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NOTES TO THE FINANCIAL STATEMENTS (Continued) has a common governing body(or a board over which this body has oversight responsibility)and is operated by City employees, some of whom provide services for(or exert management influence over) more than one of these units. Charges to these units for labor, materials and overhead are made directly at the City's standard rate per formal agreements with the City. Real property transfers are executed at appraised value usually net of cost incurred by the acquiring unit. Projects performed by the City on behalf of the Redevelopment Agency are charged at cost, for which the Redevelopment Agency assumes a long-term obligation to pay from future tax increment revenues. During the year ended June 30, 1993, obligations for project costs totaling $15,548,658 were assumed by the Redevelopment Agency. Note 6. SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCES 6A. Commitments and Contingencies. Numerous claims and suits have been filed against the City in the normal course of business. To the extent that information available indicates that it is probable a liability has been incurred as of June 30, 1993 and where the amount of loss could be reasonably estimated, the obligation has been accrued as an expense of the City's self-insurance program (see Note 8D). In connection with the formation of BICEP(Note 8A),bonds payable in the aggregate amount of$15,055,000 were issued by BICEP. The bonds are collateralized by BICEP's right to receive and collect all premium payments and prepayments. Each member city is obligated to pay its portion of premiums as assessed, until the earlier of the termination of the related bond agreement or prepayment of its portion of the bond obligation. The City's prepayment obligation of bond principal at June 30, 1993 is approximately$4,174,233. The following cities are members of BICEP: Huntington Beach, Oxnard, Pomona, San Bernardino and Santa Ana. 6B. Federally Assisted Programs - Compliance Audit. The City participates in a number of federally assisted grant programs, principal of which are Community Development Block Grant, Federal Aid Urban, Section 8 Housing, and Job Training Partnership Act. These programs were subjected to the audit requirements of the Office of Management and Budget Circular A-128 Audits of State and Local Governments ("A-128") which, in addition to the requirement for an organization-wide examination of financial operations, required tests of compliance with major provisions of Federal law and regulations. In addition, grantors or their representatives may, within prescribed time frames, build upon the "A-128" audit. The "A-128" audit revealed a few instances of non-compliance, and it is yet to be determined whether grantors shall wish to conduct further examination. The amount (if any) of expenditures which may be disallowed by granting agencies cannot be determined, but management believes that the disclosures of non-compliance items can be suitably remedied and that amounts disallowed therefore (if any) will be immaterial. Note 7. SIGNIFICANT EFFECTS OF SUBSEQUENT EVENTS The State of California, in adopting its 1993 fiscal year budget act, has made numerous reductions in State payments under various programs to local governments. The City is estimating that revenues to the General Fund,as directed by the State, will be reduced by approximately $1.9 million during the 1993-94 fiscal year. The City will make appropriate modifications to the 1993-94 fiscal year budget to incorporate the revenue reductions and offset them with compensating expenditure reductions, or revenue increases.