HomeMy WebLinkAboutMINUTES - 09261995 - C57 -7
Contra
Costa
TO: BOARD OF SUPERVISORS JCounty
r cou��
FROM: Harvey E. Bragdon
Director of Community Development
DATE: September 26, 1995
SUBJECT: Audit of Financial Statements 1983, 1985 and 1991 Contra Costa Home Mortgage Revenue
Bonds
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
ACCEPT Audit Report on the Financial Statements completed'by Maze and Associates for
Fiscal Year 1994/95 of the following programs: 1983 Contra Costa Home Mortgage Revenue
Bonds, 1985 Contra Costa Home Mortgage Revenue Bonds and 1991 Contra Costa Home
Mortgage Finance Authority Bonds.
FISCAL IMPACT
None.
BACKGROUND/REASONS FOR RECOMMENDATIONS
The Indentures for the above referenced Home Mortgage Revenue Bond Programs provide
that-an annual audit of the financial statements be completed. Maze and Associates have
completed the audit of the respective programs as of June 30, 1995 and submitted its report.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR ECOMME DATION OF BO D
COMMITTEE APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON September 26, 1995 APPROVED AS RECOMMENDED x OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
X UNANIMOUS (ABSENT --------- ) TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
Source: Don Steinweg
646-4208
cc: Community Development ATTESTED September 26, 1995
CAO (via Risk Management) PHIL BATCHELOR, CLERK OF
County Counsel THE BOARD OF SUPERVISORS
Auditor (c/o Nona) AND COUNTY ADMINISTRATO
Contractor
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CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
(OPERATIONS TERMINATED JUNE 30,1995)
' FINANCIAL STATEMENTS
FOR THE YEARS ENDED
JUNE 30,1995 AND 1994
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' CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
i (Operations Terminated June 30,1995)
Financial Statements
For the Years Ended June 30,1995 and 1994
' Table of Contents
PaZe
' Independent Auditor's Report...........................................................................................................l
Financial Statements:
CombinedBalance Sheets.................................................................................................................2
Combined Statements of Revenues,Expenses and Changes in Retained Earnings........................3
Combined Statements of Cash Flows...............................................................................................4
' Notes to Financial Statements...........................................................................................................5
Supplementary Information:
CombiningBalance Sheets................................................................................................................8
Combining Statements of Revenues,Expenses and Changes in Retained Eamings.....................10
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AJAZE &
ASSOCIATES
ACCOUNTANCY CORPORATION
' 1670 Riviera Avenue -Suite 100
Walnut Creek, California 94596
(510) 930-0902 ® FAX 930-0135
INDEPENDENT AUDITOR'S REPORT
To the Board of Supervisors of Contra Costa County
We have audited the financial statements of the Contra Costa County 1983 Mortgage Revenue Bond
' Fund (Fund) as of and for the years ended June 30, 1995 and 1994, as listed in the table of contents.
These financial statements are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audits to obtain reasonable assurance as to whether the financial
' statements are free of material misstatement. An audit includes examining on a test basis evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
' overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly in all material respects the
financial position of the Fund at June 30, 1995 and 1994,and the results of its operations and cash flows
for the years then ended, in conformity with generally accepted accounting principles.
' As discussed in Note 1,the Fund ceased operations on June 30, 1995.
' Our audits were made for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying Supplementary Information listed in the table of contents is presented for
purposes of additional analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in our audits of the financial
' statements, and in our opinion is fairly stated in all material respects when considered in relation to the
financial statements taken as a whole.
August 9, 1995
' 1
A Professional Corporation
CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND ,
COMBINED BALANCE SHEETS
June 30
1995 1994
ASSETS
Cash and investments(Note 3) $69,711, $262,154
Mortgage loans receivable(Note 1) 49,475 4,004,158
Interest receivable 7,674
Matured mortgage loans and interest '
receivable from mortgage servicers 9,394
Investment in real estate(Note 1) 67,707 ,
Total Assets $186,893 $4,283,380 '
LIABILITIES '
Mortgage revenue bonds-net (Note 1) $3,231,067
Interest payable 25,215 '
Accrued liabilities $26,245 1,283
Total Liabilities 26,245 3,257,565 '
RETAINED EARNINGS ,
Unreserved,undesignated 160,648
Reserve for debt service 1,025,815
Total Retained Earnings 160,648 1,025,815
Total Liabilities and Retained Earnings $186,893 $4,283,380
See accompanying notes to general purpose financial statements
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CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND
' COMBINED STATEMENTS OF REVENUES,EXPENSES
AND CHANGES IN RETAINED EARNINGS
' For the Years Ended June 30
1995 1994
REVENUES
tInterest from mortgage loans $353,707 $506,844
' Interest from investments 34,031 92,709
Total Revenues 387,738 599,553
' EXPENSES
Interest and amortization 256,253 507,874
' Administrative 15,859 28,894
' Mortgage servicing fees 7,930 12,899
Insurance 1,006 1,158
' Total Expenses 281,048 550,825
OPERATING INCOME 106,690 48,728
' EXTRAORDINARY LOSSES:
Termination of operations(Note 1) (423,082)
Early redemption of bonds (53,600)
NET(LOSS) (316,392) (4,872)
' Retained earnings at beginning of year 1,025,815 1,030,687
' Residual equity transfer (Note 4) (548,775)
Retained earnings at end of year $160,648 $1,025,815
See accompanying notes to general purpose financial statements
' 3
CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND
COMBINED STATEMENTS OF CASH FLOWS '
For the Years Ended June 30
1995 1994 ,
CASH FLOWS FROM OPERATING ACTIVITIES
Mortgage loan collections:
Principal $565,417 $2,611,702
Interest 354,938 500,084
Cash paid for operating expenses (15,389) (44,139) '
Cash Flows From Operating Activities 904,966 3,067,647
CASH FLOWS FROM INVESTING ACTIVITIES ,
Interest collected from investments 41,705 101,669
CASH FLOWS FROM NONCAPITAL '
FINANCING ACTIVITIES
Proceeds from sale of mortgage loans 3,108,026
Payment of mortgage loan selling costs (139,999) ,
Residual equity transfer to County (548,775)
Mortgage revenue refunding bond payments:
Principal (3,280,000) (3,465,000)
Interest (278,366) (526,751) '
Cash Flows from Noncapital Financing Activities (1,139,114) (3,991,751)
Net Cash Flows (192,443) (822,435) '
Investment at beginning of year 262,154 1,084,589
Investment at end of year $69,711 $262,154 '
RECONCILIATION OF OPERATING INCOME
TO CASH FLOWS FROM OPERATING ACTIVITIES ,
Operating Income $106,690 $48,728
Adjustments to reconcile operating income '
to cash flows from operating activities:
Interest expense and amortization 256,253 507,874
Interest from investments (34,031) (92,709) '
Changes in assets and liabilities:
Decrease in mortgage loan receivable 624,961 2,611,702
hicrease in investment in real estate (67,707)
(Increase)decrease in mature mortgage
loans and related interest receivable 9,394 (7,997)
Increase(decrease)in accred liabilities 9,406 49
Total Adjustments 798,276 3,018,919
Cash Flows from Operating Activities $904,966 $3,067,647
See accompanying notes to general purpose financial statements '
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CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND
' Notes to Financial Statements
NOTE 1-TERMINATION OF OPERATIONS
Operations - The Contra Costa County 1983 Mortgage Revenue Bond Fund (Fund) was
' established under the California Health and Safety Code and a June 1, 1983 indenture
(Indenture) agreement between Contra Costa County (County) and Bank of America (Trustee)
for the purpose of providing mortgage loans on owner occupied single family dwellings from
' the proceeds of Mortgage Revenue Bonds (1983 Bonds) issued by the County. The County is
the administrator of the Fund, overseeing the Trustee and mortgage servicers and maintaining
the financial records of the Fund.
tIn May 1995, the Fund sold nearly its entire portfolio of mortgage loans, retaining only three
loans, two of which were in foreclosure. In order to effect the sale, loans with a carrying value
of$3,379,187 were sold at a loss of$423,082, after legal and other expenses. The proceeds
from the sale of the mortgage loans and Fund investments were used to call and retire the
Fund's entire 1983 Mortgage Revenue Bond issue on June 1, 1995.
' At June 30, 1995, the Fund had foreclosed on its two remaining loans and taken title to the real
property securing the loans. One of these parcels was subsequently sold at auction; the second
is expected to be sold. The Fund does not expect to incur a loss on these transactions. Also at
' June 30, 1995 the Fund reduced the carrying value of the last remaining loan to its estimated
selling price net of selling expenses.
' NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity - The accompanying financial statements include only the operations of the
1 Fund,which is not considered an integral part of the County.
Basis of Accounting - The Fund's financial statements have been prepared on the accrual
' method of accounting under which revenues are recorded when earned and expenses are
recorded when incurred.
' Cash and Equivalents are stated at cost and consist of bank deposits, money market funds or
highly liquid securities which are readily convertible into cash.
' Bond Discount and Issuance Costs represent costs of issuing the Mortgage Revenue Bonds.
These costs are netted against and amortized over the term of the Mortgage Revenue Bonds,
using the effective interest rate method.
' NOTE 3-CASH AND INVESTMENTS
' Investments at June 30, 1995 and 1994 comprise:
June 30
' Description 1995 1994
Cash Deposits $29,982
Investment Agreement $241,760
Pacific Horizons Treasury Money Market Fund(invested
' in U.S.Treasury securities) 39,729 20,394
Total Investments $69,711 $262,154
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CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND '
Notes to Financial Statements '
NOTE 3-CASH AND INVESTMENTS(Continued)
The Trustee and First National Bank of Sault Paul, Minnesota, had Investment Agreements '
which required the Bank to pay interest at rates of from 7% to 9.14%, compounded
semiannually, each May 13 and November 13 until December 1, 2105. During the year ended ,
June 30, 1995, the trustee terminated the Investment Agreements by retiring all outstanding
Mortgage Revenue Bonds and withdrawing the remaining moneys.
NOTE 4-RESIDUAL EQUITY TRANSFER
After the above mortgage loans were sold and the Bonds were retired,the trustee made an initial '
residual equity transfer to the County amounting to $548,775. An additional transfer will be
made after collection of the above investments in real estate.
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' SUPPLEMENTAL INFORMATION
' As provided in the Indenture, the following funds have been established and are maintained by the
Trustee:
Revenue Fund- All revenues except interest from cash and equivalents are deposited in this
fund. Resources in this fund are transferred to the remaining funds as needed.
Capital Reserve Fund - Monies are used to make up any deficiency in the Non-mortgage
Investment Income Fund, Interest Fund or Principal Fund and for paying fees and expenses of
the County which do not exceed certain limits outlined in the Indenture.
Non-mortgage Investment Income Fund-All profits derived from cash and equivalents in any
' fund established under the Indenture are to be deposited into this fund.
Principal Fund-Monies are used to repay the principal of the Mortgage Revenue Bonds.
Interest Fund-Monies are used to pay the interest on the bonds.
' Redemption Fund - Monies are used to redeem the Mortgage Revenue Bonds prior to their
scheduled maturity.
' Escrow Fund-Monies are used to call and retire the Mortgage Revenue Bonds.
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CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND ,
COMBINING BALANCE SHEETS '
Non-mortgage
Revenue Capital Investment Principal ,
Fund Reserve Fund Income Fund Fund
ASSETS '
Investments $39,729
Mortgage e loans receivable 49,475 '
Interest receivable ,
Mature mortgage loans and interest '
receivable from mortgage servicers
Investment in real estate 67,707 ,
Total Assets $156,911
LIABILITIES ,
Mortgage revenue bonds-net ,
Interest payable
Accrued liabilities $10,689
Total Liabilities 10,689
RETAINED EARNINGS
Unreserved,undesignated 146,222 ,
Reserved for debt service
Total Liabilities and Retained Earnings $10,689
June 30
' Interest Redemption Escrow
Fund Fund Fund 1995 1994
$29,982 $69,711 $262,154
49,475 4,004,158
' 7,674
9,394
' 67,707
$29,982 $186,893 $4,283,380
' $3,231,067
25,215
' $15,556 $26,245 1,283
15,556 26,245 3,257,565
' 14,426 160,648
1,025,815
' $15,556 $26,245 $4,283,380
' 9
CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND '
COMBINING STATEMENTS OF REVENUE,EXPENSE ,
AND CHANGES IN RETAINED EARNINGS
Non-mortgage '
Revenue Capital Investment Principal
Fund Reserve Fund Income Fund Fund
REVENUES '
Interest from mortgage loans $353,707 '
Interest from investments $34,031
Total Revenues 353,707 34,031
EXPENSES
Interest 3,102
Administrative 15,859 a
Mortgage servicing fees 7,930 /
Insurance 1,006
Total Expenses 27,897 '
OPERATING INCOME(LOSS) 325,810- 34,031 '
INTERFUND TRANSFERS IN 3,321,635 $45,000
INTERFUND TRANSFERS(OUT) (4,071,608) ($205,440) (41,705) (45,000)
EXTRAORDINARY LOSSES:
Termination of operations (267,527) ,
Early redemption of bonds
NET INCOME(LOSS) (691,690) (205,440) (7,674) '
Retained earnings at beginning of year 837,912 205,440 7,674
Residual equity transfer
Retained earnings at end of year $146,222 '
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For the Years Ended June 30
' Interest Redemption Escrow
Fund Fund Fund 1995 1994
$353,707 $506,844
34,031 92,709
387,738 599,553
$253,151 256,253 507,874
15,859 28,894
7,930 12,899
1,006 1,158
' 253,151 281,048 550,825
' (253,151) 106,690 48,728
278,366 $3,235,070 $3,600,833 10,480,904 7,260,654
' (3,235,074) (2,882,077) (10,480,904) (7,260,654)
' (155,555) (423,082)
(53,600)
' 25,215 (4) 563,201 (316,392) (4,872)
' (25,215) 4 1,025,815 1,030,687
(548,775) (548,775)
t $14,426 $160,648 $1,025,815
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1 CONTRA COSTA COUNTY
1985 MORTGAGE REVENUE BOND FUND
(OPERATIONS TERMINATED OCTOBER 20,1994)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30,1994
' AND PERIOD ENDED OCTOBER 20,1994
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CONTRA COSTA COUNTY
1985 MORTGAGE REVENUE BOND FUND
(Operations Terminated October 20, 1994)
Financial Statements
For the Year Ended June 30,1994 and
' Period Ended October 20, 1994
Table of Contents
Rage
' Independent Auditor's Report................................................................................................................1
' Financial Statements:
CombinedBalance Sheets.................................................................................................................2
' Combined Statements of Revenues,Expenses
and Changes in Retained Earnings...................................................................................................3
Combined Statements of Cash Flows4
...............................................................................................
1 Notes to Financial Statements...........................................................................................................5
Supplementary Information:
CombiningBalance Sheets.................................................:..............................................................8
1 Combining Statements of Revenues,Expenses
and Changes in Retained Earnings.................................................................................................10
AJAZE &
ASSOCIATES
ACCOUNTANCY CORPORATION
' 1670 Riviera Avenue -Suite 100
Walnut Creek, California 94596
(510) 930-0902 • FAX 930-0135
' INDEPENDENT AUDITOR'S REPORT
To the Board of Supervisors of Contra Costa County
We have audited the financial statements of the Contra Costa County 1985 Mortgage Revenue Bond Fund
' (Fund)as of and for period ended October 20, 1994 and the year ended June 30, 1994, as listed in the table
of contents. These financial statements are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
' We conducted our audits in accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audits to obtain reasonable assurance as to whether the financial statements are -
free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
' presentation. We believe that our audits provide a reasonable basis for our opinion. .
In our opinion, the financial statements referred to above present fairly in all material respects the financial
' position of the Fund at October 20, 1994 and June 30, 1994,and the results of its operations and cash flows
for the periods then ended, in conformity with generally accepted accounting principles.
' As discussed in Note 1,the Fund ceased all operations on October 20, 1994 and was closed.
Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole.
' The accompanying Supplementary Information listed in the table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in our audits of the financial statements, and in our opinion is
' fairly stated in all material respects when considered in relation to the financial statements taken as a whole.
' August 9, 1995
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' A Professional Corporation
CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND '
COMBINED BALANCE SHEETS
October 20, June 30, '
1994 (Note 1) 1994
ASSETS
Investments(Note 1) $48,716
Mortgage loans receivable(Note 1) 1,103,749 '
Interest receivable 403
Matured mortgage loans and interest
receivable from mortgage servicers 4,745
Total Assets $1,157. 113 '
LIABILITIES '
Mortgage revenue bonds-net (Note 1) $131,636
Interest payable 216,715 ,
Accrued liabilities 16,870 '
Due to County
Total Liabilities 365,221 '
RETAINED EARNINGS
Reserve for debt service 792,392 '
Total Liabilities and Retained Earnings $1,157,613 ,
See accompanying notes to general.purpose financial statements
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CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND
COMBINED STATEMENTS OF REVENUES,EXPENSES
AND CHANGES IN RETAINED EARNINGS
Period Ended
' October 20, Year Ended
1994(Note 1) June 30, 1994
' REVENUES
Interest from mortgage loans $38,406 $167,275
' Interest from investments 2,119 50,988
Total Revenues 40,525 218,263
EXPENSES
Interest and amortization 11,277 145,810
Administrative 695 13,060
' Mortgage servicing fees 830 3,535
' Insurance 9,538
Total Expenses 12,802 171,943
' OPERATING INCOME - - 27;723 46,320
EXTRAORDINARY LOSSES:
' Termination of operations (Note 1) (281,109)
Early redemption of bonds (34,420)
' NET INCOME(LOSS) (253,386) 11,900
Retained earnings at beginning of period 792,391 780,492
' RESIDUAL EQUITY TRANSFER TO COUNTY(NOTE 1) (539,005)
' Retained earnings at end of period $792,392
See accompanying notes to general purpose financial statements
' 3
CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND
COMBINED STATEMENTS OF CASH FLOWS
Period Ended
October 20, Year Ended '
1994(Note 1) June 30, 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Mortgage loan collections: '
Principal $95,414 $1,258,520
Interest 38,406 156,230
Cash paid for operating expenses (2,577) (20,233)
Cash Flows From Operating Activities 131,243 1,394,517
CASH FLOWS FROM INVESTING ACTIVITIES ,
Interest collected from investments 2,522 51,568
CASH FLOWS FROM NONCAPTTAL
FINANCING ACTIVITIES
Proceeds from sale of assets 1,098,506
Payment to defeasence trust (559,501)
Residual equity transfer to County (539,005) '
Investments sold (182,481)
Mortgage revenue refunding bond payments:
Principal (1,237,465)
Interest (844,207)
Cash Flows from Noncapital Financing Activities (182,481) (2,081,672)
Net Cash Flows (48,716) (635,587) '
Investment at beginning of year 48,716 684,303 '
Investment at end of year $48 716
RECONCILIATION OF OPERATING INCOME ,
TO CASH FLOWS FROM OPERATING ACTIVITIES
Operating Income $27,723 $46,320
Adjustments to reconcile operating income ,
to cash flows from operating activities:
Interest expense and amortization 11,277 145,810
Amortization of discount on mortgage loans receivable (16,006) '
Interest from investments (2,119) (50,988)
Changes in assets and liabilities:
Decrease in mortgage loan receivable 90,669 1,158,175 '
Decrease in mature mortgage
loans and related interest receivable 4,745 105,307
Decrease in prepaid insurance 6,014
(Decrease)increase in accrued liabilities (1,052) (115) '
Total Adjustments 103,520 1,348,197
Cash Flows from.Operating Activities $131,243 $1,394,517 '
See accompanying notes to general purpose financial statements
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' CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND
Notes to Financial Statements
NOTE 1-TERNUNATION OF OPERATIONS
Operations-The Contra Costa County 1985 Mortgage Revenue Bond Fund(Fund)was established
under the California Health and Safety Code and an April 1, 1985 Indenture Agreement(Indenture)
between Contra Costa County(County) and First Interstate Bank, Inc. (Trustee) for the purpose of
providing mortgage loans on owner occupied single family dwellings from the proceeds of
Mortgage Revenue Bonds(1985 Bonds) issued by the County. The County is the administrator of
' the Fund, overseeing the Trustee and mortgage servicers and maintaining the financial records of
the Fund.
On October 20, 1994 the Fund sold its assets,which had a carrying value of$1,195,561,paid off its
liabilities, which had a carrying value of $375,447, and incurred a combined loss on these
transactions of$281,109.
' Of the proceeds received from the sale, $559,501 was used to purchase securities backed by the
U.S. government, which were placed in an irrevocable trust with the Trustee to provide all future
principal and interest payments on the 1985 Bonds. As a result the 1985 Bonds are considered
defeased and are no longer a liability of the Fund.
The remainder of the sales proceeds, which amounted to $539,005, was paid to the County on
' behalf of the Fund and has been recorded in the.accompanying financial statements as a residual
equity transfer.
1 Reporting Entity- The accompanying financial statements include only the operations of the Fund,
which is not considered a component unit or integral part of the County.
' Basis of Accounting - At October 20, 1994 the Fund's financial statements were prepared on the
cash liquidation basis of accounting, under which all the Fund's assets and liabilities have been
liquidated as discussed above.
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' SUPPLEMENTAL INFORMATION
' As provided in the Indenture,the following funds have been established and are maintained by the Trustee:
Program Expense Fund-Monies are used to pay administrative expenses.
Revenue Fund- All revenues except interest from cash and equivalents are deposited in this fund.
Resources in this fund are transferred to the remaining funds as needed.
Capital Reserve Fund - Monies are used to make up any deficiency in the Interest Fund or
Principal Fund and for paying fees and expenses of the County which do not exceed certain limits
' outlined in the Indenture.
Non-mortgage Investment Income Fund- All profits derived from cash and equivalents in any
fund established under the Indenture are to be deposited into this fund.
Principal Fund-Monies are used to pay the principal of the Mortgage Revenue Bonds.
Interest Fund-Monies are used to pay the interest on the Mortgage Revenue Bonds.
' Redemption Fund - Monies are used to redeem the Mortgage Revenue Bonds prior to their
scheduled maturity.
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CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND '
COMBINING BALANCE SHEETS '
Program ,
Expense Revenue Capital
Fund Fund Reserve Fund
ASSETS ,
Investments
Mortgage loans receivable ,
Interest receivable '
Mature mortgage loans and interest '
receivable from mortgage servicers
Total Assets
LIABILITIES
Mortgage revenue bonds-net '
Interest.payable '
Accrued liabilities
Total Liabilities
RETAINED EARNINGS '
Reserved for debt service
Total Liabilities and Retained Earnings ,
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Non-mortgage
' Investment Principal Interest Redemption October 20,
Income Fund Fund Fund Fund 1994(Note 1) June 30, 1994
$48,716
' 1,103,749
.' 403
' 4,745
' $1,157,613
' $131,636
216,715
16,870
' 365,221
792,392
' $1,157,613
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CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND
COMBINING STATEMENTS OF REVENUE,EXPENSES
AND CHANGES IN RETAINED EARNINGS
Program Non-mortgage ,
Expense Revenue Capital Investment
Fund Fund Reserve Fund Income Fund
REVENUES '
Interest from mortgage loans $38,406 ,
Interest from investments 152 $1,967 '
Total Revenues 38,558 1,967
EXPENSES '
Interest ,
Administrative $695
Mortgage servicing fees 830 ,
Insurance '
Total Expenses 1,525
OPERATING INCOME(LOSS) (1,525) 38,558 1,967 '
INTERFUND TRANSFERS IN 2,577 2,385 ,
INTERFUND TRANSFERS(OUT) (2,577) (2,370)
EXTRAORDINARY LOSSES: ,
Termination of operations (486,787) ($22,315)
Early redemption of bonds
NET INCOME(LOSS) 1,052 (448,421) (22,315) (403) '
Retained earnings at beginning of period (1,052) 987,426 22,315 403 '
RESIDUAL EQUITY TRANSFER TO '
COUNTY (539,005)
Retained earnings at end of period '
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Period Ended
Principal Interest Redemption October 20, 1994 Year Ended
Fund Fund Fund (Note 1) June 30, 1994
$38,406 $167,275
' 2,119 50,988
40,525 218,263
$11,277 11,277 145,810
695 13,060
' 830 3,535
9,538
11,277 12,802 171,943
t (11,277) 27,723 46,320
' 4,962 4,236,250
($15) (4,962) (4,236,250)
' 227,993 (281,109)
(34,420)
216,716 (15) (253,386) 11,900
' (216,716) 15 792,391 780,492
(539,005)
' $792,392
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tCONTRA COSTA COUNTY
HOME MORTGAGE FINANCE AUTHORITY
1991 TAXABLE HOME MORTGAGE
REVENUE REFUNDING BOND FUND
' FINANCIAL STATEMENTS
FOR THE YEARS ENDED
JUNE 30, 1995 AND 1994
1 -
CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
' 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
Financial Statements
For the Years Ended June 30,1995 and 1994
Table of Contents
Page
' Independent Auditor's Report................................................................................................................ 1
Financial Statements:
CombinedBalance Sheets.................................................................................................................2
.Combined Statements of Revenues,Expenses and Changes in Retained Earnings.......................3
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Combined Statements of Cash Flows...............................................................................................4
' Notes to Financial Statements...........................................................................................................5
Supplementary Information:
Combining Balance Sheets ........................................... 10
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' Combining Statements of Revenues,Expenses and Changes in Retained Earnings.................... 12
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t
AJAZE &
ASSOCIATES
ACCOUNTANCY CORPORATION
' 1670 Riviera Avenue -Suite 100
Walnut Creek, California 94596
(510) 930-0902 • FAX 930-0135
' INDEPENDENT AUDITOR'S REPORT
' To the Board of Supervisors of Contra Costa County
We have audited the financial statements of the Contra Costa County Home Mortgage Finance Authority,
1991 Taxable Home Mortgage Revenue Refunding Bond Fund(Fund)as of and for the years ended
June 30, 1995 and 1994, as listed in the table of contents. These financial statements are the responsibility
' of the Fund's management. Our responsibility is to express an opinion on these financial statements based
on our audits.
' We conducted our audits in accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audits to obtain reasonable assurance as to whether the financial statements are
free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts
' and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion,the financial statements referred to above present fairly in all material respects the financial
position of the Fund at June 30, 1995 and 1994,and the results of its operations and cash flows for the years
' then ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole.
' The accompanying Supplementary Information listed in the table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in our audits of the financial statements, and in our opinion is
fairly stated in all material respects when considered in relation to the financial statements taken as a whole.
1 August 9, 1995
I
A Professional Corporation
CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND ,
COMBINED BALANCE SHEETS
June 30
1995 1994
ASSETS
Investment agreement (Note 2) $274,218 $881,091
Mortgage loans receivable(Note 3) 2,055,186 2,189,972
Interest receivable 5,319 15,101
Matured mortgage loans and interest
receivable from mortgage servicers 7,228 3,858
Prepaid administrative fees 4,849 4,867
Total Assets $2346,800 $3,094,889 ,
LIABILITIES ,
Mortgage revenue bonds-net (Note 4) $653,480 $1,356,934
Interest payable 652,117 741,240
Total Liabilities 1,305,597 2,098,174 ,
RETAINED EARNINGS
Reserve for debt service 1,041,203 996,715
Total Liabilities and Retained Earnings $2,346,800 $3,094,889
See accompanying notes to general purpose financial statements
2
1
CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
1 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
COMBINED STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN RETAINED EARNINGS
For the Years Ended June 30
! 1995 1994
! REVENUES
Interest from mortgage loans $226,389 $312,283
1 Interest from investment agreement 21,993 54,990
Total Revenues 248,382 367,273
! EXPENSES
' Interest and amortization 151,433 273,142
Administrative 43,843 44,118
' Mortgage servicing fees 5,157 7,094
Insurance 3,461 4,882
! Total Expenses 203,894 329,236
1 OPERATING INCOME 44,488 38,037
Retained earnings at beginning of year 996,715 958,678
' Retained earnings at end of year $1,041,203 $996,715
See accompanying notes to general purpose financial statements
1
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CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
COMBINED STATEMENTS OF CASH FLOWS '
For the Years Ended June 30
1995 1994 '
CASH FLOWS FROM OPERATING ACTIVITIES
Mortgage loan collections: ,
Principal $134,370 $1,181,495
Interest 223,434 321,134
Cash paid for operating expenses (52,442) (55,203) '
Cash Flows From Operating Activities 305,362 1,447,426
CASH FLOWS FROM INVESTING ACTIVITIES
Interest collected from investments 31,773 61,592
CASH FLOWS FROM NONCAPITAL '
FINANCING ACTIVITIES
Mortgage revenue refunding bond payments:
Principal (702,808) (1,595,332) '
Interest (241,200) . (373,981)
Cash Flows from Noncapital Financing Activities (944,008) (1,969,313)
Net Cash Flows (606,873) (460,295)
Investment at beginning of year 881,091 1,341,386 '
Investment at end of year $274,218 $881,091
RECONCILIATION OF OPERATING INCOME ,
TO CASH FLOWS FROM OPERATING ACTIVITIES
Operating Income $44,488 $38,037
Adjustments to reconcile operating income ,
to cash flows from operating activities:
Interest expense and amortization 151,433 273,142 '
Interest from investment agreement (21,993) (54,989)
Changes in assets and liabilities:
Decrease in mortgage loan receivable 134,786 1,180,667
(Increase)decrease in mature mortgage '
loans and related interest receivable (3,370) 9,680
(Increase)decrease in prepaid administrative fees 18 889
Total Adjustments 260,874 1,409,389 '
Cash Flows from Operating Activities $305,362 $1,447A26
See accompanying notes to general purpose financial statements '
4
CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
' 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
Notes to Financial Statements
' NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES
A. Operations -The Contra Costa County Home Mortgage Finance Authority(Authority)was created
under the California Government Code by a May 1, 1984 joint exercise of powers agreement
between Contra Costa County(County)and the City of Antioch. In 1984,the Authority issued the
1984 Home Mortgage Revenue Bonds (1984 Bonds) for the purpose of providing home mortgage
' loans in the County. These Bonds were defeased using the proceeds of Taxable Home Mortgage
Revenue Refunding Bonds issued July 1, 1991 (1991 Bonds) and separate Registered Coupons,
which entitle those bond holders who purchased them to additional 1991 Bond interest payments.
The Contra Costa County Home Mortgage Finance Authority 1991 Taxable Home Mortgage
Revenue Refunding Bond Fund (Fund) was established under the California Health and Safety
Code and a July 1, 1991 Indenture agreement (Indenture) between the County and First Trust
California (Trustee). The County is the administrator of the Fund, overseeing the Trustee and
' mortgage servicers and maintaining the financial records of the Fund.
B. Reporting Entity -The accompanying financial statements include only the operations of the Fund,
which is not considered a component unit or integral part of the County.
C. Basis of Accounting - The Fund's financial statements have been prepared on the accrual method
of accounting, under which revenues are recorded when earned and expenses are recorded when
incurred.
D. Investment Agreement is stated at cost and is readily convertible into cash.
E. Registered Coupon Premium and Bond Discount and Issuance Costs represent a premium
collected from the sale of Registered Coupons and the costs of issuing the 1991 Bonds. These costs
' are netted against the outstanding principal balance of the 1991 Bonds and amortized over-their
term.
NOTE 2-INVESTMENT AGREEMENT
Coincident with the issuance of the 1991 Bonds on July 1, 1991, the Trustee and Berkshire
' Hathaway, Inc. signed an Investment Agreement under which Berkshire Hathaway pays interest at
6.4%, compounded semiannually each March 1 and September 1 until March 1, 2009. The
Investment Agreement may be terminated earlier by retiring all outstanding Mortgage Revenue
' Refunding Bonds or by withdrawing the remaining moneys.
Under the terms of the Investment Agreement, the Fund may deposit and withdraw amounts as
' required; all amounts on deposit earn interest.
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CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND '
Notes to Financial Statements
NOTE 3-MORTGAGE LOANS '
Mortgage Loans are secured by first deeds of trust on the underlying property, bear interest at
10.9%, are due thirty years from the date issued and are guaranteed by private mortgage insurance. '
Details of the Mortgage Loans outstanding at June 30, 1995 are as follows: .
Current Mortgages $1,906,469
Mortgages delinquent over 60 days 148,717 '
Total $2,055,186
The Countyand Trustee have signed agreements with several Mortgage Servicers which require the '
Mortgage Servicers to collect mortgage loan receipts when due and to remit such receipts to the
Trustee, maintain private mortgage insurance, standard hazard insurance and earthquake insurance, '
if available, on the underlying property and to enforce foreclosure proceedings, if necessary, to
collect delinquent loans.
NOTE 4-MORTGAGE REVENUE REFUNDING BONDS '
A. 1991 Bonds '
On July 1, 1991 the Authority issued 1991 Taxable Home Mortgage Revenue Refunding Bonds in
.the original principal amount of$11,817,856,bearing 9.5%interest and due March 1, 2009.. '
The Indenture requires that prepayments of Mortgage Loans received by the Trustee must be used
to redeem 1991 Bonds on the next June 1 at par. During the years ended June 30, 1995 and 1994,
Mortgage Loans prepayments were used to redeem 1991 Bonds with carrying values of$703,454
and$ 1,597,051,respectively,at par,prior to their scheduled maturity.
Interest on the 1991 Bonds is compounded semiannually each March 1 and September 1, but is not
payable until maturity or redemption.
The investment agreement, mortgage loan receipts and Fund revenues are pledged to repay
principal and interest on the 1991 Bonds. In addition.the 1991 Bonds, including interest are insured
by Municipal Bond Investors Assurance,Inc. '
B. Registered Coupons
Registered Coupons due March 1, 2001 and 2009 were issued in conjunction with the 1991 Bonds.
These Coupons entitle the holder to receive additional interest on the 1991 Bonds. Interest is
compounded semiannually at 1.05% for Registered Coupons maturing March 1, 2001 and 1.95%
for Registered Coupons maturing March 1, 2009 on the unpaid principal and interest on the 1991
Bonds. In addition, accumulated unpaid amounts of accrued interest evidenced by the Registered
Coupons bear interest at the rate of 10.55%compounded semiannually. '
6
CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
' 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
Notes to Financial Statements
' NOTE 4-MORTGAGE REVENUE REFUNDING BONDS(Continued)
C. Redemption Provisions
Outstanding 1991 Bonds and Registered Coupons are subject to mandatory redemption on any
' September 1 or March 1, from deposits in the Revenue Fund in excess of amounts needed to pay
program expenses and required to be deposited into the Reserve Fund. However, all 1991 Bonds
and accrued interest must be redeemed prior to the redemption of any Registered Coupons.
D. Defeasance of 1984 Bonds
A portion of the proceeds of the 1991 Bonds was used to defease the Authority's 1984 Bonds.
These proceeds were used to purchase Securities backed by the U.S. Government, which were
deposited in an irrevocable trust with an escrow agent to provide for all future debt service on the
1984 Bonds, which are considered to be defeased. The balance outstanding of the 1984 Bonds
amounted to$23,400,894 at June 30, 1995.
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SUPPLEMENTAL INFORMATION
As provided in the Indenture,the following funds have been established and are maintained by the Trustee:
iProgram Expense Fund-Monies are used to pay of administrative expenses.
' Revenue Fund- All revenues except interest from cash and equivalents are deposited in this fund.
Resources in this fund are transferred to the remaining funds as needed.
Reserve Fund-Monies are used to make up any deficiency in the Bond Fund.
' Bond Fund-Monies are used to pay the principal, accrued interest and Registered Coupons of the
Mortgage Revenue Bonds.
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CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY
1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND '
COMBINING BALANCE SHEETS
Program
Expense Revenue Reserve Bond
Fund Fund Fund Fund
ASSETS '
.Investment agreement $605 $209,592 $64,020 $1
Mortgage loans receivable 2,055,186
Interest receivable 5,319
Mature mortgage loans and interest
receivable from mortgage servicers 7,228
Prepaid administrative fees 4,849 ,
Total Assets $5,454 $2,277,325 $64,020. $1
LIABILITIES
Mortgage revenue bonds-net $653,480 ,
Interest payable 652,117
Total Liabilities 1,305,597 ,
RETAINED EARNINGS
Reserved for debt service $5,454 971,728 $64,020 $1
Total Liabilities and Retained Earnings $5,454 $2,277,325 $64,020 $1
10
' June 30
1995 1994
$274,218 $881,091
1 2,055,186 2,189,972
' 5,319 15,101
' 7,228 3,858
4,849 4,867
$2,346,800 $3,094,889
$653,480 $1,356,934
652,117 741,240
' 1,305,597 2,098,174
'
1,041,203 996 715
' $2,346,800 $3,094,889
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CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY '
1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND
COMBINING STATEMENTS OF REVENUES,EXPENSES '
AND CHANGES IN RETAINED EARNINGS
Program '
Expense Revenue Reserve Bond
Fund Fund Fund Fund
REVENUES
Interest from mortgage loans $226,389 '
Interest from investments 21,993 '
Total Revenues 248,382
EXPENSES '
Interest 151,433
Administrative $43,843
Mortgage servicing fees 5,157
Insurance 3,461 ,
Tota] Expenses 52,461 151,433
OPERATING INCOME(LOSS) (52,461) 96,949 ,
INTERFUND TRANSFERS IN 51,059 959,926 $2,414 $944,008
INTERFUND TRANSFERS(OUT) (997,481) (15,918) (944,008)
NET INCOME(LOSS) (1,402) 59,394 (13,504) ,
Retained earnings at beginning of year 6,856 912,334 77,524 1
Retained earnings at end of year $5,454 $971,728 $64,020 $1
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1
' For theYears Ended June 30
' 1995 1994
' $226,389 $312,283
' 21,993 54,990
248,382 367,273
' 151,433 273,142
43,843 44,118
' 5,157 7,094
3,461 4,882
203,894 329,236
' 44,488 38,037
' 1,957,407 3,863,590
(1,957,407) (3,863,590)
' 44,488 38,037
' 996,715 958,678
$1,041,203 $996,715
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