ATTACHMENT A

GUIDELINES FOR PREPARING ANNUAL MAINTENANCE ASSESSMENT DISTRICTS BUDGETS

Following is a summary of the steps taken when preparing the annual maintenance assessment districts budgets for the annual City Council approval process. Summary of Annual Approval Actions Council approval process is addressed in Procedure PRO-PAR-010. Following is a summary of the actions: In general, Section 22500 and following of the Streets and Highways Code, also known as the Landscaping and Lighting Act of 1972 (the "Act"), annually requires two actions for established maintenance assessment districts. First action is for the City Council to adopt a resolution that preliminarily approves the district budget, engineer's report, and sets a public hearing. The public hearing requires published notice at least 10 days prior to the hearing. The hearing needs to be conducted in time for the consulting engineer to submit the tax/assessment roll to the San Joaquin County Auditor by August 10. In recent years, the public hearing was conducted on the same evening as the City Council considered the City budget. In 2020, the preliminary approval resolution was adopted at the April 28 City Council Meeting and the public hearing was conducted June 9. The City Council considered the City budget at the June 23 meeting. You should plan for Council to consider the 2021-22 District proceedings on similar dates. The City Council will likely approve the calendar year 2021 at a late October or November meeting. Once dates are approved, I suggest selecting the last meeting date in April for the preliminary approval item and the first meeting in June for the public hearing. Then contact the MUD program manager and confirm dates so the MUD maintenance district items and the PW maintenance district items are considered on the same evenings. Then, advise PW/SEB of intended Council dates. NOTE: Final dates will be as directed by the City Manager's office. Once the assessments are approved at the public hearing, the consultant submits tax/assessment roll to the San Joaquin County Auditor by August 10. In 2020, the consultant submitted the roll on August 4. Gather Information to Prepare District Budgets You will need:

Procedure PRO-PAR-010 Reserve Analysis Worksheet (Landscape District Only) The most recent prior full year HTE Detail Budget Report for the 072 accounts

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 2

Current report of reserve for continuing appropriations balances Current service contracts Bureau of Labor and Statistics Annual Change in Consumer Price Index Park Cost Apportionment Worksheet Budget Worksheet Prior year preliminary approval agenda report, attachments, resolution and public

notice Prior year public hearing agenda report, attachments, resolution, and PowerPoint

presentation. These documents have been saved to a USB flash drive in the appropriate formats and hard copy compiled in a binder. Reserve Analysis/Reserve Analysis Worksheet (Landscape District Only) Refer To The "Stockton Consolidated Landscape Maintenance Assessment District 96-2 Reserve Analysis, October 2016" (the "Analysis") for additional information and methodology. The Analysis is an integral budgeting component must be used when developing the annual budget. There is an Excel spreadsheet for the Analysis. Update the Analysis worksheet each year in November/December. Costs should be adjusted for inflation. I suggest using the annual change in the San Francisco/Oakland/Hayward Consumer Price Index. This is the same index by which the maximum assessment can be adjusted. Next is to update the year. This will update the amount that should be in reserve for all the categories. Third update is to review each category to determine if the service was performed during the past year. Services such as tree trimming are not performed each year and, depending on when such service was last performed, that line item may be fully funded. These lines are also in the budget worksheet. The worksheet starts with a tab titled "Template." The Template is used when determining assessment for a new zone. Make a copy of the Template, rename it and place in order with the rest of the zone worksheets. Then inventory the anticipated improvements. The "Proposed Assessments" tab is a compilation and most values in most cells have to be manually entered. The "Summary" tab is just that, a summary of all the zones. Most cells will automatically populate from the individual zone tabs. Tabs "A-1" to "E-5” These are for each individual zone and includes tabs for the assessment district funded parks. Each sheet is the same and starts with details of the zone: zone designation; name, account number; year development started; year of

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 3 substantial completion; number of parcels (this is both residential and commercial); and the current year, and then three different tables:

1. The "Summary of Improvements" table with an inventory of improvements for that zone or park.

2. The "Annual Replacement/Restoration/Replenishment" table is for tasks that

should be performed annually but are not part of the routine contract or beyond the scope of the contract for conventional landscape/park maintenance services. Provided the costs can be accommodated within the annual assessment limit, costs for these services should be included in the annual assessment and arrangements made to have the services performed. This estimates the percentage of repairs needed and recommends minimum dollar amount to be budgeted. Refer to the Analysis for additional explanation.

3. The "Recurring Non-Annual Costs and End of Service Life Replacement" table is

for long service life improvements such as irrigation controller or booster pumps; and for services that are not annual required such as tree trimming for an entire zone. It is to develop/build funding, so funds are available when the improvements reach the end of service life, or it is time for the recommended service frequency. Refer to the Analysis for additional explanation.

The balance of the Analysis summarizes each zone, providing a snapshot of the financial condition when the Analysis was prepared and a boundary map of each zone. AS400/HTE Detail Budget Report Run a Detail Budget Report (DBR) from AS400/HTE before starting. One of the Program Managers or Analysts at SEB/Fiscal can help generate that report/teach someone how to generate that report. A great skill to have is to know how to generate a Detail Budget Report. For the FY 2021-22 budget, run the report for 2019-20. That will have the most recent full year expenditures. I have found if I run the partial year 2020-21 DBR and then extrapolate costs for the full year, the results are not accurate. Better and more accurate to use the most recent full year and then increase expenses by the known CPI to use for the estimated expenses. Reserve for Continuing Appropriations Balances This report will be generated by Administrative Services Department. Work with one of the PW/Fiscal Program Managers or Analysts to request this from ASD. Current Service Contracts Gather current service contracts so costs for contracted services can be entered in the budget worksheet. These are contracts for services and tasks such as: landscape and park maintenance; path sweeping; pest control; back flow prevention testing; and

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 4 engineering services. This is not all inclusive and there may be others that are not described. Bureau of Labor and Statistics Annual Increase in Consumer Price Index This is needed to determine the percentage increase in the maximum assessment for those zones that provide for an annual escalator in the maximum assessment. The approved formula for the zones that have an escalator is the greater of three (3) percent or the annual increase in the San Francisco-San Jose-Hayward CPI. Go to the Bureau of Labor and Statistics website. Find the table for the annual increase in the San Francisco-San Jose-Hayward consumer price index. It is important to note that the "annual increase" is used. The annual increase is the change in the average of the changes throughout the year and is more gradual. It is usually less than using the December over December change. This is usually available about the third week of January. Preliminary Approval Agenda Report, Attachments, Resolution, and Public Notice Most information is consistent from year to year and generally the only thing that needs to be changed in the dates and financial summary. Use the prior year's report to make sure the most recent edits to text and content are captured in the current year's report. Similarly, with the attachments, resolution and notice; dates and amounts in those documents will need to be updated. These will be updated upon completion of the budget worksheet. Public Hearing Agenda Report, Attachments, and Resolution Like the Preliminary Approval items, most information of the public hearing report items is consistent from year to year and generally the only thing that needs to be changed are the dates and financial summary. Use the prior year's report to make sure the most recent edits are captured in the current year's report. Similarly, with the attachments, and resolution, dates and amounts in those documents will need to be updated. You will notice there is a lot of 'overlap' in the information contained in the preliminary approval and public hearing reports and attachments. These will be updated upon completion of the budget worksheet and completion and submittal of the preliminary approval report and associated items.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 5 Preparing Landscape District Budget Worksheet The Landscape District Budget Worksheet is prepared considering both the District reserve analysis and prior year expenditures. See the next section for the Preparing the Lighting District Budget Worksheet. The Budget worksheet is what I use to determine the overall District budget and budget for each zone. This has rows describing various tasks/services, total estimated expenditure, Activity. Element-Object number, for each individual zone. Rows are for the individual line item expenditures. What I call the 'expenditure portion' of the budget worksheet is divided into nine (9) sections:

1. Landscape Maintenance Costs (Rows 7 – 48) 2. Walls, Signs And Bridge Railings (Rows 49 – 52) 3. Graffiti Abatement (Row 53) 4. Park Maintenance Costs (Rows 54 – 97) 5. Materials And Supplies (Rows 98 – 101) 6. Street Lights (Rows 102 – 110) 7. Special District/Storm Basin Maint. Dist. (Row 113) 8. Replacement Reserve (Rows 115 – 118) 9. District Administration (Rows 119 – 142).

What I call the revenue portion of the budget worksheet is divided into three (3) sections:

1. Total Estimated Revenue Required (Row 144) 2. Appropriation From Reserve (Row 146) 3. Total Estimated Assessment For The Fiscal Year (Row 148)

Below the 'revenue portion' of the worksheet, are rows with various information and calculations used to determine amounts to be entered on specific lines for each zone. Those are further referenced and explained at the description for each line item/row. The formulas will apportion/calculate to the penny. I usually round to the nearest whole dollar – look at past year's budgets for reference. Before making any entries into the budget tab/worksheet, the first place to start is with the tab titled "Utilities Estimate Oct 2020” This is a running summary of utilities costs. A column has been added for 2020 costs and 2020 costs entered. Enter the total year costs for the utilities from the DBR. Consult the appropriate utility provider, i.e. COS MUD, California Water Service, PG&E; to determine the projected rate increase for the upcoming year. Calculate the increase for both the "Average" and the Prior year cost. Use whichever cost is higher for budgeting purposes. This needs to be completed

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 6 before starting entries into the budget itself. Once this is completed/updated, anticipated utility costs will be determined for entry into the budget worksheet. Following is a line by line summary of the Budget Worksheet and how to populate the cells. Row numbers refer the Excel worksheet row number: Rows 7 through 48: Maintenance, Repairs and Utilities. This section covers the street landscaping and open spaces. Row 8: Landscape and Open Spaces 'Section' Rows 9 - 17: Contracted Scheduled Landscape Services; These are services and tasks that must be performed at a regular interval and for which there is a contract. This includes regular landscape maintenance services, back flow prevention assembly testing, etc. Contract prices will be used for these expenses. Rows 19 – 38: Incidental Services; This includes services that may occur and for which need to be budgeted. Row 29, "Irrigation Repairs per Contract Apportionment" are the anticipated repairs included in the maintenance contract. The remainder of these services may or may not be required depending on the zone and if there is an incident that requires repair/service. Some of these estimated costs will be from the Reserve Analysis Worksheet. Rows 41 through 47: Landscape Utilities; this is estimated utility costs. Row 42: Electricity; There is a tab on the worksheet titled "Utilities Estimate Jan 2020” This is a running summary of electricity costs. When preparing the 2022-23 budget, a column will need to be added for 2021 electricity costs. Consult PG&E to determine the projected rate increase for the upcoming year. Calculate the increase for both the "Average" and the Prior year cost. Use whichever cost is higher for budgeting purposes. Row 43: Sewer; There is a tab on the worksheet titled "Utilities Estimate Jan 2020” This is a running summary of sewer costs. When preparing the 2022-23 budget, a column will need to be added for 2021 electricity costs. Consult MUD to determine the projected rate increase for the upcoming year. Calculate the increase for both the "Average" and the Prior year cost. Use whichever cost is higher for budgeting purposes. Row 44: Water; There is a tab on the worksheet titled "Utilities Estimate Jan 2020” This is a running summary of water costs. When preparing the 2022-23 budget, a column will need to be added for 2021 electricity costs. Consult MUD to determine the projected rate increase for the upcoming year. Calculate the increase for both the

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 7 "Average" and the Prior year cost. Use whichever cost is higher for budgeting purposes. Row 45: Telephone – Central irrigation Control. Currently there is no landscaped areas on central irrigation control. Row 46: Storm Drain Fee – Use amounts from prior year's budget and from Detail Budget Report. MUD is inconsistent charging this. Should be on all park and open space but is not. Better to budget for it that have to try to amend budget later to accommodate it. The fee for open space and parks is $35.07 per acre per month. See rows 272 through 274 for areas and calculations. Row 49 through 52: Wall/Signs/Bridge Railings. This section is for maintenance and repair of back-up walls; entry monument signs; and the bridge railing on Pock Lane over Little John Creek in the Little John Creek subdivision (Zone E-1). Line 50: Wall and Bridge Railing Maintenance and Repair. Wall repairs. Budget a minimum of $15,000 for each zone. Some zones are higher because of the amount of wall in the zone and/or past experience with the annual amount of damage incurred/repaired. Line 51: Entry Monument Sign Repair. This is for signs like the one at William Moss/Manthey Road or signs in entrance medians in Zone A-3 off of Inspiration, Maranatha, etc. Row 53: Graffiti Abatement – Performed by Neighborhood Services. Years ago there was a big push form the City Manager's office regarding graffiti abatement and funding the service. Walls in maintenance assessment districts were included as a way to fund NS Graffiti Abatement Services. They do the work for $0.35/square foot. NS sends a summary worksheet mid-June of each year. An FAOF is processed to charge NS cost to the proper account. The cost for each zone is estimated based on prior years costs. Rows 54 through 97: Parks. This section is for park maintenance expenses. For the most part, these rows are the same as rows 7 through 48 for landscaping. The two exceptions are: Row 79, BBQ replacement; and Row 80, Bathroom Repairs. Those items are not in the 'Landscape and Open Spaces' section since those improvements are not in landscape and open space areas. Estimated costs for Rows 54 through 94 are determined in the same manner as for the 'Landscape and Open Spaces' section. NOTE: Fong, Weston, Baxter, and Shropshire Parks are funded by multiple zones/accounts. For Fong, Baxter and Shropshire, the parks costs are apportioned by the number of dueF in Zones A-4/A-7; C-1/C-2; and E-1/E-3 respectively. For Weston

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 8 Park, costs are generally evenly split between Zones B-2 and B-3. Please also refer to the following Table:

Park Zone Account dueF Percent Baxter C-1 072-6908-590 581 28.23 Baxter C-2 072-6916-590 1544.05 71.77 Fong A-4 072-6914-590 365 34.11 Fong A-7 072-6929-590 705 65.89 Shropshire E-1 072-6912-590 790 71.69 Shropshire E-3 072-6926-590 312 28.31 Weston B-2 072-6906-590 4767.83 50.00 Weston B-3* 072-6909-590 5496.83 50.00

*If B-3 does not generate enough assessment revenue to fund 50% of the Total Estimated Revenue Required (rows 143/144) for Weston Park, proportionately reduce all costs allocated to B-3 except for Engineering Services (row 132) and add the difference to the estimated expenses in Zone B-2 until the B-3 Total Estimated Revenue Required matches the maximum B-3 revenue generated by the assessments. Row 96: Graffiti Abatement in Parks – By PW Staff. This is apportioned by park acreage. Total amount determined/provided by Fiscal. Go to Rows 278 and 279 for amounts. Rows 98 through 101: Materials and Supplies. This section is for material and supplies. I divide this into two parts, "Office Supplies" and "Park Equip/Light Equip/Misc. Supplies." I budget approximately $5,000 for office supplies and proportioned based on each zones' expenses. See also Row 312. The Park Equip/Light Equip/Misc. Supplies line is generally apportioned in the same manner, but I also try to project other expenses that may be incurred during the year. See also Row 314. Rows 102 through 110: Street Lights. This section is for street light costs for those zones where street lights area an improvement whose maintenance is eligible to be funded. Street lights are an eligible improvement in part of Zone A-7 (Riverbend Annexation); Zone A-10 (Cannery Park); part of Zone C-2 (Silver Springs Annexation); Zone C-6 (Westlake Villages); and Zone C-7 (North Stockton Projects III). See also rows 348 through 352 Row 103: Unscheduled Maintenance. Assumes 5% of lights will burn out unscheduled; $300/light. Use amount from Analysis. Row 104: Materials and Supplies (Street Lights). Typically, not budgeted since Parks Division would not typically be purchasing street light material and supplies, that would be done by Electrical and is included in the costs for unscheduled relamping or knockdown replacement. In the event Parks Division does need to procure streetlight

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 9 (not park or open space pathway lights) related M&S, a budget amendment may be necessary. Row 105: Unscheduled Knockdown Replacement. Assumes 1% of lights per year being knocked down; but budget for no less than one (1) knockdown; budget $11,845 for cobra head; $13,400 for decorative. Use number of lights from analysis. Row 108: Electricity. Need to obtain flat rate from PG&E. Rate based on wattage or LED equivalent. Number of lights in each zone in found in Analysis and rows 348 through 352. Row 112: Contingency; 10% of Subtotal Estimated Expenses. This is contingency for maintenance and utility expenses. There is a separate contingency line for administrative expenses (row 141). Start with 10% of Subtotal Estimated Expenses (row 111). This does not automatically calculate so it has to be manually entered. This may have to be adjusted when finalizing total amount to be assessed so the assessment per dueF is an even amount in whole cents or when changes come after budget and the per dueF assessment amount is finalized. Row 113: Special Dist./Storm Basin Maint. Dist. Zones E-1 and E-3 contribute to the Stockton Airport Business Center Storm Drain Basin Maintenance Assessment District. These amounts are fixed which is why they are not included in Row 111 Subtotal Estimated Expenses. Since they are a fixed cost, there is no need to include them when determining the contingency. Rows 115 through 117: Replacement Reserve. This is determined from the Analysis. Most zones do not have adequate assessment capacity for this to be included. The Analysis will provide separate reserve amounts for landscape and open spaces and for parks. Where a park is funded by two different zones, the Analysis will determine each zone's proportionate share. Rows 119 through 142: District Administration. This section is for administrative costs attributable to each zone. For all rows except row 132 (engineering services), the costs are apportioned based on the Total Estimated Maint/Util/Repair Expenses (row 114) PLUS Engineering Services (row 132). Engineering Services costs (row 132) have a contracted cost per zone. Row 120: City Administration and Inspection. This is the cost for PW staff; inspection, budget preparation, annual approval, etc. This amount will be provided by Fiscal. This is apportioned based on Row 114 Total Estimated Maint/Util/Repair Expenses and Row 132 Engineering Services. Calculation is shown on Rows 285 through 289. The amount for each zone has to be manually input on Row 120.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 10 Row 121: Insurance Premiums. Apportion on same basis as Row 120. Calculation on Row 294. The amount for each zone has to be manually input on Row 121. Row 122: Auto Equipment Rental. No costs for this in the recent past. Apportion on same basis as Row 120. Calculation on Row 296. The amount for each zone has to be manually input on Row 122. Row 123: Office Equipment Rental. No costs for this in the recent past. Apportion on same basis as Row 120. Calculation on Row 298. The amount for each zone has to be manually input on Row 123. Row 124: Computer/Tech Support. Apportion on same basis as Row 120. Calculation on Row 300. You will have to manually input the amounts on Row 124. The amount for each zone has to be manually input on Row 124. Row 125: Other Rentals. No costs for this in the recent past. Apportion on same basis as Row 120. If needed, you will have to insert a row for this calculation. The amount for each zone has to be manually input on Row 125. Row 126: Pool Vehicle Rental. No costs for this in the recent past. Apportion on same basis as Row 120. Calculation on Row 302. The amount for each zone has to be manually input on Row 126. Row 127: Phone Rental. This is for the desk phone. Apportion on same basis as Row 120. Calculation on Row 304. The amount for each zone has to be manually input on Row 127. Row 128: Publicity/Advertising/Publication/Legal Notice. This is for the public notice for the annual public hearing. Apportion on same basis as Row 120. Calculation on Row 306. The amount for each zone has to be manually input on Row 128. Row 129: Processing Fees/County Administration. This is paid to San Joaquin County for placing the assessment on the tax roll. This cost is based on the number of parcels assessed. Amount can be found in the Detail Budget Report. The amount for each zone has to be manually input on Row 129. Row 130: Legal Services. This is for any outside counsel legal services necessary for the annual approval process. It is not for individual zone legal costs. Apportion on same basis as Row 120. Calculation on Row 308. The amount for each zone has to be manually input on Row 130. Row 131: Computer Programming Services. This expense was moved to elem-obj 30-51 at the direction of Fiscal; Row 133, "Comp. Software/Comp. Maint. Mgt. System".

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 11 Therefore, no costs for Row 131 in the recent past. Apportion on same basis as Row 120. Calculation on Row 310. The amount for each zone has to be manually input on Row 131. Row 132: Engineering Services: Annl Report, Tax Roll, Diagrams. This is the cost for the engineer' to prepare the engineer's report, assessment/tax roll, and associated diagrams for annual approval. This is a contracted service and costs for each zone will be found in the service contract. The amount for each zone has to be manually input on Row 132. Row 133: Comp Software/Comp. Maint. Mgt. System. Total amount provided by Fiscal. Apportion on same basis as Row 120. Calculation on Row 316. The amount for each zone has to be manually input on Row 133. Row 134: Fuels/Gas/Oil/Propane. There have been no costs for this and there should not be. If there ever is, the cost would be location and zone specific. The amount for each zone has to be manually input on Row 134. Row 135: Training. This is outside training. Apportion on same basis as Row 120. Calculation on Row 320. The amount for each zone has to be manually input on Row 135. Row 136: Meetings and Travel. Apportion on same basis as Row 120. Calculation on Row 322. The amount for each zone has to be manually input on Row 136. Row 137: Car Mileage Reimbursement. No costs for this in the recent past. Apportion on same basis as Row 120. Calculation on Row 324. The amount for each zone has to be manually input on Row 137. Row 138: City Indirect Allocation. This amount is provided by the City Manager's office through PW/Fiscal. Apportion on same basis as Row 120. Calculation on Row 330. The amount for each zone has to be manually input on Row 138. Row 139: Enterprise Resource Planning. This was charged only one year. If charged in the future, amount will be provided by PW/Fiscal. Apportion on same basis as Row 120. Calculation on Row 326. The amount for each zone has to be manually input on Row 139. Row 140: Subtotal District Administration Expenses. Total of rows 120 through 139. Row 141: Contingency. District Admin. Expenses. Like Row 112 in the Landscape and Parks Section, start at 10% of the "Subtotal District Administration Expenses." This

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 12 may have to be adjusted when finalizing total amount to be assessed or when changes come after budget and per dueF assessment amount is finalized. Row 142: Total Estimated District Admin. Expenses. This is the sum of rows 140 and 141. Rows 143/144: Total Estimated Revenue Required. This is the total of all budgeted contractual and anticipated expenses. Rows 145/146: Total Appropriation from Reserve for Continuing Appropriations. An appropriation from the Reserve for Continuing Appropriations is used to balance the budget if a zone's assessment cannot be set at a level that will generate the zone's "Total Estimated Revenue Required" (Row 144). The amount of the appropriation is the difference between the "Total Estimated Assessment" (Row 148) and the "Total Estimated Revenue Required" (Row 144). Scenarios where an appropriation from the Reserve for Continuing Appropriations is in order:

1. The zone has a fixed assessment and an appropriation is the only way to meet financial obligations.

2. The zone has an assessment that can be increased. The increase would exceed

what is thought to be reasonable (15 to 20%). An appropriation would allow the assessment to be increased over 3 to 5 years to moderate the annual increase until the assessment is at a rate to fully funds all budgeted all budgeted contractual and anticipated expenses.

3. There is an overage in the reserve. Setting the Total Estimated Assessment at a

rate that is less than the Total Estimated Revenue Required and making up the difference with an appropriation from the Reserve for Continuing Appropriations will reduce the reserve balance to bring it to the amount recommended in the Analysis. Once the reserve is at the recommended amount, the appropriation could be eliminated and the assessment set at a rate that would fully fund budgeted contractual and anticipated expenses

Rows 147/148: Total Estimated Assessment. This is the total amount of revenue expected to be generated by the assessment. Rows 150 through 360+ are for various miscellaneous information that will be helpful in preparing the agenda report and attachments.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 13 Row 150: Proposed Potential per dueF Assessment. Total Estimated Assessment divided by Total dueF (Row 152) Row 151: Maximum Possible per dueF Assessment. For the zones with an annual escalator, the prior year maximum assessment increased by the escalator. Escalator is the greater of three (3) percent or the percentage increase in the annual San Francisco/San Jose/Hayward consumer price index. See also Row 201 for directions on how to calculate the maximum possible assessment.

SPECIAL NOTE Regarding Calculating Zone E-1 Maximum Assessment: For Zone E-1, Little John Creek, the original assessment was $59.68/dueF. Subsequent to forming the zone, the assessment was increased to fund maintenance of Shropshire Park. Only the portion of the assessment that increased is subject to the annual escalator. To determine the maximum assessment, take the current maximum assessment, subtract $59.68, and that result is the amount subject to the annual escalator.

Row 152: Total dueF. The total number of "dwelling unit equivalent factor (dueF) in the zone. One (1) dueF is equivalent to a single family residence. Consult each zone's original engineer's report for the dueF formula for other property classifications. If a zone is not fully developed, this may change. Row 154: Max Revenue Generated. Maximum Possible per dueF Assessment multiplied by the number of dueF. Row 166: Assessment for Maint/Op/Admin. This is the Total Estimated Revenue Required 9row143) divided by the number of dueF. This is especially helpful to show where the assessment in/for fixed assessment zones is inadequate to cover anticipated expenditures and to provide for ongoing maintenance of the improvements. Row 169: Max Revenue that can be Generated. This is the maximum possible assessment (row 151) multiplied by the total dueF. Rows 178 through 181 provide differential values for use in the Agenda Report and Attachment C to the report. Row 178: Difference in Potential per dueF Assessment (last FY to Current FY). This is the difference between the proposed and last year's assessment. This amount will be helpful when preparing the agenda report and Attachment C and for any questions that may arise. Row 179: Percentage Increase/(Decrease) Last FY to Current FY. Percentage difference in the potential assessment. This amount will be helpful when preparing the agenda report and Attachment C and for any questions that may arise.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 14 Row 180: Difference in Max. Assessment (Prior FY to current FY). Dollar amount difference in the maximum assessment. This amount will be helpful when preparing the agenda report and Attachment C and for any questions that may arise. Row 201: Max Assessment: Last Year + the greater of three (3) percent or the Annual Percentage Increase in the San Francisco – San Jose – Hayward CPI. This is to determine the proposed maximum assessment. Applies to Zones A-3, A-4, A-5, A-6, A-7, A-10, B-4, B-5, C-2, C-3, C-4, C-6, C-7, D-3, D-4, D-6, E-1*, E-3, E-4, and E-5. The formula in the cell needs to be revised each year to reflect the applicable escalator amount – 3% or the annual change in CPI. The formula for the zones that provide for an increase is set to round down to the nearest whole cent. It is important that the amount is rounded down. In certain instances, if the calculation rounds up, the increase could be slightly greater than what the formula allows potentially opening up the assessment to legal challenge. I recommend being conservative to minimize any potential legal challenge. In the end, the result is only a few pennies and will not make or break the affected zone/district. Enter the result in Row 151.

* SPECIAL NOTE Regarding Calculating Zone E-1 Maximum Assessment: For Zone E-1, Little John Creek, the original assessment was $59.68/dueF. Subsequent to forming the zone, the assessment was increased to provide funding for maintenance of Shropshire Park. Only the portion of the assessment that increased is subject to the annual escalator. To determine the maximum assessment, take the current maximum assessment, subtract $59.68, and that result is the amount subject to the annual escalator. The formula in the cell reflects this.

Row 203: Assessment per dueF for Budgeted Expenditures and Replacement Reserve Allocations. This is actually the amount from Row 144 – Total Estimated Revenue Required divided by row 152 – Total dueF. This is to substantiate what the actual assessment should be especially for zones with a fixed assessment. Rows 205 through 207. These are prior FY values used for calculating the difference between prior FY and current FY. Row 209: Difference if dueF. Difference in dueF between prior FY and current FY. Rows 211 through 229. The reserve balance seems to be updated once each year. An HTE report can be generated for these amounts. Report account range will be 072-0000-283.00-00 to 072-0000-283.99-99. This is to provide an indication of if the balance is increasing or decreasing. A row needs to be added for each fiscal year and formulas adjusted to accommodate the new row.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 15 Rows 232 through 248. These show trends in prior year total expenditures. Rows 248 and 249 show what a lack of resources does. If there are not sufficient staff assigned to this program, the non-routine but budgeted work does not get completed. Like the reserve, each year a new row needs to be added and the prior year expenditure amounts manually input. A Detail Budget Report for the 072-6900 fund from HTE will provide this information. Row 255: Proposed Current FY App(ropriation) from Reserve. This is directly from Row 146. Row 257: Estimated Remaining Reserve for Continuing Appropriation after current FY Appropriation. Just as described. Most current row, most likely Row 211, minus Row 146. Row 259: Years Until Reserve Depleted at Current Appropriation (rate or amount). Row 257 divided by Row 146/255. This is most relevant to the zones with a fixed assessment. It is somewhat of a nebulous figure. Looking as Rows 250 and 251, in some of the fixed assessment zones, such as A-1, revenue did exceed actual expenditures. This is still relevant information to have. Row 264: This is the assessment per dueF for "Total Estimated Revenue Required" (Row 144) This is also the total estimated expenditures. This would be the 'true' assessment if there was not an appropriation. Rows 266 through 272 are some miscellaneous calculations. Row 274: Park acreage. This is needed to determine the "Park Storm Fee" on Row 276 and entered on Row 94. Row 276: Park Storm Fee. Fee is $35.07 per acre per month. Seems to be charged on only some parks. This row calculates the fee. Enter on Row 94. Row 278: Calculation to apportion PW staff cots for graffiti abatement in parks. Apportioned by developed acreage. Rows 283 and 285: For information – calculates the percentage that administration costs are of the overall assessment. Row 287: Amount on which City Admin & Indirect Calced. This is the dollar amount used to determine the percentage of City Administration, Administration and Indirect Allocation to charge to each zone. This is the sum of: "Total Estimated Expenses" (Row 111)

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 16 + "Engineering Services" (Row 132) - "Graffit Abatement by PW Staff" (Row 96) - "Materials and Supplies” (Row 101) Row 289: "Percentage of Total Amt. On Which Admin/Indir Calced” This is each zone's Row 287 amount divided by the sum of Row 287. This percentage is used to determine each zone's proportionate share of Rows 120 through 131 and Rows 133 through 139 costs. These costs are determined proportionately in relation to expenses on the basis that generally the greater the estimated expenses, the greater amount of time will be spent on that zone. This provides a reasonable nexus to charging costs. NOTE: Row 132 cost (Engineering Services) is not apportioned in this manner. Row 132 costs are determined by contract. Rows 296 through 330: Enter costs in Column G "Total Estimated Expenditure" and the worksheet will apportion the costs to each zone. Manually enter in each of Rows 120 through 139. Row 332 and 334: Contingency as described. Rows 336 and 337: Estimating street lighting cost for those zones where street lighting is and eligible expense. Zones:

A-7, Hunter Ridge annexation area A-10, Cannery Park C-2, Silver/Golds Springs annexation area C-6, Westlake Villages C-7, North Stockton Projects; Sub Zone A (generally southerly of a line 100 feet

southerly of Villa Point Drive D-4, Calaveras Estates D-6, Moss Gardens, public street lighting on Highway 4/Charter Way and Fresno

Avenue E-3, Seabreeze, Little John Creek North and South annexation area (generally

southerly of Industrial Drive and westerly of State Route 99 Frontage Road) Zone E-5, Rancho Del Sol, (generally Simbad Estates and Linda Vista

annexation; and Old Oak Estates annexation) Enter amounts on Rows 102 through 109. Rows 339 and 340: Lights in parks. Enter amount on Row 74. Rows 342 through 344: Summary of actual Zone expenditures. Accounting charges 'district wide' costs (generally Rows 120 through 139 EXCEPT Row 132) to the 072-6900 account. Then those costs are distributed proportionately to each zone at the

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 17 close of the fiscal year. These rows summarize the costs charged to each zone and then distributes the -6900 costs proportionately. Row 342 is from the DBR. Row 343: The "Total Estimated Expenditure" (Column G) is from the DBR. Formula in each cell calculates each zones share. Row 344: Sum of Rows 342 and 343. Finalize Landscape District Budget Actual per dueF assessment must be divisible by 2 and the result in whole cents because the assessment is paid in two (2) installments that are due December 10 and April 10 of the following year. For example, an assessment of $39.78 will work; an assessment of $50.09 will not. Finalize the budget by mid-January so the agenda report and attachments can be completed and started routing. Assuming preliminary approval at a late April City Council meeting, the Agenda Report and attachments will have to start routing by the end of January. Send the budget to engineer so they can start on the engineer's report and assessment roll. For 2020-21 the engineer's report was completed March 26. Note that some administrative and salary costs will not be finalized by the Budget Office by that time. What has to be done is set the Total Estimated Assessment for the Fiscal Year. This also sets the assessment per dueF. Then, once changes come from the Budget Office, adjustments are made first to contingencies to keep the "Total Estimated Revenue Required" constant. If that is not possible, then the "Total Appropriation from Reserve for Continuing Appropriations" can be adjusted. Avoid adjusting the Total Estimated Assessment and per dueF assessment because of the amount of work involved to change the agenda report, attachments and engineer's report. LIGHTING DISTRICT BUDGET Preparing Lighting District Budget Worksheet The Lighting District Budget Worksheet is prepared considering both the District reserve and prior year expenditures. The assessment for the lighting district is the difference in cost between the special enhanced lighting fixtures and city standard 'cobra head' poles. The poles and heads used in the lighting district are more expensive and there are more lights than city standards require. The assessment funds the special benefit the enhanced lighting confers to the residences within the district. The assessment is calculated based on each lot's street frontage in linear feet.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 18 The Budget worksheet is used to determine the overall District budget and assessment. This has a column describing the task/service, total estimated expenditure, and Activity.Element-Object number. Rows are for the individual line item expenditures. What I call the 'expenditure portion' of the budget worksheet is divided into two (2) main sections:

1. Operation and Maintenance Costs Oxford Manor Lighting (Rows 5 – 24) 2. General Benefit Value (Rows 25 – 34)

Rows 35 and 36: Estimated Special Benefit Value to Oxford Manor. This is the difference between the "Total Estimated Cost of Oxford Manor Lighting" (Row 24) and "Total Estimated General Benefit Value" (Row 34) What I call the revenue portion of the budget worksheet is divided into four (4) sections:

1. Appropriation From Reserve (Rows 37-38) 2. Total Amount To Be Assessed (Rows 39-40) 3. Total Oxford Manor Assessable Linear Frontage Footage (LFF) (Row 41) 4. Proposed Actual LFF Unit Assessment Rate (Row 42)

Below the 'revenue portion' of the worksheet, are rows with various information and calculations used to determine amounts to be entered on specific lines. Those are further referenced and explained at the description for each line item/row. The formulas will apportion/calculate to the penny. I usually round to the nearest whole dollar – look at past year's budgets for reference. Enter the total year costs for electricity. This should be available from PG&E bills. Consult PG&E to determine the projected rate increase for the upcoming year. This can be found on the PG&E website. This needs to be completed before starting entries into the budget itself. Following is a line by line summary of the Budget Worksheet and how to populate the cells. Row numbers refer the Excel worksheet row number: Rows 5 through 15: Operation and Maintenance Costs. This is the cost of the lights in the district. Row 6: Painting. This is fully funded in the reserve. If resources are available for a painting project, include the estimated project cost so funds are available. It is estimated the project cost will require City Council approval and an appropriation could be approved with the contract approval. Row 7: Knockdown Repair/Replacement. Budget assuming one knockdown that requires replacing the foundation. Used $13,400 for 2021-22. Increase by

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 19 CPI/escalator in subsequent years. If there are no knockdowns during the year, funds roll into the reserve at the end of the fiscal year. Row 8: Bulb Replacement. Covers non-scheduled replacement and general maintenance. Rows 9 through 14: Estimated cost of energy. Costs available form PG&E website. Differentiated by wattage. Row 15: Estimated Operation and Maintenance costs. Sum of Rows 6 through 14. This is the estimated cost of the lighting system in the district. NOTE: This is NOT the cots that is assessed. Rows 16 through 21: District Administration Costs. Row 17: Engineering Services. This is the cost for the engineer to prepare the engineer's report, assessment/tax roll, and associated diagrams for annual approval. This is a contracted service and cost will be found in the service contract. Row 18: City Administration. This cost has carried forward since district inception. Row 19: Publicity/Advertising/Publication/Legal Notice. This is for the public notice for the annual public hearing. Same as Row 128 in the Landscape District Budget. Row 20: Processing Fees/County Administration. This is paid to San Joaquin County for placing the assessment on the tax roll. This cost is based on the number of parcels assessed. Amount can be found in the Detail Budget Report. Row 21: Total Estimated District Admin. Expenses. Sum of Rows 17 through 20. Row 22: Subtotal. Sum of Rows 15 and 21. Row 23: Contingency. Ten (10) percent of Row 22. Row 24: Total Estimated Cost of Oxford Manor Lighting. This is the estimated cost of operating and maintaining the installed lighting system. Row 25: General Benefit Value. This is the cost/value to operate and maintain the lighting system if City standard lights were installed at City standard spacing. If the lighting system were installed to City standards, there would be 170 lights installed instead of the 278 decorative lights installed. The decorative lights are not as tall and have to be spaced closer than City standard lights to maintain the same minimum lighting level.

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 20 Row 26: General Benefit Knockdown Repair/Replacement. Budget assuming one knockdown that requires replacing the foundation. I used $11,845 for 2021-22. Increase by CPI/escalator in subsequent years. If there are no knockdowns during the year, funds roll into the reserve at the end of the fiscal year. Row 27: General Benefit Bulb Replacement. Cost for non-scheduled replacement and general maintenance. Rows 28 and 29: General Benefit Estimated cost of energy. Costs available form PG&E website. Differentiated by wattage. Row 31: Subtotal. Sum of Rows 26 through 30. Row 32: Contingency. Ten (10) percent of Row 31. Row 33: Total Estimated General Benefit Value. This is the estimated value/cost of operating and maintaining the lighting system it installed to City standards. Rows 35 and 36: Estimated Special Benefit Value to Oxford Manor. This is the difference between the "Total Estimated Cost of Oxford Manor Lighting" (Row 24) and "Total Estimated General Benefit Value" (Row 34) Rows 37 and 38: Appropriation from Reserve for Continuing Appropriations. Here is where you will have to 'kind of work backwards.' Look at the reserve balance, if it is adequate, the assessment can be held constant. If that is the case, subtract Row 34 (general benefit value) from Row 24 (total estimated cost of Oxford Manor lighting). Then determine the total revenue that will be generated using the prior year "Actual LFF Unit Assessment Rate." Subtract the total revenue that will be generated from assessments from the resulting difference between Row 34 and Row 24. That will result in the value/amount of the appropriation form the reserve. Rows 39 and 40: Total Amount to be Assessed. Row 24 minus Row 34 minus Row 36. Row 41: Total assessable linear frontage footage in district. Row 42: Proposed Actual LFF Unit Assessment Rate. Row 38 (total amount to be assessed) divided by Row 41/Total Oxford Manor Assessable Linear Frontage Footage. Row 44: Same as Row 42

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 21 Row 45: Maximum Possible per LFF Assessment. Prior year maximum assessment increased by the escalator. Escalator used is the greater of 3% or the percentage increase in the annual San Francisco/San Jose/Hayward consumer price index. Rows 47 through 50: Difference between prior year and proposed assessments. Row 52: Assessment Required for budgeted Expenditures. The sum of Rows 38 and 40 divided by the total LFF. Row 54: Max. Possible per LFF Assessment. Maximum revenue that could be generated if assessed at maximum rate. Rows 56 and 57: Prior year assessment rates. Row 59: Calculation of maximum per LFF assessment. Prior year's maximum multiplied by escalator. Row 61: Estimated Reserve from continuing Appropriation. Obtain this from ASD. Row 63: Estimated remaining reserve after appropriation. This is the difference between Rows 61 and 38. Row 67: This will calculate the amount of reserve appropriation needed to keep actual assessment the same as prior year. Finalize Lighting District Budget Actual per dueF assessment must be divisible by 2 and the result in whole cents because the assessment is paid in two (2) installments that are due December 10 and April 10 of the following year. For example, an assessment of $39.78 will work; an assessment of $50.09 will not. For this district, the engineer will make sure the assessment for each lot is evenly divisible by 2. Finalize the budget by mid-January so the agenda report and attachments can be completed and started routing. Assuming preliminary approval at a late April City Council meeting, the Agenda Report and attachments will have to start routing by the end of January. Send the budget to engineer so they can start on the engineer's report and assessment roll. For 2020-21 the engineer's report was completed March 26. Note that some administrative and salary costs will not be finalized by the Budget Office by that time. What has to be done is set the Total Estimated Assessment for the Fiscal Year. This also sets the assessment per dueF. Then, once changes come from the Budget Office, adjustments are made first to contingencies to keep the "Total Estimated Revenue Required" constant. If that is not possible, then the "Total Appropriation from Reserve for Continuing Appropriations" can be adjusted. Avoid adjusting the Total

Guidelines For Preparing Annual Maintenance Assessment Districts Budgets Page 22 Estimated Assessment and per dueF assessment because of the amount of work involved to change the agenda report, attachments and engineer's report. Route Preliminary Approval Report and Attachments for Review and Approval See "Guidelines For Preparing City Council Agenda Reports, Attachments, And Resolutions For Preliminary Approval And Public Hearing" Route Preliminary Approval agenda report, attachments, resolution, and public notice for review and approval. This will occur mid to end of January for a late April City Council Meeting. During this time, there may be revised personnel costs or other Internal Service Fund (ISF) costs provided from the Budget Office/PW Fiscal. As noted earlier, you will have to reapportion the revised costs and adjust the contingency as necessary so the "Total Estimated Assessment" (Row 148 L/S; Row 40 Lighting) and per dueF assessment (Row 150 L/S) and per LFF assessment (Row 44 Lighting) does not change. Revise and reroute the affected documents. Next, start work on the Public Hearing report, attachments and resolution as that will have to be routed early March for a June Public Hearing.