HomeMy WebLinkAboutMINUTES - 09172002 - C.82 BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA
RESOLUTION NO. 2002/605
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO
EXCEED $125,000,000 COUNTY OF CON'T'RA COSTA, CALIFORNIA, 2002-
2003 TAX AND REVENUE ANTICIPATION NOTES, APPROVING THE
FORINTS OF AND DIRECTING THE DISTRIBUTION OF A NOTICE OF
INTENTION TO SELL,AN OFFICIAL NOTICE OF SALE AND AN
OFFICIAL STATEMENT; DELEGATING TO COUNTY ADMINISTRATOR
OR HIS DESIGNEE AUTHORIZATION TO AWARD BIDS FOR.SAID
NOTES; AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND
EXECUTION OF NECESSARY DOCUMENTS
WHEREAS,pursuant to Sections 53850 et seq. of the Government Code of the
State of California(the"Government Code"),this Board of Supervisors(the"Board")has found
and determined that the sum of not to exceed One Hundred Twenty-Five Million Dollars
($125,000,000)is needed for the requirements of the County of Contra Costa(the`County")to
satisfy obligations payable from the general fund of the County(the"General Fund")and that it
is necessary that said sum be borrowed for such purpose at this time by the issuance of
temporary notes(the"Notes")therefor in anticipation of the receipt of taxes,revenue and other
moneys to be received by the County for the General Fund of the County allocable to Fiscal Year
2002-2003,
WHEREAS, it appears, and the Board hereby finds and determines,that said sum
of One Hundred Twenty-Five Million Dollars($125,000,000), when added to the interest
estimated to be payable thereon, does not exceed eighty-five percent(85%)of the estimated
amount of the uncollected taxes, income,revenue, cash receipts and other moneys of the County
for the General Fund of the County attributable to Fiscal Year 2002-2003 and available for the
payment of the principal of and interest on the Notes;
WHEREAS, no money has heretofore been borrowed by the County through the
issuance of any temporary notes in anticipation of the receipt of, or payable or secured by,taxes,
income, revenue, cash receipts or other moneys of the County received or accrued during or
allocable to Fiscal Year 2002-2003;
WHEREAS,pursuant to Section 53856 of the Government Code, certain revenues
which will be received by the County for the General Fund and attributable to Fiscal Year 2002-
2003 can be pledged for the payment of the principal of and interest on the Notes;
WHEREAS,the County wishes to authorize the issuance of one or more series of
the Notes in an aggregate amount not to exceed$125,000,000;
WHEREAS,the Notes shall be sold to the highest bidder or bidders pursuant to a
competitive sale to be held on October 8, 2002 or on such earlier or later date as is established by
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the County Administrator of the County(the "County Administrator")in accordance with the
terms of the Official Notice of Sale for the Notes;
WHEREAS, an Official Statement describing the Notes and an Official Notice of
Sale for the sale of the Notes will be distributed to potential purchasers of the Notes and a Notice
of Intention to Sell Notes will be published in THE BOND BUYER;
WHEREAS, this Board has been presented with the form of each document
hereinafter referred to, relating to the Notes, and the Board has examined and approved the form
of each document and desires to authorize and direct the execution of such documents and the
issuance of the Notes; and
WHEREAS, the County has full legal right, power and authority under the
Constitution and the laws of the State of California to enter into the transactions hereinafter
authorized;
NOW THEREFORE, BE IT RESOLVED by the Board of Supervisors of the
County of Contra Costa, as follows:
Section 1. Recitals. The foregoing recitals are true and correct and this Board
hereby so finds and determines.
Section 2. Authorization and Issuance.
(A) Solely for the purpose of anticipating taxes, income, revenues, cash
receipts and other moneys to be received by the County for the General Fund of the County
allocable to Fiscal Year 2002-2003, and not pursuant to any common plan of financing, the
County hereby determines to and shall borrow the aggregate principal sum of not to exceed One
Hundred Twenty-Five Million Dollars ($125,000,000), by the issuance of temporary notes in one
or more series under Sections 53850 et seq. of the Government Code, designated the "County of
Contra Costa, California, 2002-2003 Tax and Revenue Anticipation Notes." A first series of
Notes labeled"Series A" (the "Series A Notes") shall be issued pursuant hereto in the aggregate
principal amount of not to exceed$125,000,000. A second series of Notes labeled"Series B"
(the"Series B Notes")may hereafter be issued prior to January 1, 2003, in an amount not to
exceed the difference between $125,000,000 and the principal amount of the Series A Notes.
The Notes of each series shall be payable on a parity with each other.
(B) The Series A Notes shall be initially issued and registered as provided in
Section 9 hereof and otherwise shall be in the denominations of$5,000 or any integral multiple
thereof, and shall be dated the date of issuance thereof, shall mature (without option of prior
redemption)not more than thirteen (13) months thereafter, and shall bear interest,payable at
least one year from the date of issuance and at maturity and computed on the basis of a 360-day
year composed of twelve 30-day months, at the rate per annum determined in accordance with
this Resolution.
(C) Interest due on the Nates, prior to the maturity thereof, shall be payable to
the person in whose name such Note is registered on the registration boobs of the County,
maintained by the Paying Agent (hereinafter defined), as of the close of business on the 15th day
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of the calendar month immediately preceding the interest payment date (the"Record Date"),
such interest to be paid by check mailed to such registered owner. Both the principal of the
Nates and interest due on the Notes at maturity shall be payable in lawful money of the United
States of America, only to the registered owners of the Notes upon surrender thereof at the office
of the Treasurer-Tax Collector of the County, as initial paying agent for the Notes (the "Paying
Agent")in Martinez,California upon the maturity thereof. No interest shall be payable on any
Note for any period after maturity during which the registered owner thereof fails to properly
present such Note for payment.
(D) The Series B Notes shall be dated the date of issuance thereof, shall
mature(without option of prior redemption) not more than thirteen (13)months thereafter and
shall bear interest payable at least one year from the date of issuance and at maturity computed
on the basis of a 360-day year composed of twelve 30-day months at the rate or rates determined
in accordance with this Resolution. The issuance of the Series B Notes shall be subject to the
following conditions:
(1) receipt of confirmation from Moody's Investors Service ("Moody's") and
Standard&Poor's Ratings Service ("S&P") (each an"Agency") (if such respective
rating agency rated the Series A Notes)that the issuance of the Series B Nates will not
cause a reduction or withdrawal in such Agency's rating on the Series A Notes, and
(2) Receipt of an opinion of Bond Counsel to the effect that the interest on the
Series B Notes is excludable from gross income for federal income tax purposes.
(E) At any time after the sale of a series of the Notes, the County shall execute
the Notes of such series for issuance hereunder and shall deliver them to the Paying Agent, and
thereupon such Nates shall be authenticated and delivered by the Paying Agent to the purchaser
thereof upon the written request of the County and upon receipt of payment therefor from the
purchaser thereof.
Section 3. Sale of Nates. The proposed form of the Official Notice of Sale
for the Series A Nates, in substantially the farm presented to this meeting(a copy of which is on
file with the Clerk of the Board), is hereby approved and adopted as the Official Notice of Sale
for the Series A Notes. The County Administrator is hereby authorized and directed,for and in
the name of and on behalf of the County,to execute and deliver such Official Notice of Sale,
with such changes, additions,completions and corrections therein as the County Administrator
shall require or approve, including specifying the term of the Series A Notes and the interest
payment dates therefor, such approval to be conclusively evidenced by the execution and
delivery thereof. All of the Series A Notes shall be offered for public sale in accordance with the
Official Notice of Sale. Tamalpais Advisors,Inc. (the "Financial Advisor")is hereby authorized
and directed to cause to be delivered to prospective bidders for the Notes copies of said Official
Notice of Sale, subject to such changes, additions and completions as may be acceptable to the
County Administrator.
The proposed form of the Notice of Intention to Sell Notes, in substantially the
form presented to this meeting(a copy of which is on file with the Clerk of the Board), is hereby
approved. The County Administrator is hereby directed to cause said Notice of Intention to Sell
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Notes to be published once,no later than 15 days before the date of sale of the Notes, in THE
FUND BUYER, a financial publication generally circulated throughout the State of California.
Electronic or faxed bids shall be received by the County Administrator of the
County or his designee up to the hour of 10:00 a.m. California time on October 8, 2002 or on
such earlier or later date or time as determined by the County Administrator as set forth in the
Official Notice of Sale, for the purchase of the Series A Notes for cash at not less than their
principal amount and accrued interest thereon to the date of their delivery, the interest rate or
rates (which shall not exceed 12% per annum)to be designated in the bid or bids, the County
Administrator reserving the right to reject any and all bids, in accordance with the terms and
conditions of said Official Notice of Sale. The County Administrator is hereby authorized to
determine whether to accept partial bids in increments of a specified denominational amount,
such as $20,000,000, and to award the Series A Notes to the highest responsible bidder or
bidders resulting in the lowest true interest cost to the County or to reject any or all bids. If the
Series A Notes are awarded to more than one bidder and at different rates of interest, each
incremental amount of Series A Notes of the same interest rate shall be given the same
designation with the number of designations equal to the number of different interest rates.
The County Administrator may, in his sole discretion, cancel the public sale of the
Series A Notes and negotiate for the sale of the Series A Notes with an underwriter or
underwriters, and enter into an agreement for the sale of the Notes, upon such terms and
conditions as he shall deem appropriate.
The County Administrator is hereby authorized, upon a determination it is in the
best interest of the County, to sell the Series F Notes prior to January 1, 2003, by negotiated or
public sale at not less than the principal amount thereof, which principal amount shall not exceed
the difference between $125,000,000 and the principal amount of the Series A Nates, and at an
interest rate or rates not to exceed .12% per annum.
Section 4. Disposition of Proceeds of Notes. The County shall, immediately
upon receiving the proceeds of the sale of the Notes, place in the County General Fund
maintained in the County Treasury all amounts received from such sale. Such amounts held in
the County General Fund shall be invested as permitted by Section 53601 or Section 53635 of
the Government Code provided that no such investments shall consist of reverse repurchase
agreements. Such amounts may be commingled with other funds of the County.
Amounts in the County General Fund attributable to the sale of the Notes shall be
withdrawn and expended by the County for any purpose for which the County is authorized to
expend funds from the General Fund of the County,but (except for costs related to the issuance
of the Nates)only after exhausting funds otherwise available for such purposes (which are not
restricted funds), and only to the extent that on any given day such other funds are not then
available, and for purposes of this section,otherwise available funds excludes amounts that are
held or set aside in a reasonable working capital reserve(as described in the tax certificate of the
County delivered upon issuance of the Notes and, in any event, not exceeding five percent(5%)
of the County's total working capital expenditures from its available funds in fiscal year 2001-
2002). If on the date that is six months from the date of issuance of a series of the Notes all
amounts attributable to the proceeds of the Notes of such series (including investment earnings
DOCSSFI:627789.3 4
thereon) have not been so expended, the County shall promptly notify Carrick, Herrington &
Sutcliffe LLP("Bond Counsel") and, to the extent of its power and authority, comply with the
instructions from Bond Counsel as to the means of satisfying the rebate requirements of Section
148 of the Internal Revenue Code of 1986 (the "Code").
Section 5. Source of Payment.
(A) The principal of and interest on the Notes shall be payable from taxes,
income, revenue, cash receipts and other moneys which are received by the County for the
General Fund for the fiscal year 2002-2003 and which are lawfully available for the payment of
current expenses and other obligations of the County (the "Unrestricted Revenues").
(B) As security for the payment of the principal of and interest on the Notes,
the County hereby pledges to deposit in trust in a special County fund designated as the"2002-
2003 Tax and Revenue Anticipation Note Repayment Fund" (the "Repayment Fund") (i) an
amount equal to fifty percent (50%v)of the aggregate principal amount of the Notes from the first
Unrestricted Revenues received by the County during the accounting period commencing on
December 11, 2002 and ending January 12,2003, inclusive (the "First Pledge Period"), and (ii)
an amount equal to 50% of the principal amount of Notes from the first Unrestricted Revenues
received by the County during the accounting period commencing on April 11, 2033 and ending
May 11, 2003, inclusive (the "Seconal Pledge Period"), together with an amount sufficient (net of
anticipated earnings on moneys in the Repayment Fund)(x)to satisfy and make up any
deficiency in the Repayment Fund with respect to the prior Pledge Period and (y)to pay the
interest on the Notes due on and prior to maturity. The amounts pledged by the County for
deposit into the Repayment Fund from the Unrestricted Revenues received during each indicated
accounting period are hereinafter called the "Pledged Revenues."
(C) In the event that there have been insufficient Unrestricted Revenues
received by the County by the third business day prior to the end of any such Pledge Period to
permit the deposit into the Repayment Fund of the full amount of the Pledged Revenues required
to be deposited with respect to such Pledge Period, then the amount of any deficiency in the
Repayment Fund shall be satisfied and made up from any other moneys of the County lawfully
available for the payment of the principal of the Notes and the interest thereon (all as provided in
Sections 53856 and 53857 of the Government Code) (the "Other Pledged Moneys") on such date
or thereafter on a daily basis, when and as such Pledged Revenues and Cather Pledged Moneys
are received by the County.
Section 6. Pledged Revenues.
(A) The Pledged Revenues shall be deposited by the Treasurer-Tax Collector
of the County(the "Treasurer")in the Repayment Fund on or prior to the last business day of
each respective Pledge Period, and applied as directed in this Resolution; and the Cather Pledged
Moneys, if any, shall be deposited by the Treasurer in the Repayment Fund on the last business
day of such Pledge Period and on each business day thereafter, until the full amount of the
moneys required by Section 5(B)has been so deposited in the.Repayment Fund; provided that, if
on the date that is six months from the date of issuance of a series of the Notes all amounts
attributable to the proceeds of the Notes of such series (including investment earnings thereon)
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have not been expended in accordance with Section 4, the amounts to be deposited in the
Repayment Fund during the period in which received shall be deposited as soon as received.
The principal of and interest on the Notes constitute a first lien and charge on, and shall be
payable from, moneys in the Repayment Fund. Moneys in the Repayment Fund shall be applied
only as hereinafter in this Section 6 provided.
(B) The Treasurer shall use the moneys in the Repayment Fund on the
respective interest payment dates to pay interest on the Notes then due and on the respective
maturity dates of the Notes to pay the principal of and interest on the Notes then due. Any
moneys remaining in the Repayment Fund after all such payments, or after provision for such
payments have been made, shall be transferred to the General Fund of the County. If for any
reason amounts in the Repayment Fund are insufficient to pay the Notes in full, such amounts
shall be applied pro rata to the payment of each series of Notes based on the total principal of
and interest payable upon the Notes at the respective maturities thereof, taking into account
anticipated earnings to be received on amounts in the Repayment Fund prior to the final maturity
date thereof.
(C) Moneys in the Repayment Fund shall be invested in Permitted Investments
as defined below, except that no such investments shall have a maturity date later than the
maturity date of the respective series of Notes expected to be paid with proceeds of such
investments. The proceeds of any such investments shall be retained in the Repayment Fund
until payment of principal of and interest on the Notes (or provision therefor) has been made in
accordance with paragraph (B), at which time any excess amount shall be transferred to the
General Fund of the County.
(D) Permitted Investments mean any of the following:
(1) United States Treasury notes, bonds, bills or certificates of indebtedness, or
those for which the full faith and credit of the United States are pledged for
the payment of principal and interest.
(2) Obligations of instrumentalities or agencies of the United States of
America limited to the following: (a) the Federal Home Loan Bank Board
(FHLB); (b)the Federal Home Loan Mortgage Corporation (FHLMC);
(c) the Federal National Mortgage Association (FNMA); (d)Federal Farm
Credit Bank (FFCB); (e) Government National Mortgage Association
(GNMA); (f) Student Loan Marketing Association (SLMA); Federal
Agricultural Mortgage Association and(g) guaranteed portions of Small
Business Administration (SBA)notes.
(3) Bills of exchange or time drafts drawn on and accepted by a commercial
bank, otherwise known as bankers acceptances. Purchases of bankers
acceptances may not exceed a maturity of 180 days. The financial
institution must have a minimum short-term rating of"A-1" and"P-1" by
S&P and Moody's, respectively, and a long-term rating of no less than
"A".
DOCSSFI:627789.3 6
(4) Commercial paper of"prime" quality of the highest ranking or of the
highest letter and numerical rating as provided for by Moody's ("P 1") or
S&P ("A-1"). Eligible paper is further limited to issuing corporations that
are organized and operating within the United States and having total
assets in excess of five hundred million dollars ($500,000,000). Purchases
of eligible commercial paper may not exceed a maturity of 270 days.
(5) Negotiable certificates of deposits issued by a nationally or state-chartered
bank or a state or federal association (as defined by Section 5102 of the
California Financial Code) or by a state-licensed branch of a foreign bank
in each case which has, or which is a subsidiary of a parent company which
has, the highest letter and numerical rating from Moody's ("P-1") and S&P
("A-1"),respectively.
(6) Investments in repurchase agreements of any securities listed in (1) through
(4) above. Investments in repurchase agreements may be made with
financial institutions having a rating of"Aa" or"AA" or better from
Moody's and S&P, respectively, and when the term of the agreement does
not exceed 30 days and are fully secured at or greater than 102% of the
market value plus accrued interest by obligations of the United States
Government, its agencies and instrumentalities, in accordance with number
(2) above.
(7) Deposits in the State of California Treasurer's Local Agency Investment
Fund(LAIF).
(8) Investment agreements with or the obligations of which are guaranteed by
(a) a domestic bank, financial institution or insurance company the
financial capacity to honor its senior obligations of which is rated at least
"AA" by S&P and"Aa2"by Moody's; or(b) a foreign bank the long-term
debt of which is rated "AA" by S&P and"Aa2" by Moody's (a"Qualified
Provider"); provided, that the investment agreement shall provide that if
during its term the provider's (or, if guaranteed, the guarantor's)rating by
either S&P or Moody's falls below "AA" or"Aa2", respectively, the
provider must within 10 business days assign the investment agreement to
a Qualified Provider reasonably acceptable to the County or collateralize
the investment agreement by delivering or transferring in accordance with
applicable state and federal laws (other than by means of entries on the
provider's books) to the County or a third party acting solely as agent
therefor(the "Molder of the Collateral") United States Treasury Obligations
which are free and clear of any third-party liens or claims at sufficient
collateral levels to maintain the highest short-term rating on the Notes.
(9) The Contra Costa County Treasurer's Investment Pool.
Section 7. Execution of Notes. The Treasurer or his designee is hereby
authorized to execute the Notes by use of his manual or facsimile signature, and the Clerk of the
Board of Supervisors of the County or one of his assistants is hereby authorized to countersign,
DOCSSF1:627789.3 7
by manual or facsimile signature, the Notes and to affix the seal of the County thereto by
impressing the seal or by imprinting a facsimile of the seal thereon. Said officers are hereby
authorized to cause the blank spaces in Exhibit A to be filled in as may be appropriate and to
deliver the Notes to the respective purchasers thereof. In the case of Notes executed by facsimile
signature of both the Treasurer and the Clerk of the Board of Supervisors, the Notes shall not be
valid unless and until the Paying Agent or his designee shall have manually authenticated such
Notes.
In case any officer whose signature appears on the Notes shall cease to be such
officer before the delivery of the Notes to the purchaser thereof, such signature shall nevertheless
be valid and sufficient for all purposes as if such officer had remained in office until such
delivery of the Notes.
Section 8. Form of Notes and Certificate of Authentication and Registration.
The Notes shall be issued in fully registered form without coupons and the Notes and the
Certificate of Authentication and Registration shall be substantially in the form and substance set
forth in Exhibit A attached hereto and by reference incorporated herein, the blanks in said form
to be filled in with appropriate words and figures.
Section 9. Use of Degositorv; Registration, Exchange and-Transfer.
(A) The Depository Trust Company, New York, New York, is hereby
appointed depository for the Notes. The Depository Trust Company shall act as depository
pursuant to the Blanket Issuer Letter of Representations on file with the Clerk of the Board. The
Notes shall be initially issued and registered in the name of"Cede&Co.," as nominee of The
Depository Trust Company, New York, New York and shall be evidenced by a single Note.
Registered ownership of each Note,or any portion thereof, may not thereafter be transferred
except as set forth in Section 9(B).
(B) The Notes shall be initially issued and registered as provided in
Section(A) hereof. Registered ownership of the Notes, or any portions thereof, may not
thereafter be transferred except:
(i) to any successor of Cede & Co., as nominee of The Depository
Trust Company, or its nominee, or of any substitute depository designated pursuant to clause (ii)
of this subsection (B) ("Substitute Depository"); provided that any successor of Cede &Co., as
nominee of The Depository Trust Company or Substitute Depository, shall be qualified under
any applicable laws to provide the service proposed to be provided by it;
(ii) to any Substitute Depository not objected to by the Treasurer, upon
(1)the resignation of The Depository Trust Company or its successor(or any Substitute
Depository or its successor)from its functions as depository, or(2)determination by the
Treasurer to substitute another depository for The Depository Trust Company(or its successor)
because the repository Trust Company(or its successor) is no longer able to carry out its
functions as depository, provided that any such Substitute repository shall be qualified under
any applicable laws to provide the services proposed to be provided by it; or
DOCSSFi:627789.3 8
(iii) to any person as provided below, upon (1) the resignation of The
Depository Trust Company or its successor(or any Substitute Depository or its successor)from
its functions as depository, or(2) a determination by the Treasurer to discontinue using The
Depository Trust Company or a depository.
(C) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection
(B) of this Section , upon receipt of all outstanding Notes of each series by the Paying Agent
(together, in the case of a successor paying agent appointed by the County pursuant to Section 12
hereof, with a written request of the Treasurer to such successor paying agent designating the
Substitute Depository), a single new Note for each series, which the County shall prepare or
cause to be prepared, shall be executed and delivered, registered in the name of any such
successor to Cede & Co. or such Substitute Depository,or their respective nominees, as the case
may be, all as specified by the Treasurer or, in the case of a successor paying agent appointed by
the County pursuant to Section 12 hereof, as specified in the written request of the Treasurer. In
the case of any transfer pursuant to clause (iii) of Subsection (B) of this Section 9 upon receipt of
all outstanding Notes by the Paying Agent (together, in the case of a successor paying agent
appointed by the County pursuant to Section 12 hereof, with a written request of the Treasurer to
such successor paying agent), new Notes, which the County shall prepare or cause to be
prepared, shall be executed and delivered in such denominations and registered in the names of
such persons as specified by the Treasurer or, in the case of a successor paying agent appointed
by the County pursuant to Section 12 hereof, as are requested in such written request of the
Treasurer, subject to the limitations of this Section 9, provided that the Paying Agent shall
deliver such new Notes as soon as practicable.
(D) The County and the Paying Agent shall be entitled to treat the person in
whose name any Note is registered as the owner thereof for all purposes of the Resolution and
for purposes of payment of principal of and interest on such Note, notwithstanding any notice to
the contrary received by the Paying Agent or the County; and the County and the Paying Agent
shall not have responsibility for transmitting payments to,communicating with, notifying, or
otherwise dealing with any beneficial owners of the Notes. Neither the County nor the Paying
Agent shall have any responsibility or obligation, legal or otherwise, to any such beneficial
owners or to any other party, including The Depository Trust Company or its successor(or
Substitute Depository or its successor), except to the owner of any Notes, and the Paying Agent
may rely conclusively on its records as to the identity of the owners of the Notes.
(E) Notwithstanding any other provision of this Resolution and so long as all
outstanding Notes are registered in the name of Cede &Co. or its registered assigns, the County
and the Paying Agent shall cooperate with Cede &Co. or its registered assigns, as sole registered
owner, in effecting payment of the principal of and interest on the Notes by arranging for
payment in such manner that funds for such payments are properly identified and are made
available on the date they are due all in accordance with the Letter of Representations, the
provisions of which the Paying Agent may rely upon to implement the foregoing procedures
notwithstanding any inconsistent provisions herein.
(F) In the case of any transfer pursuant to clause (iii) of subsection (B) of this
Section, any Note may, in accordance with its terms, be transferred or exchanged for a like
aggregate principal amount in authorized denominations of the same series, upon the books
DOCSSF1:627789.3 9
required to be kept by the Paying Agent pursuant to the provisions hereof,by the person in
whose name it is registered, in person or by his duly authorized attorney, upon surrender of such
Note for cancellation, and, in the case of a transfer, accompanied by delivery of a written
instrument of transfer, duly executed and in form approved by the Paying Agent.
Whenever any Note shall be surrendered for transfer or exchange, the County
shall execute and the Paying Agent shall authenticate, if required, and deliver a new Note or
Notes of the same series of authorized denominations, for a like aggregate principal amount.
The Paying Agent shall require the owner requesting such transfer or exchange to pay any tax or
other governmental charge required to be paid with respect to such transfer or exchange.
(G) The Paying Agent will keep or cause to be kept sufficient books for the
registration and transfer of the Notes, which shall at all times be open to inspection by the
County. Upon presentation for such purpose, the Paying Agent shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
such books, Notes as hereinbefore provided.
(H) If any Note shall become mutilated, the County, at the expense of the
owner of such Note, shall execute, and the Paying Agent shall thereupon authenticate, if
required, and deliver a new Note of like series,tenor and number in exchange and substitution
for the Note so mutilated, but only upon surrender to the Paying Agent of the Note so mutilated.
Every mutilated Note so surrendered to the Paying Agent shall be cancelled by it and delivered
to, or upon the order of, the County. If any Note shall be lost, destroyed or stolen,evidence of
such loss, destruction or theft may be submitted to the County and the Paying Agent and, if such
evidence be satisfactory to both and indemnity satisfactory to them shall be given, the County, at
the expense of the owner, shall execute, and the Paying Agent shall thereupon authenticate, if
required, and deliver a new Note of like series, tenor and number in lieu of and in substitution for
the Note so lost, destroyed or stolen (or if any such Note shall have matured or shall be about to
mature, instead of issuing a substitute Note,the Paying Agent may pay the same without
surrender thereof). The Paying Agent may require payment by the registered owner of a Note of
a sum not exceeding the actual cost of preparing each new Note issued pursuant to this paragraph
and of the expenses which may be incurred by the County and the Paying Agent. Any Note
issued under these provisions in lieu of any Note alleged to be lost, destroyed or stolen shall
constitute an original additional contractual obligation on the part of the County whether or not
the Note so alleged to be lost, destroyed or stolen be, at any time, enforceable by anyone, and
shall be entitled to the benefits of this Resolution with all other Notes secured by this Resolution.
All Notes surrendered for payment or registration of transfer, if surrendered to
any person other than the Paying Agent, shall be delivered to the Paying Agent and shall be
promptly cancelled by it. The County may at any time deliver to the Paying Agent for
cancellation any Notes previously authenticated and delivered hereunder which the County may
have acquired in any manner whatsoever, and all Notes so delivered shall promptly be cancelled
by the Paying Agent. No Note shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided herein, except as expressly permitted hereunder. All cancelled Notes held
by the Paying Agent shall be disposed of as directed by the County.
DOCSSFI:627784.3 10
Section 10. General Covenants. It is hereby covenanted and warranted by the
Board that all representations and recitals contained in this Resolution are true and correct and
that the Board and the County, and their appropriate officials, have duly taken all proceedings
necessary to be taken by them, and will take any additional proceedings necessary to be taken by
them, for the levy,collection and enforcement of the taxes, income, revenue, cash receipts and
other moneys pledged hereunder in accordance with law and for carrying out the provisions of
this Resolution and the Notes and shall cause to be paid in accordance with their terms the
principal of and interest on the Notes.
Section 11. Tax Covenants,• Rebate Fund.
(A) The County hereby covenants that it will not take any action, or fail to
take any action, if such action or failure to take such action would adversely affect the exclusion
from gross income of the interest payable on the Notes under Section 103 of the Code. Without
limiting the generality of the foregoing, the County hereby covenants that it will comply with the
requirements of the Tax Certificate of the County with respect to the Notes (the "Tax
Certificate"), to be entered into by the County as of the date of issuance of the Notes. The
provisions of this Section 1 I shall survive payment in full or defeasance of the Notes.
(B) The County covenants that it shall make or cause to be made all
calculations in a reasonable and prudent fashion relating to any rebate of excess investment
earnings on the proceeds of the Notes due to the United States Treasury, shall segregate and set
aside from lawfully available sources the amount such calculations may indicate may be required
to be paid to the United States Treasury and shall otherwise at all times do and perform all acts
and things necessary and within its power and authority, including complying with each
applicable requirement of Section 103 and Sections 141 through 150 of the Code and complying
with the instructions of Bond Counsel referred to in Section 4 hereof, to assure that interest paid
on the Notes shall, for the purposes of federal income taxes and California personal income
taxation, be excludable from the gross income of the recipients thereof and exempt from such
taxation. As part of the performance of the covenant contained in the preceding sentence,
promptly after six months from the date of the issuance of each series of the Notes, the County
will reasonably and prudently calculate the amount of the Note proceeds of such series which
have been expended, with a view to determining whether or not the County has met the
requirements of Section 148(f)(4)(B) of the Code with respect to the Notes of such series, and if
it has not met such requirements, it will reasonably and prudently calculate or cause to be
calculated the amount, if any, of investment earnings which must be rebated to the United States
and will immediately set aside, from revenues attributable to the 2002-2003 Fiscal Year or, to the
extent not available from such revenues, from any other moneys lawfully available, the amount
of any such rebate in the Fund referred to in paragraph (C)of this Section 11.
(C) If funds are required to be deposited therein, the County shall establish
and maintain a fund separate from any other fund established and maintained hereunder
designated as the "2002-2003 Tax and Revenue Anticipation Note Rebate Fund". There shall be
deposited in the Rebate Fund such amounts as are required to be deposited therein in accordance
with the written instructions from Bond Counsel pursuant to Section 4 hereof.
nocssrI:627789.3 11
(D) Notwithstanding any other provision of this Resolution to the contrary,
upon the County's failure to observe, or refusal to comply with, the covenants contained in this
Section, no one other than the owners or former owners of the Notes shall be entitled to exercise
any right or remedy under this Resolution on the basis of the County's failure to observe, or
refusal to comply with, such covenants.
(E) Notwithstanding any provision of this section, if the County shall provide
to the Paying Agent an opinion of Bond Counsel that any specified action required under this
section is no longer required or that some further or different action is required to maintain the
exclusion from gross income for federal income tax purposes of interest on the Notes, the Paying
Agent and the County may conclusively rely on such opinion in complying with the
requirements of this section, and the covenants hereunder shall be deemed to be modified to that
extent.
Section 12. Paying-Agent. The Treasurer is hereby appointed as Paying Agent
for the Notes. The County hereby directs and authorizes the payment by the Paying Agent of the
interest on and principal of the Notes when such become due and payable, from the Repayment
Fund in the manner set forth herein. The County hereby covenants to deposit funds in the
Repayment Fund at the times and in the amounts specified herein to provide sufficient moneys to
pay the principal of and interest on the Notes on the day or days on which they mature. Payment
of the Notes shall be in accordance with the terms of the Notes and this Resolution.
This appointment shall not preclude the County from appointing a financial
institution to act as Paying Agent or one or more successors thereto, all without notice to or the
consent of the registered owners of the Notes. Any such successor paying agent shall be or shall
have co-paying agent relationships with one or more banks or trust companies with offices in
New York, New York, or Los Angeles, California, or San Francisco, California.
The Paying Agent, initially the Treasurer, is also appointed as registrar and upon
the request of any registered owner is authorized to record the transfer or exchange of Notes in
accordance with the provisions hereof.
Section 13, Official Statement for Notes. The proposed form of Official
Statement relating to the Notes (the "Official Statement"), on file with the Clerk of the Board of
Supervisors and incorporated into this Resolution by reference, is hereby approved with such
changes, additions,completion and corrections as the County Administrator may approve. The
County Administrator or his designee is hereby authorized and directed, for and in the name and
on behalf of the County, to execute and deliver an official statement in substantially said form,
with such changes therein as such officer executing the same may require or approve, such
approval to be conclusively evidenced by the execution and delivery thereof. Distribution by the
Financial Advisor of a preliminary Official Statement relating to the Notes is hereby approved
and the County Administrator or his designee is hereby authorized and directed, for and in the
name and on behalf of the County, to execute a certificate confirming that the Preliminary
Official Statement has been "deemed final" by the County for purposes of Securities and
Exchange Commission Rule 15c2-12.
DOCSSFt:627789.3 12
Section 14. Continuing Disclosure. The Treasurer is hereby authorized to
execute a Continuing Disclosure Certificate on behalf of the County containing such covenants
of the County as shall be necessary to comply with the requirements of Securities and Exchange
Commission Rule 15c2-12. The County hereby covenants and agrees that it will comply with
and carry out all of the provisions of such Continuing Disclosure Certificate.
Section 15. .Approval of Actions. All actions heretofore taken by the officers
and agents of the County or the Board with respect to the sale and issuance of the Notes are
hereby approved, confirmed and ratified, and the officers of the County and the Board are hereby
authorized and directed, for and in the name and on behalf of the County, to do any and all things
and take any and all actions and execute any and all certificates, agreements and other documents
which they, or any of them, may deem necessary or advisable in order to consummate the lawful
issuance and delivery of the Notes in accordance with this Resolution.
Section 16. Proceedings Constitute Contract. The provisions of the Notes and
of this Resolution shall constitute a contract between the County and the registered owners of the
Notes, and such provisions shall be enforceable by mandamus or any other appropriate suit,
action or proceeding at law or in equity in any court of competent jurisdiction, and, upon
issuance of the Notes, shall be irrepealable.
Section 17. Severability. If any one or more of the agreements, conditions,
covenants or terms contained herein required to be observed or performed by or on the part of
the Board shall be contrary to law, then such agreement or agreements, such condition or
conditions, such covenant or covenants or such term or terms shall be null and void and shall be
deemed severable from the remaining agreements, conditions, covenants and terms hereof and
shall in no way affect the validity hereof or of the Notes, and the owners of the Notes shall retain
all the benefit, protection and security afforded to them hereunder and under all provisions of
applicable law. The Board hereby declares that it would have adopted this Resolution and each
and every other section, paragraph, subdivision, sentence,clause and phrase hereof and would
have authorized the issuance of the Notes pursuant hereto irrespective of the fact that any one or
more of the sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the
application thereof to any person or circumstance may be held to be unconstitutional,
unenforceable or invalid.
C)oCSSF i:627789.3 13
PASSED AND ADOPTED BY THE BOARD OF SUPERVISORS OF TBE
COUNTY OF CONTRA COSTA this i7th day of SnMM , 2002 by the
following vote:
YES: aTMaSYRS UUXM, GMM, TJeM�, WM AIS GIOIA
NOES: NOM
ABSENT: NM
COUNTY OF FONTRA COSTA
r
By: --N.V
i Chair of the Board
of Supervisors
ATTEST: John R. Sweeten,County
Administrator and Clerk of the Board
of Supervisors of the County of
Contra Costa
Deputy
CLERK'S CERTIFICATE
The undersigned Chief Clerk of the Board of Supervisors of the County of Centra
Costa, hereby certifies as follows:
The foregoing is a full, true and correct copy of a resolution duly adopted at a
regular meeting of the Board of Supervisors of said County duly and regularly and legally held at
the regular meeting place thereof on ss=imix - 17, , 2002, of which meeting all of
the members of the Board of Supervisors of said County had due notice and at which a majority
thereof were present.
At said meeting said resolution was adopted by the following vote:
Ayes: amwisms UITIMA, MM, DesAUMIM, GLOM AND GIOIA
Noes: NM
Absent: Nm
I have carefully compared the same with the original minutes of said meeting on
file and of record in my office and the foregoing is a full, true and correct copy of the original
resolution adopted at said meeting and entered in said minutes.
I further certify that an agenda of said meeting was posted at least 72 hours prior
to the date of the meeting in a place in the City of Martinez, California, freely accessible to
members of the public and that a short description of said resolution appeared on said agenda.
Said resolution has not been amended, modified or rescinded since the date of its
adoption, and the same is now in full force and effect.
Dated- SLTTRABM 17,ZW2
Chief Clerk of the Board of Supervisors
County of Contra Costa
[Seal]
DOCSSF1:627789.3
EXHIBIT A
REGISTERED REGISTERED
No. R-_ $ ,000,000
COUNTY OF CONTRA COSTA, CALIFORNIA,
2002-2003 TAX AND REVENUE ANTICIPATION NOTE, SERIES [A/B1
Rate of Interest: Note Date: Maturity Date: CUSIP No.:
Registered Owner: CEDE&r.CO.
Principal Amount: DOLLARS
FOR VALUE RECEIVED,the County of Contra Costa(the"County„), State of
California, acknowledges itself indebted to and premises to pay to the Registered Owner
identified above, or registered assigns, the Principal Amount specified above, in lawful money of
the United States of America,on the Maturity Date specified above, together with interest
thereon payable [on and] at the maturity thereof, at the Pate of Interest per annum
set forth above (computed on the basis of a 360-day year composed of twelve 30-day months)in
like lawful money from the Note Date specified above until payment in full of said principal
sum. Interest on this Note, due on _ —, shall be paid to the person in whose name this
Note is registered as of the close of business on the 15th day of the calendar month immediately
preceding the interest payment date by check mailed to such registered owner. The principal of
and interest on this Note shall be payable only to the registered owner hereof upon surrender of
this Note at the office of the Treasurer-Tax Collector of the County, as paying agent(together
with any successor appointed by the County, the "Paying Agent") as the same shall fall dine;
provided., however, that no interest shall be payable for any period after maturity during which
the registered owner hereof fails to properly present this Note for payment.
It is hereby certified, recited and declared that this Note is one of a series of Notes
of the Series specified above issued in the aggregate principal amount of$ _ and is
part of an authorized issue of Notes entitled"County of Contra Costa, California, 2002-2003 Tax
and Revenue Anticipation Notes" (the "Notes"), authorized in the aggregate principal amount of
One Hundred Twenty-Five Million Dollars ($125,000,000), all of like tenor, made, executed and
given pursuant to the authority of Article 7.6 (commencing with Section 53850) of Chapter 4,
Part 1,Division 2,Title 5 of the California Government Code and all laws amendatory thereof or
supplemental thereto, and under and pursuant to the provisions of a Resolution of the Board of
Supervisors of the County adopted on September—, 2002 (herein called the"Resolution"),
DOCSSFt:627789.3 A-1
authorizing the issuance of the Notes, and that all acts, conditions and things required to exist,
happen and be performed precedent to and in the issuance of this Note have existed, happened
and been performed in regular and due time, form and manner as required by law, and that this
Note, together with all other indebtedness and obligations of the County, does not exceed any
limit prescribed by the Constitution or statutes of the State of California. The Notes of each
series shall be payable on a parity with each other.
The principal of and interest on the Notes shall be payable from taxes, income,
revenue, cash receipts and other moneys which are received by the County for the General Fund
of the County for the fiscal year 2002-2043 and which are lawfully available for the payment of
current expenses and other obligations of the County(the"Unrestricted Revenues"). As security
for the payment of the principal of and interest on the Notes, the County has pledged to deposit
in the Repayment Fund(as defined in the Resolution): (i) an amount equal to 50% of the
principal amount of the Notes from the first Unrestricted Revenues received by the County
during the accounting period commencing on December 11, 2002 and ending January 12, 2003,
inclusive (the "First Pledge Period"), and(ii)an amount equal to 50% of the principal amount of
Notes from the first Unrestricted Revenues received by the County during the accounting period
commencing on April 11, 2403 and ending May 11, 2003, inclusive (the "Second Pledge
Period"), together with an amount sufficient(net of anticipated earnings on moneys in the
Repayment Fund) (x) to satisfy and make up any deficiency in the Repayment Fund with respect
to the prior Pledge Period and(y) to pay the interest on the Notes due on and prior to maturity
(such pledged amounts being hereinafter called the "Pledged Revenues"). In the event that there
are insufficient Pledged Revenues received by the County by the third business day prior to the
end of any such Pledge Period to permit the deposit into the Repayment Fund of the full amount
of the aforesaid moneys to he deposited, then the amount of any deficiency in the Repayment
Fund shall be satisfied and made up from any other moneys of the County lawfully available for
the payment of the principal of and interest on the Notes (such other pledged moneys being
hereinafter called the "Other Pledged Moneys"). The principal of and interest on the Notes shall
constitute a first lien and charge on, and shall be payable from, moneys in the Repayment Fund.
This Note is transferable by the registered owner hereof in person or by such
owner's attorney duly authorized in writing at the office of the Paying Agent, but only in the
manner, subject to the limitations and upon payment of the charges provided in the Resolution,
and upon surrender and cancellation of this Note. Upon such transfer a new Note or Notes of
authorized denominations and for the same aggregate principal amount will be issued to the
transferees in exchange herefor.
The County and the Paying Agent may deem and treat the registered owner hereof
as the absolute owner hereof for the purpose of receiving payment of or on account of principal
hereof and interest due hereon and for all other purposes, and neither the County nor the Paying
Agent shall be affected by any notice to the contrary.
This Note shall not be valid or become obligatory for any purpose until the
Certificate of Registration hereon shall have been signed by the Paying Agent.
DOCSSFi:627789.3 A-2
IN WITNESS WHEREOF,the County of Centra Costa has caused this Note to be
executed by the manual or facsimile signature of its Treasurer-Tax Collector and countersigned
by the manual or facsimile signature of the Clerk of its Board.of Supervisors and caused the
official seal of its Board.of Supervisors to be impressed hereon, all as of the Note Date specified
above.
COUNTY OF CONTRA COSTA
By,
re e`
-Tax Collector
(SEAT,.)
Countersigned:
County Administrator and
erk of the Board of Supervisors
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION]
This Note is one of the Nates described in the within-mentioned Resolution,
which Nate has been authenticated and registered on the date set forth below.
Date of Authentication:
By49
Tia er-Tax Collector
of tt` unty of Contra Costa
[)OCSSFI:627789.3 Awa
[FORM OF ASSIGNMENT]
For value received the undersigned do(es)hereby sell, assign and transfer unto
(insert Social Security Number or taxpayer identification
number)the within-mentioned registered Note and hereby irrevocably constitute(s)and
appoint(s) attorney,to transfer the same on the books of the
Trustee with full flower of substitution in the premises.
Dated:
Signature
NOTE. The signature to the
assignment must correspond to the
name as written on the face of this
Note in every particular, without
any alteration or change
whatsoever.
Signature Guaranteed By:
NOTE:The signature to
the assignment must be
guaranteed by a member
firm of the New York Stock
Exchange or a commercial
bank or trust company.
[FORM OF DTC LEGEND]
Unless the certificate is presented by an authorized representative of The
Depository Trust Company to the issuer or its agent for registration of transfer,exchange or
payment, and any certificate issued is registered in the name of Cede &Co. or such other name
as requested by an authorized representative of The Depository Trust Company and any payment
is made to Cede &Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR ''VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since the registered owner
hereof, Cede & Co., has an interest herein.
DOCSSFi:627789.3 A-4
NOTICE OF INTENTION TO SELL NOTES
$_,000,000-
COUNTY OF CONTRA COSTA, CALIFORNIA
2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
NOTICE IS HEREBY GIVEN that the County of Contra Costa, California (the
"County"), intends to offer the above Notes for public sale on Tuesday, October 8, 2002,at the
hour of 10:00 a.m., local time (or on such other date and time as may be determined by the
County as provided below), at the offices of the Financial Advisor, Tamalpais Advisors, Inc.,
3030 Bridgeway, Suite 340, Sausalito, California 94965, subject to all the terms and conditions
of the Official Notice of Sale forthe Notes, copies of which (along with the Preliminary Official
Statement relating to the Notes) will be furnished upon request to the Financial Advisor at the
above address (telephone (415) 331.4473, fax(415) 331-4479).
Any sale date, time and terms of the Notes may be changed by the County by
notice thereof through The Bond Buyer Wire no later than 1:00 p.m., Pacific time, on the
business day prior to the then-scheduled date for receipt of bids or on such date if no legal bid or
bids are received. Legal Opinion: Orrick, Herrington& Sutcliffe LLP, San Francisco,
California.
Dated: September_, 2002.
lsl John R. Sweeten
County Administrator and Clerk
of the Board of Supervisors,
County of Contra Costa, State of California
Preliminary,subject to change.
DOCSSF 1:627808.2
OFFICIAL NOTICE OF SALE
AND
BID FORM
COUNTY OF CONTRA COSTA
STATE OF CALIFORNIA
$_,000,000
2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
:DATE OF SALE
TUESDAY, OCTOBER 8, 2002
10:00 A.M., LOCAL TIME
BIDS TO BE RECEIVED AT THE OFFICES OF
TAMALPAIS ADVISORS, INC.
3030 Bridgeway, Suite 340
Sausalito,California 94965
Tel: (415) 331-4473
Fax: (415) 331-4479
DOCSSF1:627814.2
OFFICIAL NOTICE OF SALE
$_,000,000
COUNTY OF CONTRA COSTA, CALIFORNIA
2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
NOTICE IS HEREBY GIVEN that faxed bids as well as electronically submitted
proposals will be received and opened on behalf of the County of Contra Costa(the "County") at
the place and up to the time specified below for the purchase of$,000,000 principal amount of
County of Contra Costa 2002-2003 Tax and Revenue Anticipation Notes, Series A(the "Notes"):
TIME: 10:00 a.m. local time on Tuesday, October 8, 2002, or at such later date and/or
other time as shall be established by the County Administrator of the County or
his designee (the "County Administrator") and communicated through The Bond
Buyer Wire not later than 1:00 p.m., Pacific time, on the business day prior to the
day bids are to be received. If no legal bid or bids are received for the Notes on
October 8, 2002 (or such other date as is communicated by The Bond Buyer
Wire) at the time and place specified, bids will be received at the same place at
such time specified on such other date as shall be designated by The Bond Buyer
Wire.
As an accommodation to bidders, telephonic or faxed notice of the postponement
of the sale time and/or date or change in the principal amount will be given to any
bidder requesting such notice by request directed to the County's Financial
Advisor, Tarnalpais Advisors, Inc., 3030 Bridgeway, Suite 340, Sausalito,
California 94965; Attn. Jean Buckley (Phone (415) 331-4473). Failure of any
bidder to receive such Bond Buyer Wire, telephonic or faxed notice shall not
affect the legality of the sale.
PLACE: Tamalpais Advisors, Inc.
3030 Bridgeway, Suite 340
Sausalito, California 94965
Telephone: (415) 331-4473
Fax: (415) 331-4479
MAIL: Mailed bids should be addressed to:
County of Contra Costa
c/o Tamalpais Advisors, Inc.
3030 Bridgeway, Suite 340
Sausalito, California 94965
Attn: Jean Buckley
The Notes will be issued pursuant to a Resolution (the "Resolution") adopted by
the County on September_, 2002. Copies of the Resolution will be furnished to any interested
bidder upon request to the Director, Capital Facilities and Debt Management, County of Contra
Costa, 651 Pine Street, 6`h Floor, Martinez, CA 94553-0063, (925) 335-1093, Attn: Laura W.
Lockwood.
DOCSSFI:627$14.2
BOOK-ENTRY ONLY: The Notes shall be issued in registered form by means
of a book-entry system with no distribution of note certificates made to the public. One or more
Note certificates representing the Note issue will be issued to The Depository Trust Company,
New York., New York ("DTC"), registered in the name of Cede & Co., its nominee. The book-
entry system will evidence ownership interests in the Notes in the denominations of$5,000 or
any integral multiple thereof,with transfers of ownership effected on the records of DTC.
PAYMENT OF DTC FEES: The County will submit all requisite documents to
DTC for DTC-eligibility purposes. However, the purchaser of the Notes will be responsible for
payment of all fees charged by DTC.
NOTE TERMS: The Notes will be dated the date of issuance thereof, will pay
interest on , 2003 and at the maturity thereof and will mature on ,
2003.
PREPAYMENT: The Notes are not subject to prepayment prior to maturity.
PURPOSE: The proceeds of the sale of the Notes will provide moneys to help
meet current (Fiscal Year 2002-2003) County expenditures, including current expenses, capital
expenditures and the discharge of other obligations or indebtedness of the County.
ADDITIONAL NOTES: The County has authorized the issuance of additional
notes (the "Series B Notes") payable on a parity with the Series A Notes and which in aggregate
with the principal amount of the Series A Notes are not to exceed$100,000,000.
SECURITY: The principal amount of the Notes and Series B Notes, together
with interest thereon, shall be payable from taxes, income, revenue, cash receipts and other
moneys which are received by the County for the General Fund of the County attributable to
Fiscal Year 2002-2003 and which are lawfully available for the payment of current expenses and
other obligations of the County (the "Unrestricted Revenues"). The Notes and Series B Notes
are secured by the County's pledge to deposit in trust in a special fund designated as the "2002-
2003 Tax and Revenue Anticipation Note Repayment Fund" (the "Repayment Fund") specific
amounts on specific dates. Bidders are referred to the Resolution and the Preliminary Official
Statement for further information.
CONTINUING DISCLOSURE: The County will deliver to the accepted bidder
or bidders a Continuing Disclosure Certificate in connection with the issuance of the Notes in
which, among other things, the County covenants to provide notice of certain material events to
nationally recognized municipal securities information depositories. The County has never
failed in any material respects to comply with its obligations regarding continuing disclosure.
LEGAL OPINION -- DISCLOSURE COUNSEL: The accepted bidder or
bidders will receive a disclosure opinion from Lofton & Jennings, San Francisco, California
regarding the Official Statement.
LEGAL OPINION -- TAX. EXEMPT STATUS: The Notes will be issued
subject to the approving legal opinion of Orrick, Herrington & Sutcliffe SLP, San Francisco,
California ("Bond Counsel"), approving the validity of the Notes and stating that, in the opinion
rsocssFI:62761a.z 2
of Bond Counsel, based on an analysis of existing laws, regulations, rulings, and court decisions,
and assuming, among other matters, compliance with certain covenants, interest on the Notes is
excluded from gross income for federal income tax purposes under Section 103 of the Internal
Revenue Code of 1986 and is exempt from State of California personal income taxes. A copy of
the proposed opinion of Bond Counsel is set forth in Appendix C of the Preliminary Official
Statement.
FORM OF BID -- NO DISCOUNT: The bids may be for all or part (in
increments of $20,000,000) of the Notes hereby offered for sale. Bids for less than all of the
issue are required to be made in increments of$20,000,000 and no bid for less than $20,000,000
principal amount of Notes will be entertained. Awards will be made in increments of
$20,000,000 up to $,000,000 with the remainder to be then awarded. Each bid shall state the
purchase price,which shall not be less than par, and the interest rate, which shall not exceed 12%
per annum, and together with the bidder's good faith check described herein (unless a Financial
Surety Bond is furnished pursuant to "BID CHECK. OR BOND"), must be delivered by
electronic or facsimile transmission, as described below, or enclosed in a sealed envelope
addressed to the County and received by the time and at the place specified above. Each bid
must be in accordance with the terms and conditions set forth in this Official Notice of Sale.
ELECTRONIC BIDS: Solely as an accommodation to bidders, the County will
receive bids delivered electronically through the following service (the "Bid Service").
Dalcomp, a division of Thomson Financial Municipals Group, Inc.
BIDCOMP Competitive Bidding System and Parity Electronic Bid
Submission System
395 Hudson Street
New York, NY 10014
Phone: (212) 806-8304
Fax: (212) 989-9281
Internet address: htt_p://www.tm3.com
If any provision of this Official Notice of Sale conflicts with information provided
by the Bid Service, this Official Notice of Sale shall control. Each bidder submitting an
electronic bid agrees by doing so that it is solely responsible for all arrangements with (including
any charges by) the Bid Service, that the County does not endorse or encourage the use of the
Bid Service, and that the Bid Service is not acting as an agent of the County. Instructions for
submitting electronic bids must be obtained from the Bid Service, and the County does not
assume any responsibility for ensuring or verifying bidder compliance with the Bid Service's
procedures. The County shall be entitled to assume that any bid received via the Bid Services
has been made by a duly authorized agent of the bidder.
WARNINGS REGARDING ELECTRONIC BIDS: THE COUNTY WILL
ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON THE OFFICIAL
BID FORM CREATED FOR SUCH PURPOSE. EACH BIDDER. SUBMITTING AN
ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY
RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY, THAT THE COUNTY
NEITHER ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY, AND
DOCSSFI:62 7824.? 3
THAT PARITY IS NOT ACTING AS AN AGENT OF THE COUNTY. INSTRUCTIONS
AND FORMS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM
PARITY, AND THE COUNTY ASSUMES NO RESPONSIBILITY FOR ENSURING OR
VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF PARITY. THE
COUNTY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY HAS BEEN
MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.
THE COUNTY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE
ELECTRONIC BIDS; HOWEVER, THE COUNTY, THE FINANCIAL ADVISOR AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN
ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE
TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF
BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE
COUNTY AT THE PLACE OF BID OPENING AND THE COUNTY SHALL NOT BE
REQUIRED TO ACCEPT THE TIME KEPT BY PARITY AS THE OFFICIAL TIME. THE
COUNTY ASSUMES NO RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR TO
THE DEADLINE FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE OR NOT
RECEIVED.
WARNINGS REGARDING FAX BIDS: BIDS SUBMITTED BY
FACSIMILE TRANSMISSION ARE DEEMED LATE AND WILL NOT BE EVALUATED
UNLESS, AT PRECISELY THE TIME INDICATED ABOVE FOR SUBMISSION OF BIDS,
THE ENTIRE BID FORM HAS BEEN FULLY EJECTED FROM THE RECEIVING FAX
MACHINE AT THE PLACE OF THE BID OPENING, AND THE INTEREST RATES,
TOTAL PURCHASE PRICE, AND NAME AND SIGNATURE OF THE BIDDER ARE
CLEARLY READABLE BY THAT TIME. NEITHER THE COUNTY, THE COUNTY'S
FINANCIAL ADVISOR, NOR THE COUNTY'S BOND COUNSEL WILL ACCEPT
RESPONSIBILITY FOR, AND THE BIDDER EXPRESSLY ASSUMES THE RISK OF, ANY
INCOMPLETE, ILLEGIBLE OR UNTIMELY .BID SUBMITTED BY SUCH BIDDER BY
FACSIMILE TRANSMISSION, INCLUDING BY REASON OF GARBLED
TRANSMISSIONS, MECHANICAL FAILURE, ENGAGED TELEPHONE OR
TELECOMMUNICATION LINES AT THE PLACE OF BID OPENING, OR ANY OTHER
CAUSE FOR REJECTION ARISING OUT OF ANY BIDDER'S ELECTION TO DELIVER
ITS BID BY MEANS OTHER THAN HAND DELIVERY. NO ATTEMPT WILL BE MADE
PRIOR TO THE DEADLINE FOR OPENING BIDS TO INFORM ANY BIDDER THAT ITS
BID WAS INCOMPLETE, ILLEGIBLE, OR NOT RECEIVED.
IN THE EVENT ANY BIDDER SUBMITS MORE THAN ONE BID
(WHETHER BY FACSIMILE OR OTHERWISE), THE BID MOST RECENTLY RECEIVED
IN ITS ENTIRETY PRIOR TO THE DEADLINE NOTED ABOVE WILL BE CONSIDERED
THE OPERATIVE BID FOR SUCH BIDDER AND ALL PREVIOUS BIDS OF SUCH
BIDDER WILL BE DISREGARDED.
INTEREST RATE: Interest with respect to the Notes is computed on the basis
of a 360-day year and a 30-day month and accrues from the date of issuance of the Notes.
Interest on the Notes is payable on , 2003 and at the maturity of the Nates. In
connection with the bid submitted for the Notes, (I)each bidder must bid an interest rate in a
DOCSSF1:627814.2 4
multiple of one one-thousandth of one percent (1/1000 of 1%) per annum, which rate shall not
exceed 12% per annum; (2) interest with respect to a Note shall be computed from the date of
issuance thereof(expected to be October_, 2002) to , 2003 the stated maturity date at
the interest rate specified in the bid; (3)the same interest rate shall apply to all Notes (with
respect to the $20,000,000 increments specified in the bid); and(4) any premium must be paid as
part of the purchase price, and no bid will be accepted which contemplates the waiver of any
interest or other concession by the bidder as a substitute for payment in full of the purchase price.
BEST BID: The Notes will be awarded to the best responsible bidder or bidders,
considering the rate specified and the premium offered, if any, in increments of$20,000,000 up
to $,000,000, and the remainder out of the next best $20,000,000 until all $T,000,000 of
Notes have been awarded. Therefore, a bidder may be awarded Notes in an amount which is less
than that requested by such bidder. The Notes will be awarded to the bidder or bidders whose
bid or bids represent the lowest true interest cost to the County, considering the interest rate
specified and the premium offered, if any. The true interest cost will be that nominal annual
discount rate which, when compounded semiannually and when used to discount all payments of
principal and interest payable on the Notes at the rate specified in the bid to the date of the Notes
(disregarding for the purposes of the calculation the accrued interest to the date of delivery of the
Notes), results in the amount equal to the purchase price, which is the principal amount of the
Notes plus the amount of any premium offered. In the event that two or more bidders offer bids
for the Notes at the same lowest true interest cost, the County shall determine by lot which
bidder shall be awarded such Notes.
PRINCIPAL AMOUNT: The County reserves the right following receipt of
bids and detennination of the winning bid or bids to decrease the principal amount of the Notes
by not more than 10%. In such event, the County will award such lesser amount of Notes and
the purchase price bid of the successful bidder or bidders will be proportionally reduced or the
bid or bids less advantageous to the County will not be accepted or will be accepted in a lesser
amount.
RIGHT OF REJECTION: The County reserves the right, in its sole discretion,
to reject any and all bids and to waive any irregularity or informality in any bid.
PROMPT AWARD: The County Administrator or his designee will take action
awarding the Notes or rejecting all bids not later than thirty(30) hours after the expiration of the
time herein prescribed for the receipt of proposals, unless such period for award is waived by the
successful bidder or bidders. Notice of the award will be given promptly to the successful bidder
or bidders.
DELIVERY AND PAYMENT: Delivery of the Notes through DTC is expected
to be made to the successful bidder on or about October_, 2002. Payment for the Notes must
be made in Federal Reserve Bank funds or other immediately available funds. Any expense in
providing immediately available funds, whether by transfer of Federal Reserve Bank funds or
otherwise, shall be borne by the purchaser.
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the
Notes, but neither failure to print such numbers on any Note nor any error with respect thereto
DOCSSF1:627814.2 5
shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and
pay for the Notes in accordance with the terms of this Official Notice of Sale. All expenses in
relation to the printing of CUSIP numbers on the Notes shall be paid for by the County;
provided, however, that the CiUSIP Service Bureau charge for the assignment of said
numbers shall be the responsibility of and shall be paid for by the purchaser.
CER'T'IFICATE REGARDING REOFFERING PRICE: As soon as
practicable, but not later than five days after award of the Notes and upon the delivery date of the
Notes, the successful bidder or bidders for each accepted bid must submit to the County a
certificate or certificates specifying the reoffering price at which at least 10% of the Notes of
such bid or bids were sold (or were offered in a bona fide public offering and as of the date of
award of the Notes to the successful bidder were reasonably expected to be sold) to the public.
Such certificate or certificates shall be in form and substance satisfactory to Bond Counsel and
shall include such additional information as may be requested by Bond Counsel.
RIGHT OF CANCELLATION: The successful bidder or bidders shall have the
right, at their option, to cancel the contract of purchase if the County shall fail to execute the
Notes and tender the same on or before sixty(60) days after the award thereof, and in such event
the successful bidder or bidders shall be entitled to the return of the deposit accompanying the
bid.
BIT) CHECK OR BOND: A Good Faith Deposit ("Deposit") in the form of a
certified or cashier's check or a bid bond ("Financial Surety Bond"), in the amount of two
hundred fifty thousand dollars ($250,000) payable to the order of the County, must accompany
each proposal as a guarantee that the bidder, if successful, will accept and pay for the Notes in
accordance with the terms of the bid. However, an individual bidder will not be required to
submit a separate deposit for each bid submitted, but may submit one deposit for multiple bids.
If a check is used, it must accompany the bid and be drawn on a bank or trust company having an
office in San Francisco or Los Angeles, California. If a Financial Surety Bond is used, it must be
from a pre-qualified insurance company whose claims paying ability is rated in the highest rating
category by Moody's Investors Service or Standard & Poor's, and is licensed to issue such a
bond in the State of California. The form of such Financial Surety Bond is subject to prior
approval by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, and
such form must be submitted to Tamalpais Advisors, Inc., the Financial Advisor, prior to the
opening of proposals. Such Financial Surety Bond must provide that the surety shall make
payment of the full amount of the Deposit by wire transfer to the County within 24 hours of the
receipt of written notice from either the County or the Financial Advisor that the bidder has
failed to submit the Deposit as required by this Official Notice of Sale. The Financial Surety
Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If
the Notes are awarded to a bidder utilizing a Financial Surety Bond, then the purchaser
("Purchaser") is required to submit its Deposit to the County in the form of a certified or
cashier's check or wire transfer not later than 3:30 p.m., California time, on the next business day
following the award. If multiple bids are accepted, each successful bidder will be required to
submit only its pro rata amount of the Deposit as specified by the County with the award and
bidders submitting a check will have the opportunity to submit a replacement check in the lesser
amount on such next business day. If such Deposit is not received by that time, the Financial
Surety Bond may be drawn by the County to satisfy the Deposit requirement. The Deposit shall
DOCSsrt:627814.2 6
be cashed by the County and shall then be applied toward the purchase price of the Notes. If
after the award of the Notes the successful bidder or bidders fail to complete their purchase on
the terms stated in their proposal, the Deposit will be retained by the County. The checks
accompanying unaccepted proposals will be returned promptly. No interest on the Deposit will
accrue to any bidder.
STATEMENT OF TRUE INTEREST COST: Each bidder is requested, but is
not required, to state in its bid the true interest cost in dollars, which shall be considered as
informative only and not binding.
OFFICIAL STATEMENT: The County will approve a Preliminary Official
Statement relating to the Notes, which the County will certify to be "deemed final" as of its date
for purposes of SEC Rule 15c2-12, except for the omission of certain pricing and related
information, and has authorized the use of the final Official Statement in connection with the sale
of the Notes. Up to two hundred copies of the final Official Statement will be supplied within
seven business days to the purchaser or purchasers of the Notes for this purpose at the expense of
the County.
RESALE IN OTHER STATES: The successful bidder or bidders will assume
responsibility for taking any action necessary to qualify the Notes for offer and sale in
jurisdictions other than California, and for complying with the laws of all jurisdictions on resale
of the Notes, and shall indemnify and hold harmless the County and its officials and supervisors
from any loss or damage resulting from any failure to comply with any such law.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION:
The successful bidder or bidders will be required, pursuant to State law (California Government
Code Section 8856), to pay any fees of the California Debt and Investment Advisory
Commission("CDIAC"). CDIAC will invoice the successful bidder designated by the County as
lead underwriter after the delivery of the Notes; however, if there are multiple successful bidders,
the County will direct CDIAC to invoice the County and the bidders' purchase prices will be
adjusted to account for such fee.
RATINGS IN EFFECT: Each proposal will be understood to be conditioned
upon their being in place at the date of delivery of the Notes a rating or ratings at least as high as
the rating or ratings, if any, as were in place with respect to the Notes at the time fixed for
receiving bids.
CHANGE IN TAY-EXEMPT STATUS: At any time before the Notes are
tendered for delivery, the successful bidder or bidders may disaffirm and withdraw its proposal if
the interest received by private holders of obligations of the same type and character as the Notes
(as determined by Bond Counsel) shall be declared to be includable in gross income under
present federal income tax laws, either by a federal court, or by legislation enacted subsequent to
the date of this Official Notice of Sale.
CLOSING DOCUMENTS: Each proposal will be understood to be conditioned
upon the County's furnishing to the accepted bidder or bidders, without charge, concurrently
nocssri:627$14.2 7
with payment and delivery of the Notes, the following closing papers, each dated the date of such
delivery:
(a) Legal Opinion: The legal opinion of Orrick, Herrington & Sutcliffe LLP,
Bond Counsel, described in this Official Notice of Sale under the heading "Legal Opinion -- Tax
Exempt Status."
(b) No Litigation Certificate: A certificate of the County that there is no
litigation pending concerning the validity of the Notes, the existence of the County or the
entitlement of the County Officers thereof to their respective offices except as set forth in the
Official Statement.
(c) Certificate: A certificate of an official of the County stating that as of the
date thereof, to the best of the knowledge and belief of said official, the Official Statement does
not contain an untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(d) Receipt: A receipt of the County showing that the purchase price of the
Notes has been received by the County.
(e) Disclosure Opinion: The legal opinion of Lofton & Jennings, Disclosure
Counsel, described in this Official Notice of Sale under the heading "Legal Opinion - Disclosure
Counsel."
(f) Continuing Disclosure Certificate: The Certificate described in this
Official Notice of Sale under the heading "Continuing Disclosure."
ADDITIONAL INFORMATION: A copy of said Preliminary Official
Statement and any other information concerning the proposed financing will be furnished upon
request to either the financial advisor, Tamalpais Advisors, Inc., 3030 Bridgeway, Suite 340,
Sausalito, California 94965, or to the Director, Capital Facilities and Debt Management of the
County, (925) 331-4473.
Dated: September_, 2002.
COUNTY OF CONTRA COSTA
By /s/ John R. Sweeten
John R. Sweeten
County Administrator and
Clerk of the Board of Supervisors,
DOCSSI~1:627814.2 8
BID FORM
PROPOSAL FOR THE PURCHASE OF
COUNTY OF CONTRA COSTA, CALIFORNIA
2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
, 2002 From:
Naive of Bidder
County of Contra Costa
c/o Tainalpais Advisors, Inc.
3030 Bridgeway, Suite 340
Sausalito, California 94965
Attn: Jean Buckley
Tel: (415) 331-4473
Fax: (415) 331-4479
Dear Sir:
Pursuant to the Official Notice of Sale, dated September �, 2002, and in accordance with all
terms and conditions of said Official Notice of Sale for the sale of the County of Contra Costa,
California, 2002-2003 Tax and Revenue Anticipation Notes, Series A (the "Notes"), we offer to
purchase the Notes, to be dated the date of issuance thereof(October_, 2002) and to mature on
, 2003, in the principal amount set forth below (as a whole in the amount of
$_,000,000 or in part in increments of$20,000,000), as follows:
Our calculation, made as provided in the Official Notice of Sale, but not constituting any part of
this proposal, of the true interest cost with respect to each$20,000,000 increment of Notes is also
provided in the following table.
Optional
Principal Interest Total Less
Amount Premium Rate Interest Premium TIC
(continued on next page)
DOCSSFI:527814.2
This proposal is made subject to all the terms and conditions of said Official Notice of Sale, all
of which terms and conditions are made a part hereof as though set forth in full in this proposal.
This proposal is subject to acceptance within thirty (30) hours after the expiration of the time for
the receipt of proposals, as provided pursuant to said Official Notice of Sale.
Check One:
There is enclosed herewith a certified or cashier's check. for $250,000 payable to the
order of the County of Contra Costa; or
We have obtained a Financial Surety Bond in the amount of $250,000 payable to the
County of Contra Costa.
We understand that bids will be awarded in increments of$20,000,000 up to $_,000,000 and
then the remainder will be awarded out of the next $20,000,000 bid so that all Notes are
awarded. Therefore, we may be awarded Notes in an amount which is less than that requested
by us. We also understand that the County has reserved the right to decrease the principal
amount of the Notes awarded by not more than 10% of the principal amount thereof.
We represent that we have full and complete authority to submit this bid on behalf of our bidding
syndicate and that the undersigned will serve as the lead manager for the group if the Notes are
awarded pursuant to this bid.
Respectfully submitted, Address:
(Firm)
Attn:
Telephone#:
Telecopy#:
(Authorized Signature)
(continued on next page)
DOCSSFi:627814.2 2
If this proposal is not accepted, the good faith check should be returned to the following:
Name:
Address:
Following is a list of the members of our account on whose behalf this bid is made:
Docssr1:6278141 3
APPENDIX G
OFFICIAL NOTICE OF SALE AND BID FORM
02052\pos-2
L&J DRAFT#3
09/09/02
PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER(27],2002
7 NEW ISSUE-BOOK ENTRY ONLY RATINGS: Moody's:
i Standard&Poor's:
,n V
In the opinion of Orrick, Herrington &Sutcliffe LLP, Bond Counsel, based upon existing laws, regulations, rulings
and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance
with certain covenants, interest on the Notes is excluded from gross income for federal income tax purposes under
Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In
01= the further opinion of Bond Counsel, interest on the Notes is not a specific preference item for purposes of the
U = federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is
included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond
Y�6 Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or
° the accrual or receipt of interest on, the Notes. See "TAX MATTERS"herein.
Q
x_,000,000*
COUNTY OF CONTRA COSTA, CALIFORNIA
- 2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
INTEREST RATE: %
YIELD: %
0
G >,
Dated. Date of Delivery Due: November 14,2(1{33
W The County of Contra Costa, California (the "County:') 2002-2003 Tax and Revenue Anticipation Notes, Series A
n (the "Notes") are being issued to finance the seasonal cash flow requirements of the County during the fiscal year
w C ending June 30, 2003. The Notes will be issued as fixed-rate notes in fully registered form. The Notes, when
issued,will be registered in the name of Cede&Co., as nominee for The Depository Trust Company("DTC"),New
N York, New York, which will act as securities depository for the Notes. Purchases of the Notes will be made only
through DTC Participants under the book-entry system maintained by DTC in the denominations of$5,000 or any
integral multiple thereof. Purchasers will not receive certificates representing their ownership interest in the Notes
purchased..
.0 p
The Notes will be dated the date of delivery thereof and will not be subject to redemption prior to maturity. The
'u Notes will bear interest at a fixed rate per annum from their dated date. Interest on the Notes is payable on October
15,2003 and at the maturity of the Notes. Principal of the Notes is payable at the maturity of the Notes.
N In accordance with California law, the Notes are general obligations of the County, but are payable only out of the
taxes, income, revenue, cash receipts and other moneys of the County attributable to the fiscal year 2002-2003 and
3 legally available for payment thereof. The Notes are equally and ratably secured by a pledge of certain unrestricted
taxes, income, revenue, cash receipts and other moneys. The County is not authorized, however, to levy or collect
L. any tax for the repayment of the Notes. See"THE NOTES--Security for the Notes."
y
This cover page contains certain information for quick reference only and is not a summary of the transaction.
Investors must read the entire Official Statement to obtain information essential to the making of an informed
f•
G investment decision.
w� M
?' Bids for the Notes will be received at 10.00 a.m. California time, on Tuesday, October 8, 2002. See APPENDix 0---
"OFFICIAL NOTICE OF SALE AND BID FORM."
.N The Notes are offered when, as and if issued by the County and received by the successful bidder, subject to the
approval of validity by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. Certain
c ro other legal matters will be passed upon for the County by County Counsel and by Lofton & Jennings, San
r Francisco, California, Disclosure Counsel. It is expected that the Notes will be available through the facilities of
DTC in New York, New York for delivery on or about October 15, 2002.
Dated: 2002
*Preliminary,subject to change.
02052\pos-2
No dealer, broker, salesperson or other person has been authorized by the County or the Underwriter to give any
information or to make any representations, other than those contained herein, in connection with the offering of the
Notes and,if given or made,such information or representations must not be retied upon. This Official Statement does
not constitute an offer to sell or the solicitation of an offer to buy the Notes nor shall there be any sale of the Notes by any
person in any jurisdiction in which or to any person to whom it is unlawful to make such an offer,solicitation or sale. The
Underwriter has reviewed the information In this Official Statement in accordance with its responsibilities to investors
under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does
not guarantee the accuracy or completeness of such information. This Official Statement is not to be construed as a
contract with the purchasers of the Nates. Estimates and opinions are included and should not be interpreted as
statements of fact. Summaries of documents do not purport to be complete statements of their provisions. The
information and expressions of opinion herein are subject to change without notice, and neither the delivery of this
Official Statement nor any We made hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the County since the date hereof.
TABLE OF CONTENTS
Page Proposition 62............................................................19
INTRODUCTION............................................................................I Future Initiatives........................................................ 19
COUNTY OF CONTRA COSTA CASH MANAGEMENT PROGRAM.......I TAX MATTERS.......................................... ....... 19
CONTINUING DISCLOStRE............................................................2 LEGAL MATTERS...............................................................21
THE NOTES..................................................................................3 LEGALITY FOR INVESTMENT IN CALIFORNIA......... ......,.....21
General.........................................................................3 FINANCIAL ADVISOR......................................................,...21
Authority for Issuance..................................................3 RATINGS............................................................................21
Purposeof issue...........................................................3 LITIGATION........................................................................22
Security for the Notes—....... ......... ..............-.........3 UNDERWRITING.............................
Lien in Bankruptcy.......................................................4 ADDITIONAL INFORMATION................................................22
Investment of the Repayment Fund......................... ....5
Available Sources of Payment.....................................5 APPENDIX A--GENERAL COUNTY ECONOMIC AND
State of California Finances.........................................6 DEMOGRAPHIC INFORMATION ............. A-1
Cash Flow Projections..................................................6 APPENDIX B—COUNTY FINANCIAL INFORMATION.......B-I
CONTRA COSTA COUNTY TREASURER'S INVESTMENT POOL......12 APPENDIX C—SUMMARY OF THE COUNTY
Summary of Certain Provisions ofthe Resolution....................14 INVESTMENT POLICY................................C-1
Resolution to Constitute Contract..............................14 APPENDIX D—PROPOSED FORM OF OPINION OF
Representations and Covenants of the County...........14 BOND COUNSEL ........................................D-I
Paying Agent and Note Registrar...............................15 APPENDIX E—EXCERPTS FROM THE AUDITED FINANCIAL
Exchange and Transfer of the Notes...........................15 STATEMENTS OF THE COUNTY FOR THE
Permitted Investments................................................I5 FISCAL YEAR ENDED JUNE 30,2001.........E-1
COUNTY INFORMATION.......... ............................... ..................16 APPENDIX F--FORM OF CONTINUING
CONSTITtTIONAL AND STATUTORY LIMITATIONS ON TAXES,.....17 DISCLOSURE CERTIFICATE........................F-I
Article XIII A of the California Constitution.............17 APPENDIX G—DTC AND THE BOOK-ENTRY-ONLY
Legislation Implementing Article XIII A...................17 SYSTEM....................................................
G-1
Article XIII B of the California Constitution.............17 APPENDIX H—OFFICIAL NOTICE OF SALE AND BID
Article XIII C and Article XIII D o€the California FORM.......................................................EI-1
Constitution................................................................18
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
COUNTY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION MOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS ABOVE
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED,MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE
NOTES TO CERTAIN DEALERS AND BANDS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE
STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM
TIME TO TIME BY THE UNDERWRITER.
o2o5npas-2
i
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
John Gioia Mark DeSaulnier
Chair Vice-Chair
John R. Sweeten Kenneth J. Corcoran
Executive Director and Secretary Treasurer
COUNTY OF CONTRA COSTA,CALIFORNIA
BOARD OF SUPERVISORS OF THE COUNTY
John Gioia
(District 1)
Chair
Gayle B. Uilkema Donna Gerber
(District 2) (District 3)
Mark DeSaulnier Federal Glover
(District 4) (District S)
Vice Chair
COUNTY OFFICIALS
John R. Sweeten
Clerk of the Board and County Administrator
Laura W. Lockwood
Director, Capital Facilities and Debt Management
Kenneth J.Corcoran William J. Pollacek
Auditor-Controller Treasurer-Tax Collector
Silvano Marchesi Gus Kramer Stephen L. Weir
County Counsel Assessor County Clerk-Recorder
SPECIAL SERVICES
Orrick,Herrington&Sutcliffe LLP
San Francisco,California Tamalpais Advisors, Inc.
Bond Counsel Sausalito,California
Financial Advisor
Lofton&Jennings
San Francisco, California
Disclosure Counsel
02052\ros-2
ii
$_,000,000*
COUNTY OF CONTRA COSTA,CALIFORNIA
2002-2003 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
INTRODUCTION
The purpose of this Official Statement, which includes the front cover and the attached
Appendices, is to provide certain information concerning the sale and delivery of $_,000,000* in
aggregate principal amount of 2002-2003 Tax and Revenue Anticipation Notes, Series A(the "Notes") of
the County of Contra Costa, California (the "County"). The Notes will be fixed-rate notes bearing
interest at a rate or rates to be determined at a public sale.. Issuance of the Notes will provide moneys to
help meet current (Fiscal Year 2002-2003) County General Fund expenditures, including current
expenses,capital expenditures and the discharge of other obligations or indebtedness of the County.
The Notes are authorized by and are being issued in accordance with Article 7.6, Chapter 4,
Part 1, Division 2, Title 5 (commencing with Section 53850) of the Government Code of the State of
California(the"Act"), and a resolution adopted by the Board of Supervisors of the County(the "Board of
Supervisors")on September_, 2002 and referenced as "Resolution Authorizing the Issuance and Sale of
Not to Exceed $100,000,000 County of Contra Costa, California 2002-2003 Tax and Revenue
Anticipation Notes" (the "Resolution"). If circumstances warrant, the County may issue in Fiscal Year
2002-2003 an additional series of 2002-2003 Tax and Revenue Anticipation Notes (the "Series B Notes")
in an amount not to exceed $100,000,000*. The Series B Notes, if issued, would be issued prior to
January 1, 2003,would have a maturity date not more than 13 months thereafter, and would be secured by
the same security pledge as the Notes. See "THE NoTEs—Security for the Notes." The Resolution
provides, among other things, that the issuance of the Series B Notes may occur only if such issuance
does not cause a reduction in the ratings from Moody's Investors Service ("Moody's") or Standard &
Poor's Ratings Services,A Division of the McGraw-Hill Companies("S&P")on the Notes.
The Notes are issued subject to the terms and conditions of the Resolution. Pursuant to California
law, the Notes and the interest thereon are general obligations of the County payable from the taxes,
income, revenue, cash receipts and other moneys of the County attributable to the 2002-2003 Fiscal Year
and lawfiilly available therefor. The Notes and the interest thereon are secured by a pledge of certain
unrestricted taxes, income, revenue, cash receipts and other moneys of the County attributable to the
2002-2003 Fiscal Year as specified in the Resolution. See "THE NOTES—Security for the Notes."
COUNTY OF CONTRA COSTA CASK MANAGEMENT PROGRAM
County General Fund expenditures tend to occur in level amounts throughout the fiscal year.
Conversely, receipts have followed an uneven pattern primarily as a result of secured property tax
installment delinquency dates in December and April and as a result of delays in payments from other
governmental agencies, the two largest sources of County revenues. As a result, the General Fund cash
balance prior to Fiscal Year 1979-80 had typically been negative for most of the year and had been
covered by interfund borrowings pursuant to Section 6 of Article X'VI of the California Constitution and
intrafund borrowings. "interfund burrowing" is borrowing from specific funds of other governmental
entities whose funds are held in the County Treasury. Such borrowing,
pursuant to the California
Preliminary, subject to change.
020=2'\ros-2
Constitution, may not occur after the last Monday in April of each year and shall be repaid before any
other obligation of the County. The County does not intend to engage in interfund borrowing for the
General Fund nor has it done so since the implementation of the General Fund cash management program
in Fiscal Year 1979-80. "Intrafund borrowing" is borrowing for General Fund purposes against funds
held in trust by the County. Because such General Fund intrafund borrowings caused disruptions in the
General Fund's management of pooled investments, beginning in Fiscal Year 1979-80 the County has
regulated its cash flow by issuing tax and revenue anticipation notes for the General Fund and by using
intrafund and/or interfund borrowing, if necessary, only after note proceeds have been exhausted. The
County utilized intrafund borrowing in the amounts of$10.0 million in Fiscal Year 1996-97 and $5.0
million in Fiscal Year 1998-99, however, it does not anticipate using intrafund .borrowing to cover
General Fund cash needs, in Fiscal Year 2002-03.
All notes issued in connection with the County's cash management program, with the exception
of$70,000,000 in aggregate principal amount of tax and revenue anticipation notes issued in Fiscal Year
2001-2002 (the "Fiscal Year 2001-2002 Notes"), which are due October 4, 2002, were repaid on their
respective maturity dates. An amount equal to 50% of the principal amount of the 2001-02 Notes was
placed in a trust fund in January 2002 and the remaining 50% of the principal amount of the 2001-02
Notes and all of the interest due thereon was placed in a trust fund in May 2002, The amounts in the trust
fund will be disbursed in certain amounts on September 5, 2002 and on October 4, 2002 to pay principal
of and interest on the 2001-02 Notes.
The Notes represent the twenty-sixth short-term financing program, which the County has
undertaken to meet its cash flow requirements. The County has never defaulted on the payment of
principal of or interest on any of its short-term or long-term obligations.
Set forth below is a summary of the County's short-term financing programs since Fiscal Year
1997-98.
HISTORY OF COUNTY OF CONTRA COSTA
SHORT-TERM FINANCING PROGRAMS
Date of Issuance Par Value Maturity Date
July 1, 1997 $130,000,000 July 1, 1998
July 1, 1998 107,315,000 October 1, 1999
July 1, 1999 88,000,000 September 29, 2000
July 3, 2000 55,000,000 October 1,2001
August 1, 2001 70,000,000 October 4,2002
CONTINUING DISCLOSURE
The County will agree to provide notices, during the time the Notes are outstanding, of the
occurrence of certain enumerated events, if material, in compliance with Rule 15c2-12 of the Securities
and Exchange Commission(the "Rule"). The specific nature of the notices of material events and certain
other terms of the continuing disclosure obligation are described in APPENDix F—"FORM OF CONTINUING
DISCLOSURE CERTIFICATE." The County has never failed to comply in any material respect with any
prior undertaking under the Rule.
02052pas-2 2
THE NOTES
General
The Notes will be issued in fully registered form in the aggregate principal amount of
$_,000,000*. When issued, the Notes will be registered in the name of Cede &Co., as nominee for The
Depository Trust Company ("DTC"), New York, New York, which will act as securities depository for
the Notes. Purchasers will not receive certificates representing their ownership interest in the Notes
purchased. See APPENDIX G—"DTC AND THE BOOK-ENTRY-ONLY SYSTEM." Beneficial ownership
interests in the Notes may be transferred only in accordance with the rules and procedures of DTC.
The Notes will be dated the date of issuance thereof and will pay interest on October 15, 2003
and at maturity on November 14, 2003. The Notes are not subject to redemption prior to maturity.
The Notes will be issued in denominations of $5,000 each and any integral multiple thereof
("Authorized Denominations") and will bear interest at the rate per annum set forth on the cover page
hereof. Interest on the Notes will be computed on the basis of twelve 30-day months and a 360-day year.
Interest due on October 15, 2003 will be payable to the person in whose name the Note is registered as of
the close of business on September 15, 2003 (the "Record Date"), such interest to be paid by check
mailed to such registered owner. Principal and interest payable at maturity will be payable in
immediately available funds, upon presentation and surrender of the Notes at the office of the Treasurer-
Tax Collector of the County, as initial paying agent(the "Paying Agent")with respect to the Notes.
Authority for Issuance
The Notes are issued under the authority of the Act and pursuant to the Resolution and are subject
to the terms and conditions of the Act and the Resolution.
Purpose of Issue
The Notes are being issued to finance the County's General Fund cash flow requirements during
the 2002-2003 Fiscal Year(July 1, 2002 through.Tune 30,2003). County General Fund expenditures tend
to occur in level amounts throughout the Fiscal Year. Conversely, receipts have followed an uneven
pattern primarily as a result of secured property tax installment delinquency dates in December and April
and as a result of delays in payments from other governmental agencies,the two largest sources of County
revenues. The proceeds received from the sale of the Notes will allow the County to cover periods of
deficits resulting from such uneven flow of revenues and are an alternative to borrowing from County-
held pooled income funds. The proceeds of the Notes will be invested in the Contra Costa County
Treasurer's Investment Pool (the "County fool") until expended. See "CONTRA COSTA COUNTY
TREASURER'S INVESTMENT POOL."
Security for the Notes
The 2002-2003 Tax and Revenue Anticipation Notes issued under the Resolution (in the
aggregate principal amount of$,000,000* for the Notes and up to an aggregate principal amount of
$_,000,000 for the Series B Notes)are secured by a pledge of an amount equal to fifty percent(50%d)of
the aggregate principal amount of the Notes and Series B Notes from the first unrestricted taxes, income,
revenue, cash receipts and other moneys received by the County in the accounting period beginning
December 11, 2002 and ending January 12, 2003 and an amount equal to fifty percent (50%) of the
aggregate principal amount of the Notes and Series B Notes plus an amount(net of anticipated earnings
* Preliminary, subject to change.
02052\pos-2
3
on moneys in the Repayment Fund) sufficient to make up any deficiency in the prior pledge and to pay
the interest on the Notes and the Series B Notes due on and prior to maturity from the first unrestricted
taxes, income, revenue, cash receipts and other moneys received by the County in the accounting period
beginning April 11, 2003 and ending May 12, 2003.
Accordingly, pursuant to Section 53856 of the Government Code of the State of California (the
"Government Code"), the principal of the Notes and the Series B Notes and the interest thereon are a first
lien and charge against, and are payable from, such pledged moneys. In addition to such pledged moneys,
pursuant to Section 53857 of the Government Code,the Notes are general obligations of the County, and,
to the extent not paid from the taxes, income, revenue, cash receipts and other moneys of the County
pledged for the payment thereof shall be paid with interest thereon only from any other moneys of the
County lawfully available therefor. The County is not authorized to levy or collect any tax for the
repayment of the Notes or the Series B Notes.
In accordance with the terms of the Resolution, the Treasurer-Tax Collector of the County (the
"Treasurer") will deposit the money pledged for the repayment of the Notes and the Series B Notes in a
special 'fund in the County Treasury designated as the "2002-2003 Tax and Revenue Anticipation Note
Repayment Fund"(the"Repayment Fund"). Moneys pledged for the payment of the Notes and the Series
B Notes will be deposited into the Repayment Fund on or prior to the last business day of each respective
pledge period and applied on the interest payment date to pay interest on the Notes and the Series B Notes
then due and on the respective maturity dates of the Notes and the Series B Notes to pay the principal and
interest thereon then due. The Resolution provides that such amounts may not be used for any other
purpose and may be invested in Permitted Investments. See "—Investment of the Repayment Fund" and
"SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION—Permitted Investments."
If for any reason amounts in the Repayment Fund are insufficient to pay both the Notes and the
Series B Notes in full, such amounts shall be applied pro rata to the payment of the Notes and the Series
B Notes based on the total principal of and interest payable upon the Notes and the Series B Notes at the
respective maturities thereof, taking into account anticipated earnings to be received on amounts in the
Repayment fund prior to the final maturity dates thereof.
As more particularly described under "COUNTY OF CONTRA COSTA CASH MANAGEMENT
PROGRAM," the County may, under certain circumstances, undertake interfund borrowing to fund
shortages in the General Fund. While the County does not expect to utilize any such interfund borrowing,
Section 6 of Article XVI of the California Constitution requires that any such borrowing be repaid from
revenues before any other obligation of the County(including the Notes)is paid from such revenues.
Lien in Bankruptcy
On January 24, 1996, the United States Bankruptcy Court for the Central District of California
held in the case of County of Orange v. Merrill Lynch that a State statute providing for a priority of
distribution of property held in trust conflicted with, and was preempted by, federal bankruptcy law. In
that case, the court addressed the priority of the disposition of moneys held in a county investment pool
upon bankruptcy of the county, but was not required to directly address the State statute that provides for
the lien in favor of holders of tax and revenue anticipation notes. The County is in possession of the taxes
and other revenues that will be set aside in the Repayment Fund and pledged to repay the Notes. The
Repayment Fund may be invested in the County Pool. In the event of a petition for the adjustment of
debts of the County under Chapter 9 of the federal bankruptcy code, a court might hold that the owners of
the Notes (the "Owners") do not have a valid and/or prior lien on Repayment Fund amounts deposited in
the County Pool and may not provide the Owners with a priority interest in such amounts. In that
circumstance, unless the Owners could "trace" the funds from the Repayment Fund that have been
deposited in the County Pool, the Owners would be unsecured (rather than secured) creditors of the
02052\pos 2
4
County. There can be no assurance that the Owners could successfully se "trace" the pledged taxes and
other revenues.
Investment of the Repayment Fund
Moneys in the Repayment Fund will be invested in one or more instruments of the types included
in Permitted Investments. See "SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION—Permitted
Investments." The proceeds of any such investments shall be retained in the Repayment Fund until
payment of principal of and interest on the Notes and the Series B Notes (or provision therefor)has been
made, at which time any excess amount shall be deposited by the Treasurer in the General Fund of the
County.
Available Sources of Payment
The Notes, in accordance with California law, are general obligations of the County, but are
payable only out of the taxes, income, revenue, cash receipts and other moneys received for the General
Fund of the County attributable to Fiscal Year 2002-2403 and legally available for payment thereof.
Under the Act, no obligations, including the Notes, may be issued thereunder if the principal thereof and
interestthereon exceeds 85% of the estimated amount of the then-uncollected taxes, income, revenue,
cash receipts and other moneys which will be available for payment of such principal and interest. The
principal amount of Notes and estimated interest thereon equals approximately $_ million which
represents approximately_°/o of the estimated sources available for payment of the Notes.
The County estimates that the total moneys available for payment of the Notes and the Series B
Notes will be in excess of $ million as indicated in the table that follows. Except for pledged
amounts, these moneys will be expended during the course of the fiscal year, and no assurance can be
given that any moneys, other than the pledged amounts, will be available to pay the Notes and the Series
B Notes and the interest thereon. For detailed information regarding estimated debt service coverage at
each respective pledge period, see"Table 4 -Projected Monthly General Fund and Teeter Plan Cash Flow
Projections."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.)
02052\pos-2
5
Table 1
COUNTY OF CONTRA COSTA
ESTIMATED GENERAL FUND UNRESTRICTED REVENUES
FISCAL YEAR 2002-2003('
Sources Amount
in 000's
Estimated Unrestricted Available Cash Balance at July 1, 2002
Property Taxes
Other Taxes
Licenses,Permits and Franchises
Fines,Forfeitures and Penalties
Use of Money and Property
Aid from Other Governmental Agencies
Charges for Current Services
Other Unrestricted Revenue
Total
Less amount pledged for payment of the Notes and Series B Notes(2) 101,625,000
Net Total in excess of pledged revenues
(i) Reflects revenues set forth in the Fiscal Year 2002-2003 Adopted Budget which was approved on August 13,2002.
(2) Based on$100,000,000 aggregate principal amount of Notes and Series B Notes plus an amount equal to interest thereon
calculated at the rate of 1.50%per annum,assuming delivery on October 15,2002.
Source: County Auditor-Controller.
State of California Finances
On January 10, 2002, the Governor of California (the "Governor") released the proposed
2002-2003 Fiscal Year State Budget. On May 14,2002, the Governor released the"May Revision"to the
Proposed 2002-2003 Fiscal Year State Budget. For additional information on the State budget, see
APPENDIX Bm"COUNTY FINANCIAL INFORMATION—State Budget Acts."
Cash Flow Projections
The Auditor-Controller has prepared the following five-year summary of month-end cash
balances in the General Fund. The County's historical and projected fiscal year end balances in funds
with which it may undertake intrafund borrowing("Intrafund Borrowing Capacity")is also presented. On
the subsequent pages is a detailed presentation of the Fiscal Year 2001-2002 General Fund cash flow and
of the projected cash flow for Fiscal Year 2002-2003. The cash flow projections are based on the Fiscal
Year 2002-2003 Adopted Budget. See APPENDIX B—"COUNTY FINANCIAL INFORMATION—Recent County
General Fund Budgets."
A maximum cumulative cash flow deficit of approximately $ million is anticipated to
occur in 2002. Taking into account: (a)any unrestricted monies that are expected to be available
from sources other than the General Fund to address the projected deficit and (b) the likelihood that the
projected cash flows are susceptible to forecast error, the County has elected to issue the Notes in an
amount that is equal to approximately_%of its projected maximum cumulative cash flow deficit.
The estimates of amounts and timing of receipts and disbursements in the cash flow tables are
based on certain assumptions and should not be construed as statements of fact. The assumptions are
based on present circumstances and currently available information and are believed to be reasonable.
02052\pos-2
6
The assumptions may be affected by numerous factors and there can be no assurance that such estimates
will be achieved.
Table 2
COUNTY OF CONTRA COSTA
GENERAL FUND
MONTH-END CASH BALANCES AND INTRAFUND BORROWING CAPACITY tI)
FISCAL YEARS 1997-98 THROUGH 2001-02
($in thousands)
Accounting Ending
Period ' Mid-Month 1997-98 1998-990) 1999-00(s) 2000-0101) 2001-02 e�>
1 August $69,005 $55,204 $37,210 $37,896
2 September 62,899 49,274 22,987 43,325
3 October 57,389 38,571 13,237 23,035
4 November 50,455 38,794 16,352 18,449
5 December 41,318 21,842 6,404 15,308
6 January 7,481 9,809 43,201 46,855
7 February 8,026 2,988 9,726 51,824
8 March 14,191 10,919 7,806 52,772
9 April 10,475 13,848 14,147 44,493
10 May 12,167 6,321 33,032 43,258
11 June 22,464 12,908 25,693 52,079
12 At June 30 15,419 13,558 56,040 75,425
At June 30 $372,208 $379,988 $431,464 $520,106
INTRAFUND
BORROWING
CAPACITY
ty) Period-end balances include the effects of intrafund borrowing net of deposits to the repayment funds relating to the short-term notes.
See "THE NOTEs--Interfund .Borrowing, Intrafund Borrowing and Cash Flow." In the 1996-97 fiscal year, the County began
financing its Teeter Plan cash flow needs through the General Fund,thus,the period-end balances also reflect the effects of intrafund
borrowing undertaken to finance the Teeter Plan cash flows. "Intrafund Borrowing Capacity" reflects borrowable balances as of
June 30th of each fiscal year.
(2) The County utilizes a twelve-period accounting system,with the first period beginning on July 1 and ending in the middle of August.
The subsequent periods end in mid-September,mid-October and so forth until mid-June. The final accounting period runs from mid-
June to the end of the fiscal year at June 30.
(3) Includes receipt in July 1997 of proceeds from the sale of S130,000,000 of 1997-98 Tax and Revenue Anticipation Notes,Series A.
(4) Includes receipt in July 1998 of proceeds from the sale of$107,315,000 of 1998-99 Tax and Revenue Anticipation Notes,Series A.
(5j Includes receipt in July 1999 of proceeds from the sale of$88,400,000 of 1999-2000 Tax and Revenue Anticipation Notes,Series A.
0) Includes receipt in July 2000 of proceeds from the sale of$55,000,044 of 2004-2001 Tax and Revenue Anticipation Notes,Series A.
(7) Includes receipt in September 2401 of proceeds from the sale of$70,004,000 of 2001-02 Tax and Revenue Anticipation Notes,
Series A.
02052�poc-2
7
Table 3
COUNTY OF CONTRA COSTA
ACTUAL MONTHLY GENERAL FUND AND TEETER PLAN CASH FLOW
FISCAL YEAR 2001-2002
(all numbers in thousands)
ACCOUNTING PERIOD
ENDING Aug 13 Sep 13 Oct 11 Nov 13 Dec 12
2001 2001 2001 2001 2001
BEGINNING BALANCE $ 75,425 $ 29,734 $ 102,803 $ 84,459 $ 81,452
RECEIPTS:
Property Taxes $ 0 $ 0 $ 0 $ 2,894 $ 146
Teeter Plan Redemptions 1,832 2,021 1,779 1,349 1,415
Other Taxes 0 2,324 1,244 476 1,085
Licenses 1,856 761 779 925 12,353
Fines&Forfeitures 131 512 578 477 660
Use of Money 140 0 202 1,203 1,950
Intergovernmental 41,868 66,255 45,552 51,654 20,061
Charges Current Services 10,493 0 9,160 15,705 26,248
Other Revenue 2,865 6,028 5,637 4,499 5,863
Accrued Revenue 99,241 0 0 0 0
Notes Sold 0 70,000 0 0 0
Intrafund Borrowing 12,964 0 0 0 0
TOTAL RECEIPTS $171,390 $ 147,901 $ 64,931 $ 79,182 $ 69,781
DISBURSEMENTS:
General Government $ 20,353 $ 12,886 $ 10,521 $ 10,924 $ 14,526
Public Protection 41,828 18,677 22,808 21,447 19,475
Health&Sanitation 19,024 13,998 14,417 16,352 15,577
Public Assistance 35,961 22,207 27,625 26,330 25,311
Education 1,977 1,328 1,032 1,428 1,128
Public Ways 7,831 5,736 6,872 5,708 3,390
Accrued Expense 75,137 0 0 0 0
TRANS Interest Repayment 0 0 0 0 0
TRANS Principal Repayment 0 0 0 0 0
Intrafund Borrowing Repayment 0 0 0 0 0
Teeter Plan Buyout/Advances 14,970 0 0 0 0
TOTAL DISBURSEMENTS $217,081 $ 74,832 $ 83,275 $ 82,189 $ 79,407
ENDING BALANCE $ 29,734 $ 102,803 $ 84,459 $ 81,452 $ 71,826
TRAINs REPAYMENT FUND
Beginning Balance $0 $0 $0 $0 $0
Receipts 0 0 0 0 0
Disbursements 0 0 0 0 0
Ending Balance $0 $0 $0 $0 $0
02052\pos-2 g
Jan 11 Feb 12 .Mar 12 Apr 11 May 13 Jun 12 Jun 28 Total
2002 20€12 2002 2002 2002 2002 2002 2001-2002
$ 71,826 $ 80,376 $ 79,791 $ 69,841 $ 75,622 $ 80,029 $ 52,271 $ 75,425
$ 59,871 $ 0 $ 573 $ 1,030 $ 47,010 $ 701 $ 7,235 $ 119,460
1,299 1,142 1,636 1,063 1,075 1,041 1,269 $ 16,921
1,932 1,537 1,617 718 2,081 1,158 3,154 17,326
725 1,495 1,499 18,496 1,765 1,181 981 42,816
509 541 491 513 679 997 7,934 14,022
212 2,042 236 211 1,281 391 1,229 9,097
39,813 49,628 53,797 37,784 41,589 47,687 26,164 521,852
15,986 19,802 8,693 18,188 13,946 2,848 9,462 1501531
4,753 10,427 4,698 9,137 11,349 17,606 2,212 85,074
0 0 0 0 0 0 0 99,241
0 0 0 0 0 0 0 70,000
0 0 0 0 0 0 0 12,964
$ 125,100 $ 86,614 $ 73,240 $ 87,140 $ 120,775 $ 73,610 $ 59,640 $ 1,159,304
$ 13,985 $ 13,398 $ 12,673 $ 11,431 $ 11,863 $ 17,857 $ 18,402 $ 168,819
24,064 20,431 20,347 21,043 23,743 20,492 2,834 257,189
11,900 18,162 15,327 15,552 14,246 309619 5,949 191,123
26,783 29,717 31,024 28,007 24,868 27,613 8,150 313,596
1,346 1,282 1,131 1,520 1,274 1,970 786 16,202
3,472 4,209 2,688 3,806 3,110 2,817 395 50,034
0 0 0 0 0 0 0 75,137
0 0 0 0 2,264 0 0 2,264
35,000 0 0 0 35,000 0 0 70,000
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 14,970
$ 116,550 $ 87,199 $ 83,190 $ 81,359 $ 116,368 $ 101,368 $ 36,516 $ 1,159,334
$ 80,376 $ 79,791 $ 69,841 $ 75,622 $ 80,029 $ 52,271 $ 75,395 $ 75,395
$0 $35,000 $35,000 $35,000 $35,000 $72,264 $72,264 $o
35,000 0 0 0 37,264 0 0 72,264
0 0 0 0 0 0 0 72,264
$35,000 $35,000 $35,000 $35,000 $72,264 $72,264 $72,264 $0
*An interest payment equal to 12 months of interest was disbursed on September 5,2002 and an interest payment equal
to three months of interest and the entire principal amount will be disbursed on October 4,2402.
02052\pos-2
9
Table 4
COUNTY OF CONTRA COSTA
MONTHLY GENERAL FUND AND TEETER PLAN CASH FLOW
FISCAL YEAR 2002-2003
(ail numbers in thousands)
Actual Proj. Proj. Proj. Proj. Proj.
ACCOUNTING PERIOD ENDING Aug 12 Sep 12 Oct 11 Nov 13 Dec 11 ,Tan 13
2002 2002 2002 2002 2002 2003
BEGINNING BALANCE $ 75,425 $ 93,775 $ 95,385 $ 72,380 $ 65,428 $ 46,322
RECEIPTS:
Property Taxes $ 0 $ 0 $ 0 $ 3,305 $ 167 $ 68,384
Teeter Plan Redemptions 2,272 1,962 1,727 1,310 1,374 1,261
Other Taxes - 2,477 1,326 507 1,156 2,059
Licenses 4,309 337 345 410 5,473 321
Fines&Forfeitures 296 466 526 434 601 464
Use of Money 133 - 225 1,340 2,172 236
Intergovernmental 47,405 68,960 47,412 53,763 20,880 41,438
Charges Current Services 23,329 - 8,967 15,375 25,696 15,650
Other Revenue - 6,724 6,288 5,018 6,540 5,302
Accrued Revenue 109,449 - - - - -
Notes Sold 50,000 -
Intrafund Borrowing - - - - - -
Other Available Funds 260 - - - - -
TOTAL RECEIPTS $237,193 $ 80,926 $ 66,816 $ 81,463 $ 64,059 $ 135,115
DISBURSEMENTS:
General Government $ 20,572 $ 8,638 $ 7,053 $ 7,323 $ 9,737 $ 9,375
Public Protection 42,992 22,464 27,432 25,795 23,423 28,943
Health&Sanitation 13,141 16,955 17,462. 19,806 18,867 14,413
Public Assistance 39,239 22,397 27,862 26,556 25,528 27,013
Education 2,087 1,441 1,119 1,549 1,224 1,460
Public Ways 5,303 7,423 8,893 7,386 4,387 4,493
Accrued Expense 78,348 - - - - -
TRANs Interest Repayment - - - - - -
TRANs Principal Repayment - - - - - 25,000
Intrafund Borrowing Repayment - - - - - -
Teeter Plan Buyout/Advances 17,161 - - - - -
TOTAL DISBURSEMENTS $218,843 $ 79,317 $ 89,821 $ 88,415 $ 83,166 $ 110,696
ENDING BALANCE $ 93,775 $ 95,385 $ 72,380 $ 65,428 $ 46,322 $ 70,740 tip
INTRAFUUND BORROWING CAPACITY
ENDING BALANCE,INCLUDING
INTRAFUND BORROWING CAPACITY «>
TRANS REPAYMENT FUND
Beginning Balance $0 $0 $0 $0 $0 $0
Receipts 0 0 0 0 0 25,000
Disbursements 0 0 0 0 0 0
Ending Balance $0 $0 $0 $0 $0 $25,000
(1) Monthly General Fund ending balance covers January segregation times.
(2) Monthly General Fund ending balance including intrafund borrowing capacity covers January segregation times.
02052\pos-2 to
Proj. Proj. Proj. Proj. Proj. Proj.
Feb 12 Maar 12 Apr 11 May 12 Jun 11 Jury 30 Total
2003 2003 2003 2003 2003 2003 2002-2003
$ 70,740 $ 67,226 $ 54,783 $ 47,348 $ 66,260 $ 35,898 $ 75,425
$ 0 $ 654 $ 1,176 $ 53,694 $ 801 $ 8,264 $ 123,307
1,109 1,588 1,032 1,044 1,011 1,232 15,483
1,638 1,723 765 2,218 1,234 3,362 18,023
662 664 8,195 782 523 435 17,619
493 447 467 618 908 7,225 25,165
2,275 263 235 1,427 436 1,369 17,728
51,654 55,993 39,327 43,287 49,634 27,232 526,479
19,386 8,510 17,806 13,653 2,788 9,263 157,245
11,631 5,240 10,192 12,659 19,639 2,467 78,772
- - - - - - 55,382
70,000
$ 88,847 $ 75,084 $ 79,194 $ 129,382 $ 76,973 $ 60,849 $ 1,105,203
$ 8,981 $ 8,495 $ 7,663 $ 7,952 $ 11,970 $ 12,335 $ 122,978
24,573 24,472 25,309 28,557 24,647 3,409 270,606
21,998 18,564 18,837 17,255 37,086 7,206 191,546
29,972 31,290 28,247 25,081 27,850 8,220 303,504
1,391 1,227 1,649 1,382 25137 853 14,737
5,447 3,478 4,925 4,024 3,645 511 49,689
- - - - - - 55,914
- 1,219 - - 2,263
25,000 - - 70,000
- - - - - - 16,700
$ 92,361 $ 87,527 $ 86,630 $ 110,470 $ 107,335 $ 32,533 $ 1,097,937
$ 67,226 $ 54,783 $ 47,348 $ 66,260 (1) $ 35,898 $ 64,213 $ 82,691
(2)
$25,000 $25,000 $25,000 $25,000 $51,219 $51,219 $0
0 0 0 26,219 0 0 51,219
0 0 0 0 0 0 51,219 (3)
$25,000 $25,000 $25,000 $51,219 $51,219 $51,219 $0
(1) Monthly General Fund ending balance covers May segregation`times.
(2) Monthly General Fund ending balance including intrafund borrowing capacity covers May segregation-times.
(3)An interest payment on the Notes will be disbursed on October 15,2003 and the principal of and remaining
interest on the Notes will be disbursed on November 14,2003.
020521pos-2 I I
CONTRA COSTA COUNTY TREASURER'S INVESTMENT FOUL
On the delivery date of the Notes, the Treasurer will deposit [a portion/all] net proceeds of the
Notes in the County Pool for future withdrawal by the County to meet its cash flow needs during Fiscal
Year 2002-2003. The money pledged for the repayment of the Notes and the Series B Notes will be
deposited in trust and invested in the Repayment Fund held by the Treasurer for payment of the principal
of and interest on the Notes and the Series B Notes at maturity. See"THE NOTES--Security for the Notes"
and"--Investment of the Repayment Fund."
[Since the net proceeds of the Notes will be deposited in the County Pool for general County
operating purposes, the following information about the County Pool and the County's investment policy
is provided.]
State law requires that all moneys of the County, County school districts, and certain special
districts in the County be held in the County Treasury by the Treasurer. The Treasurer has authority to
implement and oversee the investment of such funds in the County Pool in accordance with Section
53600 et seq. of the Government Code. The Treasurer accepts funds only from agencies located within
the County. The moneys on deposit are predominantly derived from local government revenues
consisting of property taxes, State and federal funding and other fees and charges. As of June 30, 2002,
there were 40 participants in the County Pool, the largest being the County. The County, County
agencies, and school and community college districts(who are involuntary members of the County Pool)
represented an aggregate of approximately 85.3%of the County Pool's investments as of June 30,2002.
The Contra Costa County Investment Policy (the "Policy„) governs the County's investments in
the County Pool. The Policy has historically been more restrictive than that mandated under the
Government Code. Although the Policy permits reverse repurchase agreements between the County and
primary dealers with the Federal Reserve Bank of New York, the County currently does not intend to
engage in such transactions. The County has an oversight committee (the "Treasury Oversight
Committee") that meets quarterly to monitor and report on all investment activities of the Treasurer's
Office. The current Policy was revised by the Treasury Oversight Committee, submitted by the Treasurer
and approved by the Board of Supervisors on June 4, 2002. All funds of the County and investment
activities are governed by the Policy, which sets forth the following primary objectives, in order of
priority:
I. Preservation of capital.
2. Liquidity— funds shall be invested only until the date of anticipated need or for a lesser
period.
3. Yield -- generation of a favorable return on investment without compromise of the first
two objectives.
For a summary of the Policy, see APPENDIX C—"SUMMARY OF THE COUNTY INVESTMENT POLICY."
02052\ras-2 12
As of June 30, 2002,investments in the County Pool were held for the following local agencies in
the indicated amounts:
Table 5
CONTRA COSTA COUNTY INVESTMENT POOL
INVESTMENTS HELI)BY TYPE OF LOCAL AGENCY
(AS OF JUNE 30,2002)
Percent Number
Local Agency Par Value of Total of Agencies
County of Contra Costa and Agencies $933,217,287.41 61.13% 1
School Districts 333,633,176.00 21.85 19
Community College District 34,688,696,00 2.27 1
Other Public Agencies- 225.262,224.00 14.75 19
TOTAL $1,526,801,383.41 100.00% 40
t Sanitation,Fire and Transportation Authorities,and two Joint Power Authorities are the only
voluntary participants in the Pool.
As of June 30, 2002, the Pool had approximately 49.9% of its assets invested in U.S. Treasury
and federal agency securities. Another approximately 34.9% of the Pool's assets were invested in highly
liquid short-term money market instruments (repurchase agreements, certificates of deposit, bankers'
acceptances, and commercial paper). As of June 30, 2002, the detailed composition, cost, and market
value of the Pool were as follows:
Type of Investment Cost Market Value %of Total
Cash $68,971,326.51 $68,971,326.51 4.52%
U.S.Treasuries 10,047,505.45 11,355,140.65 0.66
U.S.Agencies 215,970,497.48 217,562,922.49 49.93
Money Market Instruments 532,976,853.37 533,686,631.95 34.94
Other 151.725,141.17 699.898,395.31 9.95
TOTAL $1,525,358,621.60 $1,531,273,817.07 100.00%
The Pool is highly liquid, with 93.52% of the portfolio having a maturity of less than one year
and an average weighted days to maturity of 64 days. The maturity distribution of the Pool's portfolio as
of June 30,2002 is presented in the following table.
Amount %of
`Perm to Maturity (Cost Basis) Total"'
Less than 1 year $1,426,345,586 93.52%
1 to 2 years 67,098,966 4.40
2+years to 3 years 20,502,742 1.34
3+years to 4 years 3,578,868 0.23
4+years to 5 years 6,922,323 0.45
Greater than.5 years(2) 910,137 0.06
TOTAL $1,525,358,621.60 100.00%
(t) Column does not total due to independent rounding.
(2) Represents bond proceeds of School Districts.
02052\pos-2
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The mix of investments is designed to ensure that sufficient liquid funds are available to meet
disbursement requirements. Funds on hand at the end of each of the past five fiscal years in excess of
disbursement requirements were as follows:
Fiscal Year Available Funds
Ending June 30 ($in millions}
1998 $1,152
1999 1,248
2040 1,392
2001 1,505
2002 1,527
SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION
The following is a summary of certain provisions of the Resolution. This summary is not to be
considered a full statement of the terms of the Resolution and accordingly is qualified by reference thereto
and is subject to the full text thereof. Except as otherwise defined herein, capitalized terms used in this
Official Statement without definition have the respective meanings set forth in the Resolution.
Resolution to Constitute Contract
The provisions of the Notes and of the Resolution constitute a contract between the County and
the registered owners of the Notes and the Series B Notes, and such provisions may be enforceable by
mandamus or any other appropriate suit, action or proceeding at law or in equity in any court of
competent jurisdiction, and, upon issuance of the Notes will be irrepealable. See "THE NOTEs—Lien in
Bankruptcy."
Representations and Covenants of the County
The County determines pursuant to the Resolution that with respect to the 2002-2003 Fiscal Year,
the amount of$ (the maximum authorized principal amount of the Notes) when added to the
interestestimated to be payable thereon,does not exceed 85%of the estimated amount of the uncollected
taxes, income,revenue,cash receipts, and other moneys of the County for the General Fund of the County
attributable to Fiscal Year 2002-2003 which will be available for the payment of said notes and the
interest'thereon.
In order to maintain the exclusion from gross income for federal income tax purposes of interest
on the Notes, the County covenants to comply with each applicable requirement of the Internal Revenue
Code of 1986, as amended, necessary to maintain the exclusion of interest on the Notes from gross
income'for federal income tax purposes and the County agrees to comply with the requirements of the
Tax Certificate of the County as such Tax Certificate may be amended from time to time. The County
further covenants that it will make all calculations relating to any rebate of excess investment earnings on
the Note proceeds due to the United States Department of the Treasury in a reasonable and prudent
fashion and will segregate and set aside the amounts such calculations indicate may be required to be paid
to the United States Department of the Treasury from revenues attributable to the 2002-2003 Fiscal Year
or from any other lawfully available moneys. See"TAX MATTERS."
Notwithstanding any other provision of the Resolution to the contrary, upon the County's failure
to observe, or refusal to comply with,the foregoing tax covenants, no one other than the owners or former
02052\pos-2
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ownersof the Notes and the Series B Notes will be entitled to exercise any right or remedy with respect to
such covenants under the Resolution.
Paying Agent and Nate Registrar
The Treasurer will initially act as Paying Agent and as Note Registrar for the Notes. This
appointment does not preclude the County from appointing a financial institution to act as Paying Agent.
Any such successor Paying Agent will be or have co-paying agent relationships with one or more banks
or trust companies in New York,New York.or Los Angeles,California or San Francisco, California.
Exchange and Transfer of the Notes
The registered owners of the Notes which are evidenced by registered certificates may transfer
such Notes upon the books maintained by the Note Registrar, in accordance with the Resolution.
The County and any Paying Agent may deem and treat the registered owner of any Note as the
absolute owner of such Note, regardless of whether such Note is overdue, for the purpose of receiving
payment thereof and for all other purposes, and all such payments so made to any such registered owner
upon his or her order will satisfy and discharge the liability upon such Note to the extent of the sum or
sums so paid,and neither the County nor any Paying Agent will be affected by any notice to the contrary.
Cede& Co., as nominee of DTC, or such other nominee of DTC or any successor securities depository or
the nominee thereof, will be the registered owner of the Notes as long as the beneficial ownership of the
Notes is held in hook-entry form in the records of such securities depository. See APPENDIX G—"DTC
AND THE BOOK-ENTRY-ONLY-SYSTEM."
Permitted Investments
Moneys on deposit in the Repayment Fund will be retained therein until applied to the payment of
the principal of and interest on the Notes. Such amounts may not be used for any other purposes,
although they may be invested in Permitted Investments, except that no such investment shall have a
maturity date later than the maturity date of the respective Notes or Series B Notes expected to be paid
with the proceeds of such investment. The Resolution specifically designates the following investments
as Permitted Investments, subject to certain limitations more fully described in the Resolution:
(1) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for
which the full faith and credit of the United States are pledged for the payment of
principal and interest.
(2) Obligations of instrumentalities or agencies of the United States of America limited to the
following: (a) the Federal Horne Loan Bank Board (FHLB); (b) the Federal Home Loan
Mortgage Corporation (FHLMC); (c) the Federal National Mortgage Association
(FNMA); (d) Federal Farm Credit Bank (FFCB); (e) Government National Mortgage
Association (GNMA); (f) Student Loan Marketing Association (SLMA); (g) Federal
Agricultural Mortgage Association (FRM); and (h) guaranteed portions of Small
Business Administration(SBA)notes.
(3) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise
known as bankers' acceptances. Purchases of bankers' acceptances may not exceed a
maturity of 1801 days. The financial institution must have a minimum short-term rating of
41P-1" and "A-1" by Moody's and S&P, respectively, and a long-term rating of no less
than"A"
02052`pos-2
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(4) Commercial paper of"prime" quality of the highest ranking or of the highest letter and
numerical rating ("P-1" or "A-1") as provided for by Moody's or S&P, respectively.
Eligible paper is further limited to issuing corporations that are organized and operating
within the United States and having total assets in excess of five hundred million dollars
($500,000,000). Such commercial paper may not mature later than 270 days after
purchase.
(5) Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state
or federal association(as defined by Section 5102 of the California Financial Code)or by
a state-licensed branch of a foreign bank in each case which has, or which is a subsidiary
of a parent company which has, the highest letter and numerical rating from Moody's
("P-1")and S&P("A-I"),respectively.
(6) Investments in repurchase agreements of any securities listed in (1) through (4) above.
Investments in repurchase agreements is limited to financial institutions having a rating
of "Aa" or "AA" or better from Moody's and S&P, respectively. The term of the
repurchase agreement may not exceed 30 days and must consist of obligations of the
United States Government, its agencies and instrumentalities, described in clause two (2)
above with a market value of 102 percent or more of the invested amount.
(7) Deposits in the State of California Treasurer's Local Agency Investment Fund(LAIF).
(8) Investment agreements with or the obligations of which are guaranteed by (a) a domestic
bank, financial institution or insurance company the financial capacity to honor its senior
obligations of which is rated at least "Aa2" by Moody's and "AA" by S&P; or (b) a
foreign bank the long-term debt of which is rated "Aa2"by Moody's and "AA"by S&P
(a "Qualified Provider"); provided, that the investment agreement shall provide that if
during its term the provider's(or, if guaranteed, the guarantor's)rating by either Moody's
or S&P falls below "Aa2" or "AA," respectively, the provider must within 10 business
days assign the investment agreement to a Qualified Provider reasonably acceptable to
the County or collateralize the investment agreement by delivering or transferring in
accordance with applicable State and federal laws (other than by means of entries on the
provider's books) to the County or a third party acting solely as agent therefor (the
"Holder of the Collateral") United States Treasury Obligations which are free and clear
of any third-party liens or claims at sufficient collateral levels to maintain the highest
short-term rating on the Notes.
(9) The Contra Costa County Treasurer's Investment Pool.
COUNTY INFORMATION
For a discussion of the economic and demographic profiles of the County, see APPENDix A—
"GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION." For information on the County's
finances, see APPENDIX I3--"COUNTY FINANCIAL INFORMATION"and APPENDIX E—"EXCERPTS FROM THE
AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2001."
02052',pos-2
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CONSTITUTIONAL.AND STATUTORY LIMITATIONS ON TAXES,
REVENUES AND APPROPRIATIONS
Article XIII A of the California Constitution
In 1978, California voters approved Proposition 13, adding Article XIII A to the California
Constitution. Article XIII A was subsequently amended on several occasions in various respects. Article
XIII A',limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof,
except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by
the voters prior to July 1, 1978 and on bonded indebtedness for the acquisition or improvement of real
property which has been approved on or after July 1, 1978 by two-thirds of the voters voting on such
indebtedness and or bonded indebtedness incurred by a school district, community college district or
county',office of education for the construction, reconstruction, rehabilitation or replacement of school
facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real
property for school facilities approved by 55 percent of the voters voting on the proposition. Article XIII
A defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-
76 tax bill under "full cash" or thereafter, the appraised value of real property when purchased, newly
constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may
be increased at a rate not to exceed 2%per year to account for inflation.
Article XIII A has been amended to permit reduction of the "full cash value"base in the event of
declining property values caused by damage, destruction or other factors, and to provide that there would
be no increase in the "full cash value" base in the event of reconstruction of property damaged or
destroyed in a disaster or in the event of certain transfers to children or spouses or of the elderly or
disabled to new residences.
Legislation Implementing Article XIII A
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIII A. Under current law, local agencies are no longer permitted to levy directly any property tax
(exceptto pay voter-approved indebtedness). The 1%property tax is automatically levied by the County
and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1979.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in
the "taxing area" based upon their respective "situs." Any such allocation made to a local agency
continues as part of its allocation in future years.
Article'XHI B of the California Constitution
On October 6, 1979, California voters approved Proposition 4, known as the Cann Initiative,
which added Article XIII B to the California Constitution. Propositions 98 and 111, approved by the
California voters in 1988 and 1990, respectively, substantially modified Article XIII B. The principal
effect of Article XIII B is to limit the annual appropriations of the State and any city, county, school
district, authority, or other political subdivision of the State to the level of appropriations for the prior
fiscal year, as adjusted for changes in the cost of living and population. The initial version of Article XIII
B provided that the "base year" for establishing an appropriations limit was the 1978-79 fiscal year,
which was then adjusted annually to reflect changes in population, consumer prices and certain increases
in the cost of services provided by these public agencies. Proposition 111 revised the method for making
annual adjustments to the appropriations limit by redefining changes in the cost of living and in
population. It also required that beginning in fiscal year 1990-91 each appropriations limit must be
02052\pos-2
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recalculated using the actual 1986-87 appropriations limit and making the applicable annual adjustments
as if the provisions of Proposition 111 had been in effect.
Appropriations subject to limitations of a local government under Article XIII B include
generally any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity
and the proceeds of certain State subventions to that entity, exclusive of refunds of taxes. Proceeds of
taxes include, but are not limited to all tax revenues plus the proceeds to an entity of government from
(1)regulatory licenses,user charges and user fees (but only to the extent such proceeds exceed the cost of
providing the service or regulation), (2) the investment of tax revenues, and (3) certain subventions
received from the State. Article XIII B permits any government entity to change the appropriations limit
by a vote of the electors in conformity with statutory and constitutional voting effective for a maximum of
four years.
As amended by Proposition 111, Article XIII B provides for testing of appropriations limits over
consecutive two-year periods. If an entity's revenues in any two-year period exceed the amounts
permitted to be spent over such period, the excess has to be returned by revising tax rates or fee schedules
over the subsequent two years. As amended by Proposition 98, Article XIII B provides for the payment
of a portion of any excess revenues to a fund established to assist in financing certain school needs.
Appropriations for"qualified capital outlays" are excluded from the limits of Proposition 111.
For Discal Year 2402-2003, the County's Article XIII B limit is estimated to be $4,011,076,824
and budget appropriations subject to limitation are estimated to be $205,767,728. The County has never
exceeded its Article XIII B appropriations limit and does not anticipate having any difficulty in operating
within the appropriations limit.
Article XXHI C and Article XIII D of the California Constitution
On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to
Vote on Taxes Act." Proposition 218 adds Articles XIII C and XIII D to the California Constitution and
contains a number of interrelated provisions affecting the ability of the County to levy and collect both
existing and future taxes,assessments, fees and charges. The interpretation and application of Proposition
218 likely will be determined by the courts with respect to a number of the matters discussed below, and
it is not possible at this time to predict with certainty the outcome of such determination.
Article XIII C requires that all new local taxes be submitted to the electorate before they become
effective. Taxes for general governmental purposes of the County require a majority vote and taxes for
specific purposes, even if deposited in the County's General Fund,require a two-thirds vote. Further, any
general purpose tax which the County imposed, extended or increased without voter approval after
December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which
must be held within two years of November 5, 1996. The County believes that no existing County-
imposed taxes deposited into its General Fund will be affected by the voter approval requirements of
Proposition 218, although as indicated below certain tax levies may be affected by Proposition 62. The
voter approval requirements of Proposition 218 reduce the flexibility of the County to raise revenues for
the General Fund, and no assurance can be given that the County will be able to impose, extend or
increase such taxes in the future to meet increased expenditure needs.
Article .XIII D also adds several provisions making it generally more difficult for local agencies
to levy and maintain fees, charges, and assessments for municipal services and programs. These
provisions include, among other things, (i)a prohibition against assessments which exceed the reasonable
cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must
confer a "special benefit," as defined in Article XIII D, over and above any general benefits conferred,
(iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the
02052\pcs-2
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record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to
the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges
which are used for general governmental services, including police, fire or library services, where the
service is available to the public at large in substantially the same manner as it is to property owners. The
Countyestimates that in Fiscal Year 2000-2001 it will collect no such fees and assessments. Article XIII
C also removes limitations on the initiative power in matters of reducing or repealing local taxes,
assessments, fees or charges. No assurance can be given that the voters of the County will not, in the
future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges
currently comprising a substantial part of the County's General Fund. If such repeal or reduction occurs,
the County's ability to repay the Notes and the Series B Notes could be adversely affected.
Proposition 62
On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local
Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the
court held that a countywide sales tax of one-half of one percent was a special tax that, under Section
53722 of the Government Code, required a two-thirds voter approval. Because the tax received an
affirmative vote of only 54.1%, this special tax was found to be invalid. The decision did not address the
question of whether or not it should be applied retroactively.
Following the California Supreme Court's decision upholding Proposition 62, several actions
were filed challenging taxes imposed by public agencies since the adoption of Proposition 62, which was
passed in November 1986. On.Tune 4, 2001,the California Supreme Court released its decision in one of
these castes,Howard Jarvis Taxpayers Association v. City of La Habra, et al. ("La Habra'). In this case,
the court held that public agency's continued imposition and collection of a tax is an ongoing violation,
upon which the statute of limitations period begins anew with each collection. The court also held that,
unless another statute or constitutional rule provided differently, the statute of limitations for challenges
to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition
62 may only be made for those taxes received within three years of the date the action is brought.
The County has two taxes to which Proposition 62 could apply: a business license tax enacted in
1991, which generates approximately $950,000 per year, and a transient occupancy tax, an increase in
which was enacted in 1990, that generates approximately $1,200,000 per year (approximately $180,000
per year of which is from the 1990 increase).
Future Initiatives
Article XIII A, Article XIII B, Article.XIII C, Article XIII D, and Proposition 62, were adopted as
measures that qualified for the ballot through California's initiative process. From time to time other
initiative measures could be adopted, further affecting the County's revenues.
TAX MATTERS
[TO BE REVIEWED BY BOND COUNSEL]
In the opinion of Orrick, Herrington & Sutcliffe LLP ("Bond Counsel"), based on an analysis of
existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy
of certain representations and compliance with certain covenants, interest on the Notes is excluded from
gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986
(the"Code")and is exempt from State of California(the"State")personal income taxes. Bond Counsel is
of the further opinion that interest on the Nates is not a specific preference item for purposes of the
federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such
interest is included in adjusted current earnings in calculating federal corporate alternative minimum
02052\pos-2
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taxable',income. A complete copy of the proposed form of the opinion of Bond Counsel is set forth in
Appendix D hereto.
Notes purchased, whether at original issuance or otherwise, for an amount greater than their
principal amount payable at maturity ("Premium Notes") will be treated as having amortizable note
premium. No deduction is allowable for the amortizable note premium in the case of notes, like Premium
Notes, the interest on which is excluded from gross income for federal income tax purposes. However, a
purchaser's basis in. a Premium Note, and under Treasury Regulations, the amount of tax-exempt interest
received, will be reduced by the amount of amortizable note premium properly allocable to such
purchaser. Owners of Premium Notes should consult their own tax advisors with respect to the proper
treatment of amortizable note premium in their particular circumstances.
The Code imposes various restrictions,conditions and requirements relating to the exclusion from
gross income for federal income tax purposes of interest on obligations such as the Notes. The County
has covenanted to comply with certain restrictions designed to insure that interest on the Notes will not be
included in federal gross income. Failure to comply with these covenants may result in interest on the
Notes being included in gross income for federal income tax purposes,possibly from the date of original
issuance of the Notes. The opinion of Bond Counsel assumes compliance with these covenants. Bond
Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not
taken) or events occurring (or not occurring) after the date of issuance of the Nates may adversely affect
the value of,or the tax status of interest on,the Notes. Further,no assurance can be given that pending or
future legislation or amendments to the Code, if enacted into law, or any proposed legislation or
amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Notes.
Prospective Noteholders are urged to consult their own tax advisors with respect to proposals to
restructure the federal income tax.
One of the covenants of the County referred to above requires the County to reasonably and
prudently calculate the amount, if any, of excess investment earnings on the proceeds of the Notes which
must be rebated to the United States, to set aside from lawfully available sources sufficient moneys to pay
such amounts and to otherwise do all things necessary and within its power and authority to assure that
interest on the Notes is excluded from gross income for federal income tax purposes. Under the Code, if
the County spends 100% of the proceeds of the Notes within six months after issuance, there is no
requirement that there be a rebate of investment profits in order for interest on the Notes to be excluded
from gross income for federal income tax purposes. The Code also provides that such proceeds are not
deemed spent until all other available moneys (less a reasonable working capital reserve) are spent. The
County expects to satisfy this expenditure test or,if it fails to do so,to make any required rebate payments
from moneys received or accrued during the 2002-2003 Fiscal Year. To the extent that any rebate cannot
be paid from such moneys, the law of California is unclear as to whether such covenant would require the
County to pay any such rebate. This would be an issue only if it were determined that the County's
calculations of expenditures of Note proceeds or of rebatable arbitrage profits, if any, were incorrect.
Certain requirements and procedures contained or referred to in the Resolution and other relevant
documents may be changed and certain actions (including, without limitation, defeasance of the Notes)
may be or omitted,under the circumstances and subject to the terms and conditions set forth in such
documents. Bond Counsel expresses no opinion as to any Note or the interest thereon if any such change
occurs or action is taken or omitted upon the advice or approval of bond counsel other than Orrick,
Herrington& Sutcliffe LLP.
Although Bond Counsel is of the opinion that interest on the Notes is excluded from gross income
for federal income tax purposes and is exempt from State personal income taxes, the ownership or
disposition of, or the accrual or receipt of interest on, the Notes may otherwise affect a Noteholder's
federal or state tax liability. The nature and extent of these other tax consequences will depend upon the
02052\pos-2
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particular tax status of the Noteholder or the Noteholder's other items of income or deduction. Bond
Counsel expresses no opinion regarding any such other tax consequences.
In addition, no assurance can be given that any future legislation, including amendments to the
Code, if enacted into law, or changes in interpretation of the Code, will not cause interest on the Notes to
be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Nates
from realizing the full current benefit of the tax status of such interest. Prospective purchasers of the
Notes should consult their own tax advisers regarding any pending or proposed federal tax legislation.
Further, no assurance can be given that the introduction or enactment of any such future legislation, or
any action of the Internal Revenue Service ("IRS"), including but not limited to regulation, ruling, or
selection of the Notes for audit examination, or the course or result of any IRS examination of the Notes,
or obligations which present similar tax issues,will not affect the market price for the Notes.
LEGAL MATTERS
Bond Counsel's employment is limited to a review of the legal proceedings required for the
authorization of the Notes and to rendering the opinion set forth in Appendix D hereto. Bond Counsel
takes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal
matters will be passed upon for the County by the County Counsel and by Lofton & Jennings, San
Francisco, California, Disclosure Counsel. Compensation paid to Bond Counsel and Disclosure Counsel
is contingent on the sale of the Notes.
LEGALITY FOR INVESTMENT IN CALIFORNIA
Under provisions of the California Financial Cade, the Notes are legal investments for
commercial banks in the State to the extent that the Notes, in the informed opinion of the investor bank,
are prudent for the investment of funds of its depositors and, under provisions of the California
Government Code, are eligible to secure deposits of public moneys in the State.
FINANCIAL ADVISOR
The County has retained Tamalpais Advisors, Inc., Sausalito, California, as financial Advisor for
the sale of the Notes. Tamalpais Advisors, Inc. is an independent financial advisor and is not engaged in
the business of underwriting, trading or distributing municipal or ether financial securities.
Compensation paid to the Financial Advisor is contingent on the delivery of the Notes.
RATINGS
The County has obtained a rating of" " on the Notes from Moody's and a rating of"
on the Notes from. S&P. Certain information was supplied by the County to the rating agencies to be
considered in evaluating the Notes. The ratings issued reflect only the views of the rating agencies, and
any explanation of the significance of such ratings should be obtained from the rating agencies. There is
no assurance that any rating will be retained for any given period of time or that the same will not be
revised downward or withdrawn entirely by the respective rating agency if in its judgment, circumstances
so warrant. Other than as provided in the Continuing Disclosure Certificate, the County undertakes no
responsibility either to bring to the attention of the owners of any Notes any downward revision or
withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such downward
02052\pos-2
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_.
revision or withdrawal of the ratings obtained may have an adverse effect on the market price of the
Nates.
LITIGATION
No litigation is pending or threatened against the County concerning the validity of the Notes,and
a certificate of the County Counsel to that effect will be furnished to the purchaser at the time of the
original delivery of the Notes. The County is not aware of any litigation pending or threatened against the
County questioning the political existence of the County or contesting the County's ability to levy and
collect ad valorem taxes or contesting the County's ability to issue and repay the Notes.
There are a number of lawsuits and claims pending against the County. The aggregate amount of
the uninsured liabilities of the County and the timing of any anticipated payments of judgments which
may result from suits and claims will not, in the opinion of the County Counsel and the County Auditor-
Controller,materially affect the County's finances or impair its ability to repay the Notes.
UNDERWRITING
The Notes were sold at competitive bid on , 2002. The Notes were awarded to
(the "Underwriter") at a purchase price in the amount of $ . The
Official Notice of Sale provides that all Notes will be purchased if any are purchased, the obligation to
make such purchase being subject to certain terms and conditions set forth in the Official Notice of Sale,
the approval of certain legal matters by Bond Counsel, and certain other conditions. The Underwriter has
represented to the County that the Notes were reoffered to the public at the prices or yields set forth on
the cover page hereof. Based on such certification, Underwriter's compensation is $ . The
Underwriter may offer and sell the Notes to certain dealers and others at prices lower than the public
offering prices shown on the cover page hereof. The offering prices may be changed from time to time by
the Underwriter.
ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective purchasers of the
Notes. Summaries and explanations of the Notes, the Resolution, and statutes and documents contained
herein do not purport to be complete, and reference is made to said documents and statutes for a full and
complete statement of their provisions. This Official Statement is not to be construed as a contract
between the County and any purchasers or owners of the Notes.
The County regularly prepares a variety of reports, including audits. budgets and related
documents, as well as certain monthly activity reports. Any owner of a Note may obtain a copy of any
such report, as available, from the County by writing to Director, Capital facilities and Debt
Management, County Administrator's Office, 651 Pine Street, 6tn Floor, Martinez, California 94553, or
by calling 925-335-1093.
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All data contained herein have been taken or constructed from County records and other sources.
Appropriate County officials, acting in their official capacity, have reviewed this Official Statement and
have determined that as of the date hereof the information contained herein is, to the best of their
knowledge and belief,true and correct in all material respects and does not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements made herein, in
the light of the circumstances under which they are made,not misleading. An appropriate County official
will execute a certificate to this effect upon delivery of the Notes. This Official Statement and its
distribution have been duly authorized and approved by the Beard of Supervisors of the County.
COUNTY OF CONTRA COSTA
By:
County Administrator and Clerk
of the Board of Supervisors
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APPENDIX A
GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION
ozasz\pos-z
APPENDIX A
GENERAL COUNTY ECONOMIC
AND DEMOGRAPHIC INFORMATION
General
The County of Contra Costa, California (the "County") was incorporated in 1850 as one of the
original 27 counties of the State of California(the "State"), with the City of Martinez as the County Seat.
It is one of the nine counties in the San Francisco-Oakland Bay Area. The County covers about 733
square miles and extends from the northeastern shore of the San Francisco Bay easterly about 50 miles to
San Joaquin County. The County is bordered on the south and west by Alameda County and on the north
by the Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized, while
the interior sections are suburban/residential, commercial and light industrial. The County contains 19
incorporated cities,including Richmond in the west,Antioch in the northeast, and Concord in the middle.
A large part of the County is served by the San Francisco Bay Area Rapid Transit District
("BART"), which has enabled the expansion of both residential and commercial development throughout
much of the County. In addition, economic development along the Interstate 680 corridor in the County
has been substantial and has accounted for significant job creation in the Cities of Concord,Walnut Creek
and Sari Ramon.
County Government
The County has a general law form of government. A five-member Board of Supervisors, each
member of which is elected to a four-year term, serves as the County's legislative body. Also elected are
the County Assessor, Auditor-Controller, Clerk-Recorder, District Attorney-Public Administrator,
Sheriff-Coroner and Treasurer-Tax Collector. A County Administrator appointed by the Board of
Supervisors runs the day-to-day business of the County. The current County Administrator is John R.
Sweeten.
Population
The County is the ninth most populous county in California, with its population reaching
approximately 981,600 as of January 1, 2002. This represents an increase of approximately 22%
compared to the County's population in 1990. The availability of rapid transit, close proximity to major
employment hubs in San Francisco and Oakland, and relatively affordable existing and new housing have
combined to attract more residents to the County over the past decade.
While population grew in every city in the County during the last decade, population growth has
been strongest in unincorporated areas as well as in the eastern portion of the County, particularly in
Antioch,Brentwood and Clayton.
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A-1
The following is a summary of the County's population levels since 1970.
Table A-1
COUNTY OF CONTRA COSTA
I'ClPULA'TION tt)
1970 1980 1990 2000 2002
Antioch 28,064 42,683 62,195 90,532 96,700
Brentwood 2,649 4,434 7,563 23,302 29,600
Clayton 1,385 4,325 7,317 10,762 11,000
Concord 85,164 103,763 111,308 121,780 123,900
Danville)(2) N/A 26,143 31,306 41,715 43,000
El Cerrito 25,190 22,731 22,869 23,171 23,500
Hercules 252 5,500 16,829 19,488 20,150
Lafayette 20,484 20,837 23,366 23,908 24,400
Martinez 16,506 22,582 31,810 35,866 36,700
Moraga 14,205 15,014 15,987 16,290 16,500
Oakley{2' N/A NIA N/A 251619 26,150
Orinda(2) N/A 17,070 16,642 17,599 17,850
Pinole 15,850 14,253 17,460 19,039 19,450
Pittsburg 20,651 33,465 47,607 56,769 59,900
Pleasant Hill 24,610 25,547 31,583 32,837 33,350
Richmond 79,043 74,676 86,019 99,216 101,100
San Pablo 21,461 19,750 25,158 30,215 30,900
San Ramon(2) N/A 20,511 35,303 44,722 46,250
Walnut Creek 39,844 54,033 60,569 64,296 65,900
Unincorporated 163,035 128,551 152,841 151,690 155,200
TOTAL 558,389 656,331 803,732 948,816 981,600
California 18,136,045 23,668,145 29,758,213 33,871,648 35,060,000
(3) Totals may not equal sums due to independent rounding.
{2> Lutes of incorporation: Danville(7/1/82);Orinda(7/1/85);San Ramon(7/1/83), and Oakley(1999);the 1990 Census Report
created 1980 population levels for all of these cities except Oakley prior to official incorporation.
Source: United States Census for years 1970-2000;State Department of Finance for 2002.
Industry and Employment
The County has one of the fastest growing work forces among Bay Area counties, with growth in
its employment base being driven primarily by the need to provide services to an increasing local
population. The County has experienced an immigration of white-collar jobs due to the relocation of
companies from costlier locations in the Bay Area. The combined impact of population growth and
immigration has resulted in significant job creation in the County, with the 2001 job base of 342,300
having grown about 10.1 %since 1997.
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As shown below, the County's civilian labor force was 509,800 in 2001. With average 2001
unemployment rates of 3.3% and 5.3% for the County and the State, respectively, the County has
achieved a lower unemployment rate than the State in each of the past five years.
`able A-2
COUNTY Clic"CONTRA COSTA
EMPLOYMENT AND UNEMPLOYMENT OF
RESIDENT LABOR FORCE
WAGE AND SALARY EMPLOYMENT EY INDUSTRY
ANNUAL AVERAGES(IN"THOUSANDS)
1997 1998 1999 2000 2001
Civilian Labor Force(1) 472.8 479.9 490.1 505.1 509.8
Employment 453.2 462.6 475.3 490.4 493.1
County Unemployment 19.6 17.3 14.8 13.7 16.7
Unemployment Rate:
County 4.1% 3.6% 3.0% 2.7% 3.3%
State of California 6.3% 5.9% 5.2% 4.9% 5.3%
Wage and Salary Employment(2) 1997 1998 1999 2000 2001
Agriculture El i 0.9 1.3 2.2 2.4
Mining and Construction 22.1 23.3 26.3 28.0 29.8
Manufacturing 26.0 25.6 24.4 25.4 25.5
Transportation and Public Utilities 20.4 20.1 19.9 20.5 20.8
Wholesale Trade 11.3 11.0 12.1 12.3 12.2
Retail'Trade 57.4 59.2 60.6 62.0 62.2
Finance,Insurance,and Real Estate 27.9 28.1 28.5 28.4 30.1
Services 98.9 103.8 106.3 109.8 109.9
Government 45.6 45.5 47.2 _48.2 43.2
TOTAL(3) 310.8 317.6 326.5 336.6 342.3
(�) Based on place of residence.
`z} Based on place of work.
(3) "Total"may not be precise due to independent rounding.
Source: State of California,Employment Development Department,and Labor Market Information Division,March 2000
benchmark.
Major Employers
Major industries in the County include petroleum refining, telecommunications, financial and
retail services, steel manufacturing,prefabricated metals, chemicals, electronic equipment,paper products
and food processing. Most of the County's heavy manufacturing is located along the County's northern
boundary fronting on the Suisun and San Pablo Bays leading to San Francisco Bay and the Pacific Ocean.
The County is located in the region east of the San Francisco Bay known as the "East Bay,"
which also includes the County of Alameda. The following Table A-3 provides a listing of major
employers headquartered or located in the East Bay and their employment levels.
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A-3
Table A-3
MAJOR EMPLOYERS IN THE EAST BAY
WITH EMPLOYEES IN THE COUNTY(i)
Primary Location
Firm in County _ Product or Service Emloyment
U.S.Postal Service Countywide Postal Services 10,000
Chevron(2) Countywide Energy,Oil&Gas 8,730
County of Contra Costa(2) Martinez County Government 8,416
Safeway Countywide Supermarkets 7,922
Bank of America Countywide Banking 7,081
SBC/Pacific Bell/Cingular Wireless San Ramon Telecommunications 7,000
Pacific Gas&Electric Countywide Gas&Electric Service 5,200
Kaiser Permanente Medical Center(2) Walnut Creek,Martinez Health Care 4,730
Lucky Stores Countywide Supermarkets 4,631
Bio--Rad Laboratories Inc. Hercules Biotech tests 4,300
Wells Fargo&Co. Countywide Banking 4,000
AT&T Countywide Telecommunications 4,000
Mt.Diablo Unified School District(2) Concord K-12 Education 3,700
Western Contra Costa School District(2) Richmond K-12 Education 3,360
John Muir/Mt.Diablo Health System(2)
Walnut Creek Health Care 3,023
Longs Drug Stores(2) Walnut Creek Retail Drug Stores 2,900
Ocular Sciences Inc. Concord Contact lenses 3,144
San Ramon Valley Unified School District Danville K-12 Education 2,200
Contra Costa Newspapers(2) Walnut Creek Newspaper Publishing 1,417
Round Table Franchise Corp. Countywide Pizza Restaurants 1,230
Tosco Martinez Oil Refinery 1,200
Hill Physicians Med,Group Countywide Health Care 1,050
USS Posco Industries Pittsburg Steel Manufacturing 1,000
Shell Martinez Refining Co.(Equilon) Martinez Oil Refinery 930
tE� Sources. Office of County Administrator;County Audit, and various published sources, including San Francisco Chronicle,
May 2002; East Bay Business Times, November 2001, San Francisco Business Times, November 1999. Data is for the
reported entity's latest fiscal year.
(2) Headquartered in the County.
Effective Buying Income
"Effective buying income" ("EBI") is a classification developed exclusively by Sales &
Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is
defined as "money income" less personal tax and nontax payments - a number often referred to as
"disposable" or "after-tax" income. Money income is the aggregate of wages and salaries, net farm and
nonfarm self-employment income, interest, dividends,net rental and royalty income, Social Security and
railroad retirement income, other retirement and disability income, public assistance income,
unemployment compensation, Veterans Administration payments, alimony and child support, military
family allotments, net winnings from gambling and other periodic income. Money income does not
include',money received from the sale of property (unless the recipient is engaged in the business of
selling property); the value of"in-kind" income such as food stamps, public housing subsidies, medical
care, employer contributions for persons,etc.;withdrawal of bank deposits; money borrowed;tax refunds;
exchange of money between relatives living in the same household; gifts and lump-sura inheritances,
insurance payments, and other types of lump-sutra receipts. EBI is computed by deducting from money
income all personal income taxes (federal, state and local), personal contributions to social insurance
(Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness
real estate.
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The total effective buying income for the County in 2001, as reported by Sales & Marketing
Management in its Survey of Buying Prower, was $ and the median household effective
buying income was $ . This compares to 2001 median household effective buying incomes of
$ for the City and County of San Francisco, $ for Alameda County, $ for San
Mateo County, $ for Santa Clara County and$ for Los Angeles County.
Table A-4 below presents the latest available total effective buying income and median household
effective buying income for the County, the State and the nation for the calendar years 1997 through
2001.
Table A-4
COUNTY OF CONTRA COSTA
EFFECTIVE BUYING INCOME
CALENDAR YEARS 1997-2001
Total Effective Median Household
Buying Income Effective
Year and Area ($In{IOU's) Ruvine Income
20011
County
State
United States
2000
County $24,823,698 $60,189
State 652,190,282 44,464
United States 5,230,824,904 39,129
1999
County $21,772,470 $53,234
State 590,376,663 39,492
United States 4,877,786,658 37,233
1998
County $20,180,064 $49,645
state 551,999,317 37,091
United States 4,621,491,730 35,377
1997
County $19,079,564 $48,476
State 524,439,600 36,483
United States 4,399,998,035 34,618
t Most recent data available.
Source: Sales&Marketing Management,Survey of Buying Power.
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Commercial Activity
Commercial activity comprises an important part of the County's economy, with taxable
transactions totaling approximately$12.33 billion in 2000. Presented in Table A-5 below is a summary of
taxable transactions in the County since 1996.
Table A-5
COUNTY OF CONTRA COSTA
TAXABLE TRANSACTIONS
1996 To 20001
($IN 000'S)
1996 1997 1998 199 20001
Apparel Stores $ 261,695 $ 277,962 $ 289,750 $304,915 $338,215
General Merchandise Stores 1,213,152 1,283,994 1,379,504 1,467,490 1,625,482
Specialty Stares 890,623 957,508 1,070,135 1,259,681 1,278,513
Food Stores 458,877 478,924 486,580 509,062 544,489
Packaged Liquor Stores 42,925 44,700 48,261 54,563 62,907
Hating and Drinking Places 625,283 664,184 708,982 764,682 832,962
Home Furnishings and Appliances 323,400 333,179 366,400 414,384 471,944
Building Materials and Farm Implements 543,324 591,710 643,052 749,681 840,546
Service Stations 538,840 780,857 922,502 669,467 820,701
Automotive and Vehicle Dealers,Parts
and Supplies 1,046.980 1.143.170 1 30 493 1,524,336 1.833,660
Total Retail Outlets $5,945,099 $6,556,188 $7,223,699 $7,718,261 $8,649;419
Business and Personal Services 365,029 407,816 442,696 467,124 542,103
All Other Outlets 2265,576 65,576 2.313,414 2.427.295 2,929,091 3.139,038
TOTAL ALL OUTLETS $8,575,704 $9,277,418 $10,093,690 $11,114,476 $12,330,560
t Most recent data available.
Source: State Board of Equalization.
Much of the County's commercial activity is concentrated in central business districts of its cities
and unincorporated towns. Regional shopping centers, numerous smaller centers and several "big box"
warehouse stores serve County residents. The County is served by all major banks including Bank of
America and Wells Fargo Bank. In addition there are numerous local banks and branches of smaller
California and foreign banks. There are over 30 savings and loan associations in the County, including
Washington Mutual,World Savings and California Federal.
Construction Activity
The value of residential building activity increased by 6.3% in 2001 from 2000 levels. The
increase was attributable to increase in single family units, although the number of new multiple family
units declined.
Within incorporated cities in the County, Brentwood accounted for the greatest activity with
$225.0 million of construction permits in 2001.
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A-6
The following Table A-6 provides a summary of building permit valuations and number of new
dwelling units authorized in the County since 1992.
Table A-6
COUNTY OF CONTRA COSTA
BUILDING PERMIT VALUATIONS 1991 THROUGH 2001
Valuation(S in millions) Number of New Dwelling Units
Residential Single Multiple
)ear . ew Family I~arniI Total
1992 $638,714 3,279 614 3,893
1993 594,135 3,026 451 3,477
1994 699,395 3,682 230 3,912
1995 619,685 2,137 618 3,755
1996 584,108 3,094 450 31580
1997 582,793 3,105 381 3,486
1998 738,939 3,144 999 41142
1999 852,256 3,909 504 4,413
2000 841,990 3,692 1,071 4,763
2001 921,370 4,144 776 4,920
Source:Economic Sciences Corporation.
Approximately $12.7 billion of construction projects are currently approved or underway in the
County, including a $3.0 billion development known as "Dougherty Valley" that will add approximately
10,000 new homes to the County's housing stock, the development of other major subdivisions that will
add 16,000 new homes with an estimated value of $4.8 billion and construction projects totaling more
than $1.1 billion on three major bridges. Approximately $2.6 billion of projects are pending approval,
including$1.3 billion of construction spending on approximately 4,500 residential units.
The California Energy Commission has recently licensed and approved the construction of two
new natural gas power plants within the County. Using state-of-the-art environmental control technology,
these new facilities will emit 90% less pollution than the average gas-fired power plant in the United
States. The Calpine Corporation opened the $300 million Los Medanos Energy Center in July 2001.
Located in Pittsburg, this natural gas-fired facility generates 500 megawatts of electricity. In 2002, the
joint partnership of Calpine Corporation and Bechtel Enterprises opened the Delta Energy Center; this
facility cost $450 million generates 880 megawatts of electricity. In addition, a natural gas-fired power
plant that will be located outside the City of Antioch and will generate 550 megawatts of electricity is
under construction by Mirant.
Following months of hearings and the preparation of an environmental impact report, on
August 1,2000 the Berard of Supervisors unanimously adopted an amendment to the Contra Costa County
GeneralPlan, 1995-2010, modifying the boundaries of the County's Urban Limit Line. This action
shrinks the growth limit line by 22 square miles, thus removing approximately 14,000 acres from future
development. The two regions primarily affected by the Board's action are eastern Contra Costa County
and the Tassajara Valley in the south-central part of the County. Two cities within the County lost
lawsuits challenging the environmental justifications for the boundary shift. The County anticipates that
other parties may also file lawsuits or take other actions challenging the boundary shift. Consequently,
the actual number of acres ultimately removed from future development may be less than 14,000 acres.
Transportation
Availability of a broad transportation network has been one of the major factors in the County's
economic and population growth. Interstate 80 connects the western portion of the County to San
02052\pos-2
A-7
Francisco and the central portion of the County to Sacramento and points north to Interstate 5, the major
north-south highway from Mexico.to Canada. Interstate 684 connects the central County communities to
the rest of the Bay Area and portions of the Central Valley of the State via State Routes 4 and 24, the
County's major east-west arteries.
Caltrans is currently widening Interstate 80 in the western portion of the County at a cost of
$244 million and constructing replacement spans on the Carquinez Bridge on Interstate Highway 80 and
the Benicia—Martinez Bridge on Interstate Highway 680 at a cost of$1.1 billion.
Ground transportation is available to County residents from the following service providers:
• Central Contra Costa Transit Authority provides local bus service to the central area of the
County including Walnut Creep,Pleasant Hill and Concord.
• BART connects the County to Alameda County, San Francisco and Daly City and Colma in
San Mateo County with two main lines,one from the San Francisco area to Richmond and the
other to the Concord/Walnut Creek/Pittsburg/Bay Point area. BART now has 39 stations and
95 miles of roadway in its system. BART is in the process of building an extension to the San
Francisco International Airport expected to be completed in early 2003.
• AC Transit, provides local bus service and connects Contra Costa communities to San
Francisco and Oakland.
• Other bus service is provided by Greyhound.
• Commuter rail service is provided by the Capital Corridor, with daily runs between the Bay
Area and Sacramento that stop at the new intermodal facility in Martinez,the County seat.
• The Santa Fe and Union Pacific Railroads' main lines serve the County, both in the industrial
coastal areas and the inland farm.section.
Commercial water transportation and docking facilities are available through a number of port
and marina locations in the County. The Port of Richmond on San Francisco Bay and several privately
owned industrial docks on both San Pablo and Suisun Bays serve the heavy industry located in the area.
The Port of Richmond, owned and operated by the City of Richmond, covers 242 acres and handles
nearly 20 million metric tons annually. The majority of the shipments are bulk liquids with the remainder
consisting of scrap metal,autos,and gypsum rock.
Major scheduled airline passenger and freight transportation for County residents is available at
either Oakland or San Francisco International Airports, located about 20 and 30 miles, respectively, from
the County. In addition there are two general aviation fields,one at Byron and the other at Concord.
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Agriculture
The County is comprised of 470,400 acres,with 147,859 of these acres allocated to farmlands and
harvested cropland. In 200-0,the total gross value of agricultural products and crops reached$97,515,400,
an increase of$4,917,800 compared to 2001. The value of agricultural production since 1997 is set forth
in Table A-7 below.
Table A-7
COUNTY OF CONTRA COSTA
AGRICULTURAL PRODUCTION,1997 To 2001
1997 1998 1999 2000 2401
Nursery crops $31,287,800 $31,643,300 $28,202,200 $32,105,200 $37,509,500
Livestock&poultry 5,040,800 3,911,300 7,794,000 8,829,000 7,424,000
Field crops 12,696,000 9,291,000 9,525,000 9,162,000 12,140,400
Vegetable&seed crops 20,033,000 16,756,000 18,298,000 17,026,400 16,055,000
Fruit and nut crops 18,520,000 17,180,400 1.8,197,300 18,050,000 15,609,600
Livestock,apiary&
poultry products 7.597,424 8.083,250 8.474.280 7,425,000 8.777.300
TOTAL $95,175,220 $86,765,250 $90,490,780 $92,597,600 $97,515;400
Source: Contra Costa County Department of Agriculture.
Environmental Control Services
Water. The East Bay Municipal Utilities District ("EBMUD") and the Contra Costa County
Water District ("CCCWD") supply water to the County. EBMUD, the second largest retail water
distributor west of the Mississippi, supplies water to the western part of the County. Ninety-five percent
of its supply is from the Mokelumne River stored at the 69.4 billion gallon capacity Pardee Dana in Ione,
California. EBMUD is entitled to 325 million gallons per day under a contract with the State `dater
Resources Control Board, plus an additional 325 million gallons per day under a contract with the U.S.
Water and Power Resources Service(formerly the U.S. Bureau of Reclamation). EBMUD does not plan
to draw on its federal entitlement for the foreseeable future.
CCCWD obtains its water from the Sacramento-San Joaquin Delta and serves approximately
450,000 customers in Concord, Pleasant bill, Martinez, Clayton, Pittsburg and Antioch. It is entitled
under a contract with the U.S. Water and Power Resources Service to 195,000 acre-feet per year. Water
sold has ranged between 80,000 and 110,000 acre-feet annually. In addition, a number of industrial users
and several municipalities draw water directly from.the San Joaquin River under their own riparian rights,
so that actual water usage in the service area averages about 125,000 acre-feet annually. To provide
expanded water storage capacity, CCCWD constructed the Los Vaqueros Reservoir with a capacity of
100,000 acre-feet south of the City of Antioch at an estimated cost of$450 million.
Sewer. Sewer services for the County are provided by approximately 20 sanitation districts and
municipalities. Federal and State environmental requirements, plus grant money available from these two
sources,have resulted in about 14 agencies upgrading,expanding and/or building new facilities within the
past three years.
Flood Control. The Centra Costa County Flood Control District (the "District") has been in
operation since 1951 to plan, build, and operate flood control projects in unincorporated areas of the
County except for the Delta area on its eastern border. The Delta is interspersed with inland waterways
that fall under the jurisdiction of the U.S. Corps of Engineers and the State Department of Water
Resources. [The District has recently completed construction of the West Antioch Capacity Improvement
02052\pos-2
A-9
Project and is nearing completion of the Martinez Improvement Project.] The District is responsible for
meeting requirements set forth by the Environmental Protection Agency ("EPA") with respect to
addressing potential pollutants in nonspecific groundwater runoff. The County is not presently able to
estivate the cost of compliance with EPA requirements,although such costs may be significant.
Education and Community Services
Public school education in the County is available through nine elementary school districts, two
high school districts and seven unified school districts. These districts provide 137 elementary schools,
41 middle, junior high and intermediate schools, 27 high schools, and a number of preschools, adult
schools, and special education facilities. In addition, there are 110 private schools with six or more
students in the County. School enrollment in January of 2001 numbered approximately 159,714 students
in public schools and 18,543 students in regular graded private schools.
Higher education is available in the County through a combination of two-year community
colleges and four-year colleges. The Contra Costa County Community College District has campuses in
Richmond, Pleasant Hill and Pittsburg. California State University at Hayward operates a branch
campus, called Contra Costa Center, in the City of Concord where late afternoon and evening classes in
business, education and liberal arts are offered. St. Mary's College of California, a four-year private
institution, is located on a 100-acre campus in Moraga. Also located within the County is the John P.
Kennedy University campus in Orinda, which is completing a move into expanded space in downtown
Concord. In addition, County residents are within easy commuting distance of the University of
California,Berkeley.
There are twelve privately operated hospitals and one public hospital in the County, with a
combined total of approximately 1,900 beds. Four of the private hospitals are run by Kaiser, the largest
health maintenance organization in the United States. Kaiser has opened a new hospital in Richmond
with new critical care beds, surgical suites and a full service emergency department. The Walnut Creek-
based Jahn Muir/Mt.Diablo Health System is planning to build a new campus in Brentwood.
The public hospital is Contra Costa Regional MediCal Center ("CCRMC"), a 164-bed facility
that the County rebuilt and opened to the public in 1998 on the existing campus in Martinez. Since
completion of the hospital in 1998, the County has completed a public health/clinical laboratory in 2001,
has converted the former Los Medanos Hospital into the Pittsburg Health Center, has commenced
construction of a new ambulatory care clinic on the campus of CCRMC, and is in the early planning
stages of expanding clinics in Antioch and Concord and replacing clinics in Brentwood and Richmond.
02e52`pos>2
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APPENDIX P
COUNTY FINANCIAL INFORMATION
02052\pos-2
APPENDIX B
COUNTY FINANCIAL INFORMATION
Introduction
California counties administer numerous health and social service programs as the administrative
agent of the State and pursuant to State law. Many of these programs have been either wholly or partially
funded with State revenues which have been subject each year to the State budget and appropriation
process. Currently, the County is required to provide health care to all indigents, administer welfare
prograrrts, provide justice facilities (courts and jails) and administer the property tax system and real
estate recordings. Due to competing program priorities and the lack of available State funds, some of
these programs have had reduced State support without a corresponding reduction in program
responsibilities for county governments.The result has been that the County has increased its contribution
to maintain mandated services while optional local services have been reduced. The Board of Supervisors
has responded to this trend in part by instituting measures to improve management, thereby reducing
costs while increasing productivity and maintaining services with diminished funding.
Currently, approximately 35% of the County's Fiscal Year 2001-02 General Fund Budget
consists of payments from the State of California. The financial condition of the State has an impact on
the level of these revenues. In past years the State has reduced revenues to counties to help solve the
State's budget problems. The shift of nearly$3.0 billion in property taxes from counties to schools during
fiscal years 1992 through the current fiscal year is the best example. The State has also diverted other
revenues such as cigarette taxes and trailer coach in lieu taxes from counties to the State.
In 1991-92, the State and county governments collectively developed a program realignment
system to remove State funding for certain programs from the State budget process and, at the same time,
give counties enhanced program flexibility in the administration of certain health and welfare programs.
Under this plan, the sales tax was increased by 'l2 cent and dedicated to the support of specific health and
welfare programs administered by the County. In addition, vehicle license fees ("VLF") at the time were
increased and this increase was similarly dedicated to supporting these programs. VLF fees have
subsequently been reduced,but the amount of reduction has been"backfilled"by the State. See "Vehicle
License Fees"below. Counties now receive the '1/2 cent sales tax on a fixed formula under State law and
the flow of these funds will no longer be subject to the State budget process. The program shifted
approximately$2.2 billion out of the State budget process.
The level of intergovernmental revenues that the County will receive from the State in Fiscal
Year 2001-02 and in subsequent fiscal years is likely to be affected by the financial condition of the State.
State Budgets
The discussion of the California Energy Markets Disruption and State budgets presented below is
taken from information available on the State Department of Finance, the State Treasurer and the
California Legislative Analyst Office websites. The estimates and projections provided below are based
upon various assumptions as updated in the 2002-03 Governor's Budget, which may be affected by
numerous factors, including future economic conditions in the State and the nation, and there can be no
assurance that the estimates will be achieved. For further information and discussion of factors
underlying the State's projections, see the aforementioned websites. [TO BE CONFORMED TO STATE
DISCLOSURE]
02052\pas-2
B-1
California Energy Markets Disruption
Development of the Power Supply Program. In January 2001, Governor Davis determined that
the electricity available from California's utilities was insufficient to prevent widespread and prolonged
disruption of electric service in California, proclaimed a state of emergency to exist under the California
Emergency Services Act, and directed the Department of Water Resources ("DWR") to enter into
contracts and arrangements for the purchase and sale of electric power as necessary to assist in mitigating
the effects of the emergency (the "Power Supply Program"). The Power Supply Program has also been
implemented under legislation enacted in 20301 (Statutes of 2001, First Extraordinary Session,Chapters 4
and 9,the"Power Supply Act")and orders of the California Public Utilities Commission("CPUC").
Financing the Paver Supply Program. The Power Supply Program was initially financed by
unsecured, interest-bearing loans from the General Fund of the State ("State Loans") aggregating
approximately$6.2 billion (of which $116 million has already been repaid). Advances from the General
Fund ceased in June 2001, after DWR arranged secured loans from banks and other financial institutions,
producing net proceeds aggregating approximately $4.1 billion (`.`Interim Loans"). The Power Supply
Program is also funded by revenue from electricity sales to Customers, cash receipts from such revenues
have aggregated approximately$3.7 billion through January 31,2002.
DWR is authorized by the Power Supply Act to issue up to $13.4 billion in revenue bonds to,
among other things,repay the State and the Interim Loans. Sale of the bonds has been delayed since mid-
2001 by a number of factors, including potential legal challenges and CPUC Actions. At the date of this
Official Statement, there is no definitive schedule for sale of the bonds. If the bonds are not sold, a
significant State budget shortfall will result.
Effect on the County. These developments at the State level may, in turn, affect local
governments. The County receives approximately 12 percent of its general fund revenues from property
taxes and a significant portion of the balance of its revenues is provided by the State. The State's revenue
transfers to local governments could be reduced or the State could decide to shift certain of its financial
obligations to local governments to compensate for large expenditures for power. The weakened financial
situation of the investor-owned utilities ("IOUs") could cause a failure or delay by the IOUs to pay real
property taxes or other payments due or allocable to the County. The County is served by Pacific Gas&
Electric Company ("PG&E"), which is the County's fourth largest taxpayer. On April 6, 2001 PG&E
filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On May 16, 2001, the
Bankruptcy Court ruled that PG&E could pay its outstanding property taxes and such payment was made
to the County. PG&E has paid the County both installments of its property taxes as well as any tax
penalties and fees for the tax year 2000-01 and is current on its obligations for the 2001-02 tax year. No
assurance can be given that PG&E will.continue to pay its property taxes in a timely mariner. See
"Largest Taxpayers" and"The Teeter Plan"below. In addition, no assurance can be given that voluntary
or involuntary bankruptcy proceedings will not be commenced by or against PG&E.
Recent {'Market Conditions. The power situation has changed materially in California since last
year. Electrical power shortages are no longer a substantial threat due to the State's acquisition of long-
term energy contracts, increased power generation with the opening of new power plants in the State, and
decreased demand due to conservation efforts. Electrical rates for the County have stabilized and are
expected to remain at current levels through next fiscal year. Natural gas rates have dropped significantly
and the County is planning to lock in rates for the majority of its natural gas needs next fiscal year at 30%
to 40% reductions through a multi-year contract with the Association of Bay Area Government's Power
Pool and a one year contract with PG&E. To the extent natural gas prices increase, however, the County
benefits from increased franchise fees collected from natural gas plants in the County.
02052'tros-2
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To date, the County has not experienced power shortages; however, any future temporary
reduction or loss of power could materially adversely affect the operations of the County.
State Budget Acts
Fiscal Year 2000-01. The Mate Budget for 2000-01 was signed into law by the Governor on
June 30, 2000. General Fund revenues were estimated to be $71.2 billion for 1999-00 and $73.9 billion
for 2000-01. In addition, the estimate was adjusted to reflect the following: a real revenue gain of$238
million lin 1999-00 attributable to stronger than anticipated May 2000 personal income tax receipts that
were largely attributable to the 1999 tax year; a gain of$138 million in 2000-01 due to differences in the
tax relief measures that were enacted from the Governor's original proposals; and a reduction of $60
millionin sales tax revenue from gasoline to be diverted in 2000-01 from the General Fund for
transportation purposes.
Fiscal .Year 2001-02. The 2001-02 Governor's Budget, released January 10, 2001, estimated
2001-02 General Fund revenues and transfers to be about $79.4 billion and proposed $82.9 billion in
expenditures, utilizing a portion of the surplus expected from 2000-01. The Governor proposed budget
reserves in 2001-02 of $2.4 billion, including $500 million for unplanned litigation costs. The May
Revision disclosed a reversal of the recent General Fund financial trend, as a result of the slowdown in
economic growth in the State starting in the first quarter of 2001 and, most particularly, the steep drop in
stock market levels since early 2000. The Fiscal Year 2001 Budget Act was signed by the Governor on
July 26, 2001, almost four weeks after the start of the fiscal year. The Governor vetoed almost $500
million General Fund expenditures from the Budget passed by the Legislature. The spending plan for
2001-02 included General Fund expenditures of$78.8 billion, a reduction of$1.3 billion from the prior
year. This could be accomplished without serious program cuts because such a large part of the 2000
Budget Act comprised one-time expenditures. The spending plan utilized more than half of the budget
surplus as of June 30, 2001, but still left a projected balance in the Special Fund for Economic
Uncertainties at June 30, 2002, of$2.6 billion, the largest appropriated reserve in State history. The 2001
Budget Act assumed that, during the course of the fiscal year, the $6.2 billion advanced by the General
Fund to the Department of Water Resources for power purchases would be repaid with interest. See
"California Energy Markets Disruption."
At the time that the Fiscal Year 2001 Budget Act was adopted, the Department of Finance
projected that the California economy would continue to grow, but at a more moderate pace. Although
California's growth continues to outpace the nation's by a wide margin,the State is clearly not immune to
a nationwide slowdown in economic activity. The early months of 2001 revealed a significant
moderation in the State's economic growth. Gains in nonfarm employment, which averaged more than
150,000 each quarter during 2000, slowed to only 41,500 during the first three months of 2001. In
addition., announcements by several of the State's major companies point to a softening in high-tech jobs
in the months ahead.
The tragic events of September 11, 2001 have resulted in increased uncertainty regarding the
economic and revenue outlook for the State. Past experience suggests that shocks to American society of
far lesser severity have resulted in a temporary loss in consumer and business confidence and a reduction
in the rate of economic growth. It is not possible at this time to project how much the State's economy
may be affected. However, it should be noted that California's economy is very diverse, and is as well
positioned as any to withstand and eventually recover from the effects of the September 11 attacks.
On September 12, 2001, the California Legislative Analyst's Office sent a letter (the "LAO
letter") to a member of the Legislature answering several budgetary questions from the member,
including questions related to the budgetary and cash flow impacts of a failure of the Department of
Water Resources to sell its revenue bonds and reimburse the $6.1 billion advanced by the State's General
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Fund. The LAC? letter responded by noting that at present there is no direct effect on the General Fund
condition because the $6.1 billion of General Fund advances for energy purchases are being treated as an
account receivable in the 2001-02 fiscal year budget. The LAO letter stated that adequate cash resources
were expected to be available in the then current fiscal year to pay the State's obligations. The LAO letter
also stated that failure to sell the revenue bonds would not cause a cash shortfall until the 2002-03 fiscal
year. The LAO letter indicated that failure to sell the revenue bonds would require spending cuts and/or
revenue increases in 2002-03,to maintain cash resources needed to pay ongoing obligations.
In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the Legislature and
administration permanently redirected over$3 billion of property taxes from cities, counties, and special
districts to schools and community college districts. The Legislature,however,provided some additional
funding sources(such as sales taxes) and reduced certain mandates for local services. Local governments
sued the State(Sonoma County, et. al. v. Commission on State Mandates, et. alb over these transfers. The
appeals court denied the plaintiffs' position and the subsequent appeal was not heard by the State
Supreme Court.
The term "ERAF" is often used as a shorthand reference for this shift of property taxes. ERAF
actually is an acronym for the fund into which redirected property taxes are deposited in each county, the
Educational Revenue Augmentation Fund. The County cannot predict the impact on its General Fund
resulting from future acts of the Legislature to redirect property taxes or the like.
Fiscal Year .2002-2003 . The 2002-03 Governor's Budget, released on January 10, 2002,
estimated 2003-03 General Fund revenues for Fiscal Year 2002-03 of$79.3 billion, an increase over the
current',year of 2.9 percent and General Fund expenditures are estimated at $78.8 billion, including $51.6
million for K-12 education,an increase of 0.5 percent over Fiscal Year 2001-02.
The Fiscal Year 2002-03 Proposed Governor's Budget identified a cumulative budget shortfall of
$12.5 billion in Fiscal Year 2002-03, consisting of a current-year deficit of $3 billion, a budget-year
imbalance between revenues and expenditures of about $9 billion, and the need to rebuild the reserve of
$500 million. The budget forecasts that total General Fund revenues and transfers will grow from $71.4
billion in.Fiscal Year 2000-01 to $77.1 billion in 2001-02 and $79.3 billion in Fiscal Year 2002-03. The
following assumptions were the basis of these figures; a transfer out of the General Fund of$6.2 billion in
Fiscal Year 2000-01 related to loans to the Department of Water Resources' Electric Power Fund; an
offsetting transfer back into the General Fund of$6.5 billion in Fiscal Year 2001-02 reflecting repayment
of and interest on these electricity loans, financed from an assumed electricity revenue bond sale in June
2002 and a $2.4 billion transfer into the General Fund in Fiscal Year 2002-03 associated with the
administration's tobacco settlement securitization proposal.
Exclusive of the above transfers, underlying General Fund revenues are projected to decline by
9.4 percent in the current year and increase by 7.2 percent in Fiscal Year 2002-03. The Fiscal Year 2002-
03 Proposed Governor's Budget proposes to close the $12.5 billion funding gap through a variety of
measures which include:
1. The Fiscal Year 2002-03 Proposed Governor's Budget assumes implementation of the
$2.5 billion in spending reductions proposed in'tiTovember 2001 by the Governer(current year and budget
year combined) from program areas throughout the budget. The budget plan also contains an additional
$2.7 billion in budget-year reductions, including such items as suspensions of cost of living adjustments
("COLAs") in various social services programs, postponements of some recent health care expansions,
reduced inflationary adjustments for higher education, and various other program reductions.
02e52\pos-2
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_.._. ..
2. The Fiscal Year 2002-03 Proposed Governor's Budget includes $586 Million in shifts of
capital outlay support from the General Fund to lease-revenue bonds,and various spending shifts from the
General Fund to special funds.
3. The Fiscal Year 2002-03 Proposed Governor's Budget assumes $1.1 billion in additional
federal funds to offset state costs for MediCal, undocumented felon incarceration, and security activities.
It also assumes elimination of federal child support penalties.
4. Total General Fund spending increase for K-12 education would be limited to 1.1 percent
in Fiscal Year 2002-03. The Fiscal Year 2002-03 Proposed Governor's Budget reflects a minimal
increase in the Proposition 98 minimum funding guarantee (2.2 percent, most of which is funded by
growth in property tax revenues).
5, The California Work Opportunity and Responsibility to Kids (CalWORKs) shows an
increase of 6.7 percent, with total funding equaling the minimum level required by federal law. The
Supplemental Security Income/State Supplementary Program (SSIISSP) also shows an increase in the
budget year of 8.1 percent,primarily due to prior-year COLA adjustments and 2 percent caseload growth.
6. The Fiscal Year 2002-03 Proposed Governor's Budget shows an aggregate decline of 1.7
percent, reflecting reductions in resources an environmental protection, as well as in general government
programs.
May Revision to the Fiscal Year 2002-03 Governor's Proposed Budget. The Governor released
the May Revision to the Fiscal Year 2002-03 Governor's Proposed Budget on May 14, 20012 (the "May
Revision"). As a result of a major decline in anticipated tax receipts, coupled with additional expenditure
requirements for Proposition 98, the Governor has made substantial revisions to his January Proposed
Budget. These involve significant amounts of new borrowing, new expenditure reductions, and tax
increases. Since January, the revenue situation has deteriorated further, with total receipts in Fiscal Year
2001-02 and Fiscal Year 2002-03 now expected by the Governor to fall by a combined $9.5 billion from.
the January budget forecast. In addition, expenditures are expected to exceed the January proposal by
about $1.6 billion for the same period. The May Revision addresses a projected cumulative budget
shortfall higher by another$11.1 billion, to $23.6 billion between expenditures and revenues through the
Fiscal Year 2002-03, or 30 percent of the General Fund.
In response, the Governor has proposed a wide range of new spending reductions, tax increases,
expanded borrowing, and funding shifts to address the $23.6 billion shortfall. Compared to January, the
May Revision includes:
1. $2.4 billion in additional budget reductions, including significant reductions in MediCal,
social services,payments to local governments, and juvenile justice grant programs.
2. $3.7 billion in new tax increases and accelerations, including a one-year increase in the
vehicle license fee (VLF), a two-year suspension of net operating loss (NOL) deductions for businesses,
and an increase in cigarette taxes.
3. $2.1 billion more from the securitization of future tobacco settlement receipts (from
$2.4 billion in the January proposal to$4.5 billion in the May Revision).
4. $2.9 billion from a variety of other actions, including increases in loans from
transportation funds and other funding redirections.
020521pos-2
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The May Revision does not reduce local government VLF revenues, but redirects to schools
about $120 million of property taxes from special districts and redevelopment agencies. The May
Revision also reduces local government subventions and grants by over $200 million, cuts county-
administered health and social services programs by over$200 million, and requires counties to pay for a
portion of federal penalties for the child support and Food Stamps programs (about $150 million). The
budget plan defers funding for about$1.6 billion of local agency mandate reimbursement claims, roughly
half of which would have been paid to cities and counties.
LAO Report. On May 16, 2002, the State Legislative Analyst Office ("LAC?") released its
analysis of the May Revision, a copy of which is available on the LAO's website. The LAC} indicated
that the May Revision provides a credible framework for addressing what has become an enormous
budget problem. However, the LAO also indicated that the State has an underlying budget imbalance in
an amount of at least$7.0 billion that will persist into Fiscal Year 2003-04.
The County cannot predict what actions will be taken in the future by the State Legislature and
the Governor to deal with the State budget deficit. Should the Governor's proposals set forth in the May
Revision be adopted, however, the County has estimated that it would lose approximately $24 million
dollars and would have to streamline and/or reduce delivery of programs and services. The County has
estimated that it has approximately$80.0 million of available reserves to mitigate any impacts that cannot
be accomplished through program reductions.
Vehicle License Fee
On September 20, 1998, the Governor approved a 25 percent reduction in Vehicle License Fee
("VLF"), beginning on January 1, 1999. An additional 10 percent reduction took effect in January 2000.
The VLF is an annual fee on the ownership of a registered vehicle in California. Automobiles,
motorcycles,pick-up trucks, commercial trucks and trailers, rental cars and taxicabs are all subject to the
VLF. The VLF revenues are distributed by the State to cities and counties. Approximately three-fourths
of the VLF revenues are general revenues and can be used for any purpose,with the remaining funds used
to pay for"realignment" Health and Social Services programs. In 1998-1999, VLF revenues in the State
were expected to total over $3.9 billion. This permanent reduction was backfilled by State general tax
revenue, so that counties and cities see no reduction in revenues.
The County's Fiscal Year 2001-02 budget anticipates receipt of $81.0 million in VLF. The
Countyutilizes the general VLF revenues (approximately $60 million) to fund various Countywide
programs, and utilizes "realignment" VLF revenues ($21 million) to fund health service programs. As
indicated above, the State's General Fund currently pays local governments for lost VLF revenues on a
dollar per dollar matching basis, from State general fund revenues. The repayment funds are continuous
appropriations, which means continued replacement is not guaranteed. Thus, in future years there could
be a loss by local governments of State general fund revenues to offset lost VLF fees.
The 2002-03 Budget Act does not reduce local government VLF revenues, nor does it increase in
VLF fees.
From Welfare to Work
In Fiscal Year 1994-95,4,600 single adults and 14,977 families were on welfare (based upon the
Fiscal Year 1994-95 average monthly caseload) in the County. In Fiscal Year 2000-01, that number was
only 501 single adults and 9,151 families (based upon the Fiscal Year 2000-01 average monthly
caseload). This dramatic decline, 51% overall, was in part clue to State and federal policies which set
time limits on cash assistance and created a new"welfare-to-work" system.
020521pos-2
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The federal government and the State have been the driving forces of change in development of
the current system;... In 1996, Congress passed the Personal Responsibility and Work Opportunity
Reconciliation Act (the "Welfare Reform Act"), which placed a five-year lifetime limit on cash welfare
benefits and expanded the scope of the program to include supportive services for achieving economic
self sufficiency. In California, the Welfare Reform Act has been implemented under the California Work
Opportunity and Responsibility to Kids Act ("CalWORKs"), which sets the parameters under which
counties provide welfare services, including cash benefits and supportive services. In California, welfare
recipients are eligible for up to two years of welfare-to-work services, specifically designed to help the
transition from welfare to work. In 1998, Congress also passed the Workforce Investment Act, which
reorganized federal funding for job training employment services, broadened the program to include
services for the welfare population and required consolidation of employment services to one stop
employment centers.
Employment and human Services Department. In 1998, the Board of Supervisors created the
Employment and Human Services Department (the "Department"), a merger of the County's Social
Service Department and the Private Industry Council. In Fiscal Year 2001-02, the Department's budget
was $291.2 million, with a net County cost of $24.55 million. Overall, the Department's reliance on
County General Funds has been reduced from 12.7%in 1994-95 to 8.4%in 2001-02.
Welfare Caseloads. The CaIWORKs caseload is projected to be 8,182 in Fiscal Year 2001-02,
down from 8,520 in.Fiscal Year 2000-01 and a high of 14,977 cases in Fiscal Year 1994-95. The decline
of the CaIWORKs caseload has left the Department with a remaining caseload increasingly concentrated
with individuals experiencing severe barriers to employment such as mental illness and substance abuse.
The Department is currently implementing a collaborative effort with the County's Health Services
Department to provide specialized services to these program participants that will assist them in
overcoming their barriers to employment.
Health Care Funding
The County has the responsibility for providing health care to all persons, regardless of their
ability to pay or insurance status. In recent years, it has become more and more difficult to meet this
obligation as an "open door provider" for the federal and state governments, due to declining and
inadequate federal and state health care financing coupled with rising service demands and service costs.
The County has taken steps to eliminate the gap between revenue and expenditures in its health care
system through revenue enhancements and operational efficiencies.
[Cast Reduction. In order to close the gap between revenue decline and increasing costs, the
County initiated a $3.2 million cost reduction process in the Health Services Department in July 2001.
The Health Services Department met its targets in the first seven months and will have a balanced budget
by year-end that reflects these cost reductions.]
[Revenue Enhancement. The board of supervisors affirmed its support for the health services
department by allocating to its budget all of the$10.9 million in revenues arising from the tobacco master
settlement agreement in Fiscal Year 2041-02. Through restructuring of children's mental health services
and outreach, the health services department was able to raise $6.8 million in state Medicaid (Medi-Cal)
dollars above the level of its expected revenue of$11.5 million for Fiscal Year 2001-02.1
Trial Court Funding
Assembly Bill 233 ("AB 233"), which was adopted by the State Legislature in 1997 and became
effective January 1, 1998, transferred responsibility from the counties to the State for local trial court
funding commencing in Fiscal Year 1997-98. Under the legislation,the State assumed a greater degree of
02052\pos-2
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responsibility for trial court operations costs starting in Fiscal Year 1997-98. The County's trial court
funding requirement declined from $22.8 million in Fiscal Year 1997-98 to $16.1 million in Fiscal Year
2004-01 to$16.5 million in Fiscal Year 200102 as a result of AB 233.
The County will continue to be obligated to provide court facilities for all judicial officers and
support positions authorized prior to July 1, 1996. This includes those judicial officers and positions
which replace those officers and positions created prior to July 1, 1996. However, AB 233 does not
require that the County finance new capital facility expenditures related to judicial officers and support
staff required for any judgeships authorized during the period from January 1, 1998 to June 30, 2001.
The final decision as to who will finance new capital facility expenditures related to this period of time
and into the future has been evaluated by a State task force(the "Task Force").
The Task Force report was submitted to the State Legislature, with Senate Bill 1732 ("SB 1732")
comprising the first of what is expected to be a series of bills that would implement the recommendations
of the Task Force. SB 1732 would create a new fund, the Court Facilities Trust Fund, for the deposit of
county payments for operation and maintenance of the transferred facilities, with a formula for each
county's maintenance of effort payment(as defined in SB 1732),and for the deposit of new monies raised
throughvarious fee increases, and fines and penalty surcharges. The bill also describes the method for
transfer of the facilities to the State and the timeframe for such transfers. This trust fund would be the
source of funding for the costs of implementing the recommendations of the Task Force on Court
Facilities vis-a-vis repairs, modifications, renovations and construction of facilities. [Current status of
this Bill',is Inactive—any additional information?]
County Budget Process
The County is required by State law to adopt a balanced budget by August 30 of each year,
although the Board of Supervisors may, by resolution, extend the date on a permanent basis or for a
limited period,to October 2. The County's budget process involves a number of steps.
First, upon release of the Governor's Proposed Budget in January, the County Administrator
prepares a preliminary forecast of the County's budget based on current year expenditures, the
assumptions and projections contained in the Governor's Proposed Budget and other projected revenue
trends.
Second, the County Administrator presents the County's Proposed Budget to the Board of
Supervisors. Absent the adoption of a final County budget by June 30, the current existing budget is
continued into the new fiscal year until a final budget is adopted.
Third, between January and the time the State adopts its own budget, legally due no later than
June 15,representatives of the County Administrator monitor, review and analyze the State budget and all
adjustments made by the State legislature. Upon adoption of the final State budget, the County
Administrator recommends revisions to the County's Proposed Budget to align County expenditures with
approved State revenue. After conducting public hearings and deliberating the details of the budget, the
Board of Supervisors adopts the County's Final Budget by August 30, or by October 2 if the Board of
Supervisors has adopted a resolution to extend the deadline.
The County adopted its Final Adopted Budget for 2001-02 on August 7, 2001, ahead of the
legally extended deadline of October 2,2001. The County adopted its Fiscal Year 2002-03 Final Adopted
Budget on August 13,2002.
In order to ensure that the budget retrains in balance throughout the fiscal year, the County
Administrator monitors actual expenditures and revenue receipts each month. In the event of a projected
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year-end deficit, steps are taken, in accordance with the State Constitution, to reduce expenditures. On a
quarterly basis, the County Administrator's staff prepares a report that details the activity within each
budget category and provides summary information on the status of the budget. Actions that are
necessary to ensure a healthy budget status at the end of the fiscal year are recommended in the quarterly
budget status reports. {ether items which have major fiscal impacts are also reviewed quarterly. The
County's ability to increase its revenues is limited by State laws that prohibit the imposition of fees to
raise general revenue, except to recover the cost of regulation or provisions of services. See
"CONS'T'ITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS" in the
forepart of this Official Statement.
Recent County General Fund Budgets
Set forth below is a description of the County's comparative budgetary and expenditure
experience for Fiscal Years 2000-01 through 2002-03. For a summary of the actual audited financial
results of the County for Fiscal Year 2000-01, see "ExCERPTS FROM THE AUDITED FINANCIAL
STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2001" in Appendix E to this
Official Statement.
Fiscal Year 2000--01. The County's Fiscal Year 2000-01 Final Adopted Budget was 4%
larger than the prior fiscal year. Salary and benefit increases accounted for the largest share of the
increased costs. Capital projects and building maintenance costs represented a smaller portion of the
increase.
Fiscal Year .2001-02. The County's Fiscal Year 2001-02 Final Adopted Budget was 16.0%
higher than the prior fiscal year's Final Adopted Budget. Major cost increases are the result of salary and
benefit adjustments and rising energy costs. The budget included the loss of$3 million in ERAF monies
from the State.
The budget was balanced through a measured strategy aimed at avoiding disruption of delivery of
services. The specific elements of the strategy are presented below:
1. Conservation of fund balance by placing a freeze on the funding of new,positions.
2. Reductions in one-time costs associated with facilities, equipment purchases, computer
systems and other non-continuing expenses.
3. Aggressive limits in budget baseline inflationary increases, such that increases were
allowed only for prearranged or unavoidable items, such as salary and benefit growth,
energy costs,facility lease increases and information technology adjustments.
4. Reductions in department baseline budgets through tighter control over vacancies.
The County's fiscal performance for Fiscal Year 2001-02 trached the adopted.budget.
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A comparison of the County's General Fund budgets for Fiscal Years 2001-02 and 2002-03 is
shown in Table B-1 below.
Table B-1
COUNTY OF CONTRA COSTA
GENERAL FUND BUDGET
FOR FISCAL YEARS 2001-02 AND 2003-03�
($IN 0000
Final Adopted Final Adopted
Budget Budget
2001-02 2003-03
Requirements
General Government $154,936
Public Protection 272,637
Health and Sanitation 211,849
Public Assistance 320,978
Education 227
Public Ways and Facilities 48,809
Recreation and Culture 1
Reserves and Debt Service 14.706
TOTAL REQUIREMENTS $
Available Funds
Property Taxes $111,332
Fund Balance Available 86,021
Other Taxes 15,562
Licenses,Permits and Franchises 7,335
Fines,Forfeitures and Penalties 13,431
Use of Money and Property 12,312
Intergovernmental 539,152
Charges for Current Services 155,065
Other Revenue 83,933
TOTAL AVAILABLE FUNDS $
This table presents budget information for the General Fund only.
Source: County Auditor-Controller.
Fiscal Year 2002-03. While local-based revenues are anticipated to grow at normal levels, the
Fiscal Year 2002-03 Adopted Budget contains cuts of$31.3 million to County programs and services and
the elimination of full-time equivalent positions due to potential State Budget cuts and increasing
County',personnel and pension costs. The County has estimated that it would lose approximately $24
million if the proposals set forth in the Governor's May Revision are adopted. Of this $24 million, the
County has already implemented budget cuts of$6 million in law and justice and general government,
however, the Adopted Budget does not incorporate additional cuts in-health and human services which
may become necessary once the State Budget is adopted. See"State Budgets."
In addition, the County is facing new budgetary pressure due to an anticipated decrease in
subsidies which were paid from excess earnings on the investment portfolio of the Contra Costa County
Employees' Retirement Association("CCCERA") investment portfolio toward a portion of the County's
retirement contribution requirements. The CCCERA retirement Administrator informed the County in
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early June 2002 that such subsidies would cease after December 2002 due to recent weakness in the
performance of CCCER.A's investment portfolio. The additional net County cost is expected to be $12
million in Fiscal Year 2002-03 and by $25 million in Fiscal Year 2003-04. The County reduced its
budget by $12 million in Fiscal Year 2002-03 and expects to reduce its budget by $25 million in Fiscal
Year 2003-04 in order to maintain budget balance. Future budget reductions are likely to include staff
reductions. For a discussion of the County's pension system and recent collective bargaining over pension
benefits, see "Pension Plan."
Ad Valorem Property Taxes
The County administers the property tax levy and collection system for the County and all local
governments in the County. Taxes are levied for each fiscal year on taxable real and personal property
that is situated in the County as of the preceding January 1. For assessment and collection purposes,
property is classified either as "secured"or"unsecured," and is listed accordingly on separate parts of the
assessment roll. The "secured roll" is that part of the assessment roll containing State assessed property
and property secured by a lien on real property which is sufficient, in the opinion of the Assessor, to
secure payment of the taxes. Other property is assessed on the"unsecured roll."
Property taxes on the secured roll are due in two installments, on November I and February I of
each fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10,respectively,and
a 10%penalty attaches to any delinquent payment. In addition, property on the secured roll with respect
to which taxes are delinquent is declared to be in default on or about June 30 of the fiscal year. Such
property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty,
plus a redemption penalty of one and one half percent per month to the time of redemption. If taxes are
unpaid for a period of five years or more, the tax-defaulted property is declared to be subject to the
Treasurer's power of sale and may be subsequently sold by the Treasurer.
Legislation established the "supplemental roll" in 1984, which directs the Assessor to re-assess
real property, at market value, on the date the property changes ownership or upon completion of
construction. Property on the supplemental roll is eligible for billing 30 days after the reassessment and
notification to the new assessee. The resultant charge (or refund) is a one-time levy on the increase (or
decrease) in value for the period between the date of the change in ownership or completion of
construction and the date of the next regular tax roll upon which the assessment is entered.
Billings are made on a monthly basis and are due on the date mailed. If mailed between the
months',of July through October,the first installment becomes delinquent on December 10 and the second
on April 10. If mailed within the months of November through June, the first installment becomes
delinquent on the last day of the month following the month of billing. The second installment becomes
delinquent on the last day of the fourth month following the date the first installment is delinquent.
Property taxes on the unsecured roll are due as of the January I lien date and become delinquent,
if unpaid., on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll,
and an additional penalty of one and one-half percent per month begins to accrue beginning November 1.
The taxing authority has four ways of collecting unsecured personal property taxes: (1) by filing a civil
action against the taxpayer; (2)by filing a certificate in the office of the County Clerk specifying certain
facts in order to obtain a judgment lien on certain property of the taxpayer; (3) by filing a certificate of
delinquency for recordation in the County Recorder's office, in order to obtain a lien on certain property
of the taxpayer•, and(4)by the seizure and sale of personal property, improvements or possessory interest,
belonging to the taxpayer.
The County and its political subdivisions operate under the Teeter Plan pursuant to provisions of
Sections 4701 through 4717 of the Califoia Revenue and Taxation Code. See "—The Teeter Plan."
02052lpos-2
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Pursuant to those sections,the accounts of all political subdivisions that levy taxes on the County tax rolls
are credited with 100% of their respective tax levies regardless of actual payments and delinquencies.
The County Treasury's cash position (from taxes) is protected by a special fund (the "—The Teeter Plan—
Tax Losses Reserve Fund51) into which all county-wide delinquent penalties are deposited. The County
has used this method since Fiscal Year 1950-51.
Major property tax assessment appeals by businesses and the oil industry total $3.71 billion in
disputed value,with potential loss of revenue in the millions to various units of County local government.
Of the total amount, approximately $2.35 billion is attributable to appeals by oil refineries pertaining to
assessments through the Fiscal Year 2001 tax roll. Two oil refineries have outstanding appeals: Unocal
for 1992 and 1993,and Equilon for 1999, 2000 and 2001. The total assessed values for the refineries over
the years still under appeal and being disputed by the County amount to$5.187 billion. The refineries are
seeking value reductions of$2.35 billion, which is approximately 45% of their respective assessed values
in the indicated fiscal years and equate to approximately $26 million of tax refunds. Heavy industry
accounts for 14.44%of the collected property taxes in the County.
The County incorporated $3.6 million of property tax revenue adjustments in its Fiscal Year
2001-02 budget as a precaution against potential assessment appeal decisions. [Status]
A recent history of County tax levies, delinquencies and the Tax Losses Reserve Fund cash
balances as of June 30th is shown in Table B-2 below.
Table B-2
COUNTY OF CONTRA COSTA
SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY
TAXATION FOR FISCAL YEARS 199091'THROUGH 2002-03
Balance in
Current Tax %Levy Tax Losses
Fiscal Year Assessed Secured Property Delinquencies Delinquent Reserve Fund
Jure 3Q Valuation Tax bevies (June 30) (June 30) June 30)
1990-91 $54,114,860,915 $669,071,124 $19,762,687 2.95% $24,093,615
1991-92 55,422,186,087 714,963,052 24,787,991 3.47 26,558,333
1992-93 61,393,320,088 760,559,294 24,239,204 3.19 29,042,152
1993-94 63,427,696,575 794,435,830 20,652,106 2.60 31,225,565
1994-95 65,294,364,749 823,495,651 20,640,379 2.51 24,709,211
1995-96 67,146,461,590 854,519,556 18,296,237 2.14 15,670,511
1996-97 69,242,099,630 869,580,974 18,057,023 2.05 17,154,539
1997-98 70,314,800,892 892,581,453 15,547,736 1.74 19,508,732
1998-•99 73,699,554,452 939,437,116 15,375,159 1.64 21,550,142
1999-00 75,346,533,416 951,579,866 15,904,158 1.62 23,054,593
2000-01 84,627,977,952 1,062,831,354 16,738,410 1.57 24,535,061
2001-02 93,490,199,701 1,157,173,140 20,551,776 1.73 26,735,236
2002-03(est.) 100,925,700,794 N/A N/A N/A N/A
Source: County Auditor-Controller.
The Teeter Plan
hi 1949, the California Legislature enacted an alternative method for the distribution of secured
property taxes to local agencies. This method, known as the Teeter Plan, is set forth in Sections
4701-4717 of Revenue and Taxation Cade of the State of California (the "Law"). Generally, the Teeter
Plan provides for a tax distribution procedure by which secured roll taxes are distributed to taxing
agencies within the County included in the Teeter Plan on the basis of the tax levy, rather than on the
42052\pos-2
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basis of actual tax collections. The County deposits in the Tax. Losses Reserve Fund (defined below) all
future delinquent tax payments, penalties and interest, and a complex tax redemption distribution system
for all participating taxing agencies is avoided. While the County bears the risk of loss on delinquent
taxes that go unpaid, it benefits from the penalties associated with these delinquent taxes when they are
paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the
elimination of collection risk. The constitutionality of the Teeter Plan was upheld in Carrie v. County of
Contra',Costa, 110 Cal. App.2d 210(1952). The County was the first Teeter Plan county in the State.
Tax Losses Reserve Fund. Pursuant to the Law, the County is required to establish a tax losses
reserve,fund(the "Tax Losses Reserve Fund")to cover losses that may occur in the amount of tax liens as
a result of special sales of tax-defaulted property (i.e., if the sale price of the property is less than the
amount owed). During each fiscal year, the Tax Losses Reserve Fund is reviewed and when the amount
of the fund exceeds certain levels, the excess may be credited to the County General Fund as provided by
Sections 4703 and 4703.2 of the California Revenue and Taxation Code. State law allows any county to
draw down their tax losses reserve fund: to a balance equal to (i) one percent of the total of all taxes and
assessments levied on the secured roll for that year, or(ii)25/0 of the current year delinquent secured tax
levy. The reductions in the County's Tax Losses Reserve Fund balances from Fiscal Year 1994-95
through Fiscal Year 1996-97 reflected multiple reductions in minimum reserve requirements legislated
over that period. The impact of these reductions was to allow increased credits to the County General
Fund. No other material drawdowns have occurred.
As of June 30, 2002, the balance in the Tax Losses Reserve Fund was $24.5 million.
Approximately $7.389 million of the reserve was transferred to the County's General Fund in Fiscal Year
2001-02. In addition, pursuant to the Law, the County has established a tax resources account to
compensate for losses that may occur as a result of uncollected current property taxes.
On April 6, 2001, PG&E, one of the largest taxpayers in the County, filed for voluntary
protection under Chapter I 1 of the federal Bankruptcy Code. The bankruptcy proceedings (the "PG&E
Bankruptcy") are pending in U.S. Bankruptcy Court in San Francisco, California. During the PG&E
Bankruptcy, PG&E's operations will continue under current management, while the Bankruptcy Court
decides on the allocation of PG&E's available cash flow assets among its various creditors. PG&E has
paid the County both installments of its property taxes as well as any tax penalties and fees for the tax
year 2000-01 and was current on its obligations for the 2001-02 tax year. There is no guarantee that
PG&E will make its future property tax payments to the County, in which case the County would
potentially need to draw amounts from its tax resources account to cover losses. Bankruptcies involving
large and complex companies typically take several years to reach a conclusion. PG&E's parent company
has not filed for bankruptcy protection.
Largest Taxpayers
The ten largest taxpayers in the County, as shown on the Fiscal Year 2001-2002 secured tax roll,
and the,approximate amounts of their property tax payments are shown below. These ten taxpayers paid a
total of$99.08 million in taxes,or about 8.7%of the County's 2001-2002 secured tax collection.
Table B-3
COUNTY OF CONTRA COSTA
TEN LARGEST PROPERTY TAXPAYERS
Com any Total Taxes Paid 2.001_-2002 %of Total County Tax Roll(')
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_.._. .........
................................ .. ......... .._....-__.. .. . _. ..._..... ..._.. _..
.. ....... ........ ... ...... .... ._... .
........................
Chevron $27,240,683.54 2.40%
Equilon Enterprise 16,941,151.90 1.49
Toscottlltramar 12,296,601.70 1.08
Pacific Bell 8,964,043.48 0.79
PG&E"' 8,948,735.02 0.79
Mirant Delta(formerly Southern Energy) 7,111,430.58 0.53
GMAC Commercial 5,263,594.00 0.46
Seeno&Associates 4,664,966.00 0.41
USS Posco 4,246,554.42 0.37
ORECM Escrow 3,410,198.00 0.30
TOTAL TEN LARGEST TAXPAYERS $99,087,958.74 8.73%
Column does not total due to rounding.
`Z) PG&E has filed for bankruptcy protection. PG&E has paid all of its taxes due. See"California Energy Markets Disruption—
Effect on the County"and"The Teeter Plan."
Source: County Treasurer-Tax Collector.
Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by regulated utilities
be assessed by the State Board of Equalization (the "SBE") and taxed locally. Property valued by the
SBE as an operating unit in a primary function of the utility taxpayer is known as "unitary property, a
concept designed to permit assessment of the utility as a going concern rather than assessment of each
individual element ofreal and personal property owned by the utility taxpayer. State-assessed unitary and
°c operating nonunitary" property (which excludes nonunitary property of regulated railways) is allocated
to the counties based on the situs of the various components of the unitary property. Except for unitary
property of regulated railways and certain ether excepted property, all unitary and operating nonunitary
property is taxed at special county-wide rates and distributed to taxing jurisdictions according to statutory
formulae generally based on the distribution of taxes in the prior year. In 1999, the SBE adapted a rule
that provides for local assessment of certain investor-owned electric utility facilities. As a result of this
rule, the County Assessor currently assesses two power plants located in the County. However,
assessment of certain power plants has recently been transferred to the SBE, so the portion of the
County's total net assessed valuation constituting unitary property subject to SBE assessment will likely
increase (see further discussion below). Currently, approximately 2.34% of the County's total net
assessed valuation constitutes property subject to State assessment by the SBE, for which approximately
$21,883,000 of property taxes were collected in Fiscal Year 2001-02. The portion of Fiscal Year 2001-02
tax collections through the SBE assessment methodology attributable to the County General Fund was
$5,417,505.
Recently enacted, Assembly Bill 81 (California Legislature 2001-2002 Regular Session),
provides that commencing with the January 1, 2003 property tax lien date, the SBE will assess certain
electric generation facilities. The legislation provides that the assessed value and revenues derived from
such assessed property will be allocated to local jurisdictions in the same manner as locally assessed
property based on the location of the property and not under the unitary property formulae. The County
estimates that, should cities annex property underlying existing power plants, the resultant revenue
allocation could annually decrease County General Fund revenue by approximately $S million to 8
million based on the current fiscal year.
In. addition, the California electric utility industry is currently undergoing significant changes in
its structure and in the way in which components of the industry are or are not regulated. The County is
unable to predict the impact of these changes on its utility property tax revenues, or whether further
legislation may be proposed or enacted in response to industry restructuring, or whether any future
litigation may affect, for example, methods of assessing utility property and the allocation of assessed
value to or among local taxing agencies.
02052\pos-2
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Redevelopment Agencies
The California Community Redevelopment Law authorizes city or county redevelopment
agencies to issue bonds payable from the allocation of tax revenues resulting from increases in full cash
values of properties within designated project areas. In effect, local taxing authorities other than the
redevelopment agency realize tax revenues only on the "frozen" tax base. The following Table B4
shows redevelopment agency full cash value increments and tax allocations for agencies within the
County'.
`fable B-4
COUNTY OF CONTRA COSTA
COMMUNITY REDEVELOPMENT AGENCY PROJECTS
FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS(t3
FISCAL YEARS 1991-92 THROUGH 2001-02
Fiscal Year Base Year Value Full Cash Value Increment Total Total Tax Allocations«;
1991-92 $1,806,223,553 $4,573,718,772 $48,590,841
1992-93 1,864,029,147 5,009,792,773 53,485,897
1993-94 1,864,029,147 5,236,543,696 55,748,579
1994-95 2,715,784,139 5,324,724,2039 56,677,717
1995-96 3,0351,303.629 5,337,629,341 57,204,637
1996-97 3,195,085,095 5,493,724,548 58,807,082
1997-98 2,198,412,524(4) 5,687,444,922 60,454,787
1998-99 2,343,330,103 6,084,461,483 64,427,525
1999-00 2,480,670;587 6,660,417,603 69,321,686
2000.01 2,704,690,573 7,446,872,533 76,886,217
2001-02 3,578,860,177 8,835,385,357 91,289,481
Full cash values for all redevelopment projects above the"frozen"base year valuations. These data represent growth in full
cash values generating tax revenues for use by the community redevelopment agencies.
(2) Does not include unitary and operating non-unitary utility roll values which are determined by the State Board of Equalization
on a county-wide basis.
(3) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies.
(4) The Base Year Value was reduced to exclude project areas with negative increment.
Source: County Auditor-Controller.
Accounting Policies,Reports and Audits
Except as mentioned below, the County believes that its accounting policies used in preparation
of its audited financial statements conform to generally accepted accounting principles applicable to
counties. The County's governmental funds and fiduciary funds use the modified accrual basis of
accounting. This system recognizes revenues when they become available and measurable.
Expenditures, with the exception of unrnatured interest on general long-term debt, are recognized when
the fund liability is incurred. Proprietary funds use the accrual basis of accounting, whereby revenues are
recognized when they are earned and become measurable, while expenses are recognized when they are
incurred.
The Treasurer also holds certain trust and agency funds not under the control of the Board of
Supervisors,such as those of school districts,which are accounted for on a cash basis.
The California Government Code requires every county to prepare an annual financial report.
The Auditor-Controller prepares the Comprehensive Annual Financial Report for the County. This
annual report covers financial operations of the County, County districts and service areas, local
021152\pos-2
B-15
_ _
autonomous districts and various trust transactions of the County Treasury. Linder California law,
independent audits are required of all operating funds under the control of the Board of Supervisors. The
Countyhas had independent audits for more than 40 years. See APPENDix E--"ExCERPTS FROM THE
AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2001."
In addition to the shove-mentioned audits, the County Grand Jury may also conduct management
audits of certain offices of the County.
Funds accounted for by the County are categorized as follows.
Government Funds. Government funds are used to account for all or most of the County's
general'government activities, including the collection and disbursement of earmarked monies (special
revenue funds), the acquisition or construction of general fixed. assets (capital projects funds) and the
servicing of general long-term obligations (debt service funds). The General Fund is used to account for
the revenues and expenditures of the County that are not accounted for by other funds.
Proprietary Funds. Proprietary funds are used to account for activities similar to those in the
private sector, where the measurement focus is upon determination of net income and capital
maintenance. Goods or services from such activities can be provided either to outside parties (enterprise
funds)or to other departments or agencies primarily within the County(internal service funds).
Fiduciary Funds. Fiduciary funds are used to account for assets held by the County in a trustee
capacity or as an agent for individuals, private organizations, other governments, and/or other funds.
These include the Pension and Investment Funds, the Expendable Trust Fund and agency funds.
Presented in Table B-5 on the following page is the County's Schedule of Revenues,
Expenditures and Changes in Fund Balances for the County General Fund as of June 30th for the five
most recent fiscal years for which audited financial statements are available. More detailed information
from the County's audited financial report for the fiscal year ending June 30,2001 appears in Appendix E
to this Official Statement.
02052\pos-2
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Table B-5
COUNTY OF CONTRA COS'T'A GENERAL FUND
SCR DLLE OF REvENUEs,EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL-BUDGETARY BASIS
FISCAL PEARS 1996-97 THROUGH 2000-01
(IN THOUSANDS)
1996-97 1997-98 1998-99 1999-00 2000-01
REVENUES
Taxes $99,974 $101,370 $110,242 $116,540 $184,513
Licenses,permits&franchises 7,419 6,476 6,597 8,623 14,823
Fines,forfeitures&penalties 14,082 12,725 13,514 15,029 14,364
Use of money&property 12,062 13,459 14,937 14,858 19,029
Intergovernmental revenues 371,750 378,383 411,112 465,245 452,351
Charges for services 103,913 107,530 123,203 143,566 160,130
Other revenue 18,198 15,083 17,750 27,923 18,078
TOTAL REVENUES 627,398 635,026 697,355 791,784 863,288
EXPENDrTURES
General government 77,199 83,847 105,967 100,734 106,250
Public protection 150,121 168,054 198,836 215,919 225,008
Health&sanitation 122,676 138,241 146,927 156,441 153,961
Public assistance 218,081 213,246 233,217 244,934 273,403
Education 133 145 144 145 151
Public ways and facilities 9,266 6,965 11,096 20,140 24,092
Interest 4,204 4,302 5,296 3,878 3,133
Capital outlay(') 2,615 2,947 3,173 3,301 1,269
TOTAL EXPENDITURES 584,295 617,747 704,656 745,492 787,267
Excess of Revenues over(under)Expenditures 43,103 17,279 (7,301) 46,292 76,021
OTHER FINANCING SOURCES(USES)
Operating transfers in 24,581 31,318 49,025 31,294 23,485
Operating transfers out (55,844) (42,005) (34,834) (55,993) (68,889)
Capital lease financing# 2,615 2,955 3,173 5,500 1,269
TOTAL OTHER FiNANcmSOURCES(USES) (28,648) (7,732) 17,364 (19,199) (44,135)
Excess(Deficiency)of Revenues and Other Financing 14,455 9,547 10,063 27,093 31,886
Sources over(under)Expenditures and Other
Financing Uses
FUND BALANCE AT BEG1NNiNG OF YEAR, 56,524 68,185 79,960 85,430 112,721
as Previously Reported
Adjustment to beginning fund balance 0 0 0 0 0
FUND BALANCE AT BEGINNING OF YEAR, 56,524 68,185 79,960 85,430 112,721
as Restated
Residual equity transfers in 0 0 0 199 0
Residual equity transfers out (2,794) (772) (1,593) (1) 0
FUND BALANCE AT END OF YEAR $68,185 $76,960 $85,430 $112,721 $144,607
t These entries are required by NCGA Statement 5 to disclose the value of fixed assets acquired during the year under lease
purchase agreements. The County does not appropriate these amounts since they apply to future years.
Source: County Auditor-Controller.
02052\pos-2
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County Employees
A summary of County employees follows:
Table B-6
COUNTY OF CONTRA COSTA
COUNTY EMPLOYEES t
Number of
As of Permanent
June 30 Employees
1990 6,635
1991 7,008
1992 7,080
1993 6,689
1994 6,658
1995 6,822
1996 6,856
1997 6,974
1998 7,106
1999 7,683
2000 8,090
2001 8,416
t Excludes temporary or seasonal employees.
Source: County Auditor-Controller.
Contract Negotiations
County and District employees are represented in 36 bargaining units by 13 labor organizations,
the principal ones being Local One of the Contra Costa County Employees Association and Local 2700 of
the American Federation of State County and Municipal Employees ("AFSCME") which, combined,
represent approximately 50%of all County employees in a variety of classifications.
The County and eleven of the labor organizations, representing approximately 85%of the County
workforce,have reached a conceptual agreement that would extend the memoranda of understanding and
provide for both wage increases and retirement enhancements, contingent upon an offset of$100 million
of the unfunded liability as approved by the Retirement Board on May 28,2002,as follows.
The Memorandums of Understanding (the "MOUS") of the employee organizations representing
employees with miscellaneous retirement benefits will be extended three years from the current expiration
date (September 30, 2002) to the new expiration date of September 30, 2005. Employees would receive
salary increases of 5% effective October 1, 2002, 3% effective October 1, 2003 and 3% effective
October 1, 2004. The formula for calculating retirement benefits would change from the current 2% at
age 58.5 formula to 2% at age 55 effective January 1, 2003. The County will eliminate the Tier II
Retirement Plan and move Tier 1I employees to Tier III, effective October 1, 2002. Employees may
participate in a shared buy-back plan that would allow employees to convert previously earned retirement
service credits to the higher flier(Tier 11I) at a 2:1 employee/employer ratio. The employee organizations
who are party to this agreement include AFSCME Locals 512 and 2700, California Nurses Association,
CCCEA Local One, Physicians' and .Dentists' of Contra Costa County, SEIU Local 535 and Western
Council of Engineers. Wage and retirement benefit provisions for employees with safety retirement in the
miscellaneous employee organizations of CCCEA Local One and SEIU Local 535 expire
September 30,2006.
026521pos-2
B-18
The MOUs of employee organizations representing employees with safety retirement benefits
will be extended three years from the current expiration date to new expiration dates as follows: Deputy
Sheriff's Association, Management and Rank & File Units, and District Attorney Investigator's
Association, September 30, 2005; IAFF Local 1230, Fire Suppression Unit (CCCFPD), March 31, 2006;
United Chief Officers' Association, June 30, 2006; and. IAFF Local 1230, East Diablo Firefighters Unit,
December 31, 2005. Annual wage increase of 5% would be provided, with the exception of employees
represented by the Deputy Sheriffs' Association who instead would receive 6°/d the first year of their
MOU and 5% annually thereafter. The formula for calculating safety retirement benefits would change
from the current 2% at 50 to 3% at 50 effective July 1, 2002. A deduction of 2.25% of wages to defray
the County's cost of providing the enhanced retirement benefits would be made at the same time the
annual wage increases would be received.
In the event the above-mentioned conceptual agreement is not implemented, negotiations with
each individual employee organization will be required. As of[August 26], 2402, all of the employee
organizations except the California Nurses Association, CCCEA Local One, have approved the
agreement.
Contract negotiations continue with the Oakley- nightsen Firefighters Association who represent
the reserve firefighters employed by the Oakley-Knightsen Fire Protection District and whose
memorandum of understanding expired on September 30, 2001. Bargaining with SEIU Local 250 which
represent In-Horne Supportive Services Workers whose memorandum of understanding with the In-Home
Supportive Services Public Authority expires June 30,2042 have commenced. [STATUS)
Pension flan
The Contra Costa County Employees' Retirement Association ("CCCERA") is a cost-sharing
multiple-employer defined pension benefit plan governed by the County Employees' Retirement Law of
1937. The plan covers substantially all of the employees of the County, its special districts, the Housing
Authority and thirteen other member agencies.
The plan provides for retirement, disability, and death and survivor benefits, in accordance with
the County Employees' Retirement Law. Annual cost-of-living adjustments to retirement benefits can be
granted by the Board of Retirement as provided by State statutes.
Except for the new Tier III described below, the CCCERA is divided into three separate benefit
sections of the 1937 Act. These sections are known as: General-- Tier I, General— Tier 11 and Safety.
Tier I includes all General members hired before August 1, 1984 and electing not to transfer to Tier II.
The Tier 11 section includes all employees hired on or after August 1, 1980 and all General members
electing to transfer from Tier 1. The Safety section covers all employees in active law enforcement,active
fire suppression work or certain other "safety„ classifications as designated by the CCCERA's Board of
Retirement.
Service retirement benefits are based on age, length of service and final average salary. For the
Tier I and Safety sections,the retirement benefit is based on the twelve highest pay months, in accordance
with Government Code Section 31462. For Tier II,the benefit is based on a three-year average salary.
Effective October 1, 1998, a Tier III retirement plan was established for permanent County
employees with over five years of service,allowing employees to transfer from.Tier 11 to Tier III. Tier III
offers a better retirement plan using Tier I payout levels, except that the more stringent requirements for
disability retirement are retained from Tier II. Recent collective bargaining negotiations have resulted in
02052\pos-2
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an agreement to merge all `Fier H employees into Tier III effective October 1, 2002, assuming the MOU
(described below)is approved by the various affected union members.
CCCERA Funding Status. The most recent actuarial report of the CCCERA reflects its financial
status as of December 31, 2041. The market value of the plan's assets as of such date was
$2,704,729,000 and the return on assets was-4.23%.
The present value of the plan's unfunded actuarial accrued liability ("UAAL") was estimated in
the December 31, 2001 actuarial report to be $370,331,000 using an 8.35% actuarial rate of return. This
includes the County's portion of the liability as well as that of the other entities comprising CCCERA.
County employees represent approximately 86% of the active members in CCCERA. The GASB
Statement No. 25 liabilities calculated for 2001 showed that the funded ration was approximately 87.6%.
An experience analysis covering active and retired employees for the period December 31, 1997
to December 31, 2000 has been completed by the actuary and has been reviewed by the CCCERA Board
of Trustees. Based upon the actuary's analysis of experience and recommended changes in assumptions,
the UAAL would increase by $91,666,000. Annual employer rates beginning in Fiscal Year 2002-2003
will increase by$14,088,000 to amortize the unfunded liability and to pay for the annual on-going costs.
At its September 2001 meeting, the CCCERA Board rejected three of the five recommended
changes in assumptions proposed by the actuary. Failure to adopt the three changes could understate the
future UAAL by $80,280,000. The two recommended assumptions adopted would result in increased
employer rates of$5,227,000.
In 2000, Governor Davis signed legislation that permits 1937 Retirement Act counties to provide
increased retirement benefits equal to (a)3% of eligible salary per year of service to safety employees
retiring at age 50, and(b)2%of eligible salary per year of service to regular employees retiring at age 55.
If approved by the County Board of Supervisors, the cost of such benefits would have to be paid by the
employers, employees or CCCERA or some combination of all three. The Board of Retirement requested
an actuarial study which refined projections regarding cost of such benefits. The actuary completed the
study and found that the UAAL would increase by$199,000,000 if the new benefits were approved. The
annual cost to pay for the new benefit and to amortize the UAAL would be $29,192,072. Representatives
of the employer and the employees have been in negotiations discussing the approval of the new benefit
and what resources will be used to pay for it. A Memorandum of Understanding("MOU")addressing the
source of payment for these additional benefits for safety employees and for general and miscellaneous
employees was recently drafted. Pursuant to the MOU, $100,000,000 of the cost of the benefit would be
funded 'from CCCERA's unrestricted reserves and safety employees would pay the remaining $99.0
million from a portion of the cost of living adjustment ("COLA") increases included in their
compensation. The MOU sets forth a four year agreement beginning on July 1, 2002 under which safety
employees will receive 5%to 6°10 COLAs out of which 2.25% is applied toward the new benefit in year 1,
with additional 2.5%increments applied in years 2 through 4. The MOU provides a three year agreement
beginning on October 1,2042 for general and miscellaneous members under which they will receive a 5%
COLA in year 1 and 3%COLAs in years 2 and 3.
1n addition to the above, the Board of Retirement has allocated, $127,000,000 of the Unrestricted.
Reserve (see the table below) to be used to pay additional retiree benefits in the amount of $200 per
month. Governor Davis signed legislation on July 21, 2001 that authorized the Board of Supervisors to
provide these additional benefits. The Board of Supervisors has not approved the provision of these
benefits to date. If the benefit is not enacted or approved by the Board of Supervisors and the Retirement
Board,the$127,000,000 will remain in the Unrestricted Reserve. Recent negotiations between the Board
of Supervisors and employee organizations has resulted in a preliminary agreement to award the new
benefit to only those retirees who retired prior to January 1, 1983. The actuary calculated the cost to
02052\pos-2
B-20
prefundthis benefit at$30,000,000. The agreement will not be finalized until the IV OU is signed by the
affected parties and special legislation is chaptered.
As of December 31, 2001,CCCERA had reserves as summarized below:
Type of Reserves Amount
Unrestricted $404,573,464
Market Stabilization (385,448,325}
Total $19,125,139
In the past, CCCERA has been able to contribute a portion of excess earnings from its investment
portfolio to the County in the form of subsidies of a portion of the County's required retirement
contributions. However, CCCERA's investment portfolio has not generated sufficient excess earnings
recently to fund said subsidies. The CCCERA Retirement Administrator informed the County in early
June 2002 that subsidies would cease after December 2002. The additional net County cost is expected to
be $12 million in Fiscal Year 2002-03 and $25 million in Fiscal Year 2003-04. The County reduced its
budget by approximately $12 million in Fiscal Year 2002-03 and expects to reduce its budget by
approximately $25 trillion in Fiscal Year 2003-04 in order to maintain budget balance. The budget
reductions are likely to include reductions in staff. The County has begun to evaluate the effect of
earnings shortfalls in its Market Stabilization Account and the resulting depletion of its surplus balances
which are likely to commence in Fiscal Year 2003-04. The Board of Supervisors has authorized the
County'Administrator to retain a pension system consultant to assist the County in evaluating short- and
long-term strategies to mitigate County pension costs. In Fiscal Year 2002-03, the County will also be
evaluating options for managing the shortfalls, including, the length of time over which the URAL is
amortized, management of the Retirement System and other financial options. See "Recent County
General Fund Budgets."
CCCERA Investment Policy
The Board of Retirement of CCCERA adopted its investment ,guidelines in 1985 and has
amended those guidelines thirteen times,the most recent amendment having been on January 9, 2001 (the
"Investment Policy"). The Investment Policy prescribes, among other things, asset class targets for
investment of CCCERA's funds. The asset allocation targets and their associated ranges, which are a
function of the returns and risks from various asset class and the nature of CCCERA's liabilities,
currently are: Domestic Equity (39%, with a range of 35% - 5541%); International Equity (12%, with a
range of 7% - 13%); Domestic Fixed Income (29%, with a range of 25% - 40%); International fixed
Income (4%, with a range of 3% - 7%), Real Estate (10%, with a range of 5% - 12010), Alternative
Investments(5%,with a range of 0%-7%)and Cash(I%,with a range of 0%-2%). CCCERA contracts
with several investment managers who are responsible for investment of their respective portion of the
portfolio. The Investment Policy prescribes investment guidelines to be followed by the investment
managers as well as monitoring procedures regarding their performance.
The CCCERA issues a stand-alone financial report,which is available at its office located at 1355
Willow Way, Suite 221, Concord, California 94520. For additional information on the County's pension
plan, see APPENDIX E---"EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR
THE FISCAL YEAR ENDED JUNE 30,2001."
Impact of the Ventura Decision
On August 14, 1997, the Supreme Court of the State of California rendered a decision in the
.matter of Ventura County Deputy Sheriffs Association v. Board of Retirement of Ventura County
Employees'Retirement Association which held that compensation not paid in cash, even if not earned by
02052\pos-2
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all employees in the same grade or class, trust be included in "compensation earnable" and "final.
compensation" on which an employee's pension is based. This California Supreme Court decision
became final on October 1, 1997, requiring, among other things, certain items such as vacation buy-hack
to be included in the calculations that determine the retirement benefits that a retiree is eligible to receive.
The court decision pertains to defined pension plans governed by the County Employees' Retirement Law
of 1937, such as the pension plans of many counties in the State, including the County. In addition, two
lawsuits against the County on similar issues have been filed by certain retired County employees. The
CCCERA has settled its litigation of these two cases that were consolidated into one case,entitled Vernon
D. Paulson, et al. v. Board of.retirement of the Contra Costa Employees'Retirement Association, et al.
The consolidated lawsuit was brought on behalf of a class of retired members of the Association
regarding the inclusions and the exclusions from "final" compensation that are used in calculating
members' retirement benefits as a result of the Ventura decision. A settlement agreement has been
entered into with all parties and a petitioners' class has been certified consisting of all retired members of
the Association whose effective retirement date was on or before September 30, 1997 (i.e., the period
prior to the October 1, 1997 effective date of the Ventura decision).
The Board of Retirement has designated $90 million from unrestricted excess earnings to cover
the anticipated liability of the settlement. As of December 31, 2001, $48.0 million in claims covering
3,243 claimants had been paid from this $90 million reserve. There are approximately 960 claimants
remaining to be processed. The liability for past benefits cannot be reasonably estimated due to the
complexity involved in calculating the benefit. As of December 31, 2001, because of interest credits,the
reserve held$53.1 million to pay the remaining claims. The Board of Retirement expects all claims to be
paid and the final tune-up completed by January 2003.
Long Term Obligations
The County has never defaulted on the payment of principal or interest on any of its indebtedness.
Following is a brief summary of the County's general obligation debt, lease obligations and direct and
overlapping debt.
No General Obligation Debt. The County has no direct general obligation bonded indebtedness,
the last issue having been redeemed in Fiscal Year 1977-78. The County has no authorized and unissued
debt.
Lease Obligations. The County has made use of various lease arrangements with private and
public financing entities, nonprofit corporations, the County of Contra Costa Public Financing Authority
and the Contra Costa County Employees' Retirement Association for the use and acquisition of capital
assets. These capital lease obligations have terms ranging from five to 30 years. The longest capital lease
ends in 2028. For a summary of the County's lease obligations as of June 30; 2001, see APPENDIX E—
"EXCERP'TS FROM THE AuTDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED
.TUNE 30,2001—Notes to General Purpose Financial Statements."
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Fiscal year debt service for the County's lease obligations and pension obligation bonds
outstanding as of October 1, 2002 is shown in Table B-7 below.
Table B-7
COUNTY OF CONTRA COSTA
OUTSTANDING LEASE OBLIGATIONS AND
PENSION OBLIGATION BONDS
Fiscal Year
Ending Total Lease Total POB Total Net
6/30 Debt Service Debt Service Debt Service(l) Debt Service(2)
2003 $30,548,144 $35,266,378 $65,814,522 $55,288,610
2004 30,671,166 35,268,818 65,939,984 55,445,002
2005 30,682,331 30,583,818 61,266,148 50,910,031
2006 30,713,674 32,880,050 63;593,724 53,154,334
2007 30,719,596 35,266,005 65,985,601 55,477,690
2008 30,768,688 35,269,240 66,037,928 55,512,567
2009 29,283,136 35,267,578 64,550,714 54,122,839
2010 26,859,696 33,519,398 60,379,094 51,221,266
2011 26,876,505 35,362,040 62,238,545 53,022,905
2012 26,886,376 35,357,058 62,243,434 53,029,054
2013 26,902,295 35,357,500 62,259,795 53,042,715
2014 26,918,895 35,360,000 62,278,895 53,055,535
2015 26,953,016 26,953,016 18,786,262
2016 26,951,150 26,951,150 18,778,656
2017 24,566,467 24,566,467 16,384,340
2018 24,417,253 24,417,253 16,238,033
2019 24,479,381 24,479,381 12,992,346
2020 21,225,283 21,225,283 14,725,266
2021 21,221,347 21,221,347 11,978,438
2022 18,468,416 18,468,416 12,289,501
2023 18,486,666 18,486,666 6,236,450
2024 8,538,437 8,538,437 8,387,460
2025 8,008,644 8,008,644 6,116,149
2026 6,214,795 6,214,795 6,165,760
2027 4,989,288 4,989,288 4,940,252
2028 0 0 2,439.465
TOTAL(') $582,350,641 $414.757.880 997.108.522 799.740.928
C1) Excludes deductions based upon estimated reimbursement from the State for County hospital debt service and estimated
earnings on various debt service and debt service reserve funds.
(2) Includes deductions based upon estimated reimbursement from the State for County hospital debt service,earnings on various
bond funds and the reduction in debt service obligation when the debt service reserve funds are liquidated at the maturity of the
applicable obligations.
(3) Totals do not add due to independent rounding.
Source: The County.
Direct and Overlapping Debt. The County contains numerous municipalities, school districts
and special purpose districts, as well as the overlapping East Bay Municipal Utility District, which has
issued general obligation bonded and lease indebtedness. Set forth in Table B-8 below is a direct and
overlapping debt report (the "Debt Report") prepared by California Municipal Statistics Inc. that
summarizes such indebtedness as of July 1, 2002. The Debt Report is included for general information
purposes only and the County does not guaranty the completeness or accuracy of the information
contained in the Debt Report.
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The Debt Report generally includes long-term obligations sold in the public credit markets by
public agencies whose boundaries overlap the boundaries of the County. Such long-term obligations
generally are not payable from revenues of the County (except as indicated) nor are they necessarily
obligations secured by land within the County. In many cases, long-term obligations issued by a public
agency are payable only from the general fund or other revenues of such public agency.
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Table B-8
CONTRA COSTA COUNTY—DEBT STATEMENT
2001-02 Assessed Valuation: $93,437,663,121 (includes unitary utility valuation)
Redevelopment Incremental Valuation: 8.835.385.357
Adjusted Assessed Valuation: $84,602,277,764
OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 7/1/02
East Bay Municipal Water District and Special District No. 1 49.589&6.018% $ 5,411,977
Contra Costa Community College District 100. 50,000,000
Martinez Unified School District 100. 41,348,920
Mt Diablo Unified School District 100. 69,400,000
Pittsburg Unified School District 100. 28,585,000
San Ramon Valley Unified School District 100. 62,129,416
West Contra Costa Unified School District 100. 122,450,000
Aealanes and Liberty Union High School Districts 100. 129,142,569
Lafayette School District 100. 28,200,000
Other School Districts 0.414-100. 95,287,039
Cities 100. 16,154,977
East Bay Regional Park District 44.549 74,595,073
Other Special Districts 100. 1,480,000
Community Facilities Districts 100. 266,420,000
1915 Act Assessment Bonds(Estimate) 100. 461,352,00fl
TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $1,451,956,971
Less: East Hay Municipal Utility District(100%self-supporting) 2,767,06b
TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $1,449,189,905
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Contra Costa County General Fund Obligations 100. % $334,355,400 til
Contra Costa County Pension Obligations 100. 281,425,000
Contra Costa County Office of Education Certificates of Participation 100. 2,720,000
Contra Costa County Mosquito Abatement District Certificates of Participation 100. 1,055,000
Alameda-Contra Costa Transit District Certificates of Participation 10.889 2,506,648
Antioch Unified School District Certificates of Participation 100. 19,673,575
San Ramon Valley Unified School District Educational Facilities Corporation 100. 29,755,000
Other School District General Fund Obligations 0.140-100. 44,111,125
City of Antioch General Fund Obligations 100. 20,672,996
City of Concord General Fund and Judgment Obligations 100. 42,095,000
City of Richmond General Fund Obligations 100. 51,904,469
City of Richmond Pension Obligations 100. 31,360,000
City of San Ramon General Fund Obligations 100. 22,580,000
Other City General Fund Obligations 100. 38,120,000
Hospital Authorities 100. 2,555,000
Other Special District Certificates of Participation 100. 11,340,00
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $936,228,813
Less: San Ramon Unified School District Certificates of Participation(self-supporting
from GIC from Bayerische Landesbank) 8,885,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $927,343,813
GROSS COMBINED TOTAL DEBT $2,388,185,784 (2)
NET COMBINED TOTAL DEBT $2,376,533,718
(1) Excludes the Notes and the$25,440,000 2002 Series B Lease Revenue Refunding Bonds delivered by the County on September 5,
2002.
(2) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease
obligations.
Ratios to 2001-02 Assessed Valuation:
Total Gross Overlapping Tax and Assessment Debt..............................1.55%
Total Net Overlapping Tax and Assessment Debt..................................1.55%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt($615,780,000)................................................0.73%
Gross Combined Total Debt...................................................................2.82%
Net Combined Total Debt.......................................................................2.81%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01: $0
Source: California Municipal Statistics,Inc.
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Future Financings
The County may undertake major financing projects for the construction of a new Sheriff's
Administration and Emergency Operation's Center and the replacement of the County's emergency radio
system and other small financings for various capital improvements over the next few years.
Insurance and Self-Insurance Programs
The County self-insures its unemployment, dental, management long-term disability and
employee medical insurance plans.
The County self-insures its workers' compensation exposure to $750,000 per occurrence and
purchases commercial insurance to provide protection for up to an additional $10 million per occurrence.
For its public and automobile liability exposures, the County purchases $30 million of commercial
insurance, excess of a$1 million per occurrence self-insured retention.
The County's airports are protected by commercial liability insurance that provides up to $100
million in coverage that is subject to neither a deductible nor a self-insured retention.
With respect to the medical malpractice liability exposure at the Regional MediCal Center, the
County purchases $11.5 million of commercial insurance that is excess of a$500,000 per occurrence self-
insured
elfinsured retention.
The County's buildings, equipment and other property are commercially insured for losses up to
$550 Trillion per occurrence,which is subject to a$50,000 deductible. Losses caused by flood are subject
to a minimum$500,000 deductible.
As of the date hereof,the County has up to$280 million of commercial earthquake insurance that
is subject to a minimum $500,000 deductible. See "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS-Insurance"and"CERTAIN RISK FACTORS—Risk of Earthquake and Other Natural Disasters"in the
forepart of the Official Statement.
All claims,with the exception of dental claims, are handled by County staff.
During the last three (3) years, one (1) fire loss and two (2) medical malpractice liability claims
have been incurred by the County that will involve payment by a commercial insurance company.
Except for the County's airports and a portion of the excess workers'compensation insurance,the
commercial insurance has been purchased through the California State Association of Counties' Excess
Insurance Authority, a joint powers authority, whose purpose is to obtain "group" commercial insurance
for its membership, which includes the County.
Internal Service Funds are used to account for all self-insurance activities. It is the County policy
to periodically infuse capital into each Fund to sufficiently cover the payment of claims, including those
that either will or may require payment sometime in the future. As of June 30, 2001, the Internal Service
Funds had approximately$84.7 million in assets and$82.2 million in liabilities.
Current and future liabilities for the workers' compensation,public liability, automobile liability,
and medical malpractice liability funds are determined annually by an outside actuarial firm, while the
others are determined by county management personnel. In the County's opinion the Internal Service
Funds are sufficiently funded, with an allowance for future investment income, to pay both known claims
and those that may have been incurred but are not presently known.
020521pos-2
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For additional information on the County's insurance coverage, see APPEI Dix E---`°EXCERPTS
FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR. ENDED JUNE 30,
2001--Notes to General Purpose Financial Statements."
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APPENDIX C
SUMMARY OF THE COUNTY INVESTMENT POLICY
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APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX E
EXCERPTS FROM THE AUDITED
FINANCIAL STATEMENTS OF THE COUNTY
FOR THE FISCAL YEAR ENDED JUNE 30, 2001
02052\pos-2
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
02052 Npos-z
APPENDIX G
DTC AND THE BOOK-ENTRY-ONLY SYSTEM
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_
APPENDIX G
DTC AND THE BOOK-ENTRY-ONLY SYSTEM
The following description of the procedures and record keeping with respect to beneficial
ownership interests in the Notes, payment of principal, redemption premium, if any, and interest with
respect to the Notes to DTC, its Participants or Beneficial Owners, confirmation and transfers of
beneficial ownership interests in the Notes and other related transactions by and between DTC, its
Participants and the Beneficial Owners is based solely on the understanding of the County of such
procedures and record keeping from information provided by DTC. Accordingly, no representations can
be made concerning these matters and neither DTC, its 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 its Participants, as the case may be. The County understands that the current "Rules"applicable
to DTC are on file with the Securities and Exchange Commission and that the current "Procedures" of
DTC to be followed in dealing with Participants are on file with DTC.
DTC will act as securities depository for the Notes. The Notes will be executed and delivered as
fully registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other
name as may be requested by an authorized representative of DTC. One fully registered Note certificate
will be executed and delivered for each maturity date of the Notes, each in the aggregate principal amount
due on such maturity date, and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York Banking Law, 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. DTC holds and provides asset servicing for over 2 million issues
of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
from over SS countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also
facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in
deposited securities, through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct
Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Government
Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, (respectively, "NISCC", "GSCC" "MBSCC", and "EMCC", also subsidiaries of DTCC), as
well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard&Poor's highest rating: AAA.. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC
can be found at www.dtcc.com.
Purchases of the Notes under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Notes on DTC's records. The ownership interest of each actual
purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however,expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
02052\1>os-2
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throughwhich the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in the Notes,except in the event that use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of the Notes with DTC and their
registration in the name of Cede&Co.or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect
only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of the Notes may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the Notes
such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For
example, Beneficial Owners of the Notes may wish to ascertain that the nominee holding the Notes for
their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.
Redemption notices shall be sent to DTC. The conveyance of notices and other.communications
by DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC Participants and
Indirect'Participants to Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. Any failure of DTC to advise
any DTC Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of
any such notice and its content or effect will not affect the validity of the redemption of the Notes called
for redemption or of any other action premised on such notice. Redemption of portions of the Notes by
the County will reduce the outstanding principal amount of Bonds held by DTC. In such event,DTC will
implement, through its book-entry system, a redemption by lot of interests in the Notes held for the
account of DTC Participants in accordance with its own rules or other agreements with DTC Participants
and then DTC Participants and Indirect Participants will implement a redemption of the Notes for the
Beneficial Owners. Any such selection of Bonds to be redeemed will not be governed by the Trust
Agreement and will not be conducted by the County.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Notes unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Payments of principal of, premium, if any, and interest evidenced by the Notes will be made to
Cede &Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail
information from the County, on payable date in accordance with their respective holdings shown on
DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or
020521,pas-2
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registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its
nominee),the County, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal of, premium, if any, and interest evidenced by the :Notes to Cede & Co. (or
such other nominee as may be requested by an authorized representative of.OTC} is the responsibility of
the County, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
Disclaimers
AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE NOTES, THE
TRUSTEE WILL SENT) ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO HOLDERS
ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY PARTICIPANT, OR OF ANY
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT
OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS
RELATING TO THE REDEMPTION OF THE NOTES CALLED FOR REDEMPTION' OR OF ANY
OTHER ACTION'PREMISED ON SUCH NOTICE.
THE COUNTY HAS NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE
RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL
OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS
RELATING TO BENEFICIAL OWNERSHIP OF INTERESTS IN THE NOTES.
THE COUNTY CANNOT GIVE AND DOES NOT GIVE ANY ASSURANCES THAT DTC
WILL DISTRIBUTE PAYMENTS TO DTC PARTICIPANTS OR THAT PARTICIPANTS OR
OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE NOTES RECEIVED BY DTC
OR ITS NOMINEES AS THE HOLDER THEREOF OR ANY REDEMPTION NOTICES OR OTHER
NOTICES TO THE BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS,
OR THAT DTC WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL
STATEMENT,
020521pos-2
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