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The City of San Leandro is located in central Alameda County, approximately 20 miles southeast of San Francisco. The City occupies some fifteen square miles between the cities of Oakland and Hayward and is bordered on the west by the San Francisco Bay. Once an agricultural community, the City has been successful in attracting significant industrial, manufacturing and retail development to the area. The estimated population of the City as of January 2006 was 81,074. The City was incorporated in 1872 and established as a charter city in 1978. The City operates under the mayor/council/manager form of government. The City Council consists of six Members from six districts and a Mayor. Council Members are nominated by each district and elected at large and the Mayor is also nominated and elected at large. Each may serve a maximum of two consecutive four year terms. The City operates under a Mayor/Council-Manager form of government. The City Council has the responsibility for policy development for the City. To assist in the decision- making process, the Council works closely with nine advisory boards and commissions whose volunteer members are residents of the community. The City Council appoints the City Manager and the City Attorney. All other employees are appointed by the City Manager. The City provides the following services: public safety (police, disaster preparedness and hazardous waste disposal), highways and streets, sanitary sewers, health services, public improvements, planning and zoning and general administration services. Certain demographic information concerning the City is included in Appendix A attached hereto. Management John J. Jermanis has been the City Manager for the City of San Leandro since February 1997. Prior to becoming the City Manager he served as Finance Director of the City for 15 years and as Assistant Finance Director of the City for 11 years. Mr. Jermanis holds a B.A. degree in Business Administration from California State University, San Francisco. Jesse Baloca has been the Finance Director of the City since May 2004. Prior to becoming the Finance Director he served as the Administrative Services Director for Saratoga, CA and as Finance Director for other Municipalities in Washington State. Mr. Baloca has service as a Municipal Finance Executive for close to 11 years. Budgetary Process and Administration The City Council adopts a budget annually for all governmental fund types. From the effective date of the budget, 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 the appropriations endure until the particular capital project is completed. Annual budgets are adopted on a basis consistent with generally accepted accounting principles, except that capital projects funds are adopted on a project length basis, which means budgets are used -16-