2014-15. Data is current as of June 30, 2014.Source: Alameda County Board of Assessment Appeals

H-40

September 18, 2014


H I S T O R I C A L A S S E S S E D V A L U A T I O N

H-41

Historical Assessed Valuations, West Leandro Project Area

Roll 2010-11 2011-12 2012-13 2013-14 2014-15Secured - Land 328,150,265 340,909,201 364,894,041 377,261,030 394,445,431 - Improvements 549,517,838 554,450,328 560,638,901 567,828,462 623,798,565 - Personal Property 8,984,000 7,820,282 14,360,040 15,003,817 12,181,518 - Exemptions (11,092,973) (9,366,795) (11,390,020) (11,622,816) (11,675,051) Secured Total 875,559,130 893,813,016 928,502,962 948,470,493 1,018,750,463 Unsecured - Land 56,200 78,700 32,400 1,557,048 - - Improvements 57,508,647 63,142,999 66,690,577 58,845,077 66,407,101 - Personal Property 102,356,554 107,556,767 99,148,698 98,703,693 100,817,438 - Exemptions (227,381) (40,642) (1,030,522) (1,142,319) (130,301) Unsecured Total 159,694,020 170,737,824 164,841,153 157,963,499 167,094,238 Utility - Land 1,073,537 1,073,537 1,073,537 1,073,537 1,073,537 - Improvements - - - - - - Personal Property - - - - - - Exemptions - - - - - Utility Total 1,073,537 1,073,537 1,073,537 1,073,537 1,073,537 Totals 1,036,326,687 1,065,624,377 1,094,417,652 1,107,507,529 1,186,918,238 Percent Change 0.54% 2.83% 2.70% 1.20% 7.17%

Plus: HOPTR AV* 105,000 105,000 98,000 105,000 105,000 Less: Base AV (638,295,280) (638,295,280) (638,295,280) (638,295,280) (638,295,280) Incremental AV 398,136,407 427,434,097 456,220,372 469,317,249 548,727,958

Incremental Revenue 3,981,364 4,274,341 4,562,204 4,693,172 5,487,280

* The Homeowner's Property Tax Relief exemption, reimbursed by the state.Source: Alameda County Assessor, State Board of Equalization, Urban Analytics

H-42

Historical Assessed Valuations,Plaza Project Area

Roll 2010-11 2011-12 2012-13 2013-14 2014-15Secured - Land 72,925,072 72,458,195 73,247,737 80,696,258 85,938,597 - Improvements 218,192,376 234,248,143 235,651,119 237,275,047 246,588,293 - Personal Property 3,798,188 3,557,228 1,383,951 1,579,559 1,944,493 - Exemptions (11,711,561) (11,800,266) (9,537,848) (9,853,539) (2,771,314) Secured Total 283,204,075 298,463,300 300,744,959 309,697,325 331,700,069 Unsecured - Land 350,125 296,750 200,196 537,500 442,216 - Improvements 6,951,582 5,735,827 8,079,176 6,827,887 10,895,581 - Personal Property 24,988,619 23,127,973 21,362,877 19,681,552 20,649,536 - Exemptions (201,619) (228,079) (219,005) (217,187) (295,450) Unsecured Total 32,088,707 28,932,471 29,423,244 26,829,752 31,691,883 Utility - Land - - - - - - Improvements - - - - - - Personal Property - - - - - - Exemptions - - - - - Utility Total - - - - - Totals 315,292,782 327,395,771 330,168,203 336,527,077 363,391,952 Percent Change 0.73% 3.84% 0.85% 1.93% 7.98%

Plus: HOPTR AV* 1,188,600 1,211,000 1,204,000 1,183,000 1,134,000 Less: Base AV (24,402,894) (24,402,894) (24,402,894) (24,402,894) (24,402,894) Incremental AV 292,078,488 304,203,877 306,969,309 313,307,183 340,123,058

Incremental Revenue 2,920,785 3,042,039 3,069,693 3,133,072 3,401,231

* The Homeowner's Property Tax Relief exemption, reimbursed by the state.Source: Alameda County Assessor, State Board of Equalization, Urban Analytics

H-43

September 18, 2014


T A X I N C R E M E N T P R O J E C T I O N S

H-44

Tax Increment Projections for the West San Leandro Project Area

Fiscal YearGross Tax Increment

Administration Fees


Net Tax Increment

2014/15 5,490,810 (54,671) (1,325,827) 4,110,313

2015/16 5,692,360 (56,678) (1,395,523) 4,240,159

2016/17 5,897,940 (58,724) (1,466,095) 4,373,121

2017/18 6,107,632 (60,812) (1,539,127) 4,507,693

2018/19 6,321,518 (62,942) (1,613,090) 4,645,487

2019/20 6,539,682 (65,114) (1,688,532) 4,786,036

2020/21 6,762,209 (67,330) (1,765,482) 4,929,397

2021/22 6,989,186 (69,590) (1,843,972) 5,075,624

2022/23 7,220,703 (71,895) (1,924,032) 5,224,776

2023/24 7,456,851 (74,246) (2,005,693) 5,376,912

2024/25 7,697,721 (76,644) (2,088,987) 5,532,089

2025/26 7,943,409 (79,091) (2,173,947) 5,690,371

2026/27 8,194,010 (81,586) (2,260,606) 5,851,818

2027/28 8,449,624 (84,131) (2,348,999) 6,016,494

2028/29 8,710,350 (86,727) (2,439,159) 6,184,463

2029/30 8,976,290 (89,375) (2,531,123) 6,355,792

2030/31 9,247,549 (92,076) (2,651,293) 6,504,181

2031/32 9,524,233 (94,831) (2,773,866) 6,655,537

2032/33 9,806,451 (97,641) (2,898,891) 6,809,920

2033/34 10,094,313 (100,507) (3,026,416) 6,967,391

2034/35 10,387,933 (103,430) (3,156,492) 7,128,011

2035/36 10,687,425 (106,412) (3,289,169) 7,291,843

2036/37 10,992,907 (109,454) (3,424,500) 7,458,953

2037/38 11,304,498 (112,556) (3,562,538) 7,629,404

2038/39 11,622,321 (115,721) (3,703,336) 7,803,264

2039/40 11,946,501 (118,949) (3,846,950) 7,980,602

2040/41 12,277,164 (122,241) (3,993,437) 8,161,487

2041/42 12,614,441 (125,599) (4,142,853) 8,345,989

2042/43 12,958,463 (129,025) (4,295,258) 8,534,181

2043/44 13,309,366 (132,518) (4,450,711) 8,726,137

2044/45 13,667,286 (136,082) (4,609,272) 8,921,932

2045/46 14,032,365 (139,717) (4,771,005) 9,121,643

2046/47 0 0 0 0

Total 298,923,515 (2,976,315) (89,006,182) 206,941,019

H-45

Tax Increment Projections for the Plaza Project Area

Fiscal YearGross Tax Increment

Administration Fees


Net Tax Increment

2014/15 3,418,792 (34,040) (327,635) 3,057,117

2015/16 3,484,970 (34,699) (348,422) 3,101,848

2016/17 3,502,593 (34,875) (369,810) 3,097,908

2017/18 3,267,322 (32,532) (353,508) 2,881,281

2018/19 3,330,657 (33,163) (373,783) 2,923,711

2019/20 3,395,258 (33,806) (394,668) 2,966,785

2020/21 3,461,152 (34,462) (416,175) 3,010,515

2021/22 3,528,364 (35,131) (438,330) 3,054,903

2022/23 2,996,926 (29,840) (461,151) 2,505,935

2023/24 3,054,966 (30,418) (484,656) 2,539,893

2024/25 3,114,167 (31,007) (508,864) 2,574,296

2025/26 580,371 (5,779) (533,798) 40,795

2026/27 0 0 0 0

2027/28 0 0 0 0

2028/29 0 0 0 0

2029/30 0 0 0 0

2030/31 0 0 0 0

2031/32 0 0 0 0

2032/33 0 0 0 0

2033/34 0 0 0 0

2034/35 0 0 0 0

2035/36 0 0 0 0

2036/37 0 0 0 0

2037/38 0 0 0 0

2038/39 0 0 0 0

2039/40 0 0 0 0

2040/41 0 0 0 0

2041/42 0 0 0 0

2042/43 0 0 0 0

2043/44 0 0 0 0

2044/45 0 0 0 0

2045/46 0 0 0 0

2046/47 0 0 0 0

2047/48 0 0 0 0

2048/49 0 0 0 0

2049/50 0 0 0 0

2050/51 0 0 0 0

2051/52 0 0 0 0

2052/53 0 0 0 0

2053/54 0 0 0 0

2054/55 0 0 0 0

Total 37,135,537 (369,750) (5,010,799) 31,754,988

H-46

$11,235,000 successor agency to the redevelopment agency of the city of san leandro...

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