HomeMy WebLinkAboutPreliminary Official Statement (1996) CD
a> o PRELIMINARY OFFICIAL STATEMENT DATED .IDLY 10, 1996
x :,.,
NEW ISSUE: FULL BOOK-ENTRY RATINGS:
Standard & Poor's: "AAA"
Q- ".� Moody's: "Aaa"
MBIA Insured
a) Q (See "RATINGS" herein)
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ro.� J In the opinion of Jones Hall Hill& White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to certain
qualifications described herein,under existing law,the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is
.n 4513 not an item of tax preference for purposes of the federal alternative ntininmm7 tax imposed on individuals and corporations, although for the purpose of
=oCi, computing the alternative minimum tax imposed on certain corporations,such interest is taken into account in determining certain income and earnings.In the
ca further opinion of Bond Counsel,such interest is exempt from Californianiaa personal income taxes.See"TAX MATTERS"herein.
u,Ocri. $28,000,000*
Cr) . COUNTYWIDE PUBLIC FINANCING AUTHORITY
o O U
O:- N
1996 Revenue Bonds
E'0 0 Dated as of: Date of Delivery Due: August 1, as shown below
w, The above-captioned bonds (the"Bonds") are being issued by the Countywide Public Financing Authority(the"Authority"),a joint exercise of powers
ID
-o i c authority established by the Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange, Santa Ana, Seal Beach, Stanton and Tustin (collectively, the
0 o c "Members"),in accordance with the provisions of Article 1 through 4(commencing with Section 6500)of Chapter 5 of Division 7 of Title 1 of the California
a,a.,.o Government Code(the"Act").The Bonds will be delivered as fully registered bonds without coupons,and when delivered,will be registered in the name of
IDCede&Co.,as nominee of the Depository Trust Company,New York,New York("DTC").See"THE BONDS—Book-Entry Only System"herein.
a 0
c m Payment of the principal of and interest and premium, if any,on the Bonds will be made by U.S.Trust Company of California, N.A.,Los Angeles,
ca'63a. California,as trustee (the "Trustee") to DTC,which will in turn remit such principal and interest (and premium, if any) to its participants for subsequent
E o o dispersal to beneficial owners of the Bonds,as described herein.Interest on the Bonds is payable semiannually on each February 1 and August 1,commencing
ai a February 1,1997.Principal of any Bond and any premium upon redemption will be paid by check of the Trustee upon presentation and surrender thereof at the
L a,.o corporate trust office of the Trustee in Los Angeles,Califomia.
c7.>_..- The Bonds are subject to mandatory redemption as described herein under the captions "THE BONDS—Mandatory Redemption from Optional
ui .� Prepayment of Lease Payments"and"—Special Mandatory Redemption."
°i 0 o °' The Bonds are being issued and delivered pursuant to an Indenture of Trust,dated as of July 1,1996(the"Indenture"),by and between the Authority and
0 the Trustee,and in accordance with the provisions of Article 4 of the Act (the"Bond Law").The proceeds from the sale of the Bonds will be used by the
o Authority(i) to provide financing for the portions of a County-wide communications system within Orange County allocable to the Members and to finance
aei 0 Q other capital projects for certain Members within their respective geographical boundaries (collectively,the"Project"), (ii) to fund a Reserve Account,and
E in (iii) to pay the costs of issuance of the Bonds.In order to provide for the repayment of the Bonds,each Member has agreed to lease certain real property and
e "- improvements(collectively,the"Leased Premises") to the Authority pursuant to separate Site and Facility Leases,each dated as of July 1,1996 between the
E•� m Authority,as lessee,and each Member,as lessor(the"Site Leases") and to lease back said Leased Premises from the Authority pursuant to separate Lease
ca o Agreements,each dated as of July I, 1996 between the Authority,as lessor,and each Member,as lessee (the"Lease Agreements").Pursuant to the Lease
Q „ Agreements,each Member has agreed to pay installments of rent for the Leased Premises to the Authority(the"Lease Payments")which have been calculated
co to be sufficient,in the aggregate,to enable the Authority to pay the principal of and interest and premium,if any,on the Bonds when due and payable.See
•�.•
o' "DEBT SERVICE FOR THE BONDS"and"APPENDIX A—Summary of Principal Legal Documents—The Lease Agreements"herein.
o-= Payment of the principal of and interest on the Bonds when due will be guaranteed by a municipal bond insurance policy to be issued by MBIA Insurance
o ri m Corporation (the"Insurer") concurrently with the delivery of the Bonds.See"MUNICIPAL BOND INSURANCE POLICY"herein.
LE
0 ,_ AiB1A
• 0
• c The Bonds are special obligations of the Authority payable solely from the revenues pledged under the Indenture as described herein,consisting primarily of
F).ro the Lease Payments.The Lease Payments are subject to abatement under certain circumstances as described herein.See"SECURITY FOR THE BONDS—
(0 8.� Lease Payments"and"RISK FACTORS—Abatement"herein.
cc o Each Member has covenanted under its respective Lease Agreement that it will take such action as may be necessary to include its Lease Payments in its
e en c" budgets during the term of its Lease Agreement and to make the necessary annual appropriations therefor.Neither the Bonds nor the obligation of each Member
E to make Lease Payments constitutes an obligation of such Member for which such Member is obligated to levy or pledge any form of taxation or for which such
s= 2. o Member has levied or pledged any form of taxation.The Authority has no taxing power.Neither the Bonds nor the obligation of each Member to make Lease
-o-c3 L Payments under its Lease Agrement constitutes a debt of such Member,Orange County,the State of California or any of its political subdivisions within the
c
O 0 meaning of any constitutional or statutory debt limitations or restrictions.
- c cn
a, MATURITY SCHEDULE*
C.-= Due Principal Interest Due Principal Interest
D (August 1) Amount Rate Price (August 1) Amount Rate Price
c —
E'- 1997 $1,990,000 2005 $2,980,000
0 g 1998 $2,085,000 2006 $3,145,000
-' .� 1999 $2,175,000 2007 $ 520,000
=•c' 2000 $2,285,000
" 2008 $ 545,000
—
i '_ 2001 $2,410,000
'5 2002 $2,530,000 2009 $ 580,000
3 a?i c 2003 $2,670,000 2010 $ 615,000
a > CO 2004 $2,815,000 2011 $ 655,000
C_
E) , THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY.IT IS NOT A SUMMARY OF THIS ISSUE.
m ti.� INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN
INFORMED INVESTMENT DECISION.
cu
To cQn The Bonds will be offered when,as and if delivered to and received by the Underwriter,subject to the approval of their validity and the legality of the Lease
.5 21 a> Agreements by Jones Hall Hill&White,A Professional Law Corporation,San Francisco,California,Bond Counsel,and certain other conditions.Certain matters
Ps ,° will be passed upon for the Underwriter by Cox,Castle&Nicholson,LLP,Los Angeles,California,for the Authority by Jones Hall Hill&White,A Professional
O•
Law Corporation,San Francisco, California, and for each Member by its City Attorney.It is anticipated that the Bonds will be available for delivery to The
73 m 'o Depository Trust Company in New York,New York on or about July 31, 1996.
.E0 Stone & Youngberg LLC
m m C° Dated: , 1996 -
H- • . *Preliminary,subject to change.
COUNTYWIDE PUBLIC FINANCING AUTHORITY
Authority Members
City of Brea
City of Buena Park
City of Fullerton
City of Garden Grove
City of Orange
City of Santa Ana
City of Seal Beach
City of Stanton
City of Tustin
Authority Staff
Christopher G. Meyer, Chairman
Ronald A. Nault, Vice Chairman
David N. Ream, Executive Director
Roderick R. Coloma, Treasurer
Janice C. Guy, Secretary
SPECIAL SERVICES
Bond Counsel
Jones Hall Hill & White,
A Professional Law Corporation
San Francisco, California
Trustee
U.S. Trust Company of California, N.A.
Los Angeles, California
Financial Advisor
Public Financial Management, Inc.
Newport Beach, California
Underwriter's Counsel
Cox, Castle & Nicholson, LLP
Los Angeles, California
TABLE OF CONTENTS
SUMMARY
INTRODUCTION 1
THE AUTHORITY 2
THE BONDS 2
General Provisions 2
Book-Entry Only System 3
Mandatory Redemption from Optional Prepayment of Lease Payments 5
Special Mandatory Redemption 5
Notice of Redemption 6
Selection of Bonds for Redemption 6
Purchase of Bonds in Lieu of Redemption 6
Transfer and Exchange of Bonds 6
Bonds Mutilated, Lost, Destroyed or Stolen 7
SECURITY FOR THE BONDS 7
Lease Payments 7
Reserve Account 8
Covenant to Budget and Appropriate 8
No Additional Bonds 8
MUNICIPAL BOND INSURANCE POLICY 8
ESTIMATED SOURCES AND USES OF FUNDS 11
DEBT SERVICE FOR THE BONDS 11
RISK FACTORS 12
No Full Faith and Credit 12
Financial Condition of Members 13
Abatement 13
Limited Recourse on Default 14
Loss of Tax Exemption 14
Constitutional Limitations on Taxation and Appropriations 14
THE MEMBERS AND THE LEASED PREMISES 16
General; Leased Premises 16
General Funds; Economic and Statistical Data 17
Sales Tax Revenues 17
Assessed Valuation and Tax Collection 17
The Teeter Plan 18
Other Tax Revenues 19
THE PROJECT 19
SUMMARY
The following information is furnished solely to provide limited introductory information regarding
the Bonds and does not purport to be comprehensive. All such information is qualified in its entirety by
reference to the more detailed descriptions appearing in this Official Statement, including the appendices
hereto. All capitalized terms used in this Official Statement not otherwise defined shall have the meanings
ascribed to them in the Indenture. The definitions of certain of such terms are set forth in Appendix A
hereto.
Issuer: The Bonds are being issued by the Countywide Public Financing Authority (the
"Authority"). See "THE AUTHORITY" herein.
Security: The Bonds are special obligations of the Authority payable solely from revenues
pledged under the Indenture, consisting primarily of Lease Payments made by the
Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange, Santa Ana, Seal
Beach, Stanton and Tustin (the "Members"), under Lease Agreements between
the Authority and each of the Members. The Members' Lease Payments are
subject to abatement under certain circumstances as described herein. See
"SECURITY FOR THE BONDS" and "APPENDIX A - Summary of Principal
Legal Documents" herein.
Payment of the principal of and interest on the Bonds will be further secured by
a municipal bond insurance policy issued by MBIA Insurance Corporation. See
"MUNICIPAL BOND INSURANCE POLICY" herein.
Purpose: Proceeds from the sale of the Bonds will be used by the Authority (i) to provide
financing for the Project, (ii) to fund the Reserve Account, and (iii) to pay the
costs of issuance of the Bonds. See "THE PROJECT" herein.
Redemption: Mandatory Redemption from Optional Prepayment of Lease Payments. The Bonds
maturing on or after August 1, 2007 are subject to mandatory redemption as a
whole or in part on any date on or after August 1, 2006, from the optional
prepayment of Lease Payments by a Member under its Lease Agreement, at the
redemption prices described herein, together with accrued interest thereon to the
date fixed for redemption. See "THE BONDS - Redemption - Mandatory
Redemption from Optional Prepayment of Lease Payments" herein.
Special Mandatory Redemption. The Bonds are subject to redemption as a whole
or in part on any date, to the extent the Trustee has received title or hazard
insurance proceeds or condemnation proceeds not used to repair or replace any
portion of the Leased Premises of a Member damaged or destroyed and elected
by such Member to be used for such purpose as provided in the Indenture, at a
redemption price equal to one hundred percent (100%) of the principal amount
thereof plus interest accrued thereon to the date fixed for redemption, without
premium. See "THE BONDS - Redemption - Special Mandatory Redemption"
herein.
Form and
Denominations: The Bonds are being issued in fully registered form, without coupons, in
denominations of$5,000 or any integral multiple thereof.
iii
$28,000,000'
COUNTYWIDE PUBLIC FINANCING AUTHORITY
1996 Revenue Bonds
INTRODUCTION
This Introduction is subject in all respects to the more complete information contained elsewhere
in this Official Statement, and the offering of the Bonds to potential investors is made only by means of
the entire Official Statement. Terms used in this Official Statement and not otherwise defined shall have
the meanings ascribed to them in the Indenture. The definitions of certain of such terms are set forth
in Appendix A hereto.
The purpose of this Official Statement is to provide certain information concerning the issuance by
the Countywide Public Financing Authority (the "Authority") of its Countywide Public Financing Authority
1996 Revenue Bonds (the "Bonds") in an aggregate principal amount of$28,000,000*. The Bonds are being
issued pursuant to an Indenture of Trust, dated as of July 1, 1996 (the "Indenture"), by and between the
Authority and U.S. Trust Company of California, N.A., Los Angeles, California, as trustee(the "Trustee").
The Authority was established pursuant to a joint exercise of powers agreement among the Members,
which include the Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange, Santa Ana, Seal Beach,
Stanton and Tustin. See "THE AUTHORITY" herein.
The proceeds from the sale of the Bonds will be used by the Authority (i) to provide financing for
the portions of a County-wide communications system within Orange County allocable to the Members and
to finance other capital projects for certain Members within their respective geographical boundaries
(collectively, the "Project"), (ii) to fund a Reserve Account, and (iii) to pay the costs of issuance of the
Bonds. In order to provide for the repayment of the Bonds, each Member has agreed to lease certain real
property and improvements (collectively, the "Leased Premises") to the Authority pursuant to separate Site
and Facility Leases, each dated as of July 1, 1996 between the Authority, as lessee, and each Member, as
lessor (the "Site Leases"), and to lease back said Leased Premises from the Authority pursuant to separate
Lease Agreements, each dated as of July 1, 1996 between the Authority, as lessor, and each Member, as
lessee (the "Lease Agreements"). Pursuant to the Lease Agreements, each Member has agreed to pay
installments of rent for the Leased Premises to the Authority (the "Lease Payments") which have been
calculated to be sufficient, in the aggregate, in both time and amount, to enable the Authority to pay the
principal of and interest and premium, if any, on the Bonds when due and payable. Pursuant to the
Indenture, the Authority has assigned to the Trustee, for the benefit of the owners of the Bonds, certain of
its rights under the Lease Agreements, including its right to receive and enforce payment of the Lease
Payments to be made by the respective Member. See "SECURITY FOR THE BONDS" and "APPENDIX
A - Summary of Principal Legal Documents - Lease Agreements" herein.
Pursuant to the Lease Agreements, each Members has covenanted that it will take such action as may
be necessary to include all its Lease Payments in its budgets and to make the necessary annual appropriations
therefore. The Lease Payments to be made by each Member are subject to abatement during any period in
which the Leased Premises are not available to such Member for use and occupancy due to damage or
destruction. See "SECURITY FOR THE BONDS - Covenant to Budget and Appropriate," "RISK
FACTORS - Abatement" and "APPENDIX A - Summary of Principal Legal Documents - Lease
Agreements" herein.
*Preliminary, subject to change.
respective addresses of such owners as they appear on the registration books of the Trustee as of the
applicable Record Date; provided, however, that payment of interest may be made by wire transfer in
immediately available funds to an account in the United States of America to any registered owner of Bonds
in the aggregate principal amount of$1,000,000 or more who shall furnish written wire instructions to the
Trustee at least five (5) days before the applicable Record Date. The Bonds will bear interest from the
Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated after
a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest
from such Interest Payment Date, or (ii) it is authenticated on or before January 15, 1996, in which event
it shall bear interest from the date of issuance thereof; provided, however, that if, as of the date of
authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest
Payment Date to which interest has previously been paid or made available for payment thereon.
Principal of any Bond and any premium upon redemption will be paid by check of the Trustee upon
presentation and surrender thereof at the corporate trust office of the Trustee in Los Angeles, California.
The Bonds will be issued in fully registered form, without coupons, registered in the name of The
Depository Trust Company, New York, New York ("DTC") or its nominee. DTC will act as securities
depository for the Bonds. Purchases of beneficial interest in the Bonds will be made in book-entry form
only in denominations of$5,000 or any integral multiple thereof. So long as the Bonds are held in the book-
entry system of DTC, all payments of principal, interest and premium, if any, will be made by the Trustee
to DTC as the registered owner of the Bonds. For a more complete discussion of DTC and its book-entry
system, see "Book-Entry Only System" below.
Book-Entry Only System
The information in this section concerning DTC and DTC's book-entry system is based solely on
information provided by DTC. Accordingly, no representations can be made by the Authority concerning
these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing
information with respect to such matters, but should instead confirm the same with DTC or the DTC
Participants, as the case may be.
DTC will act as securities depository for the Bonds. The Bonds will, when issued, be payable to
Cede & Co. (DTC's partnership nominee). One or more fully registered Bond will be issued for each
maturity of Bonds and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act
of 1934, as amended. DTC holds securities that its participants ("DTC Participants") deposit with DTC.
DTC also facilitates the settlement among DTC participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry changes in accounts of DTC
Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants
include securities brokers and dealers, banks, trust companies, clearing corporations and certain other
organizations (the "Direct Participants"). DTC is owned by a number of its Direct Participant and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the book-entry system is also available to others such as banks, securities
brokers and dealers and trust companies that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly (the "Indirect Participants"). The rules applicable to DTC and its
Direct and Indirect Participants are on file with the Securities and Exchange Commission.
3
The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or
a successor securities depository). In that event, Bond certificates will be printed and delivered in
accordance with the terms of the Indenture.
The Authority does not have any responsibility or obligation to DTC Participants, to the persons for
whom they act as nominees, or to any other person who is not shown on the registration books as being a
registered owner of the Bonds, with respect to (i) the accuracy of any records maintained by DTC or any
DTC Participant, (ii) the payment by DTC or any DTC Participant of any amount in respect of the principal
of, premium, if any, or interest on the Bonds, (iii) any consent given or other action taken by DTC as
registered owner, or (iv) any other purpose. The Authority cannot and does not give any assurances that
DTC, DTC Participants or others will distribute payments of principal of or interest on the Bonds paid to
DTC or its nominee, as the registered owner, or any notices to the Beneficial Owners or that they will do
so on a timely basis or will serve and act in a manner described in this Official Statement. The Authority
is not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any
notice to a Beneficial Owner with respect to the Bonds or any error or delay relating thereto.
Mandatory Redemption from Optional Prepayment of Lease Payments
The Bonds maturing on or after August 1, 2007 are subject to mandatory redemption as a whole or
in part upon ninety(90) days written notice to the Trustee by a Member of its intention to optionally prepay
its Lease Payments, on any date on or after August 1, 2006, from any available source of funds of the
Member so electing to prepay, at the following redemption prices (expressed as a percentage of the principal
amount of the Bonds to be redeemed), together with accrued interest thereon to the date fixed for
redemption:
Redemption Period Redemption Price
August 1, 2006 through July 31, 2007 102%
August 1, 2007 through July 31, 2008 101%
August 1, 2008 and thereafter 100%
Any such redemption shall be in such order of maturity as the Member electing to prepay its Lease
Payments shall designate (and, if no specific order of redemption is designated by such Member, in inverse
order of maturity); provided, however, that only Bonds in which such Member has an interest (see the
percentage table under the caption "DEBT SERVICE FOR THE BONDS" herein)may be redeemed by such
Member's election.
Special Mandatory Redemption
The Bonds are also subject to redemption as a whole, or in part on a pro rata basis among
maturities, on any date, to the extent the Trustee has received title or hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the Leased Premises of a Member
damaged or destroyed and elected by such Member to be used for such purpose as provided in the Indenture,
at a redemption price equal to one hundred percent (100%) of the principal amount of the Bond to be
redeemed, plus interest accrued thereon to the date fixed for redemption, without premium.
5
Any Bond may be exchanged at the corporate trust office of the Trustee in Los Angeles, California,
for a like aggregate principal amount of Bonds of other authorized denominations and of like maturity.
Exchange of any Bond shall not be permitted during the period established by the Trustee for selection of
Bonds for redemption or if such Bond has been selected for redemption pursuant to the Indenture. The
Trustee may require the Bond owner requesting such exchange to pay any tax or other governmental charge
required to be paid with respect to such exchange.
The foregoing provisions relating to the transfer and exchange of Bonds are not applicable to the
transfer and exchange of any Beneficial Owner's interests in the Bonds so long as the Bonds are held in the
book-entry system described above.
Bonds Mutilated, Lost, Destroyed or Stolen
If any Bond shall become mutilated, the Authority, at the expense of the registered owner of said
Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in
exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee must be canceled by it and destroyed. If
any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
Authority and the Trustee and, if such evidence is satisfactory to them and indemnity satisfactory to them
shall be given, the Authority, at the expense of the owner of such lost, destroyed or stolen Bond, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and
in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall
have been called for redemption, instead of issuing a substitute Bond,the Trustee may pay the same without
surrender thereof upon receipt of indemnity satisfactory to the Trustee). The Authority may require payment
by the owner of a sum not exceeding the actual cost preparing each new Bond issued under the Indenture
and of the expenses which may be incurred by the Authority and the Trustee in the preparation, execution,
authentication and delivery thereof. Any Bond issued in lieu of any Bond alleged to be lost, destroyed or
stolen will constitute an original additional contractual obligation on the part of the Authority whether or not
the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be
entitled to the benefits of the Indenture with all'other Bonds secured by the Indenture.
SECURITY FOR THE BONDS
Lease Payments
The Bonds are special obligations of the Authority payable from revenues pledged under the
Indenture, consisting primarily of Lease Payments, and from certain funds held under the Indenture. Lease
Payments are to be made by the Members from yearly appropriations which are payable out of any source
of legally available funds. The Members have covenanted under their respective Lease Agreements to make
such yearly appropriations. See "Covenant to Budget and Appropriate" below and "APPENDIX A -
Summary of Principal Legal Documents - Lease Agreements" herein. The Lease Payments to be made by
each Member are subject to abatement during any period in which the Leased Premises are not available to
such Member for use and occupancy due to damage or destruction, as described herein under "RISK
FACTORS -Abatement." Neither the full faith and credit nor the taxing power of the Members, the County
or the State is pledged to the payment of the Bonds or the Lease Payments. The Authority has no taxing
power. The Authority has assigned its right under each Lease Agreement to receive Lease Payments and
other amounts payable thereunder to the Trustee for the benefit of the owners of the Bonds.
7
shall be made in such amounts and at such times as such payments of principal would have been due had
there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently
recovered from any owner of the Bonds pursuant to a final judgment by a court of competent jurisdiction
that such payment constitutes an avoidable preference to such owner within the meaning of any applicable
bankruptcy law (a "Preference").
The Insurer's policy does not insure against loss of any prepayment premium which may at any time
be payable with respect to any Bond. The Insurer's policy does not, under any circumstance, insure against
loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii)
any payments to be made on an accelerated basis; (iii)payments of the purchase price of Bonds upon tender
by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Insurer's policy also
does not insure against nonpayment of principal of or interest on the Bonds resulting from the insolvency,
negligence or any other act or omission of the Trustee or any other paying agent for the Bonds.
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by
registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer
from the Trustee or any owner of a Bond the payment of an insured amount for which is then due, that such
required payment has not been made, the Insurer on the due date of such payment or within one business
day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an
account with State Street Bank and Trust Company, N.A., New York, New York, or its successor, sufficient
for the payment of any such insured amounts which are then due. Upon presentment and surrender of such
Bonds or presentment of such other proof of ownership of the Bonds, together with any appropriate
instruments of assignment to evidence the assignment of the insured amounts due on the Bonds as are paid
by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners
of the Bonds in any legal proceeding related to payment of insured amounts on the Bonds, such instruments
being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust
Company, N.A. shall disburse to such owners or the Trustee payment of the insured amounts due on such
Bonds, less any amount held by the Trustee for the payment of such insured amounts and legally available
therefor.
The Insurer, formerly known as Municipal Bond Investors Assurance Corporation, is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is not
obligated to pay the debts of or claims against the Insurer. The Insurer is domiciled in the State of New
York and licensed to do business in all 50 states, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. The Insurer has one European branch in the Republic of France.
As of December 31, 1995 the Insurer had admitted assets of$3.8 billion (audited), total liabilities
of$2.5 billion(audited), and total capital and surplus of$1.3 billion(audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of March 31,
1996, the Insurer had admitted assets of$4.0 billion(unaudited), total liabilities of$2.7 billion(unaudited),
and total capital and surplus of$1.3 billion(unaudited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. All information regarding the Insurer,
a wholly owned subsidiary of MBIA Inc., including the financial statements of the Insurer for the year ended
December 31, 1995, prepared in accordance with generally accepted accounting principles, included in the
Annual Report on Form 10-K of MBIA Inc. for the'year ended December 31, 1995 is hereby incorporated
by reference into this Official Statement and shall be deemed to be a part hereof. Any statement contained
in a document incorporated by reference herein shall be modified or superseded for purposes of this Official
Statement to the extent that a statement contained herein or in any other subsequently filed document which
also is incorporated by reference herein modifies or supersedes such statement. Any statement so modified
9
ESTIMATED SOURCES AND USES OF FUNDS*
The following table presents the estimated sources and uses of Bond proceeds (excluding accrued
interest, which will be deposited into the Interest Account).
Sources of Funds:
Principal Amount of Bonds $28,000,000'
Less: Original Issue Discount
Less: Underwriter's Discount
Total Sources $
Uses of Funds:
Costs of Issuance Fund') $
Reserve Account
Interest Account
Project Fund
Total Uses $
(I) Costs of issuance include an amount equal to$ , representing the premium paid for the municipal bond insurance policy.
Other costs of issuance will include printing costs for the Bonds and the preliminary and final Official Statements, fees and expenses
of the Trustee and its counsel, fees and expenses of Bond Counsel and counsel to the Authority, and certain other costs associated with
the issuance and delivery of the Bonds.
DEBT SERVICE FOR THE BONDS'
The following table sets forth the debt service requirements for the Bonds:
Payment Principal Interest Total Debt Service
Date Ending Due on Bonds Due on Bonds Due on Bonds
08/01/97 $1,990,000
08/01/98 2,085,000
08/01/99 2,175,000
08/01/2000 2,285,000
08/01/2001 2,410,000
08/01/2002 2,530,000
08/01/2003 2,670,000
08/01/2004 2,815,000
08/01/2005 2,980,000
08/01/2006 3,145,000
08/01/2007 520,000
08/01/2008 545,000
08/01/2009 580,000
08/01/2010 615,000
08/01/2011 655.000
$28,000,000
Preliminary, subject to change
11
obligations which may constitute additional charges against its general revenues and thereby adversely affect
the availability of funds to make Lease Payments.
Financial Condition of Members
Many of the Members are heavily dependent on intergovernmental revenues from the State and the
federal government, which sources of revenue may themselves be dependent on the transferring
government's budgetary and financial condition. In addition, property and other forms of taxation
comprising an additional significant source of revenue for many Members are subject to statutory and
constitutional limitations which may impede their growth and availability for Member expenditures. In
particular, if any Member were to exceed or to approach exceeding its appropriations limit described in
Article XIIIB of the California Constitution, such Member could choose to fund other expenditures to the
exclusion of the Lease Payments. See "Constitutional Limitations on Taxation and Appropriation" below
for a discussion of certain California constitutional and statutory provisions imposing limitations on the
taxing and appropriation powers of California political subdivisions. See "THE MEMBERS AND THE
LEASED PREMISES" and "APPENDIX B - Information Concerning the Members and Description of
Leased Premises" for certain general, financial and economic information relating to the Members.
No Member has covenanted to pay the Lease Payments of any other Member or to make up any
deficit in the payment to registered owners of the Bonds which occurs by reason of another Member's
nonpayment; provided, however, that moneys in the Reserve Account will be used for such purpose, if
available. For this reason, one Member's default in the payment of its Lease Payments will cause a default
in the payments of principal of and interest on the Bonds in the event that moneys in the Reserve Account
are insufficient to make up the deficit caused by such nonpayment.
Abatement
The Lease Payments under each Lease Agreement will be abated during any period in which, by
reason of damage or destruction (other than by eminent domain, as discussed below), there is substantial
interference with the applicable Member's use and occupancy of all or any portion of its Leased Premises.
The amount of such abatement will be agreed upon by the Member and the Authority such that the resulting
Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of
the Leased Premises. Such abatement will continue for the period commencing with such damage or
destruction and ending with the substantial completion of the work of repair or reconstruction. In the event
of any such damage or destruction, the applicable Lease Agreement will continue in full force and effect and
each Member has waived any right to terminate the Lease Agreement by virtue of any such damage or
destruction.
Pursuant to each Lease Agreement, if all of the applicable Leased Premises is taken permanently
under the power of eminent domain or sold to a government threatening to exercise the power of eminent
domain, the term of the Lease Agreement will cease with respect to such Leased Premises as of the day
possession shall be so taken. If less than all of the Leased Premises is taken permanently, or if all of the
Leased Premises or any part thereof is taken temporarily under the power of eminent domain, (i) the Lease
Agreement will continue in full force and effect and will not be terminated by virtue of such taking and the
parties waive the benefit of any law to the contrary, and (ii) there will be a partial abatement of Lease
Payments in an amount to be agreed upon by the Member and the Authority such that the resulting Lease
Payments for such Leased Premises represent fair consideration for the use and occupancy of the remaining
usable portion of such Leased Premises.
13
States Constitution. The Court stated, among other things, that(i) the State has a legitimate interest in local
neighborhood preservation, continuity and stability, and consequently may decide to structure its tax system
to discourage rapid turnover in ownership of homes and businesses, and (ii) the State may legitimately
conclude that a new owner at the time of acquiring his or her property does not have the same reliance
interest warranting protection against higher taxes as does an existing owner. Notwithstanding the
Nordlinger ruling, however, there can be no assurance that Article XIIIA will not be challenged on other
constitutional grounds in the future.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA.
Under current law, local agencies are no longer permitted to levy directly any ad valorem property tax. The
1% property tax is automatically levied annually by the county and distributed according to a formula among
using agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied
prior to 1978. Any special tax to pay voter-approved indebtedness is levied in addition to the basic 1%
property tax.
In the general election held November 4, 1986, voters of the State of California approved two
measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article XIIIA
to provide that the terms "purchased" and "change of ownership," for 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.
Proposition 60 amends Article XIIIA and allows persons age 55 or older to transfer the lower
assessed value of their current residence to another newly purchased residence of equal or lesser value. For
the exemption to apply, the new residence must be located in the same county and be purchased within two
years after the sale of the previous residence. Proposition 60, as such, has no direct State or local fiscal
effect unless the county board of supervisors passes an ordinance implementing it.
Proposition 62
On November 4, 1986, an initiative statute("Proposition 62 ")was adopted by the voters of the State
which (i) requires that any tax for general governmental purposes imposed by local governmental entities
be approved by resolution or ordinance adopted by a two-thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the governmental entity, (ii) requires that any special tax
(defined as taxes levied for other than general governmental purposes) imposed by a local governmental
entity be approved by a two-thirds vote of the voters within that jurisdiction, (iii) restricts the use of
revenues from a special tax to the purposes or for the service for which the special tax was imposed, (iv)
prohibits the imposition of ad valorem taxes on real property by local governmental entities except as
permitted by Article XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the sale of
real property by local governmental entities, and (vi) requires that any tax imposed by a local governmental
entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the
adoption of the initiative or be terminated by November 15, 1988.
Various provisions of Proposition 62 were declared unconstitutional at the appellate court level. On
September 28, 1995, the California Supreme Court, in Santa Clara County Local Transportation Authority
v. Guardino, upheld the constitutionality of the portion of Proposition 62 requiring a two-thirds vote in order
for a local government or district to impose a special tax, and by implication upheld a parallel provision
requiring a majority vote in order for a local government or district to impose any general tax.
15
General Funds; Economic and Statistical Data
Set forth in Appendix B hereto are summaries of financial statements for the General Fund of each
Member. The General Fund is a budget unit specifically defined under California law which serves as the
main financing instrument for general governmental activities in California cities,towns, counties and school
districts. Also set forth in Appendix B is certain economic and statistical information pertaining to each
Member.
Sales Tax Revenues
Sales tax revenues constitute a significant source of revenues for each of the Members. Sales taxes
are collected from each business engaged in retail sales in California (except for exempt items) and
distributed by the State Board of Equalization (the "SBE") to the jurisdiction where the sale took place.
Estimated advance payments are made monthly for the three months of each quarter followed by clean-up
payments which adjust for actual collections. Each quarter's estimate is based upon the previous year's sales
tax collections, as well as general economic trends determined by the SBE. Increases in sales taxes based
upon new development are not fully reflected in quarterly estimates until a full calendar year after the
opening of the new development for retail business. Sales taxes collected from merchants with no permanent
place of business (i.e., certain vendors, construction contractors, etc.) are accumulated to a County-wide
or State-wide (for out-of-state businesses) pool and distributed to cities and counties in proportion to their
collections from sales tax payers.
With limited exceptions, the sales taxes imposed upon business transactions in California cities are
subject to the sales tax levied statewide by the State. The California Legislature could change the
transactions and items upon which the State-wide tax and the sales and use tax are imposed. Any such
change or amendment could have an adverse effect on sales tax revenues in each of the Members. The
Members are not aware of any proposed legislative change which could have an adverse effect on sales tax
revenues.
Appendix B includes a summary of taxable sales transactions for the Members since 1990. The
value and volume of taxable transactions are dependent on a variety of market and economic factors. Some
of these factors include the level of inflation affecting the price of goods and services, the rate of population
growth in the general market area, the characteristics of the specific retail developments within a given city,
the market service areas of the respective developments, mobility and disposable incomes of the consumers
within the market areas, any planned and proposed retail developments existing and planned competitive
retail establishments outside of a city.
Assessed Valuation and Tax Collections
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the
Member city as of the preceding January 1, at the completion of new construction or when a change in
ownership occurs. For assessment and collection purposes, property is classified either as "secured,"
"unsecured" or "supplemental" and is listed accordingly on separate parts of the assessment roll. The
"secured roll" is that part of the assessment roll containing State-assessed public utilities property and
property the taxes on which are secured by a lien on real property sufficient, in the opinion of the county
assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll" except
properties classified as "supplemental" which include property on which construction has been completed
or for which a change of ownership has occurred during the fiscal year.
17
actual collections of unsecured taxes. A one-time adjustment for changes in the tax roll is made in the
following year.
The County's cash position is protected by a special fund, known as the Tax Losses Reserve Fund,
which is generated from the collection of penalties, interest and other charges on County-wide delinquent
taxes and special assessments, as well as other cash reserves. In the event proceeds from the sale of tax-
deeded property are insufficient to pay the full amount of delinquent taxes, the County Treasurer may draw
on its Tax Losses Reserve Fund to make up the deficiency. Section 4703 of the California Revenue and
Taxation Code allows any county to draw down the Tax Losses Reserve Fund to a balance equal to 3% of
the total of all taxes and assessments levied on its secured roll for that year if the secured tax delinquency
has been 3% of the total or less for the preceding three consecutive years. After utilizing this procedure,
if the county incurs a rate of secured tax delinquency that excess 3% of the total of all taxes and assessments
levied on its secured roll, the Tax Losses Reserve Fund must accumulate to a balance equal to 5% of the
total of all taxes and assessments levied on the secured roll for that fiscal year and remain at that level until
the county experiences three consecutive years in which the secured tax delinquency rate is under 3%.
Other Tax Revenues
In general, cities may adopt measures imposing taxes on certain local activities, such as hotel
occupancy and utility consumption taxes. See "RISK FACTORS - Constitutional and Statutory Limits on
Taxes and Appropriations - Proposition 62" for a discussion of certain limitations imposed upon the
imposition of such taxes.
THE PROJECT
The Project is comprised of (i) various capital improvements to be financed by certain Members
within their geographic boundaries, and (iii) all or a portion of each Member's share of a County-wide
coordinated communications system (the "Communications System") designed to support and facilitate all
public safety and public works radio communications throughout the County. Construction of the
Communications System is currently estimated to cost approximately $70,000,000, and will be directed by
Motorola Communications and Electronics, Inc. ("Motorola"). The Communications System has been
planned as an 81-channel, 800 MHz radio communications system enabling mutual cross-communications
among 100 city and County law, public works and fire operations. Once installed and implemented, the
Communication System is expected to be the largest multi-user, multi-owned radio system in the world.
TAX MATTERS
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco,
California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the
interest on the 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 Authority and
the Members comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must
be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be,
19
FINANCIAL ADVISOR
The City has retained Public Financial Management, Inc., Newport Beach, California as Financial
Advisor for the sale of the Bonds. The Financial Advisor is not obligated to undertake, and has not
undertaken to make, an independent verification or to assume any responsibility for the accuracy,
completeness or fairness of the information contained in this Official Statement.
Public Financial Management, Inc. is a full service financial advisor and is not engaged in the
business of underwriting, trading or distributing municipal or other public securities. Public Financial
Management, Inc. is owned and operated by its twenty (20) Managing Directors each of whom is involved
in day to day client service.
CONTINUING DISCLOSURE
The Authority has covenanted for the benefit of holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to the Bonds by not later than six months
following the end of the Authority's fiscal year (which currently ends on June 30), commencing with the
report for the 1996-97 fiscal year (the "Annual Report"), and to provide notices of the occurrence of certain
enumerated events, if material. The Annual Report will be filed by the Authority with each Nationally
Recognized Municipal Securities Information Repository, and with the appropriate State information
depository, if any. The notices of material events will be filed by the Authority with the Municipal
Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific
nature of the information to be contained in the Annual Report or the notices of material events is set forth
in "APPENDIX E - Form of Authority Continuing Disclosure Certificate." These covenants have been
made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-
12(b)(5) (the "Rule").
Each Member has covenanted for the benefit of holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to such Member by not later than six months
following the end of the Member's fiscal year (which currently ends on June 30), commencing with the
report for the 1996-97 fiscal year (the "Annual Report"). The Annual Report will be filed by each Member
with each Nationally Recognized Municipal Securities Information Repository,and with the appropriate State
information depository, if any. The specific nature of the information to be contained in the Annual Report
is set forth in "APPENDIX F- Form of Member Continuing Disclosure Certificate." These covenants have
been made in order to assist the Underwriter in complying with the Rule.
LITIGATION
Jones Hall Hill &White, A Professional Law Corporation, as counsel to the Authority, and the City
Attorney for each Member, will issue opinions in connection with the issuance of the Bonds to the effect
that there is no action, suit or proceeding known to the Authority or the applicable Member, as appropriate,
to be pending or threatened, restraining or enjoining the execution or delivery of the Bonds, the Indenture
of the Lease Agreements, or in any way contesting or affecting the validity of the foregoing or any
proceeding of the Authority or the Members taken with respect to any of the foregoing.
21
APPENDIX A
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following is a brief summary of the provisions of the Indenture, the Site and Facility Leases and the
Lease Agreements. Such summary is not intended to be definitive, and reference is made to the complete
documents for the complete terms thereof.
DEFINITIONS
"Additional Payments" means the additional payments to be made by the Members pursuant to
the Lease Agreements.
"Authority" means the Countywide Public Financing Authority, a joint exercise of powers
authority duly organized and existing under the laws of the State.
"Authority Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure
Certificate executed by the Authority and dated the Closing Date, as originally executed and as it may
be amended from time to time in accordance with the terms thereof.
"Authorized Representative" means: (a) with respect to the Authority,its Chairman, Secretary or
Treasurer, or any other person designated as an Authorized Representative of the Authority by a
Written Certificate of the Authority signed by its Chairman and filed with the Member and the Trustee;
and (b) with respect to a Member, its Mayor, City Manager, Finance Director, or any other person
designated as an Authorized Representative of Member by a Written Certificate of the Member signed
by its Mayor,City Manager or Finance Director and filed with the Authority and the Trustee.
"Bond Counsel" means (a)Jones Hall Hill &White, A Professional Law Corporation, or(b) any
other attorney or firm of attorneys appointed by or acceptable to the Authority 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 Fund" means the fund by that name established and held by the Trustee pursuant to the
Indenture.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4
(commencing with section 6584) of Chapter 5,Division 7,Title 1 of the Government Code of the State,
as amended from time to time.
"Bond Year" means each twelve-month period extending from August 2 in one calendar year to
August 1 of the succeeding calendar year, both dates inclusive; except that the first Bond Year shall
commence on the Closing Date and extend to and including August 1, 1997.
"Bonds"means the Countywide Public Financing Authority 1996 Revenue Bonds authorized by
and at any time Outstanding pursuant to the Bond Law and the Indenture.
"Business Day" means a day (other than a Saturday or a Sunday) on which banks are not
required or authorized to remain closed in the city in which the Office of the Trustee is located.
"City Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate
executed by each member and dated the Closing Date, as originally executed and as it may be
amended from time to time in accordance with the terms thereof.
"City's Pro Rata Portion" means the product of the total cost multiplied by a fraction, the
numerator of which is the aggregate principal amount of the Bonds issued for the benefit of a Member,
and the denominator of which shall be the aggregate principal amount of the Bonds issued.
Appendix A
Page 1
regulations under the Code, (iii) the investment is a United States Treasury Security—State and Local
Government Series, that is acquired in accordance with applicable regulations of the United States
Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State off
California but only if at all times during which the investment is held its yield is reasonably expected to
be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.
The Trustee shall have no duty in connection with the determination of Fair Market Value other than to
follow the investment directions of a Authorized Representative in any written directions of a
Authorized Representative.
"Federal Securities" means direct 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) 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 extending from July 1 in one calendar year to
June 30 of the succeeding calendar year,both dates inclusive, or any other twelve-month period selected
and designated by the Authority as its official fiscal year period.
"Indenture" means that certain Indenture of Trust, dated as of July 1, 1996,by and between the
Authority and the trustee, as originally executed or as it may from time to time be supplemented,
modified or amended by any Supplemental Indenture pursuant to the provisions of the Indenture.
"Independent Accountant" means any certified public accountant or firm of certified public
accountants appointed and paid by the Authority or the Member, and who, or each of whom (a) is in
fact independent and not under domination of the Authority or the Member; (b) does not have any
substantial interest, direct or indirect,in the Authority or the Member;and (c) is not connected with the
Authority or the Member as an officer or employee of the Authority or the Member but who may be
regularly retained to make annual or other audits of the books of or reports to the Authority or the
Member,
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30
Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Kenny Information Services'
"Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10006;Moody's 5250 77 Centre Drive,
Suite 150, Charlotte, NC 28217, Attention: Called Bonds Dept.; S&P's "Called Bond Record," 25
Broadway, 3rd Floor, New York, NY 10004; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other services providing
information with respect to the redemption of bonds as the Authority may designate in a Written
Certificate of the Authority delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and held by the
Trustee pursuant to the Indenture.
"Interest Account"means the account by that name established in the Bond Fund pursuant to the
Indenture.
"Interest Payment Date"means each February 1 and August 1,commencing February 1, 1997.
"Lease Agreements" means those certain Lease Agreements, each dated as of July 1, 1996,by and
between the Authority, as lessor, and each Member, as lessee, of the Leased Premises, as originally
executed and as it may from time-to time be-supplemented,-modified-or-amended in accordance with-
the terms thereof and of the Indenture.
"Lease Payment Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date.
"Lease Payments" means the aggregate amount of all the payments required to be paid by each
Member pursuant to its respective Lease Agreement.
Appendix A
Page 3
Administration; (iv) guaranteed mortgage-backed bonds or guaranteed pass-through obligations
(participation certificates) of the Government National Mortgage Association; (v) guaranteed Title XI
financings of the U.S. Maritime Administration; and (vi) project notes and local authority 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 (consolidated debt
obligations) of the Federal Home Loan Bank System; (ii) participation certificates (mortgage-backed
securities)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(v)consolidated systemwide bonds and notes of
the Farm Credit System;
(d) money market funds (including funds managed or advised by 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-C," "AAAm" or "AAm" and, if
rated by Moody's, having a rating by Moody's of "Aaa," "Aal" or"Aa2";
(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, savings and loan
associations or mutual savings banks whose short term obligations are rated "A-1+" or better by S&P
and "Prime-1" by Moody's (such collateral must be held by a third party and Owners must have a
perfected first security interest in such collateral;
(f)certificates of deposit,savings accounts,deposit accounts or money market deposits which are
fully insured by the Federal Deposit Insurance Corporation;
(g) Investment agreements, including guaranteed investment contracts, acceptable to the
Municipal Bond Insurer;
(h)commercial paper rated,at the time of purchase,'Prime-1" by Moody's and "A-1+"or better
by S&P;
(i)bonds or notes issued by any state or municipality which are rated by Moody's and S&P in
one of the two highest long term 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 'Prime-1" or "A3" or better by
Moody's and "A-1+" or better by S&P;
(k) repurchase agreements 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(unless otherwise approved by the Municipal Bond Insurer):
(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 Moody's and S&P, or (B) a bank
rated "A" or better by Moody's and 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 (including the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation);(B)the term
Appendix A
Page 5
"Revenues"means: (a) all amounts received by the Authority or the Trustee pursuant to or with
respect to the Lease Agreements, including, without limiting the generality of the foregoing, all of the
Lease Payments (including both timely and delinquent payments, any late charges, and whether paid
from any source), prepayments and insurance proceeds, but excluding any Additional Payments; and
(b) all interest,profits or other income derived from the investment of amounts in any fund or account
established pursuant to the Indenture.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., New York,
New York,or its successors.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden
City, NY 11530, Fax (516) 227-4171 or 4190; Philadelphia Depository Trust Company, Reorganization
Division, 1900 Market Street, Philadelphia, PA 19103, Attention: Bond Department, Fax (215) 496-5058;
and,in accordance with then current guidelines of the Securities and Exchange Commission,such other
addresses and/or such other securities depositories as the Authority may designate in a Written
Certificate of the Authority delivered to the Trustee.
"Site" means that certain real property more particularly described in each Site and Facility
Lease and in each Lease Agreement.
"Site and Facility Leases" means those certain Site and Facility Leases, each dated as of July 1,
1996, by and between each Member, as lessor, and the Authority, as lessee, of the Leased Premises,as
originally executed and as it may from time to time be supplemented, modified or amended in
accordance with the terms thereof and of the Indenture.
"State" means the State of California.
"Supptemental Indenture" means any indenture hereafter duly authorized and entered into
between the Authority and the Trustee, supplementing, modifying or amending the Indenture; but
only if and to the extent that such Supplemental Indenture is specifically authorized under the
Indenture.
"Trustee" means U.S. Trust Company of California, N.A., a national banking association
organized and existing under the laws off the United States of America,or its successor,as Trustee under
and as provided in the Indenture.
"Written Certificate", "Written Request"and"Written Requisition" of the Authority or the Member
mean, respectively, a written certificate, request or requisition signed in the name of the Authority or
the Member by its Authorized Representative. Any such instrument and supporting opinions or
representations, if any, may, but need not, be combined in a single instrument with any other
instrument,opinion or representation,and the two or more so combined shall be read and construed as
a single instrument.
THE INDENTURE
Application of Proceeds off Sale of the Bonds
Upon the receipt of payment for the Bonds on the Closing Date, the Trustee shall (a) deposit in
the Interest Account the amount of constituting accrued interest received on the sale of the Bonds and a
portion of the interest on the Bonds due on January 1, 1997, (b) deposit amounts required to pay the
Costs of Issuance of the Bonds in the Costs of Issuance Fund, (c)deposit in the Reserve Account the full
amount of the Reserve Requirement,and (d)deposit the remaining amounts in the Project Fund.
Establishment and Application of Costs of Issuance Fund
The Trustee shall establish,maintain and hold in trust a separate fund designated as the "Costs
of Issuance Fund". The moneys in the Costs of Issuance Fund shall be used and withdrawn by the
Appendix A
Page 7
Allocation of Revenues
Not later than the first Business Day preceding each date on which principal of or interest on the
Bonds becomes due and payable, the Trustee shall transfer from the Bond Fund and deposit into the
following respective accounts (each of which the Trustee shall establish and maintain within the Bond
Fund), the following amounts in the following order of priority, the requirements of each such account
(including the making up of any deficiencies in any such account resulting from lack of Revenues
sufficient to make any earlier required deposit)at the time of deposit to be satisfied before any transfer
is made to any account subsequent in priority:
(a)The Trustee shall deposit in the Interest Account an amount required to cause the aggregate
amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due
and payable on such date on all Bonds then Outstanding.
(b) The Trustee shall deposit in the Principal Account an amount required to cause the
aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds
coming due and payable on such date.
(c) The Trustee shall deposit in the Reserve Account an amount,if any, required to cause the
amount on deposit in the Reserve Account to be equal to the Reserve Requirement.
Application of Interest Account
All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the
purpose of paying interest on the Bonds as it shall become due and payable(including accrued interest
on any Bonds purchased or redeemed prior to maturity pursuant to the Indenture).
Application of Principal Account
All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay
the principal amount of the Bonds at their respective maturity dates.
Application of Reserve Account
(a) All amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of(i) paying principal of or interest on the Bonds when due and payable to the extent that
moneys deposited in the Interest Account or the Principal Account are not sufficient for such purpose,
and (ii) making the final payments of principal of and interest on the Bonds on the date on which all
Bonds shall be retired under the Indenture or provision made therefor pursuant to the Indenture. After
payment of the final payments of principal and interest on the Bonds and payment of any amounts then
owed to the Trustee, all moneys then on deposit in the Reserve Account shall be withdrawn by the
Trustee and paid to the Members,on a pro rata basis,as a refund of overpaid Lease Payments.
(b) If, on any date, moneys on deposit in the Reserve Account, together with amounts then on
deposit in the Bond Fund, are sufficient to pay all Outstanding Bonds, induding all principal thereof,
and interest thereon, the Trustee shall, at the written direction of the Authority, transfer all amounts
then on deposit in the Reserve Account, together with such amounts in the Bond Fund, to the
Redemption Fund to be applied to the redemption of the Bonds in accordance with the provisions of the
Indenture. Any amounts remaining in the Reserve Account upon payment in full of all Outstanding
Bonds and all amounts then owed to the Trustee, shall be withdrawn by the Trustee and paid to the
Members,on a pro rata basis, as a refund of overpaid Lease Payments. Any amounts on deposit in the
Reserve Account in excess of the Reserve Requirement shall be transferred to the Bond Fund.
At any time, moneys on deposit in the Reserve Account may be substituted by the Authority
with a letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial
institution, the long-term, unsecured obligations of which are rated not less than "A"by Moody's and
S&P,in an amount equal to the Reserve Requirement,upon presentation to the Trustee of such letter of
credit, surety bond, bond insurance policy or other form of guaranty from a financial institution, with
Appendix A
Page 9
deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding
Bonds,and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge,
lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the
Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the
Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more
other indentures for any of its corporate purposes,and reserves the right to issue other obligations for
such purposes.
Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant
to law to issue the Bonds and to enter into the Indenture and to pledge and assign the Revenues and
other assets purported to be pledged and assigned, respectively, under the Indenture in the manner
and to the extent provided in the Indenture. The Bonds and the provisions of the Indenture are and will
be the legal,valid and binding special obligations of the Authority in accordance with their terms,and
the Authority and the Trustee shall at all times, subject to the provisions of the Indenture and to the
extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and
other assets and all the rights of the Bond Owners under the Indenture against all claims and demands
of all persons whomsoever.
Accounting Records. The Trustee shall at all times keep, or cause to be kept, proper books of
record and account, prepared in accordance with industry standards, in which complete and accurate
entries shall be made of all transactions made by it relating to the proceeds of Bonds, the Revenues,the
Lease Agreements and all funds and accounts established pursuant to the Indenture. Such books of
record and account shall be available for inspection by the Authority and the Members, during business
hours and under reasonable circumstances.
No Additional Obligations. The Authority covenants that no additional bonds, notes or other
indebtedness shall be issued or incurred which are payable out of the Revenues in whole or in part.
Tax Covenants
(a)Private Business Use Limitation.The Authority shall assure that the proceeds of the
Bonds are not used in a manner which would cause the Bonds to be "private activity bonds"
within the meaning of section 141(a)of the Code.
(b) Private Loan Limitation.The Authority shall assure that no more than five percent
(5%) of the proceeds of the Bonds are used, directly or indirectly, to make or finance a loan
(other than loans constituting nonpurpose obligations as defined in the Code or constituting
assessments)to persons other than state or local government units.
(c)Federal Guarantee Prohibition.The Authority shall not take any action or permit or
suffer any action to be taken if the result of the same would be to cause the Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(d) No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the Bond proceeds which, if such action had
been reasonably expected to have been taken, or had been deliberately and intentionally
taken, on the Closing Date, would have caused the Bonds to be "arbitrage bonds" within the
meaning of section 148(a)of the Code.
(e)Rebate of Excess Investment Earnings to United States.The Authority 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 Bonds. Payment of any amounts due under such section 148(f) shall
be made by the Authority from amounts provided by the Members under the Lease
Agreements. In order to provide for the administration of this paragraph(e),the Authority may
Appendix A
Page 11
indemnity to its satisfaction,and payment of its fees and expenses,including the fees and expenses of its
counsel,shall in its own name and as the Trustee of an express trust:
(a)by mandamus,or other suit,action or proceeding at law or in equity,enforce all rights of the
Owners under, and require the Authority or the affected Member to carry out any agreements with or
for the benefit of the Owners of Bonds and to perform its or their duties under the Act, the affected
Lease Agreement, and the Indenture, provided that any such remedy may be taken only to the extent
permitted under the applicable provisions of the affected Lease Agreement or the Indenture,as the case
may be;
(b)bring suit upon the Bonds;
(c) by action or suit in equity require the Authority to account as if it were the trustee of an
express trust for the Owners of Bonds;or
(d)by action or suit in equity enjoin any acts or things which may be unlawful or in violation of
the rights off the Owners of Bonds.
Upon the occurrence of an Event of Default, the Trustee shall be entitled as a matter of right to
the appointment of a receiver or receivers for the Leased Premises, and of the revenues, income,
product,and profits thereof,ex parte,and without notice,and the Authority consents to the appointment
of such receiver upon the occurrence of an Event of Default.In the case of any receivership,insolvency,
bankruptcy, or other judicial proceedings affecting the Authority or the affected Member, the Trustee
shall be entitled to file such proofs of claims and other documents as may be necessary or advisable in
order to have the claims of the Trustee and the Bond Owners allowed in such proceedings, without
prejudice,however, to the right of any Bond Owner to file a claim on his or her own behalf; provided,
the Trustee shall be entitled to compensation and reimbursement for the reasonable fees and expenses
of its counsel and indemnity for its reasonable expenses and liability from the Authority, the affected
Member or the Bond Owners,as appropriate.
Application of Revenues and Other Funds After Default. If an Event of Default shall occur and be
continuing, all Revenues and any other funds then held or thereafter received by the Trustee under
any of the provisions of the Indenture shall be applied by the Trustee as follows and in the following
order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect the
interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses of the
Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the
performance of its powers and duties under the Indenture;
(b)To the payment of the principal of and interest then due on the Bonds (upon presentation of
the Bonds to be paid,and stamping or otherwise noting thereon of the payment if only partially paid,
or surrender thereof if fully paid)in accordance with the provisions of the Indenture,as follows:
First:To the payment to the persons entitled thereto of all installments of interest then
due in the order of the maturity of such installments,and, if the amount available shall not be
sufficient to pay in full any installment or installments maturing on the same date, then to the
payment thereof ratably,according to the amounts due thereon,to the persons entitled thereto,
without any discrimination or preference;and
Second: To the payment to the persons entitled thereto of the unpaid principal of any
Bonds which shall have become due, whether at maturity or by acceleration or redemption,
with interest on the overdue principal at the rate borne by the respective Bonds (to the extent
permitted by law), and, if the amount available shall not be sufficient to pay in full all the
Bonds, together with such interest, then to the payment thereof ratably, according to the
amounts of principal due on such date to the persons entitled thereto, without any
discrimination or preference.
Appendix A
Page 13
Remedies Not Exclusive. No remedy in the Indenture conferred upon or reserved to the Trustee
or the Owners of the Bonds is intended to be exclusive of any other remedy or remedies,and each and
every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other
remedy given under the Indenture or now or hereafter existing at law or in equity or otherwise.
No Waiver of Default.No delay or omission of the Trustee or any Owner of the Series A Bonds to
exercise any right or power arising upon the occurrence of any Event of Default shall impair any such
right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence tin
the Indenture; and every power and remedy given by the Indenture to the Trustee or the Owners of
the Series A Bonds may be exercised from time to lime and as often as may be deemed expedient.
Amendments Permitted
The Indenture and the rights and obligations of the Authority and of the Owners of the Bonds
and of the Trustee may be modified or amended from time to time and at any time by an indenture or
indentures supplemental thereto, which the Authority and the Trustee may enter into when the written
consents of the Owners off a majority in aggregate principal amount of all Bonds then Outstanding, shall
have been filed with the Trustee.No such modification or amendment shall(i)extend the fixed maturity
of any Bonds, or reduce the amount of principal thereof or extend the time of payment,or change the
method of computing the rate of interest thereon, or extend the time of payment of interest thereon,
without the consent of the Owner of each Bond so affected, or (ii) reduce the aforesaid percentage of
Bonds the consent of the Owners of which is required to effect any such modification or amendment,or
permit the creation of any lien on the Revenues and other assets pledged under the Indenture prior to
or on a parity with the lien created by the Indenture except as permitted in the Indenture, or deprive
the Owners of the Bonds of the lien created by the Indenture on such Revenues and other assets (except
as expressly provided in the Indenture), without the consent of the Owners of all of the Bonds then
Outstanding.It shall not be necessary for the consent of the Bond Owners to approve the particular form
of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance
thereof.
The Indenture and the rights and obligations of the Authority,of the Trustee and the Owners of
the Bonds may also be modified or amended from time to time and at any time by a Supplemental
Indenture, which the Authority and the Trustee may enter into without the consent of any Bond
Owners, if the Trustee has been furnished an opinion of counsel that the provisions of such
Supplemental Indenture shall not materially adversely affect the interests of the Owners of the Bonds,
including,without limitation,for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Authority in the Indenture contained other
covenants and agreements thereafter to be observed, to pledge or assign additional security for the
Bonds (or any portion thereof), or to surrender any right or power in the Indenture reserved to or
conferred upon the Authority;
(b)to make such provisions for the purpose of curing any ambiguity,inconsistency or omission,
or of curing or correcting any defective provision,contained in the Indenture,or in regard to matters or
questions arising under the Indenture, as the Authority may deem necessary or desirable, provided
that such modification or amendment does not materially adversely affect the interests of the Bond
Owners,in the opinion of Bond Counsel filed with the Trustee;
(c) to modify,amend or supplement the Indenture in such manner as to permit the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect,and to add such other terms,conditions and provisions as may be permitted by said
act or similar federal statute;or
(d) to modify,amend or supplement the Indenture in such manner as to cause interest on the
Bonds to remain excludable from gross income under the Code.
Appendix A
Page 15
redeemed prior to maturity and in respect of which notice of such redemption shall have been given or
provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to
be deposited or held shall be the principal amount of such Bonds and all unpaid interest thereon to the
redemption date;or
(b) Defeasance Obligations,the principal of and interest on which when due will,in the written
opinion of an Independent Accountant filed with the Members,the Authority and the Trustee,provide
money sufficient to pay the principal of and interest and premium(if any) on the Bonds to be paid or
redeemed, as such principal, interest and premium become due, provided that in the case of Bonds
which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been
given as provided or provision satisfactory to the Trustee shall have been made for the giving of such
notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of the
Indenture or by Written Request of the Authority) to apply such money to the payment of such
principal, interest and premium (if any) with respect to such Bonds, and (ii) the Authority shall have
delivered to the Trustee an opinion of Bond Counsel to the effect that such Bonds have been discharged
in accordance with the Indenture (which opinion may rely upon and assume the accuracy of the
Independent Accountant's opinion referred to above).
THE SITE AND FACILITY LEASES
A Site and Facility Lease will be entered into between each Member and the Authority. Under
each Site and Facility Lease, the Member agrees to lease its Leased Premises to the Authority for one
dollar for a term continuous with the term of its Lease Agreement. Each Member and the Authority
agree that the lease to the Authority of such Member's right, title and interest in its Leased Premises
pursuant to its Site and Facility Lease serves the public purposes of such Member by enabling such
Member to finance its portion of the Project.
THE LEASE AGREEMENTS
Lease of Leased Premises
The Authority leases its Leased Premises to each Member, and each Member leases its Leased
Premises from the Authority,upon the terms and conditions set forth in its Lease Agreement.
Term of Lease
Each Lease Agreement shall take effect on the Closing Date,and shall end on the date specified
therein. If,on such termination date, the Bonds allocable to such Member shall not be discharged by its
terms or if such Member's Lease Payments shall have been abated at any time and for any reason, then
the term of its Lease Agreement shall be extended until there has been deposited with the Trustee an
amount sufficient to pay all obligations due under its Lease Agreement.
Lease Payments
Obligation to Pay. In consideration of the lease of its Leased Premises from the Authority, each
Member agrees to pay to the Authority,its successors and assigns,as rental for the use and occupancy of
its Leased Premises during each Fiscal Year, its Lease Payments (denominated into components of
principal and interest) for its Leased Premises, to be due and payable on the respective Lease Payment
Dates. Any amount allocable to a Member and held in the Bond Fund, the Interest Account or the
Principal Account(other than amounts resulting from the prepayment of its Lease Payments in part but
not in whole) on any Lease Payment Date shall be credited towards the Lease Payment then due and
payable. Lease Payments coming due and payable from a Member in any Fiscal Year shall be for the
use of its Leased Premises for such Fiscal Year.
Appendix A
Page 17
Quiet Enjoyment
During the term of each Lease Agreement, the Authority shall provide each Member with quiet
use and enjoyment of its Leased Premises, and each Member shall, during such term, peaceably and
quietly have and hold and enjoy its Leased Premises without suit, trouble or hindrance from the
Authority, except as expressly set forth in its Lease Agreement. The Authority will, at the request of a
Member and at such Member's cost,join in any legal action in which such Member asserts its right to
such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the
foregoing, the Authority shall have the right to inspect all Leased Premises.
Additional Payments
In addition to its Lease Payments, each Member shall pay when due the following Additional
Payments:
(a) any fees and expenses incurred by the Authority in connection with or by reason of its
leasehold estate in its Leased Premises as and when the same become due and payable;
(b) any reasonable compensation to the Trustee pursuant to the Indenture for all services
rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities, legal fees and
other disbursements incurred in and about the performance of its powers and duties under the
Indenture;
(c) any reasonable fees and expenses of such accountants, consultants, attorneys and other
experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements,
reports, opinions or provide such other services required under its Lease Agreement or the Indenture;
and
(d)any reasonable out-of-pocket expenses of the Authority in connection with the execution and
delivery of its Lease Agreement or the Indenture, or in connection with the issuance of the Bonds,
including any and all expenses incurred in connection with the authorization, issuance, sale and
delivery of the Bonds,or incurred by the Authority in connection with any litigation which may at any
time be instituted involving its Lease Agreement, its Site and Facility Lease, the Bonds, the Indenture
or any of the other documents contemplated thereby, or otherwise incurred in connection with the
administration thereof.
Maintenance,Utilities,Taxes and Assessments
Throughout the term of its Lease Agreement, as part of the consideration for the rental of its
Leased Premises, all improvement, repair and maintenance of its Leased Premises shall be the
responsibility of the appropriate Member and such Member shall pay for or otherwise arrange for the
payment of all utility services supplied to its Leased Premises which may include, without limitation,
janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and
shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of its Leased
Premises resulting from ordinary wear and tear or want of care on the part of such Member or any
assignee or lessee thereof. In exchange for its Lease Payments provided in its Lease Agreement, the
Authority agrees to provide only its Leased Premises.
Each Member shall also pay or cause to be paid all taxes and assessments of any type or nature,
if any,charged to the Authority or such Member affecting its Leased Premises or the respective interests
or estates therein;provided that with respect to special assessments or other governmental charges that
may lawfully be paid in installments over a period of years, such Member shall be obligated to pay
only such installments as are required to be paid during the term of its Lease Agreement as and when
the same become due.
Each Member may, at such Member's expense and in its name, in good faith contest any such
taxes,assessments,utility and other charges and,in the event of any such contest,may permit the taxes,
Appendix A
Page 19
subject to deductible clauses of not to exceed $100,000 for any one loss. Such insurance may be
maintained as part of or in conjunction with any other fire and extended coverage insurance carried by
such Member and may be maintained in whole or in part in the form of insurance maintained through
a joint exercise of powers authority created for such purpose or in the form of self-insurance by such
Member.
Each Member agrees to procure and maintain, or cause to be procured and maintained,
throughout the term of its Lease Agreement,insurance against earthquake loss or damage to its Leased
Premises in such amounts as an independent insurance consultant shall annually determine is necessary
to protect such Member for such risk. Such insurance may be subject to a deductible clause of not to
exceed ten percent(10%)for any one loss. Such insurance may be maintained as part of or in conjunction
with any other insurance coverage carried by such Member. If such Member cannot purchase such
insurance on the open market from reputable insurers at reasonable cost, such Member agrees to self-
insure for such coverage.
Rental Interruption Insurance. Each Member shall procure and maintain through the term of its
Lease Agreement, rental interruption or use and occupancy insurance, if commercially available, to
cover loss, total or partial, of the use of any part of its Leased Premises during the term of its Lease
Agreement as a result of any of the hazards covered in the insurance required by its Lease Agreement,
in an amount at least equal to two times the portion of the Reserve Requirement allocable to such
Member. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Bond
Fund, and shall be credited towards the payment of its Lease Payments in the order in which such
Lease Payments would otherwise come due and be payable.
Title Insurance. On or before the Closing Date such Member shall, at its expense, (a) cause its
Lease Agreement and the Site and Facility Lease, or a memorandum thereof or thereof, and a
memorandum of the assignment made pursuant to the Indenture, in each case in form and substance
approved by Bond Counsel, to be recorded in the office of the San Bernardino County Recorder,and(b)
obtain a CLTA policy of title insurance which insures such Member's leasehold estate in its Leased
Premises in an amount equal to the aggregate principal amount of the Bonds.All Net Proceeds received
under said policy shall be deposited with the Trustee in the Redemption Fund and shall be applied to
the redemption of Bonds pursuant to the Indenture.
Net Proceeds of Insurance; Form of Policies. Each policy of insurance required by its Lease
Agreement shall provide that all proceeds thereunder shall be payable to the Trustee as and to the
extent required under its Lease Agreement. All required insurance policies shall be provided by a
commercial insurer rated "A+" by A.M. Best & Company or rated in one of the two highest rating
categories by Moody's and S&P. Each Member shall pay or cause to be paid when due the premiums
for all insurance policies required by its Lease Agreement. The Trustee shall not be responsible for the
sufficiency of any insurance required in its Lease Agreement,including any forms of self-insurance and
shall be fully protected in accepting payment on account of such insurance or any adjustment,
compromise or settlement of any loss. Each Member shall cause to be delivered annually on or before
each June 1 to the Trustee a certification, signed by a County Representative, stating compliance with
the provisions of its Lease Agreement.The Trustee shall be entitled to rely on such certification without
independent investigation. Each Member shall have the adequacy of any insurance reserves
maintained by such Member or by a joint exercise of powers authority,if applicable, for purposes of the
insurance required by its Lease Agreement reviewed at least annually, on or before each June 1, by an
independent insurance consultant and shall maintain reserves in accordance with the recommendations
of such consultant to the extent moneys are available for such purpose and not otherwise appropriated.
Tax Covenants
Federal Guarantee Prohibition. Each Member agrees that it 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 Bonds to be
"federally guaranteed" within the meaning of section 149(b)of the Code.
Appendix A
Page 21
amount which would otherwise be abated or if there is any money available in the Bond Fund or the
Reserve Account to pay the amount which would otherwise be abated.
Abatement Due to Eminent Domain. If all of its Leased Premises shall be taken permanently
under the power of eminent domain or sold to a government threatening to exercise the power of
eminent domain, the term of its Lease Agreement shall cease with respect to its Leased Premises as of
the day possession shall be so taken. If less than all of its Leased Premises shall be taken permanently,
or if all of its Leased Premises or any part thereof shall be taken temporarily under the power of
eminent domain, (a) its Lease Agreement shall continue in full force and effect and shall not be
terminated by virtue of such taking and the parties waive the benefit of any law to the contrary,and (b)
there shall be a partial abatement of Lease Payments in an amount to be agreed upon by such Member
and the Authority such that the resulting Lease Payments for its Leased Premises represent fair
consideration for the use and occupancy of the remaining usable portion of its Leased Premises.
Assignment,Leasing and Amendment
Assignment by the Authority. Certain rights of the Authority under each Lease Agreement,
including the right to receive and enforce payment of Lease Payments to be made by a Member under
its Lease Agreement, have been pledged and assigned to the Trustee for the benefit of the Owners of
the Bonds pursuant to the Indenture, to which pledge and assignment such Member consents. The
assignment of this Agreement to the Trustee is solely in its capacity as Trustee under the Indenture and
the duties, powers and liabilities of the Trustee in acting under its Lease Agreement shall be subject to
the provisions of the Indenture.
Assignment and Subleasing by such Member. No Lease Agreement may be assigned by a
Member. Each Member may sublease its Leased Premises or any portion thereof, but only upon
satisfaction of certain conditions set forth in its Lease Agreement.
Amendment of Lease.The Leased Premises may be substituted for other property,and portions of
the Leased Premises may be released, but only upon satisfaction of certain conditions set forth in its
Lease Agreement.
Events of Default.
The following shall be "Events of Default" under its Lease Agreement:
(a) Failure by such Member to pay any Lease Payment required to be paid under its Lease
Agreement at the time specified in its Lease Agreement.
(b) Failure by such Member to make any Additional Payment required under its Lease
Agreement and the continuation of such failure for a period of thirty(30)days.
(c)Failure by such Member to observe and perform any covenant,condition or agreement on its
part to be observed or performed, other than as referred to in the preceding clauses (a) or (b), for a
period of sixty (60) days after written notice specifying such failure and requesting that it be remedied
has been given to such Member by the Authority or the Trustee; provided, however, that if in the
reasonable opinion of such Member the failure stated in the notice can be corrected,but not within such
sixty (60) day period, such failure shall not constitute an Event of Default if such Member shall
commence to cure such failure within such sixty (60) day period and thereafter diligently and in good
faith shall cure such failure in a reasonable period of time.
(d) The filing by such Member of a voluntary petition in bankruptcy, or failure by such
Member promptly to lift any execution,garnishment or attachment,or adjudication of such Member as a
bankrupt,or assignment by such Member for the benefit of creditors,or the entry by such Member into
an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a
petition applicable to such Member in any proceedings instituted under the provisions of applicable
federal bankruptcy law,or under any similar acts which may hereafter be enacted.
Appendix A
Page 23
I
Limitation on Remedies
Notwithstanding the foregoing, neither the Authority nor the Trustee shall exercise any
remedies against its Leased Premises to the extent such remedies would generate funds which are
subject to such lien and which are not available to satisfy the obligations of its Lease Agreement or the
Indenture.
No Remedy Exclusive
No remedy conferred in its Lease Agreement upon or reserved to the Authority is intended to
be exclusive and every such remedy shall be cumulative and shall, except as expressly provided in its
Lease Agreement to the contrary, be in addition to every other remedy given under its Lease
Agreement or now or hereafter existing at law or in equity.No delay or omission to exercise any right
or power accruing upon any default shall impair any such right or power or shall be construed to be a
waiver thereof,but any such right and power may be exercised from time to time and as often as may
be deemed expedient.In order to entitle the Authority to exercise any remedy reserved to it in its Lease
Agreement it shall not be necessary to give any notice, other than such notice as may be required in its
Lease Agreement or by law.
Provisions Relating to the Municipal Bond Insurance Policy and the Municipal Bond Insurer
Notwithstanding any other provision of the Indenture,in determining whether the rights of the
Owners will be adversely affected by any action taken pursuant to the terms and provisions of the
Indenture, the Trustee shall consider the effect on the Owners as if there was no Municipal Bond
Insurance Policy. Any provision of the Indenture expressly recognizing or granting rights in or to the
Municipal Bond Insurer may not be amended in any manner which affects the rights of the Municipal
Bond Insurer thereunder without the prior written consent of the Municipal Bond Insurer.
The Municipal Bond Insurer's consent shall be required in addition to Owner consent, when
required, for the following purposes: (i) execution and delivery of any amendment, supplement or
change to or modification of the Indenture or any Lease Agreement, (ii) removal of the Trustee and
selection and appointment of any successor trustee; and (iii) initiation or approval of any action not
described in(i) or(ii)off this paragraph which requires Owner consent.Anything in the Indenture to the
contrary notwithstanding, upon the occurrence and continuance of an Event of Default, the Municipal
Bond Insurer shall, after payment of principal and interest then due, if any, be entitled to control and
direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of
the Owners under the Indenture and the Municipal Bond Insurer shall also be entitled to approve all
waivers of Events of Default.
In the event that the principal and/or interest due with respect to the Bonds shall be paid by the
Municipal Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Bonds shall remain
Outstanding for all purposes,not be defeased or otherwise satisfied and not be considered paid,and the
assignment and pledge of the trust created under the Indenture and all covenants, agreements and
other obligations of the Authority to the Bond Owners shall continue to exist and shall run to the benefit
of the Municipal Bond Insurer,and the Municipal Bond Insurer shall be subrogated to the rights of such
Bond Owners.
Appendix A
Page 25
APPENDIX B
INFORMATION CONCERNING THE MEMBERS AND
DESCRIPTION OF LEASED PREMISES
CITY OF BREA
General
Location and Government. The City of Brea("Brea") encompasses 10.7 square miles and is located
at the northern end of the County,just south of the Los Angeles County line. It is approximately 25 miles
southeast of downtown Los Angeles, 15 miles north of Santa Ana, the County Seat, and 22 miles inland of
the Pacific Ocean. Neighboring communities include the Cities of Fullerton, Placentia, La Habra and Yorba
Linda.
Brea is a general law city and was incorporated in 1917, the eighth city to be incorporated in the
County. Brea has a Council-Manager form of municipal government. The City Council appoints the City
Manager who is responsible for the day-to-day administration of city business and the coordination of all
city departments. The City Council is composed of five members elected hi-annually at large to four-year
alternating terms. The Mayor is selected by the City Council from among its members. Under the 1995/96
fiscal year budget, Brea employs a staff of approximately 328 full-time employees and 101 part-time
employees under the direction of the City Manager, including 76 full-time equivalent contract police services
personnel to the City of Yorba Linda and three full-time equivalent contract recreation services personnel
to the City of Diamond Bar.
Community Services and Facilities. Brea provides police and fire protection, emergency
paramedics, sewer maintenance, water, trash collection, street sweeping, park maintenance and building
inspection, and cooperates with the County in the provision of flood control services.
Educational services are provided to Brea residents by several school districts, including the Brea-
Olinda, Fullerton, Yorba Linda and La Habra Unified School Districts. Available schools include six
elementary schools, three parochial schools, one junior high school, one high school and one public
continuation high school. In addition, there are several colleges and universities in nearby Fullerton,
including California State University (Fullerton), Fullerton Community College, Western State University
College of Law and Southern California College of Optometry.
Health facilities for the City include the Brea Community Hospital with 162 beds, a staff of 278
physicians, a 24-hour emergency service and adjacent medical office buildings housing 38 physicians or
physician's groups. There are also numerous professional service offices in Brea for medical doctors,
dentists, optometrists,chiropractors and podiatrists,as well as St.Jude's Medical Center in nearby Fullerton.
Police and Fire Protection. The City of Brea Police Department consists of 101 sworn, 167 non-
sworn and 58 volunteer personnel. It provides a full range of police services for the communities of Brea
and Yorba Linda, whose daytime population exceeds 150,000, and whose combined residential population
is 95,000. Brea has provided police services to its neighboring City of Yorba Linda for over 25 years.
B-1
CITY OF BREA
CONSTRUCTION ACTIVITY
(1991 through 1995)
(000's omitted)
1991 1992 1993 1994 1995
New Residential
Single Valuation $ 0 $19,410 $5,259 $2,930 $13,453
Multiple Valuation 433 324 1,263 3,422 0
Alterations/Additions 22 346 2,116 1 349 913 2,453
Total $2,779 $21,850 $7,871 $7,265 $15,906
New Non-Residential
Commercial $1,664 $ 420 $ 1,484 $11,809 $4,777
Industrial 4,782 43 0 0 0
Other 183 1,187 179 690 0
Alterations/Additions 12,233 77 790 12.163 7 796 5.876
Total $18,862 $9,440 $13,826 $20,295 $10,653
Total Building Valuations $21,641 $31,290 $21,697 $27,560 $26,559
No. of Single Units 0 102 45 20 91
No. of Multiple Units 5 2 13 51 0
Total Units 5 104 58 71 91
Source: City of Brea
B-3
Retail Sales. Brea has experienced a steady increase in retail sales growth. For the period from
1989 to 1993, Brea experienced an increase of 32.170 in retail sales transactions. 1995 retail sales data is
available through the second quarter only.
CITY OF BREA
Taxable Retail Sales Data
(000's omitted)
1990 through 1995
1990 1991 1992 1993 1994 19950)
Apparel Stores $ 57,909 $ 60,615 $ 66,936 $ 67,820 $ 80,935 $ 19,674
General Merchandise Stores 152,278 166,187 182,974 194,512 205,495 47,779
Drug Stores 2,449 2,223 3,166 2,966 2,875 1,100
Food Stores 28,624 33,146 28,687 23,798 22,105 5,939
Packaged Liquor Stores 2,064 1,993 1,952 1,826 1,838 452
Eating and Drinking Places 57,305 63,946 63,854 63,675 66,178 18,462
Home Furnishings and
Appliances 16,715 27,131 29,833 35,497 57,388 14,247
Building Materials and Farm
Implements 9,049 8,208 6,485 7,635 4,034 1,145
Auto Dealers and Auto
Supplies 14,587 13,333 13,384 11,107 14,050 4,070
Service Stations 17,950 21,390 21,978 19,920 18,838 5,116
Other Retail Stores 86,404 95,444 100,098 99,371 88,079 24715
Total Retail Outlets 445,334 493,616 519,347 528,127 561,815 142,699
All Other Outlets 232 190 207.361 228.743 271.086 329.376 885813
Total All Outlets $677,524 $700,977 $748,090 $799,213 $891,191 $228,512
Source: State Board of Equalization
(I) First two quarters of data through June 30, 1995.
B-5
CITY OF BREA
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets and Other Debits
Assets:
Cash and investments 0 0 $ 216,371
Restricted assets
Cash $ 4,099,003 $ 6,223,248 5,434,506
Due from County 0 0 424,099
Receivables:
Taxes 79,330 60,718 117,854
Accounts receivable 60,394 167,339 75,448
Interest 397,896 355,566 182,690
Notes 99,355 0 0
Other 380,222 1,031,703 186,544
Due from other funds 1,585,406 991,583 822,380
Due from other governments 1,255,765 2,146,771 2,757,982
Advances to component units 2,366,575 2,297,573 2,226,500
Total Assets and Other Debits $10,323,946 $13,274,501 $12,444,374
Liabilities, Equity and Other Credits
Liabilities:
Accounts payable $ 676,469 $ 743,260 $ 862,972
Accrued liabilities 511,214 624,288 487,027
Interest payable 137,541 195,000 217,973
Deposits payable 255,698 224,506 219,671
Deferred Revenue 427,526 1,047,236 147,601
Due to other funds 1,650,466 1,620,836 2,269,046
Notes payable 3,950,000 6,000,000 5,200,000
Total Liabilities 7,608,914 10,455,126 9,404,290
Equity and Other Credits:
Fund Balances:
Reserved 2,505,859 2,384,950 2,887,226
Unreserved (designated) 85,284 96,482 152,858
Unreserved (undesignated) 123.889 337,943 0
Total Equity and Other Credits 2,715,032 2,819,375 3,040,084
Total Liabilities, Equity and Other Credits $10,323,946 $13,274,501 $12,444,374(')
Source: City of Brea Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial
reports are available from the City of Brea,and investors are encouraged to review the entire reports, including the notes therein, before
making an investment decision with respect to the Bonds.
(') Excludes a balance of approximately $5,100,000 transferred to the Risk Management Fund. Brea may, with the approval of its City
Council, transfer these moneys back to the General Fund.
B-7
Sales Tax Revenues. The revenue from sales tax provided approximately 39.5% of Brea's total
local tax revenues in 1995. The following table presents information concerning the value of taxable retail
sales in Brea since 1990.
CITY OF BREA
Taxable Retail Sales
1990-1995
Year Ended 12/31 Taxable Sales
1990 $677,524,000
1991 700,977,000
1992 748,090,000
1993 799,213,000
1994 891,191,000
1995(1) 228,512,000
Source: State Board of Equalization
t9 First two quarters of data through June 30, 1995
The table below shows sales tax revenues for Brea for the last five years and the projected sales tax
revenues for the 1995/96 fiscal year.
CITY OF BREA
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1990 Through June 30, 1996
Fiscal Year Sales Tax Revenues
1990/91 $ 7,686,394
1991/92 8,143,897
1992/93 8,600,037
1993/94 9,695,536
1994/95 10,485,677
1995/96"> 11,232,000
Source: City of Brea
(I) Projected
B-9
Largest Taxpayers
The following table sets forth the top ten property taxpayers, based on secured assessed valuation.
CITY OF BREA
Top Ten Secured Property Taxpayers
1995-96
1995-96 % of
Taxpayer Assessed Valuation Total (')
Corporate Property Investors $127,650,289 4.42%
Beckman Instruments, Inc. 103,661,206 3.59
Union Oil Company of California 93,178,040 3.23
BA Properties, Inc. 55,718,826 1.93
Brea Community Hospital Corporation 44,044,524 1.53
Nordstrom Realty Inc. 42,323,773 1.47
Imperial Center East Limited Partners 37,300,000 1.29
U.S. Suzuki Motor Corp. 28,015,338 0.97
Olen Commercial Realty Corp. 26,637,293 0.92
Tomlinson & Sons 26,551,452 0.92
Source: California Municipal Statistics, Inc.
(I) 1995-96 Local Secured Assessed Valuation: $2,884,932,960
Summary of Significant Accounting Policies
Brea's financial statements have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to government units. The Governmental Accounting Standards Board(GASB)
is the accepted standard-setting body for establishing governmental accounting and financial reporting
principles.
City Budget
The City follows these procedures in establishing the budgetary data reflected in the general purpose
financial statements:
1. In May, the City Manager submits to the City Council a proposed operating budget for the
fiscal year commencing July 1. The operating budget includes proposed expenditures and
the means of financing them.
2. Public hearings are conducted at City Council meetings to obtain taxpayer comments.
3. During July the budget is adopted by Council action.
B-11
Direct and Overlapping Bonded Debt
•
The following table contains information on Brea's direct and overlapping bonded indebtedness as
of June 30, 1996.
CITY OF BREA
Direct and Overlapping Bonded Debt
1995-96 Assessed Valuation: $1,758,837,462 (after deducting $1,559,488,042 redevelopment incremental
valuation)
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/96
Orange County 1.107% $ 4,373
Metropolitan Water District 0.217 1,312,622
City of Brea Community Facilities Districts 100.000 4,725,000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $6,041,995
DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT:
Orange County General Fund Obligations 1.107% $6,194,041
Orange County Pension Obligations 1.107 3,450,574
Orange County Teeter Plan Obligations 1.107 1,715,850
Orange County Transit Authority 1.107 233,577
Orange County Water District Certificates.of Participation 0.009 18,545
Municipal Water District of Orange County Water Facilities Corporation 1.670 1,378,669
Brea-Olinda Unified School District Certificates of Participation 90.377 32,309,778
Fullerton Joint Union High School District Certificates of Participation 1.397 126,162
City of Brea 100.000 0(1)
City of Brea Civic/Cultural Center Authority 100.000 20,910,000
' Orange County Sanitation District No. 2 Certificates of Participation 4.295 5,769,686
Orange County Sanitation District No. 3 Certificates of Participation 1.366 1,733,175
Orange County Sanitation District No. 13 Certificates of Participation 0.443 1.392
TOTAL GROSS DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $73,841,449
Less: Orange County Transit Authority (80% self-supporting) 186,862
Orange County Water District Certificates of Participation (100% self-supporting) 18,545
MWDOC Water Facilities Corporation(100% self-supporting) 1.378,669
TOTAL NET DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $72,257,373
GROSS COMBINED TOTAL DEBT 79,883,444(2)
NET COMBINED TOTAL DEBT $78,299,368
(I) Excludes share of issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt($20,910,000) 1.19%
Total Overlapping Tax and Assessment Debt 0.34%
Gross Combined Total Debt 4.54%
Net Combined Total Debt 4.45%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95: $0
Source; California Municipal Statistics.Inc.
B-13
CITY OF BUENA PARK
General
Location and Government. The City of Buena Park ("Buena Park") encompasses 10.27 square
miles and is located at the northern end of the County, just south of the Los Angeles County line. It is
approximately 22 miles southeast of downtown Los Angeles, 12 miles north of Santa Ana, the County Seat,
and 19 miles inland of the Pacific Ocean. Neighboring communities include the Cities of Anaheim,
Cerritos, Cypress, La Habra, La Mirada and La Palma.
Buena Park is a general law city and was incorporated in 1952. Buena Park has a Council-Manager
form of municipal government. The City Council appoints the City Manager who is responsible for the day-
today administration of city business and the coordination of all city departments. The City Council is
composed of five members elected bi-annually at large to four-year alternating terms. The Mayor is selected
by the City Council from among its members. Under the 1995-96 fiscal year budget, Buena Park employs
a staff of approximately 299 full-time employees and 128 part-time employees.
Community Services and Facilities. Buena Park provides police and fire protection, emergency
paramedics, sewer maintenance, water, trash collection, street sweeping, park maintenance and building
inspection, and cooperates with the County in the provision of flood control services.
Educational services are provided for Buena Park residents by several school districts, including
Anaheim, Buena Park, Fullerton and Centralia Unified School Districts, as well as numerous private school
systems. Available schools include fourteen elementary schools, seven junior high schools and nine high
schools. In addition, there are several colleges and universities in nearby Fullerton and Cypress, including
California State University (Fullerton), Cypress Community Colleges, Fullerton Community College,
Western State University of Law and Southern California College of Optometry.
Health facilities for the City include two general hospitals with a total bed capacity of 124. There
are also numerous professional service offices in Buena Park serving medical doctors, dentists, optometrists,
chiropractors and podiatrists, as well as St. Jude's Medical Center in nearby Fullerton.
Police and Fire Protection. The City of Buena Park Police Department consists of 89 sworn and
131 non-sworn personnel. It provides a full range of police services for the community whose daytime
population exceeds 125,000 and whose residential population is 74,000.
Besides the traditional efforts of the Police Department to respond to calls for service and enforce
laws and investigate traffic and crime-related issues, the department has implemented Problem Oriented
Policing, Anti-Gang Education and Citizen Police Academy programs.
Buena Park has three fire stations that provide twenty-four hour emergency response services to the
residential and business community of Buena Park. These services include paramedic, fire prevention and
fire suppression services and are provided, under contract, by the Orange County Fire Protection Agency.
The Orange County Fire Protection Agency responds to a wide variety of critical situations, including fires,
explosions, hazardous materials incidents, medical emergencies, accidents, and miscellaneous public
assistance requests.
Transportation. The Riverside Freeway(State Route 91), a major east-west corridor, the Santa Ana
Freeway (Interstate 5), a major north-south corridor, and Beach Boulevard (State Highway 39), a major
B-15
CITY OF BUENA PARK
CONSTRUCTION ACTIVITY
(1991 through 1995)
(000's omitted)
1991 1992 1993 1994 1995
New Residential $7,337 $3,691 $3,620 $279 $1,084
New Non-Residential
Commercial $7,892 $6,394 $21,329 $14,881 $10,508
Industrial 7,577 2,481 6,657 3,822 3,174
Alterations/Additions 6,460 6,408 9.032 1.639 2 010
Total Building Valuations $29,266 $18,974 $40,638 $20,621 $16,776
Number of Permits Issued
Residential 41 27 10 2 11
Commercial 172 186 198 190 78
Industrial 28 28 21 36 8
Alterations/Additions 868 878 1037 895 321
Total Permits 1,109 1,119 1,266 1,123 418
Source: City of Buena Park-Development Services Department
Employment. The principal employers within Buena Park, their type of business and the
approximate number of employees are shown in the table below.
CITY OF BUENA PARK
PRINCIPAL EMPLOYERS
Company Product or Service Employees
Knott's Berry Farm Entertainment Theme Park 3,300
Lucky Stores Food Products Distributor 1,775
Nutrilite Vitamin Manufacturer 990
J.C. Penney Corporate Headquarters 620
Ultra Wheel Co. Automotive Accessory Manufacturer 470
Nabisco Food Product Manufacturer 390
Leach Corporation Electronics Manufacturer 450
Pepsi Bottling 375
FedCo. Department Store 360
Kraft Foods Food Product Manufacturer 350
City of Buena Park Municipal Government 300
Pacific Bell Telecommunications 295
Sears, Roebuck & Co. Department Store 290
Medieval Times Entertainment Center 250
Source: City of Buena Park-Finance Department
B-17
_
General Fund
The following tables summarize information taken from Buena Park's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in General
Fund Balances for the past three(3) fiscal years:
CITY OF BUENA PARK
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets and Other Debits
Assets:
Cash and investments $ 9,759,158 $ 6,814,413 $ 3,926,978
Receivables:
Accounts receivable 854,102 600,366 1,022,907
Interest 172,991 175,354 271,870
Due from other funds 459,841 875,176 674,125
Due from the County of Orange 0 0 1,471,160
Due from other governments 1,092,854 1,083,364 1,093,181
Advances to component units 5,744,922 6,260,274 6,677,459
Other assets 138,022 139,296 125,389
Total Assets and Other Debits $18,221,890 $15,948,243 $15,263,069
Liabilities, Equity and Other Credits
Liabilities:
Accounts payable $ 652,113 $ 498,731 $ 567,664
Accrued liabilities 677,756 772,577 597,220
Due to other funds 80,888 2,548 233,931
Deposits payable 678,241 831,993 762,236
Retentions payable 92,814 0 0
Deferred revenue 3,225,282 3,752,593 4,167,140
Total Liabilities 5,407,094 5,858,442 6,328,191
Equity and Other Credits:
Fund Balances:
• Reserved 3,478,658 3,284,629 4,875,874
Unreserved (designated) 5,167,643 4,734,894 2,650,907
Unreserved (undesignated) 4,168,495 2,070,278 1,408,097
Total Equity and Other Credits 12,814,796 10,089,801 8,934,878
Total Liabilities, Equity and Other Credits $18,221,890 $15,948,243 $15,263,069
Source: City of Buena Park Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Buena Park, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-19
Sales Tax Revenues. The revenue from sales tax provided approximately 31.4% of Buena Park's
total local tax revenues in 1995. The following table presents information concerning the value of taxable
retail sales in Buena Park since 1992.
CITY OF BUENA PARK
Taxable Retail Sales
1992-1995
Year Ended 12/31 Taxable Sales
1992 $739,329,200
1993 727,780,500
1994 769,261,000
1995 783,847,200
Source: State of California Board of Equalization
The table below shows sales tax revenues for Buena Park for the last five years and the projected
sales tax revenues for the 1995/96 fiscal year.
CITY OF BUENA PARK
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1990 Through June 30, 1996
Fiscal Year Sales Tax Revenues
1989-90 $10,348,960
1990-91 9,643,267
1991-92 8,254,357
1992-93 8,222,440
1993-94 8,126,734
1994-95 8,674,801
1995-96(0 9,250,000
Source: City of Buena Park
(I) Projected
B-21
Largest Taxpayers
The following table sets forth the top ten property taxpayers, based on secured assessed valuation.
CITY OF BUENA PARK
Top Ten Secured Property Taxpayers
1995-96
1995-96 % of
Taxpayer Assessed Valuation Total (1)
Knotts Berry Farm $138,744,704 4.11%
Jim Dandy Markets 60,440,519 1.79
J.C. Penney Properties, Inc. 49,338,985 1.46
Nutrilite Products, Inc. 49,298,744 1.46
Nabisco, Inc. 45,889,874 1.36
Sunrise Buena Park 43,451,379 1.29
Kraft, Inc. 33,952,655 1.01
Sequoia Management 23,201,350 0.69
Teachers Insurance & Annuity Association 22,576,764 0.67
Yamaha International Corp. 21,137,037 0.63
Source: California Municipal Statistics, Inc.
°) 1995-96 Local Secured Assessed Valuation: $3,376,137,399
Summary of Significant Accounting Policies
Buena Park's financial statements have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards
Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
City Budget
The City follows these procedures in establishing the budgetary data reflected in the general purpose
financial statements:
1. In May, the City Manager submits to the City Council a proposed operating budget for the
fiscal year commencing July 1. The operating budget includes proposed expenditures and
the means of financing them.
2. Public hearings are conducted at City Council meetings to obtain taxpayer comments.
3. During June, the budget is adopted by Council action.
B-23
Direct and Overlapping Bonded Debt
The following table contains information on Buena Park's direct and overlapping bonded
indebtedness as of June 30, 1996.
CITY OF BUENA PARK
Direct and Overlapping Bonded Debt
•
1995-96 Assessed Valuation: $3,224,231,859 (after deducting $430,231,121 redevelopment incremental
valuation)
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/96
Orange County 2.029% $ 8,015
Metropolitan Water District .402 2,431,678
Centralia School District 64.426 641,039
Cypress Recreation and Park District 0.001 6
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $3,080,738
DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT:
Orange County General Fund Obligations 2.029% $11,352,945
Orange County Pension Obligations 2.029 6,324,494
Orange County Teeter Plan Obligations 2.029 3,144,950
Orange County Transit Authority 2.029 428,119
Orange County Water District Certificates of Participation 3.117 6,422,734
Municipal Water District of Orange County Water Facilities Corporation 3.081 2,543,520
Fullerton Joint Union High School District Certificates of Participation 15.224 1,374,868
Centralia School District Certificates of Participation 64.426 2,784,158
Cypress School District Certificates of Participation 4.780 163,954
Orange County Sanitation District No. 3 Certificates of Participation 10.127 12,849,093
City of Buena Park 100.000 0 (1)
TOTAL GROSS DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $47,388,835
Less: Orange County Transit Authority (80% self-supporting) 342,495
Orange County Water District Certificates of Participation (100% self-supporting) 6,422,734
MWDOC Water Facilities Corporation(100% self-supporting) 2,543.520
TOTAL NET DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $38,080,086
GROSS COMBINED TOTAL DEBT 50,469,573 (2)
NET COMBINED TOTAL DEBT $41,160,824
(1) Excludes share of issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt 0.00%
Total Overlapping Tax and Assessment Debt 0.10%
Gross Combined Total Debt 1.57%
Net Combined Total Debt 1.28%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95: $20,664
Source: California Municipal Statistics,Inc.
B-25
CITY OF FULLERTON
General
Location and Government. The City of Fullerton ("Fullerton") is located in the northern portion
of Orange County, approximately 23 miles south of downtown Los Angeles with Long Beach on the
southwest, Pomona and Ontario on the northeast, Riverside on the east and major Orange County cities to
the south. Fullerton, founded in 1887 and incorporated in 1904, is the sixth largest city in Orange County
and is accessible by three major freeways and the railroad. Fullerton is 22.2 square miles in size, 150 feet
above sea level, and 17 miles from the ocean.
Fullerton is a general law city, deriving its power from acts of the State legislature. Fullerton is
governed by a non-partisan, five-member City Council elected to serve staggered four-year terms. The City
elections are consolidated with the Statewide general elections held in November of even-numbered years.
The City Council appoints the City Manager, City Attorney, and City Treasurer, as well as members of the
various commissions, boards and other citizen advisory groups, ensuring a broad base of citizen input into
the City's decision-making process.
Community Services and Facilities, Police and Fire Protection. Fullerton provides the full range
of municipal services contemplated by statute or charter. This includes public safety (police and fire),
highways and streets, sanitation, water utility and airport, culture and recreation, public improvements,
planning and general administrative and support services.
Fullerton is a major center of higher education in the County. California State University, Fullerton,
located in Fullerton and is one of the 19 campuses of the California State Universities and offers more than
85 degree programs at both undergraduate and graduate levels. The campus is located on a 225-acre site,
has about 700 full-time instructional personnel and an enrollment of about 25,000. Fullerton Junior College,
• also located in the City, was the first junior college in California and has been in operation since 1913. The
North Orange County Community College District is also headquartered in the City and operates its
Fullerton Campus with an enrollment of 20,000.
Fullerton is served by many overlapping school districts, although educational services are provided
primarily by the City Elementary School District and the City Union High School District. Other school
districts serving portions of Fullerton are Anaheim Elementary, Anaheim Union High School, Brea-Olinda
Unified, Buena Park Elementary, La Habra Elementary and Placentia Unified.
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in Fullerton from 1990 through 1994.
B-27
The principal employers within Fullerton, their product or service and the number of employees are
shown in the table below.
CITY OF FULLERTON
PRINCIPAL EMPLOYERS
October, 1995
Company Employees
Manufacturing
Hughes Electronics Division 1,400
Beckman Instruments 1,250
Hunt Wesson Foods 1,100
Kaynar Manufacturing Co. 640
Kimberly-Clark 525
Non-Manufacturing
Cal State University, Fullerton 2,650
St. Jude Medical Center 1,700
Fullerton College 1,060
Fullerton Joint Union High School District 1,040
City of Fullerton 600
Hewlett-Packard 600
Source: City of Fullerton
Population. Since the 1990 census, Fullerton's population is estimated to have grown by
approximately 8.74%. The County's population is estimated to have expanded by approximately 7.11%
during the same interval. According to the City of Fullerton Office of Public Information, the population
estimate for Fullerton as of the beginning of 1995 was 123,692 with 44,099 households. This equates to
an average household size of 2.80 which is typical for Orange County. Per City statistics, the housing
diversity is approximately 50% single family detached, 8% single family attached; 40% multi-family
housing; and 2% mobile homes. The high multi-family is expected due to the five colleges in Fullerton with
the major college being California State University, Fullerton. Older housing is located south of
Commonwealth with smaller two and three-bedroom homes. North of Commonwealth and as you move
toward the hills, the homes are larger, newer, and well maintained. Two of the neighborhoods are built
around golf courses. The following table sets forth the population growth for Fullerton since 1980.
B-29
CITY OF FULLERTON
COMPARATIVE BALANCE SHEET
Fiscal Years 1993 through 1995
1993 1994 1995
Assets and Other Debits
Cash and investments $13,089,515 $12,432,531 $13,885,900
Receivables:
Taxes 236,422 245,388 146,216
Accounts receivable 556,109 322,621 1,450,607
Other accrued revenue receivable 1,209,944 5,392,768 3,295,542
Notes 4,950 3,300 1,650
Due from other funds 1,338,223 1,153,224 1,311,292
Advances to other funds 933,588 710,545 483,888
Inventory 350,464 311,094 250,081
Total Assets and Other Debits $17,719,215 $20,571,471 $20,825,176
Liabilities and Fund Balance
Liabilities:
Accounts payable $1,020,205 $1,229,675 $ 918,728
Other accrued liabilities 2,792,207 3,455,171 4,007,540
Deferred Revenue -0- 2,331,293 0
Notes payable 4,750,000 5,000,000 4,500,000
Advance from other funds 457.900 366.320
Total Liabilities 8,562,412 12,474,039 9,792,578
Equity and Other Credits:
Fund Balances:
Reserved for encumbrances 135,646 115,371 42,262
Reserved for advance to Brea Dam
recreational facilities 933,588 710,545 483,888
Reserved for inventory 350,464 311,094 250,081
Reserved for notes receivable 3,300 1,650 0
Reserved for long-term receivables
from County of Orange 0 0 1,003,853
Unreserved:
Designated for self-insurance 523,926 454,808 0
Designated for subsequent year
expenditures 4,250,206 3,574,631 5,723,205
Designated for emergencies 259,673 229,333 829,309
Designated for unexpected
financial losses 1,200,000 1,200,000 1,200,000
Designated for natural
disasters 1,500,000 . 1,500,000 1,500,000
Total Equity and Other Credits 9,156,803 8,097,432 11,032,598
Total Liabilities, Equity and Fund Balance $17,719,215 $20,571,471 $20,825,176
Source: City of Fullerton Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94, 1994-95;the annual financial
reports are available from the City of Fullerton, and investors are encouraged to review the entire reports, including the
notes therein, before making an investment decision with respect to the Bonds.
B-31
Assessed Values
The following table sets forth the assessed and estimated actual values of taxable property within
Fullerton for the last ten fiscal years:
ASSESSED AND ESTIMATED ACTUAL VALUES OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Total Assessed &
Fiscal Common Public Unsecured Estimated Full
Year Property Utility[') Valuation Market Valuation
1986 $3,447,895,893 $ 86,501,050 $262,042,382 $3,796,439,325
1987 3,791,332,471 93,876,990 316,974,240 4,202,183,701
1988 4,077,021,251 103,717,110 285,132,707 4,465,871,068
1989 4,379,034,075 13,489,758 318,297,944 4,710,821,777
1990 4,777,560,499 4,808,987 349,657,462 5,132,026,948
1991 5,078,492,695 4,688,817 369,297,694 5,452,479,206
1992 5,368,799,051 5,008,602 422,249,940 5,796,057,593
1993 5,633,310,098 6,037,054 407,056,590 6,046,403,742
1994 5,757,256,168 6,902,040 351,952,416 6,116,110,624
1995 5,758,455,945 5,071,849 304,794,654 6,068,322,448
Source: Orange County Assessor
(e Due to change in state law, starting in 1989, the State Board of Equalization is no longer assessing public utility property on a situs
basis. As a result, property tax revenues for utilities increased slightly for the City of Fullerton. Property tax for utilities is now based
upon a county wide assessment, and allocated on a pro rata basis. Assessed values shown for public utilities now include only non-
operating, non-unitary property and railroad property.
Property Tax Valuation
The table below presents Fullerton's property tax valuation and collection experience for the last five
fiscal years.
CITY OF FULLERTON
Property Tax Levies and Collections
Last Five Fiscal Years
% of
Total Total % of Outstanding Delinquent
Fiscal Current Current Levy Delinquent Taxes to
Year Levy Collections Collected Taxes Total Levy
1990-91 $11,196,842 $10,681,925 95.40% $514,917 4.60%
1991-92 11,634,417 10,915,382 93.82 719,035 6.18
1992-93 10,835,687 10,198,323 94.12 637,364 5.88
1993-94 9,704,237 9,233,657 95.15 470,580 4.85
1994-95 8,654,595 8,327,051 96.22 327,544 3.78
Source: County of Orange
B-33
Labor Force and Employment
The following table sets forth Fullerton's annual employment statistics and the number of persons
employed in the different divisions in the County.
CITY OF FULLERTON
Wage and Salary Employment by Industry,
Civilian Labor Force, Employment and Unemploymentttl
Calendar Year Averages: 1990-1994
1990 1991 1992 1993 1994
Total, all industries 1,178.9 1,151.1 1,133.2 1,122.7 1,133.9
Agriculture 6.6 7.4 7.2 7.3 7.5
Nonagricultural employment 1,172.4 1,143.7 1,126.0 1,115.4 1,126.4
Manufacturing
Nondurable goods 69.3 69.3 69.5 68.5 69.5
Durable goods 174.7 160.1 150.8 138.7 136.5
Mining 1.2 1.3 1.1 .9 1.0
Construction 57.2 51.1 47.7 44.5 46.9
Transportation & Public Utilities 36.4 36.5 35.4 36.7 38.8
Trade
Wholesale 81.4 79.3 79.2 76.7 78.8
Retail 217.6 203.9 201.5 201.0 202.1
Finance, Insurance & Real Estate 96.0 94.2 94.4 93.8 94.3
Services 312.6 319.1 318.3 326.9 329.5
Government'2> 126.1 128.7 127.4 127.8 128.9
Civilian Labor Force 1,350,600 1,313,100 1,328,500 1,316,900 1,342,100
Employed 1,301,800 1,244,500 1,240,700 1,228,200 1,264,200
Unemployed 48,800 68,600 87,800 88,700 77,900
County Unemployment Rate 3.6% 5.2% 6.6% 6.7% 5.8%
State Unemployment Rate 5.6% 7.5% 9.1% 9.2% 8.6%
Source: State Employment Development Department
"0 Average annual figures. Employment is reported by place of work and excludes persons who are self-employed, unpaid family
workers, domestics, volunteers and workers involved in labor disputes.
(2) Includes all civilian governmental employees regardless of activity in which engaged.
Summary of Significant Accounting Policies
The Financial Reporting Entity. Fullerton is a general law city governed by an elected five-member
city council. As required by generally accepted accounting principles, these financial statements present the
City of Fullerton(the primary government) and its component units. The component units discussed below
are included in the City's reporting entity because of the significance of their operational or financial
relationship with the City. These entities are legally separate from each other. However, the City of
Fullerton elected officials have a continuing full or partial accountability for fiscal matters of the other
B-35
Direct and Overlapping Bonded Debt
The following table contains information on Fullerton's direct and overlapping bonded indebtedness
as of June 30, 1996.
CITY OF FULLERTON
Direct and Overlapping Bonded Debt
1995-96 Assessed Valuation: $5,815,511,182 (after deducting $790,502,941 redevelopment incremental
valuation)
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/96
Orange County 3.660% $ 14,457
Metropolitan Water District .724 4,379,440
City of Fullerton 1915 Act Bonds 100.000 9.265.000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $13,658,897
DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT:
Orange County General Fund Obligations 3.660% $20,478,944
Orange County Pension Obligations 3.660 11,408,403
Orange County Teeter Plan Obligations 3.660 5,673,000
Orange County Transit Authority 3.660 772,260
Orange County Water District Certificates of Participation 5.629 11,598,836
Municipal Water District of Orange County Water Facilities Corporation 0.004 3,302
Brea-Olinda Unified School District Certificates of Participation 1.758 628,485 •
Fullerton Joint Union High School District Certificates of Participation 44.467 4,015,783
City of Fullerton Authorities and Certificates of Participation 100.000 16,200,000 (1)
Orange County Sanitation District No. 2 Certificates of Participation 9.373 12,591,215
Orange County Sanitation District No. 3 Certificates of Participation 9.684 12,287,017
TOTAL GROSS DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $95,657,245
Less: Orange County Transit Authority (80% self-supporting) 617,808
Orange County Water District Certificates of Participation (100% self-supporting) 11,598,836
MWDOC Water Facilities Corporation (100% self-supporting) 3.302
TOTAL NET DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $83,437,299
GROSS COMBINED TOTAL DEBT 109,316,142(2)
NET COMBINED TOTAL DEBT $97,096,196
(1) Excludes share of issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt($16,200,000) 0,28%
Total Overlapping Tax and Assessment Debt 0.23%
Gross Combined Total Debt 1.88%
Net Combined Total Debt 1.67%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95: $0
Source: California Municipal Statistics, Inc.
B-37
CITY OF GARDEN GROVE
General
Location and Government. The City of Garden Grove ("Garden Grove") is located in central
Orange County approximately 25 miles southeast of downtown Los Angeles. It is the fourth largest city in
Orange County and the nineteenth largest in the State of California.
Garden Grove has a Council-Manager form of government with the Mayor elected at large for a two-
year term and four council members elected at large for four-year staggered terms. The current council
consists of Mayor Bruce Broadwater, Mayor Pro-Tern Mark Leyes, and Councilmen Ho Chung, Tony
lngegneri and Bob Dinsen.
Community Services and Facilities, Police and Fire Protection, Transportation and Utilities.
Garden Grove is a full-service city which provides police, fire, paramedic, street maintenance, park
maintenance, water, recreation, traffic/transportation, public improvements, planning, zoning and general
administrative services.
Also included in the City's overall operations are the Garden Grove Agency for Community
Development, Garden Grove Housing Authority,City of Garden Grove Library Corporation, and the Garden
Grove Cable Corporation. Garden Grove operates its own Water Utility.
Economic Growth and Development
Housing, Commercial and Industrial Development. During the 1994-95 fiscal year, the number
of new building permits declined by 13% and the estimated valuation of new construction declined by 28%.
Employment. The unemployment rate dropped from 5.9% in the 1993-94 fiscal year to 5.5% in
1994-95. In addition, median family income rose approximately 2% from $43,530 in 1993-94 to $44,406
in 1994-95.
B-39
General Fund
The following tables summarize information taken from the City's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund
Balances for the past three (3) fiscal years:
CITY OF GARDEN GROVE
GENERAL FUND COMPARATIVE BALANCE SHEETS
JUNE 30, 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets:
Cash and investments $ 5,529,118 $12,599,321 $ 9,814,316
Taxes receivable 1,070,605 950,368 1,111,641
Accounts receivable 426,091 277,332 441,192
Accrued interest receivable 253,698 263,681 235,133
Reimbursement agreement receivable 2,726,172 2,771,519 2,821,611
Deposits 42,063 42.062 42,062
Total assets $10,047,747 $16,904,283 $14,465,955
Liabilities and Fund Balance
Liabilities:
Accounts payable $ 1,890,455 $ 834,175 $ 1,871,914
Other accrued liabilities 924,113 2,609,740 1,232,345
Refundable deposits 503,538 617,585 512,268
Due to other funds 0 0 2,676
Deferred revenue 18,502 11,408 169,665
Loans payable 1,098,288 1,471,677 1,471,677
Total liabilities 4,434,896 5,544,585 5,260,545
Fund Balance:
Reserved:
Reserved for encumbrances 411,871 292,968 1,156,907
Reserved for reimbursement
agreement receivable 2,726,172 2,771,519 2,821,611
Reserved for continuing projects 1,709,746 4,049,160 2,775,286
Unreserved:
Designated for subsequent years'
expenditures 765,062 4,246,051 2,451,606
Total fund balances 5,612,851 11,359,698 9,205,410
Total liabilities and fund balances $10,047,747 $16,904,283 $14,465,955
Source: City of Garden Grove Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94, 1994-95; the annual
financial reports are available from the City of Garden Grove, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-41
Sales Tax Revenues. The revenue from sales tax provided approximately 33.4% of Garden
Grove's total local tax revenues in 1995. The following table presents information concerning the value
of taxable retail sales in Garden Grove since 1990.
CITY OF GARDEN GROVE
Taxable Retail Sales
1990 through 1995
Year Ended 12/31 Taxable Sales
1990 $1,142,952
1991 1,046,437
1992 999,671
1993 992,258
1994 989,806
1995 485,160(')
Source: City of Garden Grove
of 1995 includes the first two quarters only
Property Tax Revenues
The total assessed valuation of the property within Garden Grove for the fiscal year 1994-95 was
$4,898,034,270. The total appropriations limit adopted by Garden Grove for fiscal year 1995-96 was
$49,603,100 and the actual appropriations for the same period was $25,566,400.
Garden Grove receives funds annually from the State based upon a percentage of property taxes
collected within the County computed on the City's respective assessed valuation, and a statutory system
of annual appropriations. The table below presents the assessed valuation of property within Garden
Grove for the past five fiscal years.
CITY OF GARDEN GROVE
Assessed Valuations
Total Before Total After
Fiscal Year Local Secured Utility Unsecured Redevelopment Redevelopment
1990-91 $4,917,423,755 $ 903,639 $378,301,239 $5,296,628,633 $4,358,807,353
1991-92 5,195,686,427 1,060,151 466,740,874 5,663,487,452 4,660,185,590
1992-93 5,460,472,012 914,265 487,905,340 5,949,291,617 4,954,228,462
1993-94 5,542,753,086 898,911 400,493,309 5,944,145,306 4,888,230,929
1994-95 5,528,471,115 791,702 385,782,186 5,915,045,003 4,898,034,270
1995-96 5,418,100,690 817,397 386,350,553 5,805,268,640 4,834,132,979
Source: County of Orange -Assessed Valuations
B-43
Largest Taxpayers
The following table sets forth the top ten property taxpayers, based on secured assessed
valuation.
CITY OF GARDEN GROVE
Top Ten Secured Property Taxpayers
1995-96
1995-96 % of
Taxpayer Assessed Valuation Total 0)
Gateway Properties $ 50,107,288 0.92%
Fujita Corporation USA 41,255,709 0.76
American Medical International, Inc. 36,382,968 0.67
Swedlow, Inc. 35,672,991 0.66
Alps Electric (USA) Inc. 31,101,521 0.57
Hughes & Lyon Garden Grove Associates 30,184,515 0.56
Stanford Realty Group 17,940,915 0.33
TRA-TEL Centers 14,817,056 0.27
Shih-Yuan Chen 13,667,122 0.25
Sunbelt Stores, Inc. 12,675,231 0.23
Source: California Municipal Statistics, Inc.
(0 1995-96 Local Secured Assessed Valuation: $5,418,100,960
Summary of Significant Accounting Policies
Garden Grove's accounting records for general government operations are maintained on the
modified accrual basis, with revenues being recorded when available and measurable, and expenditures
being recorded when the services or goods are received and the fund liabilities are incurred. Accounting
records for Garden Grove's Proprietary Funds are maintained on the accrual basis. Under the accrual
basis, revenues are recognized when earned, and expenses are recognized when incurred.
In developing Garden Grove's accounting system, consideration is given to the adequacy of
internal accounting controls. Internal accounting controls are designed to provide reasonable, but not
absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or
disposition; and (2) the reliability of financial records for preparing financial statements and maintaining
accountability for assets. The concept for reasonable assurance recognizes that: (1) the cost of control
should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires
estimates and judgments by management.
All internal control evaluations occur within the above framework. Garden Grove's internal
accounting controls are designed to adequately safeguard assets and provide reasonable assurance of
proper recording of financial transactions.
Budgetary control is maintained at the program level. Encumbrances of estimated purchase
amounts are made prior to the release of purchase orders to vendors. Open encumbrances are reported
as reservations of fund balance at June 30, 1995.
B-45
Investment Policy
Under provisions of Garden Grove's investment policy, and in accordance with Section 53601 of
the California Government Code, Garden Grove may invest in the following types of investments:
Repurchase Agreements
Securities of the U.S. Government and its Agencies
Banks Acceptances
Certificates of Deposit
Commercial Paper
California Local Agency Investment Fund (LAIF)
Passbook Savings Accounts
Negotiable Certificates of Deposit
Although negotiable certificates of deposits are allowed under the California Government Code,
this type of investment is currently not utilized. Garden Grove's investment policy does not allow the
borrowing of funds to purchase investments on margin through reverse repurchase agreements.
Local Agency Investment Funds (LAIF). The LAIF is a special fund of the California State
Treasury through which local governments may pool investments. Investments in LAIF are highly
liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. Included
in LAIF's investment portfolio are certain derivative securities in the form of structured notes and asset-
backed securities. LAIF's and Garden Grove's exposure to credit, market or legal risk is not available.
Repurchase Agreements. Throughout the year, Garden Grove utilizes overnight repurchase
agreements for temporary investment of City funds. Such repurchase agreements are used daily, but
generally do not exceed two percent of Garden Grove's investment portfolio.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under Garden
Grove's Site Lease and Lease Agreement:
The Leased Premises for Garden Grove consists of the City Police Headquarters located at 11301
Acacia Parkway in the City of Garden Grove. This is a 33,189 square foot facility which houses the
City Police. It is currently listed on the City's property and casualty insurance schedule as having an
improvement value of$4,509,794. No estimate was provided for the land underlying the facility.
The City of Garden Grove's Site Lease and Lease Agreement will support the City's share of the
bonds which is $3,680,000*.
* Preliminary, subject to change.
B-47
Airport, Fullerton Airport, Ontario International Airport and Long Beach Airport. Local bus
transportation is available through Orange County Transportation Authority and Metropolitan
Transportation Authority. Rail service is provided by Santa Fe Railway, Southern Pacific, Metrolink
and Amtrak.
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the
building permit activity in Orange from 1991 through 1995.
CITY OF ORANGE
CONSTRUCTION ACTIVITY
(1991 through 1995)
Residential Commercial Miscellaneous
Fiscal Number Number Number
Year of Permits Value of Permits Value of Permits Value
1991 1415 $22,202,864 593 $66,003,371 369 $3,610,580
1992 1546 41,476,003 648 40,877,430 242 1,550,579
1993 1419 26,449,315 614 20,095,093 164 915,428
1994t'I 1575 50,026,986 770 27,622,567 635 40,000
1995 1436 86,935,105 721 17,691,990 544 63,801
Source: City of Orange Building and Safety Division, Community Development Department
(I) Reduction in miscellaneous permit valuation beginning in 1994 reflects a revised classification of certain permits into residential
and commercial categories
Employment. The principal employers within Orange, their product or service and the number
of employees are shown in the table below.
CITY OF ORANGE
PRINCIPAL EMPLOYERS
Company Product or Service Employees
U.C.I. Medical Center General/Surgical Hospital 3,000
St. Joseph Hospital General Medical/Surgical Hospital 1,936
Orange County Transportation Authority Transportation Agency 1,633
Children's Hospital of Orange County Specialty Hospital 1,405
Orange Unified School District Education 1,400
TRW Information Systems & Services Information Services 1,100
Western National Group Property Management 1,000
Chapman University Higher Education 1,000
Long Beach Bank Banking 882
Gateway Educational Products Educational Materials 715
Source: City of Orange Economic Development Department
B-49
General Fund
The following tables summarize information taken from the audited financial statements of
Orange regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and
Changes in General Fund Balances for the past three (3) fiscal years:
CITY OF ORANGE
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets
Cash and investments $10,316,960 $26,684,107 $17,593,396
Receivables (net of allowance for
estimated uncollectibles):
Accounts 1,783,089 1,140,876 736,472
Taxes 212,582 1,564,758 1,427,656
Interest 171,166 464,152 491,416
Inventories 96,159 96,064 88,888
Due from other funds 12,000 851,411 370,476
Restricted assets:
Cash and investments with fiscal agent 10.000 10,000 10,000
Total Assets $12,601,956 $30,811,368 $20,718,304
Liabilities and Fund Balance
Liabilities:
Accounts payable $1,036,100 $ 1,139,167 $ 1,241,222
• Accrued expenses 2,890,795 2,854,722 1,827,941
Deposits payable 11,627 55,331 30,849
Due to other agencies 45 0 2,216
Deferred Revenue 26,870 38,421 69,505
Matured interest payable 0 300,000 0
Tax and revenue anticipation notes payable 0 10,000,000 0
Total Liabilities 3,965,437 14,387,641 3,171,733
Fund Balance:
Reserved
Inventories 96,159 96,064 88,888
Encumbrances 325,510 607,554 425,730
Unreserved:
Undesignated 8,214,850 15,720,109 17,031,953
Total fund balance 8,636,519 16,423,727 17,546,571
Total liabilities and fund balance $12,601,956 $30,811,368 $20,718,304
Source: City of Orange Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Orange, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-51
Sales Tax Revenues
The revenue from sales tax provided approximately 23.4% of the total local tax revenues for
Orange in 1995. The following table presents information concerning the value of taxable retail sales
in Orange since 1990.
CITY OF ORANGE
Taxable Retail Sales
1990-1995
Taxable Sales
Year Ended 12/31 (in thousands)
1990 $1,793,501 (1)
1991 1,698,135 (1)
1992 1,663,631 (1)
1993 1,587,490 (1)
1994 1,588,194 (1)
1995 1,913,284 (2)
Source: (1) State Board of Equalization through the City of Orange.
(2) Municipal Resource Consultants through the City of Orange.
Property Tax Revenues
The total assessed valuation of the property within Orange for the fiscal year 1994-95 was
$7,563,913,657. The total appropriations limit adopted by Orange for fiscal year 1994-95 was
$59,437,744, and the actual appropriations for the same period were $37,040,310.
The City receives funds annually from the State based upon a percentage of property taxes
collected within the County computed on the respective assessed valuation of Orange, and a statutory
system of annual appropriations. The table below presents the assessed valuation of property within
Orange for the past five fiscal years.
CITY OF ORANGE
Assessed Valuations
(Fiscal Year 1990-91 through 1994-95)
Fiscal Total Total After
Year Local Secured Utility Unsecured Assessed Value Rdv.Increment
1990-91 $6,283,502,551 $18,194,685 $601,273,141 $6,902,970,377 $6,075,335,994
1991-92 6,702,279,667 14,373,993 647,219,265 7,363,872,925 6,436,458,356
1992-93 6,987,713,016 15,985,550 619,985,887 7,623,684,453 6,681,225,101
1993-94 7,081,924,004 16,516,078 630,595,364 7,729,035,446 6,741,557,317
1994-95 7,045,175,938 17,140,563 501,597,156 7,563,913,657 6,639,219,733
Source: Orange County Office of Auditor-Controller
B-53
Summary of Significant Accounting Policies
The financial statements for Orange are prepared in accordance with generally accepted
accounting principles ("GAAP") as applied to government units. The Governmental Accounting
Standards Board ("GASB") is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles.
City Budget
The following procedures are utilized by the City in establishing the budgetary data reflected in
its audited financial statements:
Annual budgets are adopted by July 1 of each year on a basis consistent with generally accepted
accounting principles for all governmental funds. The budget is monitored to ensure compliance with
legal provisions embodied in the appropriated budget as approved or amended by the City Council and
City of Orange Redevelopment Agency Board throughout the year. Department heads are responsible
for monitoring their department's appropriated budget. The legal level of budgetary control is at the
department level. Management may make budget transfers between line items within a particular
department; however, transfers between departments or between funds or overall increases in the budget
require Council approval.
B-55
Investment Policy
The City Council has established an Investment Advisory Committee and an Investment
Oversight Committee. The Investment Advisory Committee consists of three members of the community
with expertise in financial management. The members are appointed by the City Council and serve for a
two year term. This committee's purpose is to independently review the City's investments to determine
their consistency with the City's Investment Policy's principal objectives of safety, liquidity and yield,
respectively. The Committee meets and reports to the City Council quarterly.
The Investment Oversight Committee consists of the City Treasurer, Director of Finance and the
City Manager or his/her designee. This Committee's purpose is to review reports to the City Council
from the Investment Advisory Committee and prepare responses as required. They meet and report to
the City Council quarterly. Their reports to the Council summarize their meetings and the
recommendations of the Investment Advisory Committee. Their reports also contain an unedited copy of
the Investment Advisory Committee's quarterly report.
Orange makes investments only in accordance with the provisions of California Government
Code Section 53600 et seq. Authorized investments include:
United States Treasury Bills, Notes, Bonds and Strips;
United States Government Agency issues;
Banker's Acceptances;
Commercial Paper;
Medium Term Notes;
Negotiable Certificates of Deposit;
Repurchase Agreements;
Local Agency Investment Fund;
Non-Negotiable Certificates of Deposit; and
Mutual Funds.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under the Orange
Site Lease and Lease Agreement:
The Leased Premises for Orange consist of the City Hall Complex located at 300 East Chapman
Avenue in the City of Orange. This facility houses all of the City's main administrative divisions. The
facility is made up of three separate buildings totaling approximately 45,000 square feet separated by
function: Public Works 15,418 square feet; Finance 10,000 square feet; and, Administration 19,203
square feet. The property covers one square block on Chapman Avenue between Grand and Center. It
is currently listed on the City's property and casualty insurance schedule as having an improvement
value of$5,115,861. No value estimate was provided for the land underlying the facility.
The City of Orange's Site Lease and Lease Agreement will support the City's share of the Bonds
which is $3,475,000*.
*Preliminary, subject to change.
B-57
programs. Also located in Santa Ana is California Coast University, with an enrollment of over 4,000,
which offers a variety of undergraduate degree programs.
The University of California Irvine was opened in 1965 on a 1,510 acre campus a short distance
south of Santa Ana. California State University, Fullerton opened in 1959 and has a 225 acre campus five
miles north of Santa Ana.
Other institutions of higher learning in Orange County are Chapman College in Orange; Pacific
Christian College, Fullerton; Pepperdine Educational Center and USC-Orange County, in Irvine, satellite
campuses of Pepperdine University and University of Southern California, respectively; Southern California
College, Costa Mesa; West Coast University, Orange; and Western State University College of Law in
Fullerton; plus the following 2-year community colleges: Cypress Community College; Fullerton
Community College; Golden West College; Orange Coast College; and Saddleback College.
Santa Ana has four major hospitals: Western Medical Center, Coastal Communities Hospital, Santa
Ana Medical Center and Doctors Hospital. Santa Ana operates a main public library with two branches and
a bookmobile service. Orange County maintains a law library in Santa Ana.
The Orange County Register is a daily morning and evening newspaper serving all of Orange
County. Seven other daily newspapers and several weekly and semi-weekly papers are published in the
County. The Los Angeles Times publishes an Orange County edition. One AM radio station and two FM
stations are located in Santa Ana. Residents of Santa Ana receive radio and television broadcasting serving
the Metropolitan Los Angeles Area. Santa Ana owns and operate a cable television station KCTY.
The mild climate of Orange County makes possible a wide range of recreational opportunities for
residents and visitors. Along the County's Pacific Coast shoreline are five state beaches and parks, five
municipal beaches and five county beaches. There are two small craft facilities in Newport Harbor. A third
small craft facility is located in Sunset Harbor in Huntington Beach, and a fourth is at Dana Point. Nearby
recreational facilities include the world famous Disneyland, Knott's Berry Farm and Mission San Juan
Capistrano.
In Santa Ana, there are two golf courses, numerous parks, the Santa Ana Zoo and the Bowers
Museum. Anaheim Stadium, home of the California Angels baseball team, is six miles north of the city.
Camping facilities are available in the Cleveland National Forest and at the County's O'Neill and
Featherly Parks, all close to Santa Ana.
Police and Fire Protection. The Santa Ana Police Department provides effective police services
to the Santa Ana Community through the use of community oriented policing, and the integration of modern
technology and training of police personnel. The department has 606 full-time employees including 405
sworn positions working out of 5 stations throughout Santa Ana.
The Santa Ana Fire Department has enabled Santa Ana to maintain a class I fire insurance rating
by providing an efficient response force capable of providing effective control of hazards within the
community, and rescue and advanced life support to Santa Ana businesses and residents. The department
has 282 full-time employees including 249 sworn positions working out of 10 stations throughout Santa Ana.
Transportation. Santa Ana is located within the hub of the intersection of four major freeways.
The Santa Ana Freeway (Interstate 5) provides direct access to downtown Los Angeles and connects with
the San Diego Freeway (Interstate 405) southeast of Santa Ana. The Garden Grove Freeway provides east-
B-59
CITY OF SANTA ANA
Building Permit Activity"
(Valuations in Thousands of Dollars)
1991 1992 1993 1994 1995
Building Valuations
Residential
Single Valuation $ 4,054 $ 4,545 $ 9,502 $ 167 $ 783
Multiple Valuation 1,195 519 0 0 0
Alterations/Additions 8.350 7,548 5,950 3,162 3,718
Total $13,599 $12,612 $15,452 $3,329 $4,501
Non-Residential
Commercial Valuation $73,231 $ 9,977 $38,503 $ 5,625 $14,823
Industrial Valuation 1,034 0 1,256 1,282 1,526
Other 2,038 665 1,941 320 17,803
Alterations/Additions 39.272 41.175 27,903 30.510 37,725
Total Nonresidential $111,575 $51,817 $69,603 $37,737 $71,877
Total Building Valuations $129,174 $64,429 $85,055 $41,066 $76,378
Units Developed
Single Family Units 29 37 74 3 7
Multiple Family Units 14 6 0 0 0
Total Units 43 43 74 3 7
Source: Economic Sciences Corporation, Emeryville, California
City of Santa Ana
(I)Figures may not add due to rounding
B-61
The largest employers in Santa Ana as of June 1995 are listed below:
CITY OF SANTA ANA
Employers with over 500 Employees
June, 1995
1000+Employees
City of Santa Ana Government
County of Orange Government
Ingram Micro Inc. Electronics
ISS Servisystem Janitorial
The Orange County Register Newspaper
Santa Ana Unified School District Public School System
U.S. Federal Government Government
Xerox Corporation Office Machines
501-1000 Employees
Caltrans Government
Cherry Textron Aerospace Manufacturers
Coastal Communities Hospital Medical
Diversified Maintenance Services Janitorial
Express Manufacturing Electronic Components
Farmers Insurance Group of Companies Insurance
ITT Cannon Electronics
Los Angeles Times Newspaper
Mitsubishi Consumer Electronics Televisions
Nordstrom Department Store
Rancho Santiago College Community College
Sabatasso Foods, Inc. Frozen Foods
Source: City's Financial Statements
B-63
Income. The following table summarizes per capita income levels in Santa Ana for the last 10 years:
CITY OF SANTA ANA
Per Capita Income
Year Per Capita Income
1986 $11,509
1987 12,634
1988 12,454
1989 12,526
1990 12,650
1991 12,783
1992 10,019
1993 10,291
1994 10,571
1995 10,646
Source: City of Santa Ana Comprehensive Annual Financial Report FY 94-95 and California Employment Development Department
General Fund
The following tables summarize information taken from Santa Ana's audited financial statements regarding
its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in General Fund Balances
for the past three (3) fiscal years:
B-65
CITY OF SANTA ANA
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Revenues:
Taxes $75,547,804 $75,285,574 $76,298,420
Licenses and permits 1,995,338 2,052,746 1,995,525
Intergovernmental 11,312,149 12,407,436 12,524,992
Charges for services 6,826,477 9,121,928 9,522,233
Fines and forfeits 1,951,036 2,818,962 2,567,859
Use of money and property 3,201,653 2,763,185 2,094,480
Miscellaneous 7,621,877 5,122,198 5,622,781
Total revenues 108,456,334 109,572,029 110,626,290
Expenditures:
Current:
General Government 3,818,854 3,779,097 3,984,773
Human Resources 1,486,559 1,297,969 1,235,872
Finance and Management Services 3,754,701 3,450,288 3,645,421
Museum 1,398,202 1,442,350 1,478,360
Library 3,834,518 3,752,902 3,612,261
Recreation and Community Services 9,672,682 8,893,105 8,857,085
Fire Department 25,666,937 25,746,214 25,191,835
Police Department 58,471,397 55,163,082 54,812,692
Planning & Building 9,622,188 8,408,999 7,317,725
Public Works 9,664,101 7,226,112 5,657,685
Total current expenditures 127,390,139 119,160,118 115,793,709
Capital outlay 9,478,043 3,616,943 843,873
Debt service:
Principal retirement 1,363,307 1,282,217 1,308,540
Interest and fiscal charges 194,137 572,318 121,527
Total Expenditures 138,425,626 124,631,596 118,067,649
Deficiency of revenues
over expenditures (29,969,292) (15,059,567) (7,441,359)
Other Financing Sources (uses):
Proceeds from Police Lease Revenue Bonds - 92,741,401 -
Capital lease arrangement 2,836,210 301,975 299,924
Operating transfers in 16,913,664 14,269,438 17,584,224
Operating transfers out (10,670,941) (13,239,946) (55,231,008)
Total Other Financing Sources (uses) 9,078,933 94,072,868 37,346,860
Excess (deficiency) of revenues and
other financing sources over expenditures
and other financing uses (20,890,359) 79,013,301 (44,788,219)
Fund balance - beginning 22,519,005 9,028,646 88,041,947
Equity transfers in 7,400,000 - -
Equity transfers out - - (51,486)
Fund Balance - Ending $ 9,028,646 $ 88,041,947 $ 43,202,242
Source: City of Santa Ana, Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from Santa Ana and investors are encouraged to review the entire reports, including the notes
therein, before making an investment decision with respect to the Bonds.
B-67
Santa Ana receives funds annually from the State based upon a percentage of property taxes collected
within the County computed on Santa Ana's respective assessed valuation, and a statutory system of annual
appropriations. The table below presents the assessed valuation of property within Santa Ana for the past five
fiscal years.
CITY OF SANTA ANA
Assessed Valuations
(In Millions)
Fiscal Local Total Before Total After
Year Secured Utility Unsecured Rdv. Increment Rdv. Increment
1990-91 $7,350 $7 $755 $8,112 $10,699
1991-92 7,720 6 802 8,528 11,251
1992-93 7,800 7 829 8,836 11,641
1993-94 7,971 7 828 8,806 11,451
1994-95 7,908 6 694 8,608 11,031
Source: City of Santa Ma CAFR, County of Orange Assessor
The table below presents Santa Ana's property tax valuation and collection experience for the last ten
fiscal years.
CITY OF SANTA ANA
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal
Year Percentage Delinquent Ratio Total
Ending Tax Tax Current Collected Tax Total Collection
June 30 Rate Levied Collection Currently Collection Collection') To Levy
1986 (2) $14,399,736 $13,817,709 96.0% $ 345,391 $ 14,163,100 98.4%
1987 (2) 15,957,490 15,101,451 94.6% 450,551 15,552,002 97.5%
1988 (2) 16,887,343 16,411,151 97.2% 741,785 17,152,936 101.6%
1989 (2) 18,563,060 17,521,630 94.4% 916,506 18,438,136 99.3%
1990 (2) 20,341,732 19,012,022 93.5% 725,869 19,737,891 97.0%
1991 (2) 21,649,324 19,819,687 91.5% 782,162 20,601,849 95.2%
1992 (2) 22,658,964 21,092,648 93.1% 807,428 21,900,076 96.7%
1993 (2) 20,451,119 18,608,999 91.0% 976,850 19,585,849 95.8%
1994 (2) 17,394,840 16,480,858 94.7% 1,719,517 18,200,375 104.6%
1995 (2) 16,388,236 15,568,903 95.0% 213,795 15,782,698 96.3%
Source: City of Santa Ana,County of Orange Assessor
"' Excludes Business Inventories and Homeowner's Exemptions,and Redevelopment Tax Increment.
'=' Proposition 13 eliminated the property tax rate for cities exclusive of voted bond issues for which a rate may he established for debt service. The City of Santa Ana has
no such debt at June 30, 1995.
B-69
authority for the various offices, agencies, and departments to expend subject to controls established by the City
Charter. At any meeting after the adoption of the budget, the City Council may amend or supplement the budget
by affirmative vote of at least two-thirds of the members so as to authorize the transfer of unused balances
appropriated for one purpose to another purpose, or to appropriate available revenue not included in the budget.
Where appropriations are made to offices, departments, or agencies for more than one activity or program,
"appropriations" are considered in the aggregate with respect to total expenditures authorized for that office,
department or agency within each fund, limited to purposes for which the revenues of such funds are to be spent.
The City Manager is authorized to make revisions among the items included in such appropriations if, in his
opinion, such revisions are necessary and proper. During the fiscal year, all budget and supplemental
amendments were necessary and made in a legally permissible manner.
Annual budgets are legally adopted for the General Fund, Proprietary Fund Types, and certain Special
Revenue Funds including special gas tax, civic center and centennial park maintenance, housing authority,housing
authority issuer fee, air quality improvement, and parking structure management. In addition, project and grant-
length budgets are approved for some Special Revenue Grant Funds and Capital Projects Funds as a planning
device and for financial and management control purposes. Monthly budgetary reports are prepared to effect
control through fiscal management.
Budgets are prepared on a modified accrual basis that varies from generally accepted accounting principles
wherein provisions are made to treat encumbrances as budgeted expenditures in the year of the commitment to
purchase. Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not
constitute expenditures or liabilities. All annual appropriations lapse at fiscal year-end to the extent that they have
not been expended or lawfully encumbered. Expenditures may not legally exceed appropriations at the
departmental level in the Governmental Fund Types, except that some Special Revenue Grant Funds and Capital
Projects Funds are maintained at the project level.
Under Article XIIIB of the California Constitution(the Gann Spending Limitation Initiative), Santa Ana
is restricted as to the amount of annual appropriations from proceeds of taxes; and if proceeds of taxes exceed
allowed appropriations, the excess must be returned to the taxpayers through revised tax rates or fee schedules
within the next two years. For the fiscal year ended June 30, 1995, proceeds of taxes did not exceed related
appropriations.
B-71
Investment Policy
Santa Ana annually adopts an investment policy which is intended to outline the policies for prudent
investment of idle City funds by providing guidelines for suitable investments while maximizing the efficiency
of the City's Cash Management Program.
Under the direction of the Executive Director, Finance and Management Services Agency, the
responsibility for the day to day investment of the City's funds is delegated to the Treasury Manager only. The
investment policy applies to all financial assets of the city and are pooled in an actively managed portfolio.
The City's Cash Management Program is designed to accurately monitor and forecast expenditures and
revenues, thus enabling the investment of funds to the fullest extent possible. Maturities are matched as close
as possible to coincide with cash requirements. Length of maturities is based on consideration of the yield curve
and estimate of future interest rate movement.
The investment policies and practices of the City of Santa Ana are based upon Federal, State and Local
law and prudent money management. The primary goals of these policies are:
1. To assure compliance with all Federal, State and Local laws governing the investment of monies.
2. To protect the principal monies of the City.
3. To generate the maximum amount of investment income within the parameters of this Statement
of Investment Policy and the Investment Portfolio Guidelines.
The statement of investment policy is available at the Treasury Division of Santa Ana's Financial and
Management Services Agency.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under Santa Ana's Site
Lease and Lease Agreement:
The Leased Premises for Santa Ana consist of the Carl Thorton Park located at 1801 West Segerstrom
Avenue and Bomo Koral Park located at 900 West MacArthur Boulevard, both in the City of Santa Ana. Carl
Thorton Park is approximately 32.6 acres in size and Bomo Koral Park is approximately 11.0 acres. Based on
an appraisal dated May 13, 1996, conducted by Goeppner and Associates, Inc. of Huntington Beach, California,
the parks were valued at $4,875,000 for Karl Thorton Park and $1,750,000 for Bomo Koral Park.
The City of Santa Ana's Site Lease and Lease Agreement will support the City's share of the Bonds which
is $6,585,000*.
Pursuant to the provisions of the Indenture, the City has covenanted to replace the parks with other assets
of the City acceptable to the Insurer as soon as additional assets become available. The City expects that several
assets will become available in early 1997 to meet the City's covenant. The City currently anticipates using a
set of four or five fire stations as replacement assets.
*Preliminary, subject to change.
B-73
local municipalities, Federal and State agencies. The City of Seal Beach contracts with the Orange County Fire
Authority for fire protection services.
Lifeguard Services. The City of Seal Beach Lifeguard Department consists of two full-time, and 35 part-
time seasonal lifeguards. In addition to providing basic life-saving functions, the Lifeguards provide advanced
first aid and life support services and operate a lifeguard rescue boat; effect rescues of disabled water craft;
provide marine safety and first aid instruction to approximately 150 "junior lifeguards" each summer and
approximately 30 beginning surfers in the "surf class", and provide rescue and transportation to sick and injured
marine animals.
Transportation. The San Diego, San Gabriel and Garden Grove Freeways intersect within the city limits,
and the City is bisected by State Route 1 (Pacific Coast Highway). Existing freeways provide excellent access
to all north, south and eastern points. Regularly scheduled airline service is available at the Long Beach Airport,
Orange County Airport and Los Angeles International Airport, each of which is less than 45 minutes driving time
from Seal Beach.
Western Greyhound Lines provides long distance passenger and package express service from Seal Beach.
Local bus service is provided by the Southern California Rapid Transit District, Long Beach Transportation
Company and Orange County Transit District.
Utilities. Electricity in the City is provided by Southern California Edison Company and, natural gas,
by Southern California Gas Company. GTE serves the City. Sewage collection and treatment facilities are
provided by Orange County Sanitation District No. 3 and refuse collection is furnished by a private contractor.
The City provides 75% of its own water and purchases 25% from Metropolitan Water District of Orange County. ,
Economic Growth and Development
The following table summarizes the population growth in Seal Beach from 1987 through 1996.
POPULATION SUMMARY
CITY OF SEAL BEACH
1987 through 1996
1987 27,400
1988 27,329
1989 27,364
1990 27,347
1991 25,095
1992 25,487
1993 26,031
1994 26,053
1995 26,795
1996 26,366
Source: City of Seal Beach
B-75
CITY OF SEAL BEACH
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Revenue Categories:
Property Tax $3,010,650 $2,732,832 $2,586,294
Sales & Use Tax 1,310,841 1,282,318 1,467,179
License & Permits 610,517 647,084 548,005
Intergovernmental Revenue 938,861 1,198,312 1,017,493
Charges for Services 1,718,314 1,613,571 1,538,707
Fines, Forfeitures and Penalties 643,033 560,376 590,069
Use of Money & Property 429,019 309,465 525,476
Other 111,204 196,312 134,858
Other Taxes 2,393,276 4,205,603 4,708,309
Administrative Reimbursements 402,070 287,158 287,140
Revenue Total $11,567,785 $13,033,031 $13,403,530
Expenditure Categories:
General Government $1,458,559 $1,382,905 $1,414,076
Public Safety/Protection 5,886,174 6,022,931 6,335,909
Public Works 792,473 1,109,206 1,218,593
Comm./Econ. Development 496,639 600,857 628,231
Health/Welfare/Human Services 1,185,290 1,121,138 1,223,261
Self Insurance Program 886,870 942,820 742,047
Capital Outlay 62,562 71,651 56,770
Debt Service - Principal 137,003 93,613 91,084
Debt Service - Interest 96,658 61,828 95,876
Transportation 450,060 0 0
Expenditure Total $11,452,288 $11,406,949 $11,805,847
Other Sources (Uses):
Operating Transfers In $254,469 $1,106,035 $210,000
Operating Transfers Out (602,140) (1,812,969) (1,297,000)
Total Other Sources (Uses) ($347,671) ($706,934) ($1,087,000)
Beginning Fund Balance 271,161 38,987 958,135
Residual Equity Transfer 0 0 0
Ending Fund Balance $ 38,987 $958,135 $1,468,818
Source: City of Seal Beach Comprehensive Annual Financial Reports; see source note on previous page.
B-77
CITY OF SEAL BEACH
Property Tax Levies and Collections
Last Five Fiscal Years
Percent of
Current Percent of Delinquent Total Tax
Fiscal Total Tax Levy Tax Total Tax Collections
Year Tax Levy Collections Collected Collections Collections to Levy
1990-91 3,281,385 3,163,792 95.4 41,971 3,205,763 97.7
1991-92 3,412,851 3,222,612 94.4 117,204 3,339,816 97.9
1992-93 3,132,185 2,963,680 94.6 134,603 3,098,263 98.9
1993-94 2,793,380 2,693,054 96.4 144,220 2,837,274 101.6
1994-95 2,687,857 2,617,716 97.4 112,311 2,730,027 101.6
Source: Orange County Tax Ledger
Employment. As of April 1995,the California Employment Development Department estimates that
the adjusted civilian labor force for residents of the City was 10,600 of whom 10,200 were employed. The
unadjusted unemployment rate as of March, 1995 was 3.3%.
The US Naval Weapons Station which employs 1,100 civilians and 225 military personnel is located
in the City. The station has its own docking and vessel loading facilities in a protected deep water harbor.
Rockwell International Corporation currently employs approximately 2300 full-time personnel and is also
located in the City.
Project Improvements
It is the City's intent to finance the 800 MHz improvement project along with refurbishing the beach
rest rooms located under the Seal Beach Pier. Additionally, the City is looking at alternative parking which
would include parking meters, automation and beautification of the two beach lots. This would include
installing new light standards and replacement of existing fixtures, automated parking systems, and parking
meters.
Summary of Significant Accounting Policies
Seal Beach's financial statements have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards
Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
B-79
Direct and Overlapping Bonded Debt
The following table contains information on Seal Beach's direct and overlapping bonded indebtedness
as of June 30, 1996.
CITY OF SEAL BEACH
Direct and Overlapping Bonded Debt
1995-96 Assessed Valuation: $1,721,205,417 (after deducting $136,907,157 redevelopment incremental
valuation)
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/96
Orange County 1.083% $ 4,278
Metropolitan Water District 0.214 1,294,475
Los Alamitos Unified School District Community Facilities District#90-1 53.076 6,379,735
City of Seal Beach 100.000 160,000(1)
City of Seal Beach 1915 Act Bonds 100.000 1,655,885
TOTAL GROSS DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $9,494,373
Less: City water bonds(100% self-supporting) 160,000
TOTAL NET DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $9,334,373
OVERLAPPING LEASE OBLIGATION DEBT:
Orange County General Fund Obligations 1.083% $ 6,059,753
Orange County Pension Obligations 1.083 3,375,765
Orange County Teeter Plan Obligations 1.083 1,678,650
Orange County Transit Authority 1.083 228,513
Municipal Water District of Orange County Water Facilities Corporation 1.648 1,360,506
Orange County Water District Certificates of Participation 1.652 3,404,029
Orange County Sanitation District No. 3 Certificates of Participation 5.288 6,709,391
Coast Community College District Certificates of Participation 3.182 649,255
Huntington Beach Union High School District Certificates of Participation 0.001 10
TOTAL GROSS OVERLAPPING LEASE OBLIGATION DEBT $23,465,872
Less: Orange County Transit Authority 182,810
Orange County Water District Certificates of Participation 3,404,029
MWDOC Water Facilities Corporation (100% self-supporting) 1.360,506
TOTAL NET OVERLAPPING LEASE OBLIGATION DEBT $18,518,527 •
GROSS COMBINED TOTAL DEBT $32,960,245 (2)
NET COMBINED TOTAL DEBT $27,852,900
(1) Excludes share of issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to Assessed Valuation:
Direct Debt 0.01%
Total Gross Direct and Overlapping Tax and Assessment Debt 0.55%
Total Net Direct and Overlapping Tax and Assessment Debt 0.54%
Gross Combined Total Debt 1.91%
Net Combined Total Debt 1.62%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95: $0
Source: California Municipal Statistics,Inc.
B-81
CITY OF STANTON
General
Location and Government. The City of Stanton("Stanton")was incorporated as a general law city
in May, 1956, It consists of 3.1 square miles in Central Orange County, California. Nearby cities include
Anaheim, Buena Park, Garden Grove, Cypress and La Palma. Stanton is approximately 25 miles southeast
of Los Angeles and 9 miles northwest of Santa Ana.
Stanton is operated under the Council-Manager form of government. The City Council is comprised
of five members elected at large on a staggered basis for a term of four years. The City Manager is
appointed by the City Council and has the responsibility of administering municipal services in accordance
with the policies and annual budget adopted by the City Council.
Community Services and Facilities. Stanton's Cultural Arts and Recreation Center is the focal point
of services provided to the community. Many events are coordinated from this site including cultural,
theatrical, recreational and senior activities. Other recreational facilities operated by Stanton include six
parks and public tennis courts.
Stanton residents are served by the Savanna Elementary School District, the Magnolia Elementary
School District, the Garden Grove Unified School District and the Anaheim Union High School District.
Additional educational services are provided at Cypress College, a junior college located in the adjacent city
of Cypress.
The library is a part of the Orange County Public Library System. Other attractions within the area
include Disneyland, Knott's Berry Farm, Adventure City Children's Theme Park, Anaheim Stadium and the
Orange County Performing Arts Center. Regional recreational areas include beach resorts, 10 miles to the
south, and mountain resorts, 70 miles to the east.
Stanton provides building inspection, planning, code enforcement, parking control, public facility
and street maintenance and recreational services. Street sweeping and trash disposal are provided with
contracted services.
Police and Fire Protection. Police and fire services are provided by contracts with the Orange
County Sheriff's Department and the Orange County Fire Authority, respectively.
Transportation. Stanton enjoys easy freeway access, located between four freeways. The Garden
Grove Freeway, State Route 22, runs east-west and passes just south of Stanton. The San Gabriel River
Freeway, Interstate 605, runs north-south and is to the west of Stanton. The Santa Ana Freeway, Interstate
5, runs in a northwest-southeast course to the east. The Artesia Freeway, State Route 91, runs east-west
about two and a half miles north. State Highway 39 (Beach Boulevard) runs through the center of Stanton.
Air cargo and passenger flight services are provided at Los Angeles International Airport, 30 miles
west, which is served by all major airlines; Long Beach Airport, 10 miles west; and John Wayne Airport
in Orange County, 15 miles southeast. These airports all provide regional service. Fullerton Municipal
Airport, 7 miles north, also provides freight service as well as commuter service to Los Angeles
International Airport.
B-83
Employment. The principal employers within Stanton, their product or service and the number
of employees are shown in the table below.
CITY OF STANTON
PRINCIPAL EMPLOYERS
(June 30, 1995)
Company Product or Service Employees
CR&R, Inc. Waste Disposal 350
Boyd's Automotive, Industrial 198
Smith's Food & Drugs Centers, Inc. Grocery Store 180
Food 4 Less Grocery Store 175
Sam's Club Discount Retailer 167
Robinson Prezioso, Inc. General Building Contractor 155
HomeBase Lumber, Building Materials 128
All Metals Processing Fabricated Metal Products 125
Detector Systems, Inc. Electrical Equipment 82
Adventure City Amusement Park 80
Source: City of Stanton, Administrative Services Department, Business Licenses
•
B-85
Population. The table below summarizes population information for Stanton since 1986.
POPULATION SUMMARY
CITY OF STANTON
1986 through 1995
Year Population
1986 27,679
1987 28,119
1988 28,284
1989 28,353
1990 30,491
1991 30,818
1992 31,367
1993 31,978
1994 32,229
1995 32,404
Source: State of California, Department of Finance.
B-87
•
CITY OF STANTON
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Revenues:
Taxes and assessments $4,539,827 $5,901,156 $5,845,286
Licenses and permits 205,149 172,165 260,674
Intergovernmental 1,158,087 1,163,477 1,222,680
Charges for services 75,528 67,500 58,024
Fines and forfeitures 171,551 165,849 205,793
Interest income 135,162 147,035 203,602
Rental income 695,993 810,240 928,732
Contribution from developers 0 0 625,000
Miscellaneous 96.789 216,165 103,701
Total Revenues 7,078,086 8,643,587 9,453,492
Expenditures:
Current:
General government 1,028,497 1,080,318 1,300,139
Public safety 6,011,205 6,185,134 6,611,461
Urban Development 279,699 236,019 292,816
Health and welfare 329,478 112,152 0
Highways and streets 8,950 320,411 293,900
Culture and recreation 144,753 150,559 182,131
Total Expenditures 7,802,582 8,084,593 8,680,447
Excess of Revenues
Over Expenditures (724,496) 558,994 773,045
Other Financing Sources (Uses):
Operating transfers in 742,336 672,496 685,000
Operating transfers out (71,263) (72,990) (75,000)
Total Other Financing Sources (Uses) 671,073 599,506 610,000
Excess of Revenues and
Other Sources Over
Expenditures and Other Uses (53,423) 1,158,500 1,383,045
Fund Balance, Beginning, Restated 2,205,765 2,548,075 3,706,575
Equity Transfer 0 0 (900,000)
Fund Balance, Ending° $2,152,342 $3,706,575 $4,189,620
Source: City of Stanton Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Stanton, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
(I) Includes a restatement of the July 1, 1994 fund balance due to an accounting principle change pertaining to Governmental Accounting
Standards Board (GASB) Statement No. 22-Taxpayer Assessed Taxes, effective for years beginning after June 12, 1994.
B-89
•
Property Tax Revenues
The total assessed valuation of the property within Stanton for the fiscal year 1994-95 was
$1,094,257,111. The total appropriations limit adopted by Stanton for fiscal year 1994-95 was $14,155,782
and the actual appropriations for the same period was $6,731,909.
Stanton receives funds annually from the State based upon a percentage of property taxes collected
within the County computed on Stanton's respective assessed valuation, and a statutory system of annual
appropriations. The table below presents the assessed valuation of property within Stanton for the past five
fiscal years.
CITY OF STANTON
Assessed Valuations
Fiscal Total Before Incremental Total After
Year Local Secured Utility Unsecured Rdv. Increment Assessed Value Rdv. Increment
1990-91 $ 917,481,414 $5,788,667 $70,924,973 $ 994,195,054 $149,580,239 $844,614,815
1991-92 960,487,061 5,870,197 92,594,300 1,058,951,558 151,812,345 907,139,213
1992-93 1,006,164,287 4,451,167 97,798,130 1,108,413,584 147,371,535 961,042,049
1993-94 1,038,721,628 4,435,792 93,702,876 1,136,860,296 184,954,929 951,905,367
1994-95 1,018,884,613 5,248,116 70,127,496 1,094,260,225 157,551,789 936,708,436
Source: Orange County Auditor-Controller's Office
The table below presents Stanton's property tax valuation and collection experience for the last five
fiscal years.
CITY OF STANTON
Property Tax Levies and Collections
Last Five Fiscal Years
Amount Percentage
Fiscal Secured Delinquent Delinquent
Year Tax Charge June 30 June 30
1990-91 $1,276,571 $ 58,678 4.60%
1991-92 1,341,550 65,064 4.85
1992-93 1,239,186 57,806 4.66
1993-94 1,044,644 6> N/A
1994-95 1,039,320 6) N/A
Source: County of Orange Author - Controller.
0) Beginning with fiscal year 1993-94, Stanton elected the Teeter Plan for property tax distribution in which the city receives the entire
secured levy in the current fiscal year, whether paid or not, and the County retains the penalties and interest on delinquent taxes
when paid.
B-91
Direct and Overlapping Bonded Debt
The following table contains information on Stanton's direct and overlapping bonded indebtedness
as of June 30, 1996.
CITY OF STANTON
Direct and Overlapping Bonded Debt
1995-96 Assessed Valuation: $903,107,526 (after deducting $146,686,587 redevelopment incremental
valuation)
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/96
Orange County 0.568% $ 2,244
Metropolitan Water District 0.112 677.482
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $679,726
DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT:
Orange County General Fund Obligations 0.568% $ 3,178,153
Orange County Pension Obligations 0.568 1,770,484
Orange County Teeter Plan Obligations 0.568 880,400
Orange County Transit Authority 0.568 119,848
Orange County Water District Certificates of Participation 0.884 1,821,526
Municipal Water District of Orange County Water Facilities Corporation 0.858 708,322
Coast Community College District Certificates of Participation 0.383 78,147
City of Stanton Certificates of Participation 100.000 125,000 (1)
Orange County Sanitation District No. 3 Certificates of Participation 2.872 3,643,981
TOTAL GROSS DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $12,325,861
Less: Orange County Transit Authority (80% self-supporting) 95,878
Orange County Water District Certificates of Participation (100% self-supporting) 1,821,526
MWDOC Water Facilities Corporation(100% self-supporting) 708.322
TOTAL NET DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $9,700,135
GROSS COMBINED TOTAL DEBT $13,005,587 (2)
NET COMBINED TOTAL DEBT $10,379,861
(1) Excludes share of issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt($125,000) 0.01%
Total Overlapping Tax and Assessment Debt 0.08%
Gross Combined Total Debt 1.44%
Net Combined Total Debt 1.15%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95: $86,738
Source: California Municipal Statistics, Inc.
B-93
CITY OF TUSTIN
General
Location and Government. The City of Tustin is a general law city incorporated in 1927. It is
located in Central Orange County at the intersection of the I#5 and SR#55 freeways, approximately 40 miles
southeast of Los Angeles and 85 miles north of San Diego. The City has 98.5 miles of streets and covers
11.1 square miles, bounded by the cities of Orange on the north, Santa Ana on the west, and Irvine on the
south.
In 1868 the City's founder, Columbus Tustin, and his partner, Nelson Oscar Stafford, purchased
1,300 acres of Rancho Santiago De Santa Ana (originally a Spanish Land Grant). Tustin started "Tustin
City" on his portion of the property and offered lots to all who would settle on them, and an entire block
to families with several children. The orange industry began in Tustin around the year 1875 and the City
soon was surrounded by orange, apricot and walnut orchards. The orange groves gradually took over from
the other crops between 1900 and 1950, and processing citrus fruits was the City's most important industry.
Tustin grew along with all of Orange County during the population boom of the 1960's, from a census
figure of 2,006 in 1960 to 21,178 in 1970; the present population is 63,619.
Today the City operates under a Council/Manager form of government and provides public safety
(police) services, community services, engineering services, planning services, public works, general
administrative services, and capital improvements. The Tustin Community Redevelopment Agency was
established in 1975 and works to eliminate blighted areas by encouraging the development of residential,
commercial, industrial, recreational and public facilities.
The City of Tustin employs 245 full-time personnel, 197 in classified service and 48 exempt.
Community Services and Facilities; Police and Fire Protection. There is one police station, with
88 sworn personnel, and fire protection services are contracted with the Orange County Fire Authority. The
City also contracts for refuse, animal control and cable television services, and is served by private utility
companies for electricity, natural gas and telephone; the water utility is operated by the City.
The Tustin Unified School District facilities consist of eleven elementary schools, four middle
schools, three high schools, an adult education site, a support services facility and an administration center.
The City has eleven public parks covering 65.7 acres, including a community center adjacent to the City
Hall, a Senior Center, and a new sports park in the Tustin Ranch area of the city.
B-95
Employment. The principal employers within Tustin, their product or service, and the number of
employees are shown in the table below.
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
MANUFACTURING EMPLOYMENT
Company # of Employees Products
Steelcase 950 Office Furniture
Silicon Systems 548 Integrated Circuits Mfg.
Ricoh Electronics, Inc. 296 Manufacturer
Morton Electronics 140 Chemicals
NON-MANUFACTURING EMPLOYMENT
Marine Corps 3,000 Air Station-Tustin
Tustin Unified School Dis. 1,100 Education
Tustin Auto Mall 401 Auto Sales
City Hall 248
Toshiba America 200 Medical Systems
Home Depot 180 Home Improvement
KTBN Channel 40 274 24-Hour Christian TV
(Trinity Broadcasting)
Mervyn's 100 Retail Department Store
IKEA 170 Furniture, Household and Office
Supplies
K-Mart 110 Retail
Price Costco 174 Warehouse Sales
MicroCenter 150 Computers
Toys R Us 53 Toys Retail
Source: Chamber of Commerce
B-97
The principal taxpayers, type of business and valuation as of June 30, 1995 are shown in the table
below.
CITY OF TUSTIN
PRINCIPAL TAXPAYERS
BASED ON PROPERTY VALUATION
June 30, 1995
Percentage
1995 of Total
Taxpayer Type of Business Valuation Valuation
The Irvine Company Residential and Commercial Prop. $239,838,398 7.37%
Steelcase Inc. Manufacturing 69,178,679 2.13
Catellus Development Corp. Industrial/Commercial 50,075,545 1.54
Sanyo Foods Recreation 36,347,518 1.12
Baycrest Associates Residential 27,994,784 0.86
Ricoh Development Manufacturing 26,727,256 0.82
Patrick F. Cadigan Trust Commercial 18,994,281 0.58
Stacy Lynn Bartlett Trust Commercial 18,989,151 0.58
Trinity Christian Center Non-profit 18,503,721 0.57
AUD Corp. Manufacturing 17,617,000 0.54
MAC Pherson Properties Retail Sales 14,748,868 0.45
$539,015,201 16.56%
Source: Orange County Assessor's Office
B-99
General Fund
The following tables summarize information taken from Tustin's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in General
Fund Balances for the past three (3) fiscal years:
CITY OF TUSTIN
COMPARATIVE GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets and Other Debits
Assets:
Cash and investments $ 11,156,282 $ 12,211,736 $ 14,191,252
Taxes receivable 760,934 1,024,412 1,403,396
Accrued interest receivable 210,139 123,085 212,657
Accounts receivable 197,557 102,293 1,216,066
Due from other governments 17,879 5,199 52,418
Due from other funds 38,648 28,512 199,176
Prepaid expenses 0 218,356 4,980
Total Assets $12,381,439 $13,713,593 $17,279,945
Liabilities and Fund Balance
Liabilities:
Accounts payable $ 1,921,383 $ 1,135,293 $ 2,156,450
Due to other funds 0 86,033 7,756
Deposits 2,677,556 2,266,302 3,688,908
Deferred revenue 0 568,878 332,938
Total Liabilities 4,598,939 4,056,506 6,186,052
Fund Balance:
Reserved for prepaid expenses 0 218,356 204,156
Unreserved:
Designated for capital outlay 3,172,071 3,371,873 3,591,043
Designated for self insurance 1,304,423 1,046,138 1,304,994
Designated for contingencies 3,306,006 5,020,720 5,993,700
Total Fund Balance 7,782,500 9,657,087 11,093,893
Total Liabilities and Fund Balance $12,381,439 $13,713,593 $17,279,945
Source: City of Tustin Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95;the annual financial
reports are available from the City of Tustin, and investors are encouraged to review the entire reports, including the
notes therein, before making an investment decision with respect to the Bonds.
B-101
Sales Tax Revenues. The revenue from sales tax provided approximately 39.5% of Tustin's total local
tax revenues in 1995. The following table presents information concerning the value of taxable retail sales in
Tustin since 1990.
CITY OF TUSTIN
Taxable Retail Sales
1991 Through 1995
Year Ended 12/31 Taxable Sales
1991 $ 807,211
1992 830,728
1993 918,110
1994 1,020,345
19950) 512,505
Source: California State Board of Equalization
(') 1995 Data is through second quarter only
The table below shows sales tax revenues for Tustin for the last five fiscal years.
CITY OF TUSTIN
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1991 Through June 30, 1995
Fiscal Year Sales Tax Revenues
1991 $ 9,300,457
1992 9,178,468
1993 9,197,751
1994 11,048,745
1995 11,865,910
Source: City of Tustin
B-103
Summary of Significant Accounting Policies
The Financial Reporting Entity. The City of Tustin was incorporated in 1927 as a "General Law"
City governed by an elected five-member city council. As required by generally accepted accounting
principles, these financial statements present the City of Tustin (the primary government) and its component
units. The component units discussed below are included in the City's reporting entity because of the
significance of their operational or financial relationship with the City. These entities are legally separate from
each other. However, the City of Tustin elected officials have a continuing full or partial accountability for
fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for
which the City is financially accountable and (3) organizations for which the nature and significance of their
relationship with the City are such that exclusion would cause the City's financial statements to be misleading
or incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy
taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended
presentation, a component units' balances and transactions are reported in a manner similar to the balances and
transactions of the City. Component units are presented on a blended basis when the component unit's
governing body is substantially the same as the City's or the component unit provides services almost entirely
to the City.
Blended Component Units. The Tustin Community Redevelopment Agency was established October
20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community
Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and
redevelopment of blighted areas within the territorial limits of the City of Tustin. The City provides
management assistance to the Agency, and the members of the City Council also act as the governing body of
the Agency.
The separate financial statements of the Tustin Redevelopment Agency may be obtained from the City
of Tustin Finance Department located in the Tustin Civic Center.
The City of Tustin Water Corporation was incorporated March 3, 1980 under the non-profit corporation
law of the State of California. Its purpose is to provide financial assistance to the City of Tustin by acquiring,
constructing and operating or providing for the operation of water facilities. The Corporation's original
governing body was appointed by the City Council. The City makes annual lease payments to the Corporation,
which are used for debt service on the Corporation's bonds.
Separate financial statements for the City of Tustin Water Corporation are not issued.
Description of Funds and Account Groups: The accounts of the City are organized on the basis of
funds or account groups, each of which is considered to be a separate accounting entity. The operations of
each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets,
liabilities, equity, revenues and expenditures. The various funds and account groups are defined as follows:
Governmental Fund Types:
The General Fund is used to account for all financial resources except those required to be accounted
for in another fund.
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
restricted by law or administrative action for specified purposes.
B-105
Accordingly, all assets and liabilities are included in their respective balance sheets, and the reported fund
equity (total reported assets, less total reported liabilities)provides an indication of the economic net worth of
the fund. Operating statements for proprietary fund types (on an income determination measurement focus)
report increases (revenues) and decreases (expenses) in determining total economic net worth. Under this
determination, unbilled service receivables are recorded at year-end.
This report has been prepared in conformance with Generally Accepted Accounting Principles(GAAP)
as promulgated by the Governmental Accounting Standards Board (GASB).
City Budget
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
1. The annual budget is adopted by the City Council after the holding of a hearing and provides
for the general operation of the City. The operating budget includes proposed expenditures
and the means of financing them.
2. The City Council approves total budgeted appropriations and any amendments to.appropriations
throughout the year. This "appropriated budget" (as defined by GASH Cod. Section 2400.109)
covers City expenditures in all governmental funds, except for debt service and capital
improvement projects carried forward from prior years.
The City Manager is authorized to transfer budgeted amounts between departments. Actual
expenditures may not exceed budgeted appropriations at the fund level. Budget figures used
in the accompanying financial statements are the final adjusted amounts.
3. Formal budgetary integration is employed as a management control device during the year.
Commitments for materials and services, such as purchase orders and contracts, are recorded
as encumbrances to assist in controlling expenditures. Encumbrances at year end carry
forward, and are added to the following year's budgeted appropriations. However,
encumbrances at year end are reported as reservations of fund balance, as allowed by GASB
Cod. Section 1700.129d. Also, unencumbered appropriations lapse at year end.
4. Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially
consistent with generally accepted accounting principles (GAAP). Accordingly, actual
revenues and expenditures can be compared with related budgeted amounts without any
significant reconciling items. Revisions to the originally adopted budget were made during the
year and have been incorporated into budgetary amounts presented within these financial
statements. No budgetary comparisons are presented for the Capital Projects, Debt Service and
Proprietary Funds, as the City is not legally required to adopt budgets for these fund types.
Direct and Overlapping Bonded Debt
The following table contains information on Tustin's direct and overlapping bonded indebtedness as
of June 30, 1996.
B-107
Investment Policy
Tustin annually adopts an investment policy. The most recent modifications adopted by the City
Council on April 1, 1996, are in compliance with newly adopted state legislation and in a number of areas are
more restrictive than State requirements. The Policy requires that an investment report be submitted quarterly
to the City Council. In 1988, the City Council established the City of Tustin Audit Committee which meets
on a bi-monthly basis. It is a five member advisory body made up of citizens appointed by the City Council.
The annual review of the City's Investment Policy is a primary function of the Committee.
Description of Leased Premises
Tustin's new Civic Center is a two story structure in a Santa Barbara Mission style architecture, with
beautifully landscaped grounds which include a wishing well. The main lobby features a picturesque fountain
surrounded by tropical plants on the porcelain tile, with sitting areas for residents to enjoy.
The Civic Center expansion's general architecture was designed by John Bates and Associates. The
interior finishings and furniture were designed by Laura McCants Interior Design and Planning. Project
management was provided by HNTB Corporation, and the contractor for the project was Dillingham
Construction, N.A.
Construction of the Civic Center improvements began in August of 1991 and the $11.4 million project
was completed in August of 1993. Improvements were financed by the Tustin Community Redevelopment
Agency and developer fee contributions from new construction in Tustin Ranch. The entire complex is
approximately 69,000 square feet, with an adjacent 59,000 square foot parking structure. The Civic Center
complex is comprised of the City Hall, Police Department, Council Chamber and the Community Center.
Based upon an appraisal conducted in 1994 by the Orange County Cities Risk Management Authority,
the City Hall complex has been valued at $13,100,000.
The City of Tustin's Site Lease and Lease Agreement will support the City's share of the Bonds which
is $2,740,000*.
*Preliminary, subject to change.
B-109
APPENDIX C
FORM OF FINAL OPINION OF BOND COUNSEL
[Letterhead of Jones Hall Hill&White]
[Closing Date]
Countywide Public Financing Authority
20 Civic Center Plaza
Santa Ana,California 92701
OPINION: $28,000,000*Countywide Public Financing Authority 1996 Revenue Bonds
Members of the Authority:
We have acted as bond counsel in connection with the delivery by the Countywide Public
Financing Authority (the "Authority") of$28,000,000* aggregate principal amount of the bonds of the
Authority designated the "Countywide Public Financing Authority 1996 Revenue Bonds" (the
"Bonds"), pursuant to the provisions of Article 4 (commencing with section 6584) of Chapter 5 of
Division 7 off Title 1 of the California Government Code (the "Law"), and pursuant to an indenture of
trust,dated as of July 1, 1996 (the"Indenture"),by and between the Authority and U.S.Trust Company
of California,N.A., as trustee,and a resolution of the governing body of the Authority adopted on June
19, 1996. The Bonds are secured by Revenues as defined in the Indenture, including certain lease
payments made by the Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange, Santa Ana, Seal
Beach, Stanton and Tustin(collectively, the"Members") under separate lease agreements,each dated as
of July 1, 1996(the "Lease Agreements")by and between the Authority,as lessor,and each Member, as
lessee. 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
Authority and the Members contained in the Indenture, the Lease Agreements and in the certified
proceedings, and upon other certifications furnished to us, without undertaking to verify the same by
independent investigation.
Based upon our examination we are of the opinion,under existing law,that:
1. The Authority is a joint exercise of powers agency and public entity duly organized and
existing under the laws of the State of California, with power to enter into the Indenture,to perform the
agreements on its part contained therein and to issue the Bonds.
2. The Bonds constitute legal, valid and binding special obligations of the Authority enforceable
in accordance with their terms and payable solely from the sources provided therefor in the Indenture.
3. The Indenture has been duly approved by the Authority and constitutes a legal, valid and
binding obligation of the Authority enforceable against the Authority in accordance with its terms.
*Preliminary, subject to change. Appendix C
Page 1
wAPPPENDIX D
MBIA
FINANCIAL GUARANTY INSURANCE POLICY
MBIA Insurance Corporation
Armonk,New York 10504
Policy No.[NUMBER]
MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby
unconditionally and irrevocably guarantees to any owner,as hereinafter defined,of the following described obligations,the full and complete payment
required to be made by or on behalf of the Issuer to[PAYING AGENT/IRUSTEE]or as successor(the"Paying Agent")of an amount equal to(i)the
principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory `sinking fund payment) and interest on, the
Obligations(as that term is defined below)as such payments shall become due but shall not be so paid(except that in the event of any arMPleration of
the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise,other than any
advancement of maturity pursuant to a mandatory sinking food payment,the payments guaranteed hereby shall be made in such amounts and at such
lanes as such payments of principal would have been due had there not been any such acceleration); and(ii)the reimbursement of any such payment
which is subsequently recovered fiom any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable,bankn t<y law. The amounts referred to in clauses(i)and Cu)of the
preceding sentence shall be referred to herein collectively as the"Instwed Amounts." "Obligations"shall mean
[PAR]
[LEGAL NAME OF ISSUE]
Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered or certified mail,or upon receipt of written
notice by register ed or certified mail,by the.Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which
is then due,that such required payment has not been made,the Insurer on the due date of such payment or within one business day after receipt of notice
of such nonpayment,whichever is later,will make a deposit of funds,in an account with State Street Bank and Trost Company,NA,hn New York,
New York,or its successor,sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such
Obligations or presentment of such other proof of ownership of the Obligations,together with'any appropriate instunnents of assignment to evidence
assignment of the Insured Amounts due on the Obligations as are paid by the Insurer,and appropriate instruments to effect the appointment of the
atsurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations,such instruments
being in a form satisfactory to State Street Bank and Trust Company,NA,State Street Bank and Trust Company,NA.shall disburse to such owners,
or the Paying Agent payment of the Insured Amounts due on such Obligations,less any amount held by the Paying Agent for the payment of such
Insured Amomts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable
with respect to any Obligation
As used herein,the term"owner"shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent,the
Issuer,or any designee of the Issuer for such purpose. The tenn owner shall not include the Issuer or any party whose agreement with the Issuer
constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Sthet,Armonk,New York 10504 and such service
of process shall be valid and binding.
This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of
the Obligations.
In the event the Insurer were to become insolvent,any claims arising under a policy of financial guaranty insurance are excluded from coverage by the
California Insurance Guaranty Association,established pursuant to Article 142(commencing with Section 1063)of Chapter 1 of Part 2 of Division I of
the California Insurance Code.
IN WITNESS WHEREOF,the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers,this[DAY]day of
[MONTH,YEAR].
MBIA Insurance Corporation
Pres is /3/4, p
Attest: ary�///� /�/�
Assistant Secretary °�/�^ /()
STD-R-CAs IY/
4/95
D-1
APPENDIX E
FORM OF AUTHORITY CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate")is executed and
delivered by the COUNTYWIDE PUBLIC FINANCING AUTHORITY (the "Authority") in connection
with the issuance of $ aggregate principal amount of Countywide Public Financing
Authority 1996 Revenue Bonds (the "Bonds"). The Bonds are being issued pursuant to an indenture of
trust, dated as of July 1, 1996 (the "Indenture"),by and between the Authority and U.S.Trust Company
of California,N.A.,as trustee(the"Trustee").The Authority covenants and agrees as follows:
Section 1.Purpose of the Disclosure Certificate.This Disclosure Certificate is being executed and
delivered by the Authority for the benefit of the holders and beneficial owners of the Bonds and in
order to assist the Participating Underwriters in complying with S.E.C.Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement, 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" shall mean any Annual Report provided by the Authority pursuant to, and as
described in,Sections 3 and 4 of this Disclosure Certificate.
"Dissemination Agent" shall mean U.S. Trust Company of California, N.A., or any successor
Dissemination Agent designated in writing by the Authority and which has filed with the Authority
and the Trustee a written acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a)of this Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934,as the same may be amended from time to time.
"State Repository" shall mean any public or private repository or entity designated by the State
of California as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission.As of the date of this Disclosure Certificate,there is no State Repository.
Section 3.Provision of Annual Reports.
(a) The Authority shall, or upon written direction shall cause the Dissemination Agent to, not
later than six months after the end of the Authority's fiscal year(currently June 30), commencing with
the report for the 1996 fiscal year,provide to each Repository an Annual Report which is consistent with
the requirements of Section 4 of this Disclosure Certificate with a copy to the Trustee. Not later than
fifteen (15) Business Days prior to said date, the Authority shall provide the Annual Report to the
Dissemination Agent (if other than the Authority). 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 off this Disclosure Certificate.If the Authority'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
Authority shall provide a written certification with each Annual Report furnished to the Dissemination
Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report required to
be furnished by the Authority hereunder.
Appendix E
Page 1
all of the Bonds.If such termination occurs prior to the final maturity of the Bonds, the Authority shall
give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 7. Dissemination Agent. The Authority 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 such Dissemination Agent,with or without appointing a successor Dissemination Agent.
The initial Dissemination Agent shall be U.S. Trust Company of California, N.A.. Any Dissemination
Agent may resign by providing thirty days' written notice to the Authority and the Trustee.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Authority 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 financial information 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.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the Authority 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 off occurrence of a Listed Event,in addition to that which is
required by this Disclosure Certificate. If the Authority 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 Authority 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 10. Default. In the event of a failure of the Authority to comply with any provision of
this Disclosure Certificate the Trustee,at the written direction of any Participating Underwriter or the
holders of at least 25% aggregate principal amount of Outstanding Bonds, shall,but only to the extent
moneys or other indemnity, satisfactory to the Trustee, has been furnished to the Trustee to hold it
harmless from any loss, costs,liability or expense, including fees and expenses of its attorneys and any
additional fees of the Trustee, 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 Authority 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 Trust Agreement,and the
sole remedy under this Disclosure Certificate in the event of any failure of the Authority to comply with
this Disclosure Certificate shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination
Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure
Appendix E
Page 3
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD AND EACH
STATE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name off Issuer: Countywide Public Financing Authority
Name of Issue: $ Countywide Public Financing Authority 1996 Revenue Bonds
Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to
the above-named Bonds as required by Section 6.09 of that certain indenture, dated as of July 1, 1996,
by and between the Issuer and U.S. Trust Company of California, N.A., as trustee. The Issuer
anticipates that the Annual Report will be filed by
Dated:
COUNTYWIDE PUBLIC FINANCING
AUTHORITY
By
Title
cc:Trustee
APPENDIX F
FORM OF MEMBER CONTINUING DISCLOSURE CERTIFICATE
(Each Member will execute a Continuing Disclosure Certificate substantially identical to the form below]
This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate")is executed and
delivered by the CITY OF (the "City") in connection with the issuance of $
aggregate principal amount of Countywide Public Financing Authority 1996 Revenue Bonds (the
"Bonds"). The Bonds are being issued pursuant to an indenture of trust,dated as of July 1, 1996 (the
"Indenture"), by and between the Countywide Public Financing Authority (the "Authority") and U.S.
Trust Company of California,N.A.,as trustee(the "Trustee").The City covenants and agrees as follows:
Section 1.Pm pose of the Disclosure Certificate.This Disclosure Certificate is being executed and
delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to
assist the Participating Underwriters in complying with S.E.C.Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement, 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" shall mean any Annual Report provided by the City pursuant to, and as
described in,Sections 3 and 4 of this Disclosure Certificate.
"Dissemination Agent" shall mean U.S. Trust Company of California, N.A., or any successor
Dissemination Agent designated in writing by the City and which has filed with the City and the
Trustee a written acceptance of such designation.
"Lease Agreement" shall mean that certain Lease Agreement, dated as of July 1, 1996, by and
between the Authority and the City.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934,as the same may be amended from time to time.
"State Repository" shall mean any public or private repository or entity designated by the State
of California as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission.As of the date off this Disclosure Certificate,there is no State Repository.
Section 3.Provision of Annual Reports.
(a) The City shall, or upon written direction shall cause the Dissemination Agent to, not later
than six months after the end of the City's fiscal year (currently June 30), commencing with the report
for the 1996 fiscal year, provide to each Repository an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Certificate with a copy to the Trustee.Not later than fifteen
(15) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination
Agent (if other than the City). 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 City may
be submitted separately from the balance of the Annual Report, and later than the date required above
for the filing of the Annual Report if not available by that date.If the City's fiscal year changes, it shall
Appendix F
Page 1
The initial Dissemination Agent shall be U.S. Trust Company of California, N.A.. Any Dissemination
Agent may resign by providing thirty days' written notice to the City and the Trustee.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City 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) or 4, 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 financial information 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.
If an amendment is made to the undertaking specifying the accounting principles to be followed
in preparing financial statements, the annual financial information 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 City to meet its
obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the
change in the accounting principles shall be sent to the Municipal Securities Rulemaking Board and
each State Repository with a copy to the Trustee.
Section 8. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the City 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 City 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 City 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 9. Default. In the event off a failure of the City to comply with any provision of this
Disclosure Certificate the Trustee, at the written direction of any Participating Underwriter or the
holders of at least 25% aggregate principal amount of Outstanding Bonds, shall,but only to the extent
moneys or other indemnity, satisfactory to the Trustee, has been furnished to the Trustee to hold it
harmless from any loss, costs, liability or expense, including fees and expenses of its attorneys and any
additional fees of the Trustee, 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 City 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 Trust Agreement,and the sole
Appendix F
Page 3
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD AND EACH
STATE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Countywide Public Financing Authority
Name of Issue: $ Countywide Public Financing Authority 1996 Revenue Bonds
Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the City of (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by Section 5.11 of that certain lease
agreement, dated as of July 1, 1996, by and between the Issuer and the City. The City anticipates that
the Annual Report will be filed by
Dated:
CITY OF
By
Title
cc:Trustee