HomeMy WebLinkAboutMINUTES - 10122010 - D.4RECOMMENDATION(S):
HEARING, pursuant to Section 6586.5 of the Government Code of the State of
California, in connection with plans by the County of Contra Costa Public Financing
Authority to issue Lease Revenue Bonds (Capital Project Program) 2010 Series A and
B;
1.
2.
APPROVE OTHER
RECOMMENDATION OF CNTY
ADMINISTRATOR
RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 10/12/2010 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Gayle B. Uilkema, District II Supervisor
Mary N. Piepho, District III Supervisor
Susan A. Bonilla, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Lisa Driscoll, County
Finance Director, 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on
the minutes of the Board of Supervisors on the date shown.
ATTESTED: October 12, 2010
David J. Twa, County Administrator and Clerk of the Board of
Supervisors
By: JULIE ENEA, Deputy
cc: Auditor-Controller, County Administrator, County Counsel, Health Services, Treasurer-Tax Collector
D. 4
To:Board of Supervisors
From:David Twa, County Administrator
Date:October 12, 2010
Contra
Costa
County
Subject:2010 SERIES A, B, and C LEASE REVENUE BONDS
RECOMMENDATION(S): (CONT'D)
ACKNOWLEGE and reaffirm previous approvals of projects; and
ADOPT Resolution No. 2010/521, approving the issuance by the County of Contra
Costa Public Financing Authority of Lease Revenue Bonds (Capital Projects Program),
2010 Series A, B, and C in a principal amount not to exceed $66,000,000 to finance
various capital projects and a refunding of outstanding bonds for savings, authorizing
the forms of and directing the execution and delivery of a Trust Agreement, Site Leases,
Subleases, Bond Purchase Contracts and related financing documents; and
AUTHORIZE the taking of necessary actions and the execution of necessary
documents in connection therewith.
FISCAL IMPACT:
Estimated costs and sources of funding, including lease revenue bonds, for the projects to
be financed have been previously approved by the Board of Supervisors and meet the
County’s established Debt Management Policy. The uses of bond proceeds are for (1)
acquisition, construction, improvement, and/or equipping of all or a portion of the West
County Clinic (located at 13613 and 13585-3613 San Pablo Avenue, San Pablo) and the
regional digital emergency radio communications system (Counties of Contra Costa and
Alameda); and (2) the refunding the $17.4 million outstanding principal amount of the
1998 Lease Revenue Bonds Refunding Series A.
There will be three series of lease revenue bonds issued: one for the clinic, one for the
emergency radio communications system and one for the refunding. The amortization
term for the clinic bonds is approximately 30 years, whereas the amortization term of the
emergency radio communications system is approximately 19 years and the amortization
term of the refunding is approximately 15 years. All series will be structured with level
fiscal year debt service. The maximum aggregate principal amount for 2010 Series A, B,
and C is $66.0 million, which will fund the projects, capitalized interest, reserve funds
and costs of issuance of the bonds.
About half of the series of bonds issued for the clinic will be “Recovery Zone Economic
Development Bonds (RZEDBs),” a special bond structure allowed under the American
Recovery and Reinvestment Act (ARRA). RZEDBs are taxable bonds, but the federal
government provides a 45% interest cost subsidy, thereby making RZEDBs more cost
effective than traditional tax exempt bonds. Net of the federal subsidy and interest
earnings on a reserve fund, the net fiscal year debt service cost of the clinic bonds will be
approximately $2.3 million. This cost will be borne by the Health Services
Department/Hospital Enterprise Fund.
The net fiscal year debt service cost for the emergency radio communications system
bonds is approximately $515,000, of which about 50% is attributable to the County and
the remainder paid from fees charged to other agencies using the system. The County’s
portion of the debt service is to be paid from the General Fund.
The net fiscal year debt service cost for the refunding is estimated to be approximately
$1.6 million, representing an annual reduction of about $160,000 versus the prior bonds.
The debt service on the refunding bonds will be paid from the General Fund and other
County departments, a portion of which will be reimbursed by federal programs.
BACKGROUND:
The recommendations presented in this Board Order, if approved, will fulfill the legal
obligations necessary prior to issuing Lease Revenue Bonds for the County’s 2010
Capital Projects. The proposed financing meets all of the requirements of the County’s
Debt Management Policy.
PUBLIC HEARING
The first item before your Board is a Public Hearing. Notice was given, pursuant to
Section 6586.5 of the Government Code of the State of California, that a public hearing
would be held on October 12 by the Board on behalf of itself and the County of
Alameda. Joint Powers Authority (JPA) law requires a public hearing be held before
financing projects. The purpose of the hearing is to inform the public of what is being
planned and give the public an opportunity to speak. In addition, with respect to the East
Bay Regional Communication System Project, this particular public hearing is held on
behalf of both Contra Costa County and Alameda County because the project will be
constructed and used throughout both counties. Alameda County held a similar hearing
on Tuesday, October 5, 2010.
The County intends to issue fixed rate Lease Revenue Bonds to finance three County
projects in three Series:
2010 Series A Lease Revenue Bonds are intended to finance a portion of the
construction of a new health clinic, located at 13613 and 13585-3613 San Pablo
Ave, in the City of San Pablo;
2010 Series B Bonds are intended for the acquisition of the County’s portion of an
emergency communications system for Contra Costa County and Alameda County
that will be managed by the East Bay Regional Communications System Authority,
a JPA of which the County is a founding member; and
2010 Series C Bonds are intended to refinance outstanding 1998 lease revenue
bonds for debt service savings.
PROJECTS
West County Clinic - The Richmond Health Center is obsolete and in need of total
replacement. Its functional design reflects an outmoded approach to the delivery of
healthcare. The Health Services Department, in conjunction with the General Services
Department, has reviewed a variety of options over the past ten years to address these
deficiencies. Options reviewed included (1) remodeling on the existing site, (2)
rebuilding on the existing site, and (3) rebuilding elsewhere in Richmond (multiple
rebuilding on the existing site, and (3) rebuilding elsewhere in Richmond (multiple
locations were evaluated). All of these options proved to be either too costly or politically
not acceptable. On August 6, 2009, on short notice and under considerable pressure of
time, the Health Services Department submitted a proposal to the federal Health
Resources and Services Administration (HRSA) for the maximum funding available, $12
million, under the Recovery Act Facilities Investment Program grant opportunity. On
December 9, 2009, we learned that we had been awarded the only grant of this size in
California, and one of only six of this size nationwide. The grant requires that the facility
be constructed and occupied within a two-year time period (with extensions possible).
The current Richmond Health Center will be replaced with a new 53,000 square foot
clinic with 60 exam room and all supportive services. The clinic will be located in the
City of San Pablo approximately 3 miles from the existing site. The structure is to be an
outpatient facility and will include spaces for exam and treatment rooms, medical
records, nurses’ stations, doctor work areas, patient registration, and ancillary services.
The facility will continue to be operated by the County. The Contra Costa County Health
Services Department is the largest provider of inpatient and outpatient safety-net services
for the uninsured and underinsured in the County. The Richmond Health Clinic is the
largest Federally Qualified health center in the County in the most economically
challenged part of the County.
This project has been previously approved by the Finance Committee and the Board of
Supervisors in various stages.
East Bay Regional Communication System (EBRCS) - EBRCS is a joint Public Safety
radio communication project between the Counties of Contra Costa and Alameda. Each
county will fund a portion of the acquisition, construction, site improvement, and
equipping of an emergency communications system to be located in the Contra Costa and
Alameda Counties and managed by the East Bay Regional Communications System
Authority. The EBRCS Project is expected to provide common emergency
communications equipment and service for cities, fire and police agencies and other
jurisdictions within the boundaries of the two counties. This critical project has already
received significant grant monies under Homeland Security and other federal and State
programs. Contra Costa’s funding of its portion of the project is a key element to
bringing the entire project to fruition. The East Bay Regional Communications System
Authority itself may also issue bonds to assist in the financing and refinancing of the
EBRCS.
The public safety agencies within Alameda and Contra Costa counties currently use a
combination of shared and individually-owned communications systems operating in four
different frequency bands. All of the systems are in need of replacement and/or
upgrading, and most are lacking the capacity needed by the agencies. There is also no
interoperability between agencies operating in different frequency bands. In 2004 senior
public safety officials formed a task force and began working together to develop a state
of the art communications system that would provide regional interoperability, and
provide a cost effective alternative to the patch work of systems currently in use in the
two counties. The task force grew to include elected officials, city managers, and county
administrators. The work of the task force led to the creation of the East Bay Regional
Communications System Authority (EBRCSA).
The EBRCSA was formed as a Joint Powers Authority (JPA) on September 11, 2007.
Under California law, a JPA is viewed as an independent governmental agency with the
same powers that accrue to one of the member agencies. Currently there are 36 member
agencies consisting of both counties, 29 cities, 4 special districts, and the University of
California. The Board of Directors is made up of 23 representatives consisting of elected
officials, Police Chiefs, Fire Chiefs, and City Managers who will be responsible for the
overall development, operations and funding of the system. Each board member is
selected by their representative organization.
Representatives from both Alameda and Contra Costa Counties have been working
together using Homeland Security grant funds from the Bay Area Super Urban Area
Security Initiative (SUASI), Urban Area Security Initiative (UASI), State Homeland
Security (SHSGP) programs, and COPS funds to fund the infrastructure build out while
the JPA formation process moved forward. To date approximately $39 million of grant
funds have been received.
EBRCSA System Design:
The original two-county design was proposed by Motorola through a procurement
process initiated by Alameda County, the system is a P-25 compliant digital trunked radio
system. The EBRCSA hired CTA communications to complete a review of the original
design and make recommendations as to the final design and provide cost information on
the final build out of the system as well as the operating and maintenance costs. The final
system design is based on CTA’s work and includes 6 simulcast cells connected through
a microwave system back to the master site controller located at the Alameda County
Emergency Operations Center in Dublin. The grant funds received to date have been used
to develop the microwave system and purchase the master site controller, repeater site
equipment, and dispatch consoles. The East Cell in Alameda County and the West Cell in
Contra Costa County have been the primary focus for infrastructure. The West Cell is
complete; once the testing is complete it will be available for use. The East Cell is
approximately 80% complete, with completion and testing anticipated by the end of the
year. Once the financing is in place the remaining sites will be completed. The full system
is scheduled to be available to all system users by January 1, 2013
The January 1, 2013 date is significant as agencies that are in UHF and VHF spectrum
have to complete narrow banding of their repeater site equipment and have narrow band
capable radios by that time. Having the new system available will ensure that agencies
will not have to spend funds narrow banding their existing infrastructure, and can instead
migrate to the EBRCSA system.
System Financing:
In order to complete the system by the January 1, 2013 deadline, the EBRCSA Finance
Committee has been working with both counties’ respective staffs to develop a financing
strategy that includes a combination of grants and debt financing to fund the $30,987,000
necessary to complete the system. The strategy envisions obtaining approximately $14
million in grants over the next 4 years and financing the remaining $17 million from
initial buyouts of various users and from bonds. The main body of the system will cost
$23.6 million to complete and will be completed using the $17 million being financed
plus $6.6 million of grants. There are several stand-alone sites that are planned to provide
additional coverage that will be built using grant funds totaling $7.4 million that will be
built in the following two years.
Both Alameda and Contra Costa counties are in the process of issuing lease revenue
bonds to fund other capital projects. The financing strategy proposes that each county will
increase the size of their issuance to include funds for the EBRCSA project. It was
determined based on the distribution of users that the split between the two counties
would be 60% Alameda/40% Contra Costa. Alameda County will increase their issuance
by $7.2 million and Contra Costa will increase its issuance by $4.8 million for a total of
$12 million. In addition each County will fund capitalized interest for three years and a
reserve fund. The bonds issued by the counties will mature in 2029. The EBRCSA will
then sell non-public bonds to each county as the mechanism for charging EBRCSA users
their pro rata share of the debt service each county must pay on its publicly issued lease
revenue bonds.
There are significant advantages for the EBRCSA to participate and work with the
counties. Due to the size of the issuances and their credit ratings, the counties are able to
receive a much lower interest rate than EBRCSA would if it went to the market on its
own. In addition, because it will not be issuing public bonds, EBRCSA will not have to
go through a rating process. Each user of the EBRCSA system will execute an agreement
that will bind the user to a specific monthly charge per radio that it plans to operate on the
system. The fees charged to users include an annual debt service component that will
flow to each county for the repayment of their respective lease revenue bonds. User fees
will also include the cost of operating and maintaining the system. Currently we are
projecting and accounting for about 12,200 total radios. The annual debt service is
estimated to be $2,066,000 and operating and maintenance costs are estimated to be
$3,850,900. Due to uncertainty about the number of agencies who will join the system
and the timing of when they will join, a range from $40.00 to $45.00 per month per radio
is included as the estimated cost in the operating agreement. The first three years of debt
service payments will be capitalized, so no user will have an out-of-pocket expense for
debt service. The first out-of-pocket debt service payment will be required in FY 13/14.
Should more users sign up during the two years prior to the first out-of-pocket debt
service payment, the monthly fee will be adjusted to match the total user count.
Contra Costa County Participation:
It is expected that the County itself will use approximately 1300 radios, 900 radios for the
Sheriff’s Department and Animal Services Department and another 400 radios for the
Contra Costa County Fire Protection District. Another 3,800 radios will be used by cities
and agencies in Contra Costa County. The initial estimated user fees to be paid by the
County are $623,000 ($431,000 for Sheriff and Animal Services and $192,000 for the
Contra Costa County Fire Protection District), which amount may change as additional
users participate and/or existing users add or drop radios. Operating and maintenance
costs may also rise over time with EBRSCA. Once the County repays its lease revenue
bonds in 2029, there will no longer be a debt service component to the user fees charged
by EBRCSA. At that point, EBRSCA will own the project outright and may continue to
offer services to users.
This project has also been approved in various stages by the Board of Supervisors.
RESOLUTION NO. 2010/521
Resolution 2010/521 provides for the Board of Supervisors to approve and direct the
issuance by the CCC Public Financing Authority of additional lease revenue bonds called
the 2010 Series A, B and C. The Resolution authorizes the forms of and directs the
execution and delivery of the trust agreement, site leases and facility subleases. These
documents allow the County to pledge collateral in the form of County-owned facilities
as security for new bonds as well as prescribe the terms of the bonds themselves. It
should be noted that $20.7 million of par amount of the bonds will be in the form of
Recovery Zone Economic Development Bonds due to the allocation Contra Costa
received directly ($10.7 million ) and an additional $10 million from a competitive
California Debt Allocation Committee award.
The Resolution authorizes taking necessary actions and execution of necessary
documents including the forms of the County’s Official Statement, continuing disclosure,
and bond purchase agreements.
RESOLUTION NO. 2010/522
The sole purpose of the Public Financing Authority is to assist the County with its bond
financings. It has been in existence since 1992 and has been used for BOP and lease
revenue bond financing since 1997. Resolution 2010/522 authorizes and approves the
issuance and sale of the bonds and all the same forms as Resolution 2010/521 except
continuing disclosure, which is solely a County obligation. The Resolution authorizes the
issuance and sale of the Bonds by the Authority, in an aggregate principal amount of not
to exceed $66 million for:
the financing of a portion of the costs of the new West County Clinic,
the financing of a portion of the EBRCS project,
the refunding of the 1998 lease revenue bonds, and
the funding of bond reserves, capitalized interest and the payment of bond issuance
costs.
CONSEQUENCE OF NEGATIVE ACTION:
Inability to issue bonds and possible delay in construction of the West County Clinic.
Construction delay may jeopardize Contra Costa Health Services' award of $12 million to
relocate and rebuild Richmond Health Center, a plan that has been years in the making.
The funds were awarded under the $787 billion American Recovery and Reinvestment
Act (ARRA) in response to the severe economic recession. Funds were awarded through
a competitive grant process for a one-time facility improvement opportunity to address
significant and pressing capital improvement needs in health centers, including
construction and renovation. The funds must be expended by December 31, 2011.
CHILDREN'S IMPACT STATEMENT:
None.
CLERK'S ADDENDUM
CLOSED the hearing; ACKNOWLEGED and REAFFIRMED previous approvals of
projects; ADOPTED Resolution No. 2010/521, approving the issuance by the County
of Contra Costa Public Financing Authority of Lease Revenue Bonds (Capital Projects
Program), 2010 Series A, B, and C in a principal amount not to exceed $66,000,000 to
finance various capital projects and a refunding of outstanding bonds for savings,
authorizing the forms of and directing the execution and delivery of a Trust
Agreement, Site Leases, Subleases, Bond Purchase Contracts and related financing
documents; and AUTHORIZED the taking of necessary actions and the execution of
necessary documents in connection therewith.
ATTACHMENTS
Resolution No. 2010/521
Body of Resolution No. 2010-521
Clerk's Certificate 2010-521
Trust Agreement
Site Lease (Capital Project I)
Site Lease (Capital Project II)
Site Lease (Refunding)
Sublease (Capital Project I)
Sublease (Capital Project II)
Sublease (Refunding)
Bond Purchase Agreement (Capital Projects)
Bond Purchase Agreement (Refunding)
Continuing Disclosure Certificate
Termination Agreement
Financing Agreement
Preliminary Official Statement
OHS West:260890460.9
TRUST AGREEMENT
between the
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
Dated as of November 1, 2010
$__________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds
consisting of
$__________ 2010 Series A-1 (Capital Project I - Tax-Exempt Bonds),
$__________ 2010 Series A-2 (Capital Project I - Taxable Build America Bonds),
$__________ 2010 Series A-3 (Capital Project I - Taxable Recovery Zone Bonds),
$__________ 2010 Series B (Capital Project II), and
$__________ 2010 Series C (Refunding)
TABLE OF CONTENTS
Page
-i -
OHS West:260890460.9
ARTICLE I DEFINITIONS; EQUAL SECURITY .............................................................4
SECTION 1.01 Definitions ......................................................................................4
SECTION 1.02 Equal Security ..............................................................................16
SECTION 1.03 Interpretation ................................................................................16
ARTICLE II THE BONDS ..................................................................................................17
SECTION 2.01 Authorization of Bonds; 2010 Bonds ...........................................17
SECTION 2.02 Terms of the 2010 Bonds .............................................................18
SECTION 2.03 Form of 2010 Bonds .....................................................................22
SECTION 2.04 Execution of Bonds ......................................................................22
SECTION 2.05 Transfer and Payment of Bonds ...................................................22
SECTION 2.06 Exchange of Bonds .......................................................................23
SECTION 2.07 Bond Registration Books ..............................................................23
SECTION 2.08 Mutilated, Destroyed, Stolen or Lost Bonds; Temporary
Bonds ............................................................................................23
SECTION 2.09 Special Covenants as to Book-Entry Only S ystem for
Bonds ............................................................................................24
ARTICLE III ISSUANCE OF 2010 BONDS .......................................................................26
SECTION 3.01 Procedure for the Issuance of 2010 Bonds ...................................26
SECTION 3.02 Project Fund..................................................................................28
SECTION 3.03 Conditions for the Issuance of Additional Bonds .........................28
SECTION 3.04 Proceedings for Authorization of Additional Bonds ....................29
SECTION 3.05 Limitations on the Issuance of Obligations Payable from
Revenues .......................................................................................30
SECTION 3.06 Costs of Issuance Fund .................................................................31
ARTICLE IV REDEMPTION OF BONDS ..........................................................................31
SECTION 4.01 Extraordinary Redemption ...........................................................31
SECTION 4.02 Optional Redemption....................................................................31
SECTION 4.03 Extraordinary Optional Redemption ............................................33
SECTION 4.04 Mandatory Sinking Fund Redemption .........................................33
SECTION 4.05 Selection of Bonds for Redemption..............................................34
SECTION 4.06 Notice of Redemption; Cancellation; Effect of Redemption........35
TABLE OF CONTENTS
(continued)
Page
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OHS West:260890460.9
ARTICLE V REVENUES ...................................................................................................36
SECTION 5.01 Pledge of Revenues ......................................................................36
SECTION 5.02 Receipt and Deposit of Revenues in the Revenue Fund...............36
SECTION 5.03 Establishment and Maintenance of Accounts for Use of
Money in the Revenue Fund; Reserve Fund ................................37
SECTION 5.04 Application of Insurance Proceeds ...............................................44
SECTION 5.05 Deposit and Investments of Money in Accounts and Funds ........44
SECTION 5.06 Filings for Subsidy Receipts .........................................................45
ARTICLE VI COVENANTS OF THE AUTHORITY .........................................................46
SECTION 6.01 Punctual Payment and Performance .............................................46
SECTION 6.02 Against Encumbrances .................................................................47
SECTION 6.03 Tax Covenants for Tax-Exempt Bonds; Rebate Fund ..................47
SECTION 6.04 Tax Covenants for Taxable 2010 Bonds ......................................48
SECTION 6.05 Accounting Records and Reports .................................................48
SECTION 6.06 Prosecution and Defense of Suits .................................................49
SECTION 6.07 Further Assurances .......................................................................49
SECTION 6.08 Maintenance of Revenues.............................................................49
SECTION 6.09 Amendments to Subleases ............................................................49
SECTION 6.10 Leasehold Estate ...........................................................................50
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS ............51
SECTION 7.01 Events of Default and Acceleration of Maturities ........................51
SECTION 7.02 Application of Funds Upon Acceleration .....................................52
SECTION 7.03 Institution of Legal Proceedings by Trustee .................................52
SECTION 7.04 Non-Waiver ..................................................................................53
SECTION 7.05 Actions by Trustee as Attorney-in-Fact........................................53
SECTION 7.06 Remedies Not Exclusive...............................................................53
SECTION 7.07 Limitation on Bondholders’ Right to Sue ....................................53
ARTICLE VIII THE TRUSTEE ..............................................................................................54
SECTION 8.01 The Trustee ...................................................................................54
SECTION 8.02 Liability of Trustee .......................................................................55
SECTION 8.03 Compensation and Indemnification of Trustee ............................57
SECTION 8.04 Compliance with Continuing Disclosure Agreement ...................57
TABLE OF CONTENTS
(continued)
Page
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OHS West:260890460.9
SECTION 8.05 Covenants of the Trustee ..............................................................58
ARTICLE IX AMENDMENT OF THE TRUST AGREEMENT ........................................58
SECTION 9.01 Amendment of the Trust Agreement ............................................58
SECTION 9.02 Disqualified Bonds .......................................................................59
SECTION 9.03 Endorsement or Replacement of Bonds After Amendment .........59
SECTION 9.04 Amendment by Mutual Consent ...................................................60
ARTICLE X DEFEASANCE ..............................................................................................60
SECTION 10.01 Discharge of Bonds ......................................................................60
SECTION 10.02 Unclaimed Money ........................................................................61
ARTICLE XI MISCELLANEOUS .......................................................................................61
SECTION 11.01 Liability of Authority Limited to Revenues .................................61
SECTION 11.02 Benefits of this Trust Agreement Limited to Parties and
Third Party Beneficiaries ..............................................................61
SECTION 11.03 Successor Is Deemed Included In All References To
Predecessor ...................................................................................62
SECTION 11.04 Execution of Documents by Bondholders ....................................62
SECTION 11.05 Waiver of Personal Liability.........................................................62
SECTION 11.06 Destruction of Cancelled Bonds ...................................................62
SECTION 11.07 Content of Certificates ..................................................................62
SECTION 11.08 Accounts and Funds .....................................................................63
SECTION 11.09 Business Day ................................................................................63
SECTION 11.10 Notices; Notices to Rating Agencies ............................................63
SECTION 11.11 Article and Section Headings and References..............................64
SECTION 11.12 Partial Invalidity ...........................................................................64
SECTION 11.13 Governing Law .............................................................................64
SECTION 11.14 Execution in Several Counterparts ...............................................64
EXECUTION ........................................................................................................................66
EXHIBIT A FORM OF 2010 BOND ..............................................................................A-1
EXHIBIT B-1 FORM OF REQUISITION – PROJECT FUND (2010 SERIES A).......B-1-1
EXHIBIT B-2 FORM OF REQUISITION – PROJECT FUND (SERIES B).................B-2-1
EXHIBIT C FORM OF REQUISITION – COSTS OF ISSUANCE ...............................C-1
OHS West:260890460.9
THIS TRUST AGREEMENT dated as of November 1, 2010 (the “Trust
Agreement”), by and between the COUNTY OF CONTRA COSTA PUBLIC FINANCING
AUTHORITY (the “Authority”), a joint exercise of powers authority duly organized and existing
pursuant to an Agreement entitled “Joint Exercise of Powers Agreement,” dated as of
April 7,1992, by and between the County of Contra Costa and the Contra Costa County
Redevelopment Agency, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States of America and
qualified to accept and administer the trusts hereby created, as trustee (the “Trustee”);
W I T N E S S E T H:
WHEREAS, the Authority is a joint exercise of powers authority duly organized
and operating pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State
of California (hereinafter, the “Act”);
WHEREAS, Article 4 of the Act authorizes and empowers the Authority to issue
bonds to assist local agencies in financing and refinancing projects and programs consisting of
certain public improvements or working capital or liability and other insurance needs whenever a
local agency determines that there are significant public benefits from so doing;
WHEREAS, the County of Contra Costa (the “County”) following a public
hearing duly noticed and held, has determined that the consummation of the transactions
contemplated in certain Subleases (as hereinafter defined) and this Trust Agreement will result in
significant public benefits;
WHEREAS, the Authority is empowered pursuant to the Subleases (as hereinafter
defined) and the aforementioned Article 4 of the Act to cause the lease of the Facilities (as
hereinafter defined), and to cause the financing and refinancing of the Projects (as hereinafter
defined) through the issuance of its bonds;
WHEREAS, the Authority acquired and constructed certain public facilities,
buildings and equipment (the “1998 Project”) and leased said public facilities, buildings and
equipment to the County pursuant to a Facility Lease (Various Capital Facilities), dated as of
May 1, 1998, which amended and restated the Facilities Lease (Various Capital Facilities), dated
as of August 1, 1994, by and between the Contra Costa County Public Facilities Corporation and
the County (herein as amended and restated and together with amendments from time to time
thereto, called the “1998 Facility Lease”);
WHEREAS, the Authority issued a series of bonds entitled “County of Contra
Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998
Refunding Series A (the “1998 Series A Bonds”) in an original principal amount of $24,695,000
pursuant to a trust agreement, dated as of May 1, 1998 (the “1998 Trust Agreement”), between
the Authority and BNY Western Trust Company, as trustee (the “1998 Trustee”) for the purpose
of financing the 1998 Project;
WHEREAS, the County has found and determined that it would be in the best
interests of the County and the residents of the County to defease and refund all of the
OHS West:260890460.9 2
outstanding 1998 Series A Bonds and has requested the Authority to issue a series of refunding
bonds for such purpose;
WHEREAS, to effectuate the defeasance of the 1998 Series A Bonds, the
Authority will issue the 2010 Series C Bonds (as defined herein)to refund the 1998 Series A
Bonds and the 1998 Facility Lease will terminate;
WHEREAS, the County has determined to finance and refinance various capital
projects as set forth in Exhibit D to each Sublease (as amended from time to time, collectively,
the “2010 Projects”);
WHEREAS, the County will lease to the Authority certain capital assets of the
County (the “Facilities”) pursuant to the Site Leases(as hereinafter defined);
WHEREAS, the County will lease back the Facilities from the Authority pursuant
to the terms of the Subleases (as hereinafter defined);
WHEREAS, the Authority intends to assist the County in financing and
refinancing the 2010 Projects by issuing the following series of bonds in the aggregate principal
amount of $_______ to be designated as follows:
1.County of Contra Costa Public Financing Authority Lease Revenue
Bonds, 2010 Series A-1 (Capital Project I - Tax-Exempt Bonds) (the “2010 Series A-1
Bonds”) in the aggregate principal amount of $_______ to finance portions of Capital
Project I and to fund the capitalized interest, the reserve account and a portion of the
costs relating to the issuance of the 2010 Series A-1 Bonds;
2.County of Contra Costa Public Financing Authority Lease Revenue
Bonds, 2010 Series A-2 (Capital Project I - Taxable Build America Bonds) (the “2010
Series A-2 Bonds”) in the aggregate principal amount of $_______ to finance portions of
Capital Project I and to fund the capitalized interest, the reserve account and a portion of
the costs relating to the issuance of the 2010 Series A-2 Bonds;
3.County of Contra Costa Public Financing Authority Lease Revenue
Bonds, 2010 Series A-3 (Capital Project I - Taxable Recovery Zone Bonds)(the “2010
Series A-3 Bonds”)in the aggregate principal amount of $_______ to finance portions of
Capital Project I and to fund the capitalized interest, the reserve account and a portion of
the costs relating to the issuance of the 2010 Series A-3 Bonds;
4.County of Contra Costa Public Financing Authority Lease Revenue
Bonds, 2010 Series B (Capital Project II) (the “2010 Series B Bonds”) in the aggregate
principal amount of $_______ to finance Capital Project II and to fund the capitalized
interest, the reserve account and a portion of the costs relating to the issuance of the 2010
Series B Bonds; and
5.County of Contra Costa Public Financing Authority Lease Revenue
Bonds, 2010 Series C (Refunding) (the “2010 Series C Bonds”)in the aggregate principal
OHS West:260890460.9 3
amount of $_______ to refund all of the outstanding 1998 Series A Bonds and to fund the
reserve account and a portion of the costs relating to the issuance of the 2010 Series C
Bonds.
The above series of bonds are hereinafter collectively referred to as the “2010 Bonds;”
WHEREAS, the Authority wishes to issue the 2010 Series A-2 Bonds and 2010
Series A-3 Bonds (collectively, the “Taxable 2010 Bonds”) as Bonds the interest on which is
included in gross income for federal tax purposes and that are accorded “Build America Bonds”
status under the provisions of the American Recovery and Reinvestment Act of 2009 (the
“Recovery Act”);
WHEREAS, the Authority has authorized the issuance of the 2010 Bonds, in an
aggregate principal not to exceed Sixty-Six Million ($66,000,000) to assist in financing and
refinancing the 2010 Projects;
WHEREAS, to reduce the borrowing costs of the Authority and the base rental
payments of the County, and to help the financing and refinancing of the 2010 Projects, from
which significant public benefit will be achieved, the 2010 Bonds shall be issued pursuant to
Article 4 of the Act;
WHEREAS, to provide for the authentication and delivery of the Bonds (as
hereinafter defined), to establish and declare the terms and conditions upon which the Bonds are
to be issued and secured and to secure the full and timely payment of the principal thereof and
premium, if any, and interest thereon, the Authority has authorized the execution and delivery of
this Trust Agreement; and
WHEREAS, the Authority has determined that all acts and proceedings required
by law necessary to make the Bonds, when executed by the Authority and authenticated and
delivered by the Trustee, duly issued and the valid, binding and legal obligations of the Authority
payable in accordance with their terms, and to constitute this Trust Agreement a valid and
binding agreement of the parties hereto for the uses and purposes herein set forth, have been
done and taken, and have been in all respects duly authorized;
NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that in
order to secure the full and timely payment of the principal of, premium, if any, and the interest
on all Bonds at any time issued and outstanding under this Trust Agreement, according to their
tenor, and to secure the performance and observance of all the covenants and conditions therein
and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds
are to be issued and received, and in consideration of the premises and of the mutual covenants
herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for
other valuable consideration, the receipt whereof is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to
time of the Bonds, as follows:
OHS West:260890460.9 4
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01 Definitions. Unless the context otherwise requires, the terms
defined in this Section shall for all purposes hereof and of any Supplemental Trust Agreement
and of any certificate, opinion, request or other document herein or therein mentioned have the
meanings herein specified, unless otherwise defined in such other document. Capitalized terms
not otherwise defined herein shall have the meaning assigned to such terms in the Subleases.
“Authorized Representative” means the Chair, Vice-Chair, Executive Director,
Assistant Executive Director or Deputy Executive Director of the Authority or any other person
designated to act on behalf of the Authority by a written certificate, delivered to the Trustee,
containing the specimen signature of such person and signed on behalf of the Authority by an
Authorized Representative.
“Act” means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of
Title 1 of the Government Code of the State, as amended) and all laws amendatory thereof or
supplemental thereto.
“Additional Bonds” means all bonds of the Authority authorized by and at any
time Outstanding pursuant hereto and executed, issued and delivered in accordance with
Article III.
“Authority” means the County of Contra Costa Public Financing Authority
created pursuant to the Act and its successors and assigns in accordance herewith.
“Authorized Denominations”for the 2010 Bonds means $5,000 or any integral
multiple thereof.
“Bond Counsel” means counsel of recognized national standing in the field of
law relating to municipal bonds, appointed by the Authority.
“Bond Year” means the twelve (12)-month period ending on June 1 of each year
to which reference is made.
“Bondholder or “Owner” means any person who shall be the registered owner
of any Outstanding Bond.
“Bonds” means the 2010 Bonds and all Additional Bonds of the Authority
authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in
accordance with Section 2.02 and Section 3.03.
“Business Day” means a day that is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York or California are authorized to remain
closed, or a day on which the Federal Reserve system is closed.
OHS West:260890460.9 5
“Capital Project I”means the various public capital improvements and projects,
including, but not limited to the acquisition, construction, improvement, and/or equipping of the
West County Clinic and related parking facilities to be located at 13613 and 13585-3613 San
Pablo Avenue, San Pablo, California, as described in the Sublease (Capital Project I) and to be
financed by a portion of the proceeds of the 2010 Series A Bonds, as the same may be amended
from time to time.
“Capital Project II”means the acquisition, construction, improvement and
equipping of an emergency communications system to be located in the County and the County
of Alameda through EBRCSA, as described in the Sublease (Capital Project II) and to be
financed by a portion of the proceeds of the 2010 Series B Bonds, as the same may be amended
from time to time.
“Capitalized Interest Fund”means the fund by that name created pursuant to
Section 5.03(e) hereof.
“Certificate of the Authority” means an instrument in writing signed by any of
the following officials of the Authority: Chair, Vice-Chair, Executive Director, Assistant
Executive Director or Deputy Executive Director or a designee of any such officer, or by any
other person (whether or not an officer of the Authority) who is specifically authorized by
resolution of the Authority for that purpose.
“Certificate of the County” means an instrument in writing signed by any of the
following County officials: the Chair of the Board of Supervisors, the County Administrator of
the County, the Treasurer-Tax Collector of the County or the County Finance Director or by any
such officials’ duly appointed designee, or by any other officer of the County duly authorized by
the Board of Supervisors of the County for that purpose.
“Code” means the Internal Revenue Code of 1986, as amended.
“Continuing Disclosure Agreement”shall mean that certain Continuing
Disclosure Agreement executed by the County and Digital Assurance Certification, L.L.C. dated
the date of issuance and delivery of the 2010 Bonds, as originally executed and as it may be
amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means all items of expense directly or indirectly payable by
or reimbursable to the County or the Authority and related to the authorization, execution and
delivery of the Subleases, the Site Leases, this Trust Agreement and the issuance and sale of the
Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of
rating agencies and costs to provide information required by rating agencies, filing and recording
fees, fees and charges of the Trustee, legal fees and charges, fees and disbursements of
consultants and professionals, fees and charges for preparation, execution and safekeeping of the
Bonds, title search and title insurance fees, fees of the Authority and any other authorized cost,
charge or fee in connection with the issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established pursuant to
Section 3.06.
OHS West:260890460.9 6
“County” means the County of Contra Costa, a County organized and validly
existing under the Constitution and general laws of the State.
“Current Interest Bonds” means Bonds the interest on which is payable on each
Interest Payment Date to the maturity date for each such Bond.
“Debt Service” means, for any Fiscal Year or other period, the sum of (1)the
interest accruing during such Fiscal Year or other period on all Outstanding Bonds, assuming
that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds
are redeemed or paid from sinking fund payments as scheduled (except to the extent that such
interest is to be paid from the proceeds of sale of any Bonds so long as such funded interest is in
an amount equal to the gross amount necessary to pay such interest on the Bonds and is invested
in Government Securities which mature no later than the related Interest Payment Date), (2)the
principal amount of all Outstanding Serial Bonds maturing during such Fiscal Year or other
period, and (3)the principal amount of all Outstanding Term Bonds required to be redeemed or
paid (together with the redemption premiums, if any, thereon) during such Fiscal Year or other
period.
“Depository” means DTC or another recognized securities depository selected by
the Authority which maintains a book-entry system for the Bonds.
“Dissemination Agent” means the County or any successor appointed under the
Continuing Disclosure Agreement.
“DTC” means The Depository Trust Company, New York, New York.
“EBRCSA”means the East Bay Regional Communications System Authority.
“Event of Default” shall have the meaning specified in Section 7.01.
“Extraordinary Tax Event” means that a material adverse change, as
determined by the Authority, has occurred with respect to Section 54AA or 6431 of the Code (as
such sections were added by Section 1531 of the Recovery Act, pertaining to Build America
Bonds) or any guidance is published by the Internal Revenue Service or the United States
Treasury with respect to such sections or any other determination by the Internal Revenue
Service or the United States Treasury, which determination is not the result of an act or omission
by the Authority to satisfy the requirements to receive the Subsidy Receipts from the United
States Treasury, pursuant to which the Authority’s Subsidy Receipts from the United States
Treasury are reduced or eliminated.
“Extraordinary Redemption Price” means the greater of:
(1)the issue price of the Taxable 2010 Bonds (but not less than 100% of the
principal amount of the Taxable 2010 Bonds to be redeemed); or
(2)the sum of the present value of the remaining scheduled payments of
principal and interest on the Taxable 2010 Bonds to be redeemed to the maturity date of such
OHS West:260890460.9 7
Taxable 2010 Bonds, not including any portion of those payments of interest accrued and unpaid
as of the date on which the Taxable 2010 Bonds are to be redeemed, discounted to the date on
which the Taxable 2010 Bonds are to be redeemed on a semi-annual basis, assuming a 360-day
year consisting of twelve 30-day months, at a discount rate equal to the Treasury Rate plus [___]
basis points,
plus in each case accrued interest on the Taxable 2010 Bonds to be redeemed to
the redemption date.
“Facilities” shall mean the real property and the improvements thereon as set
forth in Exhibit A to each Sublease, or any County buildings, other improvements and facilities
added thereto or substituted therefor, or any portion thereof, in accordance with each Sublease
and this Trust Agreement.
“Fiscal Year” means the twelve (12)-month period terminating on June 30 of
each year, or any other annual accounting period hereafter selected and designated by the
Authority as its Fiscal Year in accordance with applicable law.
“Fixed Rate Bonds”means Bonds of any Series which bear interest at a fixed
interest rate from the date of such Bonds until the maturity or redemption date thereof.
“Government Securities” means (1)U.S. Treasury Certificates, Notes and
Bonds (including State and Lo cal Government Series –“SLGS”); (2)direct obligations of the
U.S. Treasury which have been stripped by the Treasury itself, such as CATS, TIGRS and
similar securities; (3)Resolution Funding Corp. (REFCORP) strips (interest component only)
which have been stripped by request to the Federal Reserve Bank of New York in book entry
form; (4)pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P, or if not
rated by Moody’s, then pre-refunded bonds that have been pre-refunded with cash, direct U.S. or
U.S. guaranteed obligations, or AAA-rated pre-refunded municipal obligations; (5)obligations
issued by the following agencies which are backed by the full faith and credit of the U.S.:
(a)U.S. Export-Import Bank direct obligations or fully guaranteed certificates of beneficial
ownership, (b)Farmers Home Administration (FmHA) certificates of beneficial ownership,
(c)Federal Financing Bank, (d)General Services Administration participation certificates,
(e)U.S. Maritime Administration Guaranteed Title XI financing, (f)U.S. Department of Housing
and Urban Development (HUD) Project Notes, Local Authority Bonds, New Communities
Debentures – U.S. government guaranteed debentures, and U.S. Public Housing Notes and
Bonds – U.S. government guaranteed public housing notes and bonds.
“Independent Certified Public Accountant” means any certified public
accountant or firm of such accountants duly licensed and entitled to practice and practicing as
such under the laws of the State or another state of the United States of America or a comparable
successor, appointed and paid by the Authority, and who, or each of whom –
(1)is in fact independent according to the Statement of Auditing Standards
No.1 and not under the domination of the Authority or the County;
OHS West:260890460.9 8
(2)does not have a substantial financial interest, direct or indirect, in the
operations of the Authority or the County; and
(3)is not connected with the Authority or the County as a member, officer or
employee of the Authority or the County, but who may be regularly retained to audit the
accounting records of and make reports thereon to the Authority or the County.
“Interest Payment Date” means June 1 and December 1 in each year,
commencing June 1, 2011.
“Interest Payment Period” means the period from and including each Interest
Payment Date (or, for the first Interest Payment Period, the date of the Bonds) to and including
the day immediately preceding the next succeeding Interest Payment Date.
“Joint Powers Agreement” means the Joint Exercise of Powers Agreement by
and between the County and the Contra Costa County Redevelopment Agency, dated April 7,
1992, as originally executed and as it may from time to time be amended or supplemented
pursuant to the provisions hereof and thereof.
“Letter of Escrow Instructions”means the Letter of Escrow Instructions, dated
_________, 2010, from the Authority to the Trustee providing for the refunding and defeasance
of the 1998 Series A Bonds.
“Moody’s” means Moody’s Investors Service a corporation duly organized and
existing under and by virtue of the laws of the State of Delaware, and its successors and assigns,
except that if such corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to an y
other nationally recognized securities rating agency selected by the County.
“Opinion of Counsel” means a written opinion of Bond Counsel.
“Outstanding,” when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 9.02) all Bonds except
(1)Bonds theretofore cancelled by the Trustee or surrendered to the Trustee
for cancellation;
(2)Bonds paid or deemed to have been paid within the meaning of
Section 10.01;
(3)Bonds deemed tendered but not yet presented for purchase; and
(4)Bonds in lieu of or in substitution for which other Bonds shall have been
executed, issued and delivered by the Authority pursuant hereto.
“Permitted Encumbrances” means (1)liens for general ad valorem taxes and
assessments, if any, not then delinquent, or which the County may, pursuant to the Subleases,
permit to remain unpaid; (2)easements, rights of way, mineral rights, drilling rights and other
OHS West:260890460.9 9
rights, reservations, covenants, conditions or restrictions which exist of record as of the date of
recordation of each Sublease in the office of the County Recorder of the County of Contra Costa
and which the County certifies in writing will not materially impair the use of the respective
Facilities; (3)the Site Leases, as they may be amended from time to time and the Subleases, as
they may be amended from time to time; (4) this Trust Agreement, as it may be amended from
time to time; (5)any right or claim of any mechanic, laborer, materialman, supplier or vendor not
filed or perfected in the manner prescribed by law; (6)easements, rights of way, mineral rights,
drilling rights and other rights, reservations, covenants, conditions or restrictions to which the
Authority and the County consent in writing and certify to the Trustee will not materially impair
the ownership interests of the Authority or use of the Facilities by the County; and (7)subleases
and assignments of the County which will not adversely affect the exclusion from gross income
of interest on the Tax-Exempt Bonds.
“Permitted Investments” means any of the following:
(1)Government Securities;
(2)direct obligations of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the Treasury) or obligations
the principal of and interest on which are unconditionally guaranteed by the United States of
America;
(3)bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States of America (stripped securities are only permitted if
they have been stripped by the agency itself): (a)Farmers Home Administration (FmHA)
certificates of beneficial ownership, (b)Federal Housing Administration (FHA) debentures,
(c)General Services Administration participation certificates, (d)Government National
Mortgage Association (GNMA or “Ginnie Mae”) guaranteed mortgage-backed bonds and
guaranteed pass-through obligations (participation certificates), (e)U.S. Maritime
Administration guaranteed Title XI financing, and (f)U.S. Department of Housing and Urban
Development (HUD) Project Notes and Local Authority Bonds;
(4)bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped
securities are only permitted if they have been stripped by the agency itself): (a)Federal Home
Loan Bank System senior debt obligations (consolidated debt obligations), (b)Federal Home
Loan Mortgage Corporation (FHLMC or “Freddie Mac”) participation certificates (mortgage-
backed securities) and senior debt obligations, (c)Federal National Mortgage Association
(FNMA or “Fannie Mae”) mortgage-backed securities and senior debt obligations (excluded are
stripped mortgage securities which are valued greater than par on the portion of unpaid
principal), (d)Resolution Funding Corp. (REFCORP) strips (interest component only) which
have been stripped by request to the Federal Reserve Bank of New York in book entry form, and
(e)Farm Credit System Consolidated systemwide bonds and notes;
(5)money market funds registered under the Federal Investment Company Act of
1940, the shares of which are registered under the Federal Securities Act of 1933, and which
OHS West:260890460.9 10
have a rating by S&P of AAAm-G, AAAm, or AA-m and, if rated by Moody’s, rated Aaa, Aal
or Aa2, and which funds may include funds which the Trustee, its affiliates, or subsidiaries
provide investment advisory or other management services;
(6)certificates of deposit secured at all times by collateral described in (2) and/or
(3) above (which collateral must be held by a third party and subject to a perfected first security
interest held by the Trustee) with a maturity of one year or less and issued by commercial banks,
savings and loan associations or mutual savings banks whose short term obligations are rated “A-
1+” or better by S&P and “Prime-l” by Moody’s;
(7)certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by FDIC, including BIF and SAIF;
(8)investment agreements, including guaranteed investment contracts;
(9)commercial paper rated “Prime-1” by Moody’s and “A-1+” or better by S&P;
(10)bonds or notes issued by any state or municipality which is rated by Moody’s
and S&P in one of the two highest long-term rating categories assigned by such agencies;
(11)federal funds or bankers acceptances with a maximum term of one year of
any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or
“A3” or better by Moody’s and “A-1+” or better by S&P;
(12)repurchase agreements that provide for the transfer of securities from a dealer
bank or securities firm (seller/borrower) to the Trustee (buyer/lender) and the transfer of cash
from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or
securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a
specified date and that satisfy the following criteria:
(a)repurchase agreements must be between the municipal entity and
dealer banks or securities firms that are (i)on the Federal Reserve reporting dealer list which fall
under the jurisdiction of the SIPC and which are rated A or better by S&P and Moody’s, or
(ii)banks rated “A” or above by S&P and Moody’s, and
(b)repurchase agreements must include the following: (i)securities that
are acceptable for transfer, including those describe in clauses (2) and (3) above, (ii)terms of not
more than 30 days, (iii)collateral must be delivered to the Trustee (if Trustee is not supplying the
collateral) or third party acting as agent for the Trustee (if the Trustee is supplying the collateral)
before or simultaneously with payment (perfection by possession of certificated securities),
(iv)the Trustee must have a perfected first priority security interest in the collateral, (v)collateral
must be free and clear of third-party liens and, in the case of an SIPC broker, must not have been
acquired pursuant to a repurchase agreement or reverse repurchase agreement, (vi)failure to
maintain the requisite collateral percentage, after a two day restoration period, requires the
Trustee to liquidate collateral, (vii)securities must be valued weekly and marked-to-market at
current market price plus accrued interest, and (viii) the value of-collateral must be equal to
104% or, if the securities used as collateral are FNMA or FHLMC securities, 105%, of the
OHS West:260890460.9 11
amount of cash transferred to the dealer bank or security firm under the repurchase agreement
plus accrued interest and, if the value of securities held as collateral slips below such amount,
then additional cash and/or acceptable securities must be transferred;
(13)pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P
or, if the there is no Moody’s rating, then pre-refunded bonds pre-refunded with cash, direct U.S.
or U.S. guaranteed obligations, or AAA rated pre-refunded municipal obligations;
(14)the County of Contra Costa Investment Pool;
(15) shares of beneficial interest issued by the Investment Trust of California
(CalTRUST) pursuant to California Government Code Section 6509.7 and authorized for local
agency investment pursuant to California Government Code Section 53601(o);and
(16) the Local Agency Investment Fund of the State of California. The Trustee
may conclusively rely on the written instructions of the Authority and the County that such
investment is a Permitted Investment.
“Person” means a corporation, firm, association, partnership, trust, or other legal
entity or group of entities, including a governmental entity or any agency or political subdivision
thereof.
“Principal Office” refers to the office of the Trustee noted in Section 11.10 and
such other offices as the Trustee may designate from time to time.
“Principal Payment Date” means any date on which principal of the Bonds is
required to be paid (whether by reason of maturity, redemption or acceleration).
“Projects” means the 2010 Projects and any additional facilities or improvements
financed with proceeds of Additional Bonds.
“Project Fund” means the fund by that name established pursuant to
Section 3.02.
“Rating Category” means one of the general long-term (or short-term, if so
specifically provided) rating categories of either Moody’s and S&P, without regard to any
refinement or gradation of such rating category by a numerical modifier (unless a short-term
rating) or otherwise.
“Record Date” means the close of business on the fifteenth (15th) calendar day
(whether or not a Business Day) of the month preceding any Interest Payment Date.
“Recovery Act” means the American Recovery and Reinvestment Act of 2009 or
any successor thereto or replacement thereof.
“Redemption Date” shall mean the date fixed for redemption of any Bonds.
OHS West:260890460.9 12
“Redemption Price” means, with respect to any Bond (or portion thereof), the
principal amount of such Bond (or portion) plus the applicable premium, if any, payable upon
redemption thereof pursuant to the provisions of such Bond and this Trust Agreement.
“Representation Letter” means the blanket letter of representation of the
Authority to DTC or any similar letter to a substitute depository.
“Reserve Facility” means a surety bond or insurance policy issued to the Trustee,
on behalf of the Bondholders, by a company licensed to issue an insurance policy guaranteeing
the timely payment of the principal of and interest on the Bonds (a “municipal bond insurer”) if
such municipal bond insurer at the time of acquisition of such Reserve Facility shall be rated in
the two highest rating categories issued by Moody’s and by S&P, or a letter of credit issued or
confirmed by a state or national bank, or a foreign bank with an agency or branch located in the
continental United States, which at the time of acquisition of such letter of credit has outstanding
an issue of unsecured long term debt securities rated at least equal to the second highest rating
category by Moody’s and S&P, or any combination thereof, deposited with the Trustee by the
Authority to satisfy each Reserve Fund Requirement.
“Reserve Facility Costs” means amounts owed with respect to repayment of
draws on a Reserve Facility, including interest thereon at the rate specified in the agreement
pertaining to such Reserve Facility and expenses owed to the provider of a Reserve Facility.
“Reserve Fund” means the fund of that name established pursuant to Section
5.03(d).
“Reserve Fund Requirement” means with respect to all Outstanding Bonds of
each Series of Bonds an amount equal to the lesser of (i)the maximum annual debt service
attributable to the Outstanding Bonds and (ii)125% of average annual debt service attributable to
the Outstanding Bonds; provided that with respect to the calculation of the Reserve Fund
Requirement upon the issuance of an Additional Series of Bonds the Reserve Fund Requirement
shall be the least of (i) or (ii) above, or the amount derived by the addition of 10% of the
proceeds from the sale of such Series of Additional Bonds to the applicable reserve account of
such Series of Additional Bonds within the Reserve Fund; and provided further that debt service
on the 2010 Series A-2 Bonds and the 2010 Series A-3 Bonds shall be calculated net of Subsidy
Receipts.
“Responsible Officer” means any officer of the Trustee assigned to administer
its duties under this Trust Agreement.
“Revenue Fund” means the fund by that name created pursuant to Section 5.02
hereof.
“Revenues” means (i)all Base Rental Payments and other payments paid by the
County and received by the Authority pursuant to each respective Sublease (but not Additional
Payments) and (ii)all interest or other income from any investment, pursuant to Section 5.05, of
any money in any fund or account (other than the Rebate Fund) established pursuant to this Trust
Agreement or each respective Sublease.
OHS West:260890460.9 13
“Serial Bonds” means Bonds for which no sinking fund payments are provided.
“Series” whenever used herein with respect to Bonds, means all of the Bonds
designated as being of the same series, authenticated and delivered in a simultaneous transaction,
regardless of variations in maturity, interest rate, redemption and other provisions, and any
Bonds thereafter authenticated and delivered upon transfer or exchange of or in lieu of or in
substitution for (but not to refund) such Bonds as herein provided.
“S&P” means Standard & Poor’s, a division of the McGraw-Hill Companies,
Inc., and its successors and assigns, except that if such entity shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, then the term S&P shall be
deemed to refer to any other nationally recognized securities rating agency selected by the
County.
“Site Leases” means,collectively, those certain leases, entitled “Site Lease
(Capital Project I),”“Site Lease (Capital Project II)”and “Site Lease (Refunding),”each by and
between the County and the Authority, dated as of November 1, 2010, which lease or a
memorandum thereof was recorded in the office of the County Recorder of the County of Contra
Costa on __________, 2010 as documents Nos. ___________, __________ and __________,
respectively, as originally executed and recorded or as they may from time to time be
supplemented, modified or amended pursuant to the provisions hereof and thereof.
“State” means the State of California.
“Subleases” means,collectively, those certain leases, entitled “Sublease (Capital
Project I),”“Sublease (Capital Project II)”and “Sublease (Refunding),” each by and between the
County and the Authority, dated as of November 1, 2010, which lease or a memorandum thereof
was recorded in the office of the County Recorder of the County of Contra Costa on
__________, 2010 as documents Nos. ___________, __________ and __________,
respectively, as originally executed and recorded or as they may from time to time be
supplemented, modified or amended pursuant to the provisions hereof and thereof.
“Subsidy Receipts”means payments with respect to the interest due on a Series
of Bonds made by the United States Treasury to the County, unless otherwise instructed by the
Authority, pursuant to Section 54AA of the Code or Section 6431 of the Code or any successor
to either of such provisions of the Code.
“Supplemental Trust Agreement” means any trust agreement then in full force
and effect which has been duly executed and delivered by the Authority and the Trustee
amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental
Trust Agreement is executed and delivered pursuant to the provisions hereof.
“Taxable 2010 Bonds”means, collectively, the 2010 Series A-2 Bonds and the
2010 Series A-3 Bonds.
OHS West:260890460.9 14
“Taxable 2010 Bonds Tax Certificate”means that certain Tax Certificate
delivered by the Authority in connection with the issuance of the Taxable 2010 Bonds, as the
same may be amended or supplemented in accordance with its terms.
“Tax Certificate” means the Tax Certificate and Agreement delivered by the
Authority and the County at the time of the issuance and delivery of a Series of Tax-Exempt
Bonds, as the same may be amended or supplemented in accordance with its terms.
“Tax-Exempt Bonds”means the 2010 Series A-1 Bonds, the 2010 Series B
Bonds, the 2010 Series C Bonds,and all Additional Bonds whose interest is excluded from gross
income for federal income tax purposes under Section 103 of the Code.
“Term Bonds” means Bonds which are payable on or before their specified
maturity dates from sinking fund payments established for that purpose and calculated to retire
such Bonds on or before their specified maturity dates.
“Treasury Rate” means, with respect to any redemption date for the Taxable
2010 Bonds, the yield to maturity as of such redemption date of United States Treasury securities
with a constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two (2) Business Days
prior to the redemption date (excluding inflation-indexed securities) or, if such Statistical
Release is no longer published, any publicly available source of similar market data) most nearly
equal to the period from the redemption date to the maturity date of such Taxable 2010 Bonds;
provided, however, that if the period from the redemption date to the maturity date of such
Taxable 2010 Bond is less than one year, the weekly average yi eld on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be used to determine
such rate.
“Trust Agreement” means this Trust Agreement, dated as of November 1, 2010,
between the Authority and the Trustee, as originally executed and as it may from time to time be
amended or supplemented by all Supplemental Trust Agreements executed pursuant to the
provisions hereof.
“Trustee” means Wells Fargo Bank, National Association, or any other
association or corporation which may at any time be substituted in its place as provided in
Section 8.01.
“1998 Escrow Fund” means the fund by that name created pursuant to the Letter
of Escrow Instructions for the defeasance and refunding of the 1998 Series A Bonds.
“1998 Series A Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A, which
will be refunded and defeased by the 2010 Series C Bonds.
“2010 Bonds” means, collectively, the 2010 Series A-1 Bonds, the 2010
Series A-2 Bonds, the 2010 Series A-3 Bonds, the 2010 Series B Bonds and the 2010 Series C
Bonds, issued pursuant to Section 2.02 hereof.
OHS West:260890460.9 15
“2010 Costs of Issuance Fund” means the fund by that name established
pursuant to Section 3.06 hereof.
“2010 Projects” means, collectively, the financing and refinancing of various
capital projects of the County, and payment of any costs associated with the financing and
refinancing of said projects, as set forth in Exhibit D to each of Sublease (Capital Project I) and
Sublease (Capital Project II), as the same may be changed from time to time by the County by
filing a Certificate of the County with the Trustee.
“2010 Series A Bonds”means, collectively, the 2010 Series A-1 Bonds, the 2010
Series A-2 Bonds and the 2010 Series A-3 Bonds.
“2010 Series A Project Account”means the account by that name established
pursuant to Section 3.02.
“2010 Series A Reserve Account” means the account by that name established
pursuant to Section 5.03(d).
“2010 Series A-1 Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series A-1 (Capital Project I - Tax-Exempt Bonds).
“2010 Series A-1 Capitalized Interest Account”means the account by that
name established pursuant to Section 5.03(e).
“2010 Series A-2 Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series A-2 (Capital Project I - Taxable Build America
Bonds).
“2010 Series A-2 Capitalized Interest Account”means the account by that
name established pursuant to Section 5.03(e).
“2010 Series A-3 Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series A-3 (Capital Project I - Taxable Recovery Zone
Bonds).
“2010 Series A-3 Capitalized Interest Account”means the account by that
name established pursuant to Section 5.03(e).
“2010 Series B Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series B (Capital Project II).
“2010 Series B Capitalized Interest Account”means the account by that name
established pursuant to Section 5.03(e).
“2010 Series B Project Account” means the account by that name established
pursuant to Section 3.02.
OHS West:260890460.9 16
“2010 Series B Reserve Account” means the account by that name established
pursuant to Section 5.03(d).
“2010 Series C Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series C (Refunding).
“2010 Series C Reserve Account” means the account by that name established
pursuant to Section 5.03(d).
“Written Request of the Authority” means an instrument in writing signed by
or on behalf of the Authority by its Chair, Vice-Chair, Executive Director, Assistant Executive
Director or Deputy Executive Director or a designee of any such officer or by any other person
(whether or not an officer of the Authority) who is specifically authorized by resolution of the
Board of Directors of the Authority to sign or execute such a document on its behalf.
“Written Request of the County” means an instrument in writing signed by the
County Administrator of the County or his designee, or by the County Finance Director of the
County, or the County Treasurer-Tax Collector, or by any other officer of the County duly
authorized by the County Administrator of the County or the County Finance Director of the
County in writing to the Trustee for that purpose.
“Written Request of EBRCSA” means an instrument in writing signed by or on
behalf of EBRCSA by its Chair, Vice-Chair, Executive Director, Assistant Executive Director or
Deputy Executive Director or a designee of any such officer or by any other person (whether or
not an officer of EBRCSA) who is specifically authorized by resolution of the Board of Directors
of EBRCSA to sign or execute such a document on its behalf.
SECTION 1.02 Equal Security. In consideration of the acceptance of the Bonds by
the Bondholders thereof, this Trust Agreement shall be deemed to be and shall constitute a
contract among the Authority, the Trustee and the Bondholders from time to time of all Bonds
authorized, executed, issued and delivered hereunder and then Outstanding to secure the full,
timely and final payment of the interest on and principal of and redemption premiums, if any, on
all Bonds which may from time to time be authorized, executed, issued and delivered hereunder,
subject to the agreements, conditions, covenants and provisions contained herein; and all
agreements and covenants set forth herein to be performed by or on behalf of the Authority shall
be for the equal and proportionate benefit, protection and security of all Bondholders of the
Bonds without distinction, preference or priority as to security or otherwise of any Bonds over
any other Bonds by reason of the number or date thereof or the time of authorization, sale,
execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided
herein or therein.
SECTION 1.03 Interpretation. Unless the context otherwise indicates, words
expressed in the singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to mean or include
the neuter, masculine or feminine gender, as appropriate. Headings of articles and sections
herein and the table of contents hereof are solely for convenience of reference, do not constitute
a part hereof and shall not affect the meaning, construction or effect hereof.
OHS West:260890460.9 17
ARTICLE II
THE BONDS
SECTION 2.01 Authorization of Bonds; 2010 Bonds.
(a)Bonds may be issued hereunder from time to time in order to obtain
moneys to carry out the purposes of the Authority. The maximum principal amount of Bonds
which may be issued hereunder is not limited. The Bonds are designated generally as “County
of Contra Costa Public Financing Authority Lease Revenue Bonds,” each Series thereof to bear
such additional designation as may be necessary or appropriate to distinguish such Series from
every other Series of Bonds. The Bonds may be issued in such Series as from time to time shall
be established and authorized by the Authority, subject to the covenants, provisions and
conditions herein contained.
(b)The following Series of Bonds are hereby created and designated as
follows:
(i)“County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series A-1 (Capital Project I - Tax-Exempt
Bonds);”
(ii)“County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series A-2 (Capital Project I - Taxable Build
America Bonds);)
(iii)“County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series A-3 (Capital Project I - Taxable
Recovery Zone Bonds);”
(iv)“County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series B (Capital Project II);”and
(v)“County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series C (Refunding).”
The aggregate principal amount of 2010 Bonds which may be issued and Outstanding under this
Trust Agreement shall not exceed $66,000,000.
(c)The Authority has reviewed all proceedings heretofore taken relative to
the authorization of the 2010 Bonds and has found, as a result of such review, and hereby finds
and determines that all acts, conditions and things required by law to exist, to have happened and
to have been performed precedent to and in the issuance of the 2010 Bonds do exist, have
happened and have been performed in due time, form and manner as required by law, and that
the Authority is now duly authorized, pursuant to each and every requirement of the Act, to issue
the 2010 Bonds in the form and manner provided herein for the purpose of providing funds to
OHS West:260890460.9 18
finance and refinance the 2010 Projects, and that the 2010 Bonds shall be entitled to the benefit,
protection and security of the provisions hereof.
(d)The validity of the issuance of the 2010 Bonds shall not be dependent on
or affected in any way by the proceedings taken by the Authority for the financing and
refinancing of the 2010 Projects or by any contracts made by the Authority or its agents in
connection therewith, and shall not be dependent upon the performance by any person, firm or
corporation of his or its obligation with respect thereto. The recital contained in the 2010 Bonds
that the same are issued pursuant to the Act, and pursuant hereto shall be conclusive evidence of
their validity and of the regularity of their issuance, and all 2010 Bonds shall be incontestable
from and after their issuance. The 2010 Bonds shall be deemed to be issued, within the meaning
hereof, whenever the definitive 2010 Bonds (or any temporary 2010 Bonds exchangeable
therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof
received.
SECTION 2.02 Terms of the 2010 Bonds.
(a)2010 Series A-1 Bonds. The 2010 Series A-1 Bonds shall be issued in the
aggregate principal amount of $__________. The 2010 Series A-1 Bonds shall be dated the date
of issuance thereof, shall be issued only in fully registered form in Authorized Denominations
(not exceeding the principal amount of 2010 Series A-1 Bonds maturing at any one time), and
shall mature in the years and in the principal amounts and bear interest at the rates as set forth in
the following schedule, subject to prior redemption as described in Article IV hereof:
2010 Series A-1 Bonds
Maturity Date
(June 1)Principal Amount Interest Rate
20__$_______________%
20__
20__
20__*
_______________
*Term Bond
The 2010 Series A-1 Bonds shall bear interest at the rates set forth above, payable
commencing June 1, 2011 and semiannually thereafter on December 1 and June 1 in each year.
The 2010 Series A-1 Bonds shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless such date of authentication is an Interest Payment Date, in
which event they shall bear interest from such date, or unless such date of authentication is prior
to the Record Date for the first Interest Payment Date, in which event they shall bear interest
from their dated date.
(b)2010 Series A-2 Bonds. The 2010 Series A-2 Bonds shall be issued in the
aggregate principal amount of $__________. The 2010 Series A-2 Bonds shall be dated the date
of issuance thereof, shall be issued only in fully registered form in Authorized Denominations
OHS West:260890460.9 19
(not exceeding the principal amount of 2010 Series A-2 Bonds maturing at any one time), and
shall mature in the ye ars and in the principal amounts and bear interest at the rates as set forth in
the following schedule, subject to prior redemption as described in Article IV hereof:
2010 Series A-2 Bonds
Maturity Date
(June 1)Principal Amount Interest Rate
20__$_______________%
20__
20__
20__*
_______________
*Term Bond
The 2010 Series A-2 Bonds shall bear interest at the rates set forth above, payable
commencing June 1, 2011 and semiannually thereafter on December 1 and June 1 in each year.
The 2010 Series A-2 Bonds shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless such date of authentication is an Interest Payment Date, in
which event they shall bear interest from such date, or unless such date of authentication is prior
to the Record Date for the first Interest Payment Date, in which event they shall bear interest
from their dated date.
(c)2010 Series A-3 Bonds. The 2010 Series A-3 Bonds shall be issued in the
aggregate principal amount of $__________. The 2010 Series A-3 Bonds shall be dated the date
of issuance thereof, shall be issued only in fully registered form in Authorized Denominations
(not exceeding the principal amount of 2010 Series A-3 Bonds maturing at any one time), and
shall mature in the ye ars and in the principal amounts and bear interest at the rates as set forth in
the following schedule, subject to prior redemption as described in Article IV hereof:
2010 Series A-3 Bonds
Maturity Date
(June 1)Principal Amount Interest Rate
20__$_______________%
20__
20__
20__*
_______________
*Term Bond
The 2010 Series A-3 Bonds shall bear interest at the rates set forth above, payable
commencing June 1, 2011 and semiannually thereafter on December 1 and June 1 in each year.
The 2010 Series A-3 Bonds shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless such date of authentication is an Interest Payment Date, in
OHS West:260890460.9 20
which event they shall bear interest from such date, or unless such date of authentication is prior
to the Record Date for the first Interest Payment Date, in which event they shall bear interest
from their dated date.
(d)2010 Series B Bonds. The 2010 Series B Bonds shall be issued in the
aggregate principal amount of $__________. The 2010 Series B Bonds shall be dated the date of
issuance thereof, shall be issued only in fully registered form in Authorized Denominations (not
exceeding the principal amount of 2010 Series B Bonds maturing at any one time), and shall
mature in the years and in the principal amounts and bear interest at the rates as set forth in the
following schedule, subject to prior redemption as described in Article IV hereof:
2010 Series B Bonds
Maturity Date
(June 1)Principal Amount Interest Rate
20__$_______________%
20__
20__
20__*
_______________
*Term Bond
The 2010 Series B Bonds shall bear interest at the rates set forth above, payable
commencing June 1, 2011 and semiannually thereafter on December 1 and June 1 in each year.
The 2010 Series B Bonds shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless such date of authentication is an Interest Payment Date, in
which event they shall bear interest from such date, or unless such date of authentication is prior
to the Record Date for the first Interest Payment Date, in which event they shall bear interest
from their dated date.
(e)2010 Series C Bonds. The 2010 Series C Bonds shall be issued in the
aggregate principal amount of $__________. The 2010 Series C Bonds shall be dated the date of
issuance thereof, shall be issued only in fully registered form in Authorized Denominations (not
exceeding the principal amount of 2010 Series C Bonds maturing at any one time), and shall
mature in the years and in the principal amounts and bear interest at the rates as set forth in the
following schedule, subject to prior redemption as described in Article IV hereof:
OHS West:260890460.9 21
2010 Series C Bonds
Maturity Date
(June 1)Principal Amount Interest Rate
20__$_______________%
20__
20__
20__*
_______________
*Term Bond
The 2010 Series C Bonds shall bear interest at the rates set forth above, payable
commencing June 1, 2011 and semiannually thereafter on December 1 and June 1 in each year.
The 2010 Series C Bonds shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless such date of authentication is an Interest Payment Date, in
which event they shall bear interest from such date, or unless such date of authentication is prior
to the Record Date for the first Interest Payment Date, in which event they shall bear interest
from their dated date.
(f)The amount of interest on the 2010 Bonds so payable on any Interest
Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day
months. Payment of interest on the 2010 Bonds due on or before the maturity or prior
redemption thereof shall be paid by check mailed by first class mail on each Interest Payment
Date to the person in whose name the Bond is registered as of the applicable Record Date for
such Interest Payment Date at the address shown on the registration books maintained by the
Trustee pursuant to Section 2.07; provided, however, that interest on any Series of Bonds shall
be paid by wire transfer or other means to provide immediately available funds to any Owner of
at least $1,000,000 in aggregate principal amount of such Series of Bonds, at its option,
according to wire instructions given to the Trustee in writing for such purpose and on file as of
the applicable Record Date preceding the Interest Payment Date.
(g)Interest on any Bond shall cease to accrue (i) on the maturity date thereof,
provided that there has been irrevocably deposited with the Trustee an amount sufficient to pay
the principal amount thereof, plus interest accrued thereon to such date; or (ii) on the redemption
date thereof, provided there has been irrevocably deposited with the Trustee an amount sufficient
to pay the Redemption Price thereof, plus interest accrued thereon to such date. The Owner of
such Bond shall not be entitled to any other payment, and such Bond shall no longer be
Outstanding and entitled to the benefits of this Trust Agreement, except for the payment of the
principal amount or Redemption Price, of such Bond, as appropriate, from moneys held by the
Trustee for such payment.
(h)The principal of the Bonds shall be payable by check in lawful money of
the United States of America at the Principal Office of the Trustee. No payment of principal
shall be made on any Bond unless and until such Bond is surrendered to the Trustee for
cancellation.
OHS West:260890460.9 22
(i)The Trustee shall identify all payments (whether made by check or by
wire transfer) of interest, principal, and premium by CUSIP number of the related Bonds.
SECTION 2.03 Form of 2010 Bonds. The 2010 Bonds and the authentication and
registration endorsement and assignment to appear thereon shall be substantially in the form set
forth in Exhibit A attached hereto and by this reference herein incorporated.
SECTION 2.04 Execution of Bonds. The Chair or the Executive Director of the
Authority is hereby authorized and directed to execute each of the Bonds on behalf of the
Authority and the Secretary or Assistant Secretary of the Authority is hereby authorized and
directed to countersign each of the Bonds on behalf of the Authority. The signatures of such
officers may be by printed, lithographed or engraved by facsimile reproduction. In case any
officer whose signature appears on the Bonds shall cease to be such officer before the delivery of
the Bonds 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 Bonds.
Only those Bonds bearing thereon a certificate of authentication in the form
hereinbefore recited, executed manually and dated by the Trustee, shall be entitled to any benefit,
protection or security hereunder or be valid or obligatory for any purpose, and such certificate of
the Trustee shall be conclusive evidence that the 2010 Bonds so authenticated have been duly
authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection
and security hereof.
SECTION 2.05 Transfer and Payment of Bonds. Any Bond may, in accordance
with its terms, be transferred in the books required to be kept pursuant to the provisions of
Section 2.07 by the person in whose name it is registered, in person or by his duly authorized
attorney, upon surrender of such Bond for cancellation accompanied by delivery of a duly
executed written instrument of transfer in a form acceptable to the Trustee. Whenever any Bond
or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall
authenticate and deliver to the transferee a new Bond or Bonds of the same Series and maturity
for a like aggregate principal amount of Authorized Denominations. The Trustee shall require
the payment by the Bondholder requesting such transfer of any tax or other governmental charge
required to be paid with respect to such transfer as a condition precedent to the exercise of such
privilege.
The Authority and the Trustee may, except as otherwise provided herein, deem
and treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of
receiving payment thereof and for all other purposes, whether such Bond shall be overdue or not,
and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the
contrary; and payment of the interest on and principal of and redemption premium, if any, on
such Bond shall be made only to such registered owner, which payments shall be valid and
effectual to satisfy and discharge liability on such Bond to the extent of the sum or sums so paid.
The Trustee shall not be required to register the transfer of or exchange any Bonds
which has been selected for redemption in whole or in part, from and after the day of mailing of
a notice of redemption of such Bond selected for redemption in whole or in part as provided in
OHS West:260890460.9 23
Section 4.05 or during the period established by the Trustee for selection of Bonds for
redemption.
SECTION 2.06 Exchange of Bonds. Bonds may be exchanged at the Principal
Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and
maturity of other authorized denominations. The Trustee shall require the payment by the
Bondholder requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange as a condition precedent to the exercise of such privilege.
The Trustee shall not be required to exchange any Bond which has been selected for redemption
in whole or in part, from and after the day of mailing of a notice of redemption of such Bond
selected for redemption in whole or in part as provided in Section 4.05 or during the period
established by the Trustee for selection of Bonds for redemption.
SECTION 2.07 Bond Registration Books. The Trustee will keep at its office
sufficient books for the registration and transfer of the Bonds, which during normal business
hours shall be open to inspection by the Authority, and upon presentation for such purpose the
Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the
Bonds in such books as hereinabove provided.
SECTION 2.08 Mutilated, Destroyed, Stolen or Lost Bonds; Temporary Bonds. If
any Bond shall become mutilated, the Trustee, at the expense of the Bondholder, shall thereupon
authenticate and deliver a new Bond of like tenor and amount in exchange and substitution for
the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every
mutilated Bond so surrendered to the Trustee shall be cancelled.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and
indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the
Bondholder, shall thereupon authenticate and deliver a new Bond of like tenor in lieu of and in
substitution for the Bond so lost, destroyed or stolen.
The Trustee may require payment of a reasonable sum for each new Bond issued
under this Section 2.08 and of the expenses which may be incurred by the Authority and the
Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any
Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the
benefits of this Trust Agreement with all other Bonds of the same Series secured by this Trust
Agreement. Neither the Authority nor the Trustee shall be required to treat both the original
Bond and any replacement Bond as being Outstanding for the purpose of determining the
principal amount of Bonds which may be issued hereunder or for the purpose of determining any
percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be
treated as one and the same.
The Bonds issued under this Trust Agreement may be initially issued in
temporary form exchangeable for definitive Bonds when ready for delivery. The temporary
Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be
determined by the Authority, shall be in fully registered form and may contain such reference to
any of the provisions of this Trust Agreement as may be appropriate. Every temporary Bond
OHS West:260890460.9 24
shall be executed and authenticated as authorized by the Authority, in accordance with the terms
of the Act. If the Authority issues temporary Bonds it will execute and furnish definitive Bonds
without delay and thereupon the temporary Bonds may be surrendered, for cancellation, in
exchange therefor at the Principal Office of the Trustee, and the Trustee shall deliver in exchange
for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits
under this Trust Agreement as definitive Bonds delivered hereunder.
SECTION 2.09 Special Covenants as to Book-Entry Only S ystem for Bonds.
(a)Except as otherwise provided in subsections (b) and (c) of this Section
2.09, all of the Bonds initially issued shall be registered in the name of Cede & Co., as nominee
for DTC, or such other nominee as DTC shall request pursuant to the Representation Letter.
Payment of the interest on any Bond registered in the name of Cede & Co. shall be made on each
Interest Payment Date for such Bonds to the account, in the manner and at the address indicated
in or pursuant to the Representation Letter.
(b)The Bonds initially shall be issued in the form of a single authenticated
fully registered bond for each stated maturity of such Bonds, representing the aggregate principal
amount of the Bonds of such maturity. Upon initial issuance, the ownership of all such Bonds
shall be registered in the registration records maintained by the Trustee pursuant to Section 2.07
in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request
pursuant to the Representation Letter. The Trustee, the Authority and any paying agent may
treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name
for the purposes of payment of the principal or redemption price of and interest on such Bonds,
selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required
to be given to Bondholders hereunder, registering the transfer of Bonds, obtaining any consent or
other action to be taken by Bondholders of the Bonds and for all other purposes whatsoever; and
neither the Trustee nor the Authority or any paying agent shall be affected by any notice to the
contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility
or obligation to any “Participant” (which shall mean, for purposes of this Section 2.09, securities
brokers and dealers, banks, trust companies, clearing corporations and other entities, some of
whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in
the Bonds under or through DTC or any Participant, or any other person which is not shown on
the registration records as being a Bondholder, with respect to (i) the accuracy of any records
maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any
amount in respect of the principal or redemption price of or interest on the Bonds, (iii) any notice
which is permitted or required to be given to Bondholders of Bonds hereunder, (iv)the selection
by DTC or any Participant of any person to receive payment in the event of a partial redemption
of the Bonds, or (v) any consent given or other action taken by DTC as Bondholder of Bonds.
The Trustee shall pay all principal of and premium, if any, and interest on the Bonds only at the
times, to the accounts, at the addresses and otherwise in accordance with the Representation
Letter, and all such payments shall be valid and effective to satisfy fully and discharge the
Authority’s obligations with respect to the payment of the principal of and premium, if any, and
interest on the Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the
Trustee of written notice to the effect that DTC has determined to substitute a new nominee in
OHS West:260890460.9 25
place of its then existing nominee, the Bonds will be transferable to such new nominee in
accordance with subsection (e) of this Section 2.09.
(c)In the event that the Authority determines that the Bonds should not be
maintained in book-entry form, the Trustee shall, upon the written instruction of the Authority,
so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of
bond certificates. In such event, the Bonds will be transferable in accordance with subsection (e)
of this Section 2.09. DTC may determine to discontinue providing its services with respect to
the Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the
Authority or the Trustee and discharging its responsibilities with respect thereto under applicable
law. In such event, the Bonds will be transferable in accordance with subsection (e) of this
Section 2.09. If at any time DTC shall no longer be registered or in good standing under the
Securities Exchange Act or other applicable statute or regulation and a successor securities
depository is not appointed by the Authority within 90 days after the Authority receives notice or
becomes aware of such condition, as the case may be, then this Section 2.09 shall no longer be
applicable and the Authority shall execute and the Trustee shall authenticate and deliver
certificates representing the Bonds as provided below. Whenever DTC requests the Authority
and the Trustee to do so, the Trustee and the Authority will cooperate with DTC in taking
appropriate action after reasonable notice to arrange for another securities depository to maintain
custody of all certificates evidencing the Bonds then Outstanding. In such event, the Bonds will
be transferable to such securities depository in accordance with subsection (e) of this
Section 2.09, and thereafter, all references in this Trust Agreement to DTC or its nominee shall
be deemed to refer to such successor securities depository and its nominee, as appropriate.
(d)Notwithstanding any other provision of this Trust Agreement to the
contrary, so long as all Bonds Outstanding are registered in the name of any nominee of DTC, all
payments with respect to the principal of and premium, if any, and interest on each such Bond
and all notices with respect to each such Bond shall be made and given, respectively, to DTC as
provided in or pursuant to the Representation Letter.
(e)In the event that any transfer or exchange of Bonds is authorized under
subsection (b) or (c) of this Section 2.09, such transfer or exchange shall be accomplished upon
receipt by the Trustee from the registered owner thereof of the Bonds to be transferred or
exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance
with the applicable provisions of Sections 2.05 and 2.06. In the event Bond certificates are
issued to Bondholders other than Cede & Co., its successor as nominee for DTC as holder of all
the Bonds, another securities depository as holder of all the Bonds, or the nominee of such
successor securities depository, the provisions of Sections 2.05 and 2.06 shall also apply to,
among other things, the registration, exchange and transfer of the Bonds and the method of
payment of principal of, premium, if any, and interest on the Bonds.
OHS West:260890460.9 26
ARTICLE III
ISSUANCE OF 2010 BONDS
SECTION 3.01 Procedure for the Issuance of 2010 Bonds. At any time after the
sale of the 2010 Bonds in accordance with the Act, the Authority shall execute the 2010 Bonds
for issuance hereunder and shall deliver them to the Trustee, and thereupon the 2010 Bonds shall
be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request
of the Authority and upon receipt of payment therefor from the purchaser thereof.
(a)The proceeds of the sale of the 2010 A-1 Bonds in the amount of
$________ (computed as $________ aggregate principal amount of the 2010 Series A-1 Bonds,
less $______ Underwriter’s discount, [plus an original issue premium of $_______][less an
original issue discount of $_______]) shall be delivered to the Trustee and deposited by the
Trustee as follows:
(i)The Trustee shall deposit the sum of $________ into the 2010
Series A-1 Capitalized Interest Account within the Capitalized Interest Fund;
(ii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Reserve Account within the Reserve Fund, representing the Reserve Fund
Requirement for the 2010 Series A-1 Bonds as of the Closing Date;
(iii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Project Account within the Project Fund; and
(iv)The Trustee shall deposit the sum of $__________ into the 2010
Costs of Issuance Fund.
(b)The proceeds of the sale of the 2010 A-2 Bonds in the amount of
$________ (computed as $________ aggregate principal amount of the 2010 Series A-2 Bonds,
less $______ Underwriter’s discount, [plus an original issue premium of $_______][less an
original issue discount of $_______]) shall be delivered to the Trustee and deposited by the
Trustee as follows:
(i)The Trustee shall deposit the sum of $________ into the 2010
Series A-2 Capitalized Interest Account within the Capitalized Interest Fund;
(ii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Reserve Account within the Reserve Fund, representing the Reserve Fund
Requirement for the 2010 Series A-2 Bonds as of the Closing Date;
(iii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Project Account within the Project Fund; and
(iv)The Trustee shall deposit the sum of $__________ into the 2010
Costs of Issuance Fund.
OHS West:260890460.9 27
(c)The proceeds of the sale of the 2010 A-3 Bonds in the amount of
$________ (computed as $________ aggregate principal amount of the 2010 Series A-3 Bonds,
less $______ Underwriter’s discount, [plus an original issue premium of $_______][less an
original issue discount of $_______]) shall be delivered to the Trustee and deposited by the
Trustee as follows:
(i)The Trustee shall deposit the sum of $________ into the 2010
Series A-3 Capitalized Interest Account within the Capitalized Interest Fund;
(ii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Reserve Account within the Reserve Fund, representing the Reserve Fund
Requirement for the 2010 Series A-3 Bonds as of the Closing Date;
(iii)The Trustee shall deposit the sum of $__________ into the 2010
Series A Project Account within the Project Fund; and
(iv)The Trustee shall deposit the sum of $__________ into the 2010
Costs of Issuance Fund.
(d)The proceeds of the sale of the 2010 Series B Bonds in the amount of
$________ (computed as $________ aggregate principal amount of the 2010 Series B Bonds,
less $______ Underwriter’s discount, [plus an original issue premium of $_______][less an
original issue discount of $_______]) shall be delivered to the Trustee and deposited by the
Trustee as follows:
(i)The Trustee shall deposit the sum of $________ into the 2010
Series B Capitalized Interest Account within the Capitalized Interest Fund;
(ii)The Trustee shall deposit the sum of $__________ into the 2010
Series B Reserve Account within the Reserve Fund, representing the Reserve Fund
Requirement for the 2010 Series B Bonds as of the Closing Date;
(iii)The Trustee shall deposit the sum of $__________ into the 2010
Series B Project Account within the Project Fund; and
(iv)The Trustee shall deposit the sum of $__________ into the 2010
Costs of Issuance Fund.
(e)The proceeds of the sale of the 2010 Series C Bonds in the amount of
$________ (computed as $________ aggregate principal amount of the 2010 Series C Bonds,
less $______ Underwriter’s discount, [plus an original issue premium of $_______][less an
original issue discount of $_______]) shall be delivered to the Trustee and deposited by the
Trustee as follows:
(i)The Trustee shall deposit the sum of $__________ into the 2010
Series C Reserve Account within the Reserve Fund, representing the Reserve Fund
Requirement for the 2010 Series C Bonds as of the Closing Date;
OHS West:260890460.9 28
(ii)The Trustee shall deposit the sum of $__________ [and the deposit
of the County] into the 1998 Escrow Fund, which is created pursuant to the Letter of
Escrow Instructions for the defeasance and refunding of the 1998 Series A Bonds as
specified in the Letter of Escrow Instructions; and
(iii)The Trustee shall deposit the sum of $__________ into the 2010
Costs of Issuance Fund.
(f)The Trustee shall deposit any remaining amount from the proceeds of the
sale of the 2010 Bonds in the 2010 Costs of Issuance Fund for the payment of costs of issuance
of the 2010 Bonds.
SECTION 3.02 Project Fund. The Trustee hereby agrees to establish and maintain
so long as any Bonds are Outstanding the Project Fund and, within the Project Fund, a Project
Account for each of the 2010 Projects (the initial payments into which are provided for in
Section 3.01)designated as follows:
(a)2010 Series A Project Account (the “2010 Series A Project Account”); and
(b)2010 Series B Project Account (the “2010 Series B Project Account”).
The moneys in the 2010 Series A Project Account within the Project Fund shall be disbursed by
the Trustee upon the Written Request of the County in substantially the form attached hereto as
Exhibit B-1, for the payment of costs relating to the financing and completion of Capital
Project I and the moneys in the 2010 Series B Project Account shall be disbursed by the Trustee
upon the Written Request of EBRCSA in substantially the form attached hereto as Exhibit B-2.
SECTION 3.03 Conditions for the Issuance of Additional Bonds. The Authority
may at any time issue Additional Bonds pursuant to a Supplemental Trust Agreement, payable
from the Revenues as provided herein and secured by a pledge of and charge and lien upon the
Revenues as provided herein equal to the pledge, charge and lien securing the Outstanding
Bonds theretofore issued hereunder, but only subject to the following specific conditions, which
are hereby made conditions precedent to the issuance of any such Additional Bonds:
(a)The Authority shall be in compliance with all agreements and covenants
contained herein.
(b)The Supplemental Trust Agreement shall require that the proceeds of the
sale of such Additional Bonds shall be applied to the acquisition (by purchase or lease) or
construction of facilities to be added to the Facilities or for the refunding of Outstanding Bonds.
(c)The Supplemental Trust Agreement shall provide, if necessary, that from
such proceeds or other sources an amount shall be deposited in the Reserve Fund so that
following such deposit there shall be on deposit in the Reserve Fund an amount at least equal to
the Reserve Fund Requirement.
OHS West:260890460.9 29
(d)The aggregate principal amount of Bonds issued and at any time
Outstanding hereunder shall not exceed any limit imposed by law, by this Trust Agreement or by
any Supplemental Trust Agreement.
(e)The respective Sublease shall have been amended or additional Sublease
provided, if necessary, so that the Base Rental Payments payable by the County hereunder in
each Fiscal Year shall at least equal Debt Service, including Debt Service on the Additional
Bonds, in each Fiscal Year.
(f)The respective Sublease shall have been amended so as to lease to the
County the project being financed from the proceeds of such Additional Bonds or facilities of
comparable worth and economic life.
(g)If the proceeds of such Additional Bonds are to be used, in whole or in
part, to finance construction on real property not described in the respective Sublease or the
additional Facilities to be leased are not situated on property described in the respective
Sublease, (1)the respective Site Lease shall have been amended so as to lease to the Authority
such additional real property; and (2)the respective Sublease shall have been amended so as to
lease to the County such additional real property.
(h)If the additional Facilities to be leased are to be constructed, the Trustee
shall be paid an amount of capitalized interest on the Additional Bonds for the estimated period
of construction and at least six months thereafter.
SECTION 3.04 Proceedings for Authorization of Additional Bonds. Whenever the
Authority and the County shall determine to execute and deliver any Additional Bonds pursuant
to Section 3.03, the Authority and the Trustee shall enter into a Supplemental Trust Agreement
providing for the issuance of such Additional Bonds, specifying the maximum principal amount
of such Additional Bonds and prescribing the terms and conditions of such Additional Bonds.
The Supplemental Trust Agreement shall prescribe the form or forms of such
Additional Bonds and, subject to the provisions of Section 3.03, shall provide for the distinctive
designation, denominations, method of numbering, dates, payment dates, interest rates (or
method of determining the rates, if variable), interest payment dates, provisions for redemption
(if desired) and places of payment of principal and interest.
Before such Additional Bonds shall be issued, the County and the Authority shall
file or cause to be filed the following documents with the Trustee:
(a)An Opinion of Counsel setting forth that (1) such Counsel has examined
the Supplemental Trust Agreement and the amendment to the respective Sublease and the
respective Site Lease required by Section 3.03(e), (f) and (g); (2) the execution and delivery of
the Additional Bonds have been sufficiently and duly authorized by the County and the
Authority; and (3)said amendment to the respective Sublease and the respective Site Lease if
any, when duly executed by the County and the Authority, will be valid and binding obligations
of the County and the Authority.
OHS West:260890460.9 30
(b)A Certificate of the Authority stating that the requirements of Section 3.03
have been met.
(c)A certified copy of a resolution or ordinance of the County authorizing the
execution of the amendments to the respective Sublease required by Section 3.03(e), (f) and (g).
(d)An executed counterpart or duly authenticated copy of any amendment to
the respective Sublease required by Section 3.03(e), (f) and (g).
(e)A Certificate of the County stating that the insurance required by Sections
5.01, 5.02 and 5.03 of the respective Sublease is in effect.
(f)If the proceeds of such Additional Bonds are to be used, in whole or in
part, to finance construction or acquire facilities on real property not then described in the
respective Sublease, an executed counterpart or duly authenticated copy of the respective Site
Lease required by Section 3.03(g).
(g)A title insurance policy insuring the Authority’s leasehold or fee title in
the real property on which the additional Facilities are located, and, if the proceeds of such
Additional Bonds are to be used to finance construction on real property not then described in the
respective Sublease, a title insurance policy insuring the Authority’s leasehold or fee title in such
real property, or, at the option of the Authority, an opinion of counsel or Certificate of the
County or such other evidence of the Authority’s or County’s leasehold or fee interest in such
real property as shall be acceptable to the Authority.
Upon the delivery to the Trustee of the foregoing instruments and upon the
Trustee’s receipt of Certificates of the County and of the Authority stating that all applicable
provisions of this Trust Agreement have been complied with (so as to permit the issuance of the
Additional Bonds in accordance with the Supplemental Trust Agreement then delivered to the
Trustee), the Trustee shall authenticate and deliver said Additional Bonds in the aggregate
principal amount specified in such Supplemental Trust Agreement to, or upon the Written
Request of, the Authority.
SECTION 3.05 Limitations on the Is suance of Obligations Payable from
Revenues. The Authority will not, so long as any of the Bonds are Outstanding, issue any
obligations or securities, however denominated, payable in whole or in part from Revenues
except the following:
(a)Bonds of any Series authorized pursuant to Section 3.04;
(b)Obligations owing or agreements with respect to a Reserve Facility,
including principal, interest and fees relating thereto; provided such obligations shall be payable
on a subordinate basis to principal and interest on the Bonds.
(c)Obligations which are junior and subordinate to the payment of the
principal, premium, interest and reserve fund requirements for the Bonds and which subordinated
obligations are payable as to principal, premium, interest and reserve fund requirements, if any,
OHS West:260890460.9 31
only out of Revenues after the prior payment of all amounts then required to be paid hereunder
from Revenues for principal, premium, interest and reserve fund requirements for the Bonds, as
the same become due and payable and at the times and in the manner as required in this Trust
Agreement.
SECTION 3.06 Costs of Issuance Fund. There is hereby established in trust a
special fund designated as the “Costs of Issuance Fund” to be maintained by the Trustee, the
initial payments into which are provided for in Section 3.01. All money in the Costs of Issuance
Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the Bonds upon
receipt of a Written Request of the Authority, in substantially the form attached hereto as
Exhibit C, filed with the Trustee, each of which shall be sequentially numbered and shall state
the person(s) to whom payment is to be made, the amount(s) to be paid, the purpose(s) for which
the obligation(s) was incurred and that such payment is a proper charge against said fund. On
[November 5, 2011], or upon the earlier Written Request of the Authority, any remaining
balance in the 2010 Costs of Issuance Fund shall be transferred to the [2010 Series A Project
Account] and the Costs of Issuance Fund shall be closed.
ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01 Extraordinary Redemption. The Bonds of a Series are subject to
redemption by the Authority on any date prior to their respective stated maturities, upon notice as
hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples
of Authorized Denominations, from prepayments made by the County pursuant to Section 7.02
of the respective Sublease related to such Series of Bonds, at a redemption price equal to the sum
of the principal amount thereof, without premium, plus accrued interest thereon to the
Redemption Date. Whenever less than all of the Outstanding Bonds of a Series of Bonds are to
be redeemed on any one date, the Trustee shall select, in accordance with written directions from
the Authority, the Bonds of such Series to be redeemed in part from the Outstanding Bonds so
that the aggregate annual principal amount of and interest on such Series of Bonds which shall be
payable after such Redemption Date shall be as nearly proportional as practicable to the
aggregate annual principal amount of and interest on the such Bonds Outstanding prior to such
Redemption Date.
SECTION 4.02 Optional Redemption.
(a)The 2010 Series A-1 Bonds maturing on or prior to June 1, 20___, are not
subject to optional redemption. The 2010 Series A-1 Bonds maturing on or after June 1, 20___,
are subject to redemption prior to their respective stated maturities at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part on
any date (in such maturities as are designated in writing by the Authority to the Trustee) on or
after June 1, 20___, at the following redemption prices (expressed as percentages of the principal
amount of the 2010 Series A-1 Bonds called for redemption), together with accrued interest to
the date fixed for redemption:
OHS West:260890460.9 32
Redemption Period
(dates inclusive)Redemption Price
_____________$__________
______________________
(b)The 2010 Series A-2 Bonds maturing on or prior to June 1, 20___, are not
subject to optional redemption. The 2010 Series A-2 Bonds maturing on or after June 1, 20___,
are subject to redemption prior to their respective stated maturities at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part on
any date (in such maturities as are designated in writing by the Authority to the Trustee) on or
after June 1, 20___, at the following redemption prices (expressed as percentages of the principal
amount of the 2010 Series A-2 Bonds called for redemption), together with accrued interest to
the date fixed for redemption:
Redemption Period
(dates inclusive)Redemption Price
_____________$__________
______________________
(c)The 2010 Series A-3 Bonds maturing on or prior to June 1, 20___, are not
subject to optional redemption. The 2010 Series A-3 Bonds maturing on or after June 1, 20___,
are subject to redemption prior to their respective stated maturities at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part on
any date (in such maturities as are designated in writing by the Authority to the Trustee) on or
after June 1, 20___, at the following redemption prices (expressed as percentages of the principal
amount of the 2010 Series A-3 Bonds called for redemption), together with accrued interest to
the date fixed for redemption:
Redemption Period
(dates inclusive)Redemption Price
_____________$__________
______________________
(d)The 2010 Series B Bonds maturing on or prior to June 1, 20___, are not
subject to optional redemption. The 2010 Series B Bonds maturing on or after June 1, 20___, are
subject to redemption prior to their respective stated maturities at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part on
any date (in such maturities as are designated in writing by the Authority to the Trustee) on or
after June 1, 20___, at the following redemption prices (expressed as percentages of the principal
amount of the 2010 Series B Bonds called for redemption), together with accrued interest to the
date fixed for redemption:
OHS West:260890460.9 33
Redemption Period
(dates inclusive)Redemption Price
_____________$__________
______________________
(e)The 2010 Series C Bonds maturing on or prior to June 1, 20___, are not
subject to optional redemption. The 2010 Series C Bonds maturing on or after June 1, 20___, are
subject to redemption prior to their respective stated maturities at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part on
any date (in such maturities as are designated in writing by the Authority to the Trustee) on or
after June 1, 20___, at the following redemption prices (expressed as percentages of the principal
amount of the 2010 Series C Bonds called for redemption), together with accrued interest to the
date fixed for redemption:
Redemption Period
(dates inclusive)Redemption Price
_____________$__________
______________________
SECTION 4.03 Extraordinary Optional Redemption. Upon the occurrence of an
Extraordinary Tax Event and prior to _________, at the option of the Authority, the Taxable
2010 Bonds are subject to extraordinary optional redemption prior to their respective stated
maturities, from any source of available funds, as a whole on any date, at the Extraordinary
Redemption Price, which is the greater of:
(i) the issue price of the applicable Taxable 2010 Bonds (but not less than
100% of the principal amount of such Taxable 2010 Bonds to be redeemed); or
(ii)the sum of the present value of the remaining scheduled payments of
principal and interest on the applicable Taxable 2010 Bonds to be redeemed to the
maturity date of such Taxable 2010 Bonds, not including any portion of those payments
of interest accrued and unpaid as of the date on which the applicable Taxable 2010 Bonds
are to be redeemed, discounted to the date on which such Taxable 2010 Bonds are to be
redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day
months, at a discount rate equal to the Treasury Rate plus ___ basis points,
plus in each case accrued interest on the applicable Taxable 2010 Bonds to be redeemed
to the redemption date.
SECTION 4.04 Mandatory Sinking Fund Redemption. The Term 2010 Bonds,
upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption
prior to maturity, in part on June 1 of each year on the Mandatory Sinking Account Payment
Dates specified in Section 5.03, by lot, from and in the amount of the mandatory sinking account
payments set forth in Section 5.03 at a redemption price equal to the sum of the principal amount
thereof plus accrued interest thereon to the redemption date, without premium.
OHS West:260890460.9 34
SECTION 4.05 Selection of Bonds for Redemption. (a) The Authority shall
designate which maturities and Series of Bonds are to be redeemed. Except as provided below
with respect to the 2010 Series A-2 Bonds and the 2010 Series A-3 Bonds, if less than all
Outstanding Bonds of the same Series maturing by their terms on any one date are to be
redeemed at any one time, the Trustee shall select the Bonds of such Series and maturity date to
be redeemed by lot and shall promptly notify the Authority in writing of the numbers of such
Bonds so selected for redemption. For purposes of such selection, Bonds shall be deemed to be
composed of multiples of minimum Authorized Denominations and any such multiple may be
separately redeemed. In the event Term Bonds are designated for redemption, the Authority may
designate which sinking account payments are allocated to such redemption.
(b)[If less than all of the 2010 Series A-2 Bonds are to be redeemed, the Trustee will
redeem the principal of all such 2010 Series A-2 Bonds on a pro rata basis subject to minimum
Authorized Denominations. If the 2010 Series A-2 Bonds are registered in book-entry only form
and so long as DTC or a successor securities depository is the sole registered owner of the 2010
Series A-2 Bonds, if less than all of the 2010 Series A-2 Bonds of a maturity are called for prior
redemption, the particular 2010 Series A-2 Bonds or portions thereof to be redeemed shall be
selected on a “Pro Rata Pass-Through Distribution of Principal” basis in accordance with DTC
operational arrangements then in effect that currently provide for adjustment of the principal by a
factor provided pursuant to DTC operational arrangements. If the Trustee does not provide the
necessary information and identify the redemption as on a Pro Rata Pass-Through Distribution of
Principal basis or if the DTC operational arrangements do not allow for the redemption of the
2010 Series A-2 Bonds on a Pro Rata Pass-Through Distribution of Principal basis as described
above, the 2010 Series A-2 Bonds shall be selected for redemption by lot in accordance with
DTC procedures. DTC will be responsible for distributing the principal, premium, if any, and
accrued interest among the DTC participants, pro rata according to the beneficial interest in such
2010 Series A-2 Bonds that DTC records list as owned by each DTC participant as of the record
date for such payment. In the event the 2010 Series A-2 Bonds are designated for optional
redemption, the Authority may designate the sinking fund payments under Section 5.03(c), or
portions thereof, that are to be reduced as allocated to such redemption.]
(c)[If less than all of the 2010 Series A-3 Bonds are to be redeemed, the Trustee will
redeem the principal of all such 2010 Series A-3 Bonds on a pro rata basis subject to minimum
Authorized Denominations. If the 2010 Series A-3 Bonds are registered in book-entry only form
and so long as DTC or a successor securities depository is the sole registered owner of the 2010
Series A-3 Bonds, if less than all of the 2010 Series A-3 Bonds of a maturity are called for prior
redemption, the particular 2010 Series A-3 Bonds or portions thereof to be redeemed shall be
selected on a “Pro Rata Pass-Through Distribution of Principal” basis in accordance with DTC
operational arrangements then in effect that currently provide for adjustment of the principal by a
factor provided pursuant to DTC operational arrangements. If the Trustee does not provide the
necessary information and identify the redemption as on a Pro Rata Pass-Through Distribution of
Principal basis or if the DTC operational arrangements do not allow for the redemption of the
2010 Series A-3 Bonds on a Pro Rata Pass-Through Distribution of Principal basis as described
above, the 2010 Series A-3 Bonds shall be selected for redemption by lot in accordance with
DTC procedures. DTC will be responsible for distributing the principal, premium, if any, and
accrued interest among the DTC participants, pro rata according to the beneficial interest in such
OHS West:260890460.9 35
2010 Series A-3 Bonds that DTC records list as owned by each DTC participant as of the record
date for such payment. In the event the 2010 Series A-3 Bonds are designated for optional
redemption, the Authority may designate the sinking fund payments under Section 5.03(c), or
portions thereof, that are to be reduced as allocated to such redemption.]
SECTION 4.06 Notice of Redemption; Cancellation; Effect of Redemption.
Notice of redemption shall be mailed by first-class mail by the Trustee, not less than thirty (30)
nor more than sixty (60) days prior to the redemption date to the respective Bondholders of the
Bonds designated for redemption at their addresses appearing on the registration books of the
Trustee. Each notice of redemption shall state the date of such notice, the date of issue of the
Bonds, the Series, the redemption date, the Redemption Price, the place or places of redemption
(including the name and appropriate address of the Trustee), the CUSIP number (if any) of the
maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive
certificate numbers of the Bonds of such maturity, to be redeemed and, in the case of Bonds to be
redeemed in part only, the respective portions of the principal amount thereof to be redeemed.
Each such notice shall also state that on said date there will become due and payable on each of
said Bonds the redemption price thereof, together with interest accrued thereon to the redemption
date, and that from and after such redemption date interest thereon shall cease to accrue, and
shall require that such Bonds be then surrendered at the address of the Trustee specified in the
redemption notice. Failure to receive such notice shall not invalidate any of the proceedings
taken in connection with such redemption.
The Trustee may give a conditional notice of redemption prior to the receipt of all
funds or satisfaction of all conditions necessary to effect the redemption, provided that
redemption shall not occur unless and until all conditions have been satisfied and the Trustee has
on deposit and available or, if applicable, has received, all of the funds necessary to effect the
redemption; otherwise, such redemption shall be cancelled by the Trustee and the Trustee shall
mail notice of such cancellation to the recipients of the notice of redemption being cancelled.
The Authority may, at its option, on or prior to the date fixed for redemption in
any notice of redemption rescind and cancel such notice of redemption by Written Request to the
Trustee and the Trustee shall mail notice of such cancellation to the recipients of the notice of
redemption being cancelled.
If notice of redemption has been duly given as aforesaid and money for the
payment of the redemption price of the Bonds called for redemption is held by the Trustee, then
on the redemption date designated in such notice Bonds so called for redemption shall become
due and payable, and from and after the date so designated interest on such Bonds shall cease to
accrue, and the Bondholders of such Bonds shall have no rights in respect thereof except to
receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be cancelled
and destroyed by the Trustee in accordance with its retention policy then in effect.
OHS West:260890460.9 36
ARTICLE V
REVENUES
SECTION 5.01 Pledge of Revenues.
(a)All Revenues, any other amounts (including proceeds of the sale of the
Bonds) held by the Trustee in any fund or account established hereunder (other than amounts on
deposit in the Rebate Fund created pursuant to Section 6.03) and any other amounts (excluding
Additional Payments) received by the Authority in respect of the Facilities are hereby
irrevocably pledged and assigned to the payment of the interest and premium, if any, on and
principal of the Bonds and Reserve Facility Costs as provided herein, and the Revenues and
other amounts pledged hereunder shall not be used for any other purpose while any of the Bonds
remain Outstanding or Reserve Facility Costs remain unpaid; provided, however, that out of the
Revenues and other moneys there may be applied such sums for such purposes as are permitted
hereunder. This pledge shall constitute a pledge of and charge and first lien upon the Revenues,
all other amounts pledged hereunder and all other moneys on deposit in the funds and accounts
established hereunder (excluding amounts on deposit in the Rebate Fund created pursuant to
Section 6.03) for the payment of the interest on and principal of the Bonds and Reserve Facility
Costs in accordance with the terms hereof and thereof, provided that each Series of Bonds, [or
group of Series of Bonds designated by the same alphabetical letter,] shall be separately secured
by the Sublease and Revenues derived therefrom and accounts related to such Series of Bonds
established hereunder and shall not be entitled to the funds held in any accounts established with
respect to other Series of Bonds or the Revenues derived from the Subleases relating to such
other Series of Bonds.
(b)At least three (3) Business Days prior to each date on which a Base Rental
Payment is due, pursuant to the respective Sublease, the Trustee shall notify the County of the
amount of the installment of Base Rental Payment needed to pay the principal of and interest on
the Bonds due on the next following Interest Payment Date. Any failure to send such notice
shall not affect the County’s obligation to make timely payments of installments of Base Rental
Payments.
SECTION 5.02 Receipt and Deposit of Revenues in the Revenue Fund. In order to
carry out and effectuate the pledge, assignment, charge and lien contained herein, the Authority
agrees and covenants that all Revenues and all other amounts pledged hereunder when and as
received shall be received by the Authority in trust hereunder for the benefit of the Bondholders
and shall be transferred when and as received by the Authority to the Trustee for deposit in the
Revenue Fund (the “Revenue Fund”), which fund is hereby created and which fund the Trustee
hereby agrees and covenants to maintain in trust for Bondholders so long as any Bonds shall be
Outstanding hereunder. The County has been directed to pay all Base Rental Payments directly
to the Trustee. If the Authority receives any Base Rental Payments, it shall hold the same in trust
as agent of the Trustee and shall immediately transfer such Base Rental Payments to the Trustee.
All Revenues and all other amounts pledged and assigned hereunder shall be accounted for
through and held in trust in the Revenue Fund, and the Trustee shall have no beneficial right or
interest in any of the Revenues except only as herein provided. All Revenues and all other
OHS West:260890460.9 37
amounts pledged and assigned hereunder, whether received by the Authority in trust or deposited
with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely
to the purposes and uses hereinafter in this Article set forth, and shall be accounted for separately
and apart from all other accounts, funds, money or other resources of the Trustee.
SECTION 5.03 Establishment and Maintenance of Accounts for Use of Money in
the Revenue Fund; Reserve Fund.
(a)Revenue Fund. Subject to Section 6.03, all money in the Revenue Fund
shall be set aside by the Trustee in the following respective special accounts or funds within the
Revenue Fund (each of which is hereby created and each of which the Trustee hereby covenants
and agrees to cause to be maintained). Moneys from each respective Sublease shall be paid into
the related Interest and Principal Accounts and shall only be available to pay the principal of and
interest on such related Series of Bonds.
(1)2010 Series A Interest Account
(2)2010 Series B Interest Account,
(3)2010 Series C Interest Account,
(4)2010 Series A Principal Account
(5)2010 Series B Principal Account, and
(6)2010 Series C Principal Account.
All money in each of such accounts shall be held in trust by the Trustee and shall be applied,
used and withdrawn only for the purposes hereinafter authorized in this Section. On each
Principal Payment Date, following payment of principal of and interest on the Bonds, any excess
amount on deposit in the Revenue Fund shall be transferred to the applicable Reserve Account
within the Reserve Fund to the extent necessary to increase the amount therein to the respective
Reserve Fund Requirement or to pay any respective Reserve Facility Costs then due and owing
and any excess shall then be returned to the County as an excess payment of Base Rental
Payments.
(b)Interest Account. On or before each Interest Payment Date, the Trustee
shall set aside from the Revenue Fund and deposit in each respective Interest Account that
amount of money which is equal to the amount of interest becoming due and payable on all
Outstanding Bonds of the respective Series on such Interest Payment Date.
No deposit need be made in the Interest Account if the amount contained therein
and available to pay interest on the respective Series of Bonds is at least equal to the aggregate
amount of interest becoming due and payable on all Outstanding Bonds of such Series on such
Interest Payment Date.
All money in each Interest Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the interest on the respective Series of Bonds as it shall become
due and payable (including accrued interest on any such Bonds purchased or redeemed prior to
maturity).
OHS West:260890460.9 38
(c)Principal Account. On or before each June 1, commencing on the dates
set forth below for each Series of Bonds, the Trustee shall set aside from the Revenue Fund and
deposit in each respective Principal Account an amount of money equal to the amount of all
sinking fund payments required to be made on such June 1 into the respective sinking fund
accounts for all Outstanding Term Bonds of the respective Series of Bonds and the principal
amount of all Outstanding Serial Bonds of such Series maturing on such June 1.
Bonds First Principal Payment Date
2010 Series A-1 Bonds June 1, 2014
2010 Series A-2 Bonds June 1, 2014
2010 Series A-3 Bonds June 1, 2014
2010 Series B Bonds June 1, 2014
2010 Series C Bonds June 1, 2012
No deposit need be made in the Principal Account if the amount contained therein
and available to pay principal of such Series of Bonds is at least equal to the aggregate amount of
the principal of all Outstanding Serial Bonds of such Series maturing by their terms on such
June 1 plus the aggregate amount of all sinking fund payments required to be made on such
June 1 for all Outstanding Term Bonds of such Series.
The Trustee shall establish and maintain within each Principal Account a separate
subaccount for the Term Bonds of each Series and maturity, designated as the “2010 Series ___
Sinking Account” (the “2010 Series ___ Sinking Account”), inserting therein the Series and
maturity (if more than one such account is established for such Series) designation of such
Bonds, as set forth below. With respect to each Sinking Account, on each mandatory sinking
account payment date established for such Sinking Account, the Trustee shall apply the
mandatory sinking account payment required on that date to the redemption (or payment at
maturity, as the case may be) of Term Bonds of the Series and maturity for which such Sinking
Account was established, upon the notice and in the manner provided in Article IV.
(i)The Trustee shall establish and maintain within the Principal Account a
Sinking Account for the 2010 Series A-1 Term Bonds maturing on June 1, 20__. Subject to the
terms and conditions set forth in this Section and Section 4.04, the Term Bonds maturing on
June 1, 20__, shall be redeemed (or paid at maturity, as the case may be) by application of
mandatory sinking account payments in the amounts and upon the dates as follows:
OHS West:260890460.9 39
2010 Series A-1 Sinking Account
Mandatory Sinking Account
Payment Date (June 1)
Mandatory Sinking
Account Payments
20__$
20__
20__
20__
20__
20__
20__
20__*
__________________
*Maturity
If the 2010 Series A-1 Term Bonds are optionally redeemed in part, the
Authority may designate the Mandatory Sinking Account Payments to be allocated to such
optional redemption.
(ii)The Trustee shall establish and maintain within the Principal Account a
Sinking Account for the 2010 Series A-2 Term Bonds maturing on June 1, 20__. Subject to the
terms and conditions set forth in this Section and Section 4.04, the Term Bonds maturing on
June 1, 20__, shall be redeemed (or paid at maturity, as the case may be) by application of
mandatory sinking account payments in the amounts and upon the dates as follows:
2010 Series A-2 Sinking Account
Mandatory Sinking Account
Payment Date (June 1)
Mandatory Sinking
Account Payments
20__$
20__
20__
20__
20__
20__
20__
20__*
__________________
*Maturity
If the 2010 Series A-2 Term Bonds are optionally redeemed in part, the
Authority may designate the Mandatory Sinking Account Payments to be allocated to such
optional redemption.
OHS West:260890460.9 40
(iii)The Trustee shall establish and maintain within the Principal Account a
Sinking Account for the 2010 Series A-3 Term Bonds maturing on June 1, 20__. Subject to the
terms and conditions set forth in this Section and Section 4.04, the Term Bonds maturing on
June 1, 20__, shall be redeemed (or paid at maturity, as the case may be) by application of
mandatory sinking account payments in the amounts and upon the dates as follows:
2010 Series A-3 Sinking Account
Mandatory Sinking Account
Payment Date (June 1)
Mandatory Sinking
Account Payments
20__$
20__
20__
20__
20__
20__
20__
20__*
__________________
*Maturity
If the 2010 Series A-3 Term Bonds are optionally redeemed in part, the
Authority may designate the Mandatory Sinking Account Payments to be allocated to such
optional redemption.
(iv)The Trustee shall establish and maintain within the Principal Account a
Sinking Account for the 2010 Series B Term Bonds maturing on June 1, 20__. Subject to the
terms and conditions set forth in this Section and Section 4.04, the Term Bonds maturing on
June 1, 20__, shall be redeemed (or paid at maturity, as the case may be) by application of
mandatory sinking account payments in the amounts and upon the dates as follows:
2010 Series B Sinking Account
Mandatory Sinking Account
Payment Date (June 1)
Mandatory Sinking
Account Payments
20__$
20__
20__
20__
20__
20__
20__
20__*
__________________
*Maturity
OHS West:260890460.9 41
If the 2010 Series B Term Bonds are optionally redeemed in part, the
Authority may designate the Mandatory Sinking Account Payments to be allocated to such
optional redemption.
(v)The Trustee shall establish and maintain within the Principal Account a
Sinking Account for the 2010 Series C Term Bonds maturing on June 1, 20__. Subject to the
terms and conditions set forth in this Section and Section 4.04, the Term Bonds maturing on
June 1, 20__, shall be redeemed (or paid at maturity, as the case may be) by application of
mandatory sinking account payments in the amounts and upon the dates as follows:
2010 Series C Sinking Account
Mandatory Sinking Account
Payment Date (June 1)
Mandatory Sinking
Account Payments
20__$
20__
20__
20__
20__
20__
20__
20__*
__________________
*Maturity
If the 2010 Series C Term Bonds are optionally redeemed in part, the
Authority may designate the Mandatory Sinking Account Payments to be allocated to such
optional redemption.
All money in the Principal Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the principal of the Bonds as it shall become due and payable,
whether at maturity or redemption, except that any money in any Sinking Account shall be used
and withdrawn by the Trustee only to redeem or to pay Term Bonds for which such Sinking
Account was created.
(d)Reserve Fund. The Authority hereby agrees to establish a separate fund
titled the “Reserve Fund” to be held by the Trustee, and the Trustee is directed to establish and
maintain a separate Reserve Account for the following Series of Bonds, namely:
(1)2010 Series A Reserve Account;
(2)2010 Series B Reserve Account; and
(3)2010 Series C Reserve Account.
All money in each Reserve Account shall be deposited with, used and withdrawn by the Trustee
solely for the purpose of funding the Interest Account or the Principal Account in that order for
such Series, in the event of any deficiency in either of such accounts on a Principal Payment
OHS West:260890460.9 42
Date or Interest Payment Date, except that so long as the Authority is not in default hereunder,
any cash amounts in such Reserve Account in excess of the Reserve Fund Requirement shall be
withdrawn from the Reserve Account and transferred to the Project Fund on each Interest
Payment Date, and, upon completion of the respective Project, shall be deposited into the
Revenue Fund. The Trustee shall notify the County if any withdrawal is made from a Reserve
Account for the purpose of funding the Interest Account or the Principal Account. If the Reserve
Fund Requirement is satisfied by a Reserve Facility, the Trustee shall draw on such Reserve
Facility in accordance with its terms and the terms hereof, in a timely manner, to the extent
necessary to fund any such deficiency in the In terest Account or the Principal Account. The
Authority shall repay solely from Revenues any draws under a Reserve Facility and any Reserve
Facility Costs related thereto. Interest shall accrue and be payable on such draws and expenses
from the date of payment by a Reserve Facility provider at the rate specified in the agreement
with respect to such Reserve Facility.
Before any drawing may be made on a Reserve Facility, the Trustee shall have
withdrawn all cash and investments in such Reserve Account to replenish the Principal Account
and the Interest Account. If any obligations are due and payable under the Reserve Facility, any
new funds deposited into such Reserve Account shall be used and withdrawn by the Trustee to
pay such obligations. The pledge of the Revenues by the Authority to secure the payment of the
Reserve Facility Costs is on a basis that is subordinate to the pledge of Revenues to the Trustee
for the Bonds.
Amounts in respect of Reserve Facility Costs paid to a Reserve Facility provider
shall be credited first to the expenses due, then to interest due and then to principal due. As and
to the extent payments are made to a Reserve Facility provider on account of principal due, the
coverage under the Reserve Facility will be increased by a like amount, subject to the terms of
the Reserve Facility.
Draws on all Reserve Facilities on which there is available coverage shall be
made to the extent practical on a pro-rata basis (calculated by reference to the coverage then
available thereunder) after applying all available cash and investments in such Reserve Account.
Payment of Reserve Facility Costs and reimbursement of amounts with respect to other Reserve
Facilities shall be made on a pro-rata basis prior to the replenishment of any cash drawn from
such Reserve Account.
If the Authority shall fail to pay any Reserve Facility Costs in accordance with the
above requirements, a Reserve Facility provider shall be entitled to exercise any and all legal and
equitable remedies available to it, including those provided under this Trust Agreement other
than (i) acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect
Owners of the Bonds.
This Trust Agreement shall not be discharged until all Reserve Facility Costs
owing to a Reserve Facility provider shall have been paid in full. The Authority’s obligation to
pay such amounts shall expressly survive payment in full of the Bonds.
The Authority may satisfy the Reserve Fund Requirement at any time by the
deposit with the Trustee for the credit of the respective Reserve Account of a Reserve Facility.
OHS West:260890460.9 43
Unless the Bonds have been fully paid and retired, the Trustee shall draw the full
amount of any letter of credit credited to the Reserve Account for such Bonds on the third
Business Day preceding the date such letter of credit (taking into account any extension, renewal
or replacement thereof) would otherwise expire, and shall deposit moneys realized pursuant to
such draw in the Reserve Account.
If the Authority causes a cash-funded Reserve Account to be replaced with a
Reserve Facility, amounts on deposit in such Reserve Account shall, upon Written Request of the
Authority to the Trustee, be transferred to the County and applied for any lawful purpose,
subject, in the case where such moneys are proceeds of Bonds, to the receipt by the Authority of
an Opinion of Counsel that such transfer will not cause the interest on the Tax-Exempt Bonds to
be included in gross income for purposes of federal income taxation.
(e)Capitalized Interest Fund. The Authority hereby agrees to establish and
maintain a separate fund designated the “Capitalized Interest Fund,” which fund shall be held by
the Trustee. Within the Capitalized Interest Fund, the Trusted is hereby directed to establish
separate accounts to be designated as follows:
(1)2010 Series A-1 Capitalized Interest Account (the “2010
Series A-1 Capitalized Interest Account”),
(2)2010 Series A-2 Capitalized Interest Account (the “2010
Series A-2 Capitalized Interest Account”),
(3)2010 Series A-3 Capitalized Interest Account (the “2010
Series A-3 Capitalized Interest Account”), and
(4)2010 Series B Capitalized Interest Account (the “2010 Series B
Capitalized Interest Account”).
The Trustee shall transfer on or before each Interest Payment Date from each respective
Capitalized Interest Account for deposit into the respective Interest Account of each of the
following Series of Bonds moneys in the following amounts to pay a portion of the Interest
Payments on the 2010 Bonds on such Interest Payment Date as follows:
Date
2010 Series A-1
Capitalized
Interest Account
2010 Series A-2
Capitalized
Interest Account
2010 Series A-3
Capitalized
Interest Account
2010 Series B
Capitalized
Interest Account
OHS West:260890460.9 44
On the date of substantial completion of Capital Project I, any remaining amounts
in the 2010 Series A-2 Capitalized Interest Account and in the 2010 Series A-3 Capitalized
Interest Account shall be deposited into the 2010 Series A Project Account and expended on
Capital Project I.
On [___________, 20___], any remaining amounts in the 2010 Series A-1
Capitalized Interest Account and the 2010 Series B Capitalized Interest Account shall be
deposited into the 2010 Series A Interest Account and the 2010 Series B Interest Account,
respectively.
SECTION 5.04 Application of Insurance Proceeds. In the event of any damage to
or destruction of any part of the Facilities covered by insurance, the Authority shall cause the
proceeds of such insurance to be utilized for the repair, reconstruction or replacement of the
damaged or destroyed portion of the Facilities, and the Trustee shall hold said proceeds in a fund
established by the Trustee for such purpose separate and apart from all other funds designated
the “2010 Series ___ Insurance and Condemnation Fund”, to the end that such proceeds shall be
applied to the repair, reconstruction or replacement of the respective Facilities to at least the
same good order, repair and condition as it was in prior to the damage or destruction, insofar as
the same may be accomplished by the use of said proceeds. The County shall file a Certificate of
the County with the Trustee that sufficient funds from insurance proceeds or from any funds
legally available to the County, or from any combination thereof, are available in the event it
elects to repair, reconstruct or replace the respective Facilities. The Trustee shall invest said
proceeds in Permitted Investments pursuant to the Written Request of the County, as agent for
the Authority under the respective Sublease, and withdrawals of said proceeds shall be made
from time to time upon the filing with the Trustee of a Written Request of the County, stating
that the County has expended moneys or incurred liabilities in an amount equal to the amount
therein stated for the purpose of the repair, reconstruction or replacement of the respective
Facilities, and specifying the items for which such moneys were expended, or such liabilities
were incurred, in reasonable detail. Any balance of such proceeds not required for such repair,
reconstruction or replacement and the proceeds of use and occupancy insurance shall be paid to
the Trustee as Base Rental Payments and applied in the manner provided by Section 5.01.
Alternatively, the County, if the proceeds of such insurance together with any other moneys then
available for such purpose are sufficient to prepay all, in case of damage or destruction in whole
of the respective Facilities, or that portion, in the case of partial damage or destruction of such
Facilities, of the Base Rental Payments and all other amounts relating to the damaged or
destroyed portion of such Facilities, may elect not to repair, reconstruct or replace the damaged
or destroyed portion of such Facilities and thereupon shall cause said proceeds to be used for the
redemption of the respective Outstanding Bonds pursuant to the applicable provisions of
Section 4.01. The County shall not apply the proceeds of insurance as set forth in this
Section 5.04 to redeem the respective Bonds in part due to damage or destruction of a portion of
such Facilities unless the Base Rental Payments on the undamaged portion of such Facilities will
be sufficient to pay the scheduled principal and interest on the Bonds remaining unpaid after
such redemption.
SECTION 5.05 Deposit and Investments of Money in Accounts and Funds.
Subject to Section 6.03, all money held by the Trustee in any of the accounts or funds established
OHS West:260890460.9 45
pursuant hereto shall be invested in Permitted Investments at the Written Request of the
Authority or, if no instructions are received, in money market funds described in clause (5) of the
definition of Permitted Investments. Such investments shall, as nearly as practicable, mature on
or before the dates on which such money is anticipated to be needed for disbursement hereunder;
provided, however, that moneys in the Reserve Accounts shall be invested in Permitted
Investments with a term to maturity not exceeding five (5) years. For purposes of this restriction,
Permitted Investments containing a repurchase option or put option by the investor shall be
treated as having a maturity of no longer than such option. Unless otherwise instructed by the
Authority, all interest or profits received on any money so invested in the Project Accounts, the
Reserve Accounts and the Capitalized Interest Accounts shall be deposited in each respective
Project Account until completion of the related Project and shall thereafter be deposited first in
each respective Reserve Account, to the extent necessary to make amounts on deposit in such
Reserve Account equal to the Reserve Fund Requirement, and then in the Revenue Fund;
provided that proceeds of the Taxable 2010 Bonds shall remain in the 2010 Series A Project
Account until expended on capital expenditures. The Trustee shall value Permitted Investments
held in each Reserve Account no later than June 1 and December 1 in each year; provided that
for purposes of this Section the value of any such Permitted Investment shall be an amount equal
to the lesser of the cost or the fair market value of such Permitted Investment. The Trustee and
its affiliates may act as principal, agent, sponsor or advisor with respect to any investments. The
Trustee shall not be liable for any losses on investments made in accordance with the terms and
provisions of this Trust Agreement.
Investments purchased with funds on deposit in the Revenue Fund shall mature
not later than the payment date or redemption date, as appropriate, immediately succeeding the
investment.
Subject to Section 6.03, investments in any and all funds and accounts except for
the Rebate Fund may be commingled for purposes of making, holding and disposing of
investments, notwithstanding provisions herein for transfer to or holding in particular funds and
accounts amounts received or held by the Trustee hereunder, provided that the Trustee shall at all
times account for such investments strictly in accordance with the funds and accounts to which
they are credited and otherwise as provided in this Trust Agreement.
SECTION 5.06 Filings for Subsidy Receipts. The Authority and the Trustee
hereby agree that the Trustee, until further notified in writing by the Authority, shall file, or
cause to be filed, Internal Revenue Service Form 8038-CP (“Form 8038-CP”) on behalf of the
Authority in accordance with the following provisions (which shall be in effect for so long as,
and only so long as, the Trustee has been engaged by the Authority to provide such services):
(a)At least ninety-five (95) days prior to each Interest Payment Date for the
Taxable 2010 Bonds, the Trustee shall deliver to the Authority by a delivery method that
provides the Trustee with evidence of delivery (i) a completed Form 8038-CP relating to the
Taxable 2010 Bonds for such Interest Payment Date, which shall be signed by the Executive
Director or Deputy Executive Director (or any other officer of the Authority authorized in
writing by the Executive Director to sign such Form 8038-CP), and (ii) a certification by an
authorized representative of the Trustee stating that, to its knowledge, the Form 8038-CP is
OHS West:260890460.9 46
accurate and complete. Unless the Trustee is instructed otherwise by an Authorized
Representative of the Authority, each Form 8038-CP shall instruct the Internal Revenue Service
to send the Subsidy Receipts directly to the County Finance Director at the address provided in
Section 11.10. Each completed Form 8038-CP and certification shall be sent to the attention of
the Executive Director at the address provided in Section 11.10. The Authority shall return such
signed Form 8038-CP to the Trustee not later than ninety (90) days (or such lesser time as is
acceptable to the Trustee) prior to each Interest Payment Date with respect to the Taxable 2010
Bonds, by a delivery method which provides the Authority with evidence of delivery. The
Authority may hire an independent consultant to review each Form 8038-CP.
(b)As soon as practicable but not more than ninety (90) and not less than
forty-five (45) days prior to each Interest Payment Date for the Taxable 2010 Bonds, the Trustee
shall file, or cause to be filed a completed Form 8038-CP relating to the Taxable 2010 Bonds for
such Interest Payment Date with the Department of the Treasury, Internal Revenue Service
Center, Ogden, Utah 84201-0020, or any successor location specified by the Internal Revenue
Service, or take such other or additional actions as may be required from time to time under the
Code as are within its power and are requested by the Authority and agreed to by the Trustee, to
request Subsidy Receipts under the American Recovery and Reinvestment Act of 2009 relating
to interest payments to be made on each Interest Payment Date with respect to the Taxable 2010
Bonds (the “Subsidy Receipts”). The Authority hereby authorizes and directs the Trustee to take
all actions necessary to prepare and file each Form 8038-CP, or take such other or additional
actions as may be required from time to time under the Code as are within its power and are
requested by the Authority and agreed to by the Trustee, to request the Subsidy Receipts. Upon
completion and filing, the Trustee shall deliver a copy of each Form 8038-CP to the Authority
and the County. Failure by the Trustee to prepare or file any Form 8038-CP shall not affect any
payment obligations of the Authority hereunder or of the County under the Subleases.
(c)The Trustee shall charge a fee based on a schedule it will establish from
time to time for performing its responsibilities under this Section 5.06, which fee will be paid by
the Authority in accordance with the Trustee’s applicable fee schedule. The Trustee may also
require reimbursement of any additional expenses incurred in connection with the filing required
by clause (b) above.
(d)Notwithstanding any other provisions hereof, neither the failure of the
Authority, the County or the Trustee to comply with the provisions of this Section 5.06 nor the
failure of the Authority, the County or the Trustee to file a completed Form 8038-CP for any
Interest Payment Date shall be considered an Event of Default hereunder.
ARTICLE VI
COVENANTS OF THE AUTHORITY
SECTION 6.01 Punctual Payment and Performance. The Authority will
punctually pay out of the Revenues the interest on and principal of and redemption premiums, if
any, to become due on every Bond issued hereunder in strict conformity with the terms hereof
and of the Bonds, and will faithfully observe and perform all the agreements and covenants to be
observed or performed by the Authority contained herein and in the Bonds.
OHS West:260890460.9 47
SECTION 6.02 Against Encumbrances. The Authority will not make any pledge
or assignment of or place any charge or lien upon the Revenues except as provided in
Section 5.01, and will not issue any bonds, notes or obligations payable from the Revenues or
secured by a pledge of or charge or lien upon the Revenues except as provided in Section 3.04.
SECTION 6.03 Tax Covenants for Tax-Exempt Bonds; Rebate Fund.
(a)In addition to the accounts created pursuant to Section 5.03, the Trustee
shall establish and maintain a fund separate from any other fund or account established and
maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate
Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All
money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the
extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment
to the United States of America. Notwithstanding the provisions of Sections 5.01, 5.02, 5.05,
9.01 and 10.01 relating to the pledge of Revenues, the allocation of money in the Revenue Fund,
the investments of money in any fund or account, the application of funds upon acceleration and
the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in
the Rebate Fund shall be governed exclusively by this Section 6.03 and by the Tax Certificate
(which is incorporated herein by reference). The Trustee shall be deemed conclusively to have
complied with such provisions if it follows the written directions of the Authority, and shall have
no liability or responsibility to enforce compliance by the Authority with the terms of the Tax
Certificate.
(b)Any funds remaining in the Rebate Fund with respect to a Series of Tax-
Exempt Bonds after redemption and payment of all such Series of Bonds and all other amounts
due hereunder or under the respective Sublease relating to such Series of Tax-Exempt Bonds, or
provision made therefor satisfactory to the Trustee, including accrued interest and payment of
any applicable fees and expenses of the Trustee and satisfaction of the Rebate Requirement (as
defined in the Tax Certificate), shall be withdrawn by the Trustee and remitted to or upon the
Written Request of the Authority.
(c)The Authority shall not use or permit the use of any proceeds of the Tax-
Exempt Bonds or any funds of the Authority, directly or indirectly, in any manner, and shall not
take or omit to take any action that would cause any of the Tax-Exempt Bonds to be treated as an
obligation not described in Section 103(a) of the Code. In the event that at any time the
Authority is of the opinion that for purposes of this Section 6.03(c) it is necessary to restrict or to
limit the yi eld on the investment of any moneys held by the Trustee under this Trust Agreement,
the Authority shall so instruct the Trustee under this Trust Agreement in writing, and the Trustee
shall take such action as may be necessary in accordance with such instructions.
(d)Notwithstanding any provisions of this Section 6.03, if the Authority shall
provide to the Trustee an Opinion of Counsel that any specified action required under this
Section 6.03 or the Tax Certificate is no longer required or that some further or different action is
required to maintain the exclusion from federal income tax of interest on the Tax-Exempt Bonds,
the Trustee and the Authority may conclusivel y rely on such opinion in complying with the
requirements of this Section, and, notwithstanding Article IX hereof, the covenants hereunder
shall be deemed to be modified to that extent.
OHS West:260890460.9 48
(e)The foregoing provisions of this Section 6.03 shall not be applicable to
any Series of Bonds or the proceeds thereof that the Authority determines upon the issuance
thereof are to be taxable bonds, the interest on which is intended to be included in the gross
income of the Owner thereof for federal income tax purposes.
SECTION 6.04 Tax Covenants for Taxable 2010 Bonds. The Taxable 2010 Bonds
shall be accorded “Build America Bonds” status under the provisions of the Recovery Act and
interest on such Taxable 2010 Bonds shall be included in gross income for federal tax purposes.
The Authority hereby covenants and agrees as follows with respect to the Taxable 2010 Bonds:
(A)The Authority shall not use or permit the use of any proceeds of the
Taxable 2010 Bonds or any funds of the Authority, directly or indirectly, to acquire any
securities or obligations that would adversely affect the receipt of the Subsidy Receipts, and shall
not take or permit to be taken any other action or actions, which would cause any such Taxable
2010 Bond to be an “arbitrage bond” within the meaning of Section 148 of the Code or
“federally guaranteed” within the meaning of Section 149(b) of the Code and any such
applicable regulations promulgated from time to time thereunder. The Authority shall observe
and comply with all requirements of Sections 148 and 149(b) of the Code and any such
applicable regulations promulgated from time to time thereunder to the extent applicable to the
Taxable 2010 Bonds.
(B)The Authority covenants to comply with the provisions and procedures of
the Taxable 2010 Bonds Tax Certificate.
(C)The Authority shall not use or permit the use of any proceeds of the
Taxable 2010 Bonds or any funds of the Authority (so long as such proceeds or other funds are
under its control), directly or indirectly, in any manner, and shall not take or omit to take any
action that would adversely affect the receipt of the Subsidy Receipts.
(D)Notwithstanding any provisions of this Section 6.04 or the Taxable 2010
Bonds Tax Certificate, if the Authority shall provide to the Trustee an Opinion of Bond Counsel
to the effect that any specified action required under this Section 6.04 is no longer required or
that some further or different action is required to maintain the receipt of the Subsidy Receipts
with respect to the Taxable 2010 Bonds, the Trustee and the Authority may conclusively rely on
such opinion in complying with the requirements of this Section, and, notwithstanding any other
provision of this Trust Agreement or the Taxable 2010 Bonds Tax Certificate, the covenants
hereunder shall be deemed to be modified to that extent.
SECTION 6.05 Accounting Records and Reports. The Trustee will keep or cause
to be kept proper books of record and accounts in which complete and correct entries shall be
made of all transactions relating to the receipts, disbursements, allocation and application of the
Revenues, and such books shall be available for inspection by the Authority at reasonable hours
and under reasonable conditions. The Trustee shall provide to the Authority monthly statements
covering the funds and accounts held pursuant to the Trust Agreement. Not more than one
hundred eighty (180) days after the close of each Fiscal Year, the Trustee shall furnish or cause
to be furnished to the Authority a complete financial statement (which may be in the form of the
Trustee’s customary account statements) covering receipts, disbursements, allocation and
OHS West:260890460.9 49
application of Revenues for such Fiscal Year. The Authority shall keep or cause to be kept such
information as is required under the Tax Certificates.
SECTION 6.06 Prosecution and Defense of Suits. The Authority will defend
against every suit, action or proceeding at any time brought against the Trustee upon any claim
to the extent arising out of the receipt, application or disbursement of any of the Revenues or to
the extent involving the failure of the Authority to fulfill its obligations hereunder; provided, that
the Trustee or any affected Bondholder at its election may appear in and defend any such suit,
action or proceeding. The Authority will indemnify and hold harmless the Trustee against any
and all liability claimed or asserted by any person to the extent arising out of such failure by the
Authority, and will indemnify and hold harmless the Trustee against any reasonable attorney’s
fees or other reasonable expenses which it may incur in connection with any litigation to which it
may become a party by reason of its actions hereunder, except for any loss, cost, damage or
expense resulting from the negligence or willful misconduct by the Trustee. Notwithstanding
any contrary provision hereof, this covenant shall remain in full force and effect even though all
Bonds secured hereby may have been fully paid and satisfied.
SECTION 6.07 Further Assurances. Whenever and so often as reasonably
requested to do so by the Trustee or any Bondholder, the Authority will promptly execute and
deliver or cause to be executed and delivered all such other and further assurances, documents or
instruments, and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to further and more fully vest in the Bondholders all
rights, interests, powers, benefits, privileges and advantages conferred or intended to be
conferred upon them hereby.
SECTION 6.08 Maintenance of Revenues. The Authority will promptly collect all
rents and charges due for the occupancy or use of the Facilities as the same become due, and will
promptly and vigorously enforce its rights against any tenant or other person who does not pay
such rents or charges as they become due. The Authority will at all times maintain and
vigorously enforce all of its rights under the Subleases.
SECTION 6.09 Amendments to Subleases. The Authority shall not supplement,
amend, modify or terminate any of the terms of the Subleases, or consent to any such
supplement, amendment, modification or termination, without the prior written consent of the
Trustee. The Trustee shall give such written consent if such supplement, amendment,
modification or termination (a) will not materially adversely affect the interests of the
Bondholders or result in any material impairment of the security hereby given for the payment of
the Bonds (provided that such supplement, amendment or modification shall not be deemed to
have such adverse effect or to cause such material impairment solely by reason of providing for
the payment of Additional Bonds as required by Section 3.03(e) or substitution of real property
pursuant to Section 2.03 of the respective Sublease), (b) is to add to the agreements, conditions,
covenants and terms required to be observed or performed thereunder by any party thereto, or to
surrender any right or power therein reserved to the Authority or the County, (c) is to cure,
correct or supplement any ambiguous or defective provision contained therein, (d) is to
accommodate any substitution in accordance with Section 2.03 of the respective Sublease, (e) is
to modify the legal description of the Facilities to conform to the requirements of title insurance
OHS West:260890460.9 50
or otherwise to add or delete property descriptions to reflect accurately the description of the
parcels intended or preferred to be included therein, or substituted for the Facilities pursuant to
the provision of Section 2.03 of the respective Sublease, or (f) if the Trustee first obtains the
written consent of the Bondholders of a majority in principal amount of the Bonds then
Outstanding to such supplement, amendment, modification or termination; provided, that no such
supplement, amendment, modification or termination shall reduce the amount of Base Rental
Payments to be made to the Authority or the Trustee by the County pursuant to the respective
Sublease to an amount less than the scheduled principal and interest payment on the Outstanding
Bonds, or extend the time for making such payments, or permit the creation of any lien prior to
or on a parity with the lien created by this Trust Agreement on the Base Rental Payments (except
as expressly provided in the respective Sublease), in each case without the written consent of all
of the Bondholders of the Bonds then Outstanding.
SECTION 6.10 Leasehold Estate. The Authority will be, on the date of the
delivery of the Bonds, the owner and lawfully possessed of the leasehold estate described in the
Site Leases, and the Subleases will be, on the date of delivery of the Bonds, valid subsisting
demises for the term therein set forth of the property which it purports to demise. At the time of
the delivery of the Bonds the County will be the owner in fee simple of the premises described in
the Site Leases, and the Site Leases will be lawfully made by the County, and the covenants
contained in the Site Leases on the part of the County will be valid and binding. At the time of
the delivery of the Bonds, the Authority will have good right, full power and lawful authority to
lease said leasehold estate, in the manner and form provided in the Subleases, and the Subleases
will be duly and regularly executed.
Without allowance for any days of grace which may or might exist or be allowed
by law or granted pursuant to any terms or conditions of the Subleases, the Authority will in all
respects promptly and faithfully keep, perform and comply with all the terms, provisions,
covenants, conditions and agreements of the Subleases to be kept, performed and complied with
by it. The Authority will not do or permit anyt hing to be done, or omit or refrain from doing
anything, in any case where any such act done or permitted to be done, or any such omission of
or refraining from action, would or might be a ground for declaring a forfeiture of each
respective Sublease, or would or might be a ground for cancellation or termination of such
Sublease by the lessee thereunder. The Authority will promptly deposit with the Trustee (to be
held by the Trustee until the title and rights of the Trustee under this Trust Agreement shall be
released or reconvened) any and all documentary evidence received by it showing compliance
with the provisions of the Subleases to be performed by the Authority. The Authority,
immediately upon its receiving or giving any notice, communication or other document in any
way relating to or affecting the Subleases, or the leasehold estate thereby created, which may or
can in any manner affect the estate of the lessor or of the Authority in or under the Subleases,
will deliver the same, or a copy thereof, to the Trustee.
OHS West:260890460.9 51
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
SECTION 7.01 Events of Default and Acceleration of Maturities. If one or more
of the following events (herein called “events of default”) shall happen, that is to say:
(a)if default shall be made by the Authority in the due and punctual payment
of the interest on any Bond when and as the same shall become due and payable;
(b)if default shall be made by the Authority in the due and punctual payment
of the principal of or redemption premium, if any, on any Bond when and as the same shall
become due and payable, whether at maturity as therein expressed or by proceedings for
mandatory redemption;
(c)if default shall be made by the Authority in the performance of any of the
other agreements or covenants required herein to be performed by the Authority, and such
default shall have continued for a period of sixty (60) days or such additional time (with respect
to agreements or covenants that cannot be corrected or performed within such sixty (60) day
period but the correction of which is being diligently pursued by the Authority) as is reasonably
required to correct any such default after the Authority shall have been given notice in writing of
such default by the Trustee;
(d)if the Authority shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States
of America or any state therein, or if a court of competent jurisdiction shall approve a petition
filed with or without the consent of the Authority seeking arrangement or reorganization under
the federal bankruptcy laws or any other applicable law of the United States of America or any
state therein, or if under the provisions of any other law for the relief or aid of debtors any court
of competent jurisdiction shall assume custody or control of the Authority or of the whole or any
substantial part of its property; or
(e)if an Event of Default has occurred under Section 6.01 of the respective
Sublease;
then and in each and every such case during the continuance of such event of default the Trustee,
upon the written request of the Bondholders of not less than a majority in aggregate principal
amount of the Bonds of the Series in default then Outstanding shall, by notice in writing to the
Authority, declare the principal of all Bonds of such Series then Outstanding and the interest
accrued thereon to be due and payable immediately, and upon any such declaration the same
shall become due and payable, anything contained herein or in the Bonds to the contrary
notwithstanding. The Trustee shall promptly notify all Bondholders by first class mail of an y
such event of default which is continuing of which a Responsible Officer has actual knowledge
or written notice.
This provision, however, is subject to the condition that if at any time after the
principal of a Series of Bonds then Outstanding shall have been so declared due and payable and
OHS West:260890460.9 52
before any judgment or decree for the payment of the money due shall have been obtained or
entered the Authority shall deposit with the Trustee a sum sufficient to pay all matured interest
on all such Bonds and all principal of such Bonds matured prior to such declaration, with interest
at the rate borne by such Bonds on such overdue interest and principal, and the reasonable fees
and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in
the payment of interest on and principal of such Bonds due and payable solely by reason of such
declaration) shall have been made good or cured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate shall have been made therefor, then and in every such case
the Trustee or the Bondholders of such Series of Bonds of not less than a majority in aggregate
principal amount of such Bonds then Outstanding, by written notice to the Authority and to the
Trustee, may on behalf of the Bondholders of all of such Bonds then Outstanding rescind and
annul such declaration and its consequences; but no such rescission and annulment shall extend
to or shall affect any subsequent default or shall impair or exhaust any right or power consequent
thereon.
SECTION 7.02 Application of Funds Upon Acceleration. All moneys in the
accounts and funds provided in Sections 3.01, 3.02, 5.02, 5.03 and 5.04 relating to the Series of
Bonds then in default upon the date of the declaration of acceleration by the Trustee as provided
in Section 7.01 and all Revenues (other than Revenues on deposit in the Rebate Fund) derived
from the Sublease related to such Series of Bonds thereafter received by the Authority hereunder
shall be transmitted to the Trustee and shall be applied by the Trustee in the following order –
First, to the payment of the reasonable fees, costs and expenses of the Trustee in
providing for the declaration of such event of default and carrying out its duties under this
Agreement, including reasonable compensation to their accountants and counsel together with
interest on any amounts advanced as provided herein and thereafter to the payment of the
reasonable costs and expenses of the Bondholders, if any, in carrying out the provisions of this
Article, including reasonable compensation to their accountants and counsel; and
Second, upon presentation of the several Bonds, and the stamping thereon of the
amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the
payment of the whole amount then owing and unpaid upon the Bonds for interest and principal,
with (to the extent permitted by law) interest on the overdue interest and principal at the rate
borne by such Bonds, and in case such money shall be insufficient to pay in full the whole
amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and
(to the extent permitted by law) interest on overdue interest and principal without preference or
priority among such interest, principal and interest on overdue interest and principal ratably to
the aggregate of such interest, principal and interest on overdue interest and principal.
SECTION 7.03 Institution of Legal Proceedings by Trustee. If one or more of the
events of default shall happen and be continuing, the Trustee may, and upon the written request
of the Bondholders of a majority in principal amount of the Bonds then Outstanding, and in each
case upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or
enforce its rights or the rights of the Bondholders of Bonds under this Trust Agreement and
under Article VI of the respective Sublease by a suit in equity or action at law, either for the
specific performance of any covenant or agreement contained herein, or in aid of the execution
OHS West:260890460.9 53
of any power herein granted, or by mandamus or other appropriate proceeding for the
enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in
support of any of its rights and duties hereunder.
SECTION 7.04 Non-Waiver. Nothing in this Article or in any other provision
hereof or in the Bonds shall affect or impair the obligation of the Authority, which is absolute
and unconditional, to pay the interest on and principal of and redemption premiums, if any, on
the Bonds to the respective Bondholders of the Bonds at the respective dates of maturity or upon
prior redemption as provided herein from the Revenues as provided herein pledged for such
payment, or shall affect or impair the right of such Bondholders, which is also absolute and
unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein
and in the Bonds.
A waiver of any default or breach of duty or contract by the Trustee or any
Bondholder shall not affect any subsequent default or breach of duty or contract or impair any
rights or remedies on any such subsequent default or breach of duty or contract. No delay or
omission by the Trustee or any Bondholder to exercise any right or remedy accruing upon any
default or breach of duty or contract shall impair any such right or remedy or shall be construed
to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and
every right or remedy conferred upon the Bondholders by the Act or by this Article may be
enforced and exercised from time to time and as often as shall be deemed expedient by the
Trustee or the Bondholders.
If any action, proceeding or suit to enforce any right or exercise any remedy is
abandoned, the Authority, the Trustee and any Bondholder shall be restored to their former
positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
SECTION 7.05 Actions by Trustee as Attorney-in-Fact. Any action, proceeding or
suit which any Bondholder shall have the right to bring to enforce any right or remedy hereunder
may be brought by the Trustee for the equal benefit and protection of all Bondholders, whether
or not the Trustee is a Bondholder, and the Trustee is hereby appointed (and the successive
Bondholders, by taking and holding the Bonds issued hereunder, shall be conclusively deemed to
have so appointed it) the true and lawful attorney-in-fact of the Bondholders for the purpose of
bringing any such action, proceeding or suit and for the purpose of doing and performing an y
and all acts and things for and on behalf of the Bondholders as a class or classes as may be
advisable or necessary in the opinion of the Trustee as such attorney-in-fact.
SECTION 7.06 Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Bondholders is intended to be exclusive of any other remedy, and each such
remedy shall be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise and may be exercised
without exhausting and without regard to any other remedy conferred by the Act or any other
law.
SECTION 7.07 Limitation on Bondholders’ Right to Sue. No Bondholder of any
Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or
equity, for any remedy under or upon this Trust Agreement, unless (a) such Bondholder shall
OHS West:260890460.9 54
have previously given to the Trustee written notice of the occurrence of an event of default as
defined in Section 7.01; (b) the Bondholders of at least a majority in aggregate principal amount
of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise
the powers hereinbefore granted or to institute such suit, action or proceeding in its own name;
(c) said Bondholders shall have tendered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the
Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days
after such request shall have been received by, and said tender of indemnity shall have been
made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Bondholder of Bonds
of any remedy hereunder; it being understood and intended that no one or more Bondholders of
Bonds shall have any right in any manner whatever by his or their action to enforce any right
under this Trust Agreement, except in the manner herein provided, and that all proceedings at
law or in equity to enforce any provision of this Trust Agreement shall be instituted, had and
maintained in the manner herein provided and for the equal benefit of all Bondholders of the
Outstanding Bonds.
ARTICLE VIII
THE TRUSTEE
SECTION 8.01 The Trustee. Wells Fargo Bank, National Association shall serve
as the initial Trustee for the Bonds for the purpose of receiving all money which the Authority is
required to deposit with the Trustee hereunder and for the purpose of allocating, applyi ng and
using such money as provided herein and for the purpose of paying the interest on and principal
of and redemption premiums, if any, on the Bonds presented for payment, with the rights and
obligations provided herein. The Authority agrees that it will at all times maintain a Trustee
having a principal office in California.
The Authority, unless there exists any Event of Default as defined in Section 7.01,
may at any time remove the Trustee initially appointed and any successor thereto and may
appoint a successor or successors thereto by an instrument in writing; provided, that any such
successor shall be a bank, banking institution, or trust company, having (or whose parent holding
company has) a combined capital (exclusive of borrowed capital) and surplus of at least fifty
million dollars ($50,000,000) and subject to supervision or examination by federal or state
authority. If such bank, banking institution, or trust company publishes a report of condition at
least annually, pursuant to law or to the requirements of any supervising or examining authority
above referred to, then for the purpose of this Section the combined capital and surplus of such
bank, banking institution, or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The Trustee may at any
time resign by giving written notice of such resignation to the Authority, and by mailing by first
class mail to the Bondholders notice of such resignation. Upon receiving such notice of
resignation, the Authority shall promptly appoint a successor Trustee by an instrument in
writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall
OHS West:260890460.9 55
become effective only upon the acceptance of appointment by the successor Trustee. The
successor Trustee shall send notice of its acceptance by first class mail to the Bondholders. If,
within thirty (30) days after notice of the removal or resignation of the Trustee no successor
Trustee shall have been appointed and shall have accepted such appointment, the removed or
resigning Trustee may petition any court of competent jurisdiction for the appointment of a
successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper
and prescribe and as may be required by law, appoint a successor Trustee having the
qualifications required hereby.
The Trustee is hereby authorized to pay or redeem the Bonds when duly presented
for payment at maturity or on redemption prior to maturity. The Trustee shall cancel all Bonds
upon payment thereof or upon the surrender thereof by the Authority and shall destroy such
Bonds and a certificate of destruction shall be delivered to the Authority upon its request. The
Trustee shall keep accurate records of all Bonds paid and discharged and cancelled by it.
The Trustee shall, prior to an event of default, and after the curing of all events of
default that may have occurred, perform such duties and only such duties as are specifically set
forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust
Agreement. The Trustee shall, during the existence of any event of default (that has not been
cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the
same degree of care and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
SECTION 8.02 Liability of Trustee. The recitals of facts, agreements and
covenants herein and in the Bonds shall be taken as recitals of facts, agreements and covenants
of the Authority, and the Trustee assumes no responsibility for the correctness of the same or
makes any representation as to the sufficiency or validity hereof or of the Bonds, or shall incur
any responsibility in respect thereof other than in connection with the rights or obligations
assigned to or imposed upon it herein, in the Bonds or in law or equity. The Trustee shall not be
liable in connection with the performance of its duties hereunder except for its own negligence or
willful misconduct.
The Trustee shall not be bound to recognize any person as the Bondholder of a
Bond unless and until such Bond is submitted for inspection, if required, and such Bondholder’s
title thereto satisfactorily established, if disputed.
The Trustee shall not be liable for any error of judgment made in good faith,
unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Bondholders of not less than a
majority (or any lesser amount that may direct the Trustee in accordance with this Agreement) in
aggregate principal amount of the Bonds at the time Outstanding, relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Trust Agreement.
OHS West:260890460.9 56
The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Trust Agreement at the request, order or direction of any of the Bondholders
pursuant to the provisions of this Trust Agreement unless such Bondholders shall have offered to
the Trustee reasonable security or indemnity against the reasonable costs, expenses and liabilities
that may be incurred therein or thereby. The Trustee has no obligation or liability to the
Bondholders for the payment of the interest on, principal of or redemption premium, if any, with
respect to the Bonds from its own funds; but rather the Trustee’s obligations shall be limited to
the performance of its duties hereunder.
The Trustee shall not be deemed to have knowledge of any event of default
(except payment defaults) unless and until a Responsible Officer shall have actual knowledge
thereof or a Responsible Officer of the Trustee shall have received written notice thereof at its
Principal Office. The Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or of any of the
documents executed in connection with the Bonds, or as to the existence of a default or event of
default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any
collateral given to or held by it.
The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, but shall
be answerable for the negligence or misconduct of any such attorney-in-fact, agent or receiver.
The Trustee shall be entitled to advice of counsel and other professionals concerning all matters
of trust and its duty hereunder, but the Trustee shall not be answerable for the professional
malpractice of any attorney-in-law or certified public accountant in connection with the
rendering of his professional advice in accordance with the terms of this Trust Agreement, if
such attorney-in-law or certified public accountant was selected by the Trustee with due care.
The Trustee shall not be concerned with or accountable to anyone for the
subsequent use or application of any moneys which shall be released or withdrawn in accordance
with the provisions hereof.
Whether or not therein expressly so provided, every provision of this Trust
Agreement, the Subleases or related documents relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of this Article.
The Trustee makes no representation or warranty, express or implied, as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
contemplated by the Authority or County of the Facilities or the Projects. In no event shall the
Trustee be liable for incidental, indirect, special or consequential damages in connection with or
arising from the Subleases or this Trust Agreement for the existence, furnishing or use of the
Facilities or the Projects.
The Trustee shall be protected in acting upon any notice, resolution, requisition,
request (including any Written Request of the Authority or the County), consent, order,
certificate, report, opinion, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties. Before the Trustee acts or refrains
OHS West:260890460.9 57
from acting, the Trustee may consult with counsel, who may be counsel of or to the Authority,
with regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith.
Whenever in the administration of its rights and obligations hereunder the Trustee
shall deem it necessary or desirable that a matter be established or proved prior to taking or
suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by a Certificate of the Authority, which certificate shall
be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon
the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of
such matter or may require such additional evidence as it may deem reasonable.
No provision of this Trust Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance or exercise of any of
its duties hereunder, or in the exercise of its rights or powers.
The Trustee is not responsible for the content of any official statement or any
other offering or disclosure material prepared in connection with the Bonds.
SECTION 8.03 Compensation and Indemnification of Trustee. The Authority
covenants to pay (but solely from Additional Payments) to the Trustee from time to time, and the
Trustee shall be entitled to, compensation for all services rendered by it in the exercise and
performance of any of the powers and duties hereunder of the Trustee, and the Authority will pay
or reimburse the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee, in accordance with any of the provisions of this Trust
Agreement (including the reasonable compensation and the reasonable expenses and
disbursements of their counsel (including the allocated reasonable fees and disbursements of in-
house counsel) and of all persons not regularly in their employ) except any such expense,
disbursement or advance as may arise from their negligence or willful misconduct. The
Authority, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee
against any loss, damage, liability or expense incurred without negligence or willful misconduct
on the part of the Trustee arising out of or in connection with the acceptance or administration of
the trusts created hereby, including reasonable costs and expenses (including reasonable
attorneys’ fees and disbursements) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers hereunder. The
rights of the Trustee and the obligations of the Authority under this Section 8.03 shall survive the
discharge of the Bonds and this Trust Agreement and the resignation or removal of the Trustee.
SECTION 8.04 Compliance with Continuing Disclosure Agreement. Pursuant to
Section 8.08 of each respective Sublease, the County has undertaken all responsibility for
compliance with continuing disclosure requirements, and the Authority shall have no liability to
the Owners of the Bonds or any other person with respect to S.E.C. Rule 15c2-12. The County
has agreed that so long as it shall act as the Dissemination Agent under the Continuing
Disclosure Agreement, it will perform all of the provisions thereof to be performed by the
Dissemination Agent. Notwithstanding any other provision of this Trust Agreement, failure of
OHS West:260890460.9 58
the County to comply with the Continuing Disclosure Agreement shall not be considered an
Event of Default; however, any Bondholder or Beneficial Owner may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the County to comply with its obligations under Section 8.08 of each respective
Sublease or under this Section 8.04. For purposes of this Section, “Beneficial Owner” means
any person which has or shares the power, directly or indirectly, to make investment decisions
concerning ownership of any Bonds (including persons holding Bonds through nominees,
depositories or other intermediaries).”
SECTION 8.05 Covenants of the Trustee. The Trustee covenants and agrees that
the Trustee shall not (to the extent it has discretionary power regarding the use of proceeds) use
or permit the use of any proceeds of the Taxable 2010 Bonds or any funds of the Authority (so
long as such proceeds or other funds are under the control of the Trustee), directly or indirectly,
in any manner, and shall not take or omit to take any action that would adversely affect the
receipt of the Subsidy Receipts. The Trustee hereby further covenants and agrees to file such
forms with the Internal Revenue Service and take all other such actions as may be necessary to
request the Subsidy Receipts on the Authority’s behalf in accordance with Section 5.06 of this
Trust Agreement.
ARTICLE IX
AMENDMENT OF THE TRUST AGREEMENT
SECTION 9.01 Amendment of the Trust Agreement.
(a)This Trust Agreement and the rights and obligations of the Authority and
of the Bondholders may be amended at any time by a Supplemental Trust Agreement which shall
become binding when the written consent of the Bondholders of a majority in aggregate principal
amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in
Section 9.02, are filed with the Trustee; provided that if such modification or amendment will, by
its terms, not take effect so long as any Bonds of any particular maturity or Series remain
Outstanding, the consent of the Owners of such Bonds shall not be required and such Bonds shall
not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under
this Section. No such amendment shall (1) extend the maturity of or reduce the interest rate on
or amount of interest on or principal of or redemption premium, if any, on any Bond without the
express written consent of the Bondholder of such Bond, or (2) permit the creation by the
Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or
on a parity with the pledge, charge and lien created hereby for the benefit of the Bonds, or (3)
reduce the percentage of Bonds required for the written consent to any such amendment, or (4)
modify any rights or obligations of the Trustee, the Authority, or the County without their prior
written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders
to approve the particular form of any Supplemental Trust Agreement, but it shall be sufficient if
such consent shall approve the substance thereof. Promptly after the execution by the Authority
and the Trustee of any Supplemental Trust Agreement pursuant to this subsection (a), the Trustee
shall mail a notice on behalf of the Authority, setting forth in general terms the substance of such
Supplemental Trust Agreement to the Bondholders at the addresses shown on the registration
OHS West:260890460.9 59
books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such Supplemental Trust
Agreement.
(b)The Trust Agreement and the rights and obligations of the Authority and
of the Bondholders may also be amended at any time by a Supplemental Trust Agreement which
shall become binding upon adoption but without the consent of any Bondholders, for any
purpose that will not materially adversely affect the interests of the Bondholders, including
(without limitation) for any one or more of the following purposes –
(i)to add to the agreements and covenants required herein to be performed by
the Authority other agreements and covenants thereafter to be performed by the
Authority, or to surrender any right or power reserved herein to or conferred herein on the
Authority;
(ii)to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in regard
to questions arising hereunder which the Authority may deem desirable or necessary;
(iii)to provide for the issuance of any Additional Bonds and to provide the
terms of such Additional Bonds, subject to the conditions and upon compliance with the
procedure set forth in Article III (which shall be deemed not to adversely affect
Bondholders);
(iv)to add to the agreements and covenants required herein, such agreements
and covenants as may be necessary to qualify the Trust Agreement under the Trust
Indenture Act of 1939; or
(v)to add any provisions required by the provider of a surety bond, insurance
policy or letter of credit under Section 5.03(d).
SECTION 9.02 Disqualified Bonds. Bonds owned or held by or for the account of
the Authority shall not be deemed Outstanding for the purpose of any consent or other action or
any calculation of Outstanding Bonds provided in this Article, and shall not be entitled to
consent to or take any other action provided in this Article.
SECTION 9.03 Endorsement or Replacement of Bonds After Amendment. After
the effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds may bear a notation by endorsement in form approved by the Authority as to such
action, and in that case upon demand of the Bondholder of any Outstanding Bonds and
presentation of his Bond for such purpose at the office of the Trustee a suitable notation as to
such action shall be made on such Bond. If the Authority shall so determine, new Bonds so
modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be
prepared and executed, and in that case upon demand of the Bondholder of any Outstanding
Bond a new Bond or Bonds shall be exchanged at the office of the Trustee without cost to each
Bondholder for its Bond or Bonds then Outstanding upon surrender of such Outstanding Bonds.
OHS West:260890460.9 60
SECTION 9.04 Amendment by Mutual Consent. The provisions of this Article
shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held
by him, provided that due notation thereof is made on such Bonds.
ARTICLE X
DEFEASANCE
SECTION 10.01 Discharge of Bonds.
(a)If the Authority shall pay or cause to be paid or there shall otherwise be
paid to the Bondholders of all or any portion of the Outstanding Bonds the interest thereon and
principal thereof and redemption premiums, if any, thereon at the times and in the manner
stipulated herein and therein, and the Authority shall pay in full all other amounts due hereunder
and under the Subleases, then the Bondholders of such Bonds shall cease to be entitled to the
pledge of and charge and lien upon the Revenues as provided herein, and all agreements,
covenants and other obligations of the Authority to the Bondholders of such Bonds hereunder
shall thereupon cease, terminate and become void and be discharged and satisfied. In such event,
the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or
desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the
Authority all money or securities held by it pursuant hereto which are not required for the
payment of the interest on and principal of and redemption premiums, if any, on such Bonds and
for the payment of all other amounts due hereunder and under the Subleases.
(b)Any Outstanding Bonds shall prior to the maturity date or redemption date
thereof be deemed to have been paid within the meaning of and with the effect expressed in
subsection (a) of this Section if (1) in case any of such Bonds are to be redeemed on any date
prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it
irrevocable instructions to provide notice in accordance with Section 4.05, (2) there shall have
been deposited with the Trustee (A) cash in an amount which shall be sufficient and/or
(B)noncallable Government Securities, the interest on and principal of which when paid will
provide cash which, together with the cash, if any, deposited with the Trustee at the same time,
shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when
due the interest to become due on such Bonds on and prior to the maturity date or redemption
date thereof, as the case may be, and the principal of and redemption premiums, if any, on such
Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the
next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory
to it irrevocable instructions to mail as soon as practicable, a notice to the Bondholders of such
Bonds that the deposit required by clause (2) above has been made with the Trustee and that such
Bonds are deemed to have been paid in accordance with this Section and stating the maturity
date or redemption date upon which money is to be available for the payment of the principal of
and redemption premiums, if any, on such Bonds.
(c)In the event of an advance refunding (i) the Authority shall cause to be
delivered, on the deposit date and upon any reinvestment of the defeasance amount, a report of
an independent firm of nationally recognized certified public accountants (“Accountants”)
verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity date
OHS West:260890460.9 61
or redemption date (“Verification”), (ii) the escrow agreement shall provide that no
(A)substitution of a Government Security shall be permitted except with another Government
Security and upon delivery of a new Verification and (B)reinvestment of a Government Security
shall be permitted except as contemplated by the original Verification or upon delivery of a new
Verification, and (iii) there shall be delivered an Opinion of Bond Counsel to the effect that the
Bonds are no longer “Outstanding” under the Trust Agreement; each Verification and opinion
shall be addressed to the Authority and the Trustee.
SECTION 10.02 Unclaimed Money. Anything contained herein to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of
the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such
Bonds or interest thereon have become due and payable, either at their stated maturity dates or
by call for redemption prior to maturity, if such money was held by the Trustee at such date, or
for two (2) years after the date of deposit of such money if deposited with the Trustee after the
date when such Bonds have become due and payable, shall be repaid by the Trustee to the
Authority as its absolute property free from trust, and the Trustee shall thereupon be released and
discharged with respect thereto and the Bondholders shall not look to the Trustee for the
payment of such Bonds.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Liability of Authority Limited to Revenues. Notwithstanding
anything contained herein, the Authority shall not be required to advance any money derived
from any source other than the Revenues as provided herein for the payment of the interest on or
principal of or redemption premiums, if any, on the Bonds or for the performance of any
agreements or covenants herein contained. The Authority may, however, advance funds for any
such purpose so long as such funds are derived from a source legally available for such purpose.
The Bonds are limited obligations of the Authority and are payable, as to interest
thereon, principal thereof and any premiums upon the redemption of any thereof, solely from the
Revenues as provided herein, and the Authority is not obligated to pay them except from the
Revenues. All the Bonds are equally secured by a pledge of and charge and lien upon the
Revenues, and the Revenues constitute a trust fund for the security and payment of the interest
on and principal of and redemption premiums, if any, on the Bonds as provided herein. The
Bonds are not a debt of the County, the State or any of its political subdivisions, and neither the
County, the State nor any of its political subdivisions is liable thereon, nor in any event shall the
Bonds be payable out of any funds or properties other than those of the Authority as provided
herein. The Bonds do not constitute an indebtedness within the meaning of any constitutional or
statutory limitation or restriction.
SECTION 11.02 Benefits of this Trust Agreement Limited to Parties and Third
Party Beneficiaries. Nothing contained herein, expressed or implied, is intended to give to any
person other than the Authority, the Trustee, and the Bondholders any right, remedy or claim
under or by reason hereof. Any agreement or covenant required herein to be performed by or on
OHS West:260890460.9 62
behalf of the Authority or any member, officer or employee thereof shall be for the sole and
exclusive benefit of the Authority, the Trustee and the Bondholders.
SECTION 11.03 Successor Is Deemed Included In All References To Predecessor.
Whenever herein either the Authority or any member, officer or employee thereof or of the State
is named or referred to, such reference shall be deemed to include the successor to the powers,
duties and functions with respect to the Projects that are presently vested in the Authority or such
member, officer or employee, and all agreements and covenants required hereby to be performed
by or on behalf of the Authority or any member, officer or employee thereof shall bind and inure
to the benefit of the respective successors thereof whether so expressed or not.
SECTION 11.04 Execution of Documents by Bondholders. Any declaration,
request or other instrument which is permitted or required herein to be executed by Bondholders
may be in one or more instruments of similar tenor and may be executed by Bondholders in
person or by their attorneys appointed in writing. The fact and date of the execution by any
Bondholder or his attorney of any declaration, request or other instrument or of any writing
appointing such attorney may be proved by the certificate of any notary public or other officer
authorized to make acknowledgments of deeds to be recorded in the state or territory in which he
purports to act that the person signing such declaration, request or other instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness of such execution
duly sworn to before such notary public or other officer. The ownership of any Bonds and the
amount, maturity, number and date of holding the same may be proved by the registration books
relating to the Bonds at the Principal Office of the Trustee.
Any declaration, request, consent or other instrument or writing of the
Bondholder of any Bond shall bind all future Bondholders of such Bond with respect to anything
done or suffered to be done by the Trustee or the Authority in good faith and in accordance
therewith.
SECTION 11.05 Waiver of Personal Liability. No member, officer or employee of
the Authority or the County shall be individually or personally liable for the payment of the
interest on or principal of or redemption premiums, if any, on the Bonds by reason of their
issuance, but nothing herein contained shall relieve any such member, officer or employee from
the performance of any official duty provided by the Act or any other applicable provisions of
law or hereby.
SECTION 11.06 Destruction of Cancelled Bonds. Whenever provision is made for
the return to the Authority of any Bonds which have been cancelled pursuant to the provisions
hereof, the Authority may, by a Written Request of the Authority, direct the Trustee to destroy
such Bonds and furnish to the Authority a certificate of such destruction.
SECTION 11.07 Content of Certificates. Every Certificate of the Authority with
respect to compliance with any agreement, condition, covenant or provision provided herein
shall include (a) a statement that the person or persons making or giving such certificate have
read such agreement, condition, covenant or provision and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which
the statements contained in such certificate are based; (c) a statement that, in the opinion of the
OHS West:260890460.9 63
signers, they have made or caused to be made such examination or investigation as is necessary
to enable them to express an informed opinion as to whether or not such agreement, condition,
covenant or provision has been complied with; and (d) a statement as to whether, in the opinion
of the signers, such agreement, condition, covenant or provision has been complied with.
Any Certificate of the Authority may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel unless the person making or giving such certificate knows
that the Opinion of Counsel with respect to the matters upon which his certificate may be based,
as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same
was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters
information with respect to which is in the possession of the Authority, upon a representation by
an officer or officers of the Authority unless the counsel executing such Opinion of Counsel
knows that the representation with respect to the matters upon which his opinion may be based,
as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same
was erroneous.
SECTION 11.08 Accounts and Funds. Any account or fund required herein to be
established and maintained by the Trustee may be established and maintained in the accounting
records of the Trustee either as an account or a fund, and may, for the purposes of such
accounting records, any audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund; but all such records with respect to all such accounts and
funds shall at all times be maintained in accordance with corporate trust industry standards and
with due regard for the protection of the security of the Bonds and the rights of the Bondholders.
SECTION 11.09 Business Day. When any action is provided for herein to be done
on a day named or within a specified time period, and the day or the last day of the period falls
on a day which is not a Business Day, such action may be performed on the next ensuing
Business Day with the same effect as though performed on the appointed day or within the
specified period.
SECTION 11.10 Notices; Notices to Rating Agencies. All written notices to be
given hereunder shall be given by mail to the party entitled thereto at the addresses set forth
below, or at such other addresses as such parties may provide to the other party in writing from
time to time, namely:
If to the Authority:County of Contra Costa Public Financing Authority
c/o County Administrator
County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
If to the Trustee:Wells Fargo Bank, National Association
MAC #A0119-181
333 Market Street, 18th Floor
San Francisco, California 94105
Attn: Corporate Trust Services
OHS West:260890460.9 64
If to the County:County of Contra Costa
c/o Clerk of the Board of Supervisors
County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
cc:County Finance Director
County of Contra Costa
651 Pine Street, 10th Floor
Martinez, California 94553
The Trustee shall give written notice to Moody’s and S&P of the redemption or
defeasance of any Bonds, the amendment of each respective Sublease or Trust Agreement, any
change in the Trustee, and the deposit of a surety bond, insurance policy, or letter of credit in the
Reserve Fund in accordance herewith.
SECTION 11.11 Article and Section Headings and References. The headings or
titles of the several articles and sections hereof and the table of contents appended hereto shall be
solely for convenience of reference and shall not affect the meaning, construction or effect
hereof. All references herein to “Articles,”“Sections” and other subdivisions or clauses are to
the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,”
“herein,”“hereof,”“hereto,”“herewith,”“hereunder” and other words of similar import refer to
this Trust Agreement as a whole and not to any particular article, section, subdivision or clause
hereof.
SECTION 11.12 Partial Invalidity. If any one or more of the agreements or
covenants or portions thereof required hereby to be performed by or on the part of the Authority
or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or
covenants or such portions thereof shall be null and void and shall be deemed separable from the
remaining agreements and covenants or portions thereof and shall in no way affect the validity
hereof or of the Bonds, and the Bondholders shall retain all the benefit, protection and security
afforded to them under the Act or any other applicable provisions of law. The Authority and the
Trustee hereby declare that they would have executed and delivered this Trust Agreement and
each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof
and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that
any one or more articles, 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.
SECTION 11.13 Governing Law. This Trust Agreement shall be governed
exclusively by the provisions hereof and by the laws of the State as the same from time to time
exist.
SECTION 11.14 Execution in Several Counterparts. This Trust Agreement may be
executed in any number of counterparts and each of such counterparts shall for all purposes be
OHS West:260890460.9 65
deemed to be an original; and all such counterparts, or as many of them as the Authority and the
Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
OHS West:260890460.9
IN WITNESS WHEREOF, the COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY has caused this Trust Agreement to be signed in its name by its
Chair, and WELLS FARGO BANK, NATIONAL ASSOCIATION, in token of its acceptance of
the trusts created hereunder, has caused this Trust Agreement to be signed by one of the officers
thereunder duly authorized, all as of the day and year first above written.
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
John M. Gioia, Chair
ATTEST:
By:
David J. Twa
Executive Director and Secretary
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
ACKNOWLEDGED:
COUNTY OF CONTRA COSTA
By:
John M. Gioia
Chair of the Board of Supervisors
OHS West:260890460.9 A-1
EXHIBIT A
FORM OF 2010 BOND
No. _____$__________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
[2010 SERIES A-1 (CAPITAL PROJECT I – TAX-EXEMPT BONDS)]/
[2010 Series A-2 (CAPITAL PROJECT I - TAXABLE BUILD AMERICA BONDS)]/
[2010 Series A-3 (CAPITAL PROJECT I - TAXABLE RECOVERY ZONE BONDS)]/
[2010 SERIES B (CAPITAL PROJECT II)]/
[2010 SERIES C (REFUNDING)]
NEITHER THE FULL FAITH AND CREDIT OF THE
AUTHORITY NOR THE COUNTY OF CONTRA COSTA IS
PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR
PRINCIPAL OF THE BONDS AND NO TAX OR OTHER
SOURCE OF FUNDS OTHER THAN THE REVENUES
HEREINAFTER REFERRED TO IS PLEDGED TO PAY THE
INTEREST ON OR PRINCIPAL OF THE BONDS. NEITHER
THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON
THE BONDS CONSTITUTES A DEBT, LIABILITY OR
OBLIGATION OF THE COUNTY OF CONTRA COSTA OR
THE CONTRA COSTA COUNTY REDEVELOPMENT
AGENCY, THE PARTIES TO THE AGREEMENT CREATING
THE AUTHORITY.
Interest
Rate
Maturity
Date
Dated
Date CUSIP
____ %June 1, ______________. 2010 ___________
REGISTERED OWNER:CEDE & CO.
PRINCIPAL SUM:_______________________________________ DOLLARS
The COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a
joint exercise of powers authority, duly organized and validly existing under and pursuant to the
laws of the State of California (the “Authority”), for value received, hereby promises to pay (but
only out of the Revenues hereinafter referred to) to the registered owner identified above or
registered assigns, on the maturity date specified above (subject to any right of prior redemption
OHS West:260890460.9 A-2
hereinafter provided for) the principal sum specified above, together with interest on such
principal sum from the interest payment date next preceding the date of authentication of this
Bond (unless this Bond is authenticated as of an interest payment date or during the period from
the fifteenth calendar day of the month preceding an interest paym ent date to such interest
payment date, in which event it shall bear interest from such interest payment date, or unless this
Bond is authenticated prior to [____________, 20__], in which event it shall bear interest from
the Dated Date specified above) until the principal hereof shall have been paid at the interest rate
per annum specified above, payable on June 1, 2011, and semiannually thereafter on each
December 1 and June 1. Interest due on or before the maturity or prior redemption of this Bond
shall be payable only by check mailed by first-class mail to the registered owner hereof;
provided that upon the written request of a Bondholder of $1,000,000 or more in aggregate
principal amount of Bonds of the Series of which this Bond is a part received by the Trustee
(defined hereinafter) prior to the applicable record date, interest shall be paid by wire transfer in
immediately available funds. The principal hereof is payable in lawful money of the United
States of America upon presentation of this Bond at the principal office of the Trustee.
This Bond is one of a duly authorized issue of bonds of the Authority designated
as its “County of Contra Costa Public Financing Authority Lease Revenue Bonds” (the “Bonds”)
unlimited as to principal amount and is one of a duly authorized series of such Bonds known as
[“2010 Series A-1 (Capital Project I - Tax-Exempt Bonds),”]/[“2010 Series A-2 (Capital Project
I - Taxable Build America Bonds)”]/[“2010 Series A-3 (Capital Project I - Taxable Recovery
Zone Bonds)”]/[“2010 Series B (Capital Project II)”]/[“2010 Series C (Refunding)”](the
“Bonds”) issued in a principal amount of $________________, all of like tenor and date (except
for such variations, if any, as may be required to designate varying numbers, maturities and
interest rates, and is issued under and pursuant to the provisions of the Joint Exercise of Powers
Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended)
and all laws amendatory thereof or supplemental thereto (the “Act”) and under and pursuant to
the provisions of a trust agreement, dated as of November 1, 2010 (as amended from time to
time, the “Trust Agreement”), between the Authority and Wells Fargo Bank, National
Association, as trustee (together with any successor as trustee under the Trust Agreement, the
“Trustee”) (copies of the Trust Agreement are on file at the principal office of the Trustee in San
Francisco, California). Concurrently with the issuance of the Bonds, the Authority will issue its
[2010 Series A-1 (Capital Project I - Tax-Exempt Bonds)in the aggregate principal amount of
$_______)], [2010 Series A-2 (Capital Project I - Taxable Build America Bonds) in the
aggregate principal amount of $_______], [2010 Series A-3 (Capital Project I - Taxable
Recovery Zone Bonds) in the aggregate principal amount of $_______)], [2010 Series B (Capital
Project II) in the aggregate principal amount of $_______)], and [2010 Series C (Refunding) in
the aggregate principal amount of $_______)] under the terms of the Trust Agreement and
secured on a parity basis with the Bonds.
The Bonds are issued to provide funds to [finance and refinance the acquisition,
construction, improvement, equipping, remodeling and financing and refinancing of certain
public buildings and related facilities, located in the County of Contra Costa (as more fully
defined in the Trust Agreement, the “Projects”)][refund and defease all of the outstanding 1998
Series A Bonds (as defined in the Trust Agreement)]. The Bonds are limited obligations of the
Authority and are payable, as to interest thereon and principal thereof, solely from certain
proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and
OHS West:260890460.9 A-3
the revenues (as more fully defined in the Trust Agreement, the “Revenues”) derived from Base
Rental Payments and other payments made by the County of Contra Costa (the “County”), and
all interest or other investment income thereon, pursuant to the [Sublease (Capital
Project I)]/[Sublease (Capital Project II)]/[Sublease (Refunding)], dated as of November 1, 2010
(as amended from time to time, the “________ Sublease”), by and between the Authority and the
County, and the Authority is not obligated to pay the interest or premium, if any, on and
principal of the Bonds except from the Revenues. All Bonds are equally and ratably secured in
accordance with the terms and conditions of the Trust Agreement by a pledge and assignment of
and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security
and payment of the interest or premium, if any, on and principal of the Bonds as provided in the
Trust Agreement. The full faith and credit of the Authority, the Contra Costa County
Redevelopment Agency (the “Agency”) and the County are not pledged for the payment of the
interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the
interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of
or charge or lien upon any property of the Authority or any of its income or receipts except the
Revenues, and neither the payment of the interest on nor principal (or premium, if any) of the
Bonds is a debt, liability or general obligation of the Authority, the County or any member of the
Authority for which such entity is obligated to levy or pledge any form of taxation. Additional
bonds payable from the Revenues may be issued which will rank equally as to security with the
Bonds, but only subject to the conditions and upon compliance with the procedures set forth in
the Trust Agreement. Reference is hereby made to the Act and to the Trust Agreement and any
and all amendments thereof and supplements thereto for a description of the terms on which the
Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights
of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default
and limitations thereon, and amendment of the Trust Agreement (with or without consent of the
registered owners of the Bonds); and all the terms of the Trust Agreement are hereby
incorporated herein and constitute a contract between the Authority and the registered owner of
this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof,
agrees and consents.
The Bonds are subject to redemption prior to maturity on the dates, at the
redemption prices, and upon such notice as set forth in the Trust Agreement.
If an Event of Default (as defined in the Trust Agreement) shall occur, the
principal of all Bonds may be declared due and payable upon the conditions, in the manner and
with the effect provided in the Trust Agreement. The Trust Agreement provides that in certain
events such declaration and its consequences may be rescinded by the holders of not less than a
majority in aggregate principal amount of the Bonds then outstanding or by the Trustee.
This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned corporate trust office of the Trustee by the registered owner hereof in person or
by the duly authorized attorney of such owner upon payment of the charges provided in the Trust
Agreement and upon surrender of this Bond together with a written instrument of transfer
satisfactory to the Trustee duly executed by the registered owner or the duly authorized attorney
of such owner, and thereupon a new fully registered Bond or Bonds in the same aggregate
principal amount in authorized denominations will be issued to the transferee in exchange
therefor. The Authority and the Trustee may deem and treat the registered owner hereof as the
OHS West:260890460.9 A-4
absolute owner hereof for the purpose of receiving payment of the interest hereon and principal
hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the
Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and
payment of the interest on and principal of this Bond shall be made only to such registered
owner, which payments shall be valid and effectual to satisfy and discharge liability on this Bond
to the extent of the sum or sums so paid.
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication hereon endorsed shall have been executed and dated by the Trustee.
It is hereby certified and recited that all acts, conditions and things required by
law to exist, to have happened and to have been performed precedent to and in the issuance of
this Bond do exist, have happened and have been performed in due time, form and manner as
required by the Act and by the Constitution and laws of the State of California, that the amount
of this Bond, together with all other indebtedness of the Authority, does not exceed any limit
prescribed by the Constitution or laws of the State of California and is not in excess of the
amount of Bonds permitted to be issued under the Trust Agreement.
OHS West:260890460.9 A-5
IN WITNESS WHEREOF, the County of Contra Costa Public Financing
Authority has caused this Bond to be executed in its name and on its behalf by the manual or
facsimile signature of the Chair of the Authority and countersigned by the manual or facsimile
signature of the Secretary of said Authority, and has caused this Bond to be dated as of the Dated
Date specified above.
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By
Chair
Countersigned:
________________________________________
Secretary
OHS West:260890460.9 A-6
[FORM OF CERTIFICATE OF AUTHENTICATION
TO APPEAR ON 2010 BONDS]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been registered and authenticated on _____________, 2010.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
OHS West:260890460.9 A-7
[FORM OF ASSIGNMENT TO
APPEAR ON 2010 BONDS]
For value received the undersigned hereby sells, assigns and transfers unto
__________________________________ (Taxpayer Identification Number:_______________)
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
____________________________________ attorney to transfer the within bond on the books
kept for registration thereof, with full power of substitution in the premises.
NOTE: The signature to this Assignment must
correspond with the name as written on the face of
the Bond in every particular, without alteration or
enlargement or any change whatever.
Dated:
PLEASE INSERT SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:
Signature Guaranteed:_________________________________
NOTE: Signature must be guaranteed by
an eligible guarantor institution.
B-1-1
OHS West:260890460.9
EXHIBIT B-1
FORM OF REQUISITION – PROJECT FUND (2010 SERIES A)
Date: _______________
No.__
Wells Fargo Bank, National Association
MAC #A0119-181
333 Market Street, 18th Floor
San Francisco, CA 94105
Re:County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series A-1, A-2 and A-3
(Written Request of the County –2010 Series A Project Account)
Ladies and Gentlemen:
This letter is our authorization to you to disburse from the 2010 Series A Project
Account within the Project Fund provided for in Section 3.02 of the Trust Agreement dated as of
November 1, 2010 (the “Trust Agreement”) between the County of Contra Costa Public
Financing Authority (the “Authority”) and Wells Fargo Bank, National Association, as trustee,
the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and
corporations for project costs pursuant to the Trust Agreement.
The obligations in the stated amounts have been incurred by the County and each
item thereof is a proper charge against the 2010 Series A Project Account within the Project
Fund.
If checked here you are hereby authorized to close the 2010 Series A Project
Account within the Project Fund and transfer any remaining balance (after payment of any
amounts indicated in Schedule A) to the Revenue Fund.
Very truly yours,
COUNTY OF CONTRA COSTA
By
Authorized Representative
B-1-2
OHS West:260890460.9
SCHEDULE A
Item
No. Payee Amount Purpose
OHS West:260890460.9 B-2-1
EXHIBIT B-2
FORM OF REQUISITION – PROJECT FUND (SERIES B)
Date: _______________
No.__
Wells Fargo Bank, National Association
MAC #A0119-181
333 Market Street, 18th Floor
San Francisco, CA 94105
Re:County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series B
(Written Request of the County – 2010 Series B Project Account)
Ladies and Gentlemen:
This letter is our authorization to yo u to disburse from the 2010 Series B Project
Account within the Project Fund provided for in Section 3.02 of the Trust Agreement dated as of
November 1, 2010 (the “Trust Agreement”) between the County of Contra Costa Public
Financing Authority (the “Authority”) and Wells Fargo Bank, National Association, as trustee,
the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and
corporations for project costs pursuant to the Trust Agreement.
The obligations in the stated amounts have been incurred by the East Bay
Regional Communications System Authority and each item thereof is a proper charge against the
2010 Series B Project Account within the Project Fund.
If checked here you are hereby authorized to close the 2010 Series B Project
Account within the Project Fund and transfer any remaining balance (after payment of any
amounts indicated in Schedule A) to the Revenue Fund.
Very truly yours,
EAST BAY REGIONAL COMMUNICATIONS
SYSTEM AUTHORITY
By
Authorized Representative
OHS West:260890460.9 B-2-2
SCHEDULE A
Item
No. Payee Amount Purpose
OHS West:260890460.9 C-1
EXHIBIT C
FORM OF REQUISITION – COSTS OF ISSUANCE
Date: _______________
No.__
Wells Fargo Bank, National Association
MAC #A0119-181
333 Market Street, 18th Floor
San Francisco, CA 94105
Re:County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series [ ]
(Written Request of the Authority – Costs of Issuance Fund)
Ladies and Gentlemen:
This letter is our authorization to you to disburse from the Costs of Issuance Fund
provided for in Section 3.06 of the Trust Agreement dated as of November 1, 2010 (the “Trust
Agreement”) between the County of Contra Costa Public Financing Authority (the “Authority”)
and Wells Fargo Bank, National Association, as trustee, the not to exceed amounts indicated on
Schedule A attached hereto to the therein-named individuals, firms and corporations for
expenses incident to the issuance of the above-referenced Bonds pursuant to the Trust
Agreement.
The obligations in the stated amounts have been incurred by the Authority and
each item thereof is a proper charge against the Costs of Issuance Fund.
If checked here you are hereby authorized to close the Costs of Issuance Fund
and transfer any remaining balance (after payment of any amounts indicated in Schedule A) to
the [2010 Series A Project Account].
Very truly yours,
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By
Authorized Representative
OHS West:260890460.9 C-2
SCHEDULE A
Item
No. Payee
Not to Exceed
Amount Purpose
OHS West:260888373.7
Recording requested by
and return to:
COUNTY OF CONTRA COSTA
c/o Orrick, Herrington & Sutcliffe LLP
The Orrick Building
405 Howard Street
San Francisco, California 94105-2669
Attention: Mary A. Collins, Esq.
SITE LEASE
(Capital Project I)
by and between the
COUNTY OF CONTRA COSTA
and the
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
Related to
$____________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds
consisting of
$__________ 2010 Series A-1 (Capital Project I – Tax-Exempt Bonds),
$__________ 2010 Series A-2 (Capital Project I -Taxable Build America Bonds), and
$__________ 2010 Series A-3 (Capital Project I -Taxable Recovery Zone Bonds)
Dated as of November 1, 2010
THIS TRANSACTION IS EXEMPT FROM FILING FEES PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 6103 AND
TRANSFER TAXES PURSUANT TO CALIFORNIA REVENUE AND TAXATION CODE SECTION 11928
TABLE OF CONTENTS
Page
-i -
OHS West:260888373.7
SECTION 1.Lease of Facilities .............................................................................................2
SECTION 2.Term .................................................................................................................2
SECTION 3.Rental ................................................................................................................2
SECTION 4.Purpose .............................................................................................................2
SECTION 5.Environmental Law and Regulations ...............................................................3
SECTION 6.Environmental Compliance ..............................................................................4
SECTION 7.Owner in Fee ....................................................................................................5
SECTION 8.Assignments and Subleases ..............................................................................6
SECTION 9.Right of Entry; Easements ................................................................................6
SECTION 10.Termination ......................................................................................................6
SECTION 11.Default ..............................................................................................................6
SECTION 12.Quiet Enjoyment ...............................................................................................7
SECTION 13.Waiver of Personal Liability.............................................................................7
SECTION 14.Taxes.................................................................................................................7
SECTION 15.Eminent Domain ...............................................................................................7
SECTION 16.Partial Invalidity ...............................................................................................8
SECTION 17.Notices ..............................................................................................................8
SECTION 18.Section Headings ..............................................................................................8
SECTION 19.Amendment ......................................................................................................8
SECTION 20.Execution ..........................................................................................................8
EXHIBIT A DESCRIPTION OF FACILITIES ...............................................................A-1
EXHIBIT B LEASE TERM..............................................................................................B-1
OHS West:260888373.7
SITE LEASE
(Capital Project I)
This Site Lease, dated as of November 1, 2010 (this “Site Lease”), by and
between the COUNTY OF CONTRA COSTA, a political subdivision organized and existing
under and by virtue of the laws of the State of California (the “County”), as lessor, and the
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a public entity and
agency, duly organized and existing pursuant to an Agreement entitled “Joint Exercise of Powers
Agreement” by and between the County of Contra Costa and the Contra Costa County
Redevelopment Agency (the “Authority”), as lessee;
W I T N E S S E T H:
WHEREAS, the County has determined that it is in its best interests to finance
certain capital improvements for the County;
WHEREAS, the Authority has agreed to issue $_______ principal amount of its
Lease Revenue Bonds, 2010 Series A-1 (Capital Project I – Tax-Exempt Bonds) (the “2010
Series A-1 Bonds”), County of Contra Costa Public Financing Authority Lease Revenue Bonds,
2010 Series A-2 (Capital Project I -Taxable Build America Bonds) (the “2010 Series A-2
Bonds”) and County of Contra Costa Public Financing Authority Lease Revenue Bonds, 2010
Series A-3 (Capital Project I -Taxable Recovery Zone Bonds) (the “2010 Series A-3 Bonds”)
(collectively, the “Bonds”), pursuant to a Trust Agreement, dated as of November 1, 2010 (as
amended from time to time, the “Trust Agreement”) by and between the Authority and Wells
Fargo Bank, National Association, as trustee (together with any successor thereto, the “Trustee”),
for the purpose of financing certain capital improvements for the County;
WHEREAS, the County, pursuant hereto, will lease certain Facilities (as
hereinafter defined) of the County to the Authority and the Authority will use the proceeds of the
Bonds and certain other funds to pay to the County the rental due hereunder for the Facilities,
and the County will use the proceeds of the Bonds to make deposits to the 2010 Series A Project
Account, the 2010 Series A Reserve Account, the 2010 Costs of Issuance Fund and the
Capitalized Interest Accounts for each of the 2010 Series A-1 Bonds, the 2010 Series A-2 Bonds
and the 2010 Series A-3 Bonds, as established in the Trust Agreement;
WHEREAS, the Authority will lease back the Facilities to the County pursuant to
the Sublease (Capital Project I), dated as of November 1, 2010 (the “Sublease”), between the
Authority, as lessor, and the County, as lessee; and
WHEREAS, under the Sublease, the County will be obligated to make base rental
payments to the Authority for the lease of the Facilities and the Authority will pledge such base
rental payments to the Trustee for payments of the Bonds (capitalized terms used herein and not
otherwise defined herein have the meanings assigned thereto in the Sublease and the Trust
Agreement);
OHS West:260888373.7 2
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED as follows:
SECTION 1.Lease of Facilities
The County hereby leases to the Authority and the Authority hereby hires from
the County, on the terms and conditions hereinafter set forth, the real property situated in the
County of Contra Costa, State of California, together with the improvements thereon, as
described in Exhibit A attached hereto and made a part hereof, and any additional real property
added thereto by any supplement or amendment hereto, or any real property substituted for all or
any portion of such property in accordance with this Site Lease and the Trust Agreement (the
“Facilities”); subject, however, to any conditions, reservations, and easements of record or
known to the County.
SECTION 2.Term
The term of this Site Lease as to the Facilities shall commence on the date of
recordation of this Site Lease in the office of the County Recorder of County of Contra Costa,
State of California, or on [December 1, 2010] whichever is earlier, and shall end on the
respective dates identified in Exhibit B hereto, as applicable to the related Facility, unless such
term is extended or sooner terminated as hereinafter provided. If on such dates the Base Rental
Payments attributable to the related Facility and all other amounts then due under the Sublease
with respect to such Facility, including any Reserve Facility Costs, shall not be fully paid, or if
the rental or other amounts payable under the Sublease with respect to such Facility shall have
been abated at any time and for any reason, then the term of this Site Lease with respect to such
Facility shall be extended until ten (10) days after the Base Rental Payments attributable to such
Facility and all other amounts then due under the Sublease with respect to such Facility,
including any Reserve Facility Costs, shall be fully paid, except that the term of this Site Lease
as to the respective Facility shall in no event be extended beyond ten (10) years after the date
identified with respect thereto. If prior to such date the Base Rental Payments attributable to the
related Facility and all other amounts then due under the Sublease with respect to such Facility,
including any Reserve Facility Costs, shall be fully paid, the term of this Site Lease with respect
to such Facility shall end ten (10) days thereafter or upon written notice by the County to the
Authority, whichever is earlier.
SECTION 3.Rental
The Authority shall pay to the County from the proceeds of the Bonds as and for
rental hereunder an amount, not less than $________________, equal to the sum of the proceeds
of the Bonds to be deposited in the 2010 Series A Project Account, the 2010 Series A Reserve
Account, the 2010 Costs of Issuance Fund and the Capitalized Interest Accounts for each of the
2010 Series A-1 Bonds, the 2010 Series A-2 Bonds and the 2010 Series A-3 Bonds.
SECTION 4.Purpose
The Authority shall use the Facilities solely for the purpose of leasing the
Facilities to the County pursuant to the Sublease and for such purposes as may be incidental
thereto; provided, that in the event of default by the County under the Sublease, the Authority
may exercise the remedies provided in the Sublease.
OHS West:260888373.7 3
SECTION 5.Environmental Law and Regulations
(a)Definitions used in this Section 5 and in Section 6.
“Asbestos Containing Materials” shall mean material in friable form containing
more than one percent (1%) of the asbestiform varieties of (a)chrysotile (serpentine);
(b)crocidolite (ricbeckite); (c)amosite (cummington-itegrinerite); (d)anthophyllite;
(e)tremolite; and (f)antinolite.
“Asbestos Operations and Maintenance Plan” shall mean that written plan for
the Facilities relating to monitoring and maintaining all Asbestos Containing Materials used or
located on the Facilities.
“Environmental Regulations” shall mean all Laws and Regulations, now or
hereafter in effect, with respect to Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42
U.S.C. Section 9601, et seq.) (together with the regulations promulgated thereunder,
“CERCLA”), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901, et seq.) (together with the regulations promulgated thereunder, “RCRA”), the
Emergency Planning and Community Right-to-Know Act, as amended (42 U.S.C.
Section 11001, et seq.) (together with the regulations promulgated thereunder, “Title III”), the
Clean Water Act, as amended (33 U.S.C. Section 1321, et seq.) (together with the regulations
promulgated thereunder, “CWA”), the Clean Air Act, as amended (42 U.S.C. Section 7401, et
seq.) (together with the regulations promulgated thereunder, “CAA”) and the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601, et seq.) (together with the regulations
promulgated thereunder, “TSCA”), and any state or local similar laws and regulations and any
so-called local, state or federal “superfund” or “superlien” law.
“Hazardous Materials” shall mean any material amount of flammable
explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide,
radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive
materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated
substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and
Title III, and the regulations promulgated pursuant thereto, and in all other Environmental
Regulations applicable to the County, any of the Facilities or the business operations conducted
by the County therein.
“Laws and Regulations” shall mean any applicable law, regulation, code, order,
rule, judgment or consent agreement, including, without limitation, those relating to zoning,
building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters,
environmental protection, hazardous or toxic materials, substances or wastes, conservation,
parking, architectural barriers to the handicapped, or restrictive covenants or other agreements
affecting title to the Facilities.
(b)No portion of the Facilities is located in an area of high potential incidence
of radon which has an unventilated basement or subsurface portion which is occupied or used for
any purpose other than the foundation or support of the improvements to such Facilities.
OHS West:260888373.7 4
(c)The County has not received any notice from any insurance company
which has issued a policy with respect to the Facilities or from the applicable state or local
government agency responsible for insurance standards (or any other body exercising similar
functions) requiring the performance of any repairs, alterations or other work, which repairs,
alterations or other work have not been completed at the Facilities. The County has not received
any notice of default or breach which has not been cured under any covenant, condition,
restriction, right-of-way, reciprocal easement agreement or other easement affecting the
Facilities which is to be performed or complied with by it.
SECTION 6.Environmental Compliance
(a)Neither the County nor the Authority shall use or permit the Facilities or
any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or
dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if
necessary to maintain the Facilities and then, only in compliance with all Environmental
Regulations, and any state equivalent laws and regulations, nor shall it permit, as a result of any
intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee,
guest, invitee, contractor, employee and agent, the storage, transportation, disposal or use of
Hazardous Materials or the pumping, spilling, leaking, disposing of, emptying, discharging or
releasing (hereinafter collectively referred to as “Release”) or threat of Release of Hazardous
Materials on, from or beneath the Facilities or onto any other real property excluding, however,
those Hazardous Materials in those amounts ordinarily found in the inventory of an office
building, the use, storage, treatment, transportation and disposal of which shall be in compliance
with all Environmental Regulations. Upon the occurrence of any Release or threat of Release of
Hazardous Materials, the County shall promptly commence and perform, or cause to be
commenced and performed promptly, without cost to the Trustee or the Authority, all
investigations, studies, sampling and testing, and all remedial, removal and other actions
necessary to clean up and remove all Hazardous Materials so Released, on, from or beneath the
Facilities, in compliance with all Environmental Regulations. Notwithstanding anything to the
contrary contained herein, underground storage tanks shall only be permitted subject to
compliance with subsection (d) and only to the extent necessary to maintain the Facilities.
(b)The County and the Authority shall comply with, and shall cause its
tenants, subtenants, licensees, guests, invitees, contractors, employees and agents to comply
with, all Environmental Regulations, and shall keep the Facilities free and clear of any liens
imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be
bonded). The County and the Authority shall cause each tenant, and use its best efforts to cause
all of such tenant’s subtenants, agents, licensees, employees, contractors, guests and invitees and
the guests and invitees of all of the foregoing to comply with all Environmental Regulations with
respect to the Facilities; provided, however, that notwithstanding that a portion of this covenant
is limited to the County and the Authority’s use of its best efforts, the Authority and the County
shall remain solely responsible for ensuring such compliance and such limitation shall not
diminish or affect in any way the County and the Authority’s obligations contained in
subsection (c) hereof as provided in subsection (c) hereof. Upon receipt of any notice from any
Person with regard to the Release of Hazardous Materials on, from or beneath the Facilities, the
County and the Authority shall give prompt written notice thereof to the Trustee (and, in any
OHS West:260888373.7 5
event, prior to the expiration of any period in which to respond to such notice under any
Environmental Regulation).
(c)Irrespective of whether any representation or warranty contained in
Section 5 is not true or correct, the County and the Authority shall, to the extent permitted by
law, defend, indemnify and hold harmless the Bondholders and the Trustee, its partners,
depositors and each of its and their employees, agents, officers, directors, trustees, successors
and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including,
without limitation, attorneys’ fees incurred to enforce the indemnification contained in this
Section 6), consultants’ fees, investigation and laboratory fees, liabilities, settlements (five (5)
Business Days’ prior notice of which the Authority or the Trustee, as appropriate, shall have
delivered to the County and the Authority), court costs, damages, losses, costs or expenses of
whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in
part, arising out of, or in any way related to, (i)the presence, disposal, Release, threat of Release,
removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the
Facilities, (ii)any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials, (iii)any lawsuit brought or
threatened, settlement reached (five (5) Business Days’ prior notice of which the Authority or the
Trustee, as appropriate, shall have delivered to the County and the Authority), or governmental
order relating to Hazardous Materials on, from or beneath any of the Facilities, (iv)any violation
of Environmental Regulations or subsection (a) or (b) hereof by it or any of its agents, tenants,
employees, contractors, licensees, guests, subtenants or invitees, and (v)the imposition of any
governmental lien for the recovery of environmental cleanup or removal costs. To the extent that
the Authority or the County is strictly liable under any Environmental Regulation, its obligation
to the Trustee and the Bondholders and the other indemnitees under the foregoing
indemnification shall likewise be without regard to fault on its part with respect to the violation
of any Environmental Regulation which results in liability to any indemnitee. Its obligations and
liabilities under this Section 6(c) shall survive any termination of the Sublease or exercise of any
remedies thereunder, and the satisfaction of all Bonds.
(d)The County and the Authority shall conform to and carry out a reasonable
program of maintenance and inspection of all underground storage tanks, and shall maintain,
repair, and replace such tanks only in accordance with Laws and Regulations, including but not
limited to Environmental Regulations.
SECTION 7.Owner in Fee
[The County covenants that it is the owner in fee of the Facilities. The County
further covenants and agrees that if for any reason this covenant proves to be incorrect, the
County will either institute eminent domain proceedings to condemn the property or institute a
quiet title action to clarify the County’s title, and will diligently pursue such action to
completion. The County further covenants and agrees that it will hold the Authority and the
Bondowners harmless from any loss, cost or damages resulting from any breach by the County
of the covenants contained in this Section.]
OHS West:260888373.7 6
SECTION 8.Assignments and Subleases
Unless the County shall be in default under the Sublease, the Authority may not
assign its rights under this Site Lease or sublet the Facilities, except pursuant to the Sublease,
without the written consent of the County, which consent may be withheld in the County’s sole
and absolute discretion. Upon the occurrence of a default by the County under the Sublease, the
Authority may assign or sell its rights under this Site Lease or sublet the Facilities, without the
consent of the County.
SECTION 9.Right of Entry; Easements
The County reserves the right for any of its duly authorized representatives to
enter upon the Facilities at any reasonable time to inspect the same or to make any repairs,
improvements or changes necessary for the preservation thereof.
The County agrees, upon written request from the Authority, to grant to the
Authority a nonexclusive easement of ingress and egress for persons, vehicles and utilities,
twenty (20) feet wide, from each parcel of the Facilities not having access to a public street, and
appurtenant to such parcel, over property owned by the County to a public street. The County
may, at any time, satisfy its obligation contained in the preceding sentence as to any such parcel
of the Facilities by granting to the Authority an easement complying with the requirements of the
preceding sentence from such parcel of the Facilities to a public street.
SECTION 10.Termination
The Authority agrees, upon the termination of this Site Lease, to quit and
surrender the Facilities in the same good order and condition as the same were in at the time of
commencement of the term hereunder, reasonable wear and tear excepted, and the Authority
further agrees that the Facilities and any other permanent improvements and structures existing
upon the Facilities at the time of the termination of this Site Lease shall remain thereon and title
thereto shall vest in the County.
Upon the exercise of the option to purchase set forth in Section 7.03 of the
Sublease and upon payment of the option price required by said section, the term of this Site
Lease shall terminate as to the portion of the Facilities being so purchased, including the real
property upon which portion is situated.
SECTION 11.Default
In the event the Authority shall be in default in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for one
hundred and eighty (180) days following notice and demand for correction thereof to the
Authority and the Trustee, the County may exercise any and all remedies granted by law, except
that no merger of this Site Lease and of the Sublease shall be deemed to occur as a result thereof;
provided, however, that the County shall have no power to terminate this Site Lease by reason of
any default on the part of the Authority if such termination would affect or impair any
assignment or sublease of all or any part of the Facilities then in effect between the Authority
and any assignee or subtenant of the Authority (other than the County under the Sublease). So
OHS West:260888373.7 7
long as any such assignee or subtenant of the Authority shall duly perform the terms and
conditions of this Site Lease, such assignee or subtenant shall be deemed to be and shall become
the tenant of the County hereunder and shall be entitled to all of the rights and privileges granted
under any such assignment; provided, further, that so long as any Bonds are outstanding and
unpaid in accordance with the terms thereof, the rentals or any part thereof payable to the
Authority or Trustee shall continue to be paid to the Trustee on behalf of the Bondowners.
SECTION 12.Quiet Enjoyment
The Authority at all times during the term of this Site Lease, shall peaceably and
quietly have, hold and enjoy all of the Facilities then leased hereunder.
SECTION 13.Waiver of Personal Liability
All liabilities under this Site Lease on the part of the Authority shall be solely
liabilities of the Authority, as a public entity and agency, and the County hereby releases each
and every member, director, officer, agent or employee of the Authority of and from any
personal or individual liability under this Site Lease. No member, director, officer, agent or
employee of the Authority shall at any time or under any circumstances be individually or
personally liable under this Site Lease to the County or to any other party whomsoever for
anything done or omitted to be done by the Authority hereunder.
The Authority and its members, directors, officers, agents, employees and
assignees shall not be liable to the County or to any other party whomsoever for any death, injury
or damage that may result to any person or property by or from any cause whatsoever in, on or
about the Facilities. The County, to the extent permitted by law, shall indemnify and hold the
Authority and its members, directors, officers, agents, employees and assignees, harmless from,
and defend each of them against, any and all claims, liens and judgments arising from the
operation of the Facilities or Capital Project I, including, without limitation, death of or injury to
any person or damage to property whatsoever occurring in, on or about the Facilities or Capital
Project I regardless of responsibility for negligence, but excepting the active negligence of the
person or entity seeking indemnity.
SECTION 14.Taxes
The County covenants and agrees to pay any and all assessments of any kind or
character and also all taxes, including possessory interest taxes, levied or assessed upon the
Facilities.
SECTION 15.Eminent Domain
In the event the whole or any part of the Facilities is taken by eminent domain
proceedings, the interest of the Authority shall be recognized and is hereby determined to be the
amount of the then unpaid or outstanding Bonds and all other amounts due under the Trust
Agreement and the Sublease attributable to such part of the Facilities and shall be paid to the
Trustee, and the balance of the award, if any, shall be paid to the County.
OHS West:260888373.7 8
SECTION 16.Partial Invalidity
If any one or more of the terms, provisions, covenants or conditions of this Site
Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall
be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the
fullest extent permitted by law.
SECTION 17.Notices
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be in
writing and shall be sufficiently given and served upon the other party if delivered personally or
if mailed by United States registered or certified mail, return receipt requested, postage prepaid,
and, if to the County, addressed to the County of Contra Costa, c/o Clerk of the Board of
Supervisors, County Administration Building, 651 Pine Street, Martinez, California 94553, or if
to the Authority, addressed to the County of Contra Costa Public Financing Authority, c/o
County Administrator, County Administration Building, 651 Pine Street, Martinez, California
94553, in all cases with a copy to the County Finance Director and to the Trustee at the
respective addresses specified in the Trust Agreement, or to such other addresses as the
respective parties may from time to time designate by notice in writing.
SECTION 18.Section Headings
All section headings contained herein are for convenience of reference only and
are not intended to define or limit the scope of any provision of this Site Lease.
SECTION 19.Amendment
The Authority and the County may at any time agree to the amendment of this
Site Lease; provided, however, that the Authority and the County agree and recognize that this
Site Lease is entered into as contemplated by the terms of the Trust Agreement, and accordingly,
that any such amendment shall only be made or effected in accordance with and subject to the
terms of the Trust Agreement.
SECTION 20.Execution
This Site Lease may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all together shall constitute but one and the same Lease. It
is also agreed that separate counterparts of this Site Lease may separately be executed by the
County and the Authority, all with the same force and effect as though the same counterpart had
been executed by both the County and the Authority.
OHS West:260888373.7 9
IN WITNESS WHEREOF, the County and the Authority have caused this Site
Lease to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
COUNTY OF CONTRA COSTA,
as Lessor
By
John M. Gioia
Chair of the Board of Supervisors
County of Contra Costa, State of California
[SEAL]
ATTEST:
By
David J. Twa,
Clerk of the Board of Supervisors and
County Administrator
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY,
Lessee
By
John M. Gioia, Chair
ATTEST:
By:
David J. Twa
Executive Director and Secretary
OHS West:260888373.7 A-1
EXHIBIT A
DESCRIPTION OF FACILITIES
All that certain real property situated in the County of Contra Costa, State of
California, described as follows:
The West County Clinic
The term “West County Clinic” means the facility to be located at 13613 and 13585-3613
San Pablo Avenue, San Pablo, California 94806, together with parking, site development,
landscaping, utilities, equipment, furnishings, improvements and appurtenant and related
facilities, located on the real property described as follows:
PARCEL ONE:
PORTION OF LOT 152, MAP OF RANCHO SAN PABLO, FILED MARCH 01, 1894,
CONTRA COSTA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHWEST LINE OF SAN PABLO AVENUE,
FORMERLY ALVARADO STREET, DISTANT THEREON 50 FEET SOUTHEASTERLY
FROM THE NORTHERLY CORNER OF LOT 152 OF SAID RANCHO, SAID POINT OF
BEGINNING BEING AT THE MOST EASTERLY CORNER OF THE PARCEL OF LAND
DESCRIBED IN THE DEED TO JOSE ROBERTO RECORDED OCTOBER 23, 1900, BOOK
86, OF DEEDS, PAGE 331;
THENCE FROM SAID POINT OF BEGINNING SOUTH 48° EAST ALONG THE
SOUTHWEST LINE OF SAN PABLO AVENUE, 100 FEET TO THE MOST NORTHERLY
CORNER OF THE PARCEL OF LAND DESCRIBED IN THE DEED TO BELIA GREENE,
RECORDED FEBRUARY 28, 1929, IN BOOK 161, OFFICIAL RECORDS, PAGE 251;
THENCE SOUTH 42° WEST ALONG THE NORTHWEST LINE OF SAID GREENE TRACT
161 OR 251, 217.14 FEET TO THE SOUTHWESTERLY LINE OF LOT 152;
THENCE NORTH 48° WEST ALONG SAID LINE 100 FEET TO THE SOUTHEASTERLY
LINE OF SAID ROBERTO TRACT 86 D 331;
THENCE NORTH 42° EAST ALONG SAID LINE 217.14 FEET TO THE POINT OF
BEGINNING.
EXCEPTING FROM PARCEL ONE:
THE INTEREST CONVEYED TO CITY OF SAN PABLO BY DEED RECORDED
MARCH 26, 1981, BOOK 10255, OFFICIAL RECORDS, PAGE 47.
PARCEL TWO:
PORTION OF LOT 152, MAP OF SAN PABLO RANCHO, FILED MARCH 01, 1894,
CONTRA COSTA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
OHS West:260888373.7 A-2
BEGINNING ON THE SOUTHWEST LINE OF SAN PABLO AVENUE, FORMERLY
ALVARADO STREET, AT A STAKE MARKED 37 SET AT THE MOST NORTHERLY
CORNER OF SAID LOT 152;
THENCE FROM SAID POINT OF BEGINNING SOUTH 42° WEST, ALONG THE
NORTHWEST LINE OF SAID LOT 152, 217.14 FEET TO A STAKE MARKED 38 SET AT
THE MOST WESTERLY CORNER OF SAID LOT 152;
THENCE SOUTH 48° EAST, ALONG THE SOUTHWEST LINE OF SAID LOT 152, 50
FEET;
THENCE NORTH 42° EAST, 217.14 FEET TO THE SOUTHWEST LINE OF SAID SAN
PABLO AVENUE;
THENCE NORTH 48° WEST, ALONG SAID SOUTHWEST LINE, 50 FEET TO THE POINT
OF BEGINNING.
EXCEPTING FROM PARCEL TWO:
THE INTEREST CONVEYED TO CITY OF SAN PABLO BY DEED RECORDED MARCH
26, 1981, BOOK 10255, OFFICIAL RECORDS, PAGE 47.
PARCEL THREE:
LOTS 153 AND 154, MAP OF RANCHO SAN PABLO, FILED MARCH 01, 1894, CONTRA
COSTA COUNTY RECORDS.
EXCEPTING THEREFROM:
THE INTEREST CONVEYED TO CITY OF SAN PABLO BY DEED RECORDED MARCH
26, 1981, IN BOOK 10255, PAGE 43 OF OFFICIAL RECORDS.
APN: 417-180-028 (PARCEL ONE AND TWO); 417-170-004 (PARCEL THREE)
OHS West:260888373.7 B-1
EXHIBIT B
LEASE TERM
Facility Term Maximum Extension
West County Clinic
OHS West:260998040.2
Recording requested by
and return to:
COUNTY OF CONTRA COSTA
c/o Orrick, Herrington & Sutcliffe LLP
The Orrick Building
405 Howard Street
San Francisco, California 94105-2669
Attention: Mary A. Collins, Esq.
SITE LEASE
(Capital Project II)
by and between the
COUNTY OF CONTRA COSTA
and the
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
Related to
$____________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series B (Capital Project II)
Dated as of November 1, 2010
THIS TRANSACTION IS EXEMPT FROM FILING FEES PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 6103 AND
TRANSFER TAXES PURSUANT TO CALIFORNIA REVENUE AND TAXATION CODE SECTION 11928
TABLE OF CONTENTS
Page
-i -
OHS West:260998040.2
SECTION 1.Lease of Facilities .............................................................................................2
SECTION 2.Term .................................................................................................................2
SECTION 3.Rental ................................................................................................................2
SECTION 4.Purpose .............................................................................................................2
SECTION 5.Environmental Law and Regulations ...............................................................3
SECTION 6.Environmental Compliance ..............................................................................4
SECTION 7.Owner in Fee ....................................................................................................5
SECTION 8.Assignments and Subleases ..............................................................................6
SECTION 9.Right of Entry; Easements ................................................................................6
SECTION 10.Termination ......................................................................................................6
SECTION 11.Default ..............................................................................................................6
SECTION 12.Quiet Enjoyment ...............................................................................................7
SECTION 13.Waiver of Personal Liability.............................................................................7
SECTION 14.Taxes.................................................................................................................7
SECTION 15.Eminent Domain ...............................................................................................7
SECTION 16.Partial Invalidity ...............................................................................................8
SECTION 17.Notices ..............................................................................................................8
SECTION 18.Section Headings ..............................................................................................8
SECTION 19.Amendment ......................................................................................................8
SECTION 20.Execution ..........................................................................................................8
EXHIBIT A DESCRIPTION OF FACILITIES ...............................................................A-1
EXHIBIT B LEASE TERM..............................................................................................B-1
OHS West:260998040.2
SITE LEASE
(Capital Project II)
This Site Lease, dated as of November 1, 2010 (this “Site Lease”), by and
between the COUNTY OF CONTRA COSTA, a political subdivision organized and existing
under and by virtue of the laws of the State of California (the “County”), as lessor, and the
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a public entity and
agency, duly organized and existing pursuant to an Agreement entitled “Joint Exercise of Powers
Agreement” by and between the County of Contra Costa and the Contra Costa County
Redevelopment Agency (the “Authority”), as lessee;
W I T N E S S E T H:
WHEREAS, the County has determined that it is in its best interests to finance
certain capital improvements for the County;
WHEREAS, the Authority has agreed to issue $_______ principal amount of its
Lease Revenue Bonds, 2010 Series B (Capital Project II) (the “Bonds”), pursuant to a Trust
Agreement, dated as of November 1, 2010 (as amended from time to time, the “Trust
Agreement”) by and between the Authority and Wells Fargo Bank, National Association, as
trustee (together with any successor thereto, the “Trustee”), for the purpose of financing certain
capital improvements for the County;
WHEREAS, the County, pursuant hereto, will lease certain Facilities (as
hereinafter defined) of the County to the Authority and the Authority will use the proceeds of the
Bonds and certain other funds to pay to the County the rental due hereunder for the Facilities,
and the County will use the proceeds of the Bonds to make deposits to the 2010 Series B Project
Account, the 2010 Series B Capitalized In terest Account, the 2010 Costs of Issuance Fund and
the 2010 Series B Reserve Account, as established in the Trust Agreement;
WHEREAS, the Authority will lease back the Facilities to the County pursuant to
the Sublease (Capital Project II), dated as of November 1, 2010 (the “Sublease”), between the
Authority, as lessor, and the County, as lessee; and
WHEREAS, under the Sublease, the County will be obligated to make base rental
payments to the Authority for the lease of the Facilities and the Authority will pledge such base
rental payments to the Trustee for payments of the Bonds (capitalized terms used herein and not
otherwise defined herein have the meanings assigned thereto in the Sublease and the Trust
Agreement);
OHS West:260998040.2 2
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED as follows:
SECTION 1.Lease of Facilities
The County hereby leases to the Authority and the Authority hereby hires from
the County, on the terms and conditions hereinafter set forth, the real property situated in the
County of Contra Costa, State of California, together with the improvements thereon, as
described in Exhibit A attached hereto and made a part hereof, and any additional real property
added thereto by any supplement or amendment hereto, or any real property substituted for all or
any portion of such property in accordance with this Site Lease and the Trust Agreement (the
“Facilities”); subject, however, to any conditions, reservations, and easements of record or
known to the County.
SECTION 2.Term
The term of this Site Lease as to the Facilities shall commence on the date of
recordation of this Site Lease in the office of the County Recorder of County of Contra Costa,
State of California, or on [December 1, 2010] whichever is earlier, and shall end on the
respective dates identified in Exhibit B hereto, as applicable to the related Facility, unless such
term is extended or sooner terminated as hereinafter provided. If on such dates the Base Rental
Payments attributable to the related Facility and all other amounts then due under the Sublease
with respect to such Facility, including any Reserve Facility Costs, shall not be fully paid, or if
the rental or other amounts payable under the Sublease with respect to such Facility shall have
been abated at any time and for any reason, then the term of this Site Lease with respect to such
Facility shall be extended until ten (10) days after the Base Rental Payments attributable to such
Facility and all other amounts then due under the Sublease with respect to such Facility,
including any Reserve Facility Costs, shall be fully paid, except that the term of this Site Lease
as to the respective Facility shall in no event be extended beyond ten (10) years after the date
identified with respect thereto. If prior to such date the Base Rental Payments attributable to the
related Facility and all other amounts then due under the Sublease with respect to such Facility,
including any Reserve Facility Costs, shall be fully paid, the term of this Site Lease with respect
to such Facility shall end ten (10) days thereafter or upon written notice by the County to the
Authority, whichever is earlier.
SECTION 3.Rental
The Authority shall pay to the County from the proceeds of the Bonds as and for
rental hereunder an amount, not less than $________________, equal to the sum of the proceeds
of the Bonds to be deposited in the 2010 Series B Project Account, the 2010 Series B Capitalized
Interest Account, the 2010 Costs of Issuance Fund and the 2010 Series B Reserve Account.
SECTION 4.Purpose
The Authority shall use the Facilities solely for the purpose of leasing the
Facilities to the County pursuant to the Sublease and for such purposes as may be incidental
thereto; provided, that in the event of default by the County under the Sublease, the Authority
may exercise the remedies provided in the Sublease.
OHS West:260998040.2 3
SECTION 5.Environmental Law and Regulations
(a)Definitions used in this Section 5 and in Section 6.
“Asbestos Containing Materials” shall mean material in friable form containing
more than one percent (1%) of the asbestiform varieties of (a)chrysotile (serpentine);
(b)crocidolite (ricbeckite); (c)amosite (cummington-itegrinerite); (d)anthophyllite;
(e)tremolite; and (f)antinolite.
“Asbestos Operations and Maintenance Plan” shall mean that written plan for
the Facilities relating to monitoring and maintaining all Asbestos Containing Materials used or
located on the Facilities.
“Environmental Regulations” shall mean all Laws and Regulations, now or
hereafter in effect, with respect to Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42
U.S.C. Section 9601, et seq.) (together with the regulations promulgated thereunder,
“CERCLA”), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901, et seq.) (together with the regulations promulgated thereunder, “RCRA”), the
Emergency Planning and Community Right-to-Know Act, as amended (42 U.S.C.
Section 11001, et seq.) (together with the regulations promulgated thereunder, “Title III”), the
Clean Water Act, as amended (33 U.S.C. Section 1321, et seq.) (together with the regulations
promulgated thereunder, “CWA”), the Clean Air Act, as amended (42 U.S.C. Section 7401, et
seq.) (together with the regulations promulgated thereunder, “CAA”) and the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601, et seq.) (together with the regulations
promulgated thereunder, “TSCA”), and any state or local similar laws and regulations and any
so-called local, state or federal “superfund” or “superlien” law.
“Hazardous Materials” shall mean any material amount of flammable
explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide,
radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive
materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated
substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and
Title III, and the regulations promulgated pursuant thereto, and in all other Environmental
Regulations applicable to the County, any of the Facilities or the business operations conducted
by the County therein.
“Laws and Regulations” shall mean any applicable law, regulation, code, order,
rule, judgment or consent agreement, including, without limitation, those relating to zoning,
building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters,
environmental protection, hazardous or toxic materials, substances or wastes, conservation,
parking, architectural barriers to the handicapped, or restrictive covenants or other agreements
affecting title to the Facilities.
(b)No portion of the Facilities is located in an area of high potential incidence
of radon which has an unventilated basement or subsurface portion which is occupied or used for
any purpose other than the foundation or support of the improvements to such Facilities.
OHS West:260998040.2 4
(c)The County has not received any notice from any insurance company
which has issued a policy with respect to the Facilities or from the applicable state or local
government agency responsible for insurance standards (or any other body exercising similar
functions) requiring the performance of any repairs, alterations or other work, which repairs,
alterations or other work have not been completed at the Facilities. The County has not received
any notice of default or breach which has not been cured under any covenant, condition,
restriction, right-of-way, reciprocal easement agreement or other easement affecting the
Facilities which is to be performed or complied with by it.
SECTION 6.Environmental Compliance
(a)Neither the County nor the Authority shall use or permit the Facilities or
any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or
dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if
necessary to maintain the Facilities and then, only in compliance with all Environmental
Regulations, and any state equivalent laws and regulations, nor shall it permit, as a result of any
intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee,
guest, invitee, contractor, employee and agent, the storage, transportation, disposal or use of
Hazardous Materials or the pumping, spilling, leaking, disposing of, emptying, discharging or
releasing (hereinafter collectively referred to as “Release”) or threat of Release of Hazardous
Materials on, from or beneath the Facilities or onto any other real property excluding, however,
those Hazardous Materials in those amounts ordinarily found in the inventory of an office
building, the use, storage, treatment, transportation and disposal of which shall be in compliance
with all Environmental Regulations. Upon the occurrence of any Release or threat of Release of
Hazardous Materials, the County shall promptly commence and perform, or cause to be
commenced and performed promptly, without cost to the Trustee or the Authority, all
investigations, studies, sampling and testing, and all remedial, removal and other actions
necessary to clean up and remove all Hazardous Materials so Released, on, from or beneath the
Facilities, in compliance with all Environmental Regulations. Notwithstanding anything to the
contrary contained herein, underground storage tanks shall only be permitted subject to
compliance with subsection (d) and only to the extent necessary to maintain the Facilities.
(b)The County and the Authority shall comply with, and shall cause its
tenants, subtenants, licensees, guests, invitees, contractors, employees and agents to comply
with, all Environmental Regulations, and shall keep the Facilities free and clear of any liens
imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be
bonded). The County and the Authority shall cause each tenant, and use its best efforts to cause
all of such tenant’s subtenants, agents, licensees, employees, contractors, guests and invitees and
the guests and invitees of all of the foregoing to comply with all Environmental Regulations with
respect to the Facilities; provided, however, that notwithstanding that a portion of this covenant
is limited to the County and the Authority’s use of its best efforts, the Authority and the County
shall remain solely responsible for ensuring such compliance and such limitation shall not
diminish or affect in any way the County and the Authority’s obligations contained in
subsection (c) hereof as provided in subsection (c) hereof. Upon receipt of any notice from any
Person with regard to the Release of Hazardous Materials on, from or beneath the Facilities, the
County and the Authority shall give prompt written notice thereof to the Trustee (and, in any
OHS West:260998040.2 5
event, prior to the expiration of any period in which to respond to such notice under any
Environmental Regulation).
(c)Irrespective of whether any representation or warranty contained in
Section 5 is not true or correct, the County and the Authority shall, to the extent permitted by
law, defend, indemnify and hold harmless the Bondholders and the Trustee, its partners,
depositors and each of its and their employees, agents, officers, directors, trustees, successors
and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including,
without limitation, attorneys’ fees incurred to enforce the indemnification contained in this
Section 6), consultants’ fees, investigation and laboratory fees, liabilities, settlements (five (5)
Business Days’ prior notice of which the Authority or the Trustee, as appropriate, shall have
delivered to the County and the Authority), court costs, damages, losses, costs or expenses of
whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in
part, arising out of, or in any way related to, (i)the presence, disposal, Release, threat of Release,
removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the
Facilities, (ii)any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials, (iii)any lawsuit brought or
threatened, settlement reached (five (5) Business Days’ prior notice of which the Authority or the
Trustee, as appropriate, shall have delivered to the County and the Authority), or governmental
order relating to Hazardous Materials on, from or beneath any of the Facilities, (iv)any violation
of Environmental Regulations or subsection (a) or (b) hereof by it or any of its agents, tenants,
employees, contractors, licensees, guests, subtenants or invitees, and (v)the imposition of any
governmental lien for the recovery of environmental cleanup or removal costs. To the extent that
the Authority or the County is strictly liable under any Environmental Regulation, its obligation
to the Trustee and the Bondholders and the other indemnitees under the foregoing
indemnification shall likewise be without regard to fault on its part with respect to the violation
of any Environmental Regulation which results in liability to any indemnitee. Its obligations and
liabilities under this Section 6(c) shall survive any termination of the Sublease or exercise of any
remedies thereunder, and the satisfaction of all Bonds.
(d)The County and the Authority shall conform to and carry out a reasonable
program of maintenance and inspection of all underground storage tanks, and shall maintain,
repair, and replace such tanks only in accordance with Laws and Regulations, including but not
limited to Environmental Regulations.
SECTION 7.Owner in Fee
[The County covenants that it is the owner in fee of the Facilities. The County
further covenants and agrees that if for any reason this covenant proves to be incorrect, the
County will either institute eminent domain proceedings to condemn the property or institute a
quiet title action to clarify the County’s title, and will diligently pursue such action to
completion. The County further covenants and agrees that it will hold the Authority and the
Bondowners harmless from any loss, cost or damages resulting from any breach by the County
of the covenants contained in this Section.]
OHS West:260998040.2 6
SECTION 8.Assignments and Subleases
Unless the County shall be in default under the Sublease, the Authority may not
assign its rights under this Site Lease or sublet the Facilities, except pursuant to the Sublease,
without the written consent of the County, which consent may be withheld in the County’s sole
and absolute discretion. Upon the occurrence of a default by the County under the Sublease, the
Authority may assign or sell its rights under this Site Lease or sublet the Facilities, without the
consent of the County.
SECTION 9.Right of Entry; Easements
The County reserves the right for any of its duly authorized representatives to
enter upon the Facilities at any reasonable time to inspect the same or to make any repairs,
improvements or changes necessary for the preservation thereof.
The County agrees, upon written request from the Authority, to grant to the
Authority a nonexclusive easement of ingress and egress for persons, vehicles and utilities,
twenty (20) feet wide, from each parcel of the Facilities not having access to a public street, and
appurtenant to such parcel, over property owned by the County to a public street. The County
may, at any time, satisfy its obligation contained in the preceding sentence as to any such parcel
of the Facilities by granting to the Authority an easement complying with the requirements of the
preceding sentence from such parcel of the Facilities to a public street.
SECTION 10.Termination
The Authority agrees, upon the termination of this Site Lease, to quit and
surrender the Facilities in the same good order and condition as the same were in at the time of
commencement of the term hereunder, reasonable wear and tear excepted, and the Authority
further agrees that the Facilities and any other permanent improvements and structures existing
upon the Facilities at the time of the termination of this Site Lease shall remain thereon and title
thereto shall vest in the County.
Upon the exercise of the option to purchase set forth in Section 7.03 of the
Sublease and upon payment of the option price required by said section, the term of this Site
Lease shall terminate as to the portion of the Facilities being so purchased, including the real
property upon which portion is situated.
SECTION 11.Default
In the event the Authority shall be in default in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for one
hundred and eighty (180) days following notice and demand for correction thereof to the
Authority and the Trustee, the County may exercise any and all remedies granted by law, except
that no merger of this Site Lease and of the Sublease shall be deemed to occur as a result thereof;
provided, however, that the County shall have no power to terminate this Site Lease by reason of
any default on the part of the Authority if such termination would affect or impair any
assignment or sublease of all or any part of the Facilities then in effect between the Authority
and any assignee or subtenant of the Authority (other than the County under the Sublease). So
OHS West:260998040.2 7
long as any such assignee or subtenant of the Authority shall duly perform the terms and
conditions of this Site Lease, such assignee or subtenant shall be deemed to be and shall become
the tenant of the County hereunder and shall be entitled to all of the rights and privileges granted
under any such assignment; provided, further, that so long as any Bonds are outstanding and
unpaid in accordance with the terms thereof, the rentals or any part thereof payable to the
Authority or Trustee shall continue to be paid to the Trustee on behalf of the Bondowners.
SECTION 12.Quiet Enjoyment
The Authority at all times during the term of this Site Lease, shall peaceably and
quietly have, hold and enjoy all of the Facilities then leased hereunder.
SECTION 13.Waiver of Personal Liability
All liabilities under this Site Lease on the part of the Authority shall be solely
liabilities of the Authority, as a public entity and agency, and the County hereby releases each
and every member, director, officer, agent or employee of the Authority of and from any
personal or individual liability under this Site Lease. No member, director, officer, agent or
employee of the Authority shall at any time or under any circumstances be individually or
personally liable under this Site Lease to the County or to any other party whomsoever for
anything done or omitted to be done by the Authority hereunder.
The Authority and its members, directors, officers, agents, employees and
assignees shall not be liable to the County or to any other party whomsoever for any death, injury
or damage that may result to any person or property by or from any cause whatsoever in, on or
about the Facilities. The County, to the extent permitted by law, shall indemnify and hold the
Authority and its members, directors, officers, agents, employees and assignees, harmless from,
and defend each of them against, any and all claims, liens and judgments arising from the
operation of the Facilities or Capital Project II, including, without limitation, death of or injury to
any person or damage to property whatsoever occurring in, on or about the Facilities or Capital
Project II regardless of responsibility for negligence, but excepting the active negligence of the
person or entity seeking indemnity.
SECTION 14.Taxes
The County covenants and agrees to pay any and all assessments of any kind or
character and also all taxes, including possessory interest taxes, levied or assessed upon the
Facilities.
SECTION 15.Eminent Domain
In the event the whole or any part of the Facilities is taken by eminent domain
proceedings, the interest of the Authority shall be recognized and is hereby determined to be the
amount of the then unpaid or outstanding Bonds and all other amounts due under the Trust
Agreement and the Sublease attributable to such part of the Facilities and shall be paid to the
Trustee, and the balance of the award, if any, shall be paid to the County.
OHS West:260998040.2 8
SECTION 16.Partial Invalidity
If any one or more of the terms, provisions, covenants or conditions of this Site
Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall
be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the
fullest extent permitted by law.
SECTION 17.Notices
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be in
writing and shall be sufficiently given and served upon the other party if delivered personally or
if mailed by United States registered or certified mail, return receipt requested, postage prepaid,
and, if to the County, addressed to the County of Contra Costa, c/o Clerk of the Board of
Supervisors, County Administration Building, 651 Pine Street, Martinez, California 94553, or if
to the Authority, addressed to the County of Contra Costa Public Financing Authority, c/o
County Administrator, County Administration Building, 651 Pine Street, Martinez, California
94553, in all cases with a copy to the County Finance Director and to the Trustee at the
respective addresses specified in the Trust Agreement, or to such other addresses as the
respective parties may from time to time designate by notice in writing.
SECTION 18.Section Headings
All section headings contained herein are for convenience of reference only and
are not intended to define or limit the scope of any provision of this Site Lease.
SECTION 19.Amendment
The Authority and the County may at any time agree to the amendment of this
Site Lease; provided, however, that the Authority and the County agree and recognize that this
Site Lease is entered into as contemplated by the terms of the Trust Agreement, and accordingly,
that any such amendment shall only be made or effected in accordance with and subject to the
terms of the Trust Agreement.
SECTION 20.Execution
This Site Lease may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all together shall constitute but one and the same Lease. It
is also agreed that separate counterparts of this Site Lease may separately be executed by the
County and the Authority, all with the same force and effect as though the same counterpart had
been executed by both the County and the Authority.
OHS West:260998040.2 9
IN WITNESS WHEREOF, the County and the Authority have caused this Site
Lease to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
COUNTY OF CONTRA COSTA,
as Lessor
By
John M. Gioia
Chair of the Board of Supervisors
County of Contra Costa, State of California
[SEAL]
ATTEST:
By
David J. Twa,
Clerk of the Board of Supervisors and
County Administrator
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY,
Lessee
By
John M. Gioia, Chair
ATTEST:
By:
David J. Twa
Executive Director and Secretary
OHS West:260998040.2 A-1
EXHIBIT A
DESCRIPTION OF FACILITIES
All that certain real property situated in the County of Contra Costa, State of California,
described as follows:
The Animal Shelter
The term “Animal Shelter” means the facility located at 4800 Imhoff Place, Martinez,
California 94553, together with parking, site development, landscaping, utilities, equipment,
furnishings, improvements and appurtenant and related facilities, located on the real property
described as follows:
PORTION OF RANCHO LAS JUNTAS AND PORTION OF THE SOUTH ½ OF SECTION
22, TOWNSHIP 2 NORTH, RANGE 2 WEST, MOUNT DIABLO BASE AND MERIDIAN AS
FOLLOWS:
BEGINNING AT THE NORTHWESTERN CORNER OF THE PARCEL OF LAND
DESCRIBED IN THE DEED TO THE CENTRAL CONTRA COSTA SANITARY DISTRICT,
RECORDED OCTOBER 29, 1947, UNDER RECORDER’S SERIAL NO. 43506, IN
VOLUME 1141 OF OFFICIAL RECORDS OF SAID COUNTY, AT PAGE 402, ALSO
BEING THE SOUTHWESTERN CORNER OF THE PARCEL OF LAND DESCRIBED IN
THE DEED TO THE CENTRAL CONTRA COSTA SANITARY DISTRICT, RECORDED
JANUARY 22, 1963, UNDER RECORDER’S SERIAL NO. 5942, IN VOLUME 4287 OF
OFFICIAL RECORDS OF SAID COUNTY, AT PAGE 64, ALSO BEING THE
NORTHEASTERN CORNER OF THE PARCEL OF LAND DESCRIBED IN THE DEED TO
CONTRA COSTA COUNTY, RECORDED DECEMBER 19, 1968, IN VOLUME 5774 OF
OFFICIAL RECORDS OF SAID COUNTY, AT PAGE 178;
THENCE FROM SAID POINT OF BEGINNING NORTH 89° 27’ 30” WEST, ALONG THE
NORTHERN LINE OF SAID COUNTY PARCEL (5774 O.R. 178), 473.55 FEET TO THE
SOUTHEASTERN CORNER OF THE PARCEL OF LAND DESCRIBED IN THE DEED TO
THE ROMAN CATHOLIC ARCHBISHOP OF SAN FRANCISCO, RECORDED JUNE 12,
1942, UNDER RECORDER’S SERIAL NO. 17008, IN VOLUME 667 OF OFFICIAL
RECORDS OF SAID COUNTY, AT PAGE 481, ALSO BEING THE SOUTHWESTERN
CORNER OF THE PARCEL OF LAND DESCRIBED IN THE DEED TO THE CENTRAL
CONTRA COSTA SANITARY DISTRICT, RECORDED DECEMBER 28, 1964, UNDER
RECORDER’S SERIAL NO. 116261, IN VOLUME 4771 OF OFFICIAL RECORDS OF SAID
COUNTY, AT PAGE 68;
THENCE NORTH 0° 07’ 48” EAST, ALONG THE EASTERN LINE OF SAID CATHOLIC
ARCHBISHOP PARCEL (667 O.R. 481) 1,136.67 FEET TO THE SOUTHEASTERN
CORNER OF THE “HELMOND SHEPARD TRACT”, A MAP OF WHICH WAS FILED IN
THE OFFICE OF THE RECORDER OF SAID COUNTY, ON June 20, 1946, IN BOOK 29 OF
MAPS, AT PAGE 49;
THENCE CONTINUING NORTH 0° 07’ 48” EAST, ALONG THE EASTERN LINE OF SAID
TRACT (29 M 49), 750.34 FEET TO THE SOUTHEASTERN CORNER OF LOT 47 OF SAID
TRACT (29 M 49), ALSO BEING THE SOUTHWESTERN CORNER OF THE PARCEL OF
OHS West:260998040.2 A-2
LAND DESCRIBED UNDER ITEM 1 IN THE DEED TO MT. VIEW SANITARY DISTRICT,
RECORDED DECEMBER 19, 1951, IN VOLUME 1867 OF OFFICIAL RECORDS OF SAID
COUNTY, AT PAGE 279;
THENCE SOUTH 89° 51’ 30” EAST, ALONG THE SOUTHERN LINE OF SAID MT. VIEW
SANITARY DISTRICT PARCEL (1867 O.R. 279) 20.00 FEET, TO THE SOUTHEASTERN
CORNER THEREOF;
THENCE NORTH 0° 07’ 48” EAST ALONG THE EASTERN LINE OF SAID MR. VIEW
SANITARY DISTRICT PARCEL (1867 O.R. 279), 100.00 FEET TO THE NORTHEASTERN
CORNER THEREOF;
THENCE NORTH 89° 51’ 30” WEST ALONG THE NORTHERN LINE OF SAID MT. VIEW
SANITARY DISTRICT PARCEL (1867 O.R. 279) 20.00 FEET TO THE NORTHWESTERN
CORNER THEREOF, ALSO BEING THE NORTHEASTERN CORNER OF SAID
HELMOND SHEPARD TRACT (29 M 49) AND THE NORTHWESTERN CORNER OF THE
PARCEL OF LAND DESCRIBED IN THE DEED TO CENTRAL CONTRA COSTA
SANITARY DISTRICT, RECORDED JULY 26, 1967, UNDER RECORDER’S SERIAL NO.
45987, IN VOLUME 5418 OF OFFICIAL RECORDS OF SAID COUNTY, AT PAGE 311;
THENCE NORTH 83° 01’ 29” EAST, ALONG THE NORTHERN LINE OF THE LAST
MENTIONED SANITARY DISTRICT PARCEL (5418 O.R. 311) 479.96 FEET;
THENCE LEAVING SAID NORTHERN LINE SOUTH 0° 12’ 24” WEST, 1,684.76 FEET TO
THE NORTHWESTERN CORNER OF THE ABOVE SECOND MENTIONED SANITARY
DISTRICT PARCEL (4287 O.R. 64);
THENCE CONTINUING SOUTH 0° 12’ 24” WEST, ALONG THE WESTERN LINE OF
SAID SECOND MENTIONED SANITARY DISTRICT PARCEL (4287 O.R. 64) 365.02 FEET
TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED IN THE DEED TO
CENTRAL CONTRA COSTA SANITARY DISTRICT, RECORDED JULY 17, 1972 IN
BOOK 6700, OR, PAGE 28.
ALSO EXCEPTING THEREFROM THAT PORTION THEREOF LYING WITHIN THE
PARCEL OF LAND DESCRIBED AS PARCEL 1 IN THE DEED TO THE STATE OF
CALIFORNIA, RECORDED MARCH 25, 1976, IN BOOK 7803, OR, PAGE 208.
ALSO EXCEPTING THEREFROM THAT PORTION THEREOF LYING WITH THE
PARCEL OF LAND DESCRIBED IN THE DEED TO CENTRAL CONTRA COSTA
SANITARY DISTRICT, RECORDED APRIL 11, 1980 IN BOOK 9812, OR, PAGE 361.
ALSO EXCEPTING THEREFROM THAT PORTION THEREOF LYING WITHIN THE
FOLLOWING DESCRIBED PARCEL OF LAND.
A PORTION OF RANCHO LAS JUNTAS AND A PORTION OF THAT CERTAIN RECORD
OF SURVEY FILED SEPTEMBER 10, 1981, IN BOOK 69 OF L.S.M., AT PAGE 28, IN THE
OFFICE OF THE CONTRA COSTA COUNTY RECORDER, FURTHER DESCRIBED AS
FOLLOWS:
COMMENCING AT THE MOST WESTERLY CORNER OF THAT CERTAIN PARCEL OF
LAND DESCRIBED IN THE DEED TO CONTRA COSTA COUNTY, RECORDED IN
OHS West:260998040.2 A-3
BOOK 6709 OF OFFICIAL RECORDS, AT PAGE 810, AND AS SHOWN ON SAID 69
L.S.M. 28;
THENCE NORTHERLY ALONG THE WESTERLY BOUNDARY LINE OF SAID 6709 OR
810 NORTH 1° 06’ 18” EAST, 155.00 FEET (THE BEARING OF THE WESTERLY LINE OF
SAID 6709 OR 810 AS SHOWN ON SAID 69 L.S.M. 28 BEING TAKEN AS NORTH 1° 06’
18” EAST FOR THE PURPOSES OF THIS DESCRIPTION;
THENCE LEAVING LAST SAID BOUNDARY LINE SOUTH 88° 37’ 42” EAST, 900.00
FEET;
THENCE NORTH 1° 06’ 18” EAST, 18.00 FEET;
THENCE SOUTH 88° 37’ 42” EAST, 132.00 FEET TO THE POINTY OF BEGINNING;
THENCE FROM SAID POINT OF BEGINNING NORTH 1° 06’ 18” EAST, 30.72 FEET;
THENCE SOUTH 88° 37’ 42” EAST, 885.57 FEET TO A LINE PARALLEL TO AND 50
FEET, RIGHT ANGLE MEASUREMENT, WESTERLY OF THE EASTERLY BOUNDARY
LINE OF THAT CERTAIN PARCEL OF LAND DESCRIBED IN THE DEED TO CONTRA
COSTA COUNTY, RECORDED IN BOOK 6179 OR 462, AND AS SHOWN ON SAID 69
L.S.M. 28;
THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 1° 10’ 54” WEST, 37.50 FEET;
THENCE LEAVING LAST SAID LINE NORTH 88° 37’ 42” WEST, 231.29 FEET;
THENCE SOUTH 1° 12’ 55” WEST, 275.00 FEET;
THENCE SOUTH 31° 09’ 26” WEST, 203.94 FEET;
THENCE NORTH 88° 28’ 55” WEST, 39.00 FEET;
THENCE SOUTH 1° 12’ 49” WEST, 81.24 FEET;
THENCE SOUTH 57° 30’ 41” EAST, 173.91 FEET TO A POINT ON THE
NORTHWESTERLY RIGHT-OF-WAY LINE OF IMHOFF DRIVE, LAST SAID POINT
BEING THE BEGINNING OF A NON-TANGENT CURVE CONCAVE TO THE
NORTHWEST HAVING A RADIUS OF 481.00 FEET, A RADIAL LINE TO WHICH BEARS
SOUTH 47° 40’ 12” EAST;
THENCE SOUTHWESTERLY 46.13 FEET ALONG SAID CURVE THROUGH A CENTRAL
ANGLE OF 5° 29’ 40”;
THENCE LEAVING SAID CURVE ON A NON-TANGENT LINE NORTH 57° 30’ 41”
WEST, 148.24 FEET TO A POINT ON THE SOUTHERLY BOUNDARY LINE OF SAID
6179 OR 462;
THENCE ALONG LAST SAID LINE AND THE EXTERIOR BOUNDARY LINE OF SAID
6709 OR 810 THE FOLLOWING THREE COURSES: 1) NORTH 88° 28’ 55” WEST, 290.00
FEET; 2) NORTH 1° 12’ 49” EAST, 412.78 FEET; 3) NORTH 88° 37’ 42” WEST, 213.10
FEET;
THENCE LEAVING LAST SAID LINE NORTH 1° 06’ 18” EAST, 173.00 FEET TO THE
POINT OF BEGINNING.
APN: 159-140-059-1
OHS West:260998040.2 B-1
EXHIBIT B
LEASE TERM
Facility Term Maximum Extension
The Animal Shelter
OHS West:260998021.3
Recording requested by
and return to:
COUNTY OF CONTRA COSTA
c/o Orrick, Herrington & Sutcliffe LLP
The Orrick Building
405 Howard Street
San Francisco, California 94105-2669
Attention: Mary A. Collins, Esq.
SUBLEASE
(Refunding)
by and between
COUNTY OF CONTRA COSTA
PUBLIC FINANCING AUTHORITY
and the
COUNTY OF CONTRA COSTA
Related to
$__________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series C (Refunding)
Dated as of November 1, 2010
THIS TRANSACTION IS EXEMPT FROM FILING FEES PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 6103 AND
TRANSFER TAXES PURSUANT TO CALIFORNIA REVENUE AND TAXATION CODE SECTION 11928.
TABLE OF CONTENTS
Page
OHS West:260998021.3 i
ARTICLE I DEFINITIONS ...................................................................................................2
SECTION 1.01.Definitions .............................................................................................2
ARTICLE II LEASE OF FACILITIES; TERM......................................................................3
SECTION 2.01.Lease of Facilities ..................................................................................3
SECTION 2.02.Term; Occupancy; and Release of Existing Facilities ...........................3
SECTION 2.03.Substitution ............................................................................................4
ARTICLE III RENTAL PAYMENTS; USE OF PROCEEDS ................................................4
SECTION 3.01.Base Rental Payments............................................................................4
SECTION 3.02.Additional Payments ..............................................................................5
SECTION 3.03.Fair Rental Value ...................................................................................6
SECTION 3.04.Payment Provisions ...............................................................................6
SECTION 3.05.Appropriations Covenant .......................................................................7
SECTION 3.06.Rental Abatement ..................................................................................8
SECTION 3.07.Use of Proceeds .....................................................................................8
ARTICLE IV MAINTENANCE; ALTERATIONS AND ADDITIONS ................................8
SECTION 4.01.Maintenance and Utilities ......................................................................8
SECTION 4.02.Changes to the Facilities ........................................................................8
SECTION 4.03.Installation of County’s Equipment .......................................................9
ARTICLE V INSURANCE .....................................................................................................9
SECTION 5.01.Fire and Extended Coverage Insurance .................................................9
SECTION 5.02.Liability Insurance ...............................................................................10
SECTION 5.03.Rental Interruption or Use and Occupancy Insurance .........................11
SECTION 5.04.Worker’s Compensation ......................................................................11
SECTION 5.05.Title Insurance .....................................................................................12
SECTION 5.06.Insurance Proceeds; Form of Policies..................................................12
SECTION 5.07.Annual Certificates ..............................................................................12
ARTICLE VI DEFAULTS AND REMEDIES.......................................................................13
SECTION 6.01.Defaults and Remedies ........................................................................13
SECTION 6.02.Waiver..................................................................................................16
ARTICLE VII EMINENT DOMAIN; PREPAYMENT .........................................................16
SECTION 7.01.Eminent Domain ..................................................................................16
SECTION 7.02.Prepayment ..........................................................................................16
SECTION 7.03.Option to Purchase; Sale of Personal Property ....................................18
ARTICLE VIII COVENANTS .................................................................................................19
SECTION 8.01.Right of Entry ......................................................................................19
TABLE OF CONTENTS
(continued)
Page
OHS West:260998021.3 ii
SECTION 8.02.Liens ....................................................................................................19
SECTION 8.03.Quiet Enjoyment ..................................................................................19
SECTION 8.04.Authority Not Liable............................................................................19
SECTION 8.05.Assignment and Subleasing .................................................................20
SECTION 8.06.Title to Facilities ..................................................................................20
SECTION 8.07.Tax Covenants .....................................................................................20
SECTION 8.08.Continuing Disclosure .........................................................................21
SECTION 8.09.Taxes ....................................................................................................21
SECTION 8.10.Authority’s Purpose .............................................................................22
SECTION 8.11.Purpose of Sublease .............................................................................22
SECTION 8.12.Essential Use ........................................................................................22
ARTICLE IX DISCLAIMER OF WARRANTIES; VENDOR’S WARRANTIES;
USE OF THE FACILITIES .............................................................................22
SECTION 9.01.Disclaimer of Warranties .....................................................................22
SECTION 9.02.Vendor’s Warranties ............................................................................22
SECTION 9.03.Use of the Facilities .............................................................................22
ARTICLE X MISCELLANEOUS ........................................................................................23
SECTION 10.01.Law Governing ....................................................................................23
SECTION 10.02.Notices .................................................................................................23
SECTION 10.03.Validity and Severability .....................................................................24
SECTION 10.04.Net-Net-Net Lease ...............................................................................24
SECTION 10.05.Section Headings .................................................................................25
SECTION 10.06.Amendment or Termination ................................................................25
SECTION 10.07.Execution .............................................................................................25
EXHIBIT A Description of the Facilities ..........................................................................A-1
EXHIBIT B Base Rental Payment Schedule ......................................................................B-1
EXHIBIT C Lease Term .....................................................................................................C-1
EXHIBIT D Form of Budget Certificate ...........................................................................D-1
EXHIBIT E Form of Insurance Certificate ........................................................................E-1
OHS West:260998021.3
SUBLEASE
(Refunding)
This Sublease, dated as of November 1, 2010, by and between the COUNTY OF
CONTRA COSTA PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise
powers authority duly organized and existing under and by virtue of the laws of the State of
California, as sublessor, and the COUNTY OF CONTRA COSTA (the “County”), a body
corporate and politic and a political subdivision of the State of California, as sublessee;
W I T N E S S E T H:
WHEREAS, the Authority acquired and constructed certain public facilities,
buildings and equipment (the “1998 Project”) and leased said public facilities, buildings and
equipment to the County pursuant to a Facility Lease (Various Capital Facilities), dated as of
May 1, 1998, which amended and restated the Facilities Lease (Various Capital Facilities), dated
as of August 1, 1994, by and between the Contra Costa County Public Facilities Corporation and
the County (herein as amended and restated and together with amendments from time to time
thereto, called the “1998 Facility Lease”);
WHEREAS, the Authority issued a series of bonds entitled “County of Contra
Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998
Refunding Series A (the “1998 Series A Bonds”) in an original principal amount of $24,695,000
pursuant to a trust agreement, dated as of May 1, 1998, between the Authority and BNY Western
Trust Company, as trustee for the purpose of financing the 1998 Project;
WHEREAS, the County has found and determined that it would be in the best
interests of the County and the residents of the County to refund and defease all of the
outstanding 1998 Series A Bonds and has requested the Authority to issue a series of refunding
bonds for such purpose;
WHEREAS, the Authority intends to assist the County in refunding and defeasing
the outstanding 1998 Series A Bonds by issuing the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series C (Refunding) (the “Bonds”);
WHEREAS, concurrently with the issuance of the Bonds, the 1998 Facility Lease
will terminate;
WHEREAS, the County will lease to the Authority certain capital assets of the
County (as further defined herein, the “Facilities”) pursuant to a Site Lease, dated as of
November 1, 2010;
WHEREAS, the County will lease back the Facilities from the Authority pursuant
to the terms of this Sublease; and
WHEREAS, under this Sublease, the County will be obligated to make base rental
payments to the Authority for the lease of the Facilities and such other facilities as may from
time to time be leased hereunder;
OHS West:260998021.3 2
NOW, THEREFORE, in consideration of the mutual covenants herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.Definitions.
Unless the context otherwise requires, the terms defined in this Section shall, for
all purposes of this Sublease, have the meanings herein specified, which meanings shall be
equally applicable to both the singular and plural forms of any of the terms herein defined.
Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in
the Trust Agreement.
“Additional Payments” means all amounts payable to the Authority or the
Trustee or any other person from the County as Additional Payments pursuant to Section 3.02
hereof.
“Architects” means the architects, engineers or designers of any project or
portion thereof, and any successor or successors to any thereof.
“Authority” means the County of Contra Costa Public Financing Authority,
acting as sublessor hereunder and any surviving, resulting or transferee entity.
“Base Rental” and “Base Rental Payments” means all amounts payable to the
Authority from the County as Base Rental Payments pursuant to Section 3.01 hereof.
“Base Rental Payment Schedule” means the schedule of Base Rental Payments
payable to the Authority from the County pursuant to Section 3.01 hereof and attached hereto as
Exhibit B.
“Bonds” means the 2010 Series C Bonds and any bonds issued to refund any
such Bonds.
“Code” means the Internal Revenue Code of 1986, as the same shall be hereafter
amended, and any regulations heretofore issued or which shall be hereafter issued by the United
States Department of the Treasury thereunder.
“County” means the County of Contra Costa, California, a body corporate and
politic and a political subdivision of the State of California.
“Event of Default” shall have the meaning specified in Section 6.01 hereof.
“Facilities” shall mean the real property and the improvements thereon as
described in Exhibit A hereto, or any County buildings, other improvements and facilities, added
thereto or substituted therefor, or any portion thereof, in accordance with this Sublease and the
Trust Agreement.
OHS West:260998021.3 3
“Rental Payment Period” means the twelve month period commencing June 1
of each year and ending the following May 31, and the initial period commencing on the
effective date hereof and ending the following May 31.
“Sublease” means this sublease, as originally executed and recorded or as it may
from time to time be supplemented, modified or amended pursuant to the provisions hereof and
of the Trust Agreement.
“Trust Agreement” means the Trust Agreement, dated as of November 1, 2010,
by and between the Trustee and the Authority and acknowledged by the County, as originally
executed or as it may from time to time be supplemented, modified or amended by a
Supplemental Trust Agreement entered into pursuant to the provisions thereof.
“2010 Series C Bonds” means the County of Contra Costa Public Financing
Authority Lease Revenue Bonds, 2010 Series C (Refunding) issued by the Authority under and
pursuant to Section 2.01 of the Trust Agreement.
ARTICLE II
LEASE OF FACILITIES; TERM
SECTION 2.01.Lease of Facilities. The Authority hereby leases to the
County and the County hereby leases from the Authority the Facilities, subject, however, to all
easements, encumbrances, and restrictions that exist at the time of the commencement of the
term of this Sublease, as defined in Section 2.02 hereof. The County hereby agrees and
covenants during the term of this Sublease that, except as hereinafter provided, it will use the
Facilities for public and County purposes so as to afford the public the benefits contemplated by
this Sublease.
SECTION 2.02.Term; Occupancy; and Release of Existing Facilities. The
term of this Sublease shall commence on the date of recordation of this Sublease in the office of
the County Recorder of Contra Costa County, State of California, or on [December 1, 2010],
whichever is earlier, and shall end on the dates specified in Exhibit C hereto, unless such term is
extended or sooner terminated as hereinafter provided. If on such dates, the Base Rental
Payments attributable to the related Facility and all other amounts then due hereunder with
respect to such Facility, including any Reserve Facility Costs, shall not be fully paid, or if the
rental payable hereunder with respect to such Facility shall have been abated at any time and for
any reason, then the term of this Sublease with respect to such Facility shall be extended until the
Base Rental Payments attributable to such Facility and all other amounts then due hereunder with
respect to such Facility, including any Reserve Facility Costs, shall be fully paid, except that the
term of this Sublease as to the respective Facility shall in no event be extended beyond ten (10)
years after the date identified with respect thereto. If prior to such dates, the Base Rental
Payments attributable to the related Facility or all Bonds payable therefrom and all other
amounts then due hereunder with respect to such Facility, including any Reserve Facility Costs,
shall be fully paid, or provision therefor made, the term of this Sublease with respect to such
Facility shall end ten (10) days thereafter or upon written notice by the County to the Authority,
whichever is earlier.
OHS West:260998021.3 4
SECTION 2.03.Substitution. The County and the Authority may substitute
real property as part of the Facilities for purposes of this Sublease, but only after the County shall
have filed with the Authority and the Trustee, with copies to each rating agency then providing a
rating for the Bonds, all of the following:
(a)Executed copies of the Sublease or amendments thereto containing
the amended description of the Facilities.
(b)A Certificate of the County with copies of the Sublease or the Site
Lease, if needed, or amendments thereto containing the amended description of the Facilities
stating that such documents have been duly recorded in the official records of the County
Recorder of the County.
(c)A Certificate of the County, supported by expert knowledge or
construction cost information evidencing that the fair market value of the substitute Facilities
will be at least equal to the aggregate outstanding principal amount of the Base Rental Payments,
that the annual fair rental value of the substitute Facilities will be at least equal to the maximum
annual Base Rental Payments thereafter coming due and payable hereunder, and that the useful
life of the substitute Facilities will at least extend to the final Base Rental Payment date.
(d)A Certificate of the County stating that, based upon review of such
instruments, certificates or any other matters described in such Certificate of the County, the
County has good merchantable title to the Facilities which will constitute the Facilities after such
substitution. The term “Good Merchantable Title” shall mean such title as is satisfactory and
sufficient for the needs and operations of the County.
(e)A Certificate of the County stating that such substitution does not
adversely affect the County’s use and occupancy of the Facilities (as such term will be defined
following the substitution).
(f)An Opinion of Counsel stating that such amendment or
modification (i) complies with the terms of the Constitution and laws of the State and of the
Trust Agreement; (ii) will, upon the execution and delivery thereof, be valid and binding upon
the Authority and the County; and (iii) if the Bonds outstanding with respect thereto were issued
on a tax-exempt basis, will not cause the interest on the Bonds to be included in gross income for
federal income tax purposes.
ARTICLE III
RENTAL PAYMENTS; USE OF PROCEEDS
SECTION 3.01.Base Rental Payments. The County agrees to pay to the
Authority, as Base Rental Payments for the use and occupancy of the Facilities (subject to the
provisions of Sections 3.04, 3.06 and 7.01 of this Sublease) annual rental payments with
principal and interest components, the interest components being payable semi-annually, in
accordance with the Base Rental Payment Schedule attached hereto as Exhibit B and made a part
hereof. Base Rental Payments shall be calculated on an annual basis, for each Rental Payment
OHS West:260998021.3 5
Period, and each annual Base Rental shall be divided into two interest components, due on
December 1 and June 1, and one principal component, due on June 1, except that the first Rental
Payment Period commences on the date of recordation of this Sublease and ends on [______].
Each Base Rental Payment installment shall be payable on the fifteenth (15th) day of the month
immediately preceding its due date. The interest components of the Base Rental Payments shall
be paid by the County as and constitute interest paid on the principal components of the Base
Rental Payments to be paid by the County hereunder, computed on the basis of a 360-day year
composed of twelve 30-day months. Each annual payment of Base Rental (to be payable in
installments as aforesaid) shall be for the use of the Facilities.
If the term of this Sublease shall have been extended pursuant to Section 2.02
hereof, Base Rental Payment installments shall continue to be due on December 1 and June 1 in
each year, and payable prior thereto as hereinabove described, continuing to and including the
date of termination of this Sublease. Upon such extension of this Sublease, the County shall
deliver to the Trustee a Certificate setting forth the extended rental payment schedule, which
schedule shall establish the principal and interest components of the Base Rental Payments so
that the principal components will in the aggregate be sufficient to pay all unpaid principal
components with interest components sufficient to pay all unpaid interest components plus
interest and to pay any Reserve Facility Costs.
If at any time the Base Rental shall not have been paid by the County when due,
for any reason whatsoever, and no other source of funds shall have been available to make the
payments of principal and interest on the Bonds, the principal and interest components of the
Base Rental shall be recalculated by the County to reflect interest on the unpaid principal
components at the rate or rates specified in the Trust Agreement and to pay any Reserve Facility
Costs as provided in the agreement with respect to the Reserve Facility, and a revised Exhibit B
to this Sublease shall be prepared by the County and supplied to the Authority and the Trustee
reflecting such reallocation.
SECTION 3.02.Additional Payments. The County shall also pay such
amounts (herein called the “Additional Payments”) as shall be required by the Authority for the
payment of all costs and expenses incurred by the Authority in connection with the execution,
performance or enforcement of this Sublease, or any pledge of Base Rental payable hereunder,
the Trust Agreement, the Reserve Facility, its interest in the Facilities and the lease of the
Facilities to the County, including but not limited to payment of all fees, costs and expenses and
all administrative costs of the Authority related to the Facilities, including, without limiting the
generality of the foregoing, salaries and wages of employees, all expenses, compensation and
indemnification of the Trustee payable by the Authority under the Trust Agreement, fees of
auditors, accountants, attorneys or architects, and all other necessary administrative costs of the
Authority or charges required to be paid by it in order to maintain its existence or to comply with
the terms of the Bonds or of the Trust Agreement; but not including in Additional Payments
amounts required to pay the principal of or interest on the Bonds or the portion of any Reserve
Facility Costs related thereto.
Such Additional Payments shall be billed to the County by the Authority or the
Trustee from time to time, together with a statement certifying that the amount billed has been
paid by the Authority or by the Trustee on behalf of the Authority, for one or more of the items
OHS West:260998021.3 6
above described, or that such amount is then payable by the Authority or the Trustee for such
items. Amounts so billed shall be paid by the County to the billing party within 30 days after
receipt of the bill by the County. The County reserves the right to audit billings for Additional
Payments although exercise of such right shall in no way affect the duty of the County to make
full and timely payment for all Additional Payments.
The Authority has issued and may in the future issue bonds and has entered into
and may in the future enter into leases to finance capital improvements. The administrative costs
of the Authority shall be allocated among the facilities subject to such other lease agreements
and the Facilities, as hereinafter in this paragraph provided. The fees of the Trustee under the
Trust Agreement, and any other expenses directly attributable to the Facilities shall be included
in the Additional Payments payable hereunder. The fees of any trustee or paying agent under
any indenture securing bonds of the Authority or any trust agreement other than the Trust
Agreement, and any other expenses directly attributable to any facilities other than the Facilities,
shall not be included in the administrative costs of the Facilities and shall not be paid from the
Additional Payments payable hereunder. Any expenses of the Authority not directly attributable
to any particular lease of the Authority shall be equitably allocated among all such leases,
including this Sublease, in accordance with sound accounting practice. In the event of any
question or dispute as to such allocation, the written opinion of an independent firm of certified
public accountants, employed by the Authority to consider the question and render an opinion
thereon, shall be a final and conclusive determination as to such allocation. The Trustee may
conclusively rely upon the Written Request of the Authority, with the approval of the County
Administrator or the County Finance Director, or a duly authorized representative of the County,
endorsed thereon, in making any determination that costs are payable as Additional Payments
hereunder, and shall not be required to make any investigation as to whether or not the items so
requested to be paid are expenses related to the lease of the Facilities.
SECTION 3.03.Fair Rental Value. Such payments of Base Rental
Payments and Additional Payments for each rental period during the term of this Sublease shall
constitute the total rental for said Rental Payment Period and shall be paid by the County in each
Rental Payment Period for and in consideration of the right of use and occupancy of, and
continued quiet use and enjoyment of, the Facilities during each such period for which said rental
is to be paid. The parties hereto have agreed and determined that such total rental payable for
each Rental Payment Period represents the fair rental value of the Facilities for each such period.
In making such determination, consideration has been given to the value of the Facilities, costs
of acquisition, design, construction and financing of the Facilities, other obligations of the parties
under this Sublease, the uses and purposes which may be served by the Facilities and the benefits
therefrom which will accrue to the County and the general public.
SECTION 3.04.Payment Provisions. Each installment of rental payable
hereunder shall be paid in lawful money of the United States of America to or upon the order of
the Authority at the corporate trust office of the Trustee in San Francisco, California, or such
other place as the Authority shall designate. Any such installment of rental accruing hereunder
which shall not be paid when due and payable under the terms of this Sublease shall bear interest
at the rate of twelve percent (12%) per annum, or such lesser rate of interest as may be permitted
by law, from the date when the same is due hereunder until the same shall be paid.
Notwithstanding any dispute between the Authority and the County, the County shall make all
OHS West:260998021.3 7
rental payments when due without deduction or offset of any kind and shall not withhold any
rental payments pending the final resolution of such dispute. In the event of a determination that
the County was not liable for said rental payments or any portion thereof, said payments or
excess of payments, as the case may be, shall be credited against subsequent rental payments due
hereunder or refunded at the time of such determination. Amounts required to be deposited by
the County with the Trustee pursuant to this Section on any date shall be reduced to the extent of
amounts on deposit in the Revenue Fund, the Interest Account or the Principal Account and
available therefor.
All payments received shall be applied first to the interest components of the Base
Rental Payments due hereunder, then to the principal components of the Base Rental Payments
due hereunder and thereafter to all Additional Payments due hereunder, but no such application
of any payments which are less than the total rental due and owing shall be deemed a waiver of
any default hereunder.
Rental is subject to abatement as provided in Section 3.06.
Nothing contained in this Sublease shall prevent the County from making from
time to time contributions or advances to the Authority for any purpose now or hereafter
authorized by law, including the making of repairs to, or the restoration of, the Facilities in the
event of damage to or the destruction of the Facilities.
SECTION 3.05.Appropriations Covenant. The County covenants to take
such action as may be necessary to include all such Base Rental Payments and Additional
Payments due hereunder in its annual budgets, to make necessary annual appropriations for all
such Base Rental Payments and Additional Payments as shall be required to provide funds in
such year for such Base Rental Payments and Additional Payments. The County will deliver to
the Authority and the Trustee within sixty (60) days of adoption of the final County budget a
Certificate of the County (in the form set forth in Exhibit D attached hereto) stating that the
budget as adopted appropriates all moneys necessary for the payment of Base Rental Payments
and Additional Payments hereunder. The covenants on the part of the County herein contained
shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty
of each and every public official of the County to take such action and do such things as are
required by law in the performance of the official duty of such officials to enable the County to
carry out and perform the covenants and agreements in this Sublease agreed to be carried out and
performed by the County.
The Authority and the County understand and intend that the obligation of the
County to pay Base Rental Payments and Additional Payments hereunder shall constitute a
current expense of the County and shall not in any way be construed to be a debt of the County
in contravention of any applicable constitutional or statutory limitation or requirement
concerning the creation of indebtedness by the County, nor shall anyt hing contained herein
constitute a pledge of the general tax revenues, funds or moneys of the County. Base Rental
Payments and Additional Payments due hereunder shall be payable only from current funds
which are budgeted and appropriated or otherwise legally available for the purpose of paying
Base Rental Payments and Additional Payments or other payments due hereunder as
consideration for use of the Facilities. This Sublease shall not create an immediate indebtedness
OHS West:260998021.3 8
for any aggregate payments which may become due hereunder in the event that the term of the
Sublease is continued. The County has not pledged the full faith and credit of the County, the
State of California or any agency or department thereof to the payment of the Base Rental
Payments and Additional Payments or any other payments due hereunder.
SECTION 3.06.Rental Abatement. The Base Rental Payments and
Additional Payments shall be abated proportionately, during any period in which by reason of
any damage or destruction (other than by condemnation which is hereinafter provided for) there
is substantial interference with the use and occupancy of the Facilities by the County, in the
proportion in which the initial cost of that portion of the Facilities rendered unusable bears to the
initial cost of the whole of the Facilities. Such abatement shall continue for the period
commencing with such damage or destruction and ending with the substantial completion of the
work of repair or reconstruction. In the event of any such damage or destruction, this Sublease
shall continue in full force and effect and the County waives any right to terminate this Sublease
by virtue of any such damage or destruction.
SECTION 3.07.Use of Proceeds. The parties hereto agree that the proceeds
of the Bonds will be used to refund the 1998 Series A Bonds, to establish the associated Reserve
Account within the Reserve Fund referred to in the Trust Agreement and to pay the costs of
issuing the Bonds and incidental and related expenses.
ARTICLE IV
MAINTENANCE; ALTERATIONS AND ADDITIONS
SECTION 4.01.Maintenance and Utilities. During such time as the County
is in possession of the Facilities, all maintenance and repair, both ordinary and extraordinary, of
the Facilities shall be the responsibility of the County, which shall at all times maintain or
otherwise arrange for the maintenance of the Facilities in first class condition, and the County
shall pay for or otherwise arrange for the payment of all utility services supplied to the Facilities,
which may include, without limitation, janitor service, security, power, gas, telephone, light,
heating, ventilation, air conditioning, water and all other utility services, and shall pay for or
otherwise arrange for payment of the cost of the repair and replacement of the Facilities resulting
from ordinary wear and tear or want of care on the part of the County or any assignee or
sublessee thereof or any other cause and shall pay for or otherwise arrange for the payment of all
insurance policies required to be maintained with respect to the Facilities. In exchange for the
rental herein provided, the Authority agrees to provide only the Facilities.
SECTION 4.02.Changes to the Facilities. Subject to Section 8.02 hereof,
the County shall, at its own expense, have the right to remodel the Facilities or to make
additions, modifications and improvements to the Facilities. All such additions, modifications
and improvements shall thereafter comprise part of the Facilities and be subject to the provisions
of this Sublease. Such additions, modifications and improvements shall not in any way damage
the Facilities or cause them to be used for purposes other than those authorized under the
provisions of state and federal law; and the Facilities, upon completion of any additions,
modifications and improvements made pursuant to this Section, shall be of a value which is at
OHS West:260998021.3 9
least equal to the value of the Facilities immediately prior to the making of such additions,
modifications and improvements.
SECTION 4.03.Installation of County’s Equipment. The County and any
sublessee may at any time and from time to time, in its sole discretion and at its own expense,
install or permit to be installed other items of equipment or other personal property in or upon
the Facilities. All such items shall remain the sole property of such party, in which neither the
Authority nor the Trustee shall have any interest, and may be modified or removed by such party
at any time provided that such party shall repair and restore any and all damage to the Facilities
resulting from the installation, modification or removal of any such items. Nothing in this
Sublease shall prevent the County from purchasing items to be installed pursuant to this Section
under a conditional sale or lease purchase contract, or subject to a vendor’s lien or security
agreement as security for the unpaid portion of the purchase price thereof, provided that no such
lien or security interest shall attach to any part of the Facilities.
ARTICLE V
INSURANCE
SECTION 5.01.Fire and Extended Coverage Insurance. The County shall
procure or cause to be procured and maintain or cause to be maintained, throughout the term of
this Sublease, insurance against loss or damage to any structures constituting any part of the
Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious
mischief insurance and sprinkler system leakage insurance and earthquake insurance, if available
on the open market from reputable insurance companies. Said extended coverage insurance
shall, as nearly as practicable, cover loss or damage by explosion, windstorm, flood, riot and riot
attending a strike, aircraft, vehicle damage, hail, smoke and such other hazards as are normally
covered by such insurance. Such insurance shall be in an amount equal to the replacement cost
(without deduction for depreciation) of all structures constituting any part of the Facilities,
excluding the cost of excavations, of grading and filling, and of the land (except that such
insurance may be subject to deductible clauses for any one loss of not to exceed $[250,000] or
comparable amount adjusted for inflation or more in the case of earthquake insurance), or, in the
alternative, shall be in an amount and in a form sufficient (together with moneys held under the
Trust Agreement), in the event of total or partial loss, to enable the County to prepay all or any
part of the Base Rental Payments then unpaid, pursuant to Section 7.02 hereof and to redeem
outstanding Bonds.
In the event of any damage to or destruction of any part of the Facilities, caused
by the perils covered by such insurance, the Authority, except as hereinafter provided, shall
cause the proceeds of such insurance to be utilized for the repair, reconstruction or replacement
of the damaged or destroyed portion of the Facilities, and the Trustee shall hold said proceeds
separate and apart from all other funds, in a special fund to be designated the “Insurance and
Condemnation Fund,” to the end that such proceeds shall be applied to the repair, reconstruction
or replacement of the Facilities to at least the same good order, repair and condition as they were
in prior to the damage or destruction, insofar as the same may be accomplished by the use of said
proceeds. The Trustee shall permit withdrawals of said proceeds from time to time upon
receiving the Written Request of the Authority, stating that the Authority has expended moneys
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or incurred liabilities in an amount equal to the amount therein requested to be paid over to it for
the purpose of repair, reconstruction or replacement, and specifying the items for which such
moneys were expended, or such liabilities were incurred. Any balance of said proceeds not
required for such repair, reconstruction or replacement shall be treated by the Trustee as Base
Rental Payments and applied in the manner provided by Section 5.02 of the Trust Agreement,
provided, however, that if the insurance proceeds were paid to cover damage to property of the
County that does not constitute part of the Facilities, as defined herein, including, but not limited
to furniture and office equipment, then such proceeds shall be paid to the County. Alternatively,
the Authority, at its option, and if the proceeds of such insurance together with any other moneys
then available for the purpose are at least sufficient to redeem an aggregate principal amount of
outstanding Bonds, equal to the amount of Base Rental attributable to the portion of the Facilities
so destroyed or damaged (determined by reference to the proportion which the cost of such
portion of the Facilities bears to the cost of the Facilities), may elect not to repair, reconstruct or
replace the damaged or destroyed portion of the Facilities and thereupon shall cause said
proceeds to be used for the redemption of outstanding Bonds pursuant to the provisions of the
Trust Agreement.
The Authority and the County shall promptly apply for Federal disaster aid or
State of California disaster aid in the event that the Facilities are damaged or destroyed as a
result of an earthquake occurring at any time. Any proceeds received as a result of such disaster
aid shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of
the Facilities, or, at the option of the County and the Authority, to enable the County to prepay
all or any part of the Base Rental Payments then unpaid, pursuant to Section 7.02 hereof, and to
redeem outstanding Bonds if such use of such disaster aid is permitted.
As an alternative to providing the insurance required by the first paragraph of this
Section, or any portion thereof, the Count y may provide a self insurance method or plan of
protection if and to the extent such self insurance method or plan of protection shall afford
reasonable coverage for the risks required to be insured against, in light of all circumstances,
giving consideration to cost, availability and similar plans or methods of protection adopted by
public entities in the State of California other than the County. So long as such method or plan is
being provided to satisfy the requirements of this Sublease, there shall be filed annually with the
Trustee a statement of an actuary, insurance consultant or other qualified person (which may be
the Risk Manager of the County), stating that, in the opinion of the signer, the substitute method
or plan of protection is in accordance with the requirements of this Section and, when effective,
would afford reasonable coverage for the risks required to be insured against. There shall also be
filed a Certificate of the County setting forth the details of such substitute method or plan. In the
event of loss covered by any such self insurance method, the liability of the County hereunder
shall be limited to the amounts in the self insurance reserve fund or funds created under such
method.
SECTION 5.02.Liability Insurance. Except as hereinafter provided, the
County shall procure or cause to be procured and maintain or cause to be maintained, throughout
the term of this Sublease, a standard comprehensive general liability insurance policy or policies
in protection of the Authority and its members, directors, officers, agents and employees and the
Trustee, indemnifying said parties against all direct or contingent loss or liability for damages for
personal injury, death or property damage occasioned by reason of the operation of the Facilities,
OHS West:260998021.3 11
with minimum liability limits of $1,000,000 for personal injury or death of each person and
$3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in
a minimum amount of $200,000 for damage to property resulting from each accident or event.
Such public liability and property damage insurance may, however, be in the form of a single
limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be
maintained as part of or in conjunction with any other liability insurance carried by the County.
As an alternative to providing the insurance required by the first paragraph of this
Section, or any portion thereof, the County may provide a self insurance method or plan of
protection if and to the extent such self insurance method or plan of protection shall afford
reasonable protection to the Authority, its members, directors, officers, agents and employees
and the Trustee, in light of all circumstances, giving consideration to cost, availability and
similar plans or methods of protection adopted by public entities in the State of California other
than the County. So long as such method or plan is being provided to satisfy the requirements of
this Sublease, there shall be filed annually with the Trustee a statement of an actuary,
independent insurance consultant or other qualified person (which may be the Risk Manager of
the County), stating that, in the opinion of the signer, the substitute method or plan of protection
is in accordance with the requirements of this Section and, when effective, would afford
reasonable protection to the Authority, its members, directors, officers, agents and employees
and the Trustee against loss and damage from the hazards and risks covered thereby. There shall
also be filed a Certificate of the County setting forth the details of such substitute method or
plan.
SECTION 5.03.Rental Interruption or Use and Occupancy Insurance. The
County shall procure or cause to be procured and maintain or cause to be maintained, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the rental income
from or the use of the Facilities as the result of any of the hazards covered by the insurance
required by Section 5.01 hereof (provided with respect to earthquake insurance, only if available
on the open market from reputable insurance companies at a reasonable cost, as determined by
the County), in an amount sufficient to pay the part of the total rent hereunder attributable to the
portion of the Facilities rendered unusable (determined by reference to the proportion which the
cost of such portion bears to the cost of the Facilities) for a period of at least two years, except
that such insurance may be subject to a deductible clause of not to exceed two hundred and fifty
thousand dollars ($250,000) or a comparable amount adjusted for inflation (or more in the case
of earthquake coverage). Any proceeds of such insurance shall be used by the Trustee to
reimburse to the County any rental theretofore paid by the County under this Sublease
attributable to such structure for a period of time during which the payment of rental under this
Sublease is abated, and any proceeds of such insurance not so used shall be applied as provided
in Section 3.01 (to the extent required for the payment of Base Rental) and in Section 3.02 (to the
extent required for the payment of Additional Payments) and any remainder shall be treated as
Revenue under the Trust Agreement. The County shall not be entitled to self-insure for rental
interruption insurance.
SECTION 5.04.Worker’s Compensation. The County shall also maintain
worker’s compensation insurance issued by a responsible carrier authorized under the laws of the
State of California to insure its employees against liability for compensation under the Worker’s
Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted
OHS West:260998021.3 12
as an amendment or supplement thereto. As an alternative, such insurance may be maintained as
part of or in conjunction with any other insurance carried by the County. Such insurance may be
maintained by the County in the form of self-insurance.
SECTION 5.05.Title Insurance.The County shall obtain, for the benefit of
the Authority, upon the execution and delivery of this Sublease, title insurance on the Facilities,
in an amount equal to the aggregate principal amount of the Bonds, issued by a company of
recognized standing duly authorized to issue the same, subject only to Permitted Encumbrances.
SECTION 5.06.Insurance Proceeds; Form of Policies. All policies of
insurance required by Sections 5.01 and 5.03 hereof shall name the County, the Authority and
the Trustee as insured and shall contain a lender’s loss payable endorsement in favor of the
Trustee substantially in accordance with the form approved by the Insurance Services Office and
the California Bankers Association. The Trustee shall, to the extent practicable, collect, adjust
and receive all moneys which may become due and payable under any such policies, may
compromise any and all claims thereunder and shall apply the proceeds of such insurance as
provided in Sections 5.01 and 5.03. All policies of insurance required by this Sublease shall
provide that the Trustee shall be given thirty (30) days notice of each expiration thereof or any
intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall
not be responsible for the sufficiency of any insurance herein required and shall be fully
protected in accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss agreed to by the County. The County shall pay when due the premiums
for all insurance policies required by this Sublease.
SECTION 5.07.Annual Certificates. The County will deliver to the
Authority and the Trustee on or before September 15 in each year a written Certificate of an
officer of the County (in the form set forth in Exhibit E attached hereto) stating whether such
policies satisfy the requirements of this Sublease, setting forth the insurance policies then in
force pursuant to this Article, the names of the insurers which have issued the policies, the
amounts thereof and the property and risks covered thereby, and, if any self-insurance program is
being provided, the annual report of an actuary, independent insurance consultant or other
qualified person containing the information required for such self-insurance program and
described in Sections 5.01, 5.02 and 5.04. Delivery to the Trustee of the certificate under the
provisions of this Section shall not confer responsibility upon the Trustee as to the sufficiency of
coverage or amounts of such policies. If so requested in writing by the Trustee, the County shall
also deliver to the Trustee certificates or duplicate originals or certified copies of each insurance
policy described in such schedule.
Any policies of insurance provided by a commercial insurer to satisfy the
requirements of Sections 5.01, 5.02 or 5.03 hereof shall be provided by a commercial insurer
rated A or better by Best or in one of the two highest rating categories by S&P and by Moody’s.
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ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01.Defaults and Remedies. (a) If the County shall fail to pay
any rental payable hereunder when the same becomes due, time being expressly declared to be of
the essence of this Sublease or the County shall fail to keep, observe or perform any other term,
covenant or condition contained herein to be kept or performed by the County for a period of
sixty (60) days after notice of the same has been given to the County by the Authority or the
Trustee or for such additional time as is reasonably required, in the sole discretion of the
Authority, to correct the same, or upon the happening of any of the events specified in
subsection (b) of this Section (any such case above being an “Event of Default”), the County
shall be deemed to be in default hereunder and it shall be lawful for the Authority to exercise any
and all remedies available pursuant to law or granted pursuant to this Sublease. Upon any such
default, the Authority, in addition to all other rights and remedies it may have at law, shall have
the option to do any of the following:
(1)To terminate this Sublease in the manner hereinafter provided on
account of default by the County, notwithstanding any re-entry or re-letting of the Facilities as
hereinafter provided for in subparagraph (2) hereof, and to re-enter the Facilities and remove all
persons in possession thereof and all personal property whatsoever situated upon the Facilities
and place such personal property in storage in any warehouse or other suitable place located
within the County of Contra Costa, California. In the event of such termination, the County
agrees to surrender immediately possession of the Facilities, without let or hindrance, and to pay
the Authority all damages recoverable at law that the Authority may incur by reason of default
by the County, including, without limitation, any costs, loss or damage whatsoever arising out of,
in connection with, or incident to any such re-entry upon the Facilities and removal and storage
of such property by the Authority or its duly authorized agents in accordance with the provisions
herein contained. Neither notice to pay rent or to deliver up possession of the Facilities given
pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful
detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or
obtaining possession of the Facilities nor the appointment of a receiver upon initiative of the
Authority to protect the Authority’s interest under this Sublease shall of itself operate to
terminate this Sublease, and no termination of this Sublease on account of default by the County
shall be or become effective by operation of law or acts of the parties hereto, or otherwise, unless
and until the Authority shall have given written notice to the County of the election on the part of
the Authority to terminate this Sublease. The County covenants and agrees that no surrender of
the Facilities or of the remainder of the term hereof or any termination of this Sublease shall be
valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by
such written notice.
(2)Without terminating this Sublease, (i) to collect each installment of
rent as it becomes due and enforce any other terms or provision hereof to be kept or performed
by the County, regardless of whether or not the County has abandoned the Facilities, or (ii) to
exercise any and all rights of entry and re-entry upon the Facilities. In the event the Authority
does not elect to terminate this Sublease in the manner provided for in subparagraph (1) hereof,
the County shall remain liable and agrees to keep or perform all covenants and conditions herein
OHS West:260998021.3 14
contained to be kept or performed by the County and, if the Facilities are not re-let, to pay the
full amount of the rent to the end of the term of this Sublease or, in the event that the Facilities
are re-let, to pay any deficiency in rent that results therefrom; and further agrees to pay said rent
and/or rent deficiency punctually at the same time and in the same manner as hereinabove
provided for the payment of rent hereunder (without acceleration), notwithstanding the fact that
the Authority may have received in previous years or may receive thereafter in subsequent years
rental in excess of the rental herein specified, and notwithstanding any entry or re-entry by the
Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of
effecting such entry or re-entry or obtaining possession of the Facilities. Should the Authority
elect to enter or re-enter as herein provided, the County hereby irrevocably appoints the
Authority as the agent and attorney-in-fact of the County to re-let the Facilities, or any part
thereof, from time to time, either in the Authority’s name or otherwise, upon such terms and
conditions and for such use and period as the Authority may deem advisable, and to remove all
persons in possession thereof and all personal property whatsoever situated upon the Facilities
and to place such personal property in storage in any warehouse or other suitable place located in
the County of Contra Costa, California, for, to the extent permitted by law, the account of and at
the expense of the County, and the County, to the extent permitted by law, hereby exempts and
agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of,
in connection with, or incident to any such re-entry upon and re-letting of the Facilities and
removal and storage of such property by the Authority or its duly authorized agents in
accordance with the provisions herein contained. The County agrees that the terms of this
Sublease constitute full and sufficient notice of the right of the Authority to re-let the Facilities
and to do all other acts to maintain or preserve the Facilities as the Authority deems necessary or
desirable in the event of such re-entry without effecting a surrender of this Sublease, and further
agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or
termination of this Sublease irrespective of the use or the term for which such re-letting is made
or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event
of such default by the County the right to terminate this Sublease shall vest in the Authority to be
effected in the sole and exclusive manner provided for in sub-paragraph (1) hereof. The County
further waives the right to any rental obtained by the Authority in excess of the rental herein
specified and hereby conveys and releases such excess to the Authority as compensation to the
Authority for its services in re-letting the Facilities or any part thereof. The County further
agrees, to the extent permitted by law, to pay the Authority the reasonable cost of any alterations
or additions to the Facilities necessary to place the Facilities in condition for re-letting
immediately upon notice to the County of the completion and installation of such additions or
alterations.
The County hereby waives any and all claims for damages caused or which may
be caused by the Authority in re-entering and taking possession of the Facilities as herein
provided and all claims for damages that may result from the destruction of or injury to the
Facilities and all claims for damages to or loss of any property belonging to the County, or any
other person, that may be in or upon the Facilities.
(b)If (1) the County’s interest in this Sublease or any part thereof be assigned
or transferred, either voluntarily or by operation of law or otherwise, without the written consent
of the Authority, as hereinafter provided for, or (2) the County or any assignee shall file any
petition or institute any proceeding under any act or acts, state or federal, dealing with or relating
OHS West:260998021.3 15
to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or
acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or
whereby the County asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged
from any or all of the County’s debts or obligations, or offers to the County’s creditors to effect a
composition or extension of time to pay the County’s debts or asks, seeks or prays for
reorganization or to effect a plan of reorganization, or for a readjustment of the County’s debts,
or for any other similar relief, or if any such petition or any such proceedings of the same or
similar kind or character be filed or be instituted or taken against the County, or if a receiver of
the business or of the property or assets of the County shall be appointed by any court, except a
receiver appointed at the instance or request of the Authority, or if the County shall make a
general or any assignment for the benefit of the County’s creditors, or (3) the County shall
abandon or vacate the Facilities, or (4) any representation or warranty made by the County herein
proves to have been false, incorrect, misleading or breached in any material respect on the date
when made, then the County shall be deemed to be in default hereunder.
(c)The Authority shall in no event be in default in the performance of any of
its obligations hereunder or imposed by any statute or rule of law unless and until the Authority
shall have failed to perform such obligations within sixty (60) days or such additional time as is
reasonably required to correct any such default after notice by the County to the Authority
properly specifying wherein the Authority has failed to perform any such obligation. In the
event of default by the Authority, the County shall be entitled to pursue any remedy provided by
law.
(d)In addition to the other remedies set forth in this Section, upon the
occurrence of an event of default as described in this Section, the Authority shall be entitled to
proceed to protect and enforce the rights vested in the Authority by this Sublease or by law. The
provisions of this Sublease and the duties of the County and of its trustees, officers or employees
shall be enforceable by the Authority by mandamus or other appropriate suit, action or
proceeding in any court of competent jurisdiction. Without limiting the generality of the
foregoing, the Authority shall have the right to bring the following actions:
(1)Accounting. By action or suit in equity to require the County and its
trustees, officers and employees and its assigns to account as the trustee of an express
trust.
(2)Injunction. By action or suit in equity to enjoin any acts or things which
may be unlawful or in violation of the rights of the Authority.
(3)Mandamus. By mandamus or other suit, action or proceeding at law or in
equity to enforce the Authority’s rights against the County (and its board, officers and
employees) and to compel the County to perform and carry out its duties and obligations
under the law and its covenants and agreements with the County as provided herein.
The exercise of any rights or remedies under this Sublease shall not permit acceleration of Base
Rental Payments.
OHS West:260998021.3 16
Each and all of the remedies given to the Authority hereunder or by any law now
or hereafter enacted are cumulative and the single or partial exercise of any right, power or
privilege hereunder shall not impair the right of the Authority to other or further exercise thereof
or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting”
as used in this Section shall include, but not be limited to, re-letting by means of the operation by
the Authority of the Facilities. If any statute or rule of law validly shall limit the remedies given
to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are
allowable under any statute or rule of law.
In the event the Authority shall prevail in any action brought to enforce any of the
terms and provisions of this Sublease, the County agrees to pay a reasonable amount as and for
attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available
to the Authority hereunder, whether or not a lawsuit has been filed and whether or not any
lawsuit culminates in a judgment.
SECTION 6.02.Waiver. Failure of the Authority to take advantage of any
default on the part of the County shall not be, or be construed as, a waiver thereof, nor shall any
custom or practice which may grow up between the parties in the course of administering this
instrument be construed to waive or to lessen the right of the Authority to insist upon
performance by the County of any term, covenant or condition hereof, or to exercise any rights
given the Authority on account of such default. A waiver of a particular default shall not be
deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder
shall not be, or be construed to be, a waiver of any term, covenant or condition of this Sublease.
ARTICLE VII
EMINENT DOMAIN; PREPAYMENT
SECTION 7.01.Eminent Domain. If the whole of the Facilities or so much
thereof as to render the remainder unusable for the purposes for which it was used by the County
shall be taken under the power of eminent domain, the term of this Sublease shall cease as of the
day that possession shall be so taken. If less than the whole of the Facilities shall be taken under
the power of eminent domain and the remainder is usable for the purposes for which it was used
by the County at the time of such taking, then this Sublease shall continue in full force and effect
as to such remainder, and the parties waive the benefits of any law to the contrary, and in such
event there shall be a partial abatement of the rental due hereunder in an amount equivalent to
the amount by which the annual payments of principal and interest on the Outstanding Bonds
will be reduced by the application of the award in eminent domain to the redemption of
outstanding Bonds. So long as any of the Bonds shall be outstanding, any award made in
eminent domain proceedings for taking the Facilities or any portion thereof shall be paid to the
Trustee and applied to the prepayment of the Base Rental Payments as provided in Section 7.02.
Any such award made after all of the Base Rental Payments and Additional Payments have been
fully paid, or provision therefor made, shall be paid to the to the County.
SECTION 7.02.Prepayment. (a) The County shall prepay on any date from
insurance (including proceeds of title insurance) and eminent domain proceeds, to the extent
provided in Sections 5.01 and 7.01 hereof (provided, however, that in the event of partial damage
OHS West:260998021.3 17
to or destruction of the Facilities caused by perils covered by insurance, if in the judgment of the
Authority the insurance proceeds are sufficient to repair, reconstruct or replace the damaged or
destroyed portion of the Facilities, such proceeds shall be held by the Trustee and used to repair,
reconstruct or replace the damaged or destroyed portion of the Facilities, pursuant to the
procedure set forth in Section 5.01 for proceeds of insurance), all or any part of Base Rental
Payments then unpaid so that the aggregate annual amounts of Base Rental Payments which shall
be payable after such prepayment date shall be as nearly proportional as practicable to the
aggregate annual amounts of Base Rental Payments unpaid prior to the prepayment date (taking
into account the reduction in Base Rental allocable to future interest on the Bonds that are
redeemed), at a prepayment amount equal to the redemption payment of the maximum amount of
Bonds, including the principal thereof and the interest thereon to the date of redemption, plus any
applicable premium redeemable from such proceeds.
(b)The County may prepay, from any source of available funds, all or any
portion of Base Rental Payments by depositing with the Trustee moneys or securities as provided
in Article X of the Trust Agreement sufficient to defease Bonds corresponding to such Base
Rental Payments when due; provided that the County furnishes the Trustee with an Opinion of
Counsel that such deposit will not cause interest on the Bonds to be includable in gross income
for federal income tax purposes. The County agrees that if following such prepayment the
Facilities are damaged or destroyed or taken by eminent domain, it is not entitled to, and by such
prepayment waives the right of, abatement of such prepaid Base Rental Payments and shall not
be entitled to any reimbursement of such Base Rental Payments.
(c)Before making any prepayment pursuant to this article, the County shall,
within five (5) days following the event creating such right or obligation to prepay, give written
notice to the Authority and the Trustee describing such event and specifying the date on which
the prepayment will be made, which date shall be not less than forty-five (45) days from the date
such notice is given.
(d)When (1) there shall have been deposited with the Trustee at or prior to
the due dates of the Base Rental Payments or date when the County may exercise its option to
purchase the Facilities or any portion or item thereof, in trust for the benefit of the Owners of the
Bonds and irrevocably appropriated and set aside to the payment of the Base Rental Payments or
option price, sufficient moneys and Permitted Investments described in subsection (1) of the
definition thereof in the Trust Agreement, not redeemable prior to maturity, the principal of and
interest on which when due will provide money sufficient to pay all principal, premium, if any,
and interest on the Bonds to the due date of the Bonds or date when the County may exercise its
option to purchase the Facilities, as the case may be; (2)all requirements of Section 10.01 of the
Trust Agreement have been satisfied; and (3) an agreement shall have been entered into with the
Trustee for the payment of its fees and expenses so long as any of the Bonds shall remain unpaid,
then and in that event the right, title and interest of the Authority herein and the obligations of
the County hereunder shall thereupon cease, terminate, become void and be completely
discharged and satisfied (except for the right of the Authority and the obligation of the County to
have such moneys and such Permitted Investments applied to the payment of the Base Rental
Payments or option price) and the Authority’s interest in and title to the Facilities or applicable
portion or item thereof shall be transferred and conveyed to the County. In such event, the
Authority shall cause an accounting for such period or periods as may be requested by the
OHS West:260998021.3 18
County to be prepared and filed with the Authority and evidence such discharge and satisfaction,
and the Authority shall pay over to the County as an overpayment of Base Rental Payments all
such moneys or Permitted Investments held by it pursuant hereto other than such moneys and
such Permitted Investments as are required for the payment or prepayment of the Base Rental
Payments or the option price and the fees and expenses of the Trustee, which moneys and
Permitted Investments shall continue to be held by the Trustee in trust for the payment of Base
Rental Payments or the option price and the fees and expenses of the Trustee, and shall be
applied by the Authority to the payment of the Base Rental Payments or the option price and the
fees and expenses of the Trustee.
SECTION 7.03.Option to Purchase; Sale of Personal Property. The County
shall have the option to purchase the Authority’s interest in any part of Facilities upon payment
of an option price consisting of moneys or securities of the category specified in clause (1) of the
definition of the term Permitted Investments contained in Section 1.01 of the Trust Agreement
(not callable by the issuer thereof prior to maturity) in an amount sufficient (together with the
increment, earnings and interest on such securities) to provide funds to pay the aggregate amount
for the entire remaining term of this Sublease of the part of the total rent hereunder attributable to
such part of the Facilities (determined by reference to the proportion which the cost of such part
of the Facilities bears to the cost of all of the Facilities). Any such payment shall be made to the
Trustee and shall be treated as rental payments and shall be applied by the Trustee to pay the
principal of the Bonds and interest on the Bonds and to redeem Bonds if such Bonds are subject
to redemption pursuant to the terms of the Trust Agreement. Upon the making of such payment
to the Trustee and the satisfaction of all requirements set forth in Section 10.01 of the Trust
Agreement, (a) the Base Rental thereafter payable under this Sublease shall be reduced by the
amount thereof attributable to such part of the Facilities and theretofore paid pursuant to this
Section, (b) Section 3.06 and this Section of this Sublease shall not thereafter be applicable to
such part of the Facilities, (c) the insurance required by Sections 5.01, 5.02 and 5.03 of this
Sublease need not be maintained as to such part of the Facilities, and (d) title to such part of the
Facilities shall vest in the County and the term of this Sublease shall end as to such Facilities.
The County, in its discretion, may request the Authority to sell or exchange any
personal property which may at any time constitute a part of the Facilities, and to release said
personal property from this Sublease, if (a) in the opinion of the County the property so sold or
exchanged is no longer required or useful in connection with the operation of the Facilities, (b)
the consideration to be received from the property is of a value substantially equal to the value of
the property to be released, and (c) if the value of any such property shall, in the opinion of the
Authority, exceed the amount of $100,000, the Authority shall have been furnished a certificate
of an independent engineer or other qualified independent professional consultant (satisfactory to
the Authority) certifying the value thereof and further certifying that such property is no longer
required or useful in connection with the operation of the Facilities. In the event of any such
sale, the full amount of the money or consideration received for the personal property so sold and
released shall be paid to the Authority. Any money so paid to the Authority may, so long as the
County is not in default under any of the provisions of this Sublease, be used upon the Written
Request of the County to purchase personal property, which property shall become a part of the
Facilities leased hereunder. The Authority may require such opinions, certificates and other
documents as it may deem necessary before permitting any sale or exchange of personal property
OHS West:260998021.3 19
subject to this Sublease or before releasing for the purchase of new personal property money
received by it for personal property so sold.
ARTICLE VIII
COVENANTS
SECTION 8.01.Right of Entry. The Authority and its assignees shall have
the right to enter upon and to examine and inspect the Facilities during reasonable business hours
(and in emergencies at all times) (a) to inspect the same, (b) for any purpose connected with the
Authority’s or the County’s rights or obligations under this Sublease, and (c) for all other lawful
purposes.
SECTION 8.02.Liens. In the event the County shall at any time during the
term of this Sublease cause any changes, alterations, additions, improvements, or other work to
be done or performed or materials to be supplied, in or upon the Facilities, the County shall pay,
when due, all sums of money that may become due for, or purporting to be for, any labor,
services, materials, supplies or equipment furnished or alleged to have been furnished to or for
the County in, upon or about the Facilities and shall keep the Facilities free of any and all
mechanics’ or materialmen’s liens or other liens against the Facilities or the Authority’s interest
therein. In the event any such lien attaches to or is filed against the Facilities or the Authority’s
interest therein, the County shall cause each such lien to be fully discharged and released at the
time the performance of any obligation secured by any such lien matures or becomes due, except
that if the County desires to contest any such lien it may do so in good faith. If any such lien
shall be reduced to final judgment and such judgment or such process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the
County shall forthwith pay and discharge said judgment. The County agrees to and shall, to the
maximum extent permitted by law, indemnify and hold the Authority and the Trustee and their
respective members, directors, agents, successors and assigns, harmless from and against, and
defend each of them against, any claim, demand, loss, damage, liability or expense (including
attorney’s fees) as a result of any such lien or claim of lien against the Facilities or the
Authority’s interest therein.
SECTION 8.03.Quiet Enjoyment. The parties hereto mutually covenant
that the County, by keeping and performing the covenants and agreements herein contained and
not in default hereunder, shall at all times during the term of this Sublease peaceably and quietly
have, hold and enjoy the Facilities without suit, trouble or hindrance from the Authority.
SECTION 8.04.Authority Not Li able. The Authority and its members,
directors, officers, agents and employees shall not be liable to the County or to any other party
whomsoever for any death, injury or damage that may result to any person or property by or
from any cause whatsoever in, on or about the Facilities. The County, to the extent permitted by
law, shall indemnify and hold the Authority and its members, directors, officers, agents and
employees, harmless from, and defend each of them against, any and all claims, liens and
judgments arising from the operation of the Facilities, including, without limitation, death of or
injury to any person or damage to property whatsoever occurring in, on or about the Facilities
OHS West:260998021.3 20
regardless of responsibility for negligence, but excepting the active negligence of the person or
entity seeking indemnity.
SECTION 8.05.Assignment and Subleasing. Neither this Sublease nor any
interest of the County hereunder shall be mortgaged, pledged, assigned, sublet or transferred by
the County by voluntary act or by operation of law or otherwise, except with the prior written
consent of the Authority, which, in the case of subletting, shall not be unreasonably withheld;
provided such subletting shall not affect the tax-exempt status of the interest on the Bonds. No
such mortgage, pledge, assignment, sublease or transfer shall in any event affect or reduce the
obligation of the County to make the Base Rental Payments and Additional Payments required
hereunder.
SECTION 8.06.Title to Facilities. During the term of this Sublease, the
Authority shall hold a leasehold estate to the Facilities and any and all additions which comprise
fixtures, repairs, replacement or modifications thereof, except for those fixtures, repairs,
replacements or modifications which are added thereto by the County and which may be
removed without damaging the Facilities, and except for any items added to the Facilities by the
County pursuant to Section 4.02 hereof. This provision shall not operate to the benefit of any
insurance company if there is rental interruption covered by insurance pursuant to Section 5.03
hereof.
Upon the termination or expiration of this Sublease upon payment in full of the
Base Rental Payments attributed to the Facilities and all amounts owing on the Bonds, the
Authority’s interest in the title to the Facilities shall vest in the County and the Authority shall
execute such conveyances, deeds and other documents as may be necessary to evidence the
ownership of the Facilities by the County and to clarify the title of the County on the record
thereof.
SECTION 8.07.Tax Covenants. (a) The County and the Authority shall at
all times do and perform all acts and things permitted by law which are necessary or desirable in
order to assure that the interest on the Bonds will be excluded from gross income for federal
income tax purposes under Section 103 of the Code and shall take no action that would result in
such interest not being excluded from gross income for federal income tax purposes. Without
limiting the generality of the foregoing, the Authority and the County covenant that they will
comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set
forth herein.
(b)If at any time the County or the Authority is of the opinion that for
purposes of this Section it is necessary to restrict or limit the yield on or change in any way the
investment of any moneys held by the Trustee or the County or the Authority under this Sublease
or the Trust Agreement, the County or the Authority shall so instruct the Trustee or the
appropriate officials of the County in writing, and the Trustee or the appropriate officials of the
County, as the case may be, shall take such actions as may be necessary in accordance with such
instructions.
(c)In furtherance of the covenants of the County and the Authority set forth
above, the County will comply with the Tax Certificate and will instruct the Trustee in writing as
OHS West:260998021.3 21
necessary to comply with the Tax Certificate. The Trustee and the Authority may conclusively
rely on any such written instructions, and the County hereby agrees to hold harmless the Trustee
and the Authority for any loss, claim, damage, liability or expense incurred by the Authority and
the Trustee for any actions taken by the Authority or the Trustee in accordance with such
instructions.
(d)This covenant shall survive payment in full or defeasance of the Bonds.
SECTION 8.08.Continuing Disclosure. The County hereby covenants and
agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure
Agreement. Notwithstanding any other provision of this Sublease, failure of the County to
comply with the Continuing Disclosure Agreement shall not be considered an event of default
hereunder; however, the Trustee may (and, at the request of any Participating Underwriter (as
defined in the Continuing Disclosure Agreement) or the Holders of at least 25% aggregate
principal amount of Bonds Outstanding and provided satisfactory indemnification is provided to
the Trustee, shall) or any Bondholder may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to compel the
County to comply with its obligations under this Section 8.08.
SECTION 8.09.Taxes. The County shall pay or cause to be paid all taxes
and assessments of any type or nature charged to the Authority or affecting the Facilities or the
respective interests or estates therein; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years, the
County shall be obligated to pay only such installments as are required to be paid during the term
of this Sublease as and when the same become due.
The County shall also pay directly such amounts, if any, in each year as shall be
required by the Authority for the payment of all license and registration fees and all taxes
(including, without limitation, income, excise, license, franchise, capital stock, recording, sales,
use, value-added, property, occupational, excess profits and stamp taxes), levies, imposts, duties,
charges, withholdings, assessments and governmental charges of any nature whatsoever, together
with any additions to tax, penalties, fines or interest thereon, including, without limitation,
penalties, fines or interest arising out of any delay or failure by the County to pay any of the
foregoing or failure to file or furnish to the Authority or the Trustee for filing in a timely manner
any returns, hereinafter levied or imposed against the Authority or the Facilities, the rentals and
other payments required hereunder or any parts thereof or interests of the County or the
Authority or the Trustee therein by any governmental authority.
The County may, at the County’s expense and in its name, in good faith contest
any such taxes, assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Authority or the Trustee shall notify the County that,
in the opinion of independent counsel, by nonpayment of any such items, the interest of the
Authority in the Facilities will be materially endangered or the Facilities, or any part thereof, will
be subject to loss or forfeiture, in which event the County shall promptly pay such taxes,
assessments or charges or provide the Authority with full security against any loss which may
result from nonpayment, in form satisfactory to the Authority and the Trustee.
OHS West:260998021.3 22
SECTION 8.10.Authority’s Purpose. The Authority covenants that, prior to
the discharge of this Sublease, it will not engage in any activities inconsistent with the purposes
for which the Authority is organized.
SECTION 8.11.Purpose of Sublease. The County covenants that during the
term of this Sublease, except as hereinafter provided, (a) it will use, or cause the use of, the
Facilities for public purposes and for the purposes for which the Facilities are customarily used,
(b) it will not vacate or abandon the Facilities or any part thereof, and (c) it will not make any
use of the Facilities which would jeopardize in any way the insurance coverage required to be
maintained pursuant to Article V hereof.
SECTION 8.12.Essential Use. The Facilities are essential to the proper,
efficient and economic operation of the County and serve an essential governmental function of
the County.
ARTICLE IX
DISCLAIMER OF WARRANTIES;
VENDOR’S WARRANTIES; USE OF THE FACILITIES
SECTION 9.01.Disclaimer of Warranties. THE AUTHORITY MAKES
NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY, FITNESS
FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE FACILITIES OR
WARRANTY WITH RESPECT THERETO. THE COUNTY ACKNOWLEDGES THAT THE
AUTHORITY IS NOT A MANUFACTURER OF THE FACILITIES OR A DEALER
THEREIN, THAT THE COUNTY LEASES THE FACILITIES AS-IS, IT BEING AGREED
THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE COUNTY.
In no event shall the Authority be liable for any incidental, indirect, special or consequential
damage in connection with or arising out of this Sublease or the existence, furnishing,
functioning or the County’s use of any item or products or services provided for in this Sublease.
SECTION 9.02.Vendor’s Warranties. The Authority hereby irrevocably
appoints the County its agent and attorney-in-fact during the term of this Sublease, so long as the
County shall not be in default hereunder, to assert from time to time whatever claims and rights,
including warranties of the Facilities, which the Authority may have against the manufacturers,
vendors and contractors of the Facilities. The County’s sole remedy for the breach of such
warranty, indemnification or representation shall be against the manufacturer or vendor or
contractor of the Facilities, and not against the Authority, nor shall such matter have any effect
whatsoever on the rights and obligations of the Authority with respect to this Sublease, including
the right to receive full and timely payments hereunder. The County expressly acknowledges
that the Authority makes, and has made, no representation or warranties whatsoever as to the
existence or availability of such warranties of the manufacturer, vendor or contractor.
SECTION 9.03.Use of the Facilities. The County will not install, use,
operate or maintain the Facilities improperly, carelessly, in violation of any applicable law or in
a manner contrary to that contemplated by this Sublease. The County shall provide all permits
OHS West:260998021.3 23
and licenses, if any, necessary for the installation and operation of the Facilities. In addition, the
County agrees to comply in all respects (including, without limitation, with respect to the use,
maintenance and operation of the Facilities) with all laws of the jurisdictions in which its
operations may extend and any legislative, executive, administrative or judicial body exercising
any power or jurisdiction over the Facilities; provided, however, that the County may contest in
good faith the validity or application of any such law or rule in any reasonable manner which
does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to the
Facilities or its interest or rights under this Sublease.
ARTICLE X
MISCELLANEOUS
SECTION 10.01.Law Governing. This Sublease shall be governed
exclusively by the provisions hereof and by the laws of the State of California as the same from
time to time exist.
SECTION 10.02.Notices. All notices, statements, demands, consents,
approvals, authorizations, offers, designations, requests, agreements or promises or other
communications hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party if delivered personally or if mailed by United
States registered mail, return receipt requested, postage prepaid:
If to the County:County of Contra Costa
c/o Clerk of the Board of Supervisors
County Administration Building
651 Pine Street
Martinez, CA 94553
cc:County Finance Director
County of Contra Costa
651 Pine Street, 10th Floor
Martinez, CA 94553
OHS West:260998021.3 24
With respect to insurance matters:
County of Contra Costa
Risk Manager
Risk Management Department
2530 Arnold Drive
Martinez, CA 94553
cc:General Service Administration
1220 Morello Avenue, Suite 100
Martinez, CA 94553
cc:County Finance Director
County of Contra Costa
651 Pine Street, 10th Floor
Martinez, CA 94553
If to the Authority:County of Contra Costa Public
Financing Authority
c/o County Administrator
County Administration Building
651 Pine Street
Martinez, CA 94553
If to the Trustee:Wells Fargo Bank, National Association
MAC #A0119-181
333 Market Street, 18th Floor
San Francisco, CA 94105
or to such other addresses as the respective parties may from time to time designate by notice in
writing. A copy of any such notice or other document herein referred to shall also be delivered
to the Trustee.
SECTION 10.03.Validity and Severability. If for any reason this Sublease
shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the
Authority or by the County, or if for any reason it is held by such a court that any of the
covenants and conditions of the County hereunder, including the covenant to pay rentals
hereunder, is unenforceable for the full term hereof, then and in such event this Sublease is and
shall be deemed to be a lease under which the rentals are to be paid by the County annually in
consideration of the right of the County to possess, occupy and use the Facilities, and all of the
rental and other terms, provisions and conditions of this Sublease, except to the extent that such
terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain
in full force and effect.
SECTION 10.04.Net-Net-Net Lease. This Sublease shall be deemed and
construed to be a “net-net-net lease” and the County hereby agrees that the rentals provided for
OHS West:260998021.3 25
herein shall be an absolute net return to the Authority, free and clear of any expenses, charges or
set-offs whatsoever.
SECTION 10.05.Section Headings. All section headings contained herein
are for convenience of reference only and are not intended to define or limit the scope of any
provision of this Sublease.
SECTION 10.06.Amendment or Termination. The Authority and the
County may at any time agree to the amendment or termination of this Sublease; provided,
however, that the Authority and the County agree and recognize that this Sublease is entered into
in accordance with the terms of the Trust Agreement, and accordingly, that any such amendment
or termination shall only be made or effected in accordance with and subject to the terms of the
Trust Agreement.
SECTION 10.07.Execution. This Sublease may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all together shall constitute
but one and the same Sublease. It is also agreed that separate counterparts of this Sublease may
separately be executed by the Authority and the County, all with the same force and effect as
though the same counterpart had been executed by both the Authority and the County.
OHS West:260998021.3 26
IN WITNESS WHEREOF, the Authority and the County have caused this
Sublease to be executed by their respective officers thereunto duly authorized, all as of the day
and year first above written.
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY,
as Sublessor
By:
John M. Gioia, Chair
ATTEST:
By:
David J. Twa
Executive Director and Secretary
COUNTY OF CONTRA COSTA,
as Sublessee
[SEAL]By
John M. Gioia
Chair of the Board of Supervisors
County of Contra Costa, State of California
ATTEST:
By
David J. Twa,
Clerk of the Board of Supervisors and
County Administrator
OHS West:260998021.3 A-1
EXHIBIT A
Description of the Facilities
All that certain real property situated in the County of Contra Costa, State of California,
described as follows:
The Clerk Recorder Building
The term “Clerk Recorder Building ” means the facility located at 555 Escobar Street,
Martinez, California 94553, together with parking, site development, landscaping, utilities,
equipment, furnishings, improvements and appurtenant and related facilities, located on the real
property described as follows:
LOTS 1, 2, 3, 4, 5, 6, 7 AND 8 IN BLOCK 10, ORIGINAL SURVEY, TOWN OF MARTINEZ,
AS PER MAPS THEREOF ON FILE IN THE OFFICE OF THE RECORDER OF THE
COUNTY OF CONTRA COSTA.
EXCEPTING THEREFROM:
THOSE PORTIONS OF LOTS 1, 4, 5 AND 8, DESCRIBED IN THE OFFER OF
DEDICATION TO THE CITY OF MARTINEZ, RECORDED JANUARY 04, 2007,
RECORDER’S SERIES NO. 2007-0003177.
APN: 373-182-001-9
The Social Services Office Building
The term “Social Services Office Building ” means the facility located at 1305
MacDonald Avenue, Richmond, California 94801, together with parking, site development,
landscaping, utilities, equipment, furnishings, improvements and appurtenant and related
facilities, located on the real property described as follows:
A PORTION OF BLOCK 59 AS SHOWN ON THE “AMENDED MAP OF THE CITY OF
RICHMOND:, FILED MARCH 31, 1905, IN BOOK D OF MAPS, PAGE 74, CONTRA
COSTA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING ON THE WESTERN LINE OF SAID BLOCK 59, DISTANT THEREON
NORTH 1° 05’ 58” EAST, 6.00 FEET FROM THE SOUTHWEST CORNER OF SAID
BLOCK THENCE NORTH 1° 05’ 58” EAST, ALONG SAID WESTERN LINE, 305.00 FEET;
THENCE ALONG A LINE DRAWN PARALLEL TO THE SOUTHERN LINE OF SAID
BLOCK, SOUTH 88° 54’ 54” EAST, 205.00 FEET TO THE WESTERN LINE OF PARCEL
THREE DESCRIBED IN THE DEED FROM RICHMOND REDEVELOPMENT AGENCY
TO THE CITY OF RICHMOND, RECORDED FEBRUARY 2, 1971 IN BOOK 6308 OF
OFFICIAL RECORDS, PAGE 328; THENCE ALONG SAID LINE, SOUTH 1° 05’ 58” WEST
292.00 FEET AND ALONG A TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF
OHS West:260998021.3 A-2
13.00 FEET, THROUGH A CENTRAL ANGLE OF 89° 59’ 08”, AN ARC DISTANCE OF
20.42 FEET; THENCE ALONG A LINE DRAWN PARALLEL TO AND 6.00 FEET
NORTHERLY, MEASURED AT RIGHT ANGLES, FROM THE SOUTHERN LINE OF SAID
BLOCK 59, NORTH 88° 54’ 54” WEST, 192.00 FEET TO THE POINT OF BEGINNING.
APN: 540-082-033-7
OHS West:260998021.3 B-1
EXHIBIT B
Base Rental Payment Schedule
Base Rental
Payment
Due Date*Amount Total
Fiscal Year
Total
____________________________
* Payable on the 15th day of the preceding month of the Base Rental Payment Due Date.
OHS West:260998021.3 C-1
EXHIBIT C
Lease Term
Facility Term Maximum Extension
Clerk Recorder Building
Social Services Office Building
OHS West:260998021.3 D-1
Do not delete!
EXHIBIT D
Form of Budget Certificate
County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series C (Refunding)
Certificate of Final Annual Budget for the Period __/__/20__ through __/__/20__
The undersigned, as an Authorized Representative of the County of Contra Costa (the
“County”), hereby certifies that the following have been budgeted for the above-referenced
period with respect to the annual appropriations for all Base Rental Payments and Additional
Payments, as required in Section 3.05 of the Sublease (Refunding), dated as of
November 1,2010, between the County of Contra Costa Public Financing Authority and the
County:
Total Budgeted
Base Rental
Payment
Additional
Payment
COUNTY OF CONTRA COSTA
By ___________________________________
Authorized Representative
OHS West:260998021.3 E-1
EXHIBIT E
Form of Insurance Certificate
County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series C (Refunding)
Annual Insurance Certificate for the Period __/__/20__ through __/__/20__
The undersigned, as an Authorized Representative of the County of Contra Costa (the
“County”), hereby certifies that the insurance requirements as set forth in Section 5.07 of the
Sublease (Refunding), dated as of November 1, 2010, between the County of Contra Costa
Public Financing Authority and the County have been satisfied as evidenced by the attached list
of insurance policies, names of insurers issuing such policies, the property covered and the
amount of coverage.
COUNTY OF CONTRA COSTA
By ___________________________________
Authorized Representative
OHS West:260998021.3 E-2
[Attach List of Insurance Coverage]
2799816.01.17.B.doc
4000600
BOND PURCHASE CONTRACT
$________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
Lease Revenue Bonds
consisting of
$________ 2010 Series A-1 (Capital Project I – Tax-Exempt)
$________ 2010 Series A-2 (Capital Project I – Taxable Build America Bonds)
$________ 2010 Series A-3 (Capital Project I – Taxable Recovery Zone Bonds)
and
$________ 2010 Series B (Capital Project II)
October ___, 2010
County of Contra Costa Public Financing Authority
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
County of Contra Costa
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
Ladies and Gentlemen:
The undersigned, Wedbush Securities Inc., as representative (the “Representative”) on
behalf of itself and Piper Jaffray & Co., as underwriters (collectively, the “Underwriters”),
hereby offers to enter into this Bond Purchase Contract (the “Purchase Contract”) with you, the
County of Contra Costa Public Financing Authority (the “Authority”) and the County of Contra
Costa, California (the “County”), for the purchase by the Underwriters of the $___________
aggregate principal amount of the County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series A-1 (Capital Project I – Tax-Exempt) (the “2010A-1 Bonds”), the
$_______ aggregate principal amount of the County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series A-2 (Capital Project I – Taxable Build America Bonds) (the
“2010A-2 Bonds”), the $_________ aggregate principal amount of the County of Contra Costa
Public Financing Authority Lease Revenue Bonds, 2010 Series A-3 (Capital Project I – Taxable
Recovery Zone Bonds) (the “2010A-3 Bonds” and, with the 2010A-1 Bonds and the 2010A-2
Bonds, the “2010A Bonds”) and the $_________ aggregate principal amount of the County of
Contra Costa Public Financing Authority Lease Revenue Bonds, 2010 Series B (Capital Project
II) (the “2010B Bonds” and, together with the 2010A Bonds, the “Bonds”), which will be issued
pursuant to a Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”), by and
between the Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
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The Representative has been duly authorized to execute this Purchase Contract and to take any
action hereunder by and on behalf of the Underwriters. This offer is made subject to acceptance
by the Authority and the County prior to 11:59 p.m., California time, on the date hereof. If this
offer is not so accepted, this offer will be subject to withdrawal by the Underwriters upon notice
delivered to the Authority and the County at any time prior to acceptance. Upon acceptance, this
Purchase Contract shall be in full force and effect in accordance with its terms and shall be
binding upon the Authority, the County and the Underwriters. Capitalized terms used herein not
otherwise defined herein shall have the meanings set forth in the Official Statement (hereinafter
defined).
The Authority acknowledges and agrees that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm’s-length commercial transaction between the
Authority and the Underwriters, (ii) in connection with such transaction, the Underwriters have
not assumed (individually or collectively) a fiduciary responsibility in favor of the Authority
with respect to (x) the offering of the Bonds or the process leading thereto (whether or not the
Underwriters have advised or are currently advising the Authority on other matters) or (y) any
other obligation to the Authority except the obligations expressly set forth in this Purchase
Contract and (iii) the Authority has consulted with its own legal and other professional advisors
to the extent it deemed appropriate in connection with the offering of the Bonds.
Section 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements set forth herein,
the Underwriters hereby agree to purchase and the Authority agrees to sell to the Underwriters
all (but not less than all) of the 2010A-1 Bonds, in the aggregate principal amount of
$_________, the 2010A-2 Bonds, in the aggregate principal amount of $________, the 2010A-3
Bonds, in the aggregate principal amount of $________ and the 2010B Bonds, in the aggregate
principal amount of $________. The 2010A Bonds are payable from, and secured by Revenues
of the Authority, consisting primarily of certain rental payments (“2010A Base Rental
Payments”) to be made by the County pursuant to, and as defined in, the Sublease (Capital
Project I), dated as of November 1, 2010 (the “2010A Sublease”), by and between the Authority
and the County. The 2010B Bonds are payable from, and secured by Revenues of the Authority,
consisting primarily of certain rental payments (“2010B Base Rental Payments” and, together
with the 2010A Base Rental Payments, the “Base Rental Payments”) to be made by the County
pursuant to, and as defined in, the Sublease (Capital Project II), dated as of November 1, 2010
(the “2010B Sublease” and, together with the 2010A Sublease, the “Subleases”), by and between
the Authority and the County.
The Bonds shall be substantially in the form described in, and shall be issued and secured
under and pursuant to, and shall be payable and subject to redemption as provided in, the Trust
Agreement. The Bonds shall be dated the date of delivery thereof and shall mature on the dates
and in the amounts set forth on Schedule I attached hereto. Interest on the Bonds shall be
payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2011.
The Base Rental Payments to be made by the County pursuant to the Subleases are
payable by the County from its General Fund to the Authority for the right to use and possession
by the County of certain real property and the improvements thereon located within the County
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(the “Facilities”). The County has covenanted under the Subleases that it will take such action
as may be necessary to include the Base Rental Payments in its annual budgets and to make the
necessary annual appropriations therefor. The Bonds are secured by a pledge of and charge and
lien upon the Revenues.
Pursuant to a Site Lease (Capital Project I) (the “2010A Site Lease”) and a Site Lease
(Capital Project II) (the “2010B Site Lease” and, with the 2010A Site Lease, the “Site Leases”),
each dated as of November 1, 2010 and between the County and the Authority, the County
leased the Facilities to the Authority.
The Bonds are being issued for the purpose of financing all or a portion of the cost of
various capital projects of the County and paying any costs associated with the financing of said
projects.
The County will undertake, pursuant to the Trust Agreement and a Continuing Disclosure
Agreement (the “Continuing Disclosure Agreement”), to be dated the Closing Date (as
hereinafter defined), to provide annual reports and notices of certain events relating to the Bonds.
A description of this undertaking is set forth in the Preliminary Official Statement and the
Official Statement (both terms as defined below).
The Authority and the County have heretofore delivered to the Underwriters a
Preliminary Official Statement, dated ___________, 2010 relating to the Bonds (as
supplemented or amended with the consent of the Underwriters, the “Preliminary Official
Statement”), that the Authority and the County have deemed final as of its date in accordance
with paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission
(“Rule 15c2-12”). The Authority and the County shall deliver or cause to be delivered to the
Underwriters, within seven (7) business days from the date hereof, copies of an official statement
relating to the Bonds executed on behalf of and approved for distribution by the Authority and
the County in the form of the Preliminary Official Statement, as amended to conform to the
terms of this Purchase Contract and to reflect the reoffering terms of the Bonds and with such
other changes as shall have been consented to by the Authority, the County and the Underwriters
(the “Official Statement”). The Authority and the County shall deliver the Official Statement at
the Authority’s sole cost, at such address as the Underwriters shall specify, and in such quantities
as the Underwriters may request in order to comply with paragraph (b)(4) of Rule 15c2-12 and
the rules of the Municipal Securities Rulemaking Board. The Authority and the County hereby
approve the distribution of the Official Statement and authorize the use of copies of the Official
Statement and the documents referred to therein in connection with the offering and sale of the
Bonds by the Underwriters.
(b) The Underwriters shall pay to the Authority as the purchase price for the 2010A-1
Bonds $___________ (representing the $___________ aggregate principal amount of the
2010A-1 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(c) The Underwriters shall pay to the Authority as the purchase price for the 2010A-2
Bonds $___________ (representing the $___________ aggregate principal amount of the
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2010A-2 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(d) The Underwriters shall pay to the Authority as the purchase price for the 2010A-3
Bonds $___________ (representing the $___________ aggregate principal amount of the
2010A-3 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(e) The Underwriters shall pay to the Authority as the purchase price for the 2010B
Bonds $___________ (representing the $___________ aggregate principal amount of the 2010B
Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original issue
premium [discount] of $___________).
(f) At 8:00 a.m., California time, on November ___, 2010, or at such other time or on
such other date as the Authority, the County and the Underwriters mutually agree upon (the
“Closing Date”), the Authority will deliver or cause to be delivered to the Underwriters, the
Bonds (delivered through the book-entry system of The Depository Trust Company (“DTC”)),
duly executed, and at the offices of Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San
Francisco, California 94105, or at such other place as the Authority, the County and the
Underwriters shall have mutually agreed upon, the other documents mentioned herein. The
Underwriters will accept such delivery and pay the purchase price(s) of the Bonds as set forth in
subparagraphs (b), (c), (d) and (e) above in immediately available funds (such delivery and
payment being herein referred to as the “Closing”) payable to the order of the Trustee.
(g) The Underwriters agree to make a bona fide public offering of the Bonds at the
initial offering prices set forth in the Official Statement, which prices may be changed from time
to time by the Underwriters after such offering. The Authority hereby authorizes the
Underwriters to use the forms or copies of the Official Statement, the Trust Agreement, the
Subleases, the Site Leases and all other documents referred to in the Official Statement and the
information contained in each of the foregoing in connection with the public offering and sale of
the Bonds.
Section 2. Representations, Warranties and Agreements of the Authority. The
Authority hereby represents, warrants and agrees with the Underwriters as follows:
(a) The Authority is, and will be on the Closing Date a joint exercise of
powers agency duly organized and validly existing pursuant to the Constitution and laws
of the State of California with the full power and authority to issue the Bonds, to execute
and deliver the Official Statement, and to enter into this Purchase Contract, the Subleases,
the Site Leases, and the Trust Agreement. The Trust Agreement, the Subleases, and the
Site Leases, together with the Continuing Disclosure Agreement, are collectively known
as the “Financing Documents”;
(b) By official action of the Authority prior to or concurrently with the
acceptance hereof, the Authority has duly authorized and approved the execution and
delivery of, and the performance by the Authority of the obligations on its part contained
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in, the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the Authority is a party will constitute, a
legal, valid and binding obligation of the Authority, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against joint powers authorities
in California; and the execution and delivery of the Financing Documents to which it is a
party, this Purchase Contract and the Official Statement, and compliance with the
provisions on the Authority’s part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, lease, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject,
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Authority under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, lease, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the Authority, the Authority is not in any
material respect in breach of or default under any applicable law or administrative
regulation of the State of California or the United States or any applicable judgment or
decree or any loan agreement, lease, indenture, bond, note, resolution, agreement or other
instrument to which the Authority is a party or is otherwise subject, and no event has
occurred and is continuing which, with the passage of time or the giving of notice or
both, would constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the Authority, threatened against the Authority in any material
respect affecting the existence of the Authority or the titles of its officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale, execution or delivery
of the Bonds or the payment of Base Rental Payments or in any way contesting or
affecting the validity or enforceability of the Bonds, the Financing Documents to which
the Authority is a party or this Purchase Contract or contesting the powers of the
Authority or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Official
Statement, or any amendment or supplement thereto, wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity or enforceability of the
Financing Documents to be executed by it or this Purchase Contract;
(f) The Authority will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
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reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the Authority be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the statements contained in the Official Statement
under the captions “THE AUTHORITY” and “LITIGATION MATTERS” did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement under the captions “THE AUTHORITY”
and “LITIGATION MATTERS” as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated therein
or necessary to make such information therein, in the light of the circumstances under
which it was presented, not misleading, the Authority will notify the Underwriters, and, if
in the opinion of the Authority, the Underwriters or their respective counsel, such event
requires the preparation and publication of a supplement or amendment to the Official
Statement, the Authority will forthwith prepare and furnish to the Underwriters (at the
expense of the Authority) a reasonable number of copies of an amendment of or
supplement to the Official Statement (in form and substance satisfactory to counsel for
the Underwriters) which will amend or supplement the Official Statement so that it will
not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the
Bonds, the Authority will furnish such information with respect to itself as the
Underwriters may from time to time reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement under the captions “THE AUTHORITY” and “LITIGATION MATTERS” so
supplemented or amended (including any financial and statistical data contained therein)
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
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(j) As used herein and for the purposes of the foregoing, the term “End of the
Underwriting Period” for the Bonds shall mean the earlier of (i) the Closing Date or (ii)
the date on which the End of the Underwriting Period for the Bonds has occurred under
Rule 15c2-12, as specified as such in a notice from the Underwriters stating the date
which is the End of the Underwriting Period;
(k) There is no consent, approval, authorization or other order of, or filing or
registration with, or certification by, any regulatory authority having jurisdiction over the
Authority required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
Authority of the other transactions contemplated by this Purchase Contract or the
Financing Documents to which the Authority is a party;
(l) The Bonds will be issued in accordance with the Trust Agreement;
(m) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(n) The Authority will apply the proceeds of the Bonds, and earnings thereon,
in accordance with the Trust Agreement;
(o) The Authority is not in default, and at no time has defaulted in any
material respect, on any bond, note or other obligation for borrowed money or any
agreement under which any such obligation is or was outstanding; and
(p) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the Authority to
the Underwriters as to the statements made therein.
Section 3. Representations, Warranties and Agreements of the County. The County
hereby represents, warrants and agrees with the Underwriters as follows:
(a) The County is and will be on the Closing Date a political subdivision of
the State of California organized and operating pursuant to the laws of the State of
California with full power and authority to execute and deliver the Official Statement,
and to enter into this Purchase Contract and the Financing Documents to be executed by
it;
(b) By official action of the County prior to or concurrently with the
acceptance hereof, the County has duly authorized and approved the execution and
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delivery of, and the performance by the County of the obligations on its part contained in,
the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the County is a party will constitute, a legal,
valid and binding obligation of the County enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against counties in California;
to the best knowledge of the County, the execution and delivery of the Financing
Documents to be executed by it, this Purchase Contract and the Official Statement, and
compliance with the provisions on the County’s part contained herein and therein, will
not in any material respect conflict with or constitute a breach of or default under any
law, administrative regulation, judgment, decree, loan agreement, lease, indenture, bond,
note, resolution, agreement or other instrument to which the County is a party or is
otherwise subject, nor will any such execution, delivery, adoption or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the properties or assets of the County under the terms
of any such law, administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the County, the County is not in any material
respect in breach of or default under any applicable law or administrative regulation of
the State of California or the United States or any applicable judgment or decree or any
loan agreement, lease, indenture, bond, note, resolution, agreement or other instrument to
which the County is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both, would
constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the County, threatened against the County in any material respect
affecting the existence of the County or the titles of its officers to their respective offices
or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds or
the payment of Base Rental Payments or in any way contesting or affecting the validity
or enforceability of the Bonds, the Financing Documents to which the County is a party
or this Purchase Contract or contesting the powers of the County or its authority to enter
into, adopt or perform its obligations under any of the foregoing, or contesting in any way
the completeness or accuracy of the Official Statement, or any amendment or supplement
thereto, wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Financing Documents to be executed by it or
this Purchase Contract;
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(f) The County will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the County be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under the
caption “UNDERWRITING”) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement (excluding therefrom information relating
to DTC and the book-entry system and the information under the caption
“UNDERWRITING”), as then supplemented or amended, to contain any untrue statement of
a material fact or to omit to state a material fact required to be stated therein or necessary
to make such information therein, in the light of the circumstances under which they were
made, not misleading, the County will notify the Underwriters, and, if in the opinion of
the Underwriters, the County or their respective counsel, such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the
County will forthwith prepare and furnish to the Underwriters (at the expense of the
County) a reasonable number of copies of an amendment of or supplement to the Official
Statement (in form and substance satisfactory to counsel for the Underwriters) which will
amend or supplement the Official Statement so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. For the purposes of this subsection, between the date hereof and the date
which is 25 days after the End of the Underwriting Period for the Bonds, the County will
furnish such information with respect to itself as the Underwriters may from time to time
reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement (excluding therefrom information relating to DTC and the book-entry
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system and the information under the caption “UNDERWRITING”) so supplemented or
amended will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) There is no material consent, approval, authorization or other order of, or
filing or registration with, or certification by, any regulatory authority having jurisdiction
over the County required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
County of the other transactions contemplated by this Purchase Contract or the Financing
Documents to which the County is a party;
(k) The Bonds will be issued in accordance with the Trust Agreement;
(l) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(m) Except as disclosed in the Official Statement, there has not been any
material adverse change in the financial condition of the County since June 30, 2009.
The financial statements of, and other financial information regarding the County set
forth in the Official Statement fairly present the financial position and results of the
operations of the County as of the dates and for the periods therein set forth and (i) the
audited financial statements have been prepared in accordance with the generally
accepted accounting principles consistently applied, and (ii) the other financial
information set forth in the Official Statement has been determined on a basis
substantially consistent with that of the County’s audited financial statements;
(n) The County is not in default, and at no time has defaulted in any material
respect, on any bond, note or other obligation for borrowed money or any agreement
under which any such obligation is or was outstanding;
(o) Any certificate signed by a duly authorized official of the County and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the County to the
Underwriters as to the statements made therein; and
(p) The information provided to the Underwriters by the County in connection
with the Underwriters’ consideration of purchasing the Bonds was true and correct in all
material respects as of its date.
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Section 4. Conditions to the Obligations of the Underwriters. The Underwriters
hereby enter into this Purchase Contract in reliance upon the representations and warranties of
the Authority and the County contained herein and the representations and warranties of the
Authority and the County to be contained in the documents and instruments to be delivered at the
Closing and upon the performance by the Authority and the County of their obligations both on
and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations
under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
subject, at the option of the Underwriters, to the accuracy in all material respects of the
representations and warranties of the Authority and the County contained herein as of the date
hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the
officers and other officials of the County and the Authority made in any certificate or other
document furnished pursuant to the provisions hereof, to the performance by the Authority and
the County of their respective obligations to be performed hereunder and under the Financing
Documents at or prior to the Closing Date, and also shall be subject to the following additional
conditions:
(a) The Underwriters shall receive, prior to the Closing Date and at least in
sufficient time to accompany any orders or confirmations that request payment from any
customer, copies of the Official Statement, in such reasonable quantity as the
Underwriters shall have requested;
(b) At the Closing, the Financing Documents shall have been duly authorized,
executed and delivered by the respective parties thereto, and the Official Statement shall
have been duly authorized, executed and delivered by the Authority and the County, all in
substantially the forms heretofore submitted to the Underwriters, with only such changes
as shall have been agreed to in writing by the Underwriters, and shall be in full force and
effect; and there shall be in full force and effect such resolution or resolutions of the
Board of Directors of the Authority and the Board of Supervisors of the County as, in the
opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), shall be necessary or
appropriate in connection with the transactions contemplated hereby and by the
Financing Documents;
(c) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth in the Official Statement, of the Bonds
shall not have been materially adversely affected, in the judgment of the Underwriters
(evidenced by a written notice to the Authority and the County terminating the obligation
of the Underwriters to accept delivery of and make any payment for the Bonds), by
reason of any of the following:
(1) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, the Speaker of the House of Representatives, the
President Pro Tempore of the Senate, the Chairman or ranking minority member
of the Committee on Ways and Means of the House of Representatives or the
Chairman or ranking minority member of the Committee on Finance of the
Senate, or a decision rendered by a court established under Article III of the
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Constitution of the United States or by the Tax Court of the United States, or an
order, ruling, regulation (final, temporary or proposed) or press release issued or
made by or on behalf of the Treasury Department of the United States or the
Internal Revenue Service, with the purpose or effect, directly or indirectly, of
imposing federal income taxation upon moneys that would be received by the
Authority or the County, Base Rental Payments that would be received by the
Authority under the Subleases or Revenues that would be received by the Trustee
under the Trust Agreement or upon interest on the Bonds that would be received
by the Bondowners;
(2) there shall have occurred any new outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or any
other calamity or crisis, the effect of which on financial markets is such as to
make it, in the sole judgment of the Underwriters, impracticable or inadvisable to
proceed with the offering and delivery of the Bonds;
(3) a general banking moratorium shall have been declared by Federal,
New York or California authorities having jurisdiction and shall be in force;
(4) there shall be in force a general suspension of trading on the New
York Stock Exchange or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been
required and be in force on the New York Stock Exchange, whether by virtue of a
determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction;
(5) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, or an order, decree or injunction issued by any
court of competent jurisdiction, or an order, ruling, regulation (final, temporary or
proposed) or press release issued or made by or on behalf of the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of
the subject matter, to the effect that obligations of the general character of the
Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under the Securities Act of 1933, as amended, or that the
Trust Agreement is not exempt from qualification under the Trust Indenture Act
of 1939, as amended, or that the execution, offering or sale of obligations of the
general character of the Bonds, or of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Financing Documents or the
Official Statement, otherwise is or would be in violation of the federal securities
laws as amended and then in effect;
(6) the withdrawal or downgrading of any rating of the Bonds by a
national rating agency or the placing of the Bonds on credit watch or under review
of any such rating agency that has assigned a rating to the Bonds; or
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(7) any event occurring, or information becoming known which, in the
judgment of the Underwriters, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect of causing the
Official Statement to contain any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made,
not misleading; and
(d) At or prior to the Closing Date, the Underwriters shall have received the
following documents, in each case satisfactory in form and substance to the
Underwriters:
(1) Two copies of each of the Financing Documents, each duly
executed and delivered by the respective parties thereto;
(2) The approving opinion, dated the Closing Date and addressed to
the Authority and the County, of Bond Counsel in substantially the form attached
to the Official Statement as Appendix F, and a letter of such counsel, dated the
Closing Date and addressed to the Underwriters to the effect that such opinion
may be relied upon by the Underwriters to the same extent as if such opinion were
addressed to them;
(3) The supplemental opinion, dated the Closing Date and addressed to
the Underwriters, of Bond Counsel, to the effect that (i) this Purchase Contract
has been duly executed and delivered by the Authority and the County and
(assuming due authorization, execution and delivery by and validity with respect
to the respective parties thereto) constitutes the valid and binding obligation of the
Authority and the County, subject to bankruptcy or other laws affecting creditors’
rights, the exercise of judicial discretion, the application of equitable principles,
and the limitations on legal remedies against public agencies in the State of
California, with no opinion being expressed with respect to any indemnification
or contribution provisions herein; (ii) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Trust Agreement
is exempt from qualification under the Trust Indenture Act of 1939, as amended;
and (iii) the statements contained in the Official Statement under the captions
“2010 SERIES A BONDS,” “2010 SERIES B BONDS,” “SECURITY AND SOURCES OF
PAYMENT FOR THE 2010 BONDS,” “TAX MATTERS” and in APPENDIX E -
“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS,”
APPENDIX F - “PROPOSED FORM OF BOND COUNSEL OPINION,” and APPENDIX G -
“PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT,” insofar as such
statements purport to summarize certain provisions of the Financing Documents
and Bond Counsel’s opinion concerning certain federal tax matters relating to the
Bonds, are accurate in all material respects;
(4) The opinion of counsel for the Authority, dated the Closing Date
and addressed to the Underwriters, to the effect that (i) the Authority is a joint
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exercise of powers agency organized under the laws of the State of California; (ii)
the resolution of the Authority approving and authorizing the execution and
delivery by the Authority of the Financing Documents to which it is a party, this
Purchase Contract and the Official Statement (the “Resolution”) was duly
adopted at a meeting of the Governing Board of the Authority which was called
and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout; (iii) there is no action, suit,
proceeding or investigation at law or in equity before or by any court, public
board or body, pending or, to the best knowledge of such counsel, threatened
against the Authority, to restrain or enjoin the Base Rental Payments under the
Subleases, or in any way contesting or affecting the validity of the Bonds, the
Financing Documents or this Purchase Contract; (iv) the execution and delivery
of the Financing Documents to which the Authority is a party, this Purchase
Contract and the Official Statement, the adoption of the Resolution, and
compliance by the Authority with the provisions of the foregoing, under the
circumstances contemplated thereby, do not and will not in any material respect
conflict with or constitute on the part of the Authority a breach or default under
any agreement or other instrument to which the Authority is a party or by which it
is bound or, to the best knowledge of such counsel, any existing law, regulation,
court order or consent decree to which the Authority is subject; (v) no
authorization, approval, consent, or other order of the State of California or any
other governmental authority or agency within the State of California having
jurisdiction over the Authority is required for the valid authorization, execution,
delivery and performance by the Authority of the Financing Documents to which
the Authority is a party, the Official Statement or this Purchase Contract or for the
adoption of the Resolution which has not been obtained; and (vi) the Official
Statement (excluding therefrom financial statements and statistical data, as to
which no opinion need be expressed) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(5) The opinion, dated the Closing Date and addressed to the
Underwriters, the Authority and the County, of Counsel to the Trustee, in
substantially the form of Exhibit A hereto;
(6) The opinion of counsel to the County, dated the Closing Date and
addressed to the Underwriters, to the effect that (i) the County is a political
subdivision of the State of California organized and operating pursuant to the
Constitution and laws of the State of California; (ii) the resolution or resolutions
of the County approving and authorizing the execution and delivery by the
County of the Financing Documents to which it is a party, this Purchase Contract
and the Official Statement (the “County Resolution”) were duly adopted at
meetings of the Board of Supervisors of the County which were called and held
pursuant to law and with all public notice required by law and at which a quorum
was present acting throughout; (iii) there is no action, suit, proceeding or
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investigation at law or in equity before or by any court, public board or body,
pending or, to the best knowledge of such counsel, threatened against the County,
to restrain or enjoin the Base Rental Payments under the Subleases, or in any way
contesting or affecting the validity of the Bonds, the Financing Documents or this
Purchase Contract; (iv) the execution and delivery of the Financing Documents to
which the County is a party, this Purchase Contract and the Official Statement,
the adoption of the County Resolution, and compliance by the County with the
provisions of the foregoing, under the circumstances contemplated thereby, do not
and will not in any material respect conflict with or constitute on the part of the
County a breach or default under any agreement or other instrument to which the
County is a party or by which it is bound or, to the best knowledge of such
counsel, any existing law, regulation, court order or consent decree to which the
County is subject; (v) no authorization, approval, consent or other order of the
State of California or any other governmental authority or agency within the State
of California having jurisdiction over the County is required for the valid
authorization, execution, delivery and the performance by the County of the
Financing Documents to which the County is a party, the Official Statement or
this Purchase Contract or for the adoption of the County Resolution which has not
been obtained; and (vi) the Official Statement (excluding therefrom financial
statements and statistical data, as to which no opinion need be expressed) does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(7) The opinion, dated the Closing Date and addressed to the
Underwriters, of Chapman and Cutler LLP, San Francisco, California, counsel for
the Underwriters (“Underwriters’ Counsel”) to the effect that the Bonds are
exempt from registration under the Securities Act of 1933, as amended, and the
Trust Agreement is exempt from qualification under the Trust Indenture Act of
1939, as amended.
(8) The opinion, dated the Closing Date and addressed to the
Underwriters, of Lofton & Jennings, San Francisco, California, disclosure
counsel, to the effect that without passing upon or assuming any responsibility for
the accuracy, completeness or fairness of the statements contained in the Official
Statement and making no representation that they have independently verified the
accuracy, completeness or fairness of any such statements, based upon the
information made available to them in the course of their participation in the
preparation of the Official Statement, nothing has come to their attention that
would lead them to believe that the Official Statement, as of its date and as of the
date of such opinion (excluding therefrom any CUSIP numbers, financial,
statistical, economic, or demographic data or forecasts, numbers, charts, tables,
graphs, estimates, projections, assumptions or expressions of opinion,
environmental matters, information relating to DTC and its book-entry system,
and the Appendices thereto, as to which no opinion need be expressed) contains
any untrue statement of a material fact or omits to state a material fact required to
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be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(9) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Authority satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the Authority contained in this Purchase
Contract are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date; (b) except as disclosed in the
Official Statement, no litigation is pending or, to the best of such official’s
knowledge, threatened against the Authority (i) to restrain or enjoin the issuance,
sale or delivery of any of the Bonds or the payment of Base Rental Payments
under the Subleases, (ii) in any way contesting or affecting the validity of the
Bonds, this Purchase Contract, the Financing Documents to which the Authority
is a party, or (iii) in any way contesting the existence or powers of the Authority;
and (c) no event affecting the Authority has occurred since the date of the Official
Statement that either makes untrue or incorrect in any material respect as of the
Closing Date any statement or information contained in the Official Statement
under the captions “THE AUTHORITY” or “LITIGATION MATTERS” or is not
reflected in the Official Statement but should be reflected therein in order to make
the statements and information therein under the captions “THE AUTHORITY” or
“LITIGATION MATTERS” not misleading in any material respect;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the County satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the County contained in this Purchase Contract
are true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date; (b) except as disclosed in the Official
Statement, no litigation is pending or, to the best of such official’s knowledge,
threatened against the County (i) to restrain or enjoin the issuance, sale or delivery
of the Bonds or the payment of the Base Rental Payments under the Subleases;
(ii) in any way contesting or affecting the validity of the Bonds, this Purchase
Contract or the Financing Documents to which the County is a party; or (iii) in
any way contesting the existence or powers of the County; and (c) no event
affecting the County has occurred since the date of the Official Statement that
either makes untrue or incorrect in any material respect as of the Closing Date any
statement or information contained in the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under
the caption “UNDERWRITING”) or is not reflected in the Official Statement but
should be reflected therein in order to make the statements and information
therein not misleading in any material respect;
(11) A certificate, dated the Closing Date, signed by a duly authorized
official of the Trustee, satisfactory in form and substance to the Underwriters, to
the effect that:
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(a) the Trustee is a national banking association organized and
existing under and by virtue of the laws of the United States, having the
full power and being qualified to enter into and perform its duties under
the Trust Agreement;
(b) the Trustee is duly authorized to enter into the Trust
Agreement and the Trustee has duly executed and delivered the Trust
Agreement;
(c) the execution and delivery of the Trust Agreement and
compliance with the provisions on the Trustee’s part contained therein,
will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument to which
the Trustee is a party or is otherwise subject (except that no representation,
warranty or agreement is made with respect to any federal or state
securities or blue sky laws or regulations), nor will any such execution,
delivery, adoption or compliance result in the creation or imposition of
any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets held by the Trustee
pursuant to the Trust Agreement under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument, except as
provided by the Trust Agreement;
(d) to the best knowledge of the Trustee, it has not been served
with any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or
body, nor is any such action or other proceeding threatened against the
Trustee, as such but not in its individual capacity, affecting the existence
of the Trustee, or the titles of its officers to their respective offices or
seeking to prohibit, restrain or enjoin the collection of Revenues to be
applied to pay the principal, premium, if any, and interest on the Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Trust Agreement, or contesting the powers of the
Trustee or its authority to enter into, adopt or perform its obligations under
any of the foregoing, wherein an unfavorable decision, ruling or finding
would materially adversely affect the validity or enforceability of the Trust
Agreement;
(12) The Preliminary Official Statement, a certificate pursuant to Rule
15c2-12 related to the Preliminary Official Statement and the Official Statement,
executed on behalf of the Authority and the County by authorized representatives
thereof;
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(13) A certified copy of the general resolution of by-laws of the Trustee
authorizing the execution and delivery of the Trust Agreement;
(14) A certified copy of the Resolution of the Authority authorizing the
execution and delivery of the Financing Documents to which the Authority is a
party, the Official Statement and this Purchase Contract;
(15) A certified copy of the County Resolution authorizing the
execution and delivery of the Financing Documents to which the County is a
party, the Official Statement and this Purchase Contract;
(16) Evidence that any ratings described in the Official Statement are in
full force and effect as of the Closing Date;
(17) A copy of the Blanket Letter of Representations to DTC relating to
the Bonds signed by DTC and the Authority;
(18) Arbitrage and tax certifications by the Authority in form and
substance acceptable to Bond Counsel and the Underwriters;
(19) Evidence of title to the Facilities satisfactory to the Underwriters;
(20) Evidence of existing title insurance policy satisfactory to the
Underwriters; and
(21) Such additional legal opinions, certificates, proceedings,
instruments, title insurance, other insurance policies or evidences thereof and
other documents as the Underwriters, Underwriters’ Counsel or Bond Counsel
may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the representations of the Authority and the County
herein and of the statements and information contained in the Official Statement,
and the due performance or satisfaction by the Trustee, the Authority and the
County at or prior to the Closing of all agreements then to be performed and all
conditions then to be satisfied by any of them in connection with the transactions
contemplated hereby and by the Financing Documents.
If the Authority or the County shall be unable to satisfy the conditions to the
Underwriters’ obligations contained in this Purchase Contract or if the Underwriters’ obligations
shall be terminated for any reason permitted herein, all obligations of the Underwriters hereunder
may be terminated by the Underwriters at, or at any time prior to, the Closing Date by written
notice to the County and the Authority and none of the Underwriters or the Authority or the
County shall have any further obligations hereunder. In the event that the Underwriters fail
(other than for a reason permitted by this Purchase Contract) to accept and pay for the Bonds at
the Closing, the amount of one percent (1%) of the aggregate principal amount of the Bonds
shall be payable by the Underwriters as and for full liquidated damages for such failure and for
any and all defaults hereunder on the part of the Underwriters and the acceptance of such amount
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shall constitute a full release and discharge of all claims and rights of the Authority or County
against the Underwriters.
Section 5. Expenses. All expenses and costs incident to the authorization, execution,
delivery and sale of the Bonds to the Underwriters, including the costs of printing of the Bonds,
the Official Statement, the cost of duplicating the Financing Documents, the fees of accountants,
consultants and rating agencies, the initial fee of the Trustee and its counsel in connection with
the execution and delivery of the Bonds, the fees and expenses of Underwriters’ Counsel and the
fees and expenses of Bond Counsel, shall be paid from the proceeds of the Bonds. In the event
that the Bonds for any reason are not issued, or to the extent proceeds of the Bonds are
insufficient or unavailable therefor, any fees, costs and expenses owed by the Authority to the
Trustee, which otherwise would have been paid from the proceeds of the Bonds, shall be paid by
the Authority. All out-of-pocket expenses of the Underwriters, including traveling and other
expenses, including those associated with the California Debt and Investment Advisory
Commission fee, and the costs of preparation of any blue sky and legal investment surveys
prepared by Underwriters’ Counsel, shall be paid by the Underwriters. The County shall pay for
expenses (included in the expense component of the Underwriters’ spread) incurred on behalf of
the County’s employees which are incidental to implementing this agreement, including, but not
limited to, meals, transportation, lodging, and entertainment of those employees.
Section 6. Notices. Any notice or other communication to be given to the parties to
this Purchase Contract may be given by delivering the same in writing to the respective party at
the following address:
Underwriters: Wedbush Securities Inc.
One Bush Street, Suite 1700
San Francisco, California 94104
Attention: Robert Larkins
County: County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
Attention: Finance Director
Authority: County of Contra Costa Public Financing Authority
County Administration Building
651 Pine Street
Martinez, California 94553
Attention:
Section 7. Survival of Representations and Warranties. The representations and
warranties of the Authority and the County set forth in or made pursuant to this Purchase
Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by
reason of the Closing or termination of this Purchase Contract and regardless of any
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investigations or statements as to the results thereof made by or on behalf of the Underwriters
and regardless of delivery of and payment for the Bonds.
Section 8. Effectiveness. This Purchase Contract shall become effective and binding
upon the respective parties hereto upon the execution of the acceptance hereof by a duly
authorized officer of the Authority and the County and shall be valid and enforceable as of the
time of such acceptance.
Section 9. Execution in Counterparts. This Purchase Contract may be executed in
counterparts, all of which shall constitute one and the same instrument, and each of which shall
be deemed to be an original. If the above terms are acceptable, please cause a duly authorized
officer of the Authority and the County to execute the acceptance below.
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Very truly yours,
WEDBUSH SECURITIES INC., as Representative of
the Underwriters
By:___________________________________
Managing Director
ACCEPTED:
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
COUNTY OF CONTRA COSTA, CALIFORNIA
By:
SCHEDULE I
$__________ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
2010 SERIES A-1 (CAPITAL PROJECT I – TAX-EXEMPT)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES A-2 (CAPITAL PROJECT I – TAXABLE BUILD AMERICA BONDS)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES A-3 (CAPITAL PROJECT I – TAXABLE RECOVERY ZONE BONDS)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES B (CAPITAL PROJECT II)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
EXHIBIT A
FORM OF TRUSTEE COUNSEL’S OPINION
November __, 2010
County of Contra Costa Wedbush Securities Inc.
Martinez, California San Francisco, California
County of Contra Costa Public Financing Authority Piper Jaffray & Co.
Martinez, California El Segundo, California
Re: $________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds
consisting of
$________ 2010 Series A-1 (Capital Project I – Tax-Exempt)
$________ 2010 Series A-2 (Capital Project I – Taxable Build America Bonds)
$________ 2010 Series A-3 (Capital Project I – Taxable Recovery Zone Bonds)
and
$________ 2010 Series B (Capital Project II)
Ladies and Gentlemen:
I have acted as special counsel to Wells Fargo Bank, National Association (the
“Trustee”), in connection with the Trust Agreement, dated as of November 1, 2010, by and
between the County of Contra Costa Public Financing Authority (the “Authority”) and the
Trustee (the “Trust Agreement”), and the issuance of the Authority’s Lease Revenue Bonds,
2010 Series A-1 (Capital Project I – Tax-Exempt), Lease Revenue Bonds, 2010 Series A-2
(Capital Project I – Taxable Build America Bonds), Lease Revenue Bonds, 2010 Series A-3
(Capital Project I – Taxable Recovery Zone Bonds) and Lease Revenue Bonds, 2010 Series B
(Capital Project II) (collectively, the “Bonds”). This opinion is rendered pursuant to the Bond
Purchase Contract, dated October ___, 2010 (the “Purchase Contract”) among the Authority,
the County of Contra Costa and Wedbush Securities Inc., as Representative of itself and Piper
Jaffray & Co., as underwriters. All terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Purchase Contract.
In connection therewith, I have examined and reviewed such documents and certificates
of public officials, officers of the Trustee and others as I have deemed necessary for the purposes
of this opinion. In all such examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to original and
certified documents of all copies submitted to me as conformed or photostat copies, and the
authenticity of the originals of all such latter documents. As to various questions of fact material
to this opinion, I have relied, to the extent that I deemed such reliance proper, upon such
certificates of officers of the Trustee. I have examined executed counterparts of the Trust
Agreement and have assumed the power, municipal or corporate, as the case may be, and the
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legal authority to execute and deliver the same to the other parties thereto and the due
authorization, execution and delivery thereof by the other parties thereto.
Based upon the foregoing, I am of the opinion that:
1. The Trustee has been duly organized and is validly existing in good
standing as a national banking association under the laws of the United States of America
with trust powers and full corporate power to undertake the trust of the Trust Agreement;
2. The Trustee has duly authorized, executed and delivered the Trust
Agreement and by all proper corporate action has authorized the acceptance of the duties
and obligations of the Trustee under the Trust Agreement;
3. The Trust Agreement constitutes a legally valid and binding agreement of
the Trustee, enforceable against the Trustee in accordance with its terms;
4. There is no litigation pending against the Trustee arising from its fiduciary
activities to restrain or enjoin the Trustee’s participation in, or in any way contesting the
powers of the Trustee with respect to the transactions contemplated by the Trust
Agreement;
5. The Trustee’s action in executing and delivering the Trust Agreement does
not conflict with or constitute a breach of or default under any law or governmental
regulation applicable to the Trustee.
My opinion with respect to the foregoing documents is qualified by (i) the application of
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws or general
application affecting creditors’ rights or (ii) the discretion of any court to refuse to order
equitable relief, including specific performance of any clause of any such documents, whether
such enforceability is considered in a proceeding in equity or at law.
This opinion is furnished by me to you solely for your benefit and may not, without my
express written consent, be relied upon by any other person.
Very truly yours,
2810772.01.09.B.doc
4000600
BOND PURCHASE CONTRACT
$________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2010 SERIES C (REFUNDING)
October ___, 2010
County of Contra Costa Public Financing Authority
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
County of Contra Costa
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
Ladies and Gentlemen:
The undersigned, Wedbush Securities Inc., as representative (the “Representative”) on
behalf of itself and Piper Jaffray & Co., as underwriters (collectively, the “Underwriters”),
hereby offers to enter into this Bond Purchase Contract (the “Purchase Contract”) with you, the
County of Contra Costa Public Financing Authority (the “Authority”) and the County of Contra
Costa, California (the “County”), for the purchase by the Underwriters of the $___________
aggregate principal amount of the County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series C (Refunding) (the “Bonds”), which will be issued pursuant to a
Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”) by and between the
Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The
Representative has been duly authorized to execute this Purchase Contract and to take any action
hereunder by and on behalf of the Underwriters. This offer is made subject to acceptance by the
Authority and the County prior to 11:59 p.m., California time, on the date hereof. If this offer is
not so accepted, this offer will be subject to withdrawal by the Underwriters upon notice
delivered to the Authority and the County at any time prior to acceptance. Upon acceptance, this
Purchase Contract shall be in full force and effect in accordance with its terms and shall be
binding upon the Authority, the County and the Underwriters. Capitalized terms used herein not
otherwise defined herein shall have the meanings set forth in the Official Statement (hereinafter
defined).
The Authority acknowledges and agrees that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm’s-length commercial transaction between the
Authority and the Underwriters, (ii) in connection with such transaction, the Underwriters have
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not assumed (individually or collectively) a fiduciary responsibility in favor of the Authority
with respect to (x) the offering of the Bonds or the process leading thereto (whether or not the
Underwriters have advised or are currently advising the Authority on other matters) or (y) any
other obligation to the Authority except the obligations expressly set forth in this Purchase
Contract and (iii) the Authority has consulted with its own legal and other professional advisors
to the extent it deemed appropriate in connection with the offering of the Bonds.
Section 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements set forth herein,
the Underwriters hereby agree to purchase and the Authority agrees to sell to the Underwriters
all (but not less than all) of the Bonds, in the aggregate principal amount of $_________. The
Bonds are payable from, and secured by Revenues of the Authority, consisting primarily of
certain rental payments (“Base Rental Payments”) to be made by the County pursuant to, and as
defined in, the Sublease (Refunding), dated as of November 1, 2010, by and between the
Authority and the County (the “Sublease”).
The Bonds shall be substantially in the form described in, and shall be issued and secured
under and pursuant to, and shall be payable and subject to redemption as provided in, the Trust
Agreement. The Bonds shall be dated the date of delivery thereof and shall mature on the dates
and in the amounts set forth on Schedule I attached hereto. Interest on the Bonds shall be
payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2011.
The Base Rental Payments to be made by the County pursuant to the Sublease are
payable by the County from its General Fund to the Authority for the right to use and possession
by the County of certain real property and the improvements thereon located within the County
(the “Facilities”). The County has covenanted under the Sublease that it will take such action as
may be necessary to include the Base Rental Payments in its annual budgets and to make the
necessary annual appropriations therefor. The Bonds are secured by a pledge of and charge and
lien upon the Revenues.
Pursuant to a Site Lease (Refunding) (the “Site Lease”) dated as of November 1, 2010
between the County and the Authority, the County leased the Facilities to the Authority.
The Bonds are being issued for the purpose of financing all or a portion of the refunding
of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various
Capital Facilities), 1998 Series A (the “Prior Bonds”) which were issued for the purpose of
financing and refinancing the acquisition, construction and renovation of certain facilities for the
County and other capital improvements for the County.
The County will undertake, pursuant to the Trust Agreement and a Continuing Disclosure
Agreement (the “Continuing Disclosure Agreement”), to be dated the Closing Date (as
hereinafter defined), to provide annual reports and notices of certain events relating to the Bonds.
A description of this undertaking is set forth in the Preliminary Official Statement and the
Official Statement (both terms as defined below).
-3-
The Authority and the County have heretofore delivered to the Underwriters a
Preliminary Official Statement, dated ___________, 2010 relating to the Bonds (as
supplemented or amended with the consent of the Underwriters, the “Preliminary Official
Statement”), that the Authority and the County have deemed final as of its date in accordance
with paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission
(“Rule 15c2-12”). The Authority and the County shall deliver or cause to be delivered to the
Underwriters, within seven (7) business days from the date hereof, copies of an official statement
relating to the Bonds executed on behalf of and approved for distribution by the Authority and
the County in the form of the Preliminary Official Statement, as amended to conform to the
terms of this Purchase Contract and to reflect the reoffering terms of the Bonds and with such
other changes as shall have been consented to by the Authority, the County and the Underwriters
(the “Official Statement”). The Authority and the County shall deliver the Official Statement at
the Authority’s sole cost, at such address as the Underwriters shall specify, and in such quantities
as the Underwriters may request in order to comply with paragraph (b)(4) of Rule 15c2-12 and
the rules of the Municipal Securities Rulemaking Board. The Authority and the County hereby
approve the distribution of the Official Statement and authorize the use of copies of the Official
Statement and the documents referred to therein in connection with the offering and sale of the
Bonds by the Underwriters.
(b) The Underwriters shall pay to the Authority as the purchase price for the Bonds
$___________ (representing the $___________ aggregate principal amount of the Bonds, less
an Underwriters’ discount of $___________, plus [less] a[n] [net] original issue premium
[discount] of $___________).
(c) At 8:00 a.m., California time, on November ___, 2010, or at such other time or on
such other date as the Authority, the County and the Underwriters mutually agree upon (the
“Closing Date”), the Authority will deliver or cause to be delivered to the Underwriters, the
Bonds (delivered through the book-entry system of The Depository Trust Company (“DTC”)),
duly executed, and at the offices of Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San
Francisco, California 94105, or at such other place as the Authority, the County and the
Underwriters shall have mutually agreed upon, the other documents mentioned herein. The
Underwriters will accept such delivery and pay the purchase price(s) of the Bonds as set forth in
subparagraph (b) above in immediately available funds (such delivery and payment being herein
referred to as the “Closing”) payable to the order of the Trustee.
(d) The Underwriters agree to make a bona fide public offering of the Bonds at the
initial offering prices set forth in the Official Statement, which prices may be changed from time
to time by the Underwriters after such offering. The Authority hereby authorizes the
Underwriters to use the forms or copies of the Official Statement, the Trust Agreement, the
Sublease, the Site Lease and all other documents referred to in the Official Statement and the
information contained in each of the foregoing in connection with the public offering and sale of
the Bonds.
Section 2. Representations, Warranties and Agreements of the Authority. The
Authority hereby represents, warrants and agrees with the Underwriters as follows:
-4-
(a) The Authority is, and will be on the Closing Date a joint exercise of
powers agency duly organized and validly existing pursuant to the Constitution and laws
of the State of California with the full power and authority to issue the Bonds, to execute
and deliver the Official Statement, and to enter into this Purchase Contract, the Sublease,
the Site Lease and the Trust Agreement. The Trust Agreement, the Sublease and the Site
Lease, together with the Continuing Disclosure Agreement, are collectively known as the
“Financing Documents”;
(b) By official action of the Authority prior to or concurrently with the
acceptance hereof, the Authority has duly authorized and approved the execution and
delivery of, and the performance by the Authority of the obligations on its part contained
in, the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the Authority is a party will constitute, a
legal, valid and binding obligation of the Authority, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against joint powers authorities
in California; and the execution and delivery of the Financing Documents to which it is a
party, this Purchase Contract and the Official Statement, and compliance with the
provisions on the Authority’s part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, lease, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject,
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Authority under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, lease, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the Authority, the Authority is not in any
material respect in breach of or default under any applicable law or administrative
regulation of the State of California or the United States or any applicable judgment or
decree or any loan agreement, lease, indenture, bond, note, resolution, agreement or other
instrument to which the Authority is a party or is otherwise subject, and no event has
occurred and is continuing which, with the passage of time or the giving of notice or
both, would constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the Authority, threatened against the Authority in any material
respect affecting the existence of the Authority or the titles of its officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale, execution or delivery
-5-
of the Bonds or the payment of Base Rental Payments or in any way contesting or
affecting the validity or enforceability of the Bonds, the Financing Documents to which
the Authority is a party or this Purchase Contract or contesting the powers of the
Authority or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Official
Statement, or any amendment or supplement thereto, wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity or enforceability of the
Financing Documents to be executed by it or this Purchase Contract;
(f) The Authority will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the Authority be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the statements contained in the Official Statement
under the captions “THE AUTHORITY” and “LITIGATION MATTERS” did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement under the captions “THE AUTHORITY”
and “LITIGATION MATTERS” as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated therein
or necessary to make such information therein, in the light of the circumstances under
which it was presented, not misleading, the Authority will notify the Underwriters, and, if
in the opinion of the Authority, the Underwriters or their respective counsel, such event
requires the preparation and publication of a supplement or amendment to the Official
Statement, the Authority will forthwith prepare and furnish to the Underwriters (at the
expense of the Authority) a reasonable number of copies of an amendment of or
supplement to the Official Statement (in form and substance satisfactory to counsel for
the Underwriters) which will amend or supplement the Official Statement so that it will
not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the
Bonds, the Authority will furnish such information with respect to itself as the
Underwriters may from time to time reasonably request;
-6-
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement under the captions “THE AUTHORITY” and “LITIGATION MATTERS” so
supplemented or amended (including any financial and statistical data contained therein)
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(j) As used herein and for the purposes of the foregoing, the term “End of the
Underwriting Period” for the Bonds shall mean the earlier of (i) the Closing Date or (ii)
the date on which the End of the Underwriting Period for the Bonds has occurred under
Rule 15c2-12, as specified as such in a notice from the Underwriters stating the date
which is the End of the Underwriting Period;
(k) There is no consent, approval, authorization or other order of, or filing or
registration with, or certification by, any regulatory authority having jurisdiction over the
Authority required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
Authority of the other transactions contemplated by this Purchase Contract or the
Financing Documents to which the Authority is a party;
(l) The Bonds will be issued in accordance with the Trust Agreement;
(m) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(n) The Authority will apply the proceeds of the Bonds, and earnings thereon,
in accordance with the Trust Agreement;
(o) The Authority is not in default, and at no time has defaulted in any
material respect, on any bond, note or other obligation for borrowed money or any
agreement under which any such obligation is or was outstanding; and
(p) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the Authority to
the Underwriters as to the statements made therein.
-7-
Section 3. Representations, Warranties and Agreements of the County. The County
hereby represents, warrants and agrees with the Underwriters as follows:
(a) The County is and will be on the Closing Date a political subdivision of
the State of California organized and operating pursuant to the laws of the State of
California with full power and authority to execute and deliver the Official Statement,
and to enter into this Purchase Contract and the Financing Documents to be executed by
it;
(b) By official action of the County prior to or concurrently with the
acceptance hereof, the County has duly authorized and approved the execution and
delivery of, and the performance by the County of the obligations on its part contained in,
the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the County is a party will constitute, a legal,
valid and binding obligation of the County enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against counties in California;
to the best knowledge of the County, the execution and delivery of the Financing
Documents to be executed by it, this Purchase Contract and the Official Statement, and
compliance with the provisions on the County’s part contained herein and therein, will
not in any material respect conflict with or constitute a breach of or default under any
law, administrative regulation, judgment, decree, loan agreement, lease, indenture, bond,
note, resolution, agreement or other instrument to which the County is a party or is
otherwise subject, nor will any such execution, delivery, adoption or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the properties or assets of the County under the terms
of any such law, administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the County, the County is not in any material
respect in breach of or default under any applicable law or administrative regulation of
the State of California or the United States or any applicable judgment or decree or any
loan agreement, lease, indenture, bond, note, resolution, agreement or other instrument to
which the County is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both, would
constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the County, threatened against the County in any material respect
affecting the existence of the County or the titles of its officers to their respective offices
-8-
or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds or
the payment of Base Rental Payments or in any way contesting or affecting the validity
or enforceability of the Bonds, the Financing Documents to which the County is a party
or this Purchase Contract or contesting the powers of the County or its authority to enter
into, adopt or perform its obligations under any of the foregoing, or contesting in any way
the completeness or accuracy of the Official Statement, or any amendment or supplement
thereto, wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Financing Documents to be executed by it or
this Purchase Contract;
(f) The County will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the County be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under the
caption “UNDERWRITING”) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement (excluding therefrom information relating
to DTC and the book-entry system and the information under the caption
“UNDERWRITING”), as then supplemented or amended, to contain any untrue statement of
a material fact or to omit to state a material fact required to be stated therein or necessary
to make such information therein, in the light of the circumstances under which they were
made, not misleading, the County will notify the Underwriters, and, if in the opinion of
the Underwriters, the County or their respective counsel, such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the
County will forthwith prepare and furnish to the Underwriters (at the expense of the
County) a reasonable number of copies of an amendment of or supplement to the Official
Statement (in form and substance satisfactory to counsel for the Underwriters) which will
amend or supplement the Official Statement so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. For the purposes of this subsection, between the date hereof and the date
-9-
which is 25 days after the End of the Underwriting Period for the Bonds, the County will
furnish such information with respect to itself as the Underwriters may from time to time
reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement (excluding therefrom information relating to DTC and the book-entry
system and the information under the caption “UNDERWRITING”) so supplemented or
amended will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) There is no material consent, approval, authorization or other order of, or
filing or registration with, or certification by, any regulatory authority having jurisdiction
over the County required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
County of the other transactions contemplated by this Purchase Contract or the Financing
Documents to which the County is a party;
(k) The Bonds will be issued in accordance with the Trust Agreement;
(l) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(m) Except as disclosed in the Official Statement, there has not been any
material adverse change in the financial condition of the County since June 30, 2009.
The financial statements of, and other financial information regarding the County set
forth in the Official Statement fairly present the financial position and results of the
operations of the County as of the dates and for the periods therein set forth and (i) the
audited financial statements have been prepared in accordance with the generally
accepted accounting principles consistently applied, and (ii) the other financial
information set forth in the Official Statement has been determined on a basis
substantially consistent with that of the County’s audited financial statements;
(n) The County is not in default, and at no time has defaulted in any material
respect, on any bond, note or other obligation for borrowed money or any agreement
under which any such obligation is or was outstanding;
-10-
(o) Any certificate signed by a duly authorized official of the County and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the County to the
Underwriters as to the statements made therein; and
(p) The information provided to the Underwriters by the County in connection
with the Underwriters’ consideration of purchasing the Bonds was true and correct in all
material respects as of its date.
Section 4. Conditions to the Obligations of the Underwriters. The Underwriters
hereby enter into this Purchase Contract in reliance upon the representations and warranties of
the Authority and the County contained herein and the representations and warranties of the
Authority and the County to be contained in the documents and instruments to be delivered at the
Closing and upon the performance by the Authority and the County of their obligations both on
and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations
under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
subject, at the option of the Underwriters, to the accuracy in all material respects of the
representations and warranties of the Authority and the County contained herein as of the date
hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the
officers and other officials of the County and the Authority made in any certificate or other
document furnished pursuant to the provisions hereof, to the performance by the Authority and
the County of their respective obligations to be performed hereunder and under the Financing
Documents at or prior to the Closing Date, and also shall be subject to the following additional
conditions:
(a) The Underwriters shall receive, prior to the Closing Date and at least in
sufficient time to accompany any orders or confirmations that request payment from any
customer, copies of the Official Statement, in such reasonable quantity as the
Underwriters shall have requested;
(b) At the Closing, the Financing Documents shall have been duly authorized,
executed and delivered by the respective parties thereto, and the Official Statement shall
have been duly authorized, executed and delivered by the Authority and the County, all in
substantially the forms heretofore submitted to the Underwriters, with only such changes
as shall have been agreed to in writing by the Underwriters, and shall be in full force and
effect; and there shall be in full force and effect such resolution or resolutions of the
Board of Directors of the Authority and the Board of Supervisors of the County as, in the
opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), shall be necessary or
appropriate in connection with the transactions contemplated hereby and by the
Financing Documents;
(c) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth in the Official Statement, of the Bonds
shall not have been materially adversely affected, in the judgment of the Underwriters
(evidenced by a written notice to the Authority and the County terminating the obligation
-11-
of the Underwriters to accept delivery of and make any payment for the Bonds), by
reason of any of the following:
(1) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, the Speaker of the House of Representatives, the
President Pro Tempore of the Senate, the Chairman or ranking minority member
of the Committee on Ways and Means of the House of Representatives or the
Chairman or ranking minority member of the Committee on Finance of the
Senate, or a decision rendered by a court established under Article III of the
Constitution of the United States or by the Tax Court of the United States, or an
order, ruling, regulation (final, temporary or proposed) or press release issued or
made by or on behalf of the Treasury Department of the United States or the
Internal Revenue Service, with the purpose or effect, directly or indirectly, of
imposing federal income taxation upon moneys that would be received by the
Authority or the County, Base Rental Payments that would be received by the
Authority under the Sublease or Revenues that would be received by the Trustee
under the Trust Agreement or upon interest on the Bonds that would be received
by the Bondowners;
(2) there shall have occurred any new outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or any
other calamity or crisis, the effect of which on financial markets is such as to
make it, in the sole judgment of the Underwriters, impracticable or inadvisable to
proceed with the offering and delivery of the Bonds;
(3) a general banking moratorium shall have been declared by Federal,
New York or California authorities having jurisdiction and shall be in force;
(4) there shall be in force a general suspension of trading on the New
York Stock Exchange or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been
required and be in force on the New York Stock Exchange, whether by virtue of a
determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction;
(5) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, or an order, decree or injunction issued by any
court of competent jurisdiction, or an order, ruling, regulation (final, temporary or
proposed) or press release issued or made by or on behalf of the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of
the subject matter, to the effect that obligations of the general character of the
Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under the Securities Act of 1933, as amended, or that the
Trust Agreement is not exempt from qualification under the Trust Indenture Act
-12-
of 1939, as amended, or that the execution, offering or sale of obligations of the
general character of the Bonds, or of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Financing Documents or the
Official Statement, otherwise is or would be in violation of the federal securities
laws as amended and then in effect;
(6) the withdrawal or downgrading of any rating of the Bonds by a
national rating agency or the placing of the Bonds on credit watch or under review
of any such rating agency that has assigned a rating to the Bonds; or
(7) any event occurring, or information becoming known which, in the
judgment of the Underwriters, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect of causing the
Official Statement to contain any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made,
not misleading; and
(d) At or prior to the Closing Date, the Underwriters shall have received the
following documents, in each case satisfactory in form and substance to the
Underwriters:
(1) Two copies of each of the Financing Documents, each duly
executed and delivered by the respective parties thereto;
(2) The approving opinion, dated the Closing Date and addressed to
the Authority and the County, of Bond Counsel in substantially the form attached
to the Official Statement as Appendix F, and a letter of such counsel, dated the
Closing Date and addressed to the Underwriters to the effect that such opinion
may be relied upon by the Underwriters to the same extent as if such opinion were
addressed to them;
(3) The supplemental opinion, dated the Closing Date and addressed to
the Underwriters, of Bond Counsel, to the effect that (i) this Purchase Contract
has been duly executed and delivered by the Authority and the County and
(assuming due authorization, execution and delivery by and validity with respect
to the respective parties thereto) constitutes the valid and binding obligation of the
Authority and the County, subject to bankruptcy or other laws affecting creditors’
rights, the exercise of judicial discretion, the application of equitable principles,
and the limitations on legal remedies against public agencies in the State of
California, with no opinion being expressed with respect to any indemnification
or contribution provisions herein; (ii) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Trust Agreement
is exempt from qualification under the Trust Indenture Act of 1939, as amended;
and (iii) the statements contained in the Official Statement under the captions
“2010 SERIES C BONDS” “SECURITY AND SOURCES OF PAYMENT FOR THE 2010
-13-
BONDS,” “TAX MATTERS” and in APPENDIX E - “SUMMARY OF CERTAIN
PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS,” APPENDIX F - “PROPOSED FORM
OF BOND COUNSEL OPINION,” and APPENDIX G - “PROPOSED FORM OF
CONTINUING DISCLOSURE AGREEMENT,” insofar as such statements purport to
summarize certain provisions of the Financing Documents and Bond Counsel’s
opinion concerning certain federal tax matters relating to the Bonds, are accurate
in all material respects;
(4) The opinion of counsel for the Authority, dated the Closing Date
and addressed to the Underwriters, to the effect that (i) the Authority is a joint
exercise of powers agency organized under the laws of the State of California; (ii)
the resolution of the Authority approving and authorizing the execution and
delivery by the Authority of the Financing Documents to which it is a party, this
Purchase Contract and the Official Statement (the “Resolution”) was duly
adopted at a meeting of the Governing Board of the Authority which was called
and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout; (iii) there is no action, suit,
proceeding or investigation at law or in equity before or by any court, public
board or body, pending or, to the best knowledge of such counsel, threatened
against the Authority, to restrain or enjoin the Base Rental Payments under the
Sublease, or in any way contesting or affecting the validity of the Bonds, the
Financing Documents or this Purchase Contract; (iv) the execution and delivery
of the Financing Documents to which the Authority is a party, this Purchase
Contract and the Official Statement, the adoption of the Resolution, and
compliance by the Authority with the provisions of the foregoing, under the
circumstances contemplated thereby, do not and will not in any material respect
conflict with or constitute on the part of the Authority a breach or default under
any agreement or other instrument to which the Authority is a party or by which it
is bound or, to the best knowledge of such counsel, any existing law, regulation,
court order or consent decree to which the Authority is subject; (v) no
authorization, approval, consent, or other order of the State of California or any
other governmental authority or agency within the State of California having
jurisdiction over the Authority is required for the valid authorization, execution,
delivery and performance by the Authority of the Financing Documents to which
the Authority is a party, the Official Statement or this Purchase Contract or for the
adoption of the Resolution which has not been obtained; and (vi) the Official
Statement (excluding therefrom financial statements and statistical data, as to
which no opinion need be expressed) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(5) The opinion, dated the Closing Date and addressed to the
Underwriters, the Authority and the County, of Counsel to the Trustee, in
substantially the form of Exhibit A hereto;
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(6) The opinion of counsel to the County, dated the Closing Date and
addressed to the Underwriters, to the effect that (i) the County is a political
subdivision of the State of California organized and operating pursuant to the
Constitution and laws of the State of California; (ii) the resolution or resolutions
of the County approving and authorizing the execution and delivery by the
County of the Financing Documents to which it is a party, this Purchase Contract
and the Official Statement (the “County Resolution”) were duly adopted at
meetings of the Board of Supervisors of the County which were called and held
pursuant to law and with all public notice required by law and at which a quorum
was present acting throughout; (iii) there is no action, suit, proceeding or
investigation at law or in equity before or by any court, public board or body,
pending or, to the best knowledge of such counsel, threatened against the County,
to restrain or enjoin the Base Rental Payments under the Sublease, or in any way
contesting or affecting the validity of the Bonds, the Financing Documents or this
Purchase Contract; (iv) the execution and delivery of the Financing Documents to
which the County is a party, this Purchase Contract and the Official Statement,
the adoption of the County Resolution, and compliance by the County with the
provisions of the foregoing, under the circumstances contemplated thereby, do not
and will not in any material respect conflict with or constitute on the part of the
County a breach or default under any agreement or other instrument to which the
County is a party or by which it is bound or, to the best knowledge of such
counsel, any existing law, regulation, court order or consent decree to which the
County is subject; (v) no authorization, approval, consent or other order of the
State of California or any other governmental authority or agency within the State
of California having jurisdiction over the County is required for the valid
authorization, execution, delivery and the performance by the County of the
Financing Documents to which the County is a party, the Official Statement or
this Purchase Contract or for the adoption of the County Resolution which has not
been obtained; and (vi) the Official Statement (excluding therefrom financial
statements and statistical data, as to which no opinion need be expressed) does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(7) The opinion, dated the Closing Date and addressed to the
Underwriters, of Chapman and Cutler LLP, San Francisco, California, counsel for
the Underwriters (“Underwriters’ Counsel”) to the effect that the Bonds are
exempt from registration under the Securities Act of 1933, as amended, and the
Trust Agreement is exempt from qualification under the Trust Indenture Act of
1939, as amended;
(8) The opinion, dated the Closing Date and addressed to the
Underwriters, of Lofton & Jennings, San Francisco, California, disclosure
counsel, to the effect that without passing upon or assuming any responsibility for
the accuracy, completeness or fairness of the statements contained in the Official
Statement and making no representation that they have independently verified the
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accuracy, completeness or fairness of any such statements, based upon the
information made available to them in the course of their participation in the
preparation of the Official Statement, nothing has come to their attention that
would lead them to believe that the Official Statement, as of its date and as of the
date of such opinion (excluding therefrom any CUSIP numbers, financial,
statistical, economic, or demographic data or forecasts, numbers, charts, tables,
graphs, estimates, projections, assumptions or expressions of opinion,
environmental matters, information relating to DTC and its book-entry system,
and the Appendices thereto, as to which no opinion need be expressed) contains
any untrue statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(9) The defeasance opinion of Bond Counsel relating to the defeasance
of the Prior Bonds, dated the Closing Date and addressed to the Trustee, in form
and substance satisfactory to the Trustee;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Authority satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the Authority contained in this Purchase
Contract are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date; (b) except as disclosed in the
Official Statement, no litigation is pending or, to the best of such official’s
knowledge, threatened against the Authority (i) to restrain or enjoin the issuance,
sale or delivery of any of the Bonds or the payment of Base Rental Payments
under the Sublease, (ii) in any way contesting or affecting the validity of the
Bonds, this Purchase Contract, the Financing Documents to which the Authority
is a party, or (iii) in any way contesting the existence or powers of the Authority;
and (c) no event affecting the Authority has occurred since the date of the Official
Statement that either makes untrue or incorrect in any material respect as of the
Closing Date any statement or information contained in the Official Statement
under the captions “THE AUTHORITY” or “LITIGATION MATTERS” or is not
reflected in the Official Statement but should be reflected therein in order to make
the statements and information therein under the captions “THE AUTHORITY” or
“LITIGATION MATTERS” not misleading in any material respect;
(11) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the County satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the County contained in this Purchase Contract
are true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date; (b) except as disclosed in the Official
Statement, no litigation is pending or, to the best of such official’s knowledge,
threatened against the County (i) to restrain or enjoin the issuance, sale or delivery
of the Bonds or the payment of the Base Rental Payments under the Sublease;
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(ii) in any way contesting or affecting the validity of the Bonds, this Purchase
Contract or the Financing Documents to which the County is a party; or (iii) in
any way contesting the existence or powers of the County; and (c) no event
affecting the County has occurred since the date of the Official Statement that
either makes untrue or incorrect in any material respect as of the Closing Date any
statement or information contained in the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under
the caption “UNDERWRITING”) or is not reflected in the Official Statement but
should be reflected therein in order to make the statements and information
therein not misleading in any material respect;
(12) A certificate, dated the Closing Date, signed by a duly authorized
official of the Trustee, satisfactory in form and substance to the Underwriters, to
the effect that:
(a) the Trustee is a national banking association organized and
existing under and by virtue of the laws of the United States, having the
full power and being qualified to enter into and perform its duties under
the Trust Agreement;
(b) the Trustee is duly authorized to enter into the Trust
Agreement and the Trustee has duly executed and delivered the Trust
Agreement;
(c) the execution and delivery of the Trust Agreement and
compliance with the provisions on the Trustee’s part contained therein,
will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument to which
the Trustee is a party or is otherwise subject (except that no representation,
warranty or agreement is made with respect to any federal or state
securities or blue sky laws or regulations), nor will any such execution,
delivery, adoption or compliance result in the creation or imposition of
any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets held by the Trustee
pursuant to the Trust Agreement under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument, except as
provided by the Trust Agreement;
(d) to the best knowledge of the Trustee, it has not been served
with any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or
body, nor is any such action or other proceeding threatened against the
Trustee, as such but not in its individual capacity, affecting the existence
of the Trustee, or the titles of its officers to their respective offices or
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seeking to prohibit, restrain or enjoin the collection of Revenues to be
applied to pay the principal, premium, if any, and interest on the Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Trust Agreement, or contesting the powers of the
Trustee or its authority to enter into, adopt or perform its obligations under
any of the foregoing, wherein an unfavorable decision, ruling or finding
would materially adversely affect the validity or enforceability of the Trust
Agreement;
(13) The Preliminary Official Statement, a certificate pursuant to Rule
15c2-12 related to the Preliminary Official Statement and the Official Statement,
executed on behalf of the Authority and the County by authorized representatives
thereof;
(14) A certified copy of the general resolution of by-laws of the Trustee
authorizing the execution and delivery of the Trust Agreement;
(15) A certified copy of the Resolution of the Authority authorizing the
execution and delivery of the Financing Documents to which the Authority is a
party, the Official Statement and this Purchase Contract;
(16) A certified copy of the County Resolution authorizing the
execution and delivery of the Financing Documents to which the County is a
party, the Official Statement and this Purchase Contract;
(17) Evidence that any ratings described in the Official Statement are in
full force and effect as of the Closing Date;
(18) A copy of the Blanket Letter of Representations to DTC relating to
the Bonds signed by DTC and the Authority;
(19) Arbitrage and tax certifications by the Authority in form and
substance acceptable to Bond Counsel and the Underwriters;
(20) Verification report of Causey Demgen & Moore Inc. related to the
defeasance of the Prior Bonds, dated the Closing Date, in form and substance
acceptable to the Underwriters, the Authority, the County and Bond Counsel;
(21) Evidence of title to the Facilities satisfactory to the Underwriters;
(22) Evidence of existing title insurance policy satisfactory to the
Underwriters; and
(23) Such additional legal opinions, certificates, proceedings,
instruments, title insurance, other insurance policies or evidences thereof and
other documents as the Underwriters, Underwriters’ Counsel or Bond Counsel
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may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the representations of the Authority and the County
herein and of the statements and information contained in the Official Statement,
and the due performance or satisfaction by the Trustee, the Authority and the
County at or prior to the Closing of all agreements then to be performed and all
conditions then to be satisfied by any of them in connection with the transactions
contemplated hereby and by the Financing Documents.
If the Authority or the County shall be unable to satisfy the conditions to the
Underwriters’ obligations contained in this Purchase Contract or if the Underwriters’ obligations
shall be terminated for any reason permitted herein, all obligations of the Underwriters hereunder
may be terminated by the Underwriters at, or at any time prior to, the Closing Date by written
notice to the County and the Authority and none of the Underwriters or the Authority or the
County shall have any further obligations hereunder. In the event that the Underwriters fail
(other than for a reason permitted by this Purchase Contract) to accept and pay for the Bonds at
the Closing, the amount of one percent (1%) of the aggregate principal amount of the Bonds
shall be payable by the Underwriters as and for full liquidated damages for such failure and for
any and all defaults hereunder on the part of the Underwriters and the acceptance of such amount
shall constitute a full release and discharge of all claims and rights of the Authority or County
against the Underwriters.
Section 5. Expenses. All expenses and costs incident to the authorization, execution,
delivery and sale of the Bonds to the Underwriters, including the costs of printing of the Bonds,
the Official Statement, the cost of duplicating the Financing Documents, the fees of accountants,
consultants and rating agencies, the initial fee of the Trustee and its counsel in connection with
the execution and delivery of the Bonds, the fees and expenses of Underwriters’ Counsel and the
fees and expenses of Bond Counsel, shall be paid from the proceeds of the Bonds. In the event
that the Bonds for any reason are not issued, or to the extent proceeds of the Bonds are
insufficient or unavailable therefor, any fees, costs and expenses owed by the Authority to the
Trustee, which otherwise would have been paid from the proceeds of the Bonds, shall be paid by
the Authority. All out-of-pocket expenses of the Underwriters, including traveling and other
expenses, including those associated with the California Debt and Investment Advisory
Commission fee, and the costs of preparation of any blue sky and legal investment surveys
prepared by Underwriters’ Counsel, shall be paid by the Underwriters. The County shall pay for
expenses (included in the expense component of the Underwriters’ spread) incurred on behalf of
the County’s employees which are incidental to implementing this agreement, including, but not
limited to, meals, transportation, lodging, and entertainment of those employees.
Section 6. Notices. Any notice or other communication to be given to the parties to
this Purchase Contract may be given by delivering the same in writing to the respective party at
the following address:
Underwriters: Wedbush Securities Inc.
One Bush Street, Suite 1700
San Francisco, California 94104
Attention: Robert Larkins
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County: County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
Attention: Finance Director
Authority: County of Contra Costa Public Financing Authority
County Administration Building
651 Pine Street
Martinez, California 94553
Attention:
Section 7. Survival of Representations and Warranties. The representations and
warranties of the Authority and the County set forth in or made pursuant to this Purchase
Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by
reason of the Closing or termination of this Purchase Contract and regardless of any
investigations or statements as to the results thereof made by or on behalf of the Underwriters
and regardless of delivery of and payment for the Bonds.
Section 8. Effectiveness. This Purchase Contract shall become effective and binding
upon the respective parties hereto upon the execution of the acceptance hereof by a duly
authorized officer of the Authority and the County and shall be valid and enforceable as of the
time of such acceptance.
Section 9. Execution in Counterparts. This Purchase Contract may be executed in
counterparts, all of which shall constitute one and the same instrument, and each of which shall
be deemed to be an original. If the above terms are acceptable, please cause a duly authorized
officer of the Authority and the County to execute the acceptance below.
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Very truly yours,
WEDBUSH SECURITIES INC., as Representative of
the Underwriters
By:___________________________________
Managing Director
ACCEPTED:
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
COUNTY OF CONTRA COSTA, CALIFORNIA
By:
SCHEDULE I
$__________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2010 SERIES C (REFUNDING)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
EXHIBIT A
FORM OF TRUSTEE COUNSEL’S OPINION
November __, 2010
County of Contra Costa Wedbush Securities Inc.
Martinez, California San Francisco, California
County of Contra Costa Public Financing Authority Piper Jaffray & Co.
Martinez, California El Segundo, California
Re: $________ County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series C (Refunding)
Ladies and Gentlemen:
I have acted as special counsel to Wells Fargo Bank, National Association (the
“Trustee”), in connection with the Trust Agreement, dated as of November 1, 2010, by and
between the County of Contra Costa Public Financing Authority (the “Authority”) and the
Trustee, (the “Trust Agreement”), and the issuance of the Authority’s Lease Revenue Bonds,
2010 Series C (Refunding) (the “Bonds”). This opinion is rendered pursuant to the Bond
Purchase Contract, dated October ___, 2010 (the “Purchase Contract”) among the Authority,
the County of Contra Costa and Wedbush Securities Inc., as Representative of itself and Piper
Jaffray & Co., as underwriters. All terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Purchase Contract.
In connection therewith, I have examined and reviewed such documents and certificates
of public officials, officers of the Trustee and others as I have deemed necessary for the purposes
of this opinion. In all such examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to original and
certified documents of all copies submitted to me as conformed or photostat copies, and the
authenticity of the originals of all such latter documents. As to various questions of fact material
to this opinion, I have relied, to the extent that I deemed such reliance proper, upon such
certificates of officers of the Trustee. I have examined executed counterparts of the Trust
Agreement and have assumed the power, municipal or corporate, as the case may be, and the
legal authority to execute and deliver the same to the other parties thereto and the due
authorization, execution and delivery thereof by the other parties thereto.
Based upon the foregoing, I am of the opinion that:
1. The Trustee has been duly organized and is validly existing in good
standing as a national banking association under the laws of the United States of America
with trust powers and full corporate power to undertake the trust of the Trust Agreement;
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2. The Trustee has duly authorized, executed and delivered the Trust
Agreement and by all proper corporate action has authorized the acceptance of the duties
and obligations of the Trustee under the Trust Agreement;
3. The Trust Agreement constitutes a legally valid and binding agreement of
the Trustee, enforceable against the Trustee in accordance with its terms;
4. There is no litigation pending against the Trustee arising from its fiduciary
activities to restrain or enjoin the Trustee’s participation in, or in any way contesting the
powers of the Trustee with respect to the transactions contemplated by the Trust
Agreement;
5. The Trustee’s action in executing and delivering the Trust Agreement does
not conflict with or constitute a breach of or default under any law or governmental
regulation applicable to the Trustee.
My opinion with respect to the foregoing documents is qualified by (i) the application of
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws or general
application affecting creditors’ rights or (ii) the discretion of any court to refuse to order
equitable relief, including specific performance of any clause of any such documents, whether
such enforceability is considered in a proceeding in equity or at law.
This opinion is furnished by me to you solely for your benefit and may not, without my
express written consent, be relied upon by any other person.
Very truly yours,
10014\cdc-3
PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of _______,
2010, is executed and delivered by the COUNTY OF CONTRA COSTA, CALIFORNIA (the “County”),
and acknowledged and agreed to by Digital Assurance Certification, L.L.C., as dissemination agent, in
connection with the issuance by the County of Contra Costa Public Financing Authority (the “Authority”)
of $___,___,000 aggregate principal amount of its Lease Revenue Bonds, comprised of: $_____ principal
amount of 2010 Series A-1 (Capital Project I), $_____ principal amount of 2010 Series A-2 (Taxable
Build America Bonds); $_____ principal amount of 2010 Series A-3 (Taxable Recovery Zone Bonds);
$_____ principal amount of 2010 Series B (Capital Project II); and $_____ principal amount of 2010
Series C (Refunding) (collectively, the “2010 Bonds”). The 2010 Bonds are being issued pursuant to a
Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”), by and between the County of
Contra Costa Public Financing Authority (the “Authority”) and the Trustee and acknowledged by the
County. Pursuant to a Sublease related to each Series of 2010 Bonds, each dated as November 1, 2010
(each a “Sublease” and collectively, the “Subleases”), the County has covenanted to comply with its
obligations under this Disclosure Agreement and to assume all obligations for continuing disclosure with
respect to each Series of 2010 Bonds. The County and the Dissemination Agent covenant and agree as
follows:
SECTION 1. Purpose of the Disclosure Agreement This Disclosure Agreement is being
executed and delivered by the County and the Dissemination Agent for the benefit of the Holders and
Beneficial Owners of each Series of 2010 Bonds and in order to assist the Participating Underwriters in
complying with S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which
apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section,
the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the County pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly,
to make investment decisions concerning the ownership of any Series of 2010 Bonds (including persons
holding a Series of 2010 Bonds through nominees, depositories or other intermediaries).
“Disclosure Representative” shall mean the County Administrator, the County Finance Director
or his or her designee, or such other officer or employee as the County shall designate in writing to the
Trustee from time to time.
“Dissemination Agent” shall mean the County, or any successor Dissemination Agent, which
may be designated in writing by the County and which has filed with the Trustee a written acceptance of
such designation.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
10014\cdc-3
2
“Participating Underwriters” shall mean any of the original underwriters of the 2010 Bonds
required to comply with the Rule in connection with offering of the 2010 Bonds.
“Repository” shall mean the Municipal Securities Rulemaking Board or any other entity
designated or authorized by the Securities and Exchange Commission.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“State” shall mean the State of California.
SECTION 3 Provision of Annual Reports.
(a) The County shall, or shall cause the Dissemination Agent to, not later than nine months
after the end of the County’s fiscal year (presently June 30), commencing with the report for the 2009-10
Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Agreement. The Annual Report must be submitted in electronic format,
accompanied by such identifying information as is prescribed by the Repository, and may include by
reference other information as provided in Section 4 of this Disclosure Agreement; provided, that the
audited financial statements of the County may be submitted separately from the balance of the Annual
Report and later than the date required above for the filing of the Annual Report if they are not available
by that date. If the County’s fiscal year changes, it shall give notice of such change in the same manner
as for a Listed Event under Section 5(f).
(b) Not later than thirty (30) days (not more than sixty (60) days) prior to the date on which
the Annual Report is to be provided pursuant to subsection (a), the Dissemination Agent shall give notice
to the County that the Annual Report is so required to be filed in accordance with the terms of this
Disclosure Agreement. Not later than fifteen (15) Business Days prior to the date specified in
subsection (a) for providing the Annual Report to the Repository, the County shall provide the Annual
Report to the Dissemination Agent (if other than the County). If by said date, the Dissemination Agent
has not received a copy of the Annual Report, the Dissemination Agent shall notify the County of such
failure to receive the Annual Report.
(c) If the County is unable to provide to the Dissemination Agent an Annual Report by the
date required in subsection (a), the Dissemination Agent is irrevocably instructed to file a notice, in
electronic format, to the Repository in substantially the form attached hereto as Exhibit A.
The Dissemination Agent shall file a report with the County stating that the Annual
Report has been provided pursuant to this Disclosure Agreement and stating the date it
was provided.
SECTION 4. Content of Annual Reports. The County’s Annual Report shall contain or
include by reference the following:
(a) The audited financial statements of the County for the prior fiscal year, prepared in
accordance with generally accepted accounting principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board. If the County’s audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to
Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the
financial statements contained in the final Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
10014\cdc-3
3
(b) Numerical and tabular information for the immediately preceding Fiscal Year of the type
contained in the Official Statement under the following captions:
1. The status of the construction and installation of the improvement constituting
Capital Project I and Capital Project II, until such time as each Capital Project has been
completed;
2. Report of changes in “DEBT SERVICE SCHEDULE;”
3. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Recent County General Fund
Budgets” (update Table B-1 “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”);
4. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Ad Valorem Property Taxes”
(update Table B-3 “COUNTY OF CONTRA COSTA SUMMARY OF SECURED ASSESSED VALUATIONS
AND AD VALOREM PROPERTY TAXATION”);
5. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Accounting Policies, Reports
and Audits” (update Table B-6 “COUNTY OF CONTRA COSTA GENERAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”);
6. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Pension Plan” (update Table
B-9 “CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION SCHEDULE OF FUNDED
STATUS”);
7. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Other Post-Employment
Healthcare Benefits” (update Table B-16 “CONTRA COSTA COUNTY OTHER POST-EMPLOYMENT
HEALTHCARE BENEFIT PLAN SUMMARY OF PARTICIPATING EMPLOYEES AND CONTRIBUTIONS”);
8. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Long Term Obligations”
(update Table B-22–“CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND
PENSION OBLIGATION BONDS”).
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the County or related public entities, which have been filed
with the Repository or the Securities and Exchange Commission. If the document included by reference
is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The
County shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5 and to the extent applicable, the County shall
give, or cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds, no later than 10 business days following the occurrence of such event:
1. principal and interest payment delinquencies;
2. non-payment related defaults;
3. modifications to rights of Holders of any Series of 2010 Bonds;
4. optional, contingent or unscheduled bond calls;
5. defeasances;
6. rating changes;
10014\cdc-3
4
7. adverse tax opinions or events adversely affecting the tax-exempt status of the 2010
Series A-1 Bonds (Capital Project I), the 2010 Series B Bonds (Capital Project II), or the
2010 Series C Bonds (Refunding);
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on credit enhancements reflecting financial difficulties;
10. substitution of credit or liquidity providers, or their failure to perform; and
11. release, substitution or sale of property securing repayment of any Series of 2010 Bonds.
(b) Whenever the County obtains knowledge of the occurrence of a Listed Event, the County
shall as soon as possible determine if such event would be material under applicable federal securities
laws.
(c) If the County determines that knowledge of the occurrence of a Listed Event would be
material under applicable federal securities laws, the County shall promptly notify the Dissemination
Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to
subsection (d).
(d) If the Dissemination Agent has been instructed by the County to report the occurrence of
a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be
given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders
of affected 2010 Bonds pursuant to the Trust Agreement.
SECTION 6 CUSIP Numbers. Whenever providing information to the Dissemination Agent,
including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports,
Audited Financial Statements and notices of Listed Events, the County shall indicate the full name of the
2010 Bonds and the nine-digit CUSIP numbers for the 2010 Bonds as to which the provided information
relates.
SECTION 7 Termination of Reporting Obligation. The County’s obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the
County shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 8. Dissemination Agent. The County may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial
Dissemination Agent shall be Digital Assurance Certification, L.L.C. If at any time there is no designated
Dissemination Agent appointed by the County, or if the Dissemination Agent so appointed is unwilling or
unable to perform the duties of the Dissemination Agent hereunder, the County shall be the
Dissemination Agent an undertake or assume its obligations hereunder. The Dissemination Agent (other
than the County) shall not be responsible in any manner for the content of any notice or report required to
be delivered by the County pursuant to this Disclosure Agreement.
SECTION 9. Amendment; Waiver Notwithstanding any other provision of this Disclosure
Agreement, the County may amend this Disclosure Agreement, and any provision of this Disclosure
Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in legal
10014\cdc-3
5
requirements, change in law, or change in the identity, nature or status of an obligated person with
respect to such Series of 2010 Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the
Rule at the time of the original issuance of the 2010 Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Holders of the affected Series
of 2010 Bonds in the same manner as provided in the Trust Agreement for amendments to the
Trust Agreement with the consent of Holders, or (ii) does not, in the opinion of nationally
recognized bond counsel, materially impair the interest of the Holders or Beneficial Owners of
such Series of 2010 Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the County shall
describe such amendment in the next Annual Report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a
change of accounting principles, on the presentation) of financial information or operating data being
presented by the County. In addition, if the amendment relates to the accounting principles to be followed
in preparing financial statements, (i) notice of such change shall be given in the same manner as for a
Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made
should present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
SECTION 10. Additional Information Nothing in this Disclosure Agreement shall be deemed
to prevent the County from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the County chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the County shall have no obligation under this Disclosure Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 11. Default In the event of a failure of the County to comply with any provision of
this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating
Underwriters or the Holders or Beneficial Owners of at least 25% of aggregate principal amount of the
Certificates then outstanding, shall) or any Holders or Beneficial Owners of the 2010 Bonds may take
such actions as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the County to comply with its obligations under this Disclosure Agreement;
provided that any such action may be instituted only in the Superior Court of the State of California in
and for the County of Contra Costa or in the U.S. District Court in the County of Contra Costa. A default
under this Disclosure Agreement shall not be deemed an Event of Default under the Resolution, and the
sole remedy under this Disclosure Agreement in the event of any failure of the County to comply with
this Disclosure Agreement shall be an action to compel performance.
10014\cdc-3
6
SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
County agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and
agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the
exercise or performance of its powers and duties hereunder, including the costs and expenses (including
attorneys fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent’s gross negligence or willful misconduct. The obligations of the County under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds.
SECTION 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
To the County: County of Contra Costa
County Administrator’s Office
651 Pine Street, 6th Floor
Martinez, CA 94553-0063
Attention: Lisa Driscoll, County Finance Director
Telephone: (925) 335-1093
Fax: (925) 646-1228
If to the Dissemination Agent: Digital Assurance Certification, L.L.C.
390 North Orange Avenue, Suite 1750
Orlando, FL 32801-1674
Attention: Customer Assistance
Telephone: (888) 824-2663
Any person may, by written notice to the other persons listed above, designate a different address or
telephone number(s) to which subsequent notices or communications should be sent.
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
County, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners
from time to time of the 2010 Bonds, and shall create no rights in any other person or entity.
10014\cdc-3
7
SECTION 15. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Dated: ___________, 2010
COUNTY OF CONTRA COSTA
By
Chair of the Board of Supervisors
County of Contra Costa,
State of California
DIGITAL ASSURANCE CERTIFICATION,
L.L.C., as Dissemination Agent
By:
Dissemination Agent
10014\cdc-3
8
EXHIBIT A
FORM OF NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of District: County of Contra Costa
Name of Bond Issue: County of Contra Costa Public Financing Authority Lease Revenue Bonds,
comprised of: 2010 Series A-1 (Capital Project I), 2010 Series A-2 (Taxable
Build America Bonds), 2010 Series A-3 (Taxable Recovery Zone Bonds),
2010 Series B (Capital Project II) and 2010 Series C (Refunding)
Date of Issuance: ________, 2010
NOTICE IS HEREBY GIVEN that the County of Contra Costa (the “County”) has not provided an
Annual Report with respect to the above-named Bonds as required by Section 8.08 of the Subleases, each
dated as of November 1, 2010, by and between the County of Contra Costa Public Financing Authority
and the County. The County anticipates that the Annual Report will be filed by _____________.
Dated: _______________
DIGITAL ASSURANCE CERTIFICATION, L.L.C.,
as Dissemination Agent
By:
Dissemination Agent
cc: County of Contra Costa
2799816.01.17.B.doc
4000600
BOND PURCHASE CONTRACT
$________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
Lease Revenue Bonds
consisting of
$________ 2010 Series A-1 (Capital Project I – Tax-Exempt)
$________ 2010 Series A-2 (Capital Project I – Taxable Build America Bonds)
$________ 2010 Series A-3 (Capital Project I – Taxable Recovery Zone Bonds)
and
$________ 2010 Series B (Capital Project II)
October ___, 2010
County of Contra Costa Public Financing Authority
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
County of Contra Costa
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
Ladies and Gentlemen:
The undersigned, Wedbush Securities Inc., as representative (the “Representative”) on
behalf of itself and Piper Jaffray & Co., as underwriters (collectively, the “Underwriters”),
hereby offers to enter into this Bond Purchase Contract (the “Purchase Contract”) with you, the
County of Contra Costa Public Financing Authority (the “Authority”) and the County of Contra
Costa, California (the “County”), for the purchase by the Underwriters of the $___________
aggregate principal amount of the County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series A-1 (Capital Project I – Tax-Exempt) (the “2010A-1 Bonds”), the
$_______ aggregate principal amount of the County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series A-2 (Capital Project I – Taxable Build America Bonds) (the
“2010A-2 Bonds”), the $_________ aggregate principal amount of the County of Contra Costa
Public Financing Authority Lease Revenue Bonds, 2010 Series A-3 (Capital Project I – Taxable
Recovery Zone Bonds) (the “2010A-3 Bonds” and, with the 2010A-1 Bonds and the 2010A-2
Bonds, the “2010A Bonds”) and the $_________ aggregate principal amount of the County of
Contra Costa Public Financing Authority Lease Revenue Bonds, 2010 Series B (Capital Project
II) (the “2010B Bonds” and, together with the 2010A Bonds, the “Bonds”), which will be issued
pursuant to a Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”), by and
between the Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
-2-
The Representative has been duly authorized to execute this Purchase Contract and to take any
action hereunder by and on behalf of the Underwriters. This offer is made subject to acceptance
by the Authority and the County prior to 11:59 p.m., California time, on the date hereof. If this
offer is not so accepted, this offer will be subject to withdrawal by the Underwriters upon notice
delivered to the Authority and the County at any time prior to acceptance. Upon acceptance, this
Purchase Contract shall be in full force and effect in accordance with its terms and shall be
binding upon the Authority, the County and the Underwriters. Capitalized terms used herein not
otherwise defined herein shall have the meanings set forth in the Official Statement (hereinafter
defined).
The Authority acknowledges and agrees that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm’s-length commercial transaction between the
Authority and the Underwriters, (ii) in connection with such transaction, the Underwriters have
not assumed (individually or collectively) a fiduciary responsibility in favor of the Authority
with respect to (x) the offering of the Bonds or the process leading thereto (whether or not the
Underwriters have advised or are currently advising the Authority on other matters) or (y) any
other obligation to the Authority except the obligations expressly set forth in this Purchase
Contract and (iii) the Authority has consulted with its own legal and other professional advisors
to the extent it deemed appropriate in connection with the offering of the Bonds.
Section 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements set forth herein,
the Underwriters hereby agree to purchase and the Authority agrees to sell to the Underwriters
all (but not less than all) of the 2010A-1 Bonds, in the aggregate principal amount of
$_________, the 2010A-2 Bonds, in the aggregate principal amount of $________, the 2010A-3
Bonds, in the aggregate principal amount of $________ and the 2010B Bonds, in the aggregate
principal amount of $________. The 2010A Bonds are payable from, and secured by Revenues
of the Authority, consisting primarily of certain rental payments (“2010A Base Rental
Payments”) to be made by the County pursuant to, and as defined in, the Sublease (Capital
Project I), dated as of November 1, 2010 (the “2010A Sublease”), by and between the Authority
and the County. The 2010B Bonds are payable from, and secured by Revenues of the Authority,
consisting primarily of certain rental payments (“2010B Base Rental Payments” and, together
with the 2010A Base Rental Payments, the “Base Rental Payments”) to be made by the County
pursuant to, and as defined in, the Sublease (Capital Project II), dated as of November 1, 2010
(the “2010B Sublease” and, together with the 2010A Sublease, the “Subleases”), by and between
the Authority and the County.
The Bonds shall be substantially in the form described in, and shall be issued and secured
under and pursuant to, and shall be payable and subject to redemption as provided in, the Trust
Agreement. The Bonds shall be dated the date of delivery thereof and shall mature on the dates
and in the amounts set forth on Schedule I attached hereto. Interest on the Bonds shall be
payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2011.
The Base Rental Payments to be made by the County pursuant to the Subleases are
payable by the County from its General Fund to the Authority for the right to use and possession
by the County of certain real property and the improvements thereon located within the County
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(the “Facilities”). The County has covenanted under the Subleases that it will take such action
as may be necessary to include the Base Rental Payments in its annual budgets and to make the
necessary annual appropriations therefor. The Bonds are secured by a pledge of and charge and
lien upon the Revenues.
Pursuant to a Site Lease (Capital Project I) (the “2010A Site Lease”) and a Site Lease
(Capital Project II) (the “2010B Site Lease” and, with the 2010A Site Lease, the “Site Leases”),
each dated as of November 1, 2010 and between the County and the Authority, the County
leased the Facilities to the Authority.
The Bonds are being issued for the purpose of financing all or a portion of the cost of
various capital projects of the County and paying any costs associated with the financing of said
projects.
The County will undertake, pursuant to the Trust Agreement and a Continuing Disclosure
Agreement (the “Continuing Disclosure Agreement”), to be dated the Closing Date (as
hereinafter defined), to provide annual reports and notices of certain events relating to the Bonds.
A description of this undertaking is set forth in the Preliminary Official Statement and the
Official Statement (both terms as defined below).
The Authority and the County have heretofore delivered to the Underwriters a
Preliminary Official Statement, dated ___________, 2010 relating to the Bonds (as
supplemented or amended with the consent of the Underwriters, the “Preliminary Official
Statement”), that the Authority and the County have deemed final as of its date in accordance
with paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission
(“Rule 15c2-12”). The Authority and the County shall deliver or cause to be delivered to the
Underwriters, within seven (7) business days from the date hereof, copies of an official statement
relating to the Bonds executed on behalf of and approved for distribution by the Authority and
the County in the form of the Preliminary Official Statement, as amended to conform to the
terms of this Purchase Contract and to reflect the reoffering terms of the Bonds and with such
other changes as shall have been consented to by the Authority, the County and the Underwriters
(the “Official Statement”). The Authority and the County shall deliver the Official Statement at
the Authority’s sole cost, at such address as the Underwriters shall specify, and in such quantities
as the Underwriters may request in order to comply with paragraph (b)(4) of Rule 15c2-12 and
the rules of the Municipal Securities Rulemaking Board. The Authority and the County hereby
approve the distribution of the Official Statement and authorize the use of copies of the Official
Statement and the documents referred to therein in connection with the offering and sale of the
Bonds by the Underwriters.
(b) The Underwriters shall pay to the Authority as the purchase price for the 2010A-1
Bonds $___________ (representing the $___________ aggregate principal amount of the
2010A-1 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(c) The Underwriters shall pay to the Authority as the purchase price for the 2010A-2
Bonds $___________ (representing the $___________ aggregate principal amount of the
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2010A-2 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(d) The Underwriters shall pay to the Authority as the purchase price for the 2010A-3
Bonds $___________ (representing the $___________ aggregate principal amount of the
2010A-3 Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original
issue premium [discount] of $___________).
(e) The Underwriters shall pay to the Authority as the purchase price for the 2010B
Bonds $___________ (representing the $___________ aggregate principal amount of the 2010B
Bonds, less an Underwriters’ discount of $___________, plus [less] a[n] [net] original issue
premium [discount] of $___________).
(f) At 8:00 a.m., California time, on November ___, 2010, or at such other time or on
such other date as the Authority, the County and the Underwriters mutually agree upon (the
“Closing Date”), the Authority will deliver or cause to be delivered to the Underwriters, the
Bonds (delivered through the book-entry system of The Depository Trust Company (“DTC”)),
duly executed, and at the offices of Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San
Francisco, California 94105, or at such other place as the Authority, the County and the
Underwriters shall have mutually agreed upon, the other documents mentioned herein. The
Underwriters will accept such delivery and pay the purchase price(s) of the Bonds as set forth in
subparagraphs (b), (c), (d) and (e) above in immediately available funds (such delivery and
payment being herein referred to as the “Closing”) payable to the order of the Trustee.
(g) The Underwriters agree to make a bona fide public offering of the Bonds at the
initial offering prices set forth in the Official Statement, which prices may be changed from time
to time by the Underwriters after such offering. The Authority hereby authorizes the
Underwriters to use the forms or copies of the Official Statement, the Trust Agreement, the
Subleases, the Site Leases and all other documents referred to in the Official Statement and the
information contained in each of the foregoing in connection with the public offering and sale of
the Bonds.
Section 2. Representations, Warranties and Agreements of the Authority. The
Authority hereby represents, warrants and agrees with the Underwriters as follows:
(a) The Authority is, and will be on the Closing Date a joint exercise of
powers agency duly organized and validly existing pursuant to the Constitution and laws
of the State of California with the full power and authority to issue the Bonds, to execute
and deliver the Official Statement, and to enter into this Purchase Contract, the Subleases,
the Site Leases, and the Trust Agreement. The Trust Agreement, the Subleases, and the
Site Leases, together with the Continuing Disclosure Agreement, are collectively known
as the “Financing Documents”;
(b) By official action of the Authority prior to or concurrently with the
acceptance hereof, the Authority has duly authorized and approved the execution and
delivery of, and the performance by the Authority of the obligations on its part contained
-5-
in, the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the Authority is a party will constitute, a
legal, valid and binding obligation of the Authority, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against joint powers authorities
in California; and the execution and delivery of the Financing Documents to which it is a
party, this Purchase Contract and the Official Statement, and compliance with the
provisions on the Authority’s part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, lease, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject,
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Authority under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, lease, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the Authority, the Authority is not in any
material respect in breach of or default under any applicable law or administrative
regulation of the State of California or the United States or any applicable judgment or
decree or any loan agreement, lease, indenture, bond, note, resolution, agreement or other
instrument to which the Authority is a party or is otherwise subject, and no event has
occurred and is continuing which, with the passage of time or the giving of notice or
both, would constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the Authority, threatened against the Authority in any material
respect affecting the existence of the Authority or the titles of its officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale, execution or delivery
of the Bonds or the payment of Base Rental Payments or in any way contesting or
affecting the validity or enforceability of the Bonds, the Financing Documents to which
the Authority is a party or this Purchase Contract or contesting the powers of the
Authority or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Official
Statement, or any amendment or supplement thereto, wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity or enforceability of the
Financing Documents to be executed by it or this Purchase Contract;
(f) The Authority will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
-6-
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the Authority be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the statements contained in the Official Statement
under the captions “THE AUTHORITY” and “LITIGATION MATTERS” did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement under the captions “THE AUTHORITY”
and “LITIGATION MATTERS” as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated therein
or necessary to make such information therein, in the light of the circumstances under
which it was presented, not misleading, the Authority will notify the Underwriters, and, if
in the opinion of the Authority, the Underwriters or their respective counsel, such event
requires the preparation and publication of a supplement or amendment to the Official
Statement, the Authority will forthwith prepare and furnish to the Underwriters (at the
expense of the Authority) a reasonable number of copies of an amendment of or
supplement to the Official Statement (in form and substance satisfactory to counsel for
the Underwriters) which will amend or supplement the Official Statement so that it will
not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the
Bonds, the Authority will furnish such information with respect to itself as the
Underwriters may from time to time reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement under the captions “THE AUTHORITY” and “LITIGATION MATTERS” so
supplemented or amended (including any financial and statistical data contained therein)
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
-7-
(j) As used herein and for the purposes of the foregoing, the term “End of the
Underwriting Period” for the Bonds shall mean the earlier of (i) the Closing Date or (ii)
the date on which the End of the Underwriting Period for the Bonds has occurred under
Rule 15c2-12, as specified as such in a notice from the Underwriters stating the date
which is the End of the Underwriting Period;
(k) There is no consent, approval, authorization or other order of, or filing or
registration with, or certification by, any regulatory authority having jurisdiction over the
Authority required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
Authority of the other transactions contemplated by this Purchase Contract or the
Financing Documents to which the Authority is a party;
(l) The Bonds will be issued in accordance with the Trust Agreement;
(m) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(n) The Authority will apply the proceeds of the Bonds, and earnings thereon,
in accordance with the Trust Agreement;
(o) The Authority is not in default, and at no time has defaulted in any
material respect, on any bond, note or other obligation for borrowed money or any
agreement under which any such obligation is or was outstanding; and
(p) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the Authority to
the Underwriters as to the statements made therein.
Section 3. Representations, Warranties and Agreements of the County. The County
hereby represents, warrants and agrees with the Underwriters as follows:
(a) The County is and will be on the Closing Date a political subdivision of
the State of California organized and operating pursuant to the laws of the State of
California with full power and authority to execute and deliver the Official Statement,
and to enter into this Purchase Contract and the Financing Documents to be executed by
it;
(b) By official action of the County prior to or concurrently with the
acceptance hereof, the County has duly authorized and approved the execution and
-8-
delivery of, and the performance by the County of the obligations on its part contained in,
the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the County is a party will constitute, a legal,
valid and binding obligation of the County enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against counties in California;
to the best knowledge of the County, the execution and delivery of the Financing
Documents to be executed by it, this Purchase Contract and the Official Statement, and
compliance with the provisions on the County’s part contained herein and therein, will
not in any material respect conflict with or constitute a breach of or default under any
law, administrative regulation, judgment, decree, loan agreement, lease, indenture, bond,
note, resolution, agreement or other instrument to which the County is a party or is
otherwise subject, nor will any such execution, delivery, adoption or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the properties or assets of the County under the terms
of any such law, administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the County, the County is not in any material
respect in breach of or default under any applicable law or administrative regulation of
the State of California or the United States or any applicable judgment or decree or any
loan agreement, lease, indenture, bond, note, resolution, agreement or other instrument to
which the County is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both, would
constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the County, threatened against the County in any material respect
affecting the existence of the County or the titles of its officers to their respective offices
or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds or
the payment of Base Rental Payments or in any way contesting or affecting the validity
or enforceability of the Bonds, the Financing Documents to which the County is a party
or this Purchase Contract or contesting the powers of the County or its authority to enter
into, adopt or perform its obligations under any of the foregoing, or contesting in any way
the completeness or accuracy of the Official Statement, or any amendment or supplement
thereto, wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Financing Documents to be executed by it or
this Purchase Contract;
-9-
(f) The County will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the County be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under the
caption “UNDERWRITING”) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement (excluding therefrom information relating
to DTC and the book-entry system and the information under the caption
“UNDERWRITING”), as then supplemented or amended, to contain any untrue statement of
a material fact or to omit to state a material fact required to be stated therein or necessary
to make such information therein, in the light of the circumstances under which they were
made, not misleading, the County will notify the Underwriters, and, if in the opinion of
the Underwriters, the County or their respective counsel, such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the
County will forthwith prepare and furnish to the Underwriters (at the expense of the
County) a reasonable number of copies of an amendment of or supplement to the Official
Statement (in form and substance satisfactory to counsel for the Underwriters) which will
amend or supplement the Official Statement so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. For the purposes of this subsection, between the date hereof and the date
which is 25 days after the End of the Underwriting Period for the Bonds, the County will
furnish such information with respect to itself as the Underwriters may from time to time
reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement (excluding therefrom information relating to DTC and the book-entry
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system and the information under the caption “UNDERWRITING”) so supplemented or
amended will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) There is no material consent, approval, authorization or other order of, or
filing or registration with, or certification by, any regulatory authority having jurisdiction
over the County required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
County of the other transactions contemplated by this Purchase Contract or the Financing
Documents to which the County is a party;
(k) The Bonds will be issued in accordance with the Trust Agreement;
(l) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(m) Except as disclosed in the Official Statement, there has not been any
material adverse change in the financial condition of the County since June 30, 2009.
The financial statements of, and other financial information regarding the County set
forth in the Official Statement fairly present the financial position and results of the
operations of the County as of the dates and for the periods therein set forth and (i) the
audited financial statements have been prepared in accordance with the generally
accepted accounting principles consistently applied, and (ii) the other financial
information set forth in the Official Statement has been determined on a basis
substantially consistent with that of the County’s audited financial statements;
(n) The County is not in default, and at no time has defaulted in any material
respect, on any bond, note or other obligation for borrowed money or any agreement
under which any such obligation is or was outstanding;
(o) Any certificate signed by a duly authorized official of the County and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the County to the
Underwriters as to the statements made therein; and
(p) The information provided to the Underwriters by the County in connection
with the Underwriters’ consideration of purchasing the Bonds was true and correct in all
material respects as of its date.
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Section 4. Conditions to the Obligations of the Underwriters. The Underwriters
hereby enter into this Purchase Contract in reliance upon the representations and warranties of
the Authority and the County contained herein and the representations and warranties of the
Authority and the County to be contained in the documents and instruments to be delivered at the
Closing and upon the performance by the Authority and the County of their obligations both on
and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations
under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
subject, at the option of the Underwriters, to the accuracy in all material respects of the
representations and warranties of the Authority and the County contained herein as of the date
hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the
officers and other officials of the County and the Authority made in any certificate or other
document furnished pursuant to the provisions hereof, to the performance by the Authority and
the County of their respective obligations to be performed hereunder and under the Financing
Documents at or prior to the Closing Date, and also shall be subject to the following additional
conditions:
(a) The Underwriters shall receive, prior to the Closing Date and at least in
sufficient time to accompany any orders or confirmations that request payment from any
customer, copies of the Official Statement, in such reasonable quantity as the
Underwriters shall have requested;
(b) At the Closing, the Financing Documents shall have been duly authorized,
executed and delivered by the respective parties thereto, and the Official Statement shall
have been duly authorized, executed and delivered by the Authority and the County, all in
substantially the forms heretofore submitted to the Underwriters, with only such changes
as shall have been agreed to in writing by the Underwriters, and shall be in full force and
effect; and there shall be in full force and effect such resolution or resolutions of the
Board of Directors of the Authority and the Board of Supervisors of the County as, in the
opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), shall be necessary or
appropriate in connection with the transactions contemplated hereby and by the
Financing Documents;
(c) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth in the Official Statement, of the Bonds
shall not have been materially adversely affected, in the judgment of the Underwriters
(evidenced by a written notice to the Authority and the County terminating the obligation
of the Underwriters to accept delivery of and make any payment for the Bonds), by
reason of any of the following:
(1) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, the Speaker of the House of Representatives, the
President Pro Tempore of the Senate, the Chairman or ranking minority member
of the Committee on Ways and Means of the House of Representatives or the
Chairman or ranking minority member of the Committee on Finance of the
Senate, or a decision rendered by a court established under Article III of the
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Constitution of the United States or by the Tax Court of the United States, or an
order, ruling, regulation (final, temporary or proposed) or press release issued or
made by or on behalf of the Treasury Department of the United States or the
Internal Revenue Service, with the purpose or effect, directly or indirectly, of
imposing federal income taxation upon moneys that would be received by the
Authority or the County, Base Rental Payments that would be received by the
Authority under the Subleases or Revenues that would be received by the Trustee
under the Trust Agreement or upon interest on the Bonds that would be received
by the Bondowners;
(2) there shall have occurred any new outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or any
other calamity or crisis, the effect of which on financial markets is such as to
make it, in the sole judgment of the Underwriters, impracticable or inadvisable to
proceed with the offering and delivery of the Bonds;
(3) a general banking moratorium shall have been declared by Federal,
New York or California authorities having jurisdiction and shall be in force;
(4) there shall be in force a general suspension of trading on the New
York Stock Exchange or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been
required and be in force on the New York Stock Exchange, whether by virtue of a
determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction;
(5) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, or an order, decree or injunction issued by any
court of competent jurisdiction, or an order, ruling, regulation (final, temporary or
proposed) or press release issued or made by or on behalf of the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of
the subject matter, to the effect that obligations of the general character of the
Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under the Securities Act of 1933, as amended, or that the
Trust Agreement is not exempt from qualification under the Trust Indenture Act
of 1939, as amended, or that the execution, offering or sale of obligations of the
general character of the Bonds, or of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Financing Documents or the
Official Statement, otherwise is or would be in violation of the federal securities
laws as amended and then in effect;
(6) the withdrawal or downgrading of any rating of the Bonds by a
national rating agency or the placing of the Bonds on credit watch or under review
of any such rating agency that has assigned a rating to the Bonds; or
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(7) any event occurring, or information becoming known which, in the
judgment of the Underwriters, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect of causing the
Official Statement to contain any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made,
not misleading; and
(d) At or prior to the Closing Date, the Underwriters shall have received the
following documents, in each case satisfactory in form and substance to the
Underwriters:
(1) Two copies of each of the Financing Documents, each duly
executed and delivered by the respective parties thereto;
(2) The approving opinion, dated the Closing Date and addressed to
the Authority and the County, of Bond Counsel in substantially the form attached
to the Official Statement as Appendix F, and a letter of such counsel, dated the
Closing Date and addressed to the Underwriters to the effect that such opinion
may be relied upon by the Underwriters to the same extent as if such opinion were
addressed to them;
(3) The supplemental opinion, dated the Closing Date and addressed to
the Underwriters, of Bond Counsel, to the effect that (i) this Purchase Contract
has been duly executed and delivered by the Authority and the County and
(assuming due authorization, execution and delivery by and validity with respect
to the respective parties thereto) constitutes the valid and binding obligation of the
Authority and the County, subject to bankruptcy or other laws affecting creditors’
rights, the exercise of judicial discretion, the application of equitable principles,
and the limitations on legal remedies against public agencies in the State of
California, with no opinion being expressed with respect to any indemnification
or contribution provisions herein; (ii) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Trust Agreement
is exempt from qualification under the Trust Indenture Act of 1939, as amended;
and (iii) the statements contained in the Official Statement under the captions
“2010 SERIES A BONDS,” “2010 SERIES B BONDS,” “SECURITY AND SOURCES OF
PAYMENT FOR THE 2010 BONDS,” “TAX MATTERS” and in APPENDIX E -
“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS,”
APPENDIX F - “PROPOSED FORM OF BOND COUNSEL OPINION,” and APPENDIX G -
“PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT,” insofar as such
statements purport to summarize certain provisions of the Financing Documents
and Bond Counsel’s opinion concerning certain federal tax matters relating to the
Bonds, are accurate in all material respects;
(4) The opinion of counsel for the Authority, dated the Closing Date
and addressed to the Underwriters, to the effect that (i) the Authority is a joint
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exercise of powers agency organized under the laws of the State of California; (ii)
the resolution of the Authority approving and authorizing the execution and
delivery by the Authority of the Financing Documents to which it is a party, this
Purchase Contract and the Official Statement (the “Resolution”) was duly
adopted at a meeting of the Governing Board of the Authority which was called
and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout; (iii) there is no action, suit,
proceeding or investigation at law or in equity before or by any court, public
board or body, pending or, to the best knowledge of such counsel, threatened
against the Authority, to restrain or enjoin the Base Rental Payments under the
Subleases, or in any way contesting or affecting the validity of the Bonds, the
Financing Documents or this Purchase Contract; (iv) the execution and delivery
of the Financing Documents to which the Authority is a party, this Purchase
Contract and the Official Statement, the adoption of the Resolution, and
compliance by the Authority with the provisions of the foregoing, under the
circumstances contemplated thereby, do not and will not in any material respect
conflict with or constitute on the part of the Authority a breach or default under
any agreement or other instrument to which the Authority is a party or by which it
is bound or, to the best knowledge of such counsel, any existing law, regulation,
court order or consent decree to which the Authority is subject; (v) no
authorization, approval, consent, or other order of the State of California or any
other governmental authority or agency within the State of California having
jurisdiction over the Authority is required for the valid authorization, execution,
delivery and performance by the Authority of the Financing Documents to which
the Authority is a party, the Official Statement or this Purchase Contract or for the
adoption of the Resolution which has not been obtained; and (vi) the Official
Statement (excluding therefrom financial statements and statistical data, as to
which no opinion need be expressed) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(5) The opinion, dated the Closing Date and addressed to the
Underwriters, the Authority and the County, of Counsel to the Trustee, in
substantially the form of Exhibit A hereto;
(6) The opinion of counsel to the County, dated the Closing Date and
addressed to the Underwriters, to the effect that (i) the County is a political
subdivision of the State of California organized and operating pursuant to the
Constitution and laws of the State of California; (ii) the resolution or resolutions
of the County approving and authorizing the execution and delivery by the
County of the Financing Documents to which it is a party, this Purchase Contract
and the Official Statement (the “County Resolution”) were duly adopted at
meetings of the Board of Supervisors of the County which were called and held
pursuant to law and with all public notice required by law and at which a quorum
was present acting throughout; (iii) there is no action, suit, proceeding or
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investigation at law or in equity before or by any court, public board or body,
pending or, to the best knowledge of such counsel, threatened against the County,
to restrain or enjoin the Base Rental Payments under the Subleases, or in any way
contesting or affecting the validity of the Bonds, the Financing Documents or this
Purchase Contract; (iv) the execution and delivery of the Financing Documents to
which the County is a party, this Purchase Contract and the Official Statement,
the adoption of the County Resolution, and compliance by the County with the
provisions of the foregoing, under the circumstances contemplated thereby, do not
and will not in any material respect conflict with or constitute on the part of the
County a breach or default under any agreement or other instrument to which the
County is a party or by which it is bound or, to the best knowledge of such
counsel, any existing law, regulation, court order or consent decree to which the
County is subject; (v) no authorization, approval, consent or other order of the
State of California or any other governmental authority or agency within the State
of California having jurisdiction over the County is required for the valid
authorization, execution, delivery and the performance by the County of the
Financing Documents to which the County is a party, the Official Statement or
this Purchase Contract or for the adoption of the County Resolution which has not
been obtained; and (vi) the Official Statement (excluding therefrom financial
statements and statistical data, as to which no opinion need be expressed) does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(7) The opinion, dated the Closing Date and addressed to the
Underwriters, of Chapman and Cutler LLP, San Francisco, California, counsel for
the Underwriters (“Underwriters’ Counsel”) to the effect that the Bonds are
exempt from registration under the Securities Act of 1933, as amended, and the
Trust Agreement is exempt from qualification under the Trust Indenture Act of
1939, as amended.
(8) The opinion, dated the Closing Date and addressed to the
Underwriters, of Lofton & Jennings, San Francisco, California, disclosure
counsel, to the effect that without passing upon or assuming any responsibility for
the accuracy, completeness or fairness of the statements contained in the Official
Statement and making no representation that they have independently verified the
accuracy, completeness or fairness of any such statements, based upon the
information made available to them in the course of their participation in the
preparation of the Official Statement, nothing has come to their attention that
would lead them to believe that the Official Statement, as of its date and as of the
date of such opinion (excluding therefrom any CUSIP numbers, financial,
statistical, economic, or demographic data or forecasts, numbers, charts, tables,
graphs, estimates, projections, assumptions or expressions of opinion,
environmental matters, information relating to DTC and its book-entry system,
and the Appendices thereto, as to which no opinion need be expressed) contains
any untrue statement of a material fact or omits to state a material fact required to
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be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(9) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Authority satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the Authority contained in this Purchase
Contract are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date; (b) except as disclosed in the
Official Statement, no litigation is pending or, to the best of such official’s
knowledge, threatened against the Authority (i) to restrain or enjoin the issuance,
sale or delivery of any of the Bonds or the payment of Base Rental Payments
under the Subleases, (ii) in any way contesting or affecting the validity of the
Bonds, this Purchase Contract, the Financing Documents to which the Authority
is a party, or (iii) in any way contesting the existence or powers of the Authority;
and (c) no event affecting the Authority has occurred since the date of the Official
Statement that either makes untrue or incorrect in any material respect as of the
Closing Date any statement or information contained in the Official Statement
under the captions “THE AUTHORITY” or “LITIGATION MATTERS” or is not
reflected in the Official Statement but should be reflected therein in order to make
the statements and information therein under the captions “THE AUTHORITY” or
“LITIGATION MATTERS” not misleading in any material respect;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the County satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the County contained in this Purchase Contract
are true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date; (b) except as disclosed in the Official
Statement, no litigation is pending or, to the best of such official’s knowledge,
threatened against the County (i) to restrain or enjoin the issuance, sale or delivery
of the Bonds or the payment of the Base Rental Payments under the Subleases;
(ii) in any way contesting or affecting the validity of the Bonds, this Purchase
Contract or the Financing Documents to which the County is a party; or (iii) in
any way contesting the existence or powers of the County; and (c) no event
affecting the County has occurred since the date of the Official Statement that
either makes untrue or incorrect in any material respect as of the Closing Date any
statement or information contained in the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under
the caption “UNDERWRITING”) or is not reflected in the Official Statement but
should be reflected therein in order to make the statements and information
therein not misleading in any material respect;
(11) A certificate, dated the Closing Date, signed by a duly authorized
official of the Trustee, satisfactory in form and substance to the Underwriters, to
the effect that:
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(a) the Trustee is a national banking association organized and
existing under and by virtue of the laws of the United States, having the
full power and being qualified to enter into and perform its duties under
the Trust Agreement;
(b) the Trustee is duly authorized to enter into the Trust
Agreement and the Trustee has duly executed and delivered the Trust
Agreement;
(c) the execution and delivery of the Trust Agreement and
compliance with the provisions on the Trustee’s part contained therein,
will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument to which
the Trustee is a party or is otherwise subject (except that no representation,
warranty or agreement is made with respect to any federal or state
securities or blue sky laws or regulations), nor will any such execution,
delivery, adoption or compliance result in the creation or imposition of
any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets held by the Trustee
pursuant to the Trust Agreement under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument, except as
provided by the Trust Agreement;
(d) to the best knowledge of the Trustee, it has not been served
with any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or
body, nor is any such action or other proceeding threatened against the
Trustee, as such but not in its individual capacity, affecting the existence
of the Trustee, or the titles of its officers to their respective offices or
seeking to prohibit, restrain or enjoin the collection of Revenues to be
applied to pay the principal, premium, if any, and interest on the Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Trust Agreement, or contesting the powers of the
Trustee or its authority to enter into, adopt or perform its obligations under
any of the foregoing, wherein an unfavorable decision, ruling or finding
would materially adversely affect the validity or enforceability of the Trust
Agreement;
(12) The Preliminary Official Statement, a certificate pursuant to Rule
15c2-12 related to the Preliminary Official Statement and the Official Statement,
executed on behalf of the Authority and the County by authorized representatives
thereof;
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(13) A certified copy of the general resolution of by-laws of the Trustee
authorizing the execution and delivery of the Trust Agreement;
(14) A certified copy of the Resolution of the Authority authorizing the
execution and delivery of the Financing Documents to which the Authority is a
party, the Official Statement and this Purchase Contract;
(15) A certified copy of the County Resolution authorizing the
execution and delivery of the Financing Documents to which the County is a
party, the Official Statement and this Purchase Contract;
(16) Evidence that any ratings described in the Official Statement are in
full force and effect as of the Closing Date;
(17) A copy of the Blanket Letter of Representations to DTC relating to
the Bonds signed by DTC and the Authority;
(18) Arbitrage and tax certifications by the Authority in form and
substance acceptable to Bond Counsel and the Underwriters;
(19) Evidence of title to the Facilities satisfactory to the Underwriters;
(20) Evidence of existing title insurance policy satisfactory to the
Underwriters; and
(21) Such additional legal opinions, certificates, proceedings,
instruments, title insurance, other insurance policies or evidences thereof and
other documents as the Underwriters, Underwriters’ Counsel or Bond Counsel
may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the representations of the Authority and the County
herein and of the statements and information contained in the Official Statement,
and the due performance or satisfaction by the Trustee, the Authority and the
County at or prior to the Closing of all agreements then to be performed and all
conditions then to be satisfied by any of them in connection with the transactions
contemplated hereby and by the Financing Documents.
If the Authority or the County shall be unable to satisfy the conditions to the
Underwriters’ obligations contained in this Purchase Contract or if the Underwriters’ obligations
shall be terminated for any reason permitted herein, all obligations of the Underwriters hereunder
may be terminated by the Underwriters at, or at any time prior to, the Closing Date by written
notice to the County and the Authority and none of the Underwriters or the Authority or the
County shall have any further obligations hereunder. In the event that the Underwriters fail
(other than for a reason permitted by this Purchase Contract) to accept and pay for the Bonds at
the Closing, the amount of one percent (1%) of the aggregate principal amount of the Bonds
shall be payable by the Underwriters as and for full liquidated damages for such failure and for
any and all defaults hereunder on the part of the Underwriters and the acceptance of such amount
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shall constitute a full release and discharge of all claims and rights of the Authority or County
against the Underwriters.
Section 5. Expenses. All expenses and costs incident to the authorization, execution,
delivery and sale of the Bonds to the Underwriters, including the costs of printing of the Bonds,
the Official Statement, the cost of duplicating the Financing Documents, the fees of accountants,
consultants and rating agencies, the initial fee of the Trustee and its counsel in connection with
the execution and delivery of the Bonds, the fees and expenses of Underwriters’ Counsel and the
fees and expenses of Bond Counsel, shall be paid from the proceeds of the Bonds. In the event
that the Bonds for any reason are not issued, or to the extent proceeds of the Bonds are
insufficient or unavailable therefor, any fees, costs and expenses owed by the Authority to the
Trustee, which otherwise would have been paid from the proceeds of the Bonds, shall be paid by
the Authority. All out-of-pocket expenses of the Underwriters, including traveling and other
expenses, including those associated with the California Debt and Investment Advisory
Commission fee, and the costs of preparation of any blue sky and legal investment surveys
prepared by Underwriters’ Counsel, shall be paid by the Underwriters. The County shall pay for
expenses (included in the expense component of the Underwriters’ spread) incurred on behalf of
the County’s employees which are incidental to implementing this agreement, including, but not
limited to, meals, transportation, lodging, and entertainment of those employees.
Section 6. Notices. Any notice or other communication to be given to the parties to
this Purchase Contract may be given by delivering the same in writing to the respective party at
the following address:
Underwriters: Wedbush Securities Inc.
One Bush Street, Suite 1700
San Francisco, California 94104
Attention: Robert Larkins
County: County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
Attention: Finance Director
Authority: County of Contra Costa Public Financing Authority
County Administration Building
651 Pine Street
Martinez, California 94553
Attention:
Section 7. Survival of Representations and Warranties. The representations and
warranties of the Authority and the County set forth in or made pursuant to this Purchase
Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by
reason of the Closing or termination of this Purchase Contract and regardless of any
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investigations or statements as to the results thereof made by or on behalf of the Underwriters
and regardless of delivery of and payment for the Bonds.
Section 8. Effectiveness. This Purchase Contract shall become effective and binding
upon the respective parties hereto upon the execution of the acceptance hereof by a duly
authorized officer of the Authority and the County and shall be valid and enforceable as of the
time of such acceptance.
Section 9. Execution in Counterparts. This Purchase Contract may be executed in
counterparts, all of which shall constitute one and the same instrument, and each of which shall
be deemed to be an original. If the above terms are acceptable, please cause a duly authorized
officer of the Authority and the County to execute the acceptance below.
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Very truly yours,
WEDBUSH SECURITIES INC., as Representative of
the Underwriters
By:___________________________________
Managing Director
ACCEPTED:
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
COUNTY OF CONTRA COSTA, CALIFORNIA
By:
SCHEDULE I
$__________ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
2010 SERIES A-1 (CAPITAL PROJECT I – TAX-EXEMPT)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES A-2 (CAPITAL PROJECT I – TAXABLE BUILD AMERICA BONDS)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES A-3 (CAPITAL PROJECT I – TAXABLE RECOVERY ZONE BONDS)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
2010 SERIES B (CAPITAL PROJECT II)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
EXHIBIT A
FORM OF TRUSTEE COUNSEL’S OPINION
November __, 2010
County of Contra Costa Wedbush Securities Inc.
Martinez, California San Francisco, California
County of Contra Costa Public Financing Authority Piper Jaffray & Co.
Martinez, California El Segundo, California
Re: $________
County of Contra Costa Public Financing Authority
Lease Revenue Bonds
consisting of
$________ 2010 Series A-1 (Capital Project I – Tax-Exempt)
$________ 2010 Series A-2 (Capital Project I – Taxable Build America Bonds)
$________ 2010 Series A-3 (Capital Project I – Taxable Recovery Zone Bonds)
and
$________ 2010 Series B (Capital Project II)
Ladies and Gentlemen:
I have acted as special counsel to Wells Fargo Bank, National Association (the
“Trustee”), in connection with the Trust Agreement, dated as of November 1, 2010, by and
between the County of Contra Costa Public Financing Authority (the “Authority”) and the
Trustee (the “Trust Agreement”), and the issuance of the Authority’s Lease Revenue Bonds,
2010 Series A-1 (Capital Project I – Tax-Exempt), Lease Revenue Bonds, 2010 Series A-2
(Capital Project I – Taxable Build America Bonds), Lease Revenue Bonds, 2010 Series A-3
(Capital Project I – Taxable Recovery Zone Bonds) and Lease Revenue Bonds, 2010 Series B
(Capital Project II) (collectively, the “Bonds”). This opinion is rendered pursuant to the Bond
Purchase Contract, dated October ___, 2010 (the “Purchase Contract”) among the Authority,
the County of Contra Costa and Wedbush Securities Inc., as Representative of itself and Piper
Jaffray & Co., as underwriters. All terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Purchase Contract.
In connection therewith, I have examined and reviewed such documents and certificates
of public officials, officers of the Trustee and others as I have deemed necessary for the purposes
of this opinion. In all such examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to original and
certified documents of all copies submitted to me as conformed or photostat copies, and the
authenticity of the originals of all such latter documents. As to various questions of fact material
to this opinion, I have relied, to the extent that I deemed such reliance proper, upon such
certificates of officers of the Trustee. I have examined executed counterparts of the Trust
Agreement and have assumed the power, municipal or corporate, as the case may be, and the
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legal authority to execute and deliver the same to the other parties thereto and the due
authorization, execution and delivery thereof by the other parties thereto.
Based upon the foregoing, I am of the opinion that:
1. The Trustee has been duly organized and is validly existing in good
standing as a national banking association under the laws of the United States of America
with trust powers and full corporate power to undertake the trust of the Trust Agreement;
2. The Trustee has duly authorized, executed and delivered the Trust
Agreement and by all proper corporate action has authorized the acceptance of the duties
and obligations of the Trustee under the Trust Agreement;
3. The Trust Agreement constitutes a legally valid and binding agreement of
the Trustee, enforceable against the Trustee in accordance with its terms;
4. There is no litigation pending against the Trustee arising from its fiduciary
activities to restrain or enjoin the Trustee’s participation in, or in any way contesting the
powers of the Trustee with respect to the transactions contemplated by the Trust
Agreement;
5. The Trustee’s action in executing and delivering the Trust Agreement does
not conflict with or constitute a breach of or default under any law or governmental
regulation applicable to the Trustee.
My opinion with respect to the foregoing documents is qualified by (i) the application of
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws or general
application affecting creditors’ rights or (ii) the discretion of any court to refuse to order
equitable relief, including specific performance of any clause of any such documents, whether
such enforceability is considered in a proceeding in equity or at law.
This opinion is furnished by me to you solely for your benefit and may not, without my
express written consent, be relied upon by any other person.
Very truly yours,
2810772.01.09.B.doc
4000600
BOND PURCHASE CONTRACT
$________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2010 SERIES C (REFUNDING)
October ___, 2010
County of Contra Costa Public Financing Authority
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
County of Contra Costa
County Administrator’s Office
651 Pine Street, 10th Floor
Martinez, California 94553
Ladies and Gentlemen:
The undersigned, Wedbush Securities Inc., as representative (the “Representative”) on
behalf of itself and Piper Jaffray & Co., as underwriters (collectively, the “Underwriters”),
hereby offers to enter into this Bond Purchase Contract (the “Purchase Contract”) with you, the
County of Contra Costa Public Financing Authority (the “Authority”) and the County of Contra
Costa, California (the “County”), for the purchase by the Underwriters of the $___________
aggregate principal amount of the County of Contra Costa Public Financing Authority Lease
Revenue Bonds, 2010 Series C (Refunding) (the “Bonds”), which will be issued pursuant to a
Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”) by and between the
Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The
Representative has been duly authorized to execute this Purchase Contract and to take any action
hereunder by and on behalf of the Underwriters. This offer is made subject to acceptance by the
Authority and the County prior to 11:59 p.m., California time, on the date hereof. If this offer is
not so accepted, this offer will be subject to withdrawal by the Underwriters upon notice
delivered to the Authority and the County at any time prior to acceptance. Upon acceptance, this
Purchase Contract shall be in full force and effect in accordance with its terms and shall be
binding upon the Authority, the County and the Underwriters. Capitalized terms used herein not
otherwise defined herein shall have the meanings set forth in the Official Statement (hereinafter
defined).
The Authority acknowledges and agrees that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm’s-length commercial transaction between the
Authority and the Underwriters, (ii) in connection with such transaction, the Underwriters have
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not assumed (individually or collectively) a fiduciary responsibility in favor of the Authority
with respect to (x) the offering of the Bonds or the process leading thereto (whether or not the
Underwriters have advised or are currently advising the Authority on other matters) or (y) any
other obligation to the Authority except the obligations expressly set forth in this Purchase
Contract and (iii) the Authority has consulted with its own legal and other professional advisors
to the extent it deemed appropriate in connection with the offering of the Bonds.
Section 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements set forth herein,
the Underwriters hereby agree to purchase and the Authority agrees to sell to the Underwriters
all (but not less than all) of the Bonds, in the aggregate principal amount of $_________. The
Bonds are payable from, and secured by Revenues of the Authority, consisting primarily of
certain rental payments (“Base Rental Payments”) to be made by the County pursuant to, and as
defined in, the Sublease (Refunding), dated as of November 1, 2010, by and between the
Authority and the County (the “Sublease”).
The Bonds shall be substantially in the form described in, and shall be issued and secured
under and pursuant to, and shall be payable and subject to redemption as provided in, the Trust
Agreement. The Bonds shall be dated the date of delivery thereof and shall mature on the dates
and in the amounts set forth on Schedule I attached hereto. Interest on the Bonds shall be
payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2011.
The Base Rental Payments to be made by the County pursuant to the Sublease are
payable by the County from its General Fund to the Authority for the right to use and possession
by the County of certain real property and the improvements thereon located within the County
(the “Facilities”). The County has covenanted under the Sublease that it will take such action as
may be necessary to include the Base Rental Payments in its annual budgets and to make the
necessary annual appropriations therefor. The Bonds are secured by a pledge of and charge and
lien upon the Revenues.
Pursuant to a Site Lease (Refunding) (the “Site Lease”) dated as of November 1, 2010
between the County and the Authority, the County leased the Facilities to the Authority.
The Bonds are being issued for the purpose of financing all or a portion of the refunding
of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various
Capital Facilities), 1998 Series A (the “Prior Bonds”) which were issued for the purpose of
financing and refinancing the acquisition, construction and renovation of certain facilities for the
County and other capital improvements for the County.
The County will undertake, pursuant to the Trust Agreement and a Continuing Disclosure
Agreement (the “Continuing Disclosure Agreement”), to be dated the Closing Date (as
hereinafter defined), to provide annual reports and notices of certain events relating to the Bonds.
A description of this undertaking is set forth in the Preliminary Official Statement and the
Official Statement (both terms as defined below).
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The Authority and the County have heretofore delivered to the Underwriters a
Preliminary Official Statement, dated ___________, 2010 relating to the Bonds (as
supplemented or amended with the consent of the Underwriters, the “Preliminary Official
Statement”), that the Authority and the County have deemed final as of its date in accordance
with paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission
(“Rule 15c2-12”). The Authority and the County shall deliver or cause to be delivered to the
Underwriters, within seven (7) business days from the date hereof, copies of an official statement
relating to the Bonds executed on behalf of and approved for distribution by the Authority and
the County in the form of the Preliminary Official Statement, as amended to conform to the
terms of this Purchase Contract and to reflect the reoffering terms of the Bonds and with such
other changes as shall have been consented to by the Authority, the County and the Underwriters
(the “Official Statement”). The Authority and the County shall deliver the Official Statement at
the Authority’s sole cost, at such address as the Underwriters shall specify, and in such quantities
as the Underwriters may request in order to comply with paragraph (b)(4) of Rule 15c2-12 and
the rules of the Municipal Securities Rulemaking Board. The Authority and the County hereby
approve the distribution of the Official Statement and authorize the use of copies of the Official
Statement and the documents referred to therein in connection with the offering and sale of the
Bonds by the Underwriters.
(b) The Underwriters shall pay to the Authority as the purchase price for the Bonds
$___________ (representing the $___________ aggregate principal amount of the Bonds, less
an Underwriters’ discount of $___________, plus [less] a[n] [net] original issue premium
[discount] of $___________).
(c) At 8:00 a.m., California time, on November ___, 2010, or at such other time or on
such other date as the Authority, the County and the Underwriters mutually agree upon (the
“Closing Date”), the Authority will deliver or cause to be delivered to the Underwriters, the
Bonds (delivered through the book-entry system of The Depository Trust Company (“DTC”)),
duly executed, and at the offices of Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San
Francisco, California 94105, or at such other place as the Authority, the County and the
Underwriters shall have mutually agreed upon, the other documents mentioned herein. The
Underwriters will accept such delivery and pay the purchase price(s) of the Bonds as set forth in
subparagraph (b) above in immediately available funds (such delivery and payment being herein
referred to as the “Closing”) payable to the order of the Trustee.
(d) The Underwriters agree to make a bona fide public offering of the Bonds at the
initial offering prices set forth in the Official Statement, which prices may be changed from time
to time by the Underwriters after such offering. The Authority hereby authorizes the
Underwriters to use the forms or copies of the Official Statement, the Trust Agreement, the
Sublease, the Site Lease and all other documents referred to in the Official Statement and the
information contained in each of the foregoing in connection with the public offering and sale of
the Bonds.
Section 2. Representations, Warranties and Agreements of the Authority. The
Authority hereby represents, warrants and agrees with the Underwriters as follows:
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(a) The Authority is, and will be on the Closing Date a joint exercise of
powers agency duly organized and validly existing pursuant to the Constitution and laws
of the State of California with the full power and authority to issue the Bonds, to execute
and deliver the Official Statement, and to enter into this Purchase Contract, the Sublease,
the Site Lease and the Trust Agreement. The Trust Agreement, the Sublease and the Site
Lease, together with the Continuing Disclosure Agreement, are collectively known as the
“Financing Documents”;
(b) By official action of the Authority prior to or concurrently with the
acceptance hereof, the Authority has duly authorized and approved the execution and
delivery of, and the performance by the Authority of the obligations on its part contained
in, the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the Authority is a party will constitute, a
legal, valid and binding obligation of the Authority, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against joint powers authorities
in California; and the execution and delivery of the Financing Documents to which it is a
party, this Purchase Contract and the Official Statement, and compliance with the
provisions on the Authority’s part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, lease, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject,
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Authority under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, lease, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the Authority, the Authority is not in any
material respect in breach of or default under any applicable law or administrative
regulation of the State of California or the United States or any applicable judgment or
decree or any loan agreement, lease, indenture, bond, note, resolution, agreement or other
instrument to which the Authority is a party or is otherwise subject, and no event has
occurred and is continuing which, with the passage of time or the giving of notice or
both, would constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the Authority, threatened against the Authority in any material
respect affecting the existence of the Authority or the titles of its officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale, execution or delivery
-5-
of the Bonds or the payment of Base Rental Payments or in any way contesting or
affecting the validity or enforceability of the Bonds, the Financing Documents to which
the Authority is a party or this Purchase Contract or contesting the powers of the
Authority or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Official
Statement, or any amendment or supplement thereto, wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity or enforceability of the
Financing Documents to be executed by it or this Purchase Contract;
(f) The Authority will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the Authority be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the statements contained in the Official Statement
under the captions “THE AUTHORITY” and “LITIGATION MATTERS” did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement under the captions “THE AUTHORITY”
and “LITIGATION MATTERS” as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated therein
or necessary to make such information therein, in the light of the circumstances under
which it was presented, not misleading, the Authority will notify the Underwriters, and, if
in the opinion of the Authority, the Underwriters or their respective counsel, such event
requires the preparation and publication of a supplement or amendment to the Official
Statement, the Authority will forthwith prepare and furnish to the Underwriters (at the
expense of the Authority) a reasonable number of copies of an amendment of or
supplement to the Official Statement (in form and substance satisfactory to counsel for
the Underwriters) which will amend or supplement the Official Statement so that it will
not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the
Bonds, the Authority will furnish such information with respect to itself as the
Underwriters may from time to time reasonably request;
-6-
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement under the captions “THE AUTHORITY” and “LITIGATION MATTERS” so
supplemented or amended (including any financial and statistical data contained therein)
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(j) As used herein and for the purposes of the foregoing, the term “End of the
Underwriting Period” for the Bonds shall mean the earlier of (i) the Closing Date or (ii)
the date on which the End of the Underwriting Period for the Bonds has occurred under
Rule 15c2-12, as specified as such in a notice from the Underwriters stating the date
which is the End of the Underwriting Period;
(k) There is no consent, approval, authorization or other order of, or filing or
registration with, or certification by, any regulatory authority having jurisdiction over the
Authority required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
Authority of the other transactions contemplated by this Purchase Contract or the
Financing Documents to which the Authority is a party;
(l) The Bonds will be issued in accordance with the Trust Agreement;
(m) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(n) The Authority will apply the proceeds of the Bonds, and earnings thereon,
in accordance with the Trust Agreement;
(o) The Authority is not in default, and at no time has defaulted in any
material respect, on any bond, note or other obligation for borrowed money or any
agreement under which any such obligation is or was outstanding; and
(p) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the Authority to
the Underwriters as to the statements made therein.
-7-
Section 3. Representations, Warranties and Agreements of the County. The County
hereby represents, warrants and agrees with the Underwriters as follows:
(a) The County is and will be on the Closing Date a political subdivision of
the State of California organized and operating pursuant to the laws of the State of
California with full power and authority to execute and deliver the Official Statement,
and to enter into this Purchase Contract and the Financing Documents to be executed by
it;
(b) By official action of the County prior to or concurrently with the
acceptance hereof, the County has duly authorized and approved the execution and
delivery of, and the performance by the County of the obligations on its part contained in,
the Financing Documents to be executed by it and the consummation by it of all other
transactions contemplated by the Official Statement and this Purchase Contract;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,
each of the Financing Documents to which the County is a party will constitute, a legal,
valid and binding obligation of the County enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion and to the limitations on legal remedies against counties in California;
to the best knowledge of the County, the execution and delivery of the Financing
Documents to be executed by it, this Purchase Contract and the Official Statement, and
compliance with the provisions on the County’s part contained herein and therein, will
not in any material respect conflict with or constitute a breach of or default under any
law, administrative regulation, judgment, decree, loan agreement, lease, indenture, bond,
note, resolution, agreement or other instrument to which the County is a party or is
otherwise subject, nor will any such execution, delivery, adoption or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the properties or assets of the County under the terms
of any such law, administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note resolution, agreement or other instrument, except as provided in the
Financing Documents;
(d) To the best knowledge of the County, the County is not in any material
respect in breach of or default under any applicable law or administrative regulation of
the State of California or the United States or any applicable judgment or decree or any
loan agreement, lease, indenture, bond, note, resolution, agreement or other instrument to
which the County is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both, would
constitute a default or an event of default under any such instrument;
(e) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the County, threatened against the County in any material respect
affecting the existence of the County or the titles of its officers to their respective offices
-8-
or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds or
the payment of Base Rental Payments or in any way contesting or affecting the validity
or enforceability of the Bonds, the Financing Documents to which the County is a party
or this Purchase Contract or contesting the powers of the County or its authority to enter
into, adopt or perform its obligations under any of the foregoing, or contesting in any way
the completeness or accuracy of the Official Statement, or any amendment or supplement
thereto, wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Financing Documents to be executed by it or
this Purchase Contract;
(f) The County will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriters as the Underwriters may
reasonably request in order to qualify the Bonds for offer and sale under the blue sky or
other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriters may designate and will use its best efforts to continue such
qualification in effect so long as required for distribution of the Bonds; provided,
however, that in no event shall the County be required to take any action which would
subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject;
(g) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the Bonds, the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under the
caption “UNDERWRITING”) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(h) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement (excluding therefrom information relating
to DTC and the book-entry system and the information under the caption
“UNDERWRITING”), as then supplemented or amended, to contain any untrue statement of
a material fact or to omit to state a material fact required to be stated therein or necessary
to make such information therein, in the light of the circumstances under which they were
made, not misleading, the County will notify the Underwriters, and, if in the opinion of
the Underwriters, the County or their respective counsel, such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the
County will forthwith prepare and furnish to the Underwriters (at the expense of the
County) a reasonable number of copies of an amendment of or supplement to the Official
Statement (in form and substance satisfactory to counsel for the Underwriters) which will
amend or supplement the Official Statement so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. For the purposes of this subsection, between the date hereof and the date
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which is 25 days after the End of the Underwriting Period for the Bonds, the County will
furnish such information with respect to itself as the Underwriters may from time to time
reasonably request;
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the Bonds, the portions of the
Official Statement (excluding therefrom information relating to DTC and the book-entry
system and the information under the caption “UNDERWRITING”) so supplemented or
amended will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) There is no material consent, approval, authorization or other order of, or
filing or registration with, or certification by, any regulatory authority having jurisdiction
over the County required for the execution and delivery of this Purchase Contract or the
execution, delivery and sale of the Bonds to the Underwriters or the consummation by the
County of the other transactions contemplated by this Purchase Contract or the Financing
Documents to which the County is a party;
(k) The Bonds will be issued in accordance with the Trust Agreement;
(l) The Bonds will be validly issued and outstanding obligations of the
Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the
funds and accounts pledged under the Trust Agreement, subject only to the provisions of
the Trust Agreement permitting the application thereof on the terms and conditions set
forth in the Trust Agreement;
(m) Except as disclosed in the Official Statement, there has not been any
material adverse change in the financial condition of the County since June 30, 2009.
The financial statements of, and other financial information regarding the County set
forth in the Official Statement fairly present the financial position and results of the
operations of the County as of the dates and for the periods therein set forth and (i) the
audited financial statements have been prepared in accordance with the generally
accepted accounting principles consistently applied, and (ii) the other financial
information set forth in the Official Statement has been determined on a basis
substantially consistent with that of the County’s audited financial statements;
(n) The County is not in default, and at no time has defaulted in any material
respect, on any bond, note or other obligation for borrowed money or any agreement
under which any such obligation is or was outstanding;
-10-
(o) Any certificate signed by a duly authorized official of the County and
delivered to the Underwriters pursuant to this Purchase Contract or any document
contemplated hereby shall be deemed a representation and warranty by the County to the
Underwriters as to the statements made therein; and
(p) The information provided to the Underwriters by the County in connection
with the Underwriters’ consideration of purchasing the Bonds was true and correct in all
material respects as of its date.
Section 4. Conditions to the Obligations of the Underwriters. The Underwriters
hereby enter into this Purchase Contract in reliance upon the representations and warranties of
the Authority and the County contained herein and the representations and warranties of the
Authority and the County to be contained in the documents and instruments to be delivered at the
Closing and upon the performance by the Authority and the County of their obligations both on
and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations
under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
subject, at the option of the Underwriters, to the accuracy in all material respects of the
representations and warranties of the Authority and the County contained herein as of the date
hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the
officers and other officials of the County and the Authority made in any certificate or other
document furnished pursuant to the provisions hereof, to the performance by the Authority and
the County of their respective obligations to be performed hereunder and under the Financing
Documents at or prior to the Closing Date, and also shall be subject to the following additional
conditions:
(a) The Underwriters shall receive, prior to the Closing Date and at least in
sufficient time to accompany any orders or confirmations that request payment from any
customer, copies of the Official Statement, in such reasonable quantity as the
Underwriters shall have requested;
(b) At the Closing, the Financing Documents shall have been duly authorized,
executed and delivered by the respective parties thereto, and the Official Statement shall
have been duly authorized, executed and delivered by the Authority and the County, all in
substantially the forms heretofore submitted to the Underwriters, with only such changes
as shall have been agreed to in writing by the Underwriters, and shall be in full force and
effect; and there shall be in full force and effect such resolution or resolutions of the
Board of Directors of the Authority and the Board of Supervisors of the County as, in the
opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), shall be necessary or
appropriate in connection with the transactions contemplated hereby and by the
Financing Documents;
(c) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth in the Official Statement, of the Bonds
shall not have been materially adversely affected, in the judgment of the Underwriters
(evidenced by a written notice to the Authority and the County terminating the obligation
-11-
of the Underwriters to accept delivery of and make any payment for the Bonds), by
reason of any of the following:
(1) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, the Speaker of the House of Representatives, the
President Pro Tempore of the Senate, the Chairman or ranking minority member
of the Committee on Ways and Means of the House of Representatives or the
Chairman or ranking minority member of the Committee on Finance of the
Senate, or a decision rendered by a court established under Article III of the
Constitution of the United States or by the Tax Court of the United States, or an
order, ruling, regulation (final, temporary or proposed) or press release issued or
made by or on behalf of the Treasury Department of the United States or the
Internal Revenue Service, with the purpose or effect, directly or indirectly, of
imposing federal income taxation upon moneys that would be received by the
Authority or the County, Base Rental Payments that would be received by the
Authority under the Sublease or Revenues that would be received by the Trustee
under the Trust Agreement or upon interest on the Bonds that would be received
by the Bondowners;
(2) there shall have occurred any new outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or any
other calamity or crisis, the effect of which on financial markets is such as to
make it, in the sole judgment of the Underwriters, impracticable or inadvisable to
proceed with the offering and delivery of the Bonds;
(3) a general banking moratorium shall have been declared by Federal,
New York or California authorities having jurisdiction and shall be in force;
(4) there shall be in force a general suspension of trading on the New
York Stock Exchange or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been
required and be in force on the New York Stock Exchange, whether by virtue of a
determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction;
(5) legislation enacted (or resolution passed) by or introduced or
pending legislation amended in the Congress or recommended for passage by the
President of the United States, or an order, decree or injunction issued by any
court of competent jurisdiction, or an order, ruling, regulation (final, temporary or
proposed) or press release issued or made by or on behalf of the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of
the subject matter, to the effect that obligations of the general character of the
Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under the Securities Act of 1933, as amended, or that the
Trust Agreement is not exempt from qualification under the Trust Indenture Act
-12-
of 1939, as amended, or that the execution, offering or sale of obligations of the
general character of the Bonds, or of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Financing Documents or the
Official Statement, otherwise is or would be in violation of the federal securities
laws as amended and then in effect;
(6) the withdrawal or downgrading of any rating of the Bonds by a
national rating agency or the placing of the Bonds on credit watch or under review
of any such rating agency that has assigned a rating to the Bonds; or
(7) any event occurring, or information becoming known which, in the
judgment of the Underwriters, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect of causing the
Official Statement to contain any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made,
not misleading; and
(d) At or prior to the Closing Date, the Underwriters shall have received the
following documents, in each case satisfactory in form and substance to the
Underwriters:
(1) Two copies of each of the Financing Documents, each duly
executed and delivered by the respective parties thereto;
(2) The approving opinion, dated the Closing Date and addressed to
the Authority and the County, of Bond Counsel in substantially the form attached
to the Official Statement as Appendix F, and a letter of such counsel, dated the
Closing Date and addressed to the Underwriters to the effect that such opinion
may be relied upon by the Underwriters to the same extent as if such opinion were
addressed to them;
(3) The supplemental opinion, dated the Closing Date and addressed to
the Underwriters, of Bond Counsel, to the effect that (i) this Purchase Contract
has been duly executed and delivered by the Authority and the County and
(assuming due authorization, execution and delivery by and validity with respect
to the respective parties thereto) constitutes the valid and binding obligation of the
Authority and the County, subject to bankruptcy or other laws affecting creditors’
rights, the exercise of judicial discretion, the application of equitable principles,
and the limitations on legal remedies against public agencies in the State of
California, with no opinion being expressed with respect to any indemnification
or contribution provisions herein; (ii) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Trust Agreement
is exempt from qualification under the Trust Indenture Act of 1939, as amended;
and (iii) the statements contained in the Official Statement under the captions
“2010 SERIES C BONDS” “SECURITY AND SOURCES OF PAYMENT FOR THE 2010
-13-
BONDS,” “TAX MATTERS” and in APPENDIX E - “SUMMARY OF CERTAIN
PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS,” APPENDIX F - “PROPOSED FORM
OF BOND COUNSEL OPINION,” and APPENDIX G - “PROPOSED FORM OF
CONTINUING DISCLOSURE AGREEMENT,” insofar as such statements purport to
summarize certain provisions of the Financing Documents and Bond Counsel’s
opinion concerning certain federal tax matters relating to the Bonds, are accurate
in all material respects;
(4) The opinion of counsel for the Authority, dated the Closing Date
and addressed to the Underwriters, to the effect that (i) the Authority is a joint
exercise of powers agency organized under the laws of the State of California; (ii)
the resolution of the Authority approving and authorizing the execution and
delivery by the Authority of the Financing Documents to which it is a party, this
Purchase Contract and the Official Statement (the “Resolution”) was duly
adopted at a meeting of the Governing Board of the Authority which was called
and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout; (iii) there is no action, suit,
proceeding or investigation at law or in equity before or by any court, public
board or body, pending or, to the best knowledge of such counsel, threatened
against the Authority, to restrain or enjoin the Base Rental Payments under the
Sublease, or in any way contesting or affecting the validity of the Bonds, the
Financing Documents or this Purchase Contract; (iv) the execution and delivery
of the Financing Documents to which the Authority is a party, this Purchase
Contract and the Official Statement, the adoption of the Resolution, and
compliance by the Authority with the provisions of the foregoing, under the
circumstances contemplated thereby, do not and will not in any material respect
conflict with or constitute on the part of the Authority a breach or default under
any agreement or other instrument to which the Authority is a party or by which it
is bound or, to the best knowledge of such counsel, any existing law, regulation,
court order or consent decree to which the Authority is subject; (v) no
authorization, approval, consent, or other order of the State of California or any
other governmental authority or agency within the State of California having
jurisdiction over the Authority is required for the valid authorization, execution,
delivery and performance by the Authority of the Financing Documents to which
the Authority is a party, the Official Statement or this Purchase Contract or for the
adoption of the Resolution which has not been obtained; and (vi) the Official
Statement (excluding therefrom financial statements and statistical data, as to
which no opinion need be expressed) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(5) The opinion, dated the Closing Date and addressed to the
Underwriters, the Authority and the County, of Counsel to the Trustee, in
substantially the form of Exhibit A hereto;
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(6) The opinion of counsel to the County, dated the Closing Date and
addressed to the Underwriters, to the effect that (i) the County is a political
subdivision of the State of California organized and operating pursuant to the
Constitution and laws of the State of California; (ii) the resolution or resolutions
of the County approving and authorizing the execution and delivery by the
County of the Financing Documents to which it is a party, this Purchase Contract
and the Official Statement (the “County Resolution”) were duly adopted at
meetings of the Board of Supervisors of the County which were called and held
pursuant to law and with all public notice required by law and at which a quorum
was present acting throughout; (iii) there is no action, suit, proceeding or
investigation at law or in equity before or by any court, public board or body,
pending or, to the best knowledge of such counsel, threatened against the County,
to restrain or enjoin the Base Rental Payments under the Sublease, or in any way
contesting or affecting the validity of the Bonds, the Financing Documents or this
Purchase Contract; (iv) the execution and delivery of the Financing Documents to
which the County is a party, this Purchase Contract and the Official Statement,
the adoption of the County Resolution, and compliance by the County with the
provisions of the foregoing, under the circumstances contemplated thereby, do not
and will not in any material respect conflict with or constitute on the part of the
County a breach or default under any agreement or other instrument to which the
County is a party or by which it is bound or, to the best knowledge of such
counsel, any existing law, regulation, court order or consent decree to which the
County is subject; (v) no authorization, approval, consent or other order of the
State of California or any other governmental authority or agency within the State
of California having jurisdiction over the County is required for the valid
authorization, execution, delivery and the performance by the County of the
Financing Documents to which the County is a party, the Official Statement or
this Purchase Contract or for the adoption of the County Resolution which has not
been obtained; and (vi) the Official Statement (excluding therefrom financial
statements and statistical data, as to which no opinion need be expressed) does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(7) The opinion, dated the Closing Date and addressed to the
Underwriters, of Chapman and Cutler LLP, San Francisco, California, counsel for
the Underwriters (“Underwriters’ Counsel”) to the effect that the Bonds are
exempt from registration under the Securities Act of 1933, as amended, and the
Trust Agreement is exempt from qualification under the Trust Indenture Act of
1939, as amended;
(8) The opinion, dated the Closing Date and addressed to the
Underwriters, of Lofton & Jennings, San Francisco, California, disclosure
counsel, to the effect that without passing upon or assuming any responsibility for
the accuracy, completeness or fairness of the statements contained in the Official
Statement and making no representation that they have independently verified the
-15-
accuracy, completeness or fairness of any such statements, based upon the
information made available to them in the course of their participation in the
preparation of the Official Statement, nothing has come to their attention that
would lead them to believe that the Official Statement, as of its date and as of the
date of such opinion (excluding therefrom any CUSIP numbers, financial,
statistical, economic, or demographic data or forecasts, numbers, charts, tables,
graphs, estimates, projections, assumptions or expressions of opinion,
environmental matters, information relating to DTC and its book-entry system,
and the Appendices thereto, as to which no opinion need be expressed) contains
any untrue statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(9) The defeasance opinion of Bond Counsel relating to the defeasance
of the Prior Bonds, dated the Closing Date and addressed to the Trustee, in form
and substance satisfactory to the Trustee;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Authority satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the Authority contained in this Purchase
Contract are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date; (b) except as disclosed in the
Official Statement, no litigation is pending or, to the best of such official’s
knowledge, threatened against the Authority (i) to restrain or enjoin the issuance,
sale or delivery of any of the Bonds or the payment of Base Rental Payments
under the Sublease, (ii) in any way contesting or affecting the validity of the
Bonds, this Purchase Contract, the Financing Documents to which the Authority
is a party, or (iii) in any way contesting the existence or powers of the Authority;
and (c) no event affecting the Authority has occurred since the date of the Official
Statement that either makes untrue or incorrect in any material respect as of the
Closing Date any statement or information contained in the Official Statement
under the captions “THE AUTHORITY” or “LITIGATION MATTERS” or is not
reflected in the Official Statement but should be reflected therein in order to make
the statements and information therein under the captions “THE AUTHORITY” or
“LITIGATION MATTERS” not misleading in any material respect;
(11) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the County satisfactory to the Underwriters, in form
and substance satisfactory to the Underwriters, to the effect that (a) the
representations and warranties of the County contained in this Purchase Contract
are true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date; (b) except as disclosed in the Official
Statement, no litigation is pending or, to the best of such official’s knowledge,
threatened against the County (i) to restrain or enjoin the issuance, sale or delivery
of the Bonds or the payment of the Base Rental Payments under the Sublease;
-16-
(ii) in any way contesting or affecting the validity of the Bonds, this Purchase
Contract or the Financing Documents to which the County is a party; or (iii) in
any way contesting the existence or powers of the County; and (c) no event
affecting the County has occurred since the date of the Official Statement that
either makes untrue or incorrect in any material respect as of the Closing Date any
statement or information contained in the Official Statement (excluding therefrom
information relating to DTC and the book-entry system and the information under
the caption “UNDERWRITING”) or is not reflected in the Official Statement but
should be reflected therein in order to make the statements and information
therein not misleading in any material respect;
(12) A certificate, dated the Closing Date, signed by a duly authorized
official of the Trustee, satisfactory in form and substance to the Underwriters, to
the effect that:
(a) the Trustee is a national banking association organized and
existing under and by virtue of the laws of the United States, having the
full power and being qualified to enter into and perform its duties under
the Trust Agreement;
(b) the Trustee is duly authorized to enter into the Trust
Agreement and the Trustee has duly executed and delivered the Trust
Agreement;
(c) the execution and delivery of the Trust Agreement and
compliance with the provisions on the Trustee’s part contained therein,
will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument to which
the Trustee is a party or is otherwise subject (except that no representation,
warranty or agreement is made with respect to any federal or state
securities or blue sky laws or regulations), nor will any such execution,
delivery, adoption or compliance result in the creation or imposition of
any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets held by the Trustee
pursuant to the Trust Agreement under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, lease,
indenture, bond, note, resolution, agreement or other instrument, except as
provided by the Trust Agreement;
(d) to the best knowledge of the Trustee, it has not been served
with any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or
body, nor is any such action or other proceeding threatened against the
Trustee, as such but not in its individual capacity, affecting the existence
of the Trustee, or the titles of its officers to their respective offices or
-17-
seeking to prohibit, restrain or enjoin the collection of Revenues to be
applied to pay the principal, premium, if any, and interest on the Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Trust Agreement, or contesting the powers of the
Trustee or its authority to enter into, adopt or perform its obligations under
any of the foregoing, wherein an unfavorable decision, ruling or finding
would materially adversely affect the validity or enforceability of the Trust
Agreement;
(13) The Preliminary Official Statement, a certificate pursuant to Rule
15c2-12 related to the Preliminary Official Statement and the Official Statement,
executed on behalf of the Authority and the County by authorized representatives
thereof;
(14) A certified copy of the general resolution of by-laws of the Trustee
authorizing the execution and delivery of the Trust Agreement;
(15) A certified copy of the Resolution of the Authority authorizing the
execution and delivery of the Financing Documents to which the Authority is a
party, the Official Statement and this Purchase Contract;
(16) A certified copy of the County Resolution authorizing the
execution and delivery of the Financing Documents to which the County is a
party, the Official Statement and this Purchase Contract;
(17) Evidence that any ratings described in the Official Statement are in
full force and effect as of the Closing Date;
(18) A copy of the Blanket Letter of Representations to DTC relating to
the Bonds signed by DTC and the Authority;
(19) Arbitrage and tax certifications by the Authority in form and
substance acceptable to Bond Counsel and the Underwriters;
(20) Verification report of Causey Demgen & Moore Inc. related to the
defeasance of the Prior Bonds, dated the Closing Date, in form and substance
acceptable to the Underwriters, the Authority, the County and Bond Counsel;
(21) Evidence of title to the Facilities satisfactory to the Underwriters;
(22) Evidence of existing title insurance policy satisfactory to the
Underwriters; and
(23) Such additional legal opinions, certificates, proceedings,
instruments, title insurance, other insurance policies or evidences thereof and
other documents as the Underwriters, Underwriters’ Counsel or Bond Counsel
-18-
may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the representations of the Authority and the County
herein and of the statements and information contained in the Official Statement,
and the due performance or satisfaction by the Trustee, the Authority and the
County at or prior to the Closing of all agreements then to be performed and all
conditions then to be satisfied by any of them in connection with the transactions
contemplated hereby and by the Financing Documents.
If the Authority or the County shall be unable to satisfy the conditions to the
Underwriters’ obligations contained in this Purchase Contract or if the Underwriters’ obligations
shall be terminated for any reason permitted herein, all obligations of the Underwriters hereunder
may be terminated by the Underwriters at, or at any time prior to, the Closing Date by written
notice to the County and the Authority and none of the Underwriters or the Authority or the
County shall have any further obligations hereunder. In the event that the Underwriters fail
(other than for a reason permitted by this Purchase Contract) to accept and pay for the Bonds at
the Closing, the amount of one percent (1%) of the aggregate principal amount of the Bonds
shall be payable by the Underwriters as and for full liquidated damages for such failure and for
any and all defaults hereunder on the part of the Underwriters and the acceptance of such amount
shall constitute a full release and discharge of all claims and rights of the Authority or County
against the Underwriters.
Section 5. Expenses. All expenses and costs incident to the authorization, execution,
delivery and sale of the Bonds to the Underwriters, including the costs of printing of the Bonds,
the Official Statement, the cost of duplicating the Financing Documents, the fees of accountants,
consultants and rating agencies, the initial fee of the Trustee and its counsel in connection with
the execution and delivery of the Bonds, the fees and expenses of Underwriters’ Counsel and the
fees and expenses of Bond Counsel, shall be paid from the proceeds of the Bonds. In the event
that the Bonds for any reason are not issued, or to the extent proceeds of the Bonds are
insufficient or unavailable therefor, any fees, costs and expenses owed by the Authority to the
Trustee, which otherwise would have been paid from the proceeds of the Bonds, shall be paid by
the Authority. All out-of-pocket expenses of the Underwriters, including traveling and other
expenses, including those associated with the California Debt and Investment Advisory
Commission fee, and the costs of preparation of any blue sky and legal investment surveys
prepared by Underwriters’ Counsel, shall be paid by the Underwriters. The County shall pay for
expenses (included in the expense component of the Underwriters’ spread) incurred on behalf of
the County’s employees which are incidental to implementing this agreement, including, but not
limited to, meals, transportation, lodging, and entertainment of those employees.
Section 6. Notices. Any notice or other communication to be given to the parties to
this Purchase Contract may be given by delivering the same in writing to the respective party at
the following address:
Underwriters: Wedbush Securities Inc.
One Bush Street, Suite 1700
San Francisco, California 94104
Attention: Robert Larkins
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County: County of Contra Costa
County Administration Building
651 Pine Street
Martinez, California 94553
Attention: Finance Director
Authority: County of Contra Costa Public Financing Authority
County Administration Building
651 Pine Street
Martinez, California 94553
Attention:
Section 7. Survival of Representations and Warranties. The representations and
warranties of the Authority and the County set forth in or made pursuant to this Purchase
Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by
reason of the Closing or termination of this Purchase Contract and regardless of any
investigations or statements as to the results thereof made by or on behalf of the Underwriters
and regardless of delivery of and payment for the Bonds.
Section 8. Effectiveness. This Purchase Contract shall become effective and binding
upon the respective parties hereto upon the execution of the acceptance hereof by a duly
authorized officer of the Authority and the County and shall be valid and enforceable as of the
time of such acceptance.
Section 9. Execution in Counterparts. This Purchase Contract may be executed in
counterparts, all of which shall constitute one and the same instrument, and each of which shall
be deemed to be an original. If the above terms are acceptable, please cause a duly authorized
officer of the Authority and the County to execute the acceptance below.
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Very truly yours,
WEDBUSH SECURITIES INC., as Representative of
the Underwriters
By:___________________________________
Managing Director
ACCEPTED:
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
COUNTY OF CONTRA COSTA, CALIFORNIA
By:
SCHEDULE I
$__________
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2010 SERIES C (REFUNDING)
MATURITY DATE
(JUNE 1)
PRINCIPAL AMOUNT INTEREST RATE YIELD
EXHIBIT A
FORM OF TRUSTEE COUNSEL’S OPINION
November __, 2010
County of Contra Costa Wedbush Securities Inc.
Martinez, California San Francisco, California
County of Contra Costa Public Financing Authority Piper Jaffray & Co.
Martinez, California El Segundo, California
Re: $________ County of Contra Costa Public Financing Authority
Lease Revenue Bonds, 2010 Series C (Refunding)
Ladies and Gentlemen:
I have acted as special counsel to Wells Fargo Bank, National Association (the
“Trustee”), in connection with the Trust Agreement, dated as of November 1, 2010, by and
between the County of Contra Costa Public Financing Authority (the “Authority”) and the
Trustee, (the “Trust Agreement”), and the issuance of the Authority’s Lease Revenue Bonds,
2010 Series C (Refunding) (the “Bonds”). This opinion is rendered pursuant to the Bond
Purchase Contract, dated October ___, 2010 (the “Purchase Contract”) among the Authority,
the County of Contra Costa and Wedbush Securities Inc., as Representative of itself and Piper
Jaffray & Co., as underwriters. All terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Purchase Contract.
In connection therewith, I have examined and reviewed such documents and certificates
of public officials, officers of the Trustee and others as I have deemed necessary for the purposes
of this opinion. In all such examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to original and
certified documents of all copies submitted to me as conformed or photostat copies, and the
authenticity of the originals of all such latter documents. As to various questions of fact material
to this opinion, I have relied, to the extent that I deemed such reliance proper, upon such
certificates of officers of the Trustee. I have examined executed counterparts of the Trust
Agreement and have assumed the power, municipal or corporate, as the case may be, and the
legal authority to execute and deliver the same to the other parties thereto and the due
authorization, execution and delivery thereof by the other parties thereto.
Based upon the foregoing, I am of the opinion that:
1. The Trustee has been duly organized and is validly existing in good
standing as a national banking association under the laws of the United States of America
with trust powers and full corporate power to undertake the trust of the Trust Agreement;
-2-
2. The Trustee has duly authorized, executed and delivered the Trust
Agreement and by all proper corporate action has authorized the acceptance of the duties
and obligations of the Trustee under the Trust Agreement;
3. The Trust Agreement constitutes a legally valid and binding agreement of
the Trustee, enforceable against the Trustee in accordance with its terms;
4. There is no litigation pending against the Trustee arising from its fiduciary
activities to restrain or enjoin the Trustee’s participation in, or in any way contesting the
powers of the Trustee with respect to the transactions contemplated by the Trust
Agreement;
5. The Trustee’s action in executing and delivering the Trust Agreement does
not conflict with or constitute a breach of or default under any law or governmental
regulation applicable to the Trustee.
My opinion with respect to the foregoing documents is qualified by (i) the application of
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws or general
application affecting creditors’ rights or (ii) the discretion of any court to refuse to order
equitable relief, including specific performance of any clause of any such documents, whether
such enforceability is considered in a proceeding in equity or at law.
This opinion is furnished by me to you solely for your benefit and may not, without my
express written consent, be relied upon by any other person.
Very truly yours,
10014\cdc-3
PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of _______,
2010, is executed and delivered by the COUNTY OF CONTRA COSTA, CALIFORNIA (the “County”),
and acknowledged and agreed to by Digital Assurance Certification, L.L.C., as dissemination agent, in
connection with the issuance by the County of Contra Costa Public Financing Authority (the “Authority”)
of $___,___,000 aggregate principal amount of its Lease Revenue Bonds, comprised of: $_____ principal
amount of 2010 Series A-1 (Capital Project I), $_____ principal amount of 2010 Series A-2 (Taxable
Build America Bonds); $_____ principal amount of 2010 Series A-3 (Taxable Recovery Zone Bonds);
$_____ principal amount of 2010 Series B (Capital Project II); and $_____ principal amount of 2010
Series C (Refunding) (collectively, the “2010 Bonds”). The 2010 Bonds are being issued pursuant to a
Trust Agreement, dated as of November 1, 2010 (the “Trust Agreement”), by and between the County of
Contra Costa Public Financing Authority (the “Authority”) and the Trustee and acknowledged by the
County. Pursuant to a Sublease related to each Series of 2010 Bonds, each dated as November 1, 2010
(each a “Sublease” and collectively, the “Subleases”), the County has covenanted to comply with its
obligations under this Disclosure Agreement and to assume all obligations for continuing disclosure with
respect to each Series of 2010 Bonds. The County and the Dissemination Agent covenant and agree as
follows:
SECTION 1. Purpose of the Disclosure Agreement This Disclosure Agreement is being
executed and delivered by the County and the Dissemination Agent for the benefit of the Holders and
Beneficial Owners of each Series of 2010 Bonds and in order to assist the Participating Underwriters in
complying with S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which
apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section,
the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the County pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly,
to make investment decisions concerning the ownership of any Series of 2010 Bonds (including persons
holding a Series of 2010 Bonds through nominees, depositories or other intermediaries).
“Disclosure Representative” shall mean the County Administrator, the County Finance Director
or his or her designee, or such other officer or employee as the County shall designate in writing to the
Trustee from time to time.
“Dissemination Agent” shall mean the County, or any successor Dissemination Agent, which
may be designated in writing by the County and which has filed with the Trustee a written acceptance of
such designation.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
10014\cdc-3
2
“Participating Underwriters” shall mean any of the original underwriters of the 2010 Bonds
required to comply with the Rule in connection with offering of the 2010 Bonds.
“Repository” shall mean the Municipal Securities Rulemaking Board or any other entity
designated or authorized by the Securities and Exchange Commission.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“State” shall mean the State of California.
SECTION 3 Provision of Annual Reports.
(a) The County shall, or shall cause the Dissemination Agent to, not later than nine months
after the end of the County’s fiscal year (presently June 30), commencing with the report for the 2009-10
Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Agreement. The Annual Report must be submitted in electronic format,
accompanied by such identifying information as is prescribed by the Repository, and may include by
reference other information as provided in Section 4 of this Disclosure Agreement; provided, that the
audited financial statements of the County may be submitted separately from the balance of the Annual
Report and later than the date required above for the filing of the Annual Report if they are not available
by that date. If the County’s fiscal year changes, it shall give notice of such change in the same manner
as for a Listed Event under Section 5(f).
(b) Not later than thirty (30) days (not more than sixty (60) days) prior to the date on which
the Annual Report is to be provided pursuant to subsection (a), the Dissemination Agent shall give notice
to the County that the Annual Report is so required to be filed in accordance with the terms of this
Disclosure Agreement. Not later than fifteen (15) Business Days prior to the date specified in
subsection (a) for providing the Annual Report to the Repository, the County shall provide the Annual
Report to the Dissemination Agent (if other than the County). If by said date, the Dissemination Agent
has not received a copy of the Annual Report, the Dissemination Agent shall notify the County of such
failure to receive the Annual Report.
(c) If the County is unable to provide to the Dissemination Agent an Annual Report by the
date required in subsection (a), the Dissemination Agent is irrevocably instructed to file a notice, in
electronic format, to the Repository in substantially the form attached hereto as Exhibit A.
The Dissemination Agent shall file a report with the County stating that the Annual
Report has been provided pursuant to this Disclosure Agreement and stating the date it
was provided.
SECTION 4. Content of Annual Reports. The County’s Annual Report shall contain or
include by reference the following:
(a) The audited financial statements of the County for the prior fiscal year, prepared in
accordance with generally accepted accounting principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board. If the County’s audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to
Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the
financial statements contained in the final Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
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(b) Numerical and tabular information for the immediately preceding Fiscal Year of the type
contained in the Official Statement under the following captions:
1. The status of the construction and installation of the improvement constituting
Capital Project I and Capital Project II, until such time as each Capital Project has been
completed;
2. Report of changes in “DEBT SERVICE SCHEDULE;”
3. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Recent County General Fund
Budgets” (update Table B-1 “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”);
4. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Ad Valorem Property Taxes”
(update Table B-3 “COUNTY OF CONTRA COSTA SUMMARY OF SECURED ASSESSED VALUATIONS
AND AD VALOREM PROPERTY TAXATION”);
5. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Accounting Policies, Reports
and Audits” (update Table B-6 “COUNTY OF CONTRA COSTA GENERAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”);
6. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Pension Plan” (update Table
B-9 “CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION SCHEDULE OF FUNDED
STATUS”);
7. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Other Post-Employment
Healthcare Benefits” (update Table B-16 “CONTRA COSTA COUNTY OTHER POST-EMPLOYMENT
HEALTHCARE BENEFIT PLAN SUMMARY OF PARTICIPATING EMPLOYEES AND CONTRIBUTIONS”);
8. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Long Term Obligations”
(update Table B-22–“CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND
PENSION OBLIGATION BONDS”).
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the County or related public entities, which have been filed
with the Repository or the Securities and Exchange Commission. If the document included by reference
is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The
County shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5 and to the extent applicable, the County shall
give, or cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds, no later than 10 business days following the occurrence of such event:
1. principal and interest payment delinquencies;
2. non-payment related defaults;
3. modifications to rights of Holders of any Series of 2010 Bonds;
4. optional, contingent or unscheduled bond calls;
5. defeasances;
6. rating changes;
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7. adverse tax opinions or events adversely affecting the tax-exempt status of the 2010
Series A-1 Bonds (Capital Project I), the 2010 Series B Bonds (Capital Project II), or the
2010 Series C Bonds (Refunding);
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on credit enhancements reflecting financial difficulties;
10. substitution of credit or liquidity providers, or their failure to perform; and
11. release, substitution or sale of property securing repayment of any Series of 2010 Bonds.
(b) Whenever the County obtains knowledge of the occurrence of a Listed Event, the County
shall as soon as possible determine if such event would be material under applicable federal securities
laws.
(c) If the County determines that knowledge of the occurrence of a Listed Event would be
material under applicable federal securities laws, the County shall promptly notify the Dissemination
Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to
subsection (d).
(d) If the Dissemination Agent has been instructed by the County to report the occurrence of
a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be
given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders
of affected 2010 Bonds pursuant to the Trust Agreement.
SECTION 6 CUSIP Numbers. Whenever providing information to the Dissemination Agent,
including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports,
Audited Financial Statements and notices of Listed Events, the County shall indicate the full name of the
2010 Bonds and the nine-digit CUSIP numbers for the 2010 Bonds as to which the provided information
relates.
SECTION 7 Termination of Reporting Obligation. The County’s obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the
County shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 8. Dissemination Agent. The County may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial
Dissemination Agent shall be Digital Assurance Certification, L.L.C. If at any time there is no designated
Dissemination Agent appointed by the County, or if the Dissemination Agent so appointed is unwilling or
unable to perform the duties of the Dissemination Agent hereunder, the County shall be the
Dissemination Agent an undertake or assume its obligations hereunder. The Dissemination Agent (other
than the County) shall not be responsible in any manner for the content of any notice or report required to
be delivered by the County pursuant to this Disclosure Agreement.
SECTION 9. Amendment; Waiver Notwithstanding any other provision of this Disclosure
Agreement, the County may amend this Disclosure Agreement, and any provision of this Disclosure
Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in legal
10014\cdc-3
5
requirements, change in law, or change in the identity, nature or status of an obligated person with
respect to such Series of 2010 Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the
Rule at the time of the original issuance of the 2010 Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Holders of the affected Series
of 2010 Bonds in the same manner as provided in the Trust Agreement for amendments to the
Trust Agreement with the consent of Holders, or (ii) does not, in the opinion of nationally
recognized bond counsel, materially impair the interest of the Holders or Beneficial Owners of
such Series of 2010 Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the County shall
describe such amendment in the next Annual Report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a
change of accounting principles, on the presentation) of financial information or operating data being
presented by the County. In addition, if the amendment relates to the accounting principles to be followed
in preparing financial statements, (i) notice of such change shall be given in the same manner as for a
Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made
should present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
SECTION 10. Additional Information Nothing in this Disclosure Agreement shall be deemed
to prevent the County from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the County chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the County shall have no obligation under this Disclosure Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 11. Default In the event of a failure of the County to comply with any provision of
this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating
Underwriters or the Holders or Beneficial Owners of at least 25% of aggregate principal amount of the
Certificates then outstanding, shall) or any Holders or Beneficial Owners of the 2010 Bonds may take
such actions as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the County to comply with its obligations under this Disclosure Agreement;
provided that any such action may be instituted only in the Superior Court of the State of California in
and for the County of Contra Costa or in the U.S. District Court in the County of Contra Costa. A default
under this Disclosure Agreement shall not be deemed an Event of Default under the Resolution, and the
sole remedy under this Disclosure Agreement in the event of any failure of the County to comply with
this Disclosure Agreement shall be an action to compel performance.
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SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
County agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and
agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the
exercise or performance of its powers and duties hereunder, including the costs and expenses (including
attorneys fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent’s gross negligence or willful misconduct. The obligations of the County under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds.
SECTION 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
To the County: County of Contra Costa
County Administrator’s Office
651 Pine Street, 6th Floor
Martinez, CA 94553-0063
Attention: Lisa Driscoll, County Finance Director
Telephone: (925) 335-1093
Fax: (925) 646-1228
If to the Dissemination Agent: Digital Assurance Certification, L.L.C.
390 North Orange Avenue, Suite 1750
Orlando, FL 32801-1674
Attention: Customer Assistance
Telephone: (888) 824-2663
Any person may, by written notice to the other persons listed above, designate a different address or
telephone number(s) to which subsequent notices or communications should be sent.
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
County, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners
from time to time of the 2010 Bonds, and shall create no rights in any other person or entity.
10014\cdc-3
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SECTION 15. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Dated: ___________, 2010
COUNTY OF CONTRA COSTA
By
Chair of the Board of Supervisors
County of Contra Costa,
State of California
DIGITAL ASSURANCE CERTIFICATION,
L.L.C., as Dissemination Agent
By:
Dissemination Agent
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EXHIBIT A
FORM OF NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of District: County of Contra Costa
Name of Bond Issue: County of Contra Costa Public Financing Authority Lease Revenue Bonds,
comprised of: 2010 Series A-1 (Capital Project I), 2010 Series A-2 (Taxable
Build America Bonds), 2010 Series A-3 (Taxable Recovery Zone Bonds),
2010 Series B (Capital Project II) and 2010 Series C (Refunding)
Date of Issuance: ________, 2010
NOTICE IS HEREBY GIVEN that the County of Contra Costa (the “County”) has not provided an
Annual Report with respect to the above-named Bonds as required by Section 8.08 of the Subleases, each
dated as of November 1, 2010, by and between the County of Contra Costa Public Financing Authority
and the County. The County anticipates that the Annual Report will be filed by _____________.
Dated: _______________
DIGITAL ASSURANCE CERTIFICATION, L.L.C.,
as Dissemination Agent
By:
Dissemination Agent
cc: County of Contra Costa
OHS West:260978483.3
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Orrick, Herrington & Sutcliffe LLP
405 Howard Street
San Francisco, CA 94105
Attention: Mary A. Collins, Esq.
(Recording Fee Exempt under
Section 6103 of the Government Code)
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this “Agreement”) dated as of
_______________, 2010, is entered by and among the COUNTY OF CONTRA COSTA, a
political subdivision duly organized and existing under and by virtue of the laws of the State of
California (the “County”), the COUNTY OF CONTRA COSTA PUBLIC FINANCING
AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the
laws of the State of California (the “Authority”),and WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association duly organized and existing under and by virtue
of the laws of the United States of America, as successor trustee to BNY Western Trust
Company (the “1998 Trustee”), under that certain Trust Agreement, dated as of May 1, 1998, by
and between the Authority and the 1998 Trustee (the “1998 Trust Agreement”).
WITNESSETH
WHEREAS, pursuant to the 1998 Trust Agreement, the Authority has heretofore
issued the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various
Capital Facilities), 1998 Refunding Series A (the “1998 Bonds”), in the aggregate principal
amount of $24,695,000 for the purpose of financing and refinancing the acquisition, construction
and renovation of certain facilities for the County of Contra Costa (the “1998 Facilities”) and
other capital improvements for the County;
WHEREAS, the County has heretofore entered into a Facility Lease (Various
Capital Facilities), dated as of May 1, 1998, between the Authority and the County, which
amended and restated that certain Facility Lease (Various Capital Facilities), dated as of
August 1, 1994, by and between the Contra Costa County Public Facilities Corporation and the
County (as amended and restated, the “1998 Facility Lease”);
WHEREAS, under the terms of such 1998 Facility Lease the County is obligated
to make base rental payments to the Authority for the lease of the 1998 Facilities;
OHS West:260978483.3
2
WHEREAS, the County has caused the Authority to assist the County in the
refunding and defeasance the outstanding 1998 Bonds in order to produce debt service savings
resulting in significant public benefits from the refinancing and release property encumbered by
the 1998 Facility Lease;
WHEREAS, the County has caused the defeasance of the 1998 Bonds secured by
the base rental payments payable thereon by depositing with the 1998 Trustee moneys or
Government Securities sufficient to redeem the 1998 Bonds and the County has paid all other
amounts due or to become due with respect to the 1998 Facility Lease; and
WHEREAS, upon such defeasance and prepayment in full, title to the property
leased under the 1998 Facility Lease is to vest in the County and the 1998 Facility Lease is to
terminate ten (10) days thereafter or ten (10) days after written notice by the County to the
Authority, whichever is earlier;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the County, the Authority, and the 1998 Trustee do hereby agree as follows:
1.Termination of 1998 Facility Lease. The 1998 Trustee, the Authority and
the County do hereby unconditionally terminate the 1998 Facility Lease, recorded on May 12,
1998 in the office of the County Recorder of the County of Contra Costa, State of California,
under Recorder's Serial No. 98-0104120-00, which pertains to that certain real property located
in the Cities of Richmond, Martinez and Hercules, County of Contra Costa, California, as more
particularly described in the 1998 Facility Lease and incorporated herein by reference (the
“Property”). The 1998 Trustee, the County and the Authority agree that the County has fulfilled
its obligations under the 1998 Facility Lease and fee title to the Property leased thereunder is to
vest in the County. The 1998 Trustee and the Authority and their respective successors and
assigns shall be released from all obligations and liabilities as to the Property and the 1998
Facility Lease, whether arising or accruing prior to or following the date hereof. The 1998
Facility Lease shall no longer have any force or effect.
2.Quitclaim. The Authority and the 1998 Trustee do hereby remise, release
and forever quitclaim the Property to the County.
3.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
4.Counterparts. This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto and may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
OHS West:260978483.3
3
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COUNTY OF CONTRA COSTA
By:
John M. Gioia
Chair of the Board of Supervisors
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
John M. Gioia, Chair
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
OHS West:260978483.3
[ATTACH NOTARY FORMS]
OHS West:260978483.3
ACCEPTANCE
This Acceptance dated as of ______________, 2010, is entered into by
COUNTY OF CONTRA COSTA, a political subdivision duly organized and existing under and
by virtue of the laws of the State of California (the “County”).
WITNESSETH
In consideration of the covenants herein contained and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the County does
hereby agree as follows:
Acceptance of Property Quitclaimed. The County does hereby accept the certain
real property located in the County of Contra Costa, California, as more particularly described in
that certain Termination Agreement dated as of the date hereof, by and between the County, the
County of Contra Costa Public Financing Authority, a joint powers authority duly organized and
existing under and by virtue of the laws of the State of California (the “Authority”), and Wells
Fargo Bank, National Association, a national banking association duly organized and existing
under and by virtue of the laws of the United States of America, as successor trustee (the “1998
Trustee”), under that certain Trust Agreement, dated as of May 1, 1998, between the 1998
Trustee and the Authority (the “1998 Trust Agreement”).
IN WITNESS WHEREOF, the County has executed this Acceptance as of the
date first written above.
COUNTY OF CONTRA COSTA
By:
John M. Gioia
Chair of the Board of Supervisors
OHS West:260976900.9
$______________
EAST BAY REGIONAL
COMMUNICATIONS SYSTEM AUTHORITY
REVENUE BOND, 2010 SERIES [A]
FINANCING AGREEMENT
October __, 2010
East Bay Regional
Communications System Authority
Dublin, California
Ladies and Gentlemen:
The undersigned County of [Contra Costa] (the “County”) offers to enter into this
Financing Agreement (this “Financing Agreement”) with the East Bay Regional
Communications System Authority (the “Authority”). Upon acceptance of this offer, this
Financing Agreement shall be binding upon the Authority and the County. Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in the Trust
Agreement (defined below).
1.Upon the terms and conditions and upon the basis of the representations,
warranties and covenants set forth herein, the County agrees to purchase from the Authority, and
the Authority agrees to sell to the County, all (but not less than all) of the $_________ principal
amount of the East Bay Regional Communications System Authority Revenue Bonds, 2010
Series A (the “2010 Series A Bonds” or the “Bonds”). The acquisition of the Bonds shall be
purchased with the proceeds of and shall entitle the Authority to the benefit of proceeds from the
County of Contra Costa Financing Authority Lease Revenue Bonds, 2010 Series B (Capital
Project II) (the “County Bonds”), and payments on the Bonds shall equal principal of and interest
on the County Bonds, issued by the County of Contra Costa Financing Authority (the “County
JPA”).
2.The Bonds are authorized by Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the “Act”). The Bonds are further authorized by a
Resolution of the Authority, adopted by the Authority’s Board of Directors on _____, 2010 (the
“Resolution”). The Bonds shall be issued pursuant to Article 4 of the Act, the Resolution and a
Trust Agreement, dated as of October 1, 2010 (the “Trust Agreement”), between the Authority
and the County of Alameda, acting through its office of the Auditor Controller, as trustee (the
“Trustee”). Capitalized terms used herein and not otherwise defined herein, shall have the
meanings ascribed thereto in the Trust Agreement. The Bonds shall be secured by a pledge of all
Service Payments received by the Authority pursuant to the Operating Agreements, by and
between the Authority and each User of the Project.
OHS West:260976900.9 2
3.The Bonds shall be dated the date of Closing, and shall mature on the dates and
bear interest at the rates, payable at the times, and shall be subject to redemption, all as set forth
on Exhibit A attached hereto.
4.The County represents and warrants and covenants to the Authority as follows:
(a)The County has full power and authority to purchase the Bonds and to
enter into this Financing Agreement and any other instruments and documents required to
be executed by the County in connection with the purchase of the Bond. The County has
duly authorized the execution and delivery of, and the performance by the County of its
obligations contained in, this Financing Agreement. This Financing Agreement
(assuming due authorization, execution and delivery by and validity against the
Authority) constitutes and, as of the date of the Closing, will constitute, the valid and
binding agreement of the County enforceable in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium and other similar laws relating to or affecting the creditors’ rights generally,
to the application of equitable principles, to the exercise of judicial discretion in
appropriate cases and to the limitations on legal remedies against Counties in the State of
California (the “State”).
(b)The County is entering into this Financing Agreement in accordance with
the Act to assist in the financing of the Project.
(c)To the knowledge of the County, there is no litigation pending (with
service of process against the County having been accomplished) or threatened against
the County: (1) seeking to restrain or enjoin the purchase by the County of the Bonds, or
(2) challenging any proceeding of the County taken with respect to the foregoing.
(d)All authorizations and approvals that are or will be necessary for the
purchase of the Bonds or for the valid execution, delivery or performance of this
Financing Agreement have been obtained.
(e)The execution, delivery and performance of this Financing Agreement
does not and will not conflict with, or result in a violation of, any provision of law, or any
order, writ, rule or regulation of any court or government agency or instrumentality
binding upon or applicable to the County and does not and will not in any material aspect
conflict with, result in a violation of, or constitute a default under, any agreement or
instrument, to which the County is a party or by which the County or any of its property
is bound, which would, in any such case, materially and adversely affect the County’s
ability to perform its obligations with respect to this Financing Agreement.
(f)In making its decision to purchase the Bonds, the County acknowledges
that it has either been supplied with or has had access to information to which a
reasonable investor would attach significance in making investment decisions, and it has
had the opportunity to ask questions and receive answers from knowledgeable individuals
concerning the Bonds and the security therefor, so that as a reasonable investor it has
been able to make its decision to purchase the Bonds.
OHS West:260976900.9 3
(g)The County understands that the Bonds (i) are not being registered or
otherwise qualified for sale under the “Blue Sky” laws and regulations of any state,
(ii)will not be listed on any stock or other securities exchange, (iii) will carry no rating
from any rating service, (iv) may not be sold, and (v)due to lack of a rating may not be
readily marketable. The County further understands that the Bonds have not been
registered under the Securities Act of 1933, as amended, and that such registration is not
legally required.
(h)The County is purchasing the Bonds for its own account and not with a
view toward or for sale in connection with any distribution thereof. The County has no
present intent to (i)dispose of all or any part of the Bonds, (ii)divide the Bonds into
participation interests or other units for sale, or (iii)deposit the Bonds into any fund or
trust of which participation interests can be sold to other parties. The County understands
that the Bonds are subject to resale restrictions and may not be marketable, so that the
County will be required to bear the risk of this investment for a certain period of time.
The County is able to bear the economic risk associated with this investment.
(i)The County understands that neither the Authority nor anyone else has
prepared or provided any offering statement, prospectus, offering circular, private
placement memorandum or other comprehensive offering statement containing material
information with respect to the Bonds or the Authority.
(j)At Closing, the County shall cause the County JPA, pursuant to the Trust
Agreement for the County Bonds (the “County Trust Agreement”),to instruct the trustee
for the County Bonds (the “County Trustee”) to establish and hold in trust the following
accounts (as defined in the County Trust Agreement):
(1)Reserve Fund;
(2)Capitalized Interest Fund;
(3)Costs of Issuance Fund;and
(4)Project Fund.
(k)At Closing, the County shall cause the County JPA to instruct the County
Trustee to deposit the Reserve Fund an amount equal to $_____________, which shall be
an amount equal to the Reserve Fund Requirement for the County Bonds.So long as
Bonds remain outstanding, amounts on deposit in the Reserve Fund are pledged to the
payment of the County Bonds and shall be applied only for such purposes as permitted in
the County Trust Agreement relating to the County Bonds. No deposit need be made in
the Reserve Fund so long as there shall be on deposit therein a sum equal to the Reserve
Fund Requirement. Whenever the amount on deposit in the Reserve Fund is less than the
Reserve Fund Requirement, notice thereof shall be provided by the County Trustee to the
Authority, and such amount shall be paid by the Authority to increase the amount on
deposit in the Reserve Fund to the Reserve Fund Requirement not later than twelve
months thereafter. Moneys on deposit in the Reserve Fund shall be transferred by the
County Trustee to the Principal Fund and the Interest Fund to pay principal of and
OHS West:260976900.9 4
interest on the County Bonds on any Interest Payment Date in the event amounts on
deposit therein are insufficient for such purposes. Amounts on deposit in the Reserve
Fund in excess of the Reserve Fund Requirement shall be deposited in the Project Fund
until June 2013 and thereafter into the Interest Fund for the Related County Bonds and
credited against the amount due on the following Interest Payment Date and a
corresponding credit shall be made to the Bonds.
(l)At Closing, the County shall cause the County JPA to instruct the County
Trustee to deposit in the Capitalized Interest Fund an amount equal to $_________. All
money in the Capitalized Interest Fund shall be disbursed to pay a portion of interest due
on the County Bonds, and a corresponding credit will be applied to the Bonds, in
accordance with the following schedule:
Date Interest Payment
June 2011 $
December 2011
June 2012
December 2012
June 2013
December 2013
(m)At Closing, the County shall cause the County JPA to instruct the County
Trustee to deposit in the Costs of Issuance Fund an amount equal to $__________. All
money in the Costs of Issuance Fund shall be used by the County to pay the Costs of
Issuance of the County Bonds and the Costs of Issuance of the Bonds as indicated in
Exhibit C hereto.
(n)The County will cause to be established and maintained so long as
proceeds remain therein the Project Fund. At Closing, the County shall cause the County
JPA to instruct the County Trustee to deposit the amount of $____________ into the
Project Fund. The moneys in the Project Fund shall be disbursed by the County Trustee
upon the receipt by the County Trustee of a Requisition of the Authority in substantially
the form attached to the Trust Agreement as Exhibit B and to the County Trust
Agreement as Exhibit ___ for the payment of costs relating to the financing and
completion of the Project.
(o)The Bonds may be redeemed at the times and at the prices at which the
County Bonds may be redeemed and according to the redemption terms and conditions
for the County Bonds as set forth in the County Trust Agreement pursuant to which they
were issued, and the County agrees that to the extent the Authority exercises its right to
OHS West:260976900.9 5
redeem the Bonds, the County shall also redeem an equal amount of County Bonds, so
that there shall never be more County Bonds than Bonds outstanding.
5.The Authority represents and warrants and covenants to the County as follows:
(a)The Authority is duly organized and validly existing under the laws of the
State of California and has full power and authority to enter into this Financing
Agreement and the Trust Agreement and to issue and deliver the Bonds to the County as
provided in this Financing Agreement and the Trust Agreement. The Authority has duly
authorized the execution and delivery of, and the performance by the Authority of its
obligations contained in, the Bonds, this Financing Agreement and the Trust Agreement.
This Financing Agreement (assuming due authorization, execution and delivery by and
validity against the County) constitutes and, as of the date of the Closing, this Financing
Agreement and the Trust Agreement (assuming due authorization, execution and delivery
by and validity against the other parties thereto) and the Bonds will constitute, the valid
and binding agreements of the Authority enforceable in accordance with their respective
terms, subject to the effect of bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance, moratorium and other similar laws relating to or affecting the
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion in appropriate cases and to the limitations on legal remedies against
governmental entities in the State.
(b)The Authority’s Board of Directors has full power and authority to adopt
its Resolution approving the Bonds, this Financing Agreement and the Trust Agreement.
The Resolution has been duly adopted by the Authority’s Board of Directors empowered
to do so at a regular meeting of the Board of Directors and has not been modified,
amended or repealed and is valid and binding and in full force and effect as of the date
hereof.
(c)The Authority duly authorized the execution and delivery of the Operating
Agreements, and will make its best efforts to execute and deliver future Operating
Agreements, and said executed agreements (assuming due authorization, execution and
delivery by and validity against the other parties thereto) constitute the valid and binding
agreements of the Authority, enforceable in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium and other similar laws relating to or affecting the creditors’ rights generally,
to the application of equitable principles, to the exercise of judicial discretion in
appropriate cases and to the limitations on legal remedies against governmental entities in
the State. The Operating Agreements that have been executed remain in full force and
effect and have not been supplemented, modified or amended.
(d)To the knowledge of the Authority, there is no litigation pending (with
service of process against the Authority having been accomplished) or threatened against
the Authority: (1)seeking to restrain or enjoin the sale, issuance, execution or delivery of
the Bonds, or (2) challenging the validity of the Bonds, the Trust Agreement or the
Operating Agreements, or the pledge of the Revenues, or any proceeding of the Authority
taken with respect to the foregoing, or (3) challenging the organization or existence of the
OHS West:260976900.9 6
Authority or the entitlement to their respective offices of any of the officers who caused
the Bonds to be executed and delivered on behalf of the Authority, or (4) challenging the
power or authority of the Authority to request and receive the Revenues pursuant to the
Operating Agreements.
(e)The Bonds, when issued and delivered in accordance with the Act, the
Resolution and the Trust Agreement and sold to the County as provided herein, will be
validly issued and outstanding obligations of the Authority enforceable in accordance
with their terms and entitled to the benefits of the Act, the Resolution and the Trust
Agreement, subject to the effect of bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance, moratorium and other similar laws relating to or affecting the
creditors’ rights generally, to the application of equitable principles, to the exercise of
judicial discretion in appropriate cases and to the limitations on legal remedies against
governmental entities in the State.
(f)All authorizations, approvals, licenses, permits, consents, filings,
registrations and orders of any court or governmental authority or agency having
jurisdiction of the matter that is or will be necessary for the issuance, sale, execution and
delivery of, and payment of the principal of and interest on, the Bonds, or for the valid
execution, delivery or performance of the Resolution, the Trust Agreement, the Operating
Agreements or this Financing Agreement have been obtained.
(g)The execution, issuance and delivery of, and the payment of principal of
and interest on, the Bonds and the execution, delivery and performance of the Resolution,
the Trust Agreement, the Operating Agreements and this Financing Agreement do not
and will not conflict with, or result in a violation of, any provision of law, including the
constitution of the State, or any order, writ, rule or regulation of any court or government
agency or instrumentality binding upon or applicable to the Authority and do not and will
not in any material aspect conflict with, result in a violation of, or constitute a default
under, any agreement or instrument, to which the Authority is a party or by which the
Authority or any of its property is bound, which would, in any such case, materially and
adversely affect the Authority’s ability to perform its obligations with respect to this
Financing Agreement, the Trust Agreement, the Resolution and the Bond.
(h)All written information provided by the Authority to the County
concerning the Authority, the Authority’s finances, and the Operating Agreements are
true and accurate in all material respects and does not include a false statement of a
material fact or omit any material fact necessary to make the statements therein, under the
circumstances in which they are made, not misleading.
6.At 9:00 a.m., California time, on ___________, subject to the terms and
conditions of this Financing Agreement, the Authority will deliver or cause to be delivered to the
County or its custodian at the office of Orrick, Herrington & Sutcliffe LLP in San Francisco,
California, or such other place as may be mutually agreed upon, the documents required to be
delivered pursuant to this Financing Agreement, and, the County will accept delivery of the
Bond and such documents and pay the purchase price of the Bond by a deposit of funds as set
forth in Section 4 immediately available for requisition by the Authority in the Project Fund and
OHS West:260976900.9 7
by deposits into the Costs of Issuance Fund, the Capitalized Interest Fund and the Reserve Fund,
each pledged to the County Bonds and held by the County Trustee (such payment and delivery of
documents are herein called the “Closing”).
7.The County has entered into this Financing Agreement in reliance upon the
representations, warranties and covenants of the Authority contained herein and the performance
by the County of its obligations hereunder are and shall be subject to the following further
conditions:
(a)At or prior to the Closing, the County and the Authority shall have
received each of the following documents:
(1)An opinion of Orrick, Herrington & Sutcliffe LLP (“Orrick”) as
Bond Counsel, dated the date of Closing, addressed to the Authority substantially
in the form attached hereto as Exhibit B.
(2)Certified copies of the Resolution;
(3)Executed copies of the Trust Agreement and the County Trust
Agreement;
(4)Evidence of required filings with the California Debt and
Investment Advisory Commission; and
(5)Copies of the executed Operating Agreements listed in Exhibit D
hereto.
(6)Evidence of insurance obtained by the Authority.
(7)Any other documents, opinions and/or certifications, in form and
substance reasonably requested by and acceptable to the County and its counsel.
The opinions, certificates and other materials referred to above shall be in form and
substance satisfactory to the County and its counsel.
8.Except for the amounts specified in Exhibit C, that the County agrees shall be
paid from amounts deposited in the County Costs of Issuance Fund, the Authority shall pay or
cause to be paid all other expenses incident to the issuance and sale of the Bond as herein
provided, including but not limited to: (a)the cost of the preparation and printing or other
reproduction and distribution of the Resolution and the Bonds, (b)the fees and disbursements of
its Counsel, (c) the fees of any financial advisor for the Authority, (d)the fee of the California
Debt and Investment Advisory Commission, and (e) the fees and disbursements of any other
experts or consultants retained by the Authority in connection with the transaction contemplated
hereby. The County shall pay any other expenses incurred by it.
9.Any notice or other communication to be given to the Authority under this
Financing Agreement may be given by delivering the notice or communication in writing
(including by fax) to the East Bay Regional Communications System Authority, 4985 Broder
OHS West:260976900.9 8
Boulevard, Dublin California 94568, Attention: William J. McCammon (fax: 925-803-7878);
any notice or other communication to be given to the County under this Financing Agreement
may be given by delivering the notice or communication in writing to Contra Costa County,
Office of the County Administrator, 651 Pine Street, 10th Floor, Martinez, California 94553
Attention: Lisa Driscoll (fax: 925-646-1353).
10.This Financing Agreement shall constitute the entire agreement between the
County and the Authority and is made solely for the benefit of the Authority and the County
(including any successors of the County). No other person shall acquire or have any right
hereunder or by virtue hereof. All of the representations, warranties and agreements of the
Authority and the County in this Financing Agreement shall remain operative and in full force
and effect regardless of: (a) any investigation made by or on behalf of the County or the
Authority; (b) delivery of payment for the Bonds hereunder; and (c) any termination of this
Financing Agreement.
11.This Financing Agreement may be executed in several counterparts, each of
which shall be regarded as an original and all of which shall constitute one and the same
document.
12.This Financing Agreement shall be governed by and interpreted under the laws of
the State. This Financing Agreement shall be enforceable in the State and any action arising out
of to this Financing Agreement shall be brought in the courts of the State located in the County
of Contra Costa or the County of Alameda, California and, by execution and delivery of this
Financing Agreement, the parties hereto consent and hereby accept for themselves and in respect
of their property, generally and unconditionally, the jurisdiction of the aforesaid courts. To the
extent permitted by law, the parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based on the grounds of forum non
conveniens, which they may now have or hereafter have to the bringing of any such action or
proceeding in such jurisdictions.
OHS West:260976900.9 S-1
IN WITNESS WHEREOF, the County has executed and delivered this Financing
Agreement as of the date first written above.
Very truly yours,
COUNTY OF CONTRA COSTA, as County
By:
Finance Director
Accepted:
EAST BAY REGIONAL
COMMUNICATIONS SYSTEM
AUTHORITY
By:
Executive Director
Acknowledged:
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:__________________________________
Chair
OHS West:260976900.9 A-1
EXHIBIT A
MATURITY,PRINCIPAL AMOUNT,INTEREST RATES
MATURITY
DATE
PRINCIPAL
AMOUNT
INTEREST
RATE
[December] [June] 1,20__$_____________%
Interest Payment Dates:June 1 and December 1, commencing June 1, 2011 and on maturity or
earlier redemption.
Optional Redemption subject to 10 year par call of County Bonds.
OHS West:260976900.9 B-1
EXHIBIT B
FORM OF OPINION OF BOND COUNSEL
OHS West:260976900.9 C-1
EXHIBIT C
COSTS OF ISSUANCE
The following amounts shall be paid from the Costs of Issuance Fund at Closing:
Payee Amount
OHS West:260976900.9 D-1
EXHIBIT D
LIST OF OPERATING AGREEMENTS
10014\POS-6
PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2010
NEW ISSUE - BOOK ENTRY ONLY RATINGS: See “RATINGS”
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon
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 2010
Series A-1, 2010 Series B Bonds and 2010 Series C Bonds is excluded from gross income for federal
income tax purposes under Section 103 of the Internal Revenue Code of 1986. Bond Counsel is of the
further opinion that interest on the 2010 Series A-1, 2010 Series B Bonds and 2010 Series C Bonds is not
a specific preference item for purposes of the federal individual or corporate alternative minimum taxes,
nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable
income. Interest on the Series 2010 Bonds is exempt from State of California personal income taxes.
Bond Counsel observes that interest on the 2010 Series A-2 and 2010 Series A-3 Bonds is not excluded
from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any
other tax consequences related to the ownership or disposition of, or accrual or receipt of interest on, the
2010 Series A-2 or 2010 Series A-3 Bonds. See “TAX MATTERS” herein.
$____,___,000*
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
Comprised of:
$________* 2010 Series A-1 (Capital Project I - Tax Exempt)
$________* 2010 Series A-2 (Capital Project I - Taxable Build America Bonds)
$_________* 2010 Series A-3 (Capital Project I - Taxable Recovery Zone Bonds)
$_______* 2010 Series B (Capital Project II)
$_______* 2010 Series C (Refunding)
Dated: Date of Delivery Due: June 1, as shown on inside cover
The County of Contra Costa Public Financing Authority (the “Authority”) is issuing $______*
aggregate principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds,
comprised of: $_____* principal amount of 2010 Series A-1 (Capital Project I - Tax Exempt) (the “2010
Series A-1 Bonds”); $_____* principal amount of 2010 Series A-2 (Capital Project I - Taxable Build
America Bonds) (the “Taxable 2010 Series A-2 Bonds”); and $_____* principal amount of 2010 Series
A-3 (Capital Project I - Taxable Recovery Zone Bonds) (the “Taxable 2010 Series A-3 Bonds,” and
collectively with the 2010 Series A-1 Bonds and the Taxable 2010 Series A-2 Bonds, the “2010 Series A
Bonds”); $_____* principal amount of 2010 Series B (Capital Project II) (the “2010 Series B Bonds”);
and $_____* principal amount of 2010 Series C (Refunding); (the “2010 Series C Bonds”). The 2010
Series A Bonds, the 2010 Series B Bonds and the 2010 Series C Bonds are referred to collectively as the
“2010 Bonds.” The 2010 Bonds are being issued to: (i) finance and/or refinance the costs of acquiring,
constructing, improving and equipping capital projects (collectively, the “2010 Projects”) within the
County of Contra Costa (the “County”); (ii) pay capitalized interest with respect to certain of the 2010
Projects as described herein; (iii) fund a deposit into the separate Reserve Account (defined herein)
established for each Series of 2010 Bonds within the Reserve Fund (defined herein); and (iv) pay certain
costs associated with the issuance of the 2010 Bonds. See “THE 2010 PROJECTS” and “ESTIMATED
SOURCES AND USES OF FUNDS.”
10014\POS-6
The 2010 Bonds are limited obligations of the Authority payable solely from certain revenues of
the Authority, consisting primarily of Base Rental Payments (as defined herein) to be made by the County
to the Authority for the use and occupancy of Facilities (defined herein) pursuant to a separate Sublease
with respect for each Series of 2010 Bonds, each dated as of November 1, 2010 (each a “Sublease” and
collectively, the “Subleases”) between the Authority and the County. The County has covenanted in each
Sublease to take such action as may be necessary to include Base Rental Payments in its annual budgets
and to make the necessary annual appropriations therefor. The County agrees in each Sublease to make
all Base Rental Payments, subject to abatement in the event of damage to or destruction or condemnation
of all or a portion of the related Facilities which results in substantial interference with the County’s use
and occupancy of the related Facilities, except as otherwise described herein. See “SECURITY AND
SOURCES OF PAYMENT FOR THE 2010 BONDS.”
Interest on the 2010 Bonds will be payable from their date of issuance commencing June 1, 2011
and semiannually thereafter on each December 1 and June 1.
The 2010 Bonds of each Series will be initially delivered in book-entry form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”).
Principal of, redemption premium, if any, and interest on each Series of 2010 Bonds will be paid by Wells
Fargo Bank, National Association, as trustee (the “Trustee”), to DTC. DTC is obligated to remit such
principal and interest to its DTC Participants for disbursement to the beneficial owners of the 2010
Bonds. See APPENDIX H–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Certain Series of the 2010
Bonds are subject to optional, extraordinary and mandatory redemption as described herein.
The 2010 Bonds are being issued pursuant to a Trust Agreement, dated as of November 1, 2010
(the “Trust Agreement”), by and between the Authority and Wells Fargo Bank, National Association, as
Trustee and acknowledged by the County.
Depending upon market conditions at the time of pricing, the payment of principal of and interest
on all or some of the 2010 Bonds may be insured by a financial guaranty insurance policy.
THE 2010 BONDS OF EACH SERIES ARE LIMITED OBLIGATIONS OF THE
AUTHORITY PAYABLE SOLELY FROM RELATED REVENUES AND ARE NOT SECURED BY A
LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE OR LIEN UPON, ANY PROPERTY OF THE
AUTHORITY OR THE COUNTY OR ANY OF THEIR INCOME OR RECEIPTS, EXCEPT THE
RELATED REVENUES (AS DESCRIBED HEREIN). NEITHER THE FULL FAITH NOR THE
CREDIT OF THE AUTHORITY OR THE COUNTY IS PLEDGED FOR THE PAYMENT OF THE
INTEREST ON OR PRINCIPAL OF THE 2010 BONDS. NEITHER THE PAYMENT OF THE
PRINCIPAL OF OR INTEREST ON THE 2010 BONDS NOR THE OBLIGATION TO MAKE BASE
RENTAL PAYMENTS UNDER THE RELATED SUBLEASE CONSTITUTES A DEBT, LIABILITY
OR OBLIGATION OF THE AUTHORITY OR THE COUNTY FOR WHICH EITHER ENTITY IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH EITHER
ENTITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO
TAXING POWER.
10014\POS-6
__________________
MATURITY SCHEDULE
(See inside cover)
This cover page contains certain information for general reference only. It is not intended to be a
summary of the security or terms of this issue. Investors are advised to read the entire Official Statement
to obtain information essential to the making of an informed investment decision. An investment in the
2010 Bonds involves risk. For a discussion of certain risk factors associated with investment in the 2010
Bonds, see “CERTAIN RISK FACTORS” as well as other factors discussed throughout this Official
Statement.
The 2010 Bonds are offered when, as and if issued by the Authority and received by the
Underwriters, subject to approval as to their validity by Orrick, Herrington & Sutcliffe LLP, San
Francisco, California, Bond Counsel to the Authority. Certain other legal matters will be passed upon
for the County and the Authority by County Counsel and by Lofton & Jennings, San Francisco,
California, Disclosure Counsel and for the Underwriters by Chapman and Cutler LLP, San Francisco,
California. It is anticipated that the 2010 Bonds in book-entry form, will be available for delivery
through the facilities of DTC in New York, New York on or about November 4, 2010.
WEDBUSH SECURITIES PIPER JAFFRAY
Date of Official Statement: ________, 2010.
________________
* Preliminary, subject to change.
10014\POS-6
MATURITY SCHEDULE
$____,___,000*
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
$________*
2010 Series A-1 (Capital Project I - Tax-Exempt)
Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Initial
Offering
Price/
Yield(1)
CUSIP No.(2)
$_____ ____% Term 2010 Series A-1 Bond due June 1, 20__–Initial Offering Price(1): ___%–
Initial Offering Yield(1): ___%–CUSIP No.(2)____
$___,____,000*
2010 Series A-2 (Capital Project I - Taxable Build America Bonds)
Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Initial
Offering
Price/
Yield(1)
CUSIP No.(2)
$_____ ____% Term 2010 Series A-2 Bond due June 1, 20__–Initial Offering Price(1): ___%–
Initial Offering Yield(1): ___%–CUSIP No.(2)____
$___,____,000*
2010 Series A-3 (Capital Project I - Taxable Recovery Zone Bonds)
Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Initial
Offering
Price/
Yield(1)
CUSIP No.(2)
$_____ ____% Term 2010 Series A-3 Bond due June 1, 20__–Initial Offering Price(1): ___%–
Initial Offering Yield(1): ___%–CUSIP No.(2)____
________________
(1) Initial offering prices and yields were provided by the Underwriters.
(2) Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor’s, CUSIP Service
Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve
in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. None
of the Authority or the Underwriters take any responsibility for the accuracy of such CUSIP numbers. The CUSIP number
for a specific maturity is subject to being changed after the issuance of the 2010 Bonds as a result of various subsequent
actions including, but not limited to, a refunding in whole or in part of such maturity.
* Preliminary, subject to change.
10014\POS-6
MATURITY SCHEDULE
(Continued)
$____,___,000*
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
$________*
2010 Series B (Capital Project II)
Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Initial
Offering
Price/
Yield(1)
CUSIP No.(2)
$_____ ____% Term 2010 Series B Bond due June 1, 20__–Initial Offering Price(1): ___%–
Initial Offering Yield(1): ___% – CUSIP No.(2)____
$___,____,000*
2010 Series C (Refunding)
Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Initial
Offering
Price/
Yield(1)
CUSIP No.(2)
$_____ ____% Term 2010 Series C Bond due June 1, 20__–Initial Offering Price(1): ___%–
Initial Offering Yield(1): ___% – CUSIP No.(2)____
________________
(1) Initial reoffering prices and yields were provided by the Underwriters.
(2) Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor’s, CUSIP Service
Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve
in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. None
of the Authority or the Underwriters take any responsibility for the accuracy of such CUSIP numbers. The CUSIP number
for a specific maturity is subject to being changed after the issuance of the 2010 Bonds as a result of various subsequent
actions including, but not limited to, a refunding in whole or in part of such maturity.
* Preliminary, subject to change.
10014\POS-6
i
No dealer, broker, salesperson or other person has been authorized by the County or the Authority to give
any information or to make any representation other than those contained herein and, if given or made, such other
information or representation must not be relied upon as having been authorized by any of the foregoing. This
Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any
sale of the 2010 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,
solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the 2010 Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or
not expressly so described herein, are intended solely as such and are not to be construed as representations of facts.
The County maintains a website. Unless specifically indicated otherwise, the information presented on that
website is not incorporated by reference as part of this Official Statement and should not be relied upon in making
investment decisions with respect to the 2010 Bonds.
The information set forth herein has been obtained from the County or the Authority and from other
sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The information and
expressions of opinions herein are subject to change without notice and neither the delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no
change in the affairs of the County or the Authority since the date hereof. This Official Statement is submitted in
connection with the sale of the 2010 Bonds referred to herein and may not be reproduced or used, in whole or in
part, for any other purpose, unless authorized in writing by the County. All summaries of the documents and laws
are made subject to the provisions thereof and do not purport to be complete statements of any or all such
provisions. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the
Trust Agreement and the Subleases. This Official Statement, including any supplement or amendment hereto, is
intended to be deposited with the Electronic Municipal Market Access site maintained by the Municipal Securities
Rulemaking Board.
Any statement made in this Official Statement involving any forecast or matter of estimates or opinion,
whether or not expressly stated, is intended solely as such and not as a representation of fact. Certain statements
included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the
meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States
Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as
amended (the “Securities Act”). Such forward-looking statements are generally identified by use of the words
“plan,” “project,” “expect,” “estimate,” “budget” or other similar words. Such forward-looking statements include,
but are not limited to, statements contained in APPENDIX B–“COUNTY FINANCIAL INFORMATION.” Such forward-
looking statements refer to the achievement of certain results or other expectations or performance which involve
known and unknown risks, uncertainties and other factors. These risks, uncertainties and other factors may cause
actual results, performance or achievements to be materially different from any projected results, performance or
achievements described or implied by such forward looking statements. Neither the County nor the Authority plans
to issue updates or revisions to such forward-looking statements if or when the expectations, events, conditions or
circumstances on which such statements are based, occur, or if actual results, performance or achievements are
materially different from any results, performance or achievements described or implied by such forward-looking
statements.
The 2010 Bonds have not been registered with the Securities and Exchange Commission by reason of the
provisions of Section 3(a)(2) of the Securities Act of 1933, as amended. The registration or qualification of the 2010
Bonds in accordance with applicable provisions of Securities Laws of the states in which these Bonds have been
registered or qualified, and the exemption from registration or qualification in other states, shall not be regarded as a
recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the securities or
the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense.
The Underwriters have provided the following sentence for inclusion in this Official Statement: The
Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
In connection with this offering, the Underwriters may overallot or effect transactions which stabilize or
maintain the market prices of a Series of 2010 Bonds at a level above that which might otherwise prevail in the open
market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell a
Series of 2010 Bonds to certain dealers and banks at prices lower than the initial public offering prices and at yields
higher than stated on the inside cover page and such initial public offering prices and yields may be changed from
time to time by the Underwriters.
10014\POS-6
ii
COUNTY OF CONTRA COSTA, CALIFORNIA
BOARD OF SUPERVISORS OF THE COUNTY
John M. Gioia
(District 1)
Chair
Gayle B. Uilkema
(District 2)
Mary N. Piepho
(District 3)
Susan A. Bonilla
(District 4)
Federal D. Glover
(District 5)
COUNTY OFFICIALS
David J. Twa
Clerk of the Board and County Administrator
Stephen J. Ybarra
Auditor-Controller
William J. Pollacek
Treasurer-Tax Collector and
Paying Agent
Sharon L. Anderson
County Counsel
Gus S. Kramer
Assessor
Stephen L. Weir
County Clerk-Recorder
Lisa Driscoll
County Finance Director
SPECIAL SERVICES
Orrick, Herrington & Sutcliffe LLP
San Francisco, California
Bond Counsel
Lofton & Jennings
San Francisco, California
Disclosure Counsel
Tamalpais Advisors, Inc.
Sausalito, California
Financial Advisor
Wells Fargo Bank, National Association
San Francisco, California
Trustee and Escrow Agent
Causey Demgen & Moore Inc.
Denver, Colorado
Verification Agent
10014\POS-6
iii
TABLE OF CONTENTS
Page Page
INTRODUCTION .............................................. 1
General; Purpose .............................................. 1
Authority for Issuance ..................................... 2
2010 Series A Bonds ....................................... 2
2010 Series B Bonds ........................................ 3
2010 Series C Bonds ........................................ 3
Security and Sources of Payment .................... 3
Reserve Fund ................................................... 4
Certain Risk Factors ........................................ 4
Continuing Disclosure ..................................... 5
Reference to Documents .................................. 5
THE 2010 PROJECTS ........................................ 5
Capital Project I ............................................... 5
THE FACILITIES .............................................. 9
ESTIMATED SOURCES AND USES OF
FUNDS ..................................................... 11
Redemption Procedures ................................. 12
2010 SERIES A BONDS .................................. 13
2010 Series A-1 Bonds .................................. 13
Designation of Taxable 2010 Series
A-2 Bonds as Build America
Bonds ..................................................... 13
Designation of Taxable 2010 Series
A-3 Bonds as Recovery Zone
Economic Development Bonds ............. 13
Payment of Taxable 2010 Series A
Bonds is not Dependent Upon
Subsidy Receipts .................................... 13
Redemption Provisions .................................. 14
2010 SERIES B BONDS .................................. 17
Redemption Provisions .................................. 17
2010 SERIES C BONDS .................................. 19
Redemption Provisions .................................. 19
SECURITY AND SOURCES OF
PAYMENT FOR THE 2010 BONDS ....... 20
General .......................................................... 20
Pledge of Revenues ....................................... 21
Base Rental Payments ................................... 21
Reserve Fund ................................................. 22
Insurance ........................................................ 23
Additional Bonds ........................................... 25
Substitution of Property ................................. 25
DEBT SERVICE SCHEDULE ......................... 26
CERTAIN RISK FACTORS ............................ 31
Limited Obligation ........................................ 31
Base Rental Payments Not a Debt of
the County .............................................. 31
Valid and Binding Covenant to
Budget and Appropriate ......................... 31
Abatement ...................................................... 32
Limited Recourse on Default ......................... 32
Limitations on Remedies ................................ 33
Military Conflicts and Terrorist
Activities ................................................ 33
Risk of Earthquake and Other Natural
Disasters ................................................. 34
Hazardous Substances .................................... 34
Limited Liability of Authority to the
Owners .................................................... 34
State Funding of Counties .............................. 35
CONSTITUTIONAL AND
STATUTORY LIMITATIONS ON
TAXES, REVENUES AND
APPROPRIATIONS ................................. 35
Article XIII A of the California
Constitution ............................................ 35
Legislation Implementing Article
XIII A ..................................................... 35
Article XIII B of the California
Constitution ............................................ 36
Article XIII C and Article XIII D of
the California Constitution ..................... 37
Ventura Decision ............................................ 37
Proposition 62 ................................................ 37
Proposition 1A of 2004 .................................. 38
Future Initiatives ............................................ 39
THE AUTHORITY ........................................... 39
THE COUNTY .................................................. 40
RATINGS .......................................................... 40
LITIGATION MATTERS ................................. 40
TAX MATTERS ............................................... 41
Tax Matters Relating to the 2010
Series A-1, 2010 Series B and
2010 Series C ......................................... 41
Circular 230 .................................................... 44
Tax Matters Relating to Tax-exempt
Bonds ...................................................... 44
LEGAL MATTERS .......................................... 46
FINANCIAL ADVISOR ................................... 46
CONTINUING DISCLOSURE ........................ 46
UNDERWRITING ............................................ 47
2010 Series A Bonds ...................................... 47
2010 Series B Bonds ...................................... 47
2010 Series C Bonds ...................................... 47
VERIFICATION OF MATHEMATICAL
COMPUTATIONS FOR THE 2010
SERIES C BONDS .................................... 48
MISCELLANEOUS INFORMATION ............. 48
10014\POS-6 iv
APPENDIX A – GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC
INFORMATION …………………… ..................................................................... A-1
APPENDIX B – COUNTY FINANCIAL INFORMATION ............................................................. B-1
APPENDIX C – COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE
COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2009 ............................. C-1
APPENDIX D – COUNTY INVESTMENT POLICY ....................................................................... D-1
APPENDIX E – SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL
DOCUMENTS ......................................................................................................... E-1
APPENDIX F – PROPOSED FORM OF BOND COUNSEL OPINION ........................................... F-1
APPENDIX G – PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT .............. G-1
APPENDIX H – DTC AND THE BOOK-ENTRY ONLY SYSTEM ................................................ H-1
10014\POS-6
$____,___,000*
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
Comprised of:
$________* 2010 Series A-1 (Capital Project I - Tax Exempt)
$________* 2010 Series A-2 (Capital Project I - Taxable Build America Bonds)
$_________* 2010 Series A-3 (Capital Project I - Taxable Recovery Zone Bonds)
$_______* 2010 Series B (Capital Project II)
$_______* 2010 Series C (Refunding)
INTRODUCTION
This Introduction contains only a brief summary of the terms of the 2010 Bonds being offered and
a brief description of this Official Statement. A full review should be made of the entire Official
Statement, including the inside cover and the Appendices. All statements contained in this Introduction
are qualified in their entirety by reference to the entire Official Statement. All capitalized terms used in
this Official Statement and not otherwise defined herein have the meanings given to such terms as set
forth in the Trust Agreement (defined below). See APPENDIX E–“SUMMARY OF CERTAIN PROVISIONS OF
PRINCIPAL LEGAL DOCUMENTS–DEFINITIONS.”
General; Purpose
This Official Statement, which includes the cover page and Appendices hereto (the “Official
Statement”), provides certain information concerning the issuance by the County of Contra Costa Public
Financing Authority (the “Authority”) of $__,__,000* aggregate principal amount of County of Contra
Costa Public Financing Authority Lease Revenue Bonds, comprised of: $_____* principal amount of
2010 Series A-1 (Capital Project I - Tax Exempt) (the “2010 Series A-1 Bonds”); $_____* principal
amount of 2010 Series A-2 (Capital Project I - Taxable Build America Bonds) (the “Taxable 2010 Series
A-2 Bonds”); and $_____* principal amount of 2010 Series A-3 (Capital Project I - Taxable Recovery
Zone Bonds) (the “Taxable 2010 Series A-3 Bonds” and together with the Taxable 2010 Series A-2
Bonds, the “Taxable 2010 Series A Bonds” and the Taxable 2010 Series A Bonds together with the 2010
Series A-1 Bonds are referred to as the “2010 Series A Bonds”); $_____* principal amount of 2010
Series B (Capital Project II) (the “2010 Series B Bonds”); and $_____* principal amount of 2010
Series C (Refunding) (the “2010 Series C Bonds”). The 2010 Series A Bonds, the 2010 Series B Bonds
and the 2010 Series C Bonds are referred to collectively, as the “2010 Bonds.” The 2010 Bonds are being
issued to: (i) finance and/or refinance the costs of acquiring, constructing, improving and equipping
capital projects (collectively, the “2010 Projects”) within the County of Contra Costa (the “County”); (ii)
pay capitalized interest with respect to certain of the 2010 Projects as described herein; (iii) fund a deposit
into the separate Reserve Account (defined herein) established for each Series of 2010 Bonds within] the
Reserve Fund (defined herein); and (iv) pay certain costs associated with the issuance of the 2010 Bonds.
See “THE 2010 PROJECTS” and “ESTIMATED SOURCES AND USES OF FUNDS.”
________________
* Preliminary, subject to change.
10014\POS-6 2
The 2010 Bonds are each limited obligations of the Authority payable solely from Revenues,
consisting primarily of certain base rental payments (collectively, the “Base Rental Payments”) to be
made by the County for the use and occupancy of the related real property and improvements (each a
“Facility” and collectively, the “Facilities”). Each Facility will be leased by the County to the Authority
pursuant to the terms and conditions of a separate Site Lease with respect to each Series of 2010 Bonds,
each dated as of November 1, 2010 (respectively, the “2010 Series A Site Lease,” the “2010 Series B Site
Lease,” the 2010 Series C Site Lease” and collectively, the “Site Leases”), each between the County, as
lessor, and the Authority, as lessee. See “THE 2010 FACILITIES.” Pursuant to the terms and conditions of
a separate Sublease with respect to each Series of 2010 Bonds, each dated as of November 1, 2010
(respectively, the “2010 Series A Sublease,” the “2010 Series B Sublease,” the 2010 Series C Sublease”
and collectively, the “Subleases”), each between the Authority, as lessor and the County, as lessee, the
Authority will sublet each of the Facilities to the County. See “SECURITY AND SOURCES OF PAYMENT
FOR THE 2010 BONDS.”
Authority for Issuance
The 2010 Bonds will be issued pursuant to the Constitution and the laws of the State of California
(the “State”), resolutions adopted by the Authority and the County and a Trust Agreement, dated as of
November 1, 2010 (the “Trust Agreement”), between the Authority and Wells Fargo Bank, National
Association, as trustee (the “Trustee”) and acknowledged by the County.
2010 Series A Bonds
The proceeds of the 2010 Series A Bonds will be applied to: (i) finance and/or refinance a portion
of the costs of acquiring, constructing, improving and equipping a health clinic and related parking
facilities to be located at 13613 and 13585-3613 San Pablo Avenue, San Pablo, California (collectively,
“Capital Project I”); (ii) pay capitalized interest with respect to Capital Project I through June 1, 2013;
(iii) fund a deposit into the 2010 Series A Reserve Account within the Reserve Fund; and (iv) pay certain
costs associated with the issuance of the 2010 Series A Bonds. See “THE 2010 PROJECTS–Capital
Project I” and “ESTIMATED SOURCES AND USES OF FUNDS.”
2010 Series A-1 Bonds. The interest on the 2010 Series A-1 Bonds will be excluded from gross
income for federal income tax and from State of California personal income taxes.
Taxable 2010 Series A-2 Bonds. The Taxable 2010 Series A-2 Bonds are being issued as “Build
America Bonds” under the provisions of the American Recovery and Reinvestment Act of 2009 signed
into law on February 17, 2009 (the “Recovery Act”), the interest on which is not excluded from gross
income for federal income tax purposes but is exempt from State of California personal income taxes.
The County expects to receive direct cash subsides from the United States Treasury equal to 35% of the
interest payable on such Taxable 2010 Series A-3 Bonds (the “BABs Subsidy Receipts”). The County
covenants in the tax certificate related to the 2010 Series A Bonds to comply with all of the conditions to
the receipt and use of such BABs Subsidy Receipts. See “THE 2010 SERIES A BONDS–Designation of the
Taxable 2010 Series A-2 Bonds as Build America Bonds.”
Taxable 2010 Series A-3 Bonds. The Taxable 2010 Series A-3 Bonds are being issued as
“Recovery Zone Economic Development Bonds” under the provisions of the Recovery Act, the interest
on which is not excluded from gross income for federal income tax purposes but is exempt from State of
California personal income taxes. The County expects to receive direct cash subsidies from the United
States Treasury equal to 45% of the interest payable on such Taxable 2010 Series A-3 Bonds as provided
in Section 6431 of the Code (the “Recovery Zone Subsidy Receipts” and together with the BABs Subsidy
Receipts, the “Subsidy Receipts”). The County covenants in the tax certificate related to the 2010
Series A Bonds to comply with all of the conditions to the receipt and use of such Recovery Zone Subsidy
10014\POS-6 3
Receipts. See “THE 2010 SERIES A BONDS–Designation of the Taxable 2010 Series A-3 Bonds as
Recovery Zone Economic Development Bonds.”
See “TERMS RELATING TO EACH SERIES OF 2010 BONDS” and “2010 SERIES A BONDS.”
2010 Series B Bonds
The proceeds of the 2010 Series B Bonds will be used by the Authority to: (i) finance and
refinance a portion of the costs of acquiring, constructing, improving and installing a regional digital
emergency radio communications system within the County (collectively, “Capital Project II”); (ii) pay
capitalized interest with respect to [a portion of] the Capital Project II through November 4, 2013; (iii)
fund a deposit into the 2010 Series B Reserve Account within Reserve Fund; and (iv) pay certain costs
associated with the issuance of the 2010 Series B Bonds. See “THE 2010 PROJECTS–Capital Project II”
and “ESTIMATED SOURCES AND USES OF FUNDS.”
See “TERMS RELATING TO EACH SERIES OF 2010 BONDS” and “2010 SERIES B BONDS.”
2010 Series C Bonds
The proceeds of the 2010 Series C Bonds will be used by the Authority to: (i) refund the
outstanding $17,400,000 principal amount of the County of Contra Costa Public Finance Authority Lease
Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A (the “1998 Bonds”); (ii) fund a
deposit into the 2010 Series C Reserve Account within the Reserve Fund; and (iii) pay certain costs
associated with the issuance of the 2010 Series C Bonds. See PLAN OF FINANCE–2010 Series C Bonds”
and “ESTIMATED SOURCES AND USES OF FUNDS.”
See “TERMS RELATING TO EACH SERIES OF 2010 BONDS” and “2010 SERIES C BONDS.”
Security and Sources of Payment
General. Pursuant to the Trust Agreement, the Authority pledges to the Trustee, for the benefit
of the related Bondholders, all of the “Revenues,” defined as all Base Rental Payments and other
payments paid by the County and received by the Authority pursuant to the related Sublease (excluding
Additional Payments); and all interest or other income from any investment of any money held in any
fund or account established for such Series of 2010 Bonds pursuant to the Trust Agreement or the related
Sublease (other than the Rebate Fund).
The County covenants under each Sublease that so long as the related Facility is available for use
and occupancy by the County, it will take such action as may be necessary to include the related Base
Rental Payments and Additional Payments with respect to such Sublease in its annual budgets and to
make the necessary annual appropriations therefor. See “SECURITY AND SOURCES OF PAYMENT FOR THE
2010 BONDS.”
The Base Rental Payments made by the County pursuant to each Sublease are subject to complete
or partial abatement in the event of substantial interference with the use and occupancy by the County of
the related Facility caused by damage to or destruction or condemnation of such Facility. See “CERTAIN
RISK FACTORS” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Pledge of Revenues.”
Abatement of Base Rental Payments under the related Sublease could result in the Bondholders of such
Series of 2010 Bonds receiving less than the full amount of principal and interest on the applicable Series
of 2010 Bonds, except to the extent proceeds of insurance or moneys in the respective Reserve Account
within the Reserve Fund (as described herein) are available to make payments of principal of or interest
on the related Series of 2010 Bonds (or the relevant portion thereof) during periods of abatement of
respective Base Rental.
10014\POS-6 4
Abatement of Base Rental Payments under one Sublease will not result in the abatement of
Base Rental Payments under any other Sublease.
Each Series of 2010 Bonds is secured solely by the related Revenues which consist primarily
of the Base Rental Payments to be made by the County to the Authority under the related Sublease.
A default under one Sublease does not constitute a default under any other Sublease.
Depending upon market conditions at the time of pricing, the payment of principal of and interest
on some or all of the 2010 Bonds may be insured by a financial guaranty insurance policy.
Additional Parity Bonds. So long as any of the 2010 Bonds are Outstanding, the Authority may
only issue additional bonds under the Trust Agreement (“Additional Bonds”) secured on a parity with the
2010 Bonds for the sole purpose of refunding a Series of 2010 Bonds. See “SECURITY AND SOURCES OF
PAYMENT FOR THE 2010 BONDS–Additional Bonds.” The 2010 Bonds, together with any Additional
Bonds issued pursuant to the Trust Agreement, are herein referred to as the “Bonds.”
THE 2010 BONDS OF EACH SERIES ARE LIMITED OBLIGATIONS OF THE
AUTHORITY PAYABLE SOLELY FROM RELATED REVENUES AND ARE NOT SECURED BY A
LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE OR LIEN UPON, ANY PROPERTY OF THE
AUTHORITY OR THE COUNTY OR ANY OF THEIR INCOME OR RECEIPTS, EXCEPT THE
RELATED REVENUES (AS DESCRIBED HEREIN). NEITHER THE FULL FAITH NOR THE
CREDIT OF THE AUTHORITY OR THE COUNTY IS PLEDGED FOR THE PAYMENT OF THE
INTEREST ON OR PRINCIPAL OF THE 2010 BONDS. NEITHER THE PAYMENT OF THE
PRINCIPAL OF OR INTEREST ON THE 2010 BONDS NOR THE OBLIGATION TO MAKE BASE
RENTAL PAYMENTS UNDER THE RELATED SUBLEASE CONSTITUTES A DEBT, LIABILITY
OR OBLIGATION OF THE AUTHORITY OR THE COUNTY FOR WHICH EITHER ENTITY IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH EITHER
ENTITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO
TAXING POWER.
Reserve Fund
Pursuant to the Trust Agreement, a separate reserve account (the “2010 Series A Reserve
Account,” the “2010 Series B Reserve Account,” the “2010 Series C Reserve Account” and collectively,
the “Reserve Accounts”) is established within the reserve fund (the “Reserve Fund”) for the benefit of the
Bondholders of the related Series of 2010 Bonds in an amount equal to the respective Reserve Fund
Requirement (as defined herein). Amounts on deposit in a Reserve Account within the Reserve Fund are
available to pay only the related Series of 2010 Bonds and any related Additional Bonds. See “SECURITY
AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Reserve Fund.”
A Reserve Account secures only the related Series of 2010 Bonds. The Reserve Account
related to one Series of 2010 Bonds will not be available to pay the 2010 Bonds of another Series.
Certain Risk Factors
An investment in the 2010 Bonds involves risk. For a discussion of certain risk factors associated
with investment in the 2010 Bonds, see “CERTAIN RISK FACTORS” as well as other factors discussed
throughout this Official Statement.
10014\POS-6 5
Continuing Disclosure
The County has covenanted for the benefit of the beneficial owners of the 2010 Bonds to provide
certain financial information and operating data relating to the County by no later than nine months after
the end of each fiscal year (which fiscal year currently ends June 30), commencing with the report due for
the Fiscal Year ended June 30, 2010 (each an “Annual Report”), and to provide notices of the occurrence
of certain enumerated events, if material. The Annual Report and notices of material events will be filed
by the County or Digital Assurance Certification, L.L.C., as dissemination agent, through the Electronic
Municipal Market Access site maintained by the Municipal Securities Rulemaking Board (the “MSRB”).
The specific nature of the information to be contained in the Annual Report or the notices of material
events is set forth in APPENDIX G–“PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT.” These
covenants have been made in order to assist the Underwriters in complying with S.E.C. Rule
15c2 12(b)(5).
Reference to Documents
The summaries and descriptions in this Official Statement of the Trust Agreement, the Subleases,
the Site Leases, the 1998 Bonds Escrow Agreement, the Continuing Disclosure Agreement, and other
agreements relating to the 2010 Bonds are qualified in their entirety by reference to such documents, and
the descriptions herein of the 2010 Bonds are qualified in their entirety by the form thereof and the
information with respect thereto included in such documents. All capitalized terms used herein, unless
noted otherwise, shall have the meanings prescribed in the Trust Agreement and the Subleases. See
APPENDIX E–“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS–DEFINITIONS.”
THE 2010 PROJECTS
Capital Project I
Description. The proceeds of the 2010 Series A Bonds will be used by the Authority to:
(i) finance and refinance a portion of Capital Project I; (ii) pay capitalized interest with respect to Capital
Project I through January 1, 2013; (iii) fund a deposit into the 2010 Series A Reserve Account within the
Reserve Fund; and (iv) pay certain costs associated with the issuance of the 2010 Series A Bonds.
On January 26, 2010, the Board of Supervisors adopted a resolution designating the western area
of the County (comprised of the cities of El Cerrito, Hercules, Richmond and San Pablo) as a recovery
zone within the meaning of the Recovery Act. The County has received a total of $20.7 million in
allocation under ARRA in connection with Capital Project I. In addition, on August 6, 2009, the County
submitted a grant request to the United States Health Resources and Services Administration for $12
million in funding under the Recovery Act Facilities Investment Program and a Notice of Grant Award in
the amount of $12 million was issued to the County on October 29, 2009 (the “Grant”).
Approximately $33 million of the costs related to Capital Project I are expected to be paid from
with proceeds from the issuance of the 2010 Series A Bonds, with the remaining $12 million be paid from
the proceeds of the Grant. The County estimates that all but $3.6 million of the Grant monies will be
timely received and applied toward the costs of Capital Project I because there is an estimated six month
delay between the time the County submits a claim to the federal government for the portion of each
construction draw to be funded by the Grant and the actual date of receipt. The County Hospital
Enterprise Fund will cover construction draws for Capital Project I, if necessary, in advance of receiving
the Grant funds. The Hospital Enterprise Fund is statutorily backed by the County General Fund.
10014\POS-6 6
Capital Project I consists of the construction and equipping of an approximately 53,000 square-
foot, two-story health clinic and a three-story, approximately 320-space parking structure, and the
installation of certain related improvements to replace the existing Richmond Health Center (the “RHC”).
Capital Project I will be located on an approximately two-acre parcel owned by the County located at
13613 and 13585-3613 San Pablo Avenue, in San Pablo, California, which is approximately [0.5] miles
northwest of the location of the Doctors Medical Center. Upon completion of Capital Project I, the RHC
will be demolished.
Contractors and Schedule. The County expects to award the construction contract for Capital
Project I in _________ 2010 to _________, the contractor who submitted the lowest responsive
responsible bid based upon a [design/bid/build] procurement approach. Construction of Capital Project I
is expected to commence in spring 2011 and be completed in spring 2012.
Environmental and Land Use Approvals. Projects undertaken by the County, including the
Capital Project I, are generally subject to the California Environmental Quality Act, as amended (Division
13 of the California Public Resources Code) (“CEQA”). Under CEQA, a public agency is required,
following preparation of an initial assessment, to determine whether an environmental impact report (an
“EIR”), a negative declaration or a mitigated negative declaration is required for a project. If there is
substantial evidence that significant environmental effects may occur, an EIR is required to be prepared.
The County prepared an EIR for the Capital Project I that was certified on October 5, 2010. All other
land use approvals necessary to proceed with the Capital Project I have been obtained or are expected to
be obtained in due course.
Seismic Standards. Each component of the Capital Project I is designed to meet or exceed
current seismic standards for medical clinic facilities. See also “SECURITY AND SOURCES OF PAYMENT
FOR THE 2010 BONDS–Insurance” and “–Earthquake Insurance.”
Capital Project II
Description. The proceeds of the 2010 Series B Bonds will be used by the Authority to:
(i) finance and refinance a portion of the costs of acquiring, constructing, improving and installing
equipment and facilities related to Capital Project II, a Project 25 (“P25”) compliant, 700/800 megahertz
digital emergency radio communications system to be located throughout the County; (ii) pay capitalized
interest with respect to a portion of Capital Project II through November 4, 2013; (iii) fund a deposit into
the 2010 Series B Reserve Account within the Reserve Fund; and (iv) pay certain costs associated with
the issuance of the 2010 Series B Bonds. P25, a digital radio communications standard for use by federal,
state/province and local public safety agencies in North America, enables communication with other
agencies and mutual aid response teams during emergencies and was established to address the need for
common digital public safety radio communications standards for First Responders and Homeland
Security/Emergency Response professionals.
Upon completion, Capital Project II will ensure that two-way radio communication between
public safety responders from different agencies are inter-operable. It is expected that Capital Project II
will be a component of the joint Contra Costa County – Alameda and Contra Costa Counties East Bay
Regional Communications System Project. Capital Project II is not the Facility subject to the 2010 Series
B Sublease. See “THE FACILITIES.” The County and the County of Alameda formed the East Bay
Regional Communications System Authority (“EBRCS”) to jointly build an emergency communication
system to be used by both counties up and to 41 other regional cities and agencies.
Construction and Acquisition Schedule. EBRCS expects to begin acquiring the equipment and
commence construction of related facilities during the fourth quarter of 2010. Capital Project II is
expected completed during the third quarter of 2014.
10014\POS-6 7
[Environmental and Land Use Approvals. Projects undertaken by the County, including the
Capital Project II, are generally subject to CEQA. Under CEQA, a public agency is required, following
preparation of an initial assessment, to determine whether an EIR, a negative declaration or a mitigated
negative declaration is required for a project. If there is substantial evidence that significant
environmental effects may occur, an EIR is required to be prepared. [The County prepared an EIR for the
Capital Project II that was certified on _______, 2010.] All other land use approvals necessary to proceed
with the Capital Project II have been obtained or are expected to be obtained in due course.]
Refunding
The proceeds of the 2010 Series C Bonds will be used by the Authority to: (i) refund the 1989
Bond outstanding in the aggregate principal amount of $17,400,000; (ii) fund a deposit into the 2010
Series C Reserve Account within the Reserve Fund; and (iiii) pay certain costs associated with the
issuance of the 2010 Series C Bonds.
The Trustee executed and delivered $24,695,000 aggregate principal amount of the 1998 Bonds
pursuant to a trust agreement, dated as of May 1, 1998 (the “1998 Trust Agreement”), by and between the
County, the Authority and BNY Western Trust Company, as succeeded by Wells Fargo Bank, National
Association, as successor trustee (the “1998 Trustee”). The 1998 Bonds were delivered to finance and
refinance the costs of acquiring, constructing and renovating certain County facilities and to provide
funds to acquire and install other capital improvements for the County.
A portion of the proceeds of the 2010 Series C Bonds will be deposited with the Escrow Agent
(defined herein) which, together with certain moneys on deposit under the 1998 Trust Agreement with
respect to the 1998 Bonds, will be sufficient and will be used to redeem all of the Outstanding 1998
Bonds on November 5, 2010 at a redemption price equal to the principal amount thereof, plus accrued and
unpaid interest through the redemption date.
(Remainder of this Page Intentionally Left Blank)
10014\POS-6 8
The 1998 Bonds consist of the following:
$17,400,000
Contra Costa County Public Financing Authority
Lease Revenue Bonds
(Various Capital Facilities)
1998 Refunding Series A
Dated Date: March 4, 1998
Redemption Date: November 5, 2010
Redemption Price: 100%
Maturity Date Interest CUSIP
(August 1) Amount Rate (21226P)†
2011 $850,000 4.850% AN8
2012 895,000 4.950 AP3
2013 940,000 5.000 AQ1
2014 995,000 5.050 AR9
2015 1,050000 5.100 AS7
2016 1,115,000 5.100 AT5
2017 1,175,000 5.125 AU2
2018 1,240,000 5.150 AV0
2020 2,750,000 5.300 AW8
2028 6,435,000 5.350 AX6
_______________
† Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor’s, CUSIP Service Bureau,
a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way
as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. None of the
Authority or the Underwriters take any responsibility for the accuracy of such numbers.
Upon the deposit of cash into an escrow fund (the “1998 Bonds Escrow Fund”) established
pursuant to Letter of Escrow Instructions, dated as of November 1, 2010 (the “1998 Escrow Instructions”)
by and between the Authority and Wells Fargo Bank, National Association, as Escrow Agent, the 1998
Bonds will no longer be deemed outstanding under the Trust Agreement. The amount on deposit in the
1998 Bonds Escrow Fund will be sufficient to redeem the 1998 Bonds at a redemption price equal to the
principal amount thereof, plus accrued and unpaid interest to the redemption date.
The mathematical computations used to determine the sufficiency of the escrow deposit to
defease the 1998 Bonds will be verified by Causey Demgen & Moore Inc., Denver, Colorado (the
“Verification Agent”) who will deliver a report to such effect upon delivery of the 2010 Series C Bonds.
See “VERIFICATION OF MATHEMATICAL COMPUTATIONS FOR THE 2010 SERIES C BONDS.”
10014\POS-6 9
THE FACILITIES
The County will lease each of the Facilities summarized in Table 1 to the Authority pursuant to
the related Site Lease, and the Authority will lease back each of the Facilities to the County pursuant to
the related Sublease. The Facilities consist of a number of essential County properties and the sites
thereof. The Facilities include site development, landscaping, utilities, equipment, furnishings,
improvements and appurtenant and related facilities located on the real property.
The County covenants in each Sublease to use the related Facility for County and public purposes
and so long as each such Facility is available for its use and occupancy, the County covenants to take such
actions as may be necessary to include all Base Rental Payments and Additional payments with respect to
each Facility in its annual budgets and to make the necessary annual appropriations therefor. See
“SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS.”
The value of each Facility included in the following table is based upon historical cost, estimates
of replacement cost or insured value. The actual market value of each Facility may differ materially from
the estimated value listed below. The Authority has a leasehold interest only in each Facility and is not
authorized to sell any Facility. The County represents and agrees that the Base Rental Payments represent
the fair rental value of the related Facilities. See also “CERTAIN RISK FACTORS–Base Rental Payments
Not a Debt of the County.”
(Remainder of this Page Intentionally Left Blank)
Table 1 Estimated Value of the Facilities Facility Address Original Completion Year Approx. Acreage of Site Approx. Building Square Footage Term of Facility Lease Value ($millions) 2010 SERIES A FACILITY: West County Health Clinic 13613 San Pablo Avenue, San Pablo, CA April 2012 2.5 131,000 30 years $45.00(1) SUBTOTAL 2010 SERIES A FACILITY: $45.00 2010 SERIES B FACILITY: Martinez Animal Shelter 4800 Imhoff Place, Martinez, CA April 2005 9.4 37,500 19 years 9.14(2) SUBTOTAL 2010 SERIES B FACILITY: $9.14 2010 SERIES C FACILITIES: Clerk Recorder Building 555 Escobar Street, Martinez CA March 2007 0.92 35,115 15 years 10.10(1)Social Services Office Building 1035 MacDonald Avenue, Richmond CA _____1972 1.43 49,897 15 years 7.81(4) SUBTOTAL 2010 SERIES C FACILITIES: $17.91 TOTAL - ALL FACILITIES: $72.05 ________________ (1) Based upon the estimated construction cost of such project. (2) Based upon an appraisal by the County Assessor of the property and improvements for Fiscal Year 2010-11. The Fiscal Year 2010-11 insured value of the 2010 Series B Facility is $14.0 million. (3) Based upon the insured value for Fiscal Year 2010-11. Source: County Administrator’s Office. Pursuant to the terms of each Sublease, the County and the Authority may substitute other properties for the related Facilities or portions thereof upon the satisfaction of certain conditions. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Substitution of Property.” 10
ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds related to the issuance of the 2010 Bonds. Table 2 Estimated Sources and Uses of Funds Taxable Taxable 2010 2010 SOURCES: 2010 Series A-1 2010 Series A-2 2010 Series A-3 Series B Series C Total Principal Amount of 2010 Bonds................ Net Original Issue Premium/(Discount) ..... Transfer from the 1998 Trust Agreement ... TOTAL SOURCES .................................. USES: Deposit to Project Fund .............................. Deposit to Capitalized Interest Account .....(1) (2) (3) (4) Deposit to 1998 Bonds Escrow Account .... Deposit to Reserve Fund ............................ Costs of Issuance(5) ..................................... Underwriters’ Discount .............................. TOTAL USES ......................................... ________________ (1) Represents capitalized interest on a portion of Capital Project I through June 1, 2013. (2) Represents capitalized interest on a portion of Capital Project I through June 1, 2013. (3) Represents capitalized interest on a portion of Capital Project I through June 1, 2013. (4) Represents capitalized interest on a portion of Capital Project II through November 4, 2013. (5) Includes legal and professional fees, printing costs and other miscellaneous costs of issuance. 11
10014\POS-6 12
TERMS RELATING TO EACH OF SERIES OF 2010 BONDS
General
The 2010 Bonds of each Series are limited obligations of the Authority payable solely from
Revenues, consisting primarily of Base Rental Payments to be made by the County under the related
Sublease.
The 2010 Bonds of each Series will be dated their date of issuance, issued as fully registered
bonds and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository
Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the 2010
Bonds. Ownership interests in the 2010 Bonds may be purchased in book-entry form only, in the
denominations hereinafter set forth. Purchasers will not receive physical certificates representing their
beneficial ownership interest in the 2010 Bonds. So long as a Series of 2010 Bonds are registered in the
name of Cede & Co., payment of principal of premium, if any and interest on such Series of 2010 Bonds
will be payable to DTC. See APPENDIX H–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Ownership interests in each Series of 2010 Bonds will be in Authorized Denominations of $5,000
or any integral multiple thereof. The 2010 Bonds will mature on the dates (each a “Maturity Date”) and
in the principal amounts, and the interest payable thereon will be computed at the rates, all as set forth on
the inside cover pages of this Official Statement.
Interest on the 2010 Bonds is payable on June 1 and December 1 (each an “Interest Payment
Date”) of each year, commencing June 1, 2011 calculated from their date of on the basis of a 360-day
year composed of twelve 30-day months..
Redemption Procedures
Notice of Redemption. Pursuant to the Trust Agreement, the Trustee is required to mail notice of
redemption by first class postage prepaid, to the respective Bondholders of 2010 Bonds designated for
redemption at their addresses appearing on the registration books required to be kept by the Trustee not
less than 30 nor more than 60 days prior to the Redemption Date. Each notice of redemption is required
to state the date of such notice, the date of issue of the 2010 Bonds, the redemption date, the Redemption
Price, the place or places of redemption (including the name and appropriate address of the Trustee), the
CUSIP number of the maturity or maturities, and, if less than all of any such maturity is to be redeemed,
the distinctive certificate numbers of the 2010 Bonds to be redeemed, and in the case of a 2010 Bond of a
Series called for redemption in part, state the amount which is to be redeemed. Each such notice is also
required to state that from and after the redemption date, interest on the Series of 2010 Bonds to be
redeemed will cease to accrue. Failure to receive such notice will not invalidate any of the proceedings
taken in connection with such redemption.
Effect of Redemption. If notice of redemption has been duly given as required by the Trust
Agreement and money for the payment of the redemption price of the 2010 Bonds called for redemption
is held by the Trustee, then on the redemption date designated in such notice 2010 Bonds for such Series
so called for redemption will become due and payable, and from and after the date so designated interest
on such 2010 Bonds will cease to accrue, and the Owners of such 2010 Bonds will have no rights in
respect thereof except to receive payment of the redemption price thereof.
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2010 SERIES A BONDS
2010 Series A-1 Bonds
The interest on the 2010 Series A-1 Bonds will be excluded from gross income for federal income
tax and from State of California personal income taxes.
Principal with respect to the 2010 Series A-1 Bonds is payable on June 1 of each year,
commencing June 1, 2014.
Designation of Taxable 2010 Series A-2 Bonds as Build America Bonds
The Taxable 2010 Series A-2 Bonds are being issued as “Build America Bonds” under the
provisions of the Recovery Act. The County expects to receive BABs Subsidy Receipts pursuant to the
Recovery Act equal to 35% of the interest payable on the Taxable 2010 Series A-2 Bonds on or about
each Interest Payment Date. BABs Subsidy Receipts do not constitute a full faith and credit guarantee of
the United States, but are required to be paid by the United States Treasury under the Recovery Act. Any
BABs Subsidy Receipts received by the County through June 1, 2013 will be applied by the County to
pay capitalized interest on the Taxable 2010 Series A-2 Bonds. After June 1, 2013, BABs Subsidy
Receipts will be applied by the County solely to pay interest on the Taxable 2010 Series A-2 Bonds. The
County is obligated to make all Base Rental Payments with respect to Capital Project I whether or
not it receives BABs Subsidy Receipts pursuant to the Recovery Act.
Principal with respect to the 2010 Series A-2 Bonds is payable on June 1 of each year,
commencing June 1, 2014.
Designation of Taxable 2010 Series A-3 Bonds as Recovery Zone Economic Development Bonds
The Taxable 2010 Series A-3 Bonds are being issued as “Recovery Zone Economic Development
Bonds” under provisions of the Recovery Act. The Authority expects to receive Recovery Zone Subsidy
Receipts pursuant to the Recovery Act equal to 45% of the interest payable on the Taxable 2010 Series
A-3 Bonds on or about each Interest Payment Date. Recovery Zone Subsidy Receipts do not constitute a
full faith and credit guarantee of the United States, but are required to be paid by the United States
Treasury under the Recovery Act. Any Recovery Zone Subsidy Receipts received by the County through
June 1, 2013 will be applied by the County to pay Capitalized Interest on the Taxable 2010 Series A-3
Bonds. After June 1, 2013, Recovery Zone Subsidy Receipts will be applied by the County solely to pay
interest on the Taxable 2010 Series A-3 Bonds. The County is obligated to make all Base Rental
Payments with respect to Capital Project I whether or not it receives Recovery Zone Subsidy
Receipts pursuant to the Recovery Act.
Principal with respect to the 2010 Series A-3 Bonds is payable on June 1 of each year,
commencing June 1, 2014.
Payment of Taxable 2010 Series A Bonds is not Dependent Upon Subsidy Receipts
The United States Treasury may offset any Subsidy Receipts to which the County is otherwise
entitled against any other liability of the County payable to the United States of America, including
without limitation withholding or payroll taxes, or other penalties or interest that may be owed at any time
to the United States of America. In order for the County to be entitled to receive the Subsidy Receipts,
the Taxable 2010 Series A Bonds must comply with all of the requirements of the Internal Revenue Code
of 1986 applicable to comparable tax-exempt obligations. If the County fails to comply with the
conditions to receiving the Subsidy Receipts throughout the term of the Taxable 2010 Series A-2 Bonds
or the Taxable 2010 Series A-3 Bonds, it may no longer receive such payments and could be subject to a
10014\POS-6 14
claim for the return of previously received payments. The County covenants in the tax certificate related
to the 2010 Series A Bonds to comply with all of the conditions to the receipt of the Subsidy Receipts.
The County is obligated under the 2010 Series A Sublease to make the Base Rental Payments for
use and occupancy of Capital Project I, without regard to the receipt of Subsidy Receipts.
Redemption Provisions
Optional Redemption. The 2010 Series A Bonds maturing on or prior to June 1, 20__ are not
subject to optional redemption.
2010 Series A-1 Bonds. The 2010 Series A-1 Bonds maturing on or after June 1, 20__
are subject to optional redemption prior to their respective stated maturities, at the written direction of the
Authority, from any moneys deposited by the Authority or the County, as a whole or in part (in such
maturities as are designated in writing by the Authority to the Trustee) on any date on or after June 1,
20__ at the following Redemption Prices (expressed as percentages of the principal amount of 2010
Series A-1 Bonds called for redemption) together with accrued interest to the date fixed for redemption].
Redemption Period
(Dates Inclusive)
Redemption
Price
Taxable 2010 Series A-2 Bonds. The Taxable 2010 Series A-2 Bonds maturing on or
after June 1, 20__ are subject to optional redemption prior to their respective stated maturities, at the
written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole
or in part (in such maturities as are designated in writing by the Authority to the Trustee) on any date on
or after June 1, 20__ at the following Redemption Prices (expressed as percentages of the principal
amount of Taxable 2010 Series A-2 Bonds called for redemption) together with accrued interest to the
rate fixed for redemption].
Redemption Period
(Dates Inclusive)
Redemption
Price
Taxable 2010 Series A-3 Bonds. The Taxable 2010 Series A-3 Bonds maturing on or
after June 1, 20__ are subject to optional redemption prior to their respective stated maturities, at the
written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole
or in part (in such maturities as are designated in writing by the Authority to the Trustee) on any date on
or after June 1, 20__ at the following Redemption Prices (expressed as percentages of the principal
amount of Taxable 2010 Series A-3 Bonds called for redemption) together with accrued interest to the
rate fixed for redemption].
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Redemption Period
(Dates Inclusive)
Redemption
Price
Extraordinary Optional Redemption of the Taxable 2010 Series A Bonds. Upon the occurrence
of an Extraordinary Tax Event (defined below) and prior to _________, at the option of the Authority, the
Taxable 2010 Series A Bonds are subject to extraordinary optional redemption prior to their respective
stated maturities, from any source of available funds, as a whole on any date, at the Extraordinary
Redemption Price, which is the greater of:
(i) the issue price of the applicable Taxable 2010 Series A Bonds (but not less than
100% of the principal amount of such Taxable 2010 Series A Bonds to be redeemed); or
(ii) the sum of the present value of the remaining scheduled payments of principal
and interest on the applicable Taxable 2010 Series A Bonds to be redeemed to the maturity date
of such Taxable 2010 Series A Bonds, not including any portion of those payments of interest
accrued and unpaid as of the date on which the applicable Taxable 2010 Series A Bonds are to be
redeemed, discounted to the date on which such Taxable 2010 Series A Bonds are to be redeemed
on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at a
discount rate equal to the Treasury Rate plus ___ basis points,
plus in each case accrued interest on the applicable Taxable 2010 Series A Bonds to be
redeemed to the redemption date.
An “Extraordinary Tax Event” is defined in the Trust Agreement as the occurrence of a
material adverse change, as determined by the Authority, with respect to Section 54AA or 6431 of the
Code (as such sections were added by Section 1531 of the Recovery Act, pertaining to Build America
Bonds) or any guidance is published by the Internal Revenue Service or the United States Treasury with
respect to such sections or any other determination by the Internal Revenue Service or the United States
Treasury, which determination is not the result of an act or omission by the Authority to satisfy the
requirements to receive the Subsidy Receipts from the United States Treasury, pursuant to which the
Authority’s Subsidy Receipts from the United States Treasury are reduced or eliminated.
Mandatory Sinking Fund Redemption.
2010 Series A-1 Bonds. The 2010 Series A-1 Bonds maturing on June 1, 20__ are
subject to mandatory sinking fund redemption prior to their stated maturity, in part on June 1 of each year
on or after June 1, 20__ by lot, from and in the amount of the mandatory sinking account payment due
and payable on such dates, at a Redemption Price equal to the sum of the principal amount thereof plus
accrued interest thereon to the redemption date, without premium, in the amounts and on the dates set
forth below.
2010 Series A-1 Bonds Maturing on June 1, 20__
Sinking Account Payment Date
(June 1)
Mandatory Sinking
Account Payment
†
____________
† Maturity.
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If the 2010 Series A-1 Bonds are optionally redeemed in part, the Authority may designate the
mandatory sinking account payments to be allocated to such optional redemption.
Taxable 2010 Series A-2 Bonds. The Taxable 2010 Series A-2 Bonds maturing on
June 1, 20__ are subject to mandatory sinking fund redemption prior to their stated maturity, in part on
June 1 of each year on or after June 1, 20__ by lot, from and in the amount of the mandatory sinking
account payment due and payable on such dates, at a Redemption Price equal to the sum of the principal
amount thereof plus accrued interest thereon to the redemption date, without premium, in the amounts and
on the dates set forth below.
Taxable 2010 Series A-2 Bonds Maturing on June 1, 20__
Sinking Account Payment Date
(June 1)
Mandatory Sinking
Account Payment
†
____________
† Maturity.
If the Taxable 2010 Series A-2 Bonds are optionally redeemed in part, the Authority may
designate the mandatory sinking account payments to be allocated to such optional redemption.
Taxable 2010 Series A-3 Bonds. The Taxable 2010 Series A-3 Bonds maturing on
June 1, 20__ are subject to mandatory sinking fund redemption prior to their stated maturity, in part on
June 1 of each year on or after June 1, 20__ by lot, from and in the amount of the mandatory sinking
account payment due and payable on such dates, at a Redemption Price equal to the sum of the principal
amount thereof plus accrued interest thereon to the redemption date, without premium, in the amounts and
on the dates set forth below.
Taxable 2010 Series A-3 Bonds Maturing on June 1, 20__
Sinking Account Payment Date
(June 1)
Mandatory Sinking
Account Payment
†
____________
† Maturity.
If the Taxable 2010 Series A-3 Bonds are optionally redeemed in part, the Authority may
designate the mandatory sinking account payments to be allocated to such optional redemption.
Extraordinary Redemption. The 2010 Series A Bonds of each Series are subject to redemption
by the Authority on any date prior to their respective stated maturities, upon notice as provided in the
Trust Agreement, as a whole or in part by lot within each stated maturity in integral multiples of
Authorized Denominations, from prepayments of Base Rental Payments made by the County from the net
proceeds received by the County due to the taking of the Facilities or portions thereof under the power of
eminent domain, or from the net proceeds of title insurance or insurance received for damage to or
destruction of the Facilities or portions thereof, under the circumstances described in the Trust Agreement
and the Sublease. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Insurance.” The
redemption price will be equal to the principal amount of the 2010 Series A Bonds to be redeemed and
accrued interest thereon to the Redemption Date, without premium. Whenever less than all of the
10014\POS-6 17
Outstanding Bonds are to be redeemed on any one date, the Trustee will select, in accordance with written
instructions from the Authority, the 2010 Series A Bonds of a Series to be redeemed so that the aggregate
annual amounts of principal of and interest on the 2010 Series A Bonds which will be payable after such
Redemption Date will be as nearly proportional as practicable to the aggregate annual amounts of
principal of and interest on the 2010 Series A Bonds outstanding prior to such Redemption Date.
Selection of the 2010 Series A-1 Bonds for Optional Redemption. The Authority will designate
which maturities of the 2010 Series A-1 Bonds are to be redeemed. If less than all Outstanding 2010
Series A-1 Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee
will select the 2010 Series A-1 Bonds and maturity date to be redeemed from the Outstanding 2010 Series
A-1 Bonds date by lot and promptly notify the Authority in writing of the 2010 Series A-1 Bonds selected
for redemption. For purposes of such selection, 2010 Series A-1 Bonds will be deemed to be composed
of multiples of minimum denominations of $5,000, and any such multiple may be separately redeemed.
In the event the 2010 Series A-1 Bonds subject to sinking fund redemption are designated for redemption,
the Authority may designate which sinking account payments are allocated to such redemption.
Selection of the Taxable 2010 Series A Bonds for Redemption. If the Taxable 2010 Series A-2
Bonds or the Taxable 2010 Series A-3 Bonds are registered in book-entry only form and so long as DTC
or a successor securities depository is the sole registered owner of such Taxable 2010 Series A Bonds, if
less than all of the Taxable 2010 Series A Bonds and a maturity are called for prior redemption, such
Taxable 2010 Series A Bonds or portions thereof to be redeemed shall be selected on a “Pro Rata Pass-
Through Distribution of Principal” basis in accordance with DTC operational arrangements then in effect
that currently provide for adjustment of the principal by a factor provided pursuant to DTC operational
arrangements. If the Trustee fails to provide the necessary information and identify the redemption as on
a Pro Rata Pass-Through Distribution of Principal basis or if the DTC operational arrangements do not
allow for the redemption of such Taxable 2010 Series A Bonds on a Pro Rata Pass-Through Distribution
of Principal basis as described above, such Taxable 2010 Series A Bonds shall be selected for redemption
by lot in accordance with DTC procedures.
2010 SERIES B BONDS
Principal with respect to the 2010 Series B Bonds is payable on June 1 of each year, commencing
June 1, 2014.
Redemption Provisions
Optional Redemption. The 2010 Series B Bonds maturing on or prior to June 1, 20__ are not
subject to optional redemption.
The 2010 Series B Bonds maturing on or after June 1, 20__ are subject to optional redemption
prior to their respective stated maturities, at the written direction of the Authority, from any moneys
deposited by the Authority or the County, as a whole or in part (in such maturities as are designated in
writing by the Authority to the Trustee) on any date on or after June 1, 20__ at the following Redemption
Prices (expressed as percentages of the principal amount of 2010 Series B Bonds called for redemption)
together with accrued interest to the date fixed for redemption].
Redemption Period
(Dates Inclusive)
Redemption
Price
10014\POS-6 18
Mandatory Sinking Fund Redemption. The 2010 Series B Bonds maturing on June 1, 20__ are
subject to mandatory sinking fund redemption prior to their stated maturity, in part on June 1 of each year
on or after June 1, 20__ by lot, from and in the amount of the mandatory sinking account payment due
and payable on such dates, at a Redemption Price equal to the sum of the principal amount thereof plus
accrued interest thereon to the redemption date, without premium, in the amounts and on the dates set
forth below.
2010 Series B Bonds Maturing on June 1, 20__
Sinking Account Payment Date
(June 1)
Mandatory Sinking
Account Payment
†
____________
† Maturity.
If the 2010 Series B Bonds are optionally redeemed in part, the Authority may designate the
mandatory sinking account payments to be allocated to such optional redemption.
Extraordinary Redemption. The 2010 Series B Bonds are subject to redemption by the
Authority on any date prior to their respective stated maturities, upon notice as provided in the Trust
Agreement, as a whole or in part by lot within each stated maturity in integral multiples of Authorized
Denominations, from prepayments of Base Rental Payments made by the County from the net proceeds
received by the County due to the taking of the Facilities or portions thereof under the power of eminent
domain, or from the net proceeds of title insurance or insurance received for damage to or destruction of
the Facilities or portions thereof, under the circumstances described in the Trust Agreement and in the
2010 Series B Sublease. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Insurance.”
The redemption price will be equal to the principal amount of the 2010 Series B Bonds to be redeemed
and accrued interest thereon to the Redemption Date, without premium. Whenever less than all of the
Outstanding Bonds are to be redeemed on any one date, the Trustee will select, in accordance with written
instructions from the Authority, the 2010 Series B Bonds to be redeemed so that the aggregate annual
amounts of principal of and interest on the 2010 Series B Bonds which will be payable after such
Redemption Date will be as nearly proportional as practicable to the aggregate annual amounts of
principal of and interest on the 2010 Series B Bonds outstanding prior to such Redemption Date.
Selection of the 2010 Series B Bonds for Optional Redemption. The Authority will designate
which maturities of the 2010 Series B Bonds are to be redeemed. If less than all Outstanding 2010 Series
B Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee will
select the 2010 Series B Bonds and maturity date to be redeemed from the Outstanding 2010 Series B
Bonds date by lot and promptly notify the Authority in writing of the 2010 Series B Bonds selected for
redemption. For purposes of such selection, 2010 Series B Bonds will be deemed to be composed of
multiples of minimum denominations of $5,000, and any such multiple may be separately redeemed. In
the event the 2010 Series B Bonds subject to sinking fund redemption are designated for redemption, the
Authority may designate which sinking account payments are allocated to such redemption.
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2010 SERIES C BONDS
Principal with respect to the 2010 Series C Bonds is payable on June 1 of each year, commencing
June 1, 2013.
Redemption Provisions
Optional Redemption. The 2010 Series C Bonds maturing on or prior to June 1, 20__ are not
subject to optional redemption.
The 2010 Series C Bonds maturing on or after June 1, 20__ are subject to optional redemption
prior to their respective stated maturities, at the written direction of the Authority, from any moneys
deposited by the Authority or the County, as a whole or in part (in such maturities as are designated in
writing by the Authority to the Trustee) on any date on or after June 1, 20__ at the following Redemption
Prices (expressed as percentages of the principal amount of 2010 Series C Bonds called for redemption)
together with accrued interest to the date fixed for redemption].
Redemption Period
(Dates Inclusive)
Redemption
Price
Mandatory Sinking Fund Redemption. The 2010 Series C Bonds maturing on June 1, 20__ are
subject to mandatory sinking fund redemption prior to their stated maturity, in part on June 1 of each year
on or after June 1, 20__ by lot, from and in the amount of the mandatory sinking account payment due
and payable on such dates, at a Redemption Price equal to the sum of the principal amount thereof plus
accrued interest thereon to the redemption date, without premium, in the amounts and on the dates set
forth below.
2010 Series C Bonds Maturing on June 1, 20__
Sinking Account Payment Date
(June 1)
Mandatory Sinking
Account Payment
†
____________
† Maturity.
If the 2010 Series C Bonds are optionally redeemed in part, the Authority may designate the
mandatory sinking account payments to be allocated to such optional redemption.
Extraordinary Redemption. The 2010 Series C Bonds are subject to redemption by the
Authority on any date prior to their respective stated maturities, upon notice as provided in the Trust
Agreement, as a whole or in part by lot within each stated maturity in integral multiples of Authorized
Denominations, from prepayments of Base Rental Payments made by the County from the net proceeds
received by the County due to the taking of the Facilities or portions thereof under the power of eminent
domain, or from the net proceeds of title insurance or insurance received for damage to or destruction of
the Facilities or portions thereof, under the circumstances described in the Trust Agreement and in the
2010 Series C Sublease. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–Insurance.”
The redemption price will be equal to the principal amount of the 2010 Series C Bonds to be redeemed
and accrued interest thereon to the Redemption Date, without premium. Whenever less than all of the
10014\POS-6 20
Outstanding Bonds are to be redeemed on any one date, the Trustee will select, in accordance with written
instructions from the Authority, the 2010 Series C Bonds to be redeemed so that the aggregate annual
amounts of principal of and interest on the 2010 Series C Bonds which will be payable after such
Redemption Date will be as nearly proportional as practicable to the aggregate annual amounts of
principal of and interest on the 2010 Series C Bonds outstanding prior to such Redemption Date.
Selection of the 2010 Series C Bonds for Optional Redemption. The Authority will designate
which maturities of the 2010 Series C Bonds are to be redeemed. If less than all Outstanding 2010 Series
C Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee will
select the 2010 Series C Bonds and maturity date to be redeemed from the Outstanding 2010 Series C
Bonds date by lot and promptly notify the Authority in writing of the 2010 Series C Bonds selected for
redemption. For purposes of such selection, 2010 Series C Bonds will be deemed to be composed of
multiples of minimum denominations of $5,000, and any such multiple may be separately redeemed. In
the event the 2010 Series C Bonds subject to sinking fund redemption are designated for redemption, the
Authority may designate which sinking account payments are allocated to such redemption.
SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS
Each Series of 2010 Bonds is secured solely by the related Revenues which consist primarily
of the Base Rental Payments to be made by the County to the Authority under the related Sublease.
A default or abatement under one Sublease does not constitute a default or abatement under any
other Sublease.
General
Pursuant to each Sublease, the Authority leases the related Facilities to the County. As rental for
the use and occupancy of the related Facilities, the County covenants to pay Base Rental Payments to the
Authority, which payments are pledged to the Trustee for the benefit of the Owners of the related Series
of 2010 Bonds. The Base Rental Payments, which are subject to abatement, are calculated to generate
sufficient Revenues to pay principal of and interest on the related Series of 2010 Bonds when due.
The County covenants in each Sublease to take such action as may be necessary to include all
Base Rental Payments and Additional Payments due under the Subleases in its annual budgets and to
make the necessary annual appropriations therefor. By the 15th day of the month immediately preceding
each Interest Payment Date, the County must pay to the Trustee Base Rental Payments (to the extent
required under each Sublease) which scheduled Base Rental Payments are sufficient to pay, when due, the
principal of and interest on the related Series of 2010 Bonds. Base Rental Payments are not subject to
acceleration.
Under each Sublease, the County agrees to pay Additional Payments for the payment of all
expenses and all costs of the Authority and the Trustee related to the lease of the related Facility,
including expenses of the Trustee payable by the Authority under the Trust Agreement, and fees of
accountants, attorneys and consultants. The County is responsible for repair and maintenance of each of
the Facilities during the term of each Sublease.
The Base Rental Payments will be abated proportionately during any period in which by reason
of any damage to or destruction of the related Facilities, there is substantial interference with the use and
occupancy of such Facilities by the County, in the proportion in which the cost of that portion of the
related Facilities rendered unusable bears to the cost of the whole of the related Facilities. During any
such period of abatement, except to the extent that amounts held by the Trustee in the Revenue Fund or
the applicable Reserve Account within the Reserve Fund are otherwise available to pay the related Series
of 2010 Bonds, Base Rental Payments from the County will not be available to pay the related Series of
10014\POS-6 21
2010 Bonds. Such abatement will continue for the period commencing with such damage or destruction
and ending with the substantial completion of the work of repair or reconstruction. In the event of any
such damage or destruction, such Sublease will continue in full force and effect and the County waives
any right to terminate the related Sublease by virtue of any such damage or destruction.
If the whole of a Facility under a Sublease or so much thereof as to render the remainder unusable
is taken under power of eminent domain, the term of such Sublease will cease as of the day possession is
so taken. If less than the whole of the Facilities under a Sublease is taken by eminent domain, there will
be a partial abatement of the rental due under such Sublease in an amount equivalent to the amount by
which the annual payments of principal of and interest on the related Series of 2010 Bonds then
Outstanding will be reduced by the application of the award in eminent domain to the redemption of the
related Series of 2010 Bonds Outstanding.
If the County defaults under a Sublease, the Authority may (i) terminate such Sublease and take
possession of the related Facility for the term of such Site Lease or (ii) retain such Sublease and seek to
hold the County liable for all Base Rental Payments and Additional Payments thereunder (without
acceleration) as they become due on an annual basis. See APPENDIX E–“SUMMARY OF CERTAIN
PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS–SUBLEASES–Defaults and Remedies.” Base Rental
Payments and Additional Payments may not be accelerated. See “CERTAIN RISK FACTORS.”
Pledge of Revenues
The Revenues consist primarily of the Base Rental Payments made by the County to the
Authority under each Sublease. In accordance with the Trust Agreement, all Revenues are irrevocably
pledged to and will be used for the punctual payment of interest and premium, if any, on and principal of
the related Series of 2010 Bonds and Reserve Facility Costs, if any, and the sums due and payable by the
Authority in connection with Swaps, if any, and will not be used for any other purpose while any of the
Bonds remain Outstanding; provided, however, that out of the Revenues may be applied such sums as are
permitted under the Trust Agreement. This pledge constitutes a first lien on the Revenues in accordance
with the terms of the Trust Agreement. The County is not entering into any Swaps in connection with
any Series of 2010 Bonds.
The Authority directs that all Base Rental Payments be paid directly to the Trustee to be held in
trust by the Trustee in the Revenue Fund for the benefit of the Bondholders. The County covenants under
each Sublease that as long as such Facilities are available for the County’s use and occupancy, it will take
such action as may be necessary to include all Base Rental Payments and Additional Payments due under
each Sublease in its annual budgets and to make the necessary annual appropriations therefor.
Base Rental Payments
Base Rental Payments are calculated on an annual basis for twelve-month periods commencing
on June 1 and ending on May 31, and each annual Base Rental Payment is divided into two interest
components, due on June 1 and December 1, and one principal component, due on June 1. Each Base
Rental Payment with respect to a Series of 2010 Bonds will be payable by the County to the Authority on
the 15th day of the month immediately preceding its due date. Each annual Base Rental Payment (to be
payable in installments as described above) will be for the use of the related Facility for the 12-month
period commencing on June 1 of the period in which such installment is payable.
Pursuant to each Sublease, the County is required to make all Base Rental Payments to the
Trustee for deposit in the interest or principal account established for each Series of 2010 Bonds within
the Revenue Fund (the “2010 Series A Interest Account,” the “2010 Series B Interest Account,” the “2010
Series C Interest Account” and collectively the “Interest Accounts” and the “2010 Series A Principal
Account,” the “2010 Series B Principal Account,” the “2010 Series C Principal Account” and collectively
10014\POS-6 22
the “Principal Accounts”). In accordance with the Trust Agreement, the Trustee will transfer such
amounts as are necessary to the related Interest Account or the related Principal Account, as the case may
be, to pay principal of and interest on the related Series of 2010 Bonds as the same become due and
payable. On each Principal Payment Date, following the payment of principal of and interest on the 2010
Bonds, any excess amount in the Revenue Fund will be transferred to the applicable Reserve Account
within Reserve Fund, to the extent necessary to increase the amount on deposit therein to the respective
Reserve Fund Requirement or to pay any respective Reserve Facility costs then due and owing, and
thereafter returned to the County as an excess payment of Base Rental Payments. See APPENDIX E–
“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS–TRUST AGREEMENT–Creation
of Funds and Accounts.”
THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS IS AN
OBLIGATION PAYABLE FROM AMOUNTS IN THE GENERAL FUND OF THE COUNTY, AND
DOES NOT CONSTITUTE A DEBT OF THE COUNTY, THE AUTHORITY OR OF THE STATE OF
CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR AN
OBLIGATION FOR WHICH THE COUNTY MUST LEVY OR PLEDGE, OR HAS LEVIED OR
PLEDGED, ANY FORM OF TAXATION.
Reserve Fund
The Trust Agreement requires that the related Reserve Account for a Series of 2010 Bonds within
the Reserve Fund be funded in an amount equal to the Reserve Fund Requirement. The Reserve Fund
Requirement is defined in the Trust Agreement to mean with respect to the Outstanding Bonds of each
Series of Bonds an amount equal to the lesser of: (i) the maximum annual debt service attributable to the
Outstanding Bonds and (ii) 125% of average annual debt service attributable to the Outstanding Bonds;
provided that with respect to the calculation of the Reserve Fund Requirement upon the issuance of an
Additional Series of Bonds, the Reserve Fund Requirement will be the least of (i) or (ii) above, or the
amount derived by the addition of 10% of the proceeds from the sale of such Series of Additional Bonds
to the Reserve Account applicable to such Series of Additional Bonds within the Reserve Fund; and
provided further that debt service on the 2010 Series A-2 Bonds and the 2010 Series A-3 Bonds will be
calculated net of Subsidy Receipts expected to be received by the County. The Trust Agreement permits
the Reserve Fund to be funded with cash, permitted investments, a surety bond, an insurance policy, or a
letter of credit, or any combination thereof, as described therein.
2010 Series A Bonds. Following the delivery of the 2010 Series A Bonds, the Reserve Fund
Requirement will be equal to $_________. Proceeds of the 2010 Series A Bonds in the aggregate amount
of $__________ will be deposited in the 2010 Series A Reserve Account on the date the 2010 Series A
Bonds are delivered.
2010 Series B Bonds. Following the delivery of the 2010 Series B Bonds, the Reserve Fund
Requirement will be equal to $_________. Proceeds of the 2010 Series B Bonds in the amount of
$__________ will be deposited in the 2010 Series B Reserve Account on the date the 2010 Series B
Bonds are delivered.
2010 Series C Bonds. Following the delivery of the 2010 Series C Bonds, the Reserve Fund
Requirement will be equal to $_________. Proceeds of the 2010 Series C Bonds in the amount of
$__________ will be deposited in the 2010 Series C Reserve Account on the date the 2010 Series C
Bonds are delivered.
A Reserve Account secures only the related Series of 2010 Bonds. The Reserve Account
related to a Series of 2010 Bonds will not be available to pay the 2010 Bonds of another Series.
10014\POS-6 23
All money on deposit in each Reserve Account will be deposited with, used and withdrawn by the
Trustee solely for the purpose of funding the related Interest Account or the Principal Account, in that
order, for the related Series of 2010 Bonds, in the event of any deficiency in either of such accounts on a
Principal Payment Date or Interest Payment Date, except that so long as the Authority is not in default
under the Trust Agreement, any cash amounts in such Reserve Account in excess of the Reserve Fund
Requirement will be withdrawn from such Reserve Account and transferred to the related Project Account
within the Project Fund on each Interest Payment Date, or, if so directed by the Authority, and, upon
completion of the respective 2010 Project, will be deposited into the Revenue Fund.
Insurance
Fire and Extended Coverage Insurance. Each Sublease requires the County to maintain or
cause to be maintained, throughout the term of each Sublease, insurance against loss or damage to any
structures constituting any part of a Facility by fire and lightning, with extended coverage insurance,
vandalism and malicious mischief insurance and sprinkler system leakage insurance, and earthquake
insurance, if available on the open market from reputable insurance companies at a reasonable cost as
determined by the County. Such extended coverage insurance will, as nearly as practicable, cover loss or
damage by explosion, windstorm, riot, and not attending a strike, aircraft, vehicle damage, smoke and
such other hazards as are normally covered by such insurance. Such insurance will be in an amount equal
to the replacement cost (without deduction for depreciation) of all structures constituting any part of the
Facility, excluding the cost of excavations, of grading and filling, and of the land (except that such
insurance may be subject to deductible clauses for any one loss of not to exceed $250,000 or comparable
amount adjusted for inflation or more in the case of earthquake insurance), or in the alternative, will be in
an amount and in a form sufficient (together with moneys held under the Trust Agreement), in the event
of total or partial loss, to enable all 2010 Bonds of the related Series then Outstanding to be redeemed.
In the event of any damage to or destruction of any part of the Facility caused by the perils
covered by such insurance, the Authority, except as hereinafter described, will cause the proceeds of such
insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion
of such Facility, to at least the same condition as they were in prior to the damage or destruction, insofar
as the same may be accomplished by the use of said proceeds. The Trustee will hold such proceeds in the
Insurance and Condemnation Fund and will permit withdrawals upon written request for such purposes.
Any balance of said proceeds not required for such repair, reconstruction or replacement will be treated
by the Trustee as Base Rental Payments and applied in the manner provided by the Trust Agreement.
Alternatively, if the proceeds of such insurance together with any other moneys then available for such
purpose are at least sufficient to redeem an aggregate principal amount of Outstanding 2010 Bonds of the
related Series equal to the amount of Base Rental attributable to the portion of the Facilities so destroyed
or damaged (determined by reference to the proportion which the cost of such portion of the Facilities
bears to the cost of the Facilities), the Authority, with the written consent of the County, may elect not to
repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon will cause
said proceeds to be used for the redemption of Outstanding 2010 Bonds of the related Series pursuant to
the provisions of the Trust Agreement.
The Authority and the County covenant to promptly apply for federal or State disaster aid in the
event that the Facilities are damaged or destroyed as a result of an earthquake occurring at any time. Any
proceeds received as a result of such disaster aid will be used to repair, reconstruct, restore or replace the
damaged or destroyed portions of the Facilities, or, at the option of the County and the Authority, to
redeem Outstanding 2010 Bonds of the related Series if such use of such disaster aid is permitted.
As an alternative to providing the fire and extended coverage insurance, or any portion thereof,
required by each Sublease, the County may provide a self-insurance method or plan of protection if and to
the extent such self-insurance method or plan of protection will afford reasonable coverage for the risks
required to be insured against, in light of all circumstances, giving consideration to cost, availability and
10014\POS-6 24
similar plans or methods of protection adopted by public entities in the State other than the County. So
long as such method or plan is being provided to satisfy the requirements of the applicable Sublease, there
will be filed with the Trustee a statement of an actuary, insurance consultant or other qualified person
(which may be the Risk Manager of the County), stating that, in the opinion of the signer, the substitute
method or plan of protection is in accordance with the requirements of the related Sublease and, when
effective, would afford reasonable coverage for the risks required to be insured against. There will also
be filed a certificate of the County setting forth the details of such substitute method or plan. In the event
of loss covered by any such self-insurance method, the liability of the County under the related Sublease
will be limited to the amounts in the self-insurance reserve fund or funds created under such method.
Liability Insurance. Each Sublease requires the County to procure or cause to be procured and
maintain or cause to be maintained, throughout the term of the related Sublease, a standard
comprehensive general liability insurance policy or policies in protection of the Authority and its
members, directors, officers, agents and employees and the Trustee, indemnifying said parties against all
direct or contingent loss or liability for damages for personal injury, death or property damage occasioned
by reason of the operation of each Facility, with minimum liability limits of $1,000,000 for personal
injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in
each accident or event, and in a minimum amount of $200,000 for damage to property resulting from each
accident or event. Such public liability and property damage insurance may, however, be in the form of a
single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be
maintained as part of or in conjunction with any other liability insurance carried by the County.
As an alternative to providing the standard comprehensive general liability insurance, or any
portion thereof, the County may provide a self insurance method or plan of protection if and to the extent
such self insurance method or plan of protection shall afford reasonable protection to the Authority, its
members, directors, officers, agents and employees and the Trustee, in light of all circumstances, giving
consideration to cost, availability and similar plans or methods of protection adopted by public entities in
the State other than the County. So long as such method or plan is being provided to satisfy the
requirements of each Sublease, there is required to be filed annually with the Trustee a statement of an
actuary, independent insurance consultant or other qualified person (which may be the Risk Manager of
the County), stating that, in the opinion of the signer, the substitute method or plan of protection is in
accordance with the requirements of the Trust Agreement and, when effective, would afford reasonable
protection to the Authority, its members, directors, officers, agents and employees and the Trustee against
loss and damage from the hazards and risks covered thereby. The County is also required to file a
Certificate of the County setting forth the details of such substitute method or plan.
Rental Interruption or Use and Occupancy Insurance. Each Sublease requires the County to
maintain or cause to be maintained, rental interruption or use and occupancy insurance to cover loss, total
or partial, of the rental income from or the use of each Facility as the result of any of the hazards covered
by the fire and extended coverage insurance required by each Sublease described in the preceding
paragraphs (provided that earthquake insurance will be required only if it is available on the open market
from reputable insurance companies at a reasonable cost, as determined by the County), in an amount
sufficient to pay the part of the total rent attributable to the portion of the Facilities rendered unusable
(determined by reference to the proportion which the cost of such portion bears to the cost of the related
Facilities) for a period of at least two years, except that such insurance may be subject to a deductible
clause of not to exceed $250,000 (or comparable amount adjusted for inflation or more in the case of
earthquake coverage). Any proceeds of such insurance will be used by the Trustee to reimburse to the
County any rental theretofore paid by the County under each Sublease attributable to such structure for a
period of time during which the payment of rental under each Sublease is abated, and any proceeds of
such insurance not so used will be applied to pay the related Base Rental Payments and Additional
Payments.
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Earthquake Insurance. The County is required under each Sublease to purchase commercial
insurance to cover damage due to earthquake only if it is available on the open market from reputable
insurance companies at a reasonable cost, as determined by the County. The County has purchased an
earthquake insurance policy for all of its property, including each of the Facilities, through the California
State Association of Counties Excess Insurance Authority (“CSAC-EIA”). The County’s current
earthquake insurance coverage expires on ________, 2011 with a policy limit of $240 million on a shared
aggregate subject to a 5% deductible per location with a $100,000 minimum and $500,000 maximum
deductible. The County is in the “Zone A” designation, which has the highest potential for an earthquake
among all zone designations. No assurance is given that the Cou nty will continue to maintain earthquake
insurance in the future. See “CERTAIN RISK FACTORS–Risk of Earthquake and Other Natural Disasters”
and APPENDIX B–“COUNTY FINANCIAL INFORMATION–Insurance and Self-Insurance Programs.”
[Review and Update]
Worker’s Compensation Insurance. The County is also required to maintain worker’s
compensation insurance issued by a responsible carrier authorized under the laws of the State of
California to insure its employees against liability for compensation under the Worker’s Compensation
Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or
supplement thereto. As an alternative, such insurance may be maintained as part of or in conjunction with
any other insurance carried by the County. Such insurance may be maintained by the County in the form
of self-insurance.
Title Insurance. The County is also required to obtain, for the benefit of the Authority, title
insurance on each of the Facilities, in an amount equal to the aggregate principal amount of the related
Series of 2010 Bonds, issued by a company of recognized standing duly authorized to issue the same,
subject only to Permitted Encumbrances.
Additional Bonds
The Authority may at any time issue Additional Bonds pursuant to a Supplemental Trust
Agreement, payable from the respective Revenues as provided therein and secured by a pledge of and
charge and lien upon such Revenues as provided therein equal to the pledge, charge and lien securing an
Outstanding Series of 2010 Bonds theretofore issued under the Trust Agreement, subject to certain
conditions precedent, including that the proceeds from such Additional Bonds be applied solely to the
refunding of 2010 Bonds. APPENDIX E–“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL
DOCUMENTS–TRUST AGREEMENT–Additional Bonds.-
Substitution of Property
The County and the Authority, may substitute other real property as part of the Facilities for
purposes of the related Sublease provided the County has filed with the Authority and the Trustee, with
copies to each rating agency then providing a rating for the related Series of 2010 Bonds, all of the
following:
(i) Executed copies of the Sublease or amendments thereto containing the amended
description of the related Facilities.
(ii) A Certificate of the County with copies of the related Sublease or the related Site Lease,
if required, or amendments thereto containing the amended description of the related Facilities stating that
such documents have been duly recorded in the official records of the County Recorder of the County.
(iii) A Certificate of the County, supported by acquisition or construction cost information or
an appraisal, evidencing that the fair market value of such Facilities will be at least equal to the aggregate
outstanding principal amount of the Base Rental Payments, that the annual fair rental value of the
10014\POS-6 26
substitute such Facilities will be at least equal to the maximum annual Base Rental Payments thereafter
coming due and payable under related Sublease and that the useful life of the substitute Facilities will at
least extend to the final Base Rental Payment date.
(iv) A Certificate of the County stating that, based upon review of such instruments,
certificates or any other matters described in such Certificate of the County, the County has good
merchantable title to such Facilities which will constitute the Facilities after such substitution. The term
“good merchantable title” shall mean such title as is satisfactory and sufficient for the needs and
operations of the County.
(v) A Certificate of the County stating that such substitution does not adversely affect the
County’s use and occupancy of such Facilities.
(vi) An Opinion of Bond Counsel stating that such amendment or modification (A) complies
with the terms of the Constitution and laws of the State and of the Trust Agreement; (B) will, upon the
execution and delivery thereof, be valid and binding upon the Authority and the County; and (C) if the
Series of 2010 Bonds Outstanding with respect thereto were issued on a tax-exempt basis, will not cause
the interest on such Series of 2010 Bonds to be included in gross income for federal income tax purposes.
There is no requirement under the Subleases that any substitute Facilities be of the same or a
similar nature or function as the then-existing Facilities.
Option to Purchase
Pursuant to each Sublease, the County has the option to purchase the interest of the Authority in
any part of Facilities upon payment of an option price consisting of moneys or securities satisfying the
requirements specified in the Trust Agreement (and which securities are not callable by the issuer thereof
prior to maturity) in an amount sufficient (together with the increment, earnings and interest on such
securities) to provide funds to pay the aggregate amount for the entire remaining term of each Sublease of
the part of the total rent thereunder attributable to such part of the Facilities (determined by reference to
the proportion which the cost of such part of the Facilities bears to the cost of all of the Facilities). See
APPENDIX E–“SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS–TRUST
AGREEMENT–Additional Bonds.”
Payment of the option price is required to be made to the Trustee, will be treated as rental
payments and will be applied by the Trustee to pay the principal of the Series of 2010 Bonds and interest
on such Series of 2010 Bonds and to redeem Bonds if such Series of 2010 Bonds are subject to
redemption pursuant to the terms of the Trust Agreement.
DEBT SERVICE SCHEDULE
The following table shows the debt service schedule relating to the 2010 Bonds. For a
description of outstanding obligations of the County payable from the General Fund, see APPENDIX B–
“COUNTY FINANCIAL INFORMATION–Long Term Obligations.”
Table 3 Debt Service Schedule Payment 2010 Series A-1 Bonds Taxable 2010 Series A-2 Bonds Taxable 2010 Series A-3 Bonds Fiscal Date Principal Interest Principal Interest Principal Interest Total Year Total 12/1/2010 6/1/2011 12/1/2011 6/1/2012 12/1/2012 6/1/2013 12/1/2013 6/1/2014 12/1/2014 6/1/2015 12/1/2015 6/1/2016 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 6/1/2023 12/1/2023 6/1/2024 12/1/2024 6/1/2025 12/1/2025 27
Table 3 Debt Service Schedule (Continued) Payment 2010 Series A-1 Bonds Taxable 2010 Series A-2 Bonds Taxable 2010 Series A-3 Bonds Fiscal Date Principal Interest Principal Interest Principal Interest Total Year Total 6/1/2026 12/1/2026 6/1/2027 12/1/2027 6/1/2028 12/1/2028 6/1/2029 12/1/2029 6/1/2030 12/1/2030 6/1/2031 12/1/2031 6/1/2032 12/1/2032 6/1/2033 12/1/2033 6/1/2034 12/1/2034 6/1/2035 12/1/2035 6/1/2036 12/1/2036 6/1/2037 12/1/2037 6/1/2038 12/1/2038 6/1/2039 12/1/2039 6/1/2040 TOTAL $__,__,000* $__,__,000* $__,__,000* _____________________ * Preliminary, subject to change. 28
Table 3 Debt Service Schedule (Continued) Payment 2010 Series B Bonds 2010 Series C Bonds Fiscal Date Principal Interest Principal Interest Total Year Total 12/1/2010 6/1/2011 12/1/2011 6/1/2012 12/1/2012 6/1/2013 12/1/2013 6/1/2014 12/1/2014 6/1/2015 12/1/2015 6/1/2016 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 6/1/2023 12/1/2023 6/1/2024 12/1/2024 6/1/2025 12/1/2025 29
Table 3 Debt Service Schedule (Continued) Payment 2010 Series B Bonds 2010 Series C Bonds Fiscal Date Principal Interest Principal Interest Total Year Total 6/1/2026 12/1/2026 6/1/2027 12/1/2027 6/1/2028 12/1/2028 6/1/2029 12/1/2029 6/1/2030 12/1/2030 6/1/2031 12/1/2031 6/1/2032 12/1/2032 6/1/2033 12/1/2033 6/1/2034 12/1/2034 6/1/2035 12/1/2035 6/1/2036 12/1/2036 6/1/2037 12/1/2037 6/1/2038 12/1/2038 6/1/2039 12/1/2039 6/1/2040 TOTAL $__,__,000* $__,__,000* _____________________ * Preliminary, subject to change. 30
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CERTAIN RISK FACTORS
The following factors, along with the other information in this Official Statement, should be
considered by potential investors in evaluating the purchase of 2010 Bonds. However, the following does
not purport to be an exhaustive listing of risks and other considerations, which may be relevant to
investing in the 2010 Bonds. In addition, the order in which the following information is presented is not
intended to reflect the relative importance of any such risks.
Limited Obligation
The 2010 Bonds are not County debt and are limited obligations of the Authority. Neither the full
faith and credit of the Authority nor the County is pledged for the payment of the interest on or principal
of the 2010 Bonds nor for the payment of Base Rental Payments. The Authority has no taxing power.
The obligation of the County to pay Base Rental Payments when due is an obligation payable from
amounts in the General Fund of the County. The obligation of the County to make Base Rental Payments
under the Sublease does not constitute an obligation of the County for which the County is obligated to
levy or pledge any form of taxation or for which the County has levied or pledged any form of taxation.
Neither the 2010 Bonds nor the obligation of the County to make Base Rental Payments under the
Sublease constitute a debt or indebtedness of the Authority, the County, the State or any of its political
subdivisions, within the meaning of any constitutional or statutory debt limitation or restrictions.
Base Rental Payments Not a Debt of the County
The Base Rental Payments due under the Sublease (and insurance, payment of costs of repair and
maintenance of the Facilities, taxes and other governmental charges and assessments levied against the
Facilities) are not secured by any pledge of taxes or any other revenues of the County but are payable
from any funds lawfully available to the County. The County may incur other obligations in the future
payable from the same sources as the Base Rental Payments. In the event the County’s revenue sources
are less than its total obligations, the County could choose to fund other municipal services before making
Base Rental Payments. The same result could occur if, because of State constitutional limits on
expenditures, the County is not permitted to appropriate and spend all of its available revenues. The
County’s appropriations, however, have never exceeded the limitations on appropriations under Article
XIII B of the California Constitution. For information on the County’s current limitations on
appropriations, see “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND
APPROPRIATIONS–Article XIII B of the California Constitution.”
Valid and Binding Covenant to Budget and Appropriate
Pursuant to the Subleases, the County covenants to take such action as may be necessary to
include Base Rental Payments due in its annual budgets and to make necessary appropriations for all such
payments. Such covenants are deemed to be duties imposed by law, and it is the duty of the public
officials of the County to take such action and do such things as are required by law in the performance of
the official duty of such officials to enable the County to carry out and perform such covenants. A court,
however, in its discretion may decline to enforce such covenants. Upon issuance of the 2010 Bonds,
Bond Counsel will render its opinion (substantially in the form of APPENDIX F–“PROPOSED FORM OF
BOND COUNSEL OPINION”) to the effect that, subject to the limitations and qualifications described
therein, the Sublease constitutes a valid and binding obligation of the County. As to the Authority’s
practical realization of remedies upon default by the County, see “–Limitations on Remedies.”
10014\POS-6 32
Abatement
In the event of loss or substantial interference in the use and occupancy of a Facility by the
County caused by damage or destruction or condemnation of such Facility, the related Base Rental
Payments will be subject to abatement. In the event that any Facility or any component thereof, if
damaged or destroyed by an insured casualty, could not be replaced during the period of time that
proceeds of the County’s rental interruption insurance will be available in lieu of Base Rental Payments
plus the period for which funds are available from the related Reserve Account within the Reserve Fund
or the Revenue Fund, or in the event that casualty insurance proceeds or condemnation proceeds are
insufficient to provide for complete repair or replacement of such Facility or such component of the
Facilities or redemption of the related Series of 2010 Bonds, there could be insufficient funds to make
payments to Owners of the related Series of 2010 Bonds in full. See APPENDIX E–“SUMMARY OF
CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS–SUBLEASES–Rental Abatement.”
It is not possible to predict the circumstances under which such an abatement of rental may
occur. In addition, there is no statute, case or other law specifying how such an abatement of rental
should be measured. For example, it is not clear whether fair rental value is established as of
commencement of the lease or at the time of the abatement. If the latter, it may be that the value of
a Facility could be substantially higher or lower than its value at the time of issuance of the related
Series of 2010 Bonds. Abatement, therefore, could have an uncertain and material adverse effect
on the security for and payment of the 2010 Bonds.
Limited Recourse on Default
The enforcement of remedies provided in each Sublease and the Trust Agreement could be both
expensive and time consuming. The Trustee has no interest in the Authority’s title to any of the
Facilities, and has no right to terminate any Sublease or reenter or relet any of such Facility. Upon the
occurrence of one of the “events of default” described below, the County will be deemed to be in default
under the related Sublease and the Authority may exercise any and all remedies available pursuant to law
or granted pursuant to such Sublease. Upon any such default, including a failure to pay Base Rental
Payments, the Authority may either (1) terminate the related Sublease and seek to recover certain
damages or (2) without terminating such Sublease, (i) continue to collect rent from the County on an
annual basis by seeking a separate judgment each year for that year’s related defaulted Base Rental
Payments and/or (ii) reenter the related Facilities and relet them. In the event of default, there is no right
to accelerate the total Base Rental Payments due over the term of the Sublease or any other Sublease, and
the Trustee has no possessory interest in the related Facility and is not empowered to sell such Facility or
any of the Facilities.
Events of default under each Sublease include: (i) the failure of the County to pay any rental
payment under the Sublease when the same become due (ii) the failure of the County to keep, observe or
perform any term, covenant or condition of the related Sublease required to be kept or performed by the
County for a period of 60 days after notice of the same has been given to the County by the Authority or
the Trustee or for such additional time as reasonably required in the sole discretion of the Authority, to
correct the same and (iii) assignment or transfer of the County’s interest in the related Sublease, either
voluntarily or by operation of law or otherwise, without the written consent of the Authority; (iv) the
County or any assignee files any petition or institutes any, proceeding under any act or acts, State or
federal, dealing with or relating to the subject or subjects of the bankruptcy or insolvency or under any
amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar
capacity, wherein or whereby the County asks or seeks or prays to be adjudicated a bankrupt, or is to be
discharged from any or all of its debts or obligations, or offers to its creditors to effect a composition or
extension of time to pay the debts of the County or asks, seeks or prays for reorganization or to effect a
plan of reorganization, or for a readjustment of the debts of the County, or for any other similar relief, or
if any such petition or any such proceedings of the same or similar kind or character be filed or be
10014\POS-6 33
instituted or taken against the County, or if a receiver of the business or of the property or assets of the
County is appointed by any court, except a receiver appointed at the instance or request of the Authority,
or if the County makes a general or any assignment for the benefit of the County’s creditors, (v) the
County abandons or vacates the related Facilities, or (vi) any representation or warranty made by the
County in the related Sublease proves to have been false, incorrect, misleading or breached in any
material respect on the date when made.
Upon a default, the Trustee may elect to proceed against the County to recover damages pursuant
to the related Sublease. Any suit for money damages would be subject to statutory and judicial
limitations on lessors’ remedies under real property leases, other terms of the related Sublease and
limitations on legal remedies against counties in the State, including a limitation on enforcement of
judgments against funds needed to serve the public welfare and interest.
Limitations on Remedies
The rights of the Bondholders are subject to the limitations on legal remedies against counties in
the State, including applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors’ rights generally, now or hereafter in effect, and to the application
of general principles of equity, including concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the
bankruptcy proceedings for public agencies such as the County, there are no involuntary petitions in
bankruptcy. If the County were to file a petition under Chapter 9 of the Bankruptcy Code, the
Bondholders, the Trustee and the Authority could be prohibited from taking any steps to enforce their
rights under the Sublease, and from taking any steps to collect amounts due from the County under the
Sublease.
All legal opinions with respect to the enforcement of the Sublease and the Trust Agreement will
be expressly subject to a qualification that such agreements may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors’ rights generally and by applicable
principles of equity if equitable remedies are sought.
Military Conflicts and Terrorist Activities
Military conflicts and terrorist activities may adversely impact the finances of the County. The
County is unable to determine the effect of future terrorist events, if any, on, among other things, the
County’s current and future budgets, tax revenues, available reserves and additional public safety
expenditures. The County conducted a review of certain existing safety and security measures after the
events of September 11, 2001 and participates in additional security and public safety precautions taken in
conjunction with “code” designations (i.e., red, orange, yellow) announced by the federal government.
Such precautions include coordination of safety and medical personnel, although specific anti-terrorist
programs are not divulged publicly. The County does not guarantee that such actions will be adequate in
the event that terrorist activities are directed against the County or its residents. The County cannot
guarantee that additional safety or security related precautions taken by or affecting the County will not
have a material adverse financial impact on the County.
Although, the County maintains various insurance coverage on its properties, including sabotage
and terrorism coverage for real and personal property, the County makes no representation that this
insurance coverage will continue to be maintained in the future or as to the ability of any insurer to fulfill
its obligations under any insurance policy. See also APPENDIX B–“COUNTY FINANCIAL INFORMATION–
Insurance and Self-Insurance Programs.”
10014\POS-6 34
There are three petroleum refineries located within the County, and during the past five Fiscal
Years, the owners of these refineries were among the top 10 principal property taxpayers in the County.
A terrorist act against any of these refineries or any principal taxpayer resulting in damage or destruction
to company facilities or infrastructure could have a significant impact on revenues of the County. See
also APPENDIX A–“GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION–ECONOMIC AND
DEMOGRAPHIC INFORMATION–Principal Taxpayers.”
Risk of Earthquake and Other Natural Disasters
There are several earthquake faults in the greater San Francisco Bay Area that could result in
damage to the Facilities, the 2010 Projects, buildings, roads, bridges, and property within the County in
the event of an earthquake. Past experiences, including the 1989 Loma Prieta earthquake, measuring 7.1
on the Richter scale with an epicenter approximately 60 miles south of the County, have resulted in
minimal damage to the infrastructure and property in the County. Earthquake faults that could affect the
County include but may not be limited to the Hayward Fault in the western part of the County, and the
Concord/Green Valley, Diablo and Calaveras Faults within the eastern portions of the County.
The Subleases do not require the County to maintain insurance on the Facilities against certain
risks such as earthquakes unless such insurance is available from a reputable insurance company at a
reasonable cost to the County. The County has purchased an earthquake insurance policy that expires on
________, 2010 to cover all County property, including the Facilities. The County currently expects this
insurance will be renewed. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS–
Insurance–Earthquake Insurance” and APPENDIX B–“COUNTY FINANCIAL INFORMATION–Insurance and
Self-Insurance Programs.”
Hazardous Substances
Owners and operators of real property may be required by law to remedy conditions of the
property relating to releases or threatened releases of hazardous substances. The federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA”
or the “Superfund Act,” is the most well known and widely applicable of these laws, but California laws
with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner
(or operator) is obligated to remedy a hazardous substance whether or not the owner (or operator) has or
had anything to do with creating or handling the hazardous substance. Further, such liabilities may arise
not simply from the existence of a hazardous substance but from the method of handling it. All of these
possibilities could significantly and adversely affect the operations and finances of the County.
Although the County handles, uses and stores certain hazardous substances, including but not
limited to, solvents, paints and certain other chemicals on or near the Facilities, the County knows of no
existing hazardous substances which require remedial action on or near the Facilities. However, it is
possible that such substances do currently or potentially exist and that the County is not aware of them.
Limited Liability of Authority to the Owners
Except as expressly provided in the Trust Agreement, the Authority will not have any obligation
or liability to the Owners of the 2010 Bonds with respect to the payment when due of the Base Rental
Payments by the County, or with respect to the performance by the County of other agreements and
covenants required to be performed by it contained in each Sublease, or with respect to the performance
by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement.
10014\POS-6 35
State Funding of Counties
The County receives a significant portion of its funding from subventions by the State. In Fiscal
Year 2009-10, approximately 33.0% of the General Fund Budget is expected to consist of payments from
the State. For Fiscal Year 2010-11, approximately 32.7% of the General Fund Budget is expected to
consist of payments from the State. As a result, decreases in the revenues received by the State can affect
subventions made by the State to the County and other counties in the State. The potential impact of
State budget actions on the County in particular, and other counties in the State generally, in this and
future fiscal years is uncertain at this time but is expected to be materially adverse. For a discussion of
the potential impact of State budget actions for Fiscal Year 2009-10 and Fiscal Year 2010-11 on the
County in particular, and counties in the State generally, see APPENDIX B–“COUNTY FINANCIAL
INFORMATION –State Budget Acts.”
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,
REVENUES AND APPROPRIATIONS
Described below are certain measures which have impacted or may in the future impact the
County’s General Fund Budget.
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% 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
(except to 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.
10014\POS-6 36
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 XIII B of the California Constitution
On October 6, 1979, California voters approved Proposition 4, known as the Gann 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
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.
The Article XIII B limits for the County for the last two Fiscal Years and estimated for Fiscal
Year 2010-11 are set forth below.
Fiscal Year Article XIII A Limit Budget Amount
2008-09 $6,918,206,190 $349,812,942
2009-10 13,391,571,722(1)314,567,183
2010-11(2) 18,410,732,803 298,742,429
_____________
(1) The approximately 93.6% increase for Fiscal Year 2009-10 compared to Fiscal Year 2008-09 is due to _________.
(2) Estimated.
Source: County Auditor-Controller.
The County has never exceeded its Article XIII B appropriations limit and does not anticipate
having any difficulty in operating within the appropriations limit.
10014\POS-6 37
Article XIII 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
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
County estimates that it will collect no such fees and assessments in Fiscal Year 2010-11. 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 2010 Bonds could be adversely affected.
Ventura Decision
For a discussion of the Ventura Decision and its impacts, see APPENDIX B–“COUNTY FINANCIAL
INFORMATION–Pension Plan–Impact of the Ventura Decision.”
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.
10014\POS-6 38
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 June 4, 2001, the California Supreme Court released its decision in one of
these cases, 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 no taxes to which Proposition 62 could apply.
Proposition 1A of 2004
The California Constitution and existing statutes give the legislature authority over property
taxes, sales taxes and the VLF. The State legislature has authority to change tax rates, the items subject to
taxation and the distribution of tax revenues among local governments, schools, and community college
districts. The State has used this authority for many purposes, including increasing funding for local
services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular
local governments, and restructuring local finance.
The California Constitution generally requires the State to reimburse the local governments when
the State “mandates” a new local program or higher level of service. Due to the ongoing financial
difficulties of the State, it has not provided in recent years reimbursements for many mandated costs. In
other cases, the State has “suspended” mandates, eliminating both responsibility of the local governments
for complying with the mandate and the need for State reimbursements.
On November 3, 2004, the voters of the State approved Proposition 1A (“Proposition 1A of
2004”) that amended the California Constitution to, among other things, reduce the State Legislature’s
authority over local government revenue sources by placing restrictions on the State’s access to local
government’s property, sales and vehicle license fee revenues.
Proposition 1A of 2004 generally prohibits the State from shifting to schools or community
colleges any share of property tax revenues allocated to a county for any fiscal year under the laws in
effect as of November 3, 2004. The measure also specifies that any change in how property tax revenues
are shared among local governments within a county must be approved by two-thirds of both houses of
the Legislature (instead of by majority vote). Finally, the measure prohibits the State from reducing the
property tax revenues provided to a county as replacement for the local sales tax revenues redirected to
the State and pledged to pay debt service on State deficit-related bonds approved by voters in
March 2004.
If the State reduces the VLF rate below its current level of 0.65% of the vehicle value,
Proposition 1A of 2004 requires the State to provide local governments with equal replacement revenues.
Proposition 1A of 2004 provides two significant exceptions to the above restrictions regarding sales and
property taxes. First, beginning in Fiscal Year 2008-09, the State may shift to schools and community
colleges up to 8% of local government property tax revenues if: the Governor proclaims that the shift is
needed due to a severe State financial hardship, the legislature approves the shift with a two-thirds vote of
both houses and certain other conditions are met. The State must repay local governments for their
property tax losses, with interest, within three years. Second, Proposition 1A of 2004 allows the State to
approve voluntary exchanges of local sales tax and property tax revenues among local governments
within a county.
10014\POS-6 39
Proposition 1A of 2004 amends the California Constitution to require the State to suspend certain
State laws creating mandates in any year that the State does not fully reimburse local governments for
their costs to comply with the mandates. Beginning in Fiscal Year 2005-06, if the State does not provide
funding for the activity that has been determined to be mandated, the requirement on cities, counties or
special districts to abide by the mandate would be suspended. In addition, Proposition 1A of 2004
expands the definition of what constitutes a mandate to encompass State action that transfers to cities,
counties and special districts financial responsibility for a required program for which the State previously
had complete or partial financial responsibility. This provision does not apply to mandates relating to
schools or community colleges, or to those mandates relating to employee rights.
Proposition 1A of 2004 restricts the State’s authority to reallocate local tax revenues to address
concerns regarding funding for specific local governments or to restructure local government finance.
For example, the State could not enact measures that changed how local sales tax revenues are allocated
to cities and counties. In addition, measures that reallocated property taxes among local governments in a
county would require approval by two-thirds of the members of each house of the legislature (rather than
a majority vote). As a result, Proposition 1A of 2004 could result in fewer changes to local government
revenues than otherwise would have been the case.
Future Initiatives
Article XIII A, Article XIII B, Article XIII C, Article XIII D, and Proposition 62 and 1A of 2004,
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.
THE AUTHORITY
The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers
Agreement, dated as of April 7, 1992 (the “JPA Agreement”), between the County and the Contra Costa
County Redevelopment Agency (the “Agency”). The JPA Agreement was entered into pursuant to the
California Government Code, commencing with Section 6500. The Authority is a separate entity
constituting a public instrumentality of the State of California and was formed for the public purpose of
assisting in financing and refinancing projects for the benefit of the County and the Agency.
The Authority is governed by a five member Board of Directors. The Board of Supervisors of the
County constitutes the Board of Directors of the Authority. The Executive Director and Secretary of the
Authority is the County Administrator and Clerk of the Board of Supervisors, respectively; the Assistant
Executive Director of the Authority is the Department of Conservation and Development Director; the
Deputy Executive Directors of the Authority are the County Finance Director and the Deputy Director,
Department of Conservation and Development; the Treasurer of the Authority is the County Auditor-
Controller and the Assistant Secretary of the Authority is the County Finance Director. The Authority’s
powers include, but are not limited to, the power to issue bonds and to sell such bonds to public or private
purchasers at public or by negotiated sale. The Authority is entitled to exercise the powers common to its
members and necessary to accomplish the purposes for which it was formed. These powers include the
power to make and enter into contracts; to employ agents and employees; to acquire, construct, manage,
maintain and operate buildings, works or improvements; to acquire, hold or dispose of property within the
County; and to incur debts, liabilities or obligations.
10014\POS-6 40
THE COUNTY
The County of Contra Costa lies northeast of the San Francisco Bay and is the ninth most
populous county in California. The County seat is in the City of Martinez. Major industries in the
County include petroleum refining and telecommunications. The General Fund Adopted Budget for
Fiscal Year 2009-10 was $1.2 billion and for Fiscal Year 2010-11 is approximately $1.2 billion.
For certain economic, demographic and financial information with respect to the County, see
APPENDIX A–“GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION,” APPENDIX B–
“COUNTY FINANCIAL INFORMATION” and APPENDIX C–“COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2009.”
RATINGS
Moody’s Investors Service (“Moody’s”) and Standard & Poor’s, a division of the McGraw-Hill
Companies (“S&P”) have assigned uninsured ratings of “__” and “__,” respectively, to the 2010 Bonds.
Certain information was supplied by the Authority and the County to Moody’s and S&P to be
considered in evaluating the 2010 Bonds. The ratings express only the views of the rating agencies and
are not a recommendation to buy, sell or hold the 2010 Bonds. An explanation of the significance of the
ratings may be obtained from Moody’s Investors Service, 7 World Trade Center at 250 Greenwich Street,
New York, New York 10007 and Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., 55
Water Street, New York, New York 10041.
There is no assurance that such ratings will continue for any given period of time or that they will
not be reduced or withdrawn entirely by the rating agencies, or either of them, if in their, or its, judgment,
circumstances so warrant. The Authority, the County and the Trustee undertake no responsibility to
oppose any such revision or withdrawal. Any such downward revision or withdrawal may have an
adverse effect on the market price of the 2010 Bonds.
LITIGATION MATTERS
At the time of delivery of and payment for the 2010 Bonds, the County and the Authority will
each certify that there is no action, suit, litigation, inquiry or investigation before or by any court,
governmental agency, public board or body served, or to the best knowledge of the County or the
Authority threatened, against the County or the Authority in any material respect affecting the existence
of the County or the Authority or the titles of their officers to their respective offices or seeking to
prohibit, restrain or enjoin the sale or delivery of the 2010 Bonds, the execution of the Trust Agreement,
the Subleases, the Site Leases or the payment of Base Rental Payments or challenging, directly or
indirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Authority.
Numerous California cities, including many in Contra Costa County, have questioned the way
that counties and their auditors calculated property tax administrative fees since Fiscal Year 2006-07. In
mid-2009, the County and its cities entered into a tolling agreement to toll the statute of limitations
relating to such claims by the County’s cities, while the matter is litigated between other cities and
counties. On July 7, 2010, the Court of Appeal for the Second District found that the Los Angeles
County Auditor had improperly included certain property tax revenues in calculating the total amount of
property tax administrative fees owed by the cities since Fiscal Year 2006-07. Los Angeles County is
expected to appeal the decision to the California Supreme Court. When the decision becomes final, after
the California Supreme Court renders a decision on the merits of the dispute or denies review of the case,
it will be binding on all California courts. An unfavorable decision would have a negative impact on the
10014\POS-6 41
County in the aggregate amount of $3.5 million, of which $626,755 is attributed to Fiscal Year 2006-07;
$929,641 is attributed to Fiscal Year 2007-08; $1,043,944 is attributed to Fiscal Year 2008-09; and
$955,524 is attributed to Fiscal Year 2009-10.
For Fiscal Year 2010-11 the County calculated the property tax administrative fee in the same
manner as it has since Fiscal Year 2006-07. The impact of an unfavorable decision in this case would be
$_______ for Fiscal Year 2010-11.
Various other legal actions are pending against the County. The aggregate amount of the
uninsured liabilities of the County which may result from all legal claims currently pending against it will
not, in the opinion of the County, materially affect the County’s finances or impair its ability to make
Base Rental Payments under the Subleases. [CONFIRM]
TAX MATTERS
Tax Matters Relating to the 2010 Series A-1, 2010 Series B and 2010 Series C
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority (“Bond
Counsel”), interest on the 2010 Series A-1, 2010 Series B and 2010 Series C (collectively the “Tax-
exempt Bonds”) and the 2010 Series A-2 and 2010 Series A-3 Bonds (the “Taxable Bonds”) is exempt
from State of California personal income taxes. Bond Counsel observes that interest on the Taxable
Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the
Internal Revenue Code of 1986 (the “Code”). Bond Counsel expresses no opinion regarding any other
federal or state tax consequences relating to the ownership or disposition of, or the accrual or receipt of
interest on, the 2010 Bonds.
The following discussion summarizes certain U.S. federal tax considerations generally applicable
to holders of the Taxable Bonds that acquire their Taxable Bonds in the initial offering. The discussion
below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all
of which are subject to change, possibly with retroactive effect. Prospective investors should note that no
rulings have been or are expected to be sought from the IRS with respect to any of the U.S. federal
income tax consequences discussed below, and no assurance can be given that the IRS will not take
contrary positions. Further, the following discussion does not deal with all U.S. federal income tax
consequences applicable to any given investor, nor does it address the U.S. federal income tax
considerations applicable to categories of investors some of which may be subject to special taxing rules
(regardless of whether or not such persons constitute U.S. Holders), such as certain U.S. expatriates,
banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers or traders in securities or
currencies, partnerships, S corporations, estates and trusts, investors that hold their Taxable Bonds as part
of a hedge, straddle or an integrated or conversion transaction, or investors whose “functional currency”
is not the U.S. dollar. Furthermore, it does not address (i) alternative minimum tax consequences or
(ii) the indirect effects on persons who hold equity interests in a holder. In addition, this summary
generally is limited to investors that acquire their Taxable Bonds pursuant to this offering for the issue
price that is applicable to such Taxable Bonds (i.e., the price at which a substantial amount of the Taxable
Bonds are sold to the public) and who will hold their Taxable Bonds as “capital assets” within the
meaning of Section 1221 of the Code.
As used herein, “U.S. Holder” means a Beneficial Owner of a Taxable Bonds that for U.S. federal
income tax purposes is an individual citizen or resident of the United States, a corporation or other entity
taxable as a corporation created or organized in or under the laws of the United States or any state thereof
(including the District of Columbia), an estate the income of which is subject to U.S. federal income
taxation regardless of its source or a trust where a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United States persons (as defined
10014\POS-6 42
in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a
valid election under U.S. Treasury Regulations to be treated as a domestic trust). As used herein, “Non-
U.S. Holder” generally means a Beneficial Owner of a Taxable Bonds (other than a partnership) that is
not a U.S. Holder. If a partnership holds Taxable Bonds, the tax treatment of such partnership or a
partner in such partnership generally will depend upon the status of the partner and upon the activities of
the partnership. Partnerships holding Taxable Bonds, and partners in such partnerships, should consult
their own tax advisors regarding the tax consequences of an investment in the Taxable Bonds (including
their status as U.S. Holders or Non-U.S. Holders).
For U.S. Holders
The Taxable Bonds are not expected to be treated as issued with original issue discount (“OID”)
for U.S. federal income tax purposes because the stated redemption price at maturity of the Taxable
Bonds is not expected to exceed their issue price, or because any such excess is expected to only be a
de minimis amount (as determined for tax purposes).
Prospective investors that are not individuals or regular C corporations who are U.S. persons
purchasing the Taxable Bonds for investment should consult their own tax advisors as to any tax
consequences to them from the purchase, ownership and disposition of the Taxable Bonds .
Disposition of the Bonds. Unless a nonrecognition provision of the Code applies, the sale,
exchange, redemption, defeasance, retirement (including pursuant to an offer by the Authority) or other
disposition of a Taxable Bond, will be a taxable event for U.S. federal income tax purposes. In such
event, in general, a U.S. Holder of a Taxable Bonds will recognize gain or loss equal to the difference
between (i) the amount of cash plus the fair market value of property received (except to the extent
attributable to accrued but unpaid interest on the Taxable Bond which will be taxed in the manner
described above) and (ii) the U.S. Holder’s adjusted tax basis in the Taxable Bond (generally, the
purchase price paid by the U.S. Holder for the Taxable Bond, decreased by any amortized premium).
Any such gain or loss generally will be capital gain or loss. In the case of a noncorporate U.S. Holder of
the Taxable Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will
be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income if such
U.S. holder’s holding period for the Taxable Bonds exceeds one year. The deductibility of capital losses
is subject to limitations.
For Non-U.S. Holders
Interest. Subject to the discussion below under the heading “Information Reporting and Backup
Withholding,” payments of principal of, and interest on, any Taxable Bond to a Non-U.S. Holder, other
than (1) a controlled foreign corporation, as such term is defined in the Code, which is related to the
Authority through stock ownership and (2) a bank which acquires such Taxable Bonds in consideration of
an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business,
will not be subject to any U.S. withholding tax provided that the Beneficial Owner of the Taxable Bonds
provides a certification completed in compliance with applicable statutory and regulatory requirements,
which requirements are discussed below under the heading “Information Reporting and Backup
Withholding,” or an exemption is otherwise established.
Disposition of the Bonds. Subject to the discussion below under the heading “Information
Reporting and Backup Withholding,” any gain realized by a Non-U.S. Holder upon the sale, exchange,
redemption, retirement (including pursuant to an offer by the Authority) or other disposition of a Taxable
Bonds generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business within the United States; or
(ii) in the case of any gain realized by an individual Non-U.S. Holder, such holder is present in the United
10014\POS-6 43
States for 183 days or more in the taxable year of such sale, exchange, redemption, retirement (including
pursuant to an offer by the Authority) or other disposition and certain other conditions are met.
U.S. Federal Estate Tax. A Taxable Bond that is held by an individual who at the time of death
is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of
such individual’s death, provided that at the time of such individual’s death, payments of interest with
respect to such Taxable Bond would not have been effectively connected with the conduct by such
individual of a trade or business within the United States.
Information Reporting and Backup Withholding. U.S. information reporting and “backup
withholding” requirements apply to certain payments of principal of, and interest on the Taxable Bonds,
and to proceeds of the sale, exchange, redemption, retirement (including pursuant to an offer by the
Authority) or other disposition of a Taxable Bonds, to certain noncorporate holders of Taxable Bonds that
are United States persons. Under current U.S. Treasury Regulations, payments of principal and interest
on any Taxable Bonds to a holder that is not a United States person will not be subject to any backup
withholding tax requirements if the Beneficial Owner of the Taxable Bond or a financial institution
holding the Taxable Bond on behalf of the Beneficial Owner in the ordinary course of its trade or business
provides an appropriate certification to the payor and the payor does not have actual knowledge that the
certification is false. If a Beneficial Owner provides the certification, the certification must give the name
and address of such owner, state that such owner is not a United States person, or, in the case of an
individual, that such owner is neither a citizen nor a resident of the United States, and the owner must
sign the certificate under penalties of perjury. If a financial institution, other than a financial institution
that is a qualified intermediary, provides the certification, the certification must state that the financial
institution has received from the Beneficial Owner the certification set forth in the preceding sentence, set
forth the information contained in such certification, and include a copy of such certification, and an
authorized representative of the financial institution must sign the certificate under penalties of perjury. A
financial institution generally will not be required to furnish to the IRS the names of the Beneficial
Owners of the Taxable Bonds that are not United States persons and copies of such owners’ certifications
where the financial institution is a qualified intermediary that has entered into a withholding agreement
with the IRS pursuant to applicable U.S. Treasury Regulations.
In the case of payments to a foreign partnership, foreign simple trust or foreign grantor trust,
other than payments to a foreign partnership, foreign simple trust or foreign grantor trust that qualifies as
a withholding foreign partnership or a withholding foreign trust within the meaning of applicable U.S.
Treasury Regulations and payments to a foreign partnership, foreign simple trust or foreign grantor trust
that are effectively connected with the conduct of a trade or business within the United States, the partners
of the foreign partnership, the beneficiaries of the foreign simple trust or the persons treated as the owners
of the foreign grantor trust, as the case may be, will be required to provide the certification discussed
above in order to establish an exemption from withholding and backup withholding tax requirements.
The current backup withholding tax rate is 28% (subject to future adjustment).
In addition, if the foreign office of a foreign “broker,” as defined in applicable U.S. Treasury
Regulations pays the proceeds of the sale of a Bond to the seller of the Taxable Bond, backup withholding
and information reporting requirements will not apply to such payment provided that such broker derives
less than 50% of its gross income for certain specified periods from the conduct of a trade or business
within the United States, is not a controlled foreign corporation, as such term is defined in the Code, and
is not a foreign partnership (1) one or more of the partners of which, at any time during its tax year, are
U.S. persons (as defined in U.S. Treasury Regulations Section 1.1441-1(c)(2)) who, in the aggregate hold
more than 50% of the income or capital interest in the partnership or (2) which, at any time during its tax
year, is engaged in the conduct of a trade or business within the United States. Moreover, the payment by
a foreign office of other brokers of the proceeds of the sale of a Taxable Bond, will not be subject to
backup withholding unless the payer has actual knowledge that the payee is a U.S. person. Principal and
interest so paid by the U.S. office of a custodian, nominee or agent, or the payment by the U.S. office of a
10014\POS-6 44
broker of the proceeds of a sale of a Taxable Bond, is subject to backup withholding requirements unless
the Beneficial Owner provides the nominee, custodian, agent or broker with an appropriate certification as
to its non-U.S. status under penalties of perjury or otherwise establishes an exemption.
Circular 230
Under 31 C.F.R. part 10, the regulations governing practice before the I.R.S. (Circular 230), the
Authority and our tax advisors are (or may be) required to inform you that:
• Any advice contained herein, including any opinions of counsel referred to herein, is not
intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties
that may be imposed on the taxpayer;
• Any such advice is written to support the promotion or marketing of the Taxable Bonds and the
transactions described herein (or in such opinion or other advice); and
• Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an
independent tax advisor.
Tax Matters Relating to Tax-exempt Bonds
In the opinion of Bond Counsel, based upon 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 Tax-exempt Bonds is excluded from gross income for
federal income tax purposes under Section 103 of the Code and is exempt from State of California
personal income taxes. In the further opinion of Bond Counsel, interest on the Tax-exempt Bonds is not a
specific preference item for purposes of the federal individual or corporate alternative minimum taxes,
nor is it included in adjusted current earnings when calculating corporate alternative taxable income. A
complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX F hereto.
To the extent the issue price of any maturity of the Tax-exempt Bonds is less than the amount to
be paid at maturity of such Tax-exempt Bonds (excluding amounts stated to be interest and payable at
least annually over the term of such Tax-exempt Bonds), the difference constitutes “original issue
discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is
treated as interest on the Tax-exempt Bonds which is excluded from gross income for federal income tax
purposes and State of California personal income taxes. For this purpose, the issue price of a particular
maturity of the Tax-exempt Bonds is the first price at which a substantial amount of such maturity of such
Tax-exempt Bonds is sold to the public (excluding bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue
discount with respect to any maturity of the Tax-exempt Bonds accrues daily over the term to maturity of
such Tax-exempt Bonds on the basis of a constant interest rate compounded semiannually (with straight-
line interpolations between compounding dates). The accruing original issue discount is added to the
adjusted basis of such Tax-exempt Bonds to determine taxable gain or loss upon disposition (including
sale, redemption, or payment on maturity) of such Tax-exempt Bonds. Beneficial Owners of the Tax-
exempt Bonds should consult their own tax advisors with respect to the tax consequences of ownership of
Tax-exempt Bonds with original issue discount, including the treatment of Beneficial Owners who do not
purchase such Tax-exempt Bonds in the original offering to the public at the first price at which a
substantial amount of such Tax-exempt Bonds is sold to the public.
Tax-exempt Bonds purchased, whether at original issuance or otherwise, for an amount greater
than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium
Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the
amortizable bond premium in the case of the bonds, like the Premium Bonds, the interest on which is
10014\POS-6 45
excluded from gross income for federal income tax purposes. However, the amount of tax-exempt
interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of
amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium
Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond
premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from
gross income for federal tax purposes of interest on obligations such as the Tax-exempt Bonds. The
Authority and the County have made certain representations and covenanted to comply with certain
restrictions, conditions and requirements designed to assure that interest on the Tax-exempt Bonds will
not be included in federal gross income. Inaccuracy of these representations or failure to comply with
these covenants may result in interest on the Tax-exempt Bonds being included in gross income for
federal income tax purposes, possibly from the date of original issuance of the Tax-exempt Bonds. The
opinion of Bond Counsel assumes the accuracy of these representations and compliance with these
covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether actions
taken (or not taken), or events occurring (or not occurring) or any other matters coming to Bond
Counsel’s attention after the date of issuance of the Tax-exempt Bonds may adversely affect the value of,
or the tax status of interest on, the Tax-exempt Bonds. Accordingly, the opinion of Bond Counsel is not
intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the Tax-exempt Bonds is excluded from
gross income for federal income tax purposes and is exempt from State of California personal income
taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Tax-exempt Bonds may
otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these
other tax consequences will depend upon the particular tax status of the Beneficial Owner and the
Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding
any such other tax consequences.
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may
cause interest on the Tax-exempt Bonds to be subject, directly or indirectly, to federal income taxation or
to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from
realizing the full current benefit of the tax status of such interest. The introduction or enactment of any
such future legislative proposals, clarification of the Code or court decisions may also affect the market
price for, or marketability of, the Tax-exempt Bonds. Prospective purchasers of the Tax-exempt Bonds
should consult their own tax advisors regarding any pending or proposed federal or state tax legislation,
regulations or litigation, as to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment
of the Tax-exempt Bonds for federal income tax purposes. It is not binding on the Internal Revenue
Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or
assurance about the future activities of the Authority or the County, or about the effect of future changes
in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS.
The Authority and the County have covenanted, however, to comply with the requirements of the Code.
Bond Counsel’s engagement with respect to the Tax-exempt Bonds ends with the issuance of the
Tax-exempt Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the
Authority, the County or the Beneficial Owners regarding the tax-exempt status of the Tax-exempt Bonds
in the event of an audit examination by the IRS. Under current procedures, parties other than the
Authority, the County and their appointed counsel, including the Beneficial Owners, would have little, if
any, right to participate in the audit examination process. Moreover, because achieving judicial review in
connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review
of IRS positions with which the Authority or the County legitimately disagrees, may not be practicable.
10014\POS-6 46
Any action of the IRS, including but not limited to selection of the Tax-exempt Bonds for audit, or the
course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market
price for, or the marketability of, the Tax-exempt Bonds, and may cause the Authority, the County or the
Beneficial Owners to incur significant expense.
LEGAL MATTERS
Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, will render an
opinion with respect to the validity of the 2010 Bonds. Copies of such approving opinion will be
available at the time of delivery of the 2010 Bonds. The form of the legal opinion proposed to be
delivered by Bond Counsel is included as APPENDIX F to this Official Statement. Bond Counsel
undertakes no responsibility for the accuracy, completeness, or fairness of this Official Statement.
Certain legal matters will be passed upon for the County and the Authority by County Counsel, and by
Lofton & Jennings, San Francisco, California, Disclosure Counsel, and for the Underwriters by Chapman
and Cutler LLP, San Francisco, California. Compensation paid to Bond Counsel, Disclosure Counsel and
Underwriters’ Counsel is contingent on the delivery of the 2010 Bonds.
FINANCIAL ADVISOR
The County has retained Tamalpais Advisors Inc., Sausalito, California as financial advisor (the
“Financial Advisor”) to the County and the Authority in connection with the issuance of the 2010 Bonds.
The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting,
trading or distributing municipal securities or negotiable instruments. Compensation paid to the Financial
Advisor is contingent on the delivery of the 2010 Bonds.
CONTINUING DISCLOSURE
The County will undertake all responsibilities for any continuing disclosure to Owners of the
2010 Bonds as described below.
The County will enter into a Continuing Disclosure Agreement with the Digital Assurance
Certification, L.L.C., as Dissemination Agent, to be dated the date of delivery of the 2010 Bonds (the
“Continuing Disclosure Agreement”), which provides for certain disclosure obligations on the part of the
County. Under the Continuing Disclosure Agreement, the County will covenant for the benefit of
Owners and Beneficial Owners of the 2010 Bonds to provide certain financial information and operating
data relating to the County by not later than nine months after the end of its fiscal year (which fiscal year
currently ends on June 30), commencing with the report for the fiscal year ending June 30, 2010 (the
“Annual Report”), and to provide notices of the occurrence of certain enumerated events (the “Listed
Events”), if material. The Annual Report and notices of material events will be filed by the County or the
Dissemination Agent, through the Electronic Municipal Market Access site maintained by the MSRB.
These covenants will be made in order to assist the Underwriters in complying with Securities and
Exchange Commission Rule 15c2-12(b)(5) (the “Rule”).
The County has not failed to comply with any prior such undertaking under the Rule. For a form
of the Continuing Disclosure Agreement, see APPENDIX G–“PROPOSED FORM OF CONTINUING
DISCLOSURE AGREEMENT.”
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UNDERWRITING
Pursuant to the terms of a Bond Purchase Contract with respect to the 2010 Series A Bonds, the
2010 Series B Bonds dated October __, 2010 (the “2010 Series A-B Bonds Purchase Contract”) and a
Bond Purchase Contract with respect to the 2010 Series C Bonds dated October __, 2010 (the “2010
Series C Bonds Purchase Contract” and together with the 2010 Series A-B Bonds Purchase Contract, the
“Purchase Contracts”), each among the Authority, the County and Wedbush Securities Inc. on its own
behalf and as representative of Piper Jaffray & Co. (together, the “Underwriters”), the Underwriters will
purchase all of the 2010 Bonds of a Series, if any are purchased.
The obligation of the Underwriters to make such purchase is subject to certain terms and
conditions set forth in the related Purchase Contract.
The Underwriters may change the initial public offering prices set forth on the inside cover pages
of this Official Statement. The Underwriters may offer and sell the 2010 Bonds to certain dealers and
others at prices lower than the public offering prices set forth on the inside cover pages hereof.
The following information has been provided by Piper Jaffray & Co. (“Piper”) for inclusion in
this Official Statement and the County cannot and does not make any representations as to its accuracy
or completeness.
Piper Jaffray & Co. has entered into an agreement (the “Distribution Agreement”) with Advisors
Asset Management, Inc. (“AAM”) for the distribution of certain municipal securities offerings allocated
to Piper at the original offering prices. Under the Distribution Agreement, if applicable to the 2010
Bonds, Piper will share with AAM a portion of the fee or commission, exclusive of management fees,
paid to Piper.
2010 Series A Bonds
The Underwriters purchased the 2010 Series A Bonds at a price of $________ (which represents
the principal amount of the 2010 Series A Bonds [plus/less a net original issue premium/discount in the
amount of $________ and] less an Underwriter’s discount in the amount of $_________).
2010 Series B Bonds
The Underwriters purchased the 2010 Series B Bonds at a price of $________ (which represents
the principal amount of the 2010 Series B Bonds [plus/less a net original issue premium/discount in the
amount of $________ and] less an Underwriters’ discount in the amount of $________).
2010 Series C Bonds
The Underwriters purchased the 2010 Series C Bonds at a price of $________ (which represents
the principal amount of the 2010 Series C Bonds [plus/less a net original issue premium/discount in the
amount of $________ and] less an Underwriters’ discount in the amount of $________).
10014\POS-6 48
VERIFICATION OF MATHEMATICAL COMPUTATIONS FOR THE 2010 SERIES C BONDS
Upon delivery of the 2010 Series C Bonds, Causey Demgen & Moore Inc. (the “Verification
Agent”), will deliver a report stating that it has reviewed and confirmed the mathematical accuracy of
certain computations relating to the adequacy of the funds and/or securities deposited in the 1998 Bonds
Escrow Fund and the interest thereon, if any, to pay, when due, the redemption price and interest on the
Refunded Prior Bonds on the specified respective payment or redemption dates thereof.
MISCELLANEOUS INFORMATION
References are made herein to certain documents, reports and laws that are brief summaries
thereof which do not purport to be complete or definitive and reference is made to such documents,
reports and laws for full and complete statements of the contents thereof. Copies of documents referred to
herein are available upon written request from the County: 651 Pine Street, 10th Floor, Martinez,
California 94553-0663; Attention: Finance Director. The County may impose a charge for copying,
mailing and handling.
Any statements in this Official Statement involving matters of opinion, whether or not expressly
so stated, are intended as such and not as representations of fact. This Official Statement is not to be
construed as a contract or agreement between the Authority or the County and the purchasers or Owners
of any of the 2010 Bonds.
The execution and delivery of this Official Statement has been duly authorized by the Board of
Directors of the Authority and approved by the County Board of Supervisors.
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY
By:
David J. Twa
Executive Director
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APPENDIX A
GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION
TABLE OF CONTENTS
PAGE
General ...................................................................................................................................................... A-1
County Government .................................................................................................................................. A-1
Population ................................................................................................................................................. A-3
Industry and Employment ......................................................................................................................... A-5
Major Employers ...................................................................................................................................... A-5
Personal Income ........................................................................................................................................ A-6
Commercial Activity ................................................................................................................................. A-8
Construction Activity ................................................................................................................................ A-9
Transportation ......................................................................................................................................... A-19
Environmental Control Services ............................................................................................................ A-11
Education and Health Services ............................................................................................................... A-12
INDEX OF TABLES
PAGE
Table A-1 Population ............................................................................................................................ A-4
Table A-2 Employment and Unemployment of Resident Labor Force Wage and Salary
Employment by Industry Annual Averages ..................................................................... A-5
Table A-3 Major Employers in the East Bay with Employees in the County ...................................... A-6
Table A-4 Personal Income ................................................................................................................... A-7
Table A-5 Taxable Transactions ........................................................................................................... A-8
Table A-6 Residential Building Permit Valuations .............................................................................. A-9
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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 San 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 (the “County Auditor-Controller”), Clerk-Recorder, District
Attorney-Public Administrator, Sheriff-Coroner and Treasurer-Tax Collector (the “County Treasurer”).
A County Administrator appointed by the Board of Supervisors runs the day-to-day business of the
County. The current County Administrator is David J. Twa.
CONTRA COSTA COUNTY
ELECTED OFFICIALS
Name Office Expiration of Current Term
John M. Gioia Supervisor, District 1 January 3, 2011(1)
Gayle B. Uilkema Supervisor, District 2 January 7, 2013
Mary N. Piepho Supervisor, District 3 January 7, 2013
Susan A. Bonilla Supervisor, District 4 January 3, 2011
Federal D. Glover Supervisor, District 5 January 7, 2013
Stephen J. Ybarra Auditor-Controller January 3, 2011
William J. Pollacek Treasurer-Tax Collector January 3, 2011
Gus S. Kramer Assessor January 3, 2011(1)
Stephen L. Weir Clerk Recorder January 3, 2011(1)
Robert Kochly District Attorney-Public Administrator January 3, 2011(2)
Warren E. Rupf Sheriff-Coroner January 5, 2011
_____________
(1) Re-elected to a four-year term of office and will be sworn in on January 3, 2011.
(2) A run-off election for this office will be held on November 2, 2010.
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At the June 8, 2010 Direct Primary Election, the persons listed below were each elected for a
four-year term to the office indicated and will be sworn into office on the date set forth below:
Name Office Commencement of Term
Karen Mitchoff Supervisor, District 4 January 3, 2011
Russell V. Watts Treasurer-Tax Collector January 3, 2011
Robert R. Campbell Auditor-Controller January 3, 2011
David Livingston Sheriff-Coroner January 5, 2011
Brief resumes of key County officials are set forth below.
David J. Twa, County Administrator. Mr. Twa was appointed County Administrator by the
Board of Supervisors in June 2008 and is responsible for the overall administration of County
government. Prior to his appointment, he served as the County Manager for Ramsey County, Minnesota
from 2003-2008. Prior to that, Mr. Twa served as the County Administrator in three counties in
Minnesota for over 20 years and served as an Elected County Attorney, Interim Property Records and
Revenue Director, Executive Director of Housing and Redevelopment Authority, and Interim Director of
Public Health and Long-term Care. Mr. Twa received his Juris Doctorate from the University of
Minnesota, as well as a degree in accounting, and is also a Certified Public Accountant. Under Mr. Twa’s
leadership Ramsey County, Minnesota maintained a triple-A credit rating, one of few counties in the
country to achieve this distinguished rating. He also oversaw the efforts of Ramsey County to institute a
Strategic Planning Program, address its health care cost liability, start a two year budget process, work
with community partners to improve public services in the Minneapolis-St. Paul Region, and institute
significant redevelopment projects. Mr. Twa was named the County Manager of the Year (2007) by the
Minnesota Association of County Administrators, for his innovation in public service.
Stephen J. Ybarra, Auditor-Controller. Mr. Ybarra was appointed Auditor-Controller of the
County by the Board of Supervisors on June 1, 2004 and was reelected by the voters in 2006. Prior to his
appointment in 2004, he was the Assistant Auditor-Controller of the County. Mr. Ybarra has worked for
the County for more than 35 years. He received a Bachelor of Science degree in business administration
with a concentration in accounting from the California State University, Sacramento. Mr. Ybarra is a
Certified Government Financial Manager, an active member of the State Association of County Auditors,
a member of the Government Finance Officer’s Association and the Association of Government
Accountants, a member of the Board of Directors of the Contra Costa County Federal Credit Union and
serves on the County’s Deferred Compensation Advisory Committee. Mr. Ybarra is a former chair of the
Bay Area’s Committee of County Auditors, a former president of the State Association of County
Auditors Property Tax Managers and served as a member on the State Association’s Property Tax Shift
Guidelines Committee. Mr. Ybarra announced that he will retire from the County effective January 3,
2011.
Robert R. Campbell, Auditor-Controller Elect. Mr. Campbell was elected Auditor-Controller of
the County by the voters on June 8, 2010 and will be sworn into office on January 3, 2011. Currently
Mr. Campbell is the Chief Accountant over the property tax division. Mr. Campbell has worked for the
County for more than 22 years. He received a Bachelor of Science degree in business administration
from the California State University, Hayward. Mr. Campbell is an active member of the State
Association of County Auditors, a member of the Government Finance Officer’s Association and the
Association of Government Accountants. Mr. Campbell is a former president of the State Association of
County Auditors Property Tax and Payroll Managers’ committees, and served as a member on various
State Association’s Property Tax Guideline Committees.
10014\POS-6 A-3
William J. Pollacek, Treasurer-Tax Collector. Mr. Pollacek was elected Treasurer-Tax
Collector in June 1998 and has been reelected two times, most recently in June 2006. Prior to his election
in 1998, he served as City Treasurer for the City of Martinez following a 27 year career as a senior credit
officer and credit administrator with both Bank of America and Wells Fargo Bank. Mr. Pollacek received
a Bachelors degree from San Jose State University, Masters degree in Business Administration from
California State University at Fullerton, a Certificate in Advanced Investment Management from The
Wharton School at the University of Pennsylvania and a Certificate in Public Treasury Management from
the University of Southern California. Mr. Pollacek also serves on the Contra Costa County Employees’
Retirement Association Board of Trustees and is a founding trustee of CalTRUST, an investment trust
established by public agencies in the State for the purpose of pooling and investing local agency funds.
Mr. Pollacek announced that he will retire from the County effective January 3, 2011.
Russell V. Watts, Treasurer-Tax Collector Elect. Mr. Watts was elected Treasurer-Tax
Collector by the voters of the County on June 8, 2010 and will be sworn into office on January 3, 2011.
Mr. Watts has been serving as Chief Deputy Treasurer-Tax Collector since 2002 where he has been
responsible for the administration of the department. He has 16 years of county treasury and tax
collection experience with administrative responsibilities in such areas as revenue collections, cash
management, and investments. Mr. Watts holds a Bachelor's degree from Brigham Young University,
Provo, UT, and a Masters degree in Public Administration from the University of North Carolina, Chapel
Hill, NC. He is an active member of the California Association of County Treasurers and Tax Collectors
(CACTTC) and the Government Finance Officers Association of America. Mr. Watts serves on various
State-wide CACTTC committees. Commencing with his four-year term in 2011, Mr. Watts will also
serve on the Contra Costa County Employees’ Retirement Association Board of Trustees.
Population
The County is the ninth most populous county in California, with its population reaching
approximately 1,073,055 as of January 1, 2010. This represents an increase of approximately 4.1%
compared to the County’s population as of January 1, 2006. 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.
Population growth in the County has been strongest in unincorporated areas as well as in the
cities of Antioch, Brentwood, Hercules, Oakley, Pittsburg and San Ramon.
(Remainder of this Page Intentionally Left Blank)
10014\POS-6 A-4
The following is a summary of the County’s population levels since 2006.
Table A-1
COUNTY OF CONTRA COSTA
POPULATION(1)
(AS OF JANUARY 1)
2006 2007 2008 2009 2010(2)
Antioch 100,163 99,580 100,957 101,041 102,330
Brentwood 45,974 48,677 51,908 51,950 52,492
Clayton 10,841 10,730 10,864 10,873 10,492
Concord 123,969 122,951 124,599 124,703 125,864
Danville 42,719 42,457 43,043 43,080 43,574
El Cerrito 23,289 23,086 23,440 23,461 23,666
Hercules 23,647 23,864 24,480 24,499 24,693
Lafayette 24,003 23,841 24,087 24,106 24,342
Martinez 36,306 36,018 36,348 36,378 36,663
Moraga 16,223 16,099 16,204 16,216 16,332
Oakley 29,485 31,755 34,468 34,500 35,846
Orinda 17,557 17,434 17,669 17,687 17,866
Pinole 19,315 19,143 19,383 19,400 19,555
Pittsburg 62,492 62,712 63,771 63,827 64,967
Pleasant Hill 33,203 32,964 33,547 33,576 33,844
Richmond 102,676 103,351 104,513 104,602 105,630
San Pablo 30,977 30,822 31,808 31,834 32,131
San Ramon 56,505 57,766 63,176 63,230 64,860
Walnut Creek 65,603 65,085 65,860 65,915 66,584
SUBTOTAL 864,947 868,335 890,125 890,878 901,731
Balance of County 165,785 169,141 170,310 170,447 171,054
TOTAL 1,030,732 1,037,580 1,060,435 1,061,325 1,073,055
California 37,195,240 37,559,440 38,292,687 38,255,508 38,648,090
_______________
(1) Columns may not total due to independent rounding.
(2) Preliminary.
Source: State Department of Finance, Table 2: E-4 Population Estimates for Cities, Counties and State, 2005-2009 with 2000 DRU
Benchmark and E-1 Population Estimates for Cities, Counties and the State with Annual Percent Change – January 1,
2009 and 2010.
10014\POS-6 A-5
Industry and Employment
As shown below, the County’s civilian labor force was 526,000 in 2009. With average 2009
unemployment rates of 10.3% and 11.4% for the County and the State, respectively, the County has
achieved a lower unemployment rate than that of the State in each of the prior five calendar years.
Table A-2
COUNTY OF CONTRA COSTA
EMPLOYMENT AND UNEMPLOYMENT OF
RESIDENT LABOR FORCE
WAGE AND SALARY EMPLOYMENT BY INDUSTRY
ANNUAL AVERAGES (IN THOUSANDS)
2004 2005 2006 2007 2008 2009
County Civilian Labor Force (1) 512.5 516.1 519.0 519.7 526.9 526.0
Employment 484.6 491.0 496.7 495.4 494.4 471.7
Unemployment 27.9 25.1 22.3 24.3 32.4 54.3
Unemployment Rate:
County 5.4% 4.9% 4.3% 4.7% 6.2% 10.3%
State of California 6.2% 5.4% 4.9% 5.4% 7.2% 11.4%
Wage and Salary Employment (2) 2004 2005 2006 2007 2008 2009†
Farm 0.8 0.8 0.7 0.7 0.7
Natural Resources and Mining 0.9 0.9 1.0 1.0 1.0
Construction 28.0 29.6 29.2 28.5 24.8
Manufacturing 20.6 19.8 20.2 20.6 20.8
Wholesale Trade 9.0 8.8 9.1 9.1 8.7
Retail Trade 43.4 44.0 44.0 44.4 43.9
Transportation and Public Utilities 7.5 7.6 8.4 8.8 8.8
Information 14.0 13.5 13.4 13.0 11.9
Finance and Insurance 25.0 26.4 24.7 22.4 20.0
Real Estate, Rental and Leasing 7.6 7.6 7.4 6.8 6.4
Professional and Business Services 45.9 46.7 50.6 49.4 49.4
Education and Health Services 41.1 40.8 42.7 44.6 45.7
Leisure and Hospitality 30.3 31.5 32.4 33.2 32.9
Other Services 13.9 12.3 12.2 12.6 13.8
Government 49.3 50.2 48.5 52.2 51.6
TOTAL (3) 337.5 340.3 344.5 346.9 340.4
_____________
† Detailed information is not yet available.
(1) Based on place of residence.
(2) Based on place of work.
(3) Columns may not total due to independent rounding.
Source: State of California, Employment Development Department, and Labor Market Information Division, March 2009
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 Bay and San Pablo Bay leading to San Francisco Bay and the Pacific
Ocean.
10014\POS-6 A-6
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 with locations in the County and their estimated firm-wide employment
levels.
Table A-3
MAJOR EMPLOYERS IN THE EAST BAY
WITH EMPLOYEES IN THE COUNTY
2010
Firm Primary Location Product or Service
Estimated No.
Employees
University of California, Berkeley Alameda Higher Education 22,277
Kaiser Permanente Medical Center† Walnut Creek, Martinez Health Care 17,572
State of California Countywide State Government 9,746
Safeway Countywide Supermarkets 9,570
Alameda County Oakland County Government 9,000
County of Contra Costa† Martinez County Government 8,423
Chevron/Corp.† Countywide Energy, Oil & Gas 7,636
John Muir Health† Walnut Creek Health Care 6,335
Wells Fargo & Co. Countywide Banking 5,685
Alta Bates Summit Medical Center, Summit Campus Oakland Nonprofit organization 5,265
Lawrence Livermore National Laboratory Livermore Scientific Research 4,765
U.S. Postal Service Countywide Postal Services 4,202
Lawrence Livermore National Laboratory Berkeley Scientific Research 3,336
Fremont Unified School District Fremont K-12 Education 3,000
PG&E Corp. Countywide Gas & Electric Service 2,850
Children’s Hospital and Research Center Oakland Oakland Children’s Hospital 2,725
San Francisco Bay Area Rapid Transit District (BART) Oakland Public Transit 2,163
Bayer HealthCare Berkeley Biopharmaceutical 2,000
San Ramon Valley Unified School District Danville K-12 Education 1,612
Ross Stores Inc. Pleasanton Retail 1,500
California State University, East Bay Hayward State University 1,440
Robert Half International Inc. Menlo Park Professional Services 1,156
Western Digital Fremont Technology Manufacturing 1,130
_______________
† Headquartered in the County.
Sources: San Francisco Business Times, 2010 Bay Area Book of Lists. Data is for the reported entity’s latest fiscal year.
Personal Income
The United States Department of Commerce, Bureau of Economic Analysis (the “BEA”)
produces economic account statistics that enable government and business decision-makers, researchers,
and the public to follow and understand the performance of the national economy.
The BEA defines “personal income” as income received by persons from all sources, including
income received from participation in production as well as from government and business transfer
payments. Personal income represents the sum of compensation of employees (received), supplements to
wages and salaries, proprietors’ income with inventory valuation adjustment and capital consumption
adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and
personal current transfer receipts, less contributions for government social insurance. Per capita personal
income is calculated as the personal income divided by the resident population based upon the Census
Bureau’s annual midyear population estimates.
10014\POS-6 A-7
Table A-4 below presents the latest available total income and per capita personal income for the
County, the State and the nation for the calendar years 2005 through 2009. The County has traditionally
had per capita income levels significantly higher than those of the State and the nation.
Table A-4
COUNTY OF CONTRA COSTA
PERSONAL INCOME
CALENDAR YEARS 2005 THROUGH 2009†
Year and Area
Personal Income
(millions of dollars)
Per Capita
Personal Income
(dollars)
2009†
County
State
United States
N/A
$1,564,389
12,015,535
N/A
$42,325
39,138
2008
County
State
United States
59,348
1,604,113
12,225,589
57,874
43,852
40,166
2007
County
State
United States
58,492
1,572,271
11,879,836
57,881
43,402
39,392
2006
County
State
United States
53,313
1,495,560
11,256,516
55,241
41,567
37,698
2005
County
State
United States
51,528
1,387,682
10,476,669
51,566
38,767
35,424
† Preliminary.
Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information
System, April 2010.
(Remainder of this Page Intentionally Left Blank)
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Commercial Activity
Commercial activity comprises an important part of the County’s economy, with taxable
transactions totaling approximately $13.3 billion in calendar year 2008, the most recent year for which
complete annual data is available. For calendar year 2008, the approximately 5.5% decrease in total
taxable transactions was due primarily to declines in building materials and farm implements (-20.1%)
and automotive and vehicle dealers, parts and supplies (-22.4%). Presented in Table A-5 below is a
summary of taxable transactions in the County since 2004.
Table A-5
COUNTY OF CONTRA COSTA
TAXABLE TRANSACTIONS
CALENDAR YEARS 2004 TO 2008(1)
($ IN 000’S)
2004 2005 2006 2007 2008(1)
Apparel Stores $411,121 $451,401 $462,451 $470,507 $528,456
General Merchandise Stores 1,794,677 1,840,754 1,882,310 1,878,711 1,753,124
Specialty Stores 1,313,316 1,339,013 1,353,099
(2) (2)
Food Stores 596,922 607,168 607,062 616,296 594,275
Eating and Drinking Places 994,733 1,049,124 1,098,793 1,125,644 1,134,412
Home Furnishings and Appliances 492,686 483,977 468,008 427,995 471,620
Building Materials and Farm Implements 1,080,813 1,092,471 1,027,731 944,683 747,773
Service Stations 921,731 1,043,848 1,190,703 1,351,405 1,514,897
Automotive and Vehicle Dealers, Parts
and Supplies
1,808,676
1,857,918
1,871,103
1,812,785
1,406,932
All Other Retail Stores 282,690 306,410 314,647 1,481,678 1,332,819
Total Retail Outlets 9,697,365 10,072,084 10,275,907 10,109,704 9,484,307
Business and Personal Services 506,336 524,750 567,375 555,973 533,701
All Other Outlets 2,786,837 2,883,241 3,024,379 3,420,618 3,289,673
TOTAL ALL OUTLETS $12,990,538 $13,480,075 $13,867,661 $14,086,295 $13,307,681
% CHANGE – 3.8% 2.9% 1.6% (5.5%)
_______________
(1) Most recent annual data available.
(2) Beginning in 2007, the data for the category “Specialty Stores” is included in the total for All Other Retail Stores.
Source: State Board of Equalization.
Much of the County’s commercial activity is concentrated in central business districts of its cities
and unincorporated towns. Regional shopping centers, numerous smaller centers and several “big box”
warehouse stores serve County residents. The County is served by all major banks including Bank of
America and Wells Fargo Bank. In addition there are numerous local banks and branches of smaller
California and foreign banks.
See also APPENDIX B–“COUNTY FINANCIAL INFORMATION.”
10014\POS-6 A-9
Construction Activity
The value of residential building permits in the County decreased by 23.8% in calendar year 2009
compared to calendar year 2008 levels, the lowest level in the past five years. The decrease was due to
sharp declines in building permits issued for the construction of multi-family homes.
The following Table A-6 provides a summary of residential building permit valuations and
number of new dwelling units authorized in the County since calendar year 2005.
Table A-6
COUNTY OF CONTRA COSTA
RESIDENTIAL BUILDING PERMIT VALUATIONS
CALENDAR YEARS 2005 THROUGH 2009
($ IN THOUSANDS)
Residential
Year
Single Family
Multifamily
Alterations
and
Additions
Total
Residential
Nonresidential
Valuation
Total† Units Valuation Units Valuation
2005 5,452 $1,525,515 860 $106,511 $293,394 $1,925,421 $392,870 $2,318,291
2006 3,310 986,6945 1,178 157,972 307,152 1,451,818 412,500 1,864,318
2007 2,698 832,053 909 94,505 290,108 1,216,665 491,315 1,707,980
2008 985 300,089 909 132,825 229,023 661,936 459.933 1,121,869
2009 1,038 300,363 163 34,119 170,150 504,632 314,301 818,934
______________
† Total represents the sum of residential building permit valuations. Data may not total due to independent rounding.
Source: Construction Industry Research Board.
An approximately 5,979 acre development located east of the City of San Ramon known as
“Dougherty Valley” is expected to add 11,000 new homes in the County. The development is being
constructed in nine phases with complete buildout expected in 2015. All phases of construction of
Dougherty Valley have been approved by the County. To date, approximately 8,900 homes have been
constructed, as well as the 2,200 student Dougherty Valley High School which opened in fall 2007; two
900-student middle schools and three 760-student kindergarten through grade 5 elementary schools. For
the 2009-10 academic year, approximately [1,520] students in grades 9 through 12 were enrolled in
Dougherty Valley High School.
In November 2004, County voters approved Measure J, which extended a ½ percent
transportation sales tax program within the County. Measure J included a continuation of the Growth
Management Program (the “GMP”) originally approved under the transportation sales tax measure,
known as “Measure C-1988,” and it carried forward six of eight compliance requirements from the
existing Measure C GMP. Measure J also added a new requirement that local jurisdictions adopt a voter-
approved Urban Limit Line (a boundary outside of which future growth is prohibited). In order to remain
eligible to receive the 18% Local Street Maintenance and Improvement Funds and the 5% Transportation
for Livable Communities funds under Measure J, each jurisdiction is required to adopt a voter-approved
Urban Limit Line.
On November 7, 2006, the voters in the County approved Measure L that: (i) extended the term
of the County’s Urban Limit Line to the Year 2026; (ii) requires voter approval to expand the Urban
Limit Line by more than 30 acres; (iii) adopted a new Urban Limit Line Map; and, (iv) established new
review procedures.
10014\POS-6 A-10
On April 3, 2007, the County received a letter from the Contra Costa Transportation Authority
acknowledging that through the passage of Measure L, the County had a voter-approved Urban Limit
Line in compliance with the GMP under Measure J. To date, the County, and the cities of Antioch,
Brentwood, Pittsburg and San Ramon each have voter-approved Urban Limit Lines in compliance the
Measure C GMP. [Review]
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
Francisco and the central portion of the County to Sacramento and points north via Interstate 5, the major
north-south highway from Mexico to Canada. Interstate 680 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
approximately $200 million. This project was completed and opened to the public in fall 2009. Caltrans
completed construction of the Alfred Zampa Memorial span across the Carquinez Strait on Interstate
Highway 80 in 2003; and completed a five lane bridge, with nine toll booths, over the Benicia – Martinez
Bridge on Interstate Highway 680 at a cost of approximately $1.3 billion in August 2007. The
realignment of the original Benecia-Martinez Bridge for four lanes of southbound traffic and two-way
bicycle and pedestrian traffic opened in August 2009.
Ground transportation is available to County residents from several service providers, as
described below:
Central Contra Costa Transit Authority provides local bus service to the central area of the
County including Walnut Creek, Pleasant Hill and Concord.
BART connects the County to Alameda County, San Francisco, including the
San Francisco International Airport, 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 has 43 stations and 104 miles of
roadway in its system.
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 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 in the inland areas.
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, is comprised of seven city owned
terminals, five dry docks and 11 privately owned terminals, covers approximately 202 acres and handles
more than 20 million metric tons of general, liquid and dry bulk commodities annually. The majority of
10014\POS-6 A-11
the shipments are bulk liquids, primarily petroleum, petroleum products, chemicals and petrochemicals,
coconut and other vegetable oils, tallow and molasses. Imports of automobiles, agricultural products,
vehicles, steel products, scrap metals and other diversified bulk cargo are significant components of Port
activities.
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 located in Byron and the other in
Concord.
Environmental Control Services
Water. The East Bay Municipal Utilities District (“EBMUD”) and the Contra Costa County
Water District (“CCWD”) supply water to the County. EBMUD supplies water to the western part of the
County, including Alamo, Crockett, Danville, Diablo, Hercules, Lafayette, Moraga, Orinda, Pinole,
portions of Pleasant Hill, Richmond, Rodeo, San Pablo, San Ramon Selby and portions of Walnut Creek.
Approximately 89% of its supply is from the Mokelumne River watershed stored at the 69.4 billion gallon
capacity Pardee Dam in Ione, California. EBMUD is entitled to 325 million gallons per day under a
contract with the State Water Resources Control Board, plus an additional 119 million gallons per day in
a single dry year under a contract with the U.S. Water and Power Resources Service (formerly the U.S.
Bureau of Reclamation). After dry winters in 2006 and 2007, EBMUD water supplies were at critically
low levels. To safeguard the shrinking supply, in spring 2008, EBMUD declared a drought emergency,
imposed mandatory water rationing goals ranging from 5% for industrial users to 19% for single family
residential users to 30% for irrigation user, and imposed drought surcharge rates commencing August 1,
2008. As a result of strong customer conservation and greater run-off in spring 2009, the mandatory
rationing program was terminated and was replaced with a voluntary 10% conservation program. The
voluntary conservation program was terminated on April 27, 2010.
CCWD obtains its water from the Sacramento-San Joaquin Delta and serves approximately
500,000 customers in the central and eastern part of the County, including Antioch, Bay Point, Clayton,
Clyde, Concord, Martinez, Oakley, portions of Pleasant Hill, Pittsburg and portions of Walnut Creek. It
is entitled under a contract with the U.S. Water and Power Resources Service to purchase 195,000 acre-
feet per year. Water purchased by CCWD 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, CCWD constructed the Los
Vaqueros Reservoir with a capacity of 100,000 acre-feet south of the City of Antioch. In spring 2004,
62% the voters within CCWD approved the preparation of an economic analysis, a technical feasibility
report and environmental review to expand the reservoir up to 275,000 acre-feet. The United States
Bureau of Reclamation is the lead federal agency and CCWD is the lead State agency for preparation of
the Environmental Impact Statement/Environmental Impact Report. A draft feasibility report and the
public draft environmental impact statement/environmental impact report considering four alternatives,
including expansion of the reservoir to 160,000 acre feet acre feet was released in February 2009 and final
drafts to expand the reservoir to 160,000 square-feet were certified by the CCWD on March 31, 2010.
Design and construction is planned to commence in early 2011.
Sewer. Sewer services in the County are provided by approximately 20 sanitation districts and
municipalities. Federal and State environmental requirements, plus grant money available from these two
sources, resulted in upgrading, expanding and/or building new facilities by approximately 14 agencies.
Flood Control. The Contra Costa County Flood Control and Water Conservation 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
10014\POS-6 A-12
interspersed with inland waterways that fall under the jurisdiction of the U.S. Army Corps of Engineers
and the State Department of Water Resources. 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 estimate the cost of compliance with
EPA requirements, although such costs may be significant.
Education and Health Services
Education. Public school education in the County is available through nine elementary school
districts, two high school districts and seven unified school districts. As of Fiscal Year 2009-10, these
districts provided 146 elementary schools, 43 middle, junior high and intermediate schools, seven
alternative schools, 30 high schools, 20 continuation schools, six community day, juvenile court and a
number of preschools, eight adult schools, and six special education facilities. In addition, there are
81 private schools with six or more students in the County. School enrollment for Fiscal Year 2009-10
(the most recent year for which data is available) numbered approximately 166,960 students in public
schools and approximately 16,600 in regular graded private schools.
Higher education is available in the County through a combination of two-year community
colleges and four-year colleges, including the Contra Costa County Community College District which
has campuses in Richmond, Pleasant Hill and Pittsburg; California State University East Bay which
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; and St. Mary’s College of California, a
four-year private institution, located on a 100-acre campus in Moraga. Also located within the County is
the John F. Kennedy University with campuses in Pleasant Hill and Pittsburg, the UC Berkeley Extension
Contra Costa Center in San Ramon and the University of Phoenix Campus in Concord.
Health Services. There are 12 privately operated hospitals and one public hospital in the County,
with a combined total of approximately 1,900 beds. The major public hospital is the Contra Costa
Regional Medical Center located in Martinez. See also “–Contra Costa Regional Medical Center.” Five
of the private hospitals are run by Kaiser, the largest health maintenance organization in the United States.
The Walnut Creek-based John Muir/Mt. Diablo Health System operates hospitals at its Walnut Creek and
Concord Campuses and outpatient services at its Brentwood Campus and in Rossmoor.
Doctors Medical Center. Doctors Medical Center is operated by the West Contra Costa Health
Care District (the “Health Care District”). This 247 bed facility is located in the western portion of the
County, which has a population of approximately 250,000, a large portion of whom are low income.
Doctors Medical Center provides medical services to the general public and is a critical component of the
County Emergency Medical Services system.
In September 2006, the Health Care District declared a financial emergency and authorized the
filing of a bankruptcy petition in an effort to keep the hospital open. On September 19, 2006 and
September 26, 2006 the Board of Supervisors received updates from the Health Care District regarding
possible closure of the hospital. On October 1, 2006 the Health Care District filed a voluntary petition for
Chapter 9 bankruptcy protection. On October 31, 2006, the Board of Supervisors approved the general
structure of a recovery plan (the “Recovery Plan”) to maintain services at Doctors Medical Center. The
participants in the Recovery Plan are the County, the Health Care District, the physician groups that
independently admit patients to the hospital, the State and the bankruptcy court, all of whom approved the
general structure. The Recovery Plan, in part, includes: (i) execution of a joint powers financing
agreement between the County and Doctors Medical Center to establish a joint management board on
which the County will have majority representation; (ii) execution of an agreement between the County
and the Health Care District for the temporary transfer, in installments, from the County General Fund,
through June 30, 2007 of up to $10 million to the State’s General Fund, which funds will be matched by
the federal government and used by the State to provide enhanced Medi-Cal payments to Doctors
10014\POS-6 A-13
Medical Center; and (iii) annual reallocation of approximately $2.5 million of ad valorem property tax
revenues that would otherwise be allocated to the Health Care District in each of four successive years
commencing with the Fiscal Year beginning July 1, 2007, to the County, to repay the County’s transfer
discussed in (ii) above. On February 5, 2007 the board of directors of the Health Care District
unanimously approved the creation of a joint powers authority. On February 6, 2007 the Board of
Supervisors unanimously approved the creation of the joint powers authority. The County is permitted to
end its participation in the joint powers authority at any time with 90 days notice.
The Doctors Medical Center Management Authority (the “Medical Center JPA”), a joint powers
authority, was organized pursuant to a Joint Exercise of Powers Agreement entered into in
February 2007, between the County and the Healthcare District. The Medical Center JPA is governed by
a seven member board of directors comprised of two members from the Healthcare District, one affiliated
physician representing the Doctors Medical Center medical staff and four members representing the
County. The County members of the Medical Center JPA are the Director of County Health Services, the
Chief Financial Officer of County Health Services and two members from the Board of Supervisors. The
Medical Center JPA is working with Wellspring Management Services, LLC, formerly known as Speltz
& Wells LLC and wholly-owned by Huron Consulting Group (“Wellspring”), to develop a profitability
analysis of existing services and potential operating models to reduce annual operating losses.
The Recovery Plan was executed by each participant. If the Recovery Plan is not successful and
Doctors Medical Center is closed, demand at the County public hospital (described below) and other
hospitals in the area is expected to increase.
As of June 30, 2007, the County had transferred all $10 million to the State’s General Fund.
Three million was transferred on November 3, 2006, $3 million on December 5, 2006 and $4 million on
February 15, 2007.
During the period July 1, 2007 through September 30, 2008 the Medical Center JPA worked
with Wellspring to implement a number of initiatives in the following areas: Revenue Cycle-improve
billing and collections; Labor- right size staffing with hospital volume and need; Non-Labor - renegotiate
pricing arrangements and vendor contracts (better pricing on products and services provided to the
hospital). These initiatives yielded $9.7 million in savings. The Medical Center JPA then negotiated a
three year Medi-Cal contract increase in the amount of $36 million with the California Medical
Assistance Commission (CMAC); a $12 million three year grant with Kaiser Permanente and a $3 million
three year grant with John Muir Medical Center which eliminated the annual $29.7 million structural
deficit of Doctors Medical Center.
On June 3, 2008 Doctors Medical Center filed a “Disclosure Statement Plan for the adjustment of
debt” in the United States Bankruptcy Court, Northern District of California. On August 14, 2008 the
Plan was approved without objection and Doctors Medical Center emerged from bankruptcy.
The County has received $9.796 million of the contracted $11.5 million property tax exchange
with the Hospital District. The property tax exchange commenced during Fiscal Year 2006-07 and
repayment in full is expected in Fiscal Year 2010-11.
10014\POS-6 A-14
Contra Costa Regional Medical Center. The public hospital in the County is Contra Costa
Regional Medical Center (“CCRMC”), a 164-bed facility that the County rebuilt and re-opened to the
public in 1998 on the existing campus in Martinez. Since reconstruction of the hospital in 1998, the
County completed a public health/clinical laboratory in 2001 on the CCRMC campus, converted the
former Los Medanos Hospital into the Pittsburg Health Center, completed construction of an ambulatory
care clinic on the campus of CCRMC and expanded clinics in Antioch, Concord and Brentwood. The
County reopened the Bay Point Family Health Center in Pittsburg in February 2009, following extensive
renovations, including construction of a state-of-the-art children’s dental clinic, and the County also
operates the Richmond Health Center which will be demolished upon the completion of Capital Project I.
See “THE 2010 PROJECTS–Capital Project I” in the body of this Official Statement..
For a description of the replacement of the clinic in Richmond, see “THE 2010 PROJECTS” in the
front of this Official Statement.
10014\POS-6 B-1
APPENDIX B
COUNTY FINANCIAL INFORMATION
TABLE OF CONTENTS
PAGE
Introduction ............................................................................................................................................... B-1
State Budgets ............................................................................................................................................ B-1
State Budget Acts ...................................................................................................................................... B-2
County Budget Process ............................................................................................................................. B-7
Recent County General Fund Budgets ..................................................................................................... B-8
County Financial Management Policies ................................................................................................. B-12
Ad Valorem Property Taxes ................................................................................................................... B-15
The Teeter Plan ....................................................................................................................................... B-20
Largest Property Taxpayers .................................................................................................................... B-21
Taxation of State-Assessed Utility Property ........................................................................................... B-21
Redevelopment Agencies ........................................................................................................................ B-22
Accounting Policies, Reports and Audits ............................................................................................... B-23
County Employees .................................................................................................................................. A-26
Contract Negotiations ............................................................................................................................. A-26
Pension Plan ............................................................................................................................................ B-27
Other Post-Employment Healthcare Benefits B-33
Long Term Obligations ........................................................................................................................... B-38
Future Capital Projects ............................................................................................................................ B-41
Insurance and Self-Insurance Programs .................................................................................................. B-41
INDEX OF TABLES
PAGE
Table B-1 General Fund Budget ....................................................................................................... B-12
Table B-2 Summary of Secured Assessed Valuations and Ad Valorem Property ............................ B-17
Table B-3 Summary of Foreclosure Activity .................................................................................... B-19
Table B-4 Fifteen Largest Property Taxpayers ................................................................................. B-21
Table B-5 Community Redevelopment Agency Projects Full Cash Value Increments and
Tax Allocations ................................................................................................................ B-22
Table B-6 Statement of Revenues, Expenditures and Charges in Fund Balances ............................ B-25
Table B-7 Full-Time Equivalent County Employees ........................................................................ B-26
Table B-8 Labor Organization Unit Contract Expiration Dates ........................................................ B-27
Table B-9 Schedule of Funded Status ............................................................................................... B-29
Table B-10 Total Member Population ................................................................................................ B-29
Table B-11 Schedule of Employer Contributions ............................................................................... B-30
Table B-12 Employer Contribution Rates ........................................................................................... B-31
Table B-13 Reserves and Designated Net Assets Assuming a 7.8% Actuarial Rate of Return .......... B-31
Table B-14 Schedule of Revenues, Net Assets at Market Value and Return on Market Value .......... B-32
Table B-15 Investment Policy Asset Allocation Targets .................................................................... B-33
Table B-16 Other Post Employment Benefit Plan Summary of Participating Retirees ...................... B-35
Table B-17 Post Employment Health Benefits Schedule of Funding Progress .................................. B-35
Table B-18 Post Employment Health Benefits Plan Annual OPEB Cost ........................................... B-36
Table B-19 Post Employment Health Benefits Plan Actuarial Accrued Liability and Normal Cost .. B-37
Table B-20 Post Employment Health Benefits Plan Annual Required Contribution ......................... B-37
Table B-21 Other Post Employment Benefit Plan Summary of Contributions ................................... B-38
Table B-22 Outstanding Lease Revenue Obligations and Pension Obligation Bonds ........................ B-39
Table B-23 Debt Statement ................................................................................................................. B-40
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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
programs, 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.
The level of intergovernmental revenues that the County receives from the State in Fiscal Year
2010-11 and in subsequent fiscal years is likely to be affected by the financial condition of the State.
State Budgets
Approximately 32.7% of the County’s Fiscal Year 2010-11 General Fund Budget is expected to
consist of payments collected by the State and passed-through to the County or collected by the County
and allocated to County purposes by State law. For Fiscal Year 2009-10, approximately 33.0% of the
County’s General Fund Budget consisted of payments from the State. The financial condition of the State
has an impact on the level of these revenues. In past years the State reduced revenues to counties to help
solve the State’s budget problems, although Proposition 1A of 2004 provides certain protections to
counties. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND
APPROPRIATIONS–Proposition 1A of 2004.” The State has also diverted other revenues such as cigarette
taxes and trailer coach in lieu taxes from counties to the State.
The State has faced and is continuing to face budget challenges caused by the nationwide
economic slowdown and the State’s ongoing pattern of overspending. The Governor and State
Legislature agreed on State budgets for both Fiscal Years 2008-09 and for 2009-10 as described below.
See “–State Budget Acts for Fiscal Year 2008-09 and Fiscal Year 2009-10.” The Governor and the State
Legislature have yet to agree on a budget for Fiscal Year 2010-11.
Property tax revenues received by local governments initially declined more than 50% following
passage of Proposition 13 in June 1978. Subsequently, the State Legislature enacted measures to provide
for the redistribution of the State’s General Fund surplus to local agencies, the reallocation of certain
State revenues to local agencies and the assumption of the cost of certain governmental functions by the
State to assist municipalities to raise revenues. Total local assistance from the State General Fund was
budgeted at approximately 75% of General Fund expenditures in recent years, including the effect of
implementing reductions in certain aid programs.
To the extent the State should be constrained by its Article XIII B appropriations limit, or its
obligation to conform to Proposition 98, or other fiscal considerations, the absolute level, or the rate of
growth, of State assistance to local governments may be reduced. Any such reductions in State aid could
compound the serious fiscal constraints already experienced by many local governments, particularly
counties.
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State Budget Acts
The level of intergovernmental revenues that the County will receive from the State in
Fiscal Year 2010-11 and in subsequent Fiscal Years will be affected by the financial condition of the
State. See “CERTAIN RISK FACTORS–State Funding of Counties.”
The following information concerning the State’s Fiscal Year 2008-09 through Fiscal Year
2009-10 State Budgets and the Fiscal Year 2010-11 Governor’s Budget has been obtained from publicly
available information 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, 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.
The County believes such information to be reliable, however, the County takes no responsibility as to the
accuracy or completeness thereof and has not independently verified such information.
Information about the State budget and State spending is regularly available at various State-
maintained websites. Text of the budget may be found at the website of the Department of Finance,
www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by
the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State official statements,
many of which contain a summary of the State budgets may be found at the website of the State
Treasurer, www.treasurer.ca.gov and at the Electronic Municipal Market Access site maintained by the
Municipal Securities Rulemaking Board at www.emma.msrb.org. Information on these websites has not
been reviewed or verified by the County, the Underwriters or the Financial Advisor and is not
incorporated by reference in this Official Statement.
Fiscal Year 2008-09. The 2008-09 Budget Act (the “2008 State Budget Act”) was adopted by
the Legislature on September 16, 2008 and signed by the Governor on September 23, 2008, reflecting a
reduction of $850 million from the proposed budget bill adopted by the Legislature due to the line item
veto by the Governor of $510 million in State General Fund appropriations and $340 million in State
General Fund savings due to the delay in enacting the 2008 State Budget Act and the effect of Executive
Order S-09-08 (which terminated the services of temporary employees and reduced overtime).
The 2008 State Budget Act reported that the State General Fund began Fiscal Year 2008-09 with
a balance of $4 billion. The 2008 State Budget Act projected State General Fund revenues and transfers
for Fiscal Year 2008-09 of $102 billion, a decrease of approximately 1% from the anticipated revenues
and transfers for Fiscal Year 2007-08, and State General Fund expenditures of $103.4 billion, an increase
of approximately 0.06% above the anticipated expenditures for Fiscal Year 2007-08. The 2008 State
Budget Act projected ending Fiscal Year 2008-09 with a State General Fund balance of $2.6 billion, of
which $885 million would be reserved for the liquidation of encumbrances and $1.7 billion would be
deposited in a reserve for economic uncertainties.
The Governor’s economic forecasts for Fiscal Year 2008-09 reflected weaker economic
performance throughout the country and the State. The 2008 State Budget Act addressed a projected
$24.3 billion budget shortfall which was identified in the Governor’s May Revision to the Proposed 2008
Budget with a combination of cuts in expenditures and projections of increased revenues. The 2008 State
Budget Act included vetoes on behalf of the Governor in the amount of $510 million of spending
approved by the State legislature. The 2008 State Budget Act included a proposal to increase the Budget
Stabilization Account (the “BSA”) from 5% of State General Fund expenditures to 12.5%. In addition,
the 2008 State Budget Act proposed an annual transfer to the BSA of 3% of the General Fund and the
elimination of the ability to suspend such annual transfers. The State would only be permitted to transfer
funds from the BSA if (1) actual revenues during such fiscal year are below a specified level and (2)
funds transferred from the BSA to the State General Fund are appropriated in a stand-alone bill.
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The State has previously required local governments to shift property taxes to the State and/or
schools through the Educational Revenue Augmentation Fund (the “ERAF”) in order to mitigate the
impact of structural deficits in the State budget.
AB 1389. Faced with a budget gap for Fiscal Year 2008-09, the State enacted legislation,
Assembly Bill 1389 (Chapter 751, Statutes 2008) (“AB 1389”) requiring all redevelopment agencies to
contribute an aggregate of $350 million to the ERAF in Fiscal Year 2008-09. AB 1389 provided that one-
half of an agency’s ERAF obligation for all project areas collectively is calculated based on gross tax
increment received by the agency and other half of its ERAF obligation is calculated based on tax
increment revenues net of any pass-through payments to affected taxing entities. On December 8, 2009,
the California Redevelopment Association (the “CRA”) and one of its member agencies brought suit in
Sacramento Superior Court (California Redevelopment Agency, et al. v. Michael C. Genest, Director of
the Department of Finance, et al.) (Case No. 34-2008-00028334) (“CRA I”) challenging the
constitutionality of the ERAF contributions and prohibiting the State from diverting such transfers. On
April 30, 2009, the court held for CRA and issued an injunction that prohibited redevelopment agencies
from making the ERAF transfer in Fiscal Year 2008-09. On May 26, 2009, the State filed a notice that it
would appeal the decision. On September 28, 2009, the State noticed its withdrawal of the appeal.
Fiscal Year 2009-10. On February 20, 2009, the Governor signed into law the budget for Fiscal
Year 2009-10 (the “2009 February State Budget”). The 2009 February State Budget contained $42 billion
in budget solutions, but was balanced by assuming passage of certain ballot measures by the voters of the
State on May 19, 2009. All five measures failed to gain the required majority vote. The 2009 February
Budget also relied on revenue and expenditure projections for Fiscal year 2009-10 that, similar to the
estimates supporting the Fiscal Year 2008 State Budget Act, also quickly became out of date.
Impact of the American Recovery and Reinvestment Act of 2009 on the State. The 2009
February State Budget also includes a number of reductions and revenues tied to the American Recovery
and Reinvestment Act of 2009 (“ARRA”). Certain reductions to Ca1WORKS grants, Medi-Cal benefits
and reimbursements, SSI/SSP grants, in-home support services (“IHSS”), the judicial branch and higher
education are scheduled to be enacted in statute and could be suspended if expected revenues from the
ARRA are certified by the Department of Finance to equal $10 billion, including revenues anticipated to
be received by June 30, 2010. If revenues from the ARRA are not sufficient to meet the $10 billion
target, the reductions would be permanent. If revenues from the ARRA reach $10 billion, the reductions
would not go into effect. A future statute would be required to enact the reductions should they become
necessary. On March 4, 2009, the Department of Finance released a preliminary estimate that the State
would receive approximately $8 billion in federal economic stimulus funds, $2 billion short of what is
required to prevent the cuts. The Department of Finance and the State Treasurer’s Office are working
with various interested entities to analyze the Department of Finance’s preliminary estimates.
Budget Actions after the 2009 February State Budget. From July 23, 2009 through July 24, 2009,
the State Legislature voted on, and passed, a majority of the budget solutions amending the 2009
February State Budget to address the combined $60 billion budget deficit over Fiscal Years 2008-09 and
2009-10 that resulted from the deepening recession. The amendments included spending cuts, borrowing,
redirecting revenues from local governments, accounting maneuvers, and a $921 million reserve.
On July 28, 2009, the Governor signed an amendment to the 2009 February State Budget (the
“Amended 2009 State Budget Act”) to include an additional $24.2 billion in budget solutions to address
the further deterioration of the fiscal situation of the State identified in the 2009 May Revision. Because
the State Legislature did not adopt budget solutions that eliminated the entire projected deficit, the
Governor used his veto power to eliminate an additional $489 million in spending, leaving the State with
a $500 million reserve.
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The Amended 2009 State Budget Act contained $16.1 billion in spending cuts, $2.2 billion of
borrowing, $3.5 billion of new revenues, $1 billion in fund shifts and $1.4 billion in other accounting
changes.
The $24.2 billion in budget solutions contained in the Amended 2009 State Budget included:
(i) expenditure reductions of $8.5 billion from K-12 education and additional cuts to the State colleges
and university systems (just under $2 billion total for Fiscal Year 2008-09 and Fiscal Year 2009-10);
$785 million from the Department of Corrections, with specific program reforms to be determined upon
the return of the State Legislature in August 2009, $1.7 billion from General Government, by suspending
COLAs; leveraging State assets, consolidating and reorganizing boards and commissions ($50 million in
Fiscal Year 2009-10) and IT procurement reform ($100 million); $820 million from State Employee
Compensation by adopting a third furlough day ($425 million), eliminating rural health care, and scoring
health care savings; $3.0 billion from Health and Human Services by adopting long-term reforms to
CalWORKs ($510 million in Fiscal Year 2009-10), changes and improvements to Medi-Cal eligibility
and improved care coordination ($1.4 billion); reducing In-Home Supportive Services (IHSS) services for
all but the most severely disabled and implementing anti-fraud initiatives ($264 million), funding to
counties for Child Welfare Services ($80 million), changes to eligibility in the Healthy Families program
and freezing of COLAs for IHSS and the Department of Developmental Services long-term care
providers ($76 million) and elimination of funding for the Williamson Act Program which backfills
property tax revenues that local governments forego when property is preserved for agriculture or open
space uses; (ii) fund shifts, including a shift of redevelopment agency funds to schools ($1.7 billion) with
the same amount of base school property tax shifted to the county-level Supplemental Revenue
Augmentation Funds, from which $850 million will be used to fund courts, prisons, Medi-Cal, hospital,
and K-12 school bond expenses that would otherwise be funded from the State General Fund and the
remaining $850 million used to fund K-12 school costs offsetting Proposition 98 State General Fund
costs; (iii) $3.5 billion in revenue augmentations, including optional personal income tax withholding
changes; tax enforcement; permitting the State Compensation Insurance Fund (the “SCIF”) to invest in
bonds issued by the State Treasurer to raise cash, and special fund transfers; (iv) $2.2 billion in
borrowing, including suspension of Proposition 1A of 2004 ($1.9 billion), a loan from the State Highway
Account ($135 million) and various loans and fund shifts to keep State parks open; and (v) pushing the
last State worker payday of the Fiscal Year from June 30, 2010, to July 1, 2010, the start of the next
Fiscal Year ($1.4 billion) and (vi) receipt of at least $8 billion from the American Recovery and the
American Recovery and Reinvestment Act of 2009 to offset expenditures in Fiscal Years 2008-09 and
2009-10.
The Amended 2009 State Budget Act reflected the harsh reality of diminished resources forced
by the recession and the impact of the across the board cuts.
In November 2009, the Legislative Analyst’s Office (the State’s nonpartisan fiscal and policy
advisor (the “LAO”) estimated the size of the Fiscal Year 2009-10 and 2010-11 budget problem at
$20.7 billion. The LAO stated that the Governor’s estimate of $18.9 billion estimate was reasonable, but
the baseline estimates of both revenues and expenditures were somewhat more optimistic than those
presented by the LAO. The Governor’s plan aggressively sought additional federal funding related to
health, social services, education and prison programs and flexibility to reduce spending in several areas
including IHSS and Proposition 98 school funding. Combined, the federal requests total approximately $8
billion (approximately 40%) of the proposed budget solutions. The LAO stated its belief that the
likelihood that the federal governments would agree to all of the Governor’s requests was almost non-
existent.
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County Responses to the Amended 2009 State Budget Act. Pursuant to Proposition 1A of 2004
approved by the voters of the State in November 2004, the State may shift up to 8% of local government
property tax revenues to schools and community colleges during severe State financial hardship. Because
the State chose to shift local government property tax revenues as allowed by Proposition 1A of 2004, the
County experienced a reduction in its revenues in Fiscal Year 2009-10, as discussed below. The County
estimated the potential effect of the State budget adopted in July, particularly the Proposition 1A of 2004
borrowing proposal. The County estimated that approximately $23.5 million of its General Fund
revenues in Fiscal Year 2009-10 were subject to State suspension of Proposition 1A of 2004.
Disruptions in payments to the County from the State, whether temporary or permanent, would
require adjustments in the General Fund budget. Deferrals in State payments jeopardize the ability of the
County to maintain core discretionary programs that could require suspension of such programs. As a
result, the County mitigated the $23.5 million impact related to the Proposition 1A of 2004
suspension/borrowing by participating in the California Statewide Communities Development Authority
Proposition 1A Pooled Securitization Program that issued two series of bonds, each of which funded one-
half of the amount of property taxes borrowed by the State from the County. The first securitization
included $11.75 million in property tax that was borrowed by the State from the County in January 2010.
The County received funds as a result of this securitization on January 15, 2010. The second
securitization included approximately $11.75 million in property tax that was borrowed by the State in
May 2010. The County received funds as a result of this securitization on May 3, 2010
Fiscal Year 2010-11. The Governor’s proposed budget for Fiscal Year 2010-11, released on
January 8, 2010 (the “2010 Governor’s Budget”), proposes to solve an estimated $19.9 billion budget gap
by the end of Fiscal Year 2010-11 with a combination of spending reductions, alternative funding, fund
shifts and additional federal funds. Given the re-emergence of a current year shortfall and the necessary
time for budget solutions to achieve their full value, the Governor has emphasized that many of the
solutions in the proposed budget should be adopted immediately. Concurrently with the issuance of the
2010 Governor’s Budget, the Governor declared a fiscal emergency and called the State Legislature into
special session on January 8, 2010 to close the budget gap as soon as possible. As of March 5, 2010, the
State Legislature had adopted and sent to the Governor legislation intended to reduce the budget gap by
about $3.2 billion with additional budget legislation still under consideration. On March 8, 2010, the
Governor vetoed a portion of the legislation constituting approximately $2.1 billion of intended savings.
The Governor has not indicated whether he will sign the remainder of the legislation. The projections and
budgetary proposals in the 2010 Governor’s Budget were updated in May, in connection with the May
revisions, which will be the basis for final negotiations between the Governor and the State Legislature to
reach agreement on the Fiscal Year 2010-11 budget.
2010 Governor’s Budget. The 2010 Governor’s Budget proposed a combined total of
$19.9 billion of budget solutions for Fiscal Years 2009-10 and 2010-11. The solutions consisted of
$8.5 billion in expenditure reductions (approximately 42.7% of total solutions), $6.9 billion in federal
funds solutions (approximately 34.6%), $3.9 billion in alternative funding solutions (approximately
19.5%), and $572 million in fund shifts and other revenues (approximately 2.8%). Expenditure
reductions include $1.07 billion of reductions relating to Medi-Cal; $1.0 billion of reductions relating to
IHSS; $1.63 billion in salary reductions; $2.43 billion reduction in Proposition 98 funding, and
$1.1 billion in reductions relating to prison and corrections expenditures. Alternative funding sources
included $986 million relating to the gas tax shift; the use of $550 million in Proposition 10 moneys to
offset State General Fund expenditures for children’s programs; and the use of $452 million of
Proposition 63 moneys to offset General Fund expenditures for mental health programs. The use of the
Proposition 10 and Proposition 63 moneys described above would require voter approval.
January 2010 LAO Report. On January 12, 2010, the Legislative Analyst Office released its
analysis of the 2010 Governor’s Budget (the “January 2010 LAO Report”). The LAO states that the
reasons for the State’s current budget gap are similar to prior budget shortfalls: the inability of the State to
10014\POS-6 B-6
achieve proposed budget solutions; the effects of adverse court decisions; and, for fiscal year 2010-11, the
expiration of various one-time and temporary budget solutions approved in 2009. The January 2010 LAO
Report (which is available on the website of the Legislative Analyst Office) also stated in part:
The Legislature faces incredibly daunting challenges in balancing this year’s
budget. Many of the major expenditure reductions in this budget will require significant
lead time for departments to implement. Accordingly, the Legislature and the Governor
will need to agree to a framework to solve much of the budget problem by the end of
March. While it is reasonable to assume the state will secure some additional federal
funding and flexibility, securing all of the federal relief the Governor seeks is very
unlikely. Therefore, in developing a plan to balance the 2010-11 budget and rebuild state
finances for the long term, the Legislature must make the types of very difficult decisions
suggested by the Governor’s “trigger list” of cuts and revenue increases—even if the
Legislature rejects some of the specifics of the Governor’s list. Decisions like this will
facilitate steady progress toward a new, sustainable budget framework. Such progress is
imperative to restore the state’s fiscal health and enhance public trust in state
government.
May Revision to the 2010 Governor’s Budget. The Fiscal Year 2010-11 May Revision, released
on May 14, 2010 (the “2010 May Revision”), addresses a remaining General Fund budget gap of
$19.1 billion, comprised of $7.7 billion for Fiscal Year 2009-10, $10.2 billion for Fiscal Year 2010-11,
and a modest reserve of $1.2 billion by proposing deep reductions and program eliminations.
Overall, the 2010 May Revision proposes State General Fund expenditures for Fiscal Year
2010-11 of approximately $0.5 billion above those proposed in the 2010-11 Governor’s Budget, and State
General Fund revenues that are $2.1 billion greater than projections in the Fiscal Year 2010-11
Governor’s Budget. The 2010 May Revision reflects $1.637 billion in proposed loans and transfers from
state special funds. With these additional resources, Fiscal Year 2010-11 revenues total $91.451 billion.
The May Revision proposes additional solutions to close the budget gap. Various fund shifts,
alternative funding, and other revenues, including a $650 million loan of excise taxes on gasoline, account
for $3.4 billion. Spending reductions account for $12.4 billion in solutions.
Federal funds account for $3.4 billion in solutions, a reduction from the Governor’s January
Budget proposal. Proposed federal funds include $1.7 billion from the extension of the temporary increase
in the Federal Medical Assistance Percentage (“FMAP”), $125 million from the extension of other
enhanced federal funding provided under ARRA, and $1.6 billion in additional federal funds for health
and human services and for the Department of Corrections and Rehabilitation. Congress and President
Obama’s Administration have already acted on several funding requests, including the extension of the
temporary FMAP increase to June 30, 2011.
The 2010 May Revision has the following major proposals: (i) reducing Proposition 98 spending
($4.3 billion) by eliminating need-based, subsidized child care; (ii) reducing State employee pay and
staffing and a shift of pension costs to employees ($2.1 billion) by reducing State employee salaries by
5%, increasing State employee pension contributions by 5% and increasing departmental salary savings
by 5%; (iii) eliminating the CalWORKs program ($1.2 billion); (iv) implementing various changes to
Medi-Cal; ($900 million); (v) reducing IHSS spending ($750 million) by limiting services to consumers
with the highest level of need and reducing State participation in wages paid to IHSS workers to the State
minimum wage of $8.00 per hour plus $0.60 per hour for health benefits; (vi) reducing county mental
health realignment funds ($602 million); (vii) placing certain offenders in county jails ($244 million) by
shifting certain non-serious, non-violent, non-sex offenders convicted of specified felonies and sentenced
to three years or less to serve their sentences in county jails instead of State prisons.
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The County cannot predict the extent of the budgetary problems the State will encounter in this or
in any future Fiscal Year, and, it is not clear what measures would eventually be taken by the State to
balance its budget, as required by law. Accordingly, the County cannot predict the final outcome of
future State budget negotiations, the impact that such budgets will have on its finances and operations or
the actions to be taken in the future.
Information about the State budget and State spending is regularly available at various State-
maintained websites. Text of the budget may be found at the website of the Department of Finance,
www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by
the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State official statements,
many of which contain a summary of the current and past State budgets may be found at the website of
the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State
agency maintaining each website and not by the County, and the County takes no responsibility for the
continued accuracy of the internet addresses or for the accuracy, completeness or timeliness of
information posted there, and such information is not incorporated herein by these references.
County Budget Process
Prior to the passage of Senate Bill 113 - the Local Government Omnibus Act of 2009 (“SB 113”),
the County was 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. SB 113, among other things,
implements the “County Budget Act” that clarifies the definition of the terms “administrative officer,”
“auditor,” “board” and “controller,” defines the terms “adopted budget,” “budget year,” “final budget”
and “recommended budget,” makes conforming changes throughout and repeats certain obsolete
provisions. The County will modify its budget process during Fiscal Year 2011-12 to comply with the
statutory requirements set forth in SB 113.
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 develops and presents a proposed budget (the “Proposed
Budget”) to the Board of Supervisors. Absent the adoption of a Final Budget by June 30, the Proposed
Budget is passed into the new Fiscal Year as the spending authority until a Final Budget is adopted.
Third, the County Administrator prepares a Preliminary/Recommended Budget (the
“Recommended Budget”) that is presented to the Board of Supervisors. Between January and the time
the State adopts its own budget, (which is 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 Proposed Budget or, dependent on timing, the Recommended Budget to align County expenditures
with approved State revenue.
Fourth, 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.
In order to ensure that the budget remains in balance throughout the Fiscal Year, the County
Administrator monitors actual expenditures and revenue receipts each month. In the event of a projected
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
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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. Other 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 provision of services. See
“CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS.”
Recent County General Fund Budgets
Set forth in Table B-2 is a description of the County’s comparative budgetary and expenditure
experience for Fiscal Years 2008-09 through 2010-11. For a summary of the actual audited financial
results of the County for Fiscal Year 2008-09, see “COMPREHENSIVE FINANCIAL REPORT OF THE
COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2009” in APPENDIX C to this Official Statement.
Fiscal Year 2008-09. The County’s Fiscal Year 2008-09 budget, adopted by the Board of
Supervisors on May 6, 2008 (the “Fiscal Year 2008-09 Adopted Budget”), reflected a General Fund
budget of $1.256 billion, which was 4% or $50.3 million lower than the Fiscal Year 2007-08 approved
budget. The Fiscal Year 2008-09 Adopted Budget required $52.0 million in reductions from the
maintenance level identified by departments. The Hospital Enterprise Fund cut another $3.2 million in
maintenance level costs for a combined $55 million in reductions from General Fund and Hospital
Enterprise Fund in order to balance the budgets in those funds.
After adoption of the Fiscal Year 2008-09 Adopted Budget, the Board of Supervisors took
significant actions to reduce further the County and Special District budgets, as summarized below:
• August 12, 2008 – The Board of Supervisors received a report stating that
anticipated assessed valuation had dropped from a projected 4% to 0.21% countywide. The lack
of growth in assessed valuations translated to loss of anticipated General Fund revenue in the
current year of $6.6 million included in over $12 million in Countywide loss from property tax
revenue. The County Administrator was directed to return to the Board of Supervisors with
rebalancing solutions.
• October 28, 2008 – The Board of Supervisors adopted recommended Fiscal Year
2008-09 local departmental cuts in the following funds/amounts: General Fund Reduction of
$7.6 million ($6.6 property tax, $1.0 supplemental), Library Fund reduction of $0.8 million,
Contra Costa County Fire Protection District reduction of $3.5 million, and East Contra Costa
County Fire Protection District reduction of $1.4 million.
Additionally, due to further economic uncertainty, the County Administrator
recommended and the Board of Supervisors authorized the Auditor-Controller to reduce the
General Fund Reserve Designation by $10,000,000; and to transfer those funds to an
appropriation for contingency. In effect, this action ‘budgeted’ $10,000,000 of one-time reserves
in the current Fiscal Year budget. This action was recommended in case of further loss of
General Fund revenue and was not to be construed as a cushion for any known problems. The
plan was for the County Administrator to continue to work with departments throughout the year
to achieve balanced year-end expenditures. The report ended with the direction that staff would
return to the Board of Supervisors with final State funding reductions and plans to implement a
no-growth Fiscal Year 2009-10 budget. It was anticipated that a no-growth budget would include
significant additional reductions for increased cost of doing business outside the County’s
control.
• December 9, 2008 –The Board of Supervisors adopted over $20 million in
General Fund reductions included in over $22 million in total funding reductions to adjust for the
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impact of State and other local revenue losses and directed the County Administrator to return
with a lay-off resolution necessary to implement the reductions.
• December 16, 2008 – The Board of Supervisors adopted a lay-off resolution with
lay-offs effective December 31, 2008. The resolution authorized the deletion of certain positions
in affected County departments, as approved by the Board of Supervisors on December 9, 2008.
• January 20, 2009 – The Board of Supervisors accepted a report regarding
national and local economic impacts on Contra Costa County and acknowledged that the County
Administrator had scheduled a Department Head Summit for January 30. In summary, the report
noted the importance of the Board of Supervisors and community receiving local and national
economic impact information in the context of potential impacts on services to Contra Costa
County residents. It was noted that the magnitude of loss of revenue and increased service level
demand in Contra Costa is more easily understood in the context of the national and local
economy. The report projected a current year budget gap of $30 million and a Fiscal Year 2009-
10 gap of an additional $26 million. For a variety of reasons including the economic situation
and the magnitude of the County’s problem ($56 million), the County Administrator
recommended developing a two year budget for Fiscal Years 2009-10 and 2010-11. It was
anticipated that the budget would be adopted in early spring with program reductions and lay-offs
effective in the current fiscal year. The report ended by noting that every attempt would be made
during current labor negotiations to achieve savings to salvage services and jobs in the County.
• February 3, 2009 – The Board of Supervisors declared its intent to adopt a Fiscal
Year 2009-10 General Fund budget that balances annual expenses and revenues; acknowledged
that the known budget gap of over $56 million represents significant service reductions to our
citizens and is in addition to the $90 million in reductions already made in the current fiscal year;
acknowledged that the County Administrator held a Department Head Summit on January 30 to
develop a strategy for dealing with the current budget crisis, the budget crisis over the next two
years, and for weathering the storm and coming out of this stronger, and better able to serve our
constituents; directed the County Administrator to return to the Board of Supervisors with a
'Summit Report' on February 24; affirmed the commitment of the Board of Supervisors to
defining the County’s budget/core service policy on March 3; directed Department Heads to work
closely with the County Administrator to achieve reduced net County costs pursuant to Board
policy; directed Departments, in cooperation with Labor Relations, to begin the meet and confer
process with employee representatives regarding the impact of potential program reductions on
the terms and conditions of employment for affected employees; directed the County
Administrator to return to the Board of Supervisors March 17, 2009 with a Fiscal Year 2009-10
Recommended Budget that meets the above requirements; and designated Tuesday, March 17,
2009 for Fiscal Year 2009-10 budget hearings (including Bielenson hearings if needed); and
Tuesday, March 31, 2009 for adoption of the Fiscal Year 2009-10 County and Special District
budgets.
• March 2009 – the County Administrator advised the Board of Supervisors to be
prepared to adopt the Fiscal Year 2009-10 Budget on March 31, 2009 and to consider layoff
resolutions on April 7, 2009 to carry out necessary actions to balance the Fiscal Year 2009-10
Budget.
Contra Costa County has long focused on its mission of “providing public services which
improve the quality of life of our residents and the economic viability of our businesses.” As the County
completed into Fiscal Year 2009-10 and moved into Fiscal Year 2010-11, national, State and local events
made it apparent that the pursuit of the public service mission would be seriously challenged.
Nonetheless, the County Administrator again affirmed the four major areas of focus that were first
identified in Fiscal Year 2006-07: improving the County’s fiscal health; providing services more
10014\POS-6 B-10
efficiently and effectively; improving the County’s credibility; and developing greater use of teams and
partnerships to address issues. Focusing on these areas for improvement allowed the County to better
manage its resources, lower its expense growth, improve its revenues, and build reserves.
Fiscal Year 2009-10. The Fiscal Year 2009-10 Budget was approved by the Board of
Supervisors on March 31, 2009 (the “Fiscal Year 2009-10 Adopted Budget”). The County closed the
projected General Fund gap between prior-year baseline requirements and Fiscal Year 2009-10 revenue
projections of approximately $58.2 million. The Fiscal Year 2009-10 Adopted Budget assumed a 5%
decline in assessed valuation, based upon a weak residential housing market and actions taken by the
County Assessor to reduce property valuations pursuant to Proposition 8 and negative growth in sales tax
and Proposition 172 public safety sales taxes. See APPENDIX A–“GENERAL COUNTY ECONOMIC AND
DEMOGRAPHIC INFORMATION–ECONOMIC AND DEMOGRAPHIC INFORMATION–Construction Activity”
and APPENDIX B–“COUNTY FINANCIAL INFORMATION–Ad Valorem Property Taxes–Proposition 8
Appeals” and “–Declines in Fiscal Year 2009-10 and Fiscal Year 2010-11 Assessed Valuation”). The
$58.2 million General Fund budget gap, which was net of a retirement expense decrease in the amount of
$19.5 million) resulted in significant impacts upon County operations, including $49.4 million in reduced
services.
Significant actions taken by the Board of Supervisors include the following:
• April 2009 – Adopted lay-offs effective April 30 in order to achieve a two month
savings in Fiscal Year 2008-09 and achieve a full 12 month savings in Fiscal Year 2009-10.
In order to address the structural imbalance in the budget and the expected continuation
of budget pressure into Fiscal Year 2010-11, the County negotiated employee compensation
concessions in the form of six furlough days in each of Fiscal Year 2009-10 and Fiscal Year
2010-11 for all represented employees and unrepresented management personnel. Total savings
as a result of the furloughs was projected to be 2.31% of base salary or a total of $8.4 million in
Fiscal Year 2009-10. The compensation concessions were adopted on July 21, 2009 by the Board
of Supervisors along with significant modifications to health care premium subsidies. See “–
Other Post-Employment Healthcare Benefits.”
• August 2009 – The County Administrator advised department heads that
additional budget reductions would be necessary, in part due to a steeper decline in assessed
valuation (-7.19%) compared to a 5% decline assumed in the Fiscal Year 2009-10 Adopted
Budget. On October 6, 2009, the Board of Supervisors adopted over $11 million in General Fund
departmental funding reductions to rebalance the Fiscal Year 2009-10 Adopted Budget. Of this
amount, $8.8 million was due to reduced revenue projections and $4.5 million from a reduction in
property tax revenue.
Fiscal Year 2010-11. The Fiscal Year 2010-11 Budget was approved by the Board of
Supervisors on May 11, 2010 (the “Fiscal Year 2010-11 Approved Budget”). The Fiscal Year 2010-11
Approved Budget assumed a 5% decline in assessed valuation, based upon ongoing weakness in the
residential property market, however, the actual assessed valuation decline was subsequently reported to
be 3.3%. The County projected a General Fund deficit of approximately $34 million for Fiscal Year
2010-11 which was addressed by reducing General Fund contributions to health-related departments, by
reducing other expenditures by $23.5 million through position reductions in other departments and by
using $3.3 million of General Fund reserves. A total reduction of 119 full-time positions was approved
by the Board of Supervisors, of which 78 positions were General Fund personnel. The Board of
Supervisors also approved layoff resolutions in order to achieve the necessary budget reductions.
10014\POS-6 B-11
As was agreed to in Fiscal Year 2009-10, represented employees and unrepresented management
personnel are subject to six furlough days, which is expected to save approximately $8.4 million in labor
costs in Fiscal Year 2010-11.
In connection with the Fiscal Year 2010-11 Approved Budget, the Board of Supervisors took the
following actions:
• April 20, 2010 – Adopted the Fiscal Year 2010-11 Proposed Budget; conducted public
hearings on County and Special District budgets and directed the County Administrator to
prepare for Board of Supervisors adoption of the Fiscal Year 2010-11 County and Special District
budgets, as modified, to incorporate any changes directed by the Board of Supervisors during the
public hearings.
• May 11, 2010 – Requested that the Auditor-Controller make adjustments to the Fiscal
Year 2009-2010 appropriations and revenues by reallocating and balancing budgeted and actual
expenditures and revenues as needed for various budget units and special districts, subject to
Board of Supervisors approval in September 2010. The request was made pursuant to State law
that requires each budget unit and expenditure object level within those units not exceed
appropriations; the Board of Supervisors authorized the Auditor-Controller to make technical
adjustments to the Fiscal Year 2010-2011 County and Special District budgets when actual
amounts were known; and directed the County Administrator to return to the Board of
Supervisors by the end of September 2010 with further recommendations and/or refinements to
the County Special District and County Service Area budgets.
(Remainder of this Page Intentionally Left Blank)
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A summary of the General Fund Budgets for Fiscal Years 2009-09 through 2010-11 is presented
in Table B-1.
Table B-1
COUNTY OF CONTRA COSTA
GENERAL FUND BUDGET
FOR FISCAL YEARS 2008-09 THROUGH 2010-11
($ IN 000’S)
Final Adopted
Budget
2008-09
Adopted
Budget
2009-10
Approved
Budget
2010-11
Requirements
General Government $146,915 $143,926 $141,521
Public Protection 376,644 341,510 343,233
Health and Sanitation 268,407 260,381 272,116
Public Assistance 410,294 403,108 411,741
Education 337 158 0
Public Ways and Facilities 60,019 49,231 49,390
Recreation and Culture 43 0 0
Reserves and Debt Service 100 100 0
TOTAL REQUIREMENTS 1,262,759 1,198,414 1,218,001
Available Funds
Property Taxes 299,477 269,216 255,170
Fund Balance Available 9,510 10,132 3,333
Other Taxes 20,651 18,187 17,691
Licenses, Permits and Franchises 15,415 14,260 13,847
Fines, Forfeitures and Penalties 14,410 14,657 17,484
Use of Money and Property 6,281 3,199 3,809
Intergovernmental 604,216 561,415 574,602
Charges for Current Services 193,907 204,855 224,832
Other Revenue 98,891 102,493 107,233
TOTAL AVAILABLE FUNDS $1,262,759 $1,198,414 $1,218,001
___________
Source: County Auditor-Controller.
County Financial Management Policies
The Board of Supervisors has adopted a comprehensive set of financial management policies to
provide for: (i) the annual adoption of a policy for the prudent investment of County funds; (ii)
establishing a Treasury Oversight Committee; (iii) establishing and maintaining a General Fund reserve
(iv) establishing formal fiscal policies regarding the adoption and maintenance of an annual balanced
budget, and (v) establishing parameters for issuing and managing debt. Each of these financial
management policies is described below.
Investment Policy. The County annually adopts an investment policy (the “Investment Policy”)
governing the County’s investment of funds in the County Treasurer’s Investment Pool, which as of June
30, 2010 held assets in the approximate amount of $2.0 billion. The most recent update to the Investment
Policy was approved by the Board on June 8, 2010. For a description of the Investment Policy and
investments held in the County Treasurer’s Investment Pool, see APPENDIX B–“COUNTY FINANCIAL
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INFORMATION–CONTRA COSTA COUNTY TREASURER’S INVESTMENT POOL” and APPENDIX D–“COUNTY
INVESTMENT POLICY.”
Treasury Oversight Committee. In November 1995, the Board of Supervisors adopted an Order
establishing a committee (the “Treasury Oversight Committee”). The Treasury Oversight Committee is
composed of seven members: the County Superintendent of Schools or his/her designee; a representative
selected by a majority of the presiding officers of the governing bodies of the school districts and
community college districts in the County; a representative selected by a majority of the presiding officers
of the legislative bodies of the special districts in the County that are required or authorized to deposit
funds in the County treasury; a representative appointed by the Board of Supervisors; and three members
of the public nominated by the County Treasurer-Tax Collector (the “County Treasurer”). Members of
the Treasury Oversight Committee are appointed to four year terms. The members of the first Treasury
Oversight Committee were appointed by an Order of the Board of Supervisors in April 1996. The
original members of the Treasury Oversight Committee were appointed by an Order of the Board of
Supervisors adopted on March 18, 2008 and a replacement representative for the County Superintendent
of Schools was appointed on May 1, 2009.
The Treasury Oversight Committee is responsible for conducting a quarterly review of the
County investment portfolio and annually updating the Investment Policy.
Reserves Policy. In January 2006, the Board of Supervisors adopted a General Fund Reserves
Policy (the “Reserves Policy”). The Reserves Policy requires the County to maintain a General Fund
balance equal to a minimum of 10% of General Fund revenues and an unreserved balance equal to a
minimum of 5% of General Fund revenues. Reserves exceeding the minimum are applied only to one-
time uses such as additional reserves or capital projects up to an amount equal to 1% of General Fund
revenues. The reserves can be used only in emergency situations and only if accompanied by a Board-
approved plan to restore reserves to the target levels. Since Fiscal Year 2005-06, the County’s audited
financial reports confirms compliance with the Reserves Policy. For Fiscal Year 2008-09, the total
General Fund balance was 10.7% of General Fund revenues and the unreserved portion was 8.6%.
For Fiscal Year 2009-10, the County estimates that the total fund balance was 11.5% of General
Fund revenues and the unreserved portion was 8.6%. The budget for Fiscal Year 2010-11 estimates that
the total fund balance will be [8.1%] of General Fund Revenues and the unreserved portion will be
[6.8%].
Budget Policy. In November 2006, the Board of Supervisors adopted a Budget Policy (the
“Budget Policy”) to establish best practices for the budget process and require the preparation of multi-
year budget projections. Among other things, the Budget Policy requires: (i) the adoption of structurally
balanced budgets; and (ii) preparation of mid-year departmental updates on budget status, with corrective
actions presented to the Board of Supervisors within 30 days for any cost centers over budget.
Debt Management Policy. In December 2006, the Board of Supervisors adopted a Debt
Management Policy (the “Debt Management Policy”) that formulized guidelines for issuing and
managing various types of debt instruments and other financial obligations. The Debt Management
Policy provides that the County will undertake multi-year capital planning and sets forth guidelines for
the term of debt issues, refunding savings targets and other structural debt features.
The Debt Management Policy established a Debt Affordability Advisory Committee (the
“Advisory Committee”) that establishes the viability of any proposed debt financing, monitors and
evaluates the performance of the County against various debt ratio benchmarks, and annually prepares a
comprehensive debt capacity report for the County Administrator. The Advisory Committee is composed
of the Auditor-Controller, the County Treasurer, the Deputy Director, Department of Conservation and
Development and the County Director of Finance.
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The Advisory Committee issues an annual report to the County Administrator defining the debt
capacity of the County. From Moody’s Investors Service, the Advisory Committee evaluates the County
against the following debt ratios from the most recently available national medians for counties in the
“Aa” rating tier contained in Municipal Financial Ratio Analysis – U.S. Counties (Population > 1 million)
and for the cohort group of the County in Moody’s Investors Service’s “California County Medians:”
1. Direct net debt as a percentage of assessed valuation;
2. Overall net debt as a percentage of assessed valuation; and
3. Assessed valuation per-capita.
From Standard and Poor’s, the Advisory Committee evaluates the County against the following
three debt ratios from the most recent available national medians for counties in the “AA” rating tier:
1. Percentage of total fund equity;
2. Percentage of unreserved fund equity; and
3. Direct debt per-capita.
The 2009 annual report, completed in September 2010, indicated that even with relatively weak
performance, the performance of the County was improved compared to the 2008 annual report.
Workers’ Compensation Funding. In September 2007, the Board of Supervisors established a
workers’ compensation internal services funding policy, the objective of which is to establish a targeted
minimum confidence level (the measure of probability that the workers’ compensation trust fund will
have sufficient money to cover all benefits and claims that have been incurred) of 80%. The actuarial
report dated as of June 30, 2009 indicated that the total County self insurance reserves reflected an
approximately 99% confidence level on a discounted basis.
Ad Valorem Property Taxes
General. 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
County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”
Ad valorem property taxes on the secured roll are due in two installments, on November 1 and
February 1 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 power of sale by the County Treasurer and may be subsequently sold by the County 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. Ad valorem property taxes on the supplemental roll are 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.
10014\POS-6 B-15
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.
Ad valorem property taxes on the unsecured roll are due as of the January 1 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 California Revenue and Taxation Code. See “–The Teeter Plan.”
Pursuant to those sections, the accounts of all political subdivisions that levy ad valorem 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 “Tax
Losses Reserve Fund”) into which all County-wide delinquent penalties are deposited. The County has
used this method since Fiscal Year 1950-51. See the “–The Teeter Plan–Tax Losses Reserve Fund.”
Ad valorem property tax revenues, which comprised approximately ___% of Fiscal Year 2009-10
General Fund revenues of the County, were significantly affected by a reduction in taxable property
assessed values due to successful property owner appeals and/or unilateral reductions by the County
Assessor pursuant to Proposition 8 (discussed below). For Fiscal Year 2010-11, the ad valorem property
tax values for 49.9% of the parcels reviewed were reduced pursuant to Proposition 8.
Proposition 8 Appeals. In 1978, the voters of the State passed Proposition 8 (“Proposition 8”), a
constitutional amendment to Article XIII A that allows a temporary reduction in assessed value when real
property suffers a decline in value. A decline in value occurs when the current market value of real
property is less than the current assessed (taxable) factored base year value as of the lien date, January 1.
See also “–Declines in Fiscal Year 2009-10 and Fiscal year 2010-11 Assessed Valuation.”
A property owner may apply for a Proposition 8 reduction of the ad valorem property tax
assessment for such owner’s property by filing a written application, in the form prescribed by the State
Board of Equalization, with the appropriate county assessment appeals board (a “Proposition 8” appeal).
In addition to reductions in assessed value resulting from Proposition 8 appeals, Proposition 8 also allows
assessors to reduce assessed value unilaterally to reflect reductions in market value.
Any reduction in the assessment ultimately granted applies only to the year for which application
is made and during which written application is filed. The assessed value increases to its pre-reduction
level for fiscal years following the year for which the reduction application is filed. However, if the
taxpayer establishes through proof of comparable values that the property continues to be overvalued
(known as “ongoing hardship”), a county assessor has the power to grant a reduction not only for the year
for which application was originally made, but also for the then current year as well. In a similar manner,
a county assessor may reassert the pre-appeal level of assessed value depending on the county assessor’s
determination of current value.
In addition to reductions in assessed value resulting from Proposition 8 appeals, California law
also allows assessors to reduce assessed value unilaterally based on a general decline in market value of
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an area. Although Proposition 8 reductions are temporary only for those property that are not sold to new
owners, and are otherwise expected to be eliminated under Proposition 13 if and when market conditions
improve, no assurance is given that such reductions will be eliminated.
On September 3, 2006, the County Appeals Board ruled that the property taxes assessed against
Chevron USA (“Chevron”), for Fiscal Years 2004-05 through 2006-07 were too high by a combined
$1.2 billion and that Chevron had overpaid property taxes by at least $12.6 million. The County and
Chevron have reached a tentative agreement on a repayment plan for $17.84 million refund owed to
Chevron, of which $__ million will be refunded by the County.
Declines in Fiscal Year 2009-10 and Fiscal Year 2010-11 Assessed Valuations. In 2009, the
County Assessor proactively reviewed 200,000 properties throughout the County and reduced the
assessed valuation for approximately 168,000 parcels for Fiscal Year 2009-10. The majority of the
reductions were in Antioch, Pittsburg, Brentwood, Oakley and San Ramon, the cities within the County
that experienced the highest recent population growth. On July 1, 2009 the County Assessor sent a letter
to the County Board of Supervisors to the effect that the Fiscal Year 2009-10 assessment roll had been
prepared reflecting a 7.2% decline Countywide in assessed valuation compared to Fiscal Year 2008-09.
In February 2010, the County Assessor began identifying properties that had declines in value
and automatically reviewing properties that received a reduction in value for Fiscal Year 2009-10. The
County Assessor reviewed a total of 318,327 parcels (310,464 residential parcels and 7,863
commercial/industrial parcels) and reduced the assessed value for 154,889 parcels on the Fiscal Year
2010-11 roll, the majority of which are located in the eastern and western areas of the County.
On July 1, 2010, the County Assessor sent a letter to the County Board of Supervisors to the
effect that due to the downturn in the economy, there was a $4.9 billion County-wide decrease in the local
tax base for Fiscal Year 2010-11. The Fiscal Year 2010-11 County Assessment Roll delivered to the
County Auditor indicated that assessed value was approximately $140.706 billion representing a decrease
of approximately 3.4% compared to Fiscal Year 2009-10.
Pending Assessment Appeals. Property tax values calculated by the County Auditor-Controller
and determined by the County Assessor may be subject to an appeal by the property owners. Assessment
appeals are annually filed with the County Assessment Appeals Board (the “Appeals Board”) for a
hearing and resolution. The resolution of an appeal may result in a reduction to the County Assessor’s
original taxable value and a tax refund to the applicant/property owner.
Outstanding property tax assessment appeals by businesses and the oil industry with a difference
of opinion in value of $50 million or more total approximately $13.1 billion in disputed value for Fiscal
Years 2007-08 through 2009-10, with potential loss of revenue in the millions to various units of County
local government. Of the total amount, an aggregate of approximately $11.4 billion is attributable to
appeals by Chevron USA Inc. (“Chevron”) for Fiscal Year 2007-08 through Fiscal Year 2009-10. On
September 3, 2009, the Appeals Board found in favor of Chevron and determined that the property tax
assessments were too high by a combined amount of $1.2 billion for Fiscal Years 2004-05 through
2006-07 and Chevron had overpaid property taxes by at least $12.6 billion.
On April 1, 2010, the County and Chevron reached a tentative agreement for a repayment plan for
a $17.87 million refund owed to Chevron. The County paid [$6] million to Chevron in August 2010 and
will pay the remaining amount ([$12] million) in August 2011. The County’s portion of such amount
totals $1.8 million and, will result in a loss of property tax revenues in Fiscal Year 2010-11 in the amount
of $600,000 and in the amount of $1.2 million in Fiscal Year 2010-11. Chevron is also appealing its
assessed valuation for the Fiscal Years 2007-08 through 2011-12. The County cannot predict whether or
not appeals will be filed by Chevron or any other major property taxpayers in the future, or if filed
whether or to what extent they will be successful.
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Effect of Foreclosures on Property Tax Collections. As described above, once an installment of
property tax becomes delinquent, penalties are assessed commencing on the applicable delinquency date
until the delinquent installment(s) and all assessed penalties are paid. In the event of foreclosure and sale
of property by a mortgage holder, all past due property taxes, penalties and interest are required to be paid
before the property can be transferred to the purchaser/new owner.
In addition, as required under the Teeter Plan (described below), the County maintains a Tax
Losses Reserve Fund, to cover potential losses that may result if tax-defaulted property is sold by the
County for less than the amount of the taxes owed. See also “–The Teeter Plan.”
A recent history of secured 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 SECURED ASSESSED VALUATIONS AND AD VALOREM PROPERTY
TAXATION FOR FISCAL YEARS 2000-01 THROUGH 2010-11(1)
Tax Losses
Fiscal Secured Secured Current Year Tax Balance in Total Reserve Fund
Year Assessed Property % Delinquent Tax Losses as % of Total
(June 30) Valuation† Tax Levies Delinquencies Delinquent Property Tax Reserve Fund Delinquencies
2000-01 $81,169,335,859 $1,062,831,354 $16,728,410 1.57% $31,050,012 $24,247,987 78.1%
2001-02 89,192,187,601 1,187,173,140 20,551,776 1.73 33,941,546 27,032,058 79.6
2002-03 96,329,938,366 1,293,561,117 25,574,249 1.98 38,614,691 30,347,321 78.6
2003-04 104,887,057,082 1,402,895,299 27,325,421 1.95 40,071,424 20,167,593 50.3
2004-05 114,462,803,733 1,584,132,373 26,598,823 1.68 37,821,908 23,134,013 61.2
2005-06 126,692,954,537 1,720,977,608 35,699,270 2.07 47,003,688 26,334,817 56.0
2006-07 141,883,051,128 1,967,771,060 80,851,968 4.11 97,323,762 33,558,844 34.5
2007-08 154,721,506,676 2,077,282,718 106,031,582 5.10 143,490,997 45,174,112 31.5
2008-09 154,820,838,330 2,061,930,220 86,035,461 4.17 129,971,278 66,209,174 50.9
2009-10 143,356,117,163 1,964,723,577 55,418,474 2.82 101,461,335 84,269,785 83.1
2010-11 139,106,978,652 N/A N/A N/A N/A N/A N/A
___________
† Restated to reflect secured assessed valuations only. In any Fiscal Year, unsecured assessed valuation represents less than
___% of the total.
Source: County Auditor-Controller.
Residential mortgage loan defaults and foreclosures have recently increased significantly in
connection with the collapse of the subprime sector of the residential mortgage market and broader
economic pressures. In California, the greatest impacts to date are in regions of the Central Valley and
the Inland Empire (both areas that are outside of the County), although the County has been impacted as
well, particularly in the eastern portions of the County where the largest number of new mortgages were
originated as growth in residential development occurred since 2000.
Based on information provided by an independent data collection service for calendar year 2009,
mortgage holders had sent 18,248 notices of default with respect to properties located within the County
compared to 16,696 during calendar year 2008, and 7,998 trustee deeds had been recorded (indicating that
the property has been lost to foreclosure) during calendar year 2009 compared to 11,270 during calendar
year 2008.
During the first three quarters (January through September) of calendar year 2010, mortgage
holders sent ____ notices of default and recorded ____ trustee deeds compared to ____ notices of default
sent and ____ trustee deeds recorded during the first three quarters of calendar year 2009.
10014\POS-6 B-18
Due to the continued downturn in the real estate market, there was an approximately $11.3 billion
decrease in the local tax base for Fiscal Year 2009-10 and an approximately $4.9 billion decrease in
Fiscal Year 2010-11. The Fiscal Year 2009-10 total assessment roll (including, the supplemental roll)
totaled approximately $145.6 billion, which represented a 7.2% decline in value compared to the Fiscal
Year 2008-09 total assessment roll and the Fiscal Year 2010-11 total assessment roll (including, the
supplemental roll) totals approximately $140.71 which represents an approximately 3.4% decline
compared to Fiscal Year 2009-10. The greatest percentage declines in assessed value occurred in San
Pablo, Oakley and Antioch, followed by Brentwood, Pittsburg, Hercules and Richmond.
A summary of the notices of default sent and trustee deeds recorded for the cities within the
County during calendar years 2007 through 2009 and during the first three quarters (January through
September) of calendar years 2009 and 2010 are set forth in Table B-3.
(Remainder of this Page Intentionally Left Blank)
Table B-3 CONTRA COSTA COUNTY SUMMARY OF FORECLOSURE ACTIVITY CALENDAR YEARS 2007 THROUGH 2009 AND FIRST THREE QUARTERS OF CALENDAR YEAR 2009 AND 2010 Notices of Defaults Foreclosures Calendar Year January through September Calendar Year January through September Incorporated 2007 2008 2009 % Change 2007 2008 2009 % Change 2009 2010 % Change Alamo 46 61 124 103.3% 4 20 23 15.0% Antioch 2,328 3,104 2,968 (4.4) 981 2,451 1,455 (41.2) Bethel Island 11 14 37 164.3 7 16 10 (37.5) Brentwood 1,011 1,406 1,611 14.6 377 930 729 (21.6) Byron 7 13 15 15.4 5 8 3 (62.5) Clayton 61 69, 118 71.0 12 24 36 50.0 Concord 1,091 1,798 1,922 6.9 396 1,140 837 (26.6) Crockett 20 31 45 45.2 13 16 21 31.3 Danville 152 265 499 88.5 34 76 107 40.8 Diablo 2 3 2 (33.3) 0 0 1 – Discovery Bay 328 487 568 16.6 120 286 241 (15.7) El Cerrito 51 57 94 64.9 21 25 24 (4.0) El Sobrante 144 231 421 82.3 79 262 179 (31.7) Hercules 394 592 753 27.2 123 318 251 (21.1) Knightsen 1 3 0 – 1 0 1 – Lafayette 46 74 108 45.9 10 26 31 19.2 Martinez 245 402 598 48.8 89 251 219 (12.7) Moraga 26 37 60 62.2 7 12 21 75.0 Oakley 688 1,053 1,049 (0.4) 256 801 505 (37.0) Orinda 41 55 79 43.6 7 17 23 35.3 Pinole 184 273 322 17.9 53 161 150 (6.8) Pittsburg 1,129 1,828 2,182 19.4 523 1,759 1,123 (36.2) Pleasant Hill 162 237 318 34.2 40 120 106 (11.7) Richmond 1,412 2,137 1,490 (30.3) 415 1,203 800 (33.5) Rodeo 111 145 149 0.7 37 98 52 (46.9) San Pablo 546 862 1,270 47.3 290 857 604 (29.5) San Ramon 293 543 824 51.7 83 220 242 10.0 Walnut Creek 225 343 585 70.6 47 168 194 15.5 Subtotal Incorporated(1) 10,755 18,131 18,211 0.4 3,983 11,097 7,794 (29.8) Unincorporated(2) 384 573 37 (93.5) 48 173 204 17.9 Total County(3) 11,139 16,696 18,248 9.3% 4,031 11,270 7,998 (29.0%) ____________ (1) Represents the average for all incorporated areas. (2) Represents the average for all unincorporated areas. (3) Represents the Countywide average. Source: MDA DataQuick Information. B-19
10014\POS-6 B-20
The level of default and foreclosure activity has resulted in downward pressure on home prices in
the affected areas. In response, the County has taken the proactive step of reducing the assessed valuation
on certain properties pursuant to Proposition 8, legislation that permits a temporary ad valorem tax
reduction when baseline market value is lower than current market value.
The Teeter Plan
In 1949, the California Legislature enacted an alternative method for the distribution of secured
ad valorem property taxes to local agencies. This method, known as the Teeter Plan, is set forth in
Sections 4701-4717 of Revenue and Taxation Code 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
basis of actual tax collections. The County deposits in the Tax Losses Reserve Fund 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 Corrie v. County of Contra Costa,
110 Cal. App. 2d 210 (1952). The Teeter Plan was named after Desmond Teeter, the then Auditor-
Controller of the County who originated this method of tax distribution. 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 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% of the current year delinquent secured tax levy.
As of June 30, 2010, the balance in the Tax Losses Reserve Fund was $84,269,785. An amount
equal to $9 million of such reserve was transferred to the County’s General Fund in Fiscal Year 2009-10.
(Remainder of this Page Intentionally Left Blank)
10014\POS-6 B-21
Largest Property Taxpayers
The 15 largest property taxpayers in the County, as shown on the Fiscal Year 2009-10 secured tax
roll, and the approximate amounts of their ad valorem property tax payments are shown below. These 15
taxpayers paid a total of approximately $177.7 million in taxes, or approximately 9.1% of the County’s
Fiscal Year 2009-10 secured tax collection.
Table B-4
COUNTY OF CONTRA COSTA
FIFTEEN LARGEST PROPERTY TAXPAYERS
FISCAL YEAR 2009-10
Taxpayer Total Taxes
% of Total
County Tax Roll†
Chevron USA Inc. $49,319,167 2.52%
Equilon Enterprises LLC 22,562,698 1.15
PG & E 18,803,909 0.96
Tesoro Refining & Marketing Co. 15,564,749 0.80
Tosco Corporation 12,228,749 0.63
Sunset Land Co./Annabel Investments 8,324,074 0.43
SeenoSeecon/Century/West Coast 8,291,360 0.42
Pacific Bell Telephone Co./AT&T 7,327,581 0.37
Shappell Industries Inc. 7,034,400 0.36
Mirant Delta/Delta Energy Center 6,017,042 0.31
First Walnut Creek Mutual 5,654,149 0.29
Richmond / Alamo Essex 4,973,458 0.25
Macerich Northwest Association 4,102,743 0.21
Regency Centers 4,009,898 0.21
USS Posco Industries 3,551,985 0.18
TOTAL FIFTEEN LARGEST TAXPAYERS 177,765,961 9.10
Other Taxpayers 1,776,609,727 90.90
TOTAL $1,954,375,689 100.00%
______________
† Column does not total due to rounding.
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 of real and personal property owned by the utility taxpayer. State-assessed unitary and
“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 other 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 adopted 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 three power plants located in the County. However,
assessment of certain power plants has been transferred to the SBE, so the portion of the County’s total
net assessed valuation constituting unitary property subject to SBE assessment has increased (see further
discussion below).
10014\POS-6 B-22
For Fiscal Year 2009-10, approximately 1.8% of the County’s total net assessed valuation
constituted property subject to State assessment by the SBE, for which approximately $33.8 million of
property taxes were collected in Fiscal Year 2009-10. The portion of Fiscal Year 2009-10 tax collections
through the SBE assessment methodology attributable to the County General Fund was approximately
$5.8 million.
For Fiscal Year 2010-11, approximately 2.1% of the County’s total net assessed valuation
constituted property subject to State assessment by the SBE, for which approximately $40.8 million of
property taxes are expected to be collected in Fiscal Year 2010-11. The portion of Fiscal Year 2010-11
tax collections through the SBE assessment methodology attributable to the County General Fund for
Fiscal Year 2010-11 is budgeted to be $7.8 million.
Pursuant to Assembly Bill 81 (California Legislature 2001-2002 Regular Session), commencing
with the January 1, 2003 property tax lien date, the SBE assesses certain electric generation facilities.
The legislation provides that the assessed value and revenues derived from such assessed property is
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 $1.5 million based on the current fiscal year. [Status?]
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 B-5
shows redevelopment agency full cash value increments and tax allocations for agencies within the
County.
Table B-5
COUNTY OF CONTRA COSTA
COMMUNITY REDEVELOPMENT AGENCY PROJECTS
FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS (1)
FISCAL YEARS 2001-02 THROUGH 2009-10
Fiscal Year Base Year Value(2)
Full Cash
Value Increment (3)
Total Tax
Allocations(4)
2001-02 $3,578,860,177 $8,835,385,357 $91,289,481
2002-03 3,433,942,598 10,070,678,634 103,955,708
2003-04 3,600,771,960 11,403,833,690 116,813,986
2004-05 2,881,589,675(5)12,875,417,794 131,478,464
2005-06 2,884,391,641 14,506,883,003 148,064,971
2006-07 3,711,200,834 17,084,543,345 175,384,368
2007-08 3,908,138,764 18,826,562,088 193,352,304
2008-09 3,912,742,668 19,128,706,951 196,972,694
2009-10 3,146,702,990 16,657,996,054 171,145,224
___________
(1) Full cash values for all redevelopment projects above the “frozen” base year valuations. This data represents growth in full cash
values generating tax revenues for use by the community redevelopment agencies.
(2) The Base Year Values since Fiscal Year 1999-00 have been reduced to exclude project areas with negative increment.
(3) 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.
(4) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies.
(5) Decrease reflects the removal of an undevelopable parcel from a redevelopment project area.
Source: County Auditor-Controller.
10014\POS-6 B-23
2009 SERAF Legislation. In connection with the Amended 2009 State Budget Act, Assembly
Bill X4 26 (Chapter 21, Statutes 2009) (the “2009 SERAF Legislation”) was enacted.
The 2009 SERAF Legislation restructured the ERAF transfer in an attempt to satisfy the finding
made by the trial court in CRA I and to extend the ERAF transfer to Fiscal Year 2009-10 and 2010-11.
Under the 2009 SERAF Legislation, redevelopment agencies in the State are required to contribute to the
county Supplemental Educational Revenue Augmentation Fund (the “SERAF”) an aggregate of
$1.7 billion in Fiscal Year 2009-10 prior to May 10, 2010 and $350 million in Fiscal Year 2010-11 prior
to May 10, 2011. The formula for calculating each agency’s share of the total SERAF obligation is the
same as that used in Fiscal Year 2008-09. Based on this formula, the County Redevelopment Agency’s
estimated SERAF share is $6.3 million for Fiscal Year 2009-10 (representing approximately ___% of the
County Redevelopment Agency’s cash and investments available as of June 30, 2009) and $13 million for
Fiscal Year 2010-11. Under the 2009 SERAF Legislation, redevelopment agencies may authorize, from
July 1, 2009, to June 30, 2010, inclusive, the suspension of all or part of its required allocation to the low
and moderate income housing fund from property tax increment revenues that are allocated to the agency
with provisions to repay the fund by June 30, 2015, and use any funds that are legally available and not
legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of bonds or
other indebtedness, lease revenues, interest and other earned income to make the SERAF payments.
On October 20, 2009, the CRA and two member agencies again brought suit in Sacramento
Superior Court (California Redevelopment Association, et al. v. Michael C. Genest, Director of the
Department of Finance, et al.) (CRA II) (Case No. 34-2009-80000359) challenging the SERAF shift. A
hearing on the merits was held on February 5, 2010. Supplemental briefs were filed February 23, 2010.
On May 4, 2010, the Superior Court found that the SERAF shift did not violate the State Constitution and
rejected CRA’s request for a stay of the SERAF transfers. On May 10, 2010, the Third District Court of
Appeal denied CRA’s request for a temporary stay on making the SERAF payment. CRA filed an appeal
on August 30, 2010.
Accounting Policies, Reports and Audits
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
unmatured 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 County 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 County 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
autonomous districts and various trust transactions of the County Treasury. Under California law,
independent audits are required of all operating funds under the control of the Board of Supervisors. The
County has had independent audits for more than 40 years. See APPENDIX C–“AUDITED FINANCIAL
STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2009.”
In addition to the above-mentioned audits, the County Grand Jury may also conduct management
audits of certain offices of the County.
10014\POS-6 B-24
The County, like other State and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the County can be
divided into these categories as follows: (i) governmental funds; (ii) property funds; and (iii) fiduciary
funds.
Governmental Funds: used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-
wide financial statements, governmental fund financial statements focus on near-term inflows and
outflows of resources that are available for spending as well as on balances of resources that are available
for spending at the end of the Fiscal Year.
The County maintains 28 individual governmental funds (e.g. General Fund, special revenue
funds, debt service funds, capital projects funds and permanent fund) for reporting purposes. Information
is presented separately in the governmental fund balance sheet and in the governmental fund statement of
revenues, expenditures, and changes in fund balances for the General Fund, the Contra Costa County Fire
Protection District Special Revenue Fund, and the Land Development Special Revenue Fund.
Proprietary Funds: used to account for information of the same type as the government-wide
financial statements, only in more detail. There are of two different types: (i) Enterprise Funds (used to
report the same functions presented as business-type activities in the government-wide financial
statements) and (ii) Internal Service Funds (used to accumulate and allocate costs internally among the
County’s various functions).
Fiduciary Funds: used to account for resources held for the benefit of entities legally separate
from the County and individuals, which are not part of the reporting entity. Fiduciary Funds are not
reflected in the government-wide financial statements because the resources of those funds are not
available to support the County’s own programs.
Presented in Table B-6 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, 2009 appears in
APPENDIX E to this Official Statement.
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10014\POS-6 B-25
Table B-6
COUNTY OF CONTRA COSTA GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES
FISCAL YEARS 2004-05 THROUGH 2008-09
($ IN THOUSANDS)
2004-05 2005-06 2006-07 2007-08 2008-09
REVENUES
Taxes $237,828 $273,521 $304,323 $317,307 $314,074
Licenses, permits & franchises 12,736 14,442 15,265 12,613 14,041
Fines, forfeitures & penalties 16,620 14,167 13,714 21,255 14,538
Use of money & property 5,454 13,371 18,594 13,829 7,848
Intergovernmental revenues 530,155 578,249 603,078 588,193 552,511
Charges for services 183,774 213,553 215,232 216,838 221,026
Other revenue 76,892 86,745 107,624 99,325 97,203
TOTAL REVENUES 1,063,459 1,194,048 1,277,830 1,269,360 1,221,241
EXPENDITURES
Current:
General government 127,686 145,803 168,963 159,755 146,787
Public protection 285,743 307,005 331,986 341,334 345,338
Health & sanitation 197,686 179,305 181,851 196,017 211,228
Public assistance 357,657 381,600 391,106 392,182 390,659
Education 290 304 241 312 321
Public ways and facilities 51,884 66,929 86,634 88,851 54,848
Recreation – 294 – – –
Debt service:
Principal – – 93 95 98
Interest – 2,181 4,453 5,108 2,274
Capital outlay 6,388 – – – –
TOTAL EXPENDITURES 1,027,352 1,083,421 1,165,327 1,183,654 1,151,553
Excess (deficiency) of Revenues over (under)
Expenditures
36,107
110,627
112,503
85,706
69,688
OTHER FINANCING SOURCES (USES)
Operating transfers in 24,775 21,352 1,707 12,621 19,106
Operating transfers out (94,093) (91,609) (104,817) (106,506) (106,313)
Issuance of debt – – – 1,332 –
Premium on debt issues – – 1,007 970 –
Capital lease financing 6,388 1,705 3,578 2,375 2,629
TOTAL OTHER FINANCING SOURCES (USES) (62,930) (68,552) (98,525) (89,208) (84,578)
.
NET CHANGE IN FUND BALANCES (26,823) 42,075 13,978 (3,502) (14,890)
FUND BALANCE AT BEGINNING OF YEAR,
as Previously Reported
119,886
93,063
135,138
149,116
145,614
Adjustment to beginning fund balance – – – – –
FUND BALANCE AT BEGINNING OF YEAR,
if Restated
119,886†
–
–
–
–
Residual equity transfers in – – – – –
Residual equity transfers out – – – – –
FUND BALANCE AT END OF YEAR $93,063 $135,138 $149,116 $145,614 $130,724
_______________
† Restated.
Source: County Auditor-Controller.
10014\POS-6 B-26
County Employees
A summary of the number of County full-time equivalent (FTE) employees is set forth below:
Table B-7
COUNTY OF CONTRA COSTA
FULL-TIME EQUIVALENT COUNTY EMPLOYEES(1)
As of
June 30
Number of FTE
Employees
2002 8,779
2003 8,785
2004 8,670
2005 8,381
2006 8,423
2007 8,409
2008 8,697
2009 8,625
2010 [8,500]
2011† 8,142
___________
† Budgeted.
Source: County Auditor-Controller.
Contract Negotiations
County employees are represented in 36 bargaining units by 17 labor organizations, the principal
ones being Public Employees Union, Local One; Local 1021 of the Service Employees International
Union (“SEIU”) and Local 2700 of the American Federation of State County and Municipal Employees
(“AFSCME”) which, combined, represent approximately 72% of all County employees in a variety of
classifications.
The Memoranda of Understanding (the “MOUs”) of the employee organizations that have
expired remain in full force and effect. Table B-8 summarizes the labor organizations at the County,
contract expiration dates and status of negotiations.
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10014\POS-6 B-27
Table B-8
COUNTY OF CONTRA COSTA
LABOR ORGANIZATION UNIT CONTRACT EXPIRATION DATES
Contract
Expiration Number of
Labor Organization Date Employees
AFSCME Local 512, Professional and Technical Employees 06/30/11 272
AFSCME Local 2700, United Clerical, Technical and Specialized Employees 06/30/11 1,709
California Nurses Association 08/31/11 510
Contra Costa County Defenders Association 09/30/08(1) 69
Contra Costa County Deputy District Attorneys Association 09/30/08(1) 82
Deputy Sheriff’s Association, Management Unit and Rank and File Unit 06/30/08(1) 780
District Attorney Investigator’s Association 06/30/08(1) 18
East Contra Costa County Firefighters Association, IAFF, Local 1230 06/30/12(1) 315
Physicians and Dentists of Contra Costa 09/30/08(1) 276
Probation Peace Officers Association 09/30/08(1) 275
Professional and Technical Engineers, Local 21, AFL-CIO (2) 837
Public Employees Union, FACS Site Supervisor Unit, Local One 06/30/11 21
Public Employees Union, Local One 06/30/11 2,463
SEIU United Health Care Workers West 09/30/09 812
SEIU Local 1021, Rank and File Unit and Service Line Supervisors Unit 06/30/11 776
SEIU Local 1021, Service Line Supervisors Unit 6/30/2011 36
United Chief Officers’ Association 09/30/10 11
United Professional Firefighters, IAFF Local 1230 06/30/12 315
Western Council of Engineers 06/30/11 20
____________
(1) Negotiations are in process and the employees continue to work for the County pursuant to the terms of the existing MOU
for this labor organization.
(2) No current MOU. The members of this bargaining unit previously were unrepresented. Negotiations are in process.
Source: Contra Costa County Human Resources Department.
Pension Plan
Description. The Contra Costa County Employees’ Retirement Association (the “Association”)
is a cost-sharing multiple-employer defined pension benefit plan governed by the County Employees’
Retirement Law of 1937, as amended (the “Retirement Law”). The plan was established on July 1, 1947
and covers substantially all of the employees of the County, its special districts, the Housing Authority of
the County and 16 other member agencies.
The plan provides for retirement, disability, and death and survivor benefits, in accordance with
the Retirement Law. Annual cost-of-living adjustments to retirement benefits can be granted by the
Board of Retirement of the Association (the “Board of Retirement”) as provided by State statutes.
The Board of Retirement is responsible for the general management of the Association and is
comprised of 12 trustees, three of which are alternates, one for Safety members, one for retirees and one
appointed by the Board of Supervisors. Five members are appointed by the Board of Supervisors,
including the alternate appointee; four members, including one of whom is the Safety alternate, are
elected by the active membership of the Association; and two members, including the retiree alternate are
elected by retirees. The County Treasurer serves as an ex-officio member of the Board of Retirement.
Members of the Board of Retirement, with the exception of the County Treasurer, serve three-year terms
of office, with no term limits.
10014\POS-6 B-28
The Board of Retirement has exclusive control of all retirement system investments and is
responsible for establishing investment objectives, strategies and policies. The State Constitution and the
Act authorize the Board of Retirement to invest in any investment deemed prudent in the opinion of the
Board of Retirement. See “–Investment Policy of the Association.”
The Association is divided into eight separate benefit sections in accordance with the Retirement
Law. These sections are known as: General Tier I, Tier II, Tier III-Enhanced; Safety Tier A, Safety Tier
C and Contra Costa County Fire Protection District Safety and Tier I. On October 1, 2002 the Board of
Supervisors adopted Resolution No. 2002/608, providing enhanced benefit changes equal to 3% of
eligible salary per year of service to safety employees retiring at age 50 (commonly known as 3% at 50)
and 2% of eligible salary per year of service to general employees retiring at age 55 (commonly known as
2% at 55), effective July 1, 2002 and January 1, 2003, respectively.
Legislation was signed by the Governor in 2002 which allowed the County, effective
October 1, 2002, to provide Tier III to all new employees, to move those previously in Tier II to Tier III
as of that date, and to apply all future service as Tier III. Tier III was originally created October 1, 1998
and made available to all members with five or more years of Tier II service who elected to transfer to
Tier III coverage.
Tier I includes members not mandated to be in Tier II or Tier III and reciprocal members who
elect Tier I membership. County employees who were moved to Tier III effective October 1, 2002,
continue to have Tier II benefits for service prior to that date unless the service is converted to Tier III.
The Safety section includes members in active law enforcement, active fire suppression work or certain
other “safety” classifications as designated by the Board of Retirement.
Effective November 1, 2002, an additional flat monthly retiree benefit of $200 is provided for all
former members who retired prior to January 1, 1983, and are currently receiving pension benefits
(including spousal continuance benefits). The cost of this benefit improvement, as determined by the
actuary of the Association was $22,955,000 and has been funded by the Association.
Service retirement benefits are based on age, length of service and final average salary in
accordance with the California Government Code. For Tiers I and III and Safety Tier A members, the
retirement benefit is based on a one-year average salary. For Tier II and Safety Tier C, the retirement
benefit is based on a three-year average salary. Effective January 1, 2007, Contra Costa County and the
Deputy Sheriff’s Association agreed to adopt a new Safety Tier C for sworn employees hired by the
County after December 31, 2006. A Deputy Sheriff hired on or after January 1, 2007 is subject to a 3% at
50 benefit formula with a 2% maximum COLA and a 36-month final average salary period. A five-year
schedule of the funding progress for the Association is set forth in Table B-9.
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10014\POS-6 B-29
Table B-9
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
SCHEDULE OF FUNDED STATUS
($ in 000’s)
Actuarial
Valuation
Date
Actuarial
Value of
Assets(1)
(a)
Actuarial
Accrued
Liability
(AAL)(2)
Entry Age
(b)
Unfunded
AAL
(UAAL)
(b-a)
Funded
Ratio
(a/b)
Covered
Payroll
(c)
UAAL as a
Percentage
of Covered
Payroll
(b-a/c)
12/31/04 $3,673,858 $4,481,243 $807,385 82.0% $619,132 130.4%
12/31/05(3) 4,062,057 4,792,428 730,371 84.8 627,546 116.4
12/31/06(4) 4,460,871 5,293,977 833,106 84.3 653,953 127.4
12/31/07 5,016,137 5,581,048 564,912 89.9 671,618 84.1
12/31/08(5) 5,282,505 5,972,471 689,966 88.5 704,948 97.9
_____________
(1) Excludes assets for non-valuation reserves.
(2) Excludes liabilities from non-valuation reserves.
(3) Reflects the action by the Board of Retirement to revise the inflation rate assumption to 3.75%.
(4) Adjusted to reflect the action by the Board of Retirement to revise the annual investment return assumption to 7.8%.
(5) Excludes Accounts Payable. Restated to exclude non-valuation reserves.
Source: Association Comprehensive Annual Financial Reports for the years ended December 31, 2005 through 2009.
During calendar year 2009, 7,385 County employees were active members of the Association,
representing approximately 82.6% of the Association’s total active membership. Listed in Table B-10 is
a summary of member population in the Association and in Table B-11 are the payments made by the
County to the Association for normal retirement costs as well, as in certain years, UAAL amortized
payments.
Table B-10
COUNTY OF CONTRA COSTA EMPLOYEES’ RETIREMENT ASSOCIATION
TOTAL MEMBER POPULATION
Year Ended
December 31
Total
Association
Active
Members
Inactive
Vested and
Terminated
Members†
Retired
Members and
Beneficiaries
Total
Membership
Ratio of
Non-Actives
to Actives
2005 9,205 1,731 6,437 17,373 0.89:1
2006 9,210 1,919 6,646 17,775 0.93:1
2007 9,421 2,008 6,911 18,340 0.95:1
2008 9,385 2,153 7,012 18,550 0.98:1
2009 8,942 2,227 7,272 18,441 1.06:1
_____________
† Includes terminated members due a refund of member contributions.
Source: Association Comprehensive Annual Financial Reports for the years ended December 31, 2006 through 2009
10014\POS-6 B-30
Table B-11
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
Year
Ended
December 31
Annual
Required
Contribution
Annual
Percentage
Contributed
2004 $118,245,418 100.0%
2005 147,165,108(1)100.0
2006 179,755,314(2)100.0
2007 196,929,570 100.0
2008 206,518,693 100.0
_______________
(1) Excludes the Contra Costa Consolidated Fire District and Moraga-Orinda Fire District pension obligation bond proceeds in
the amounts of $124,917,000 and $28,317,911, respectively.
(2) Excludes the City of Pittsburg pension obligation bond proceeds in the amount of $11,693,396 received on June 27, 2006.
(3) Decrease is primarily attributed to investment gains prior to 2008 that were reflected in the December 31, 2007 actuarial
valuation. Also includes approximately $2.4 million paid by County departments as a result of employees converting prior
Tier 2 Service to Tier 3 Service.
Sources: Association Comprehensive Annual Financial Report for the Year Ended December 31, 2006 through 2009 a
CCCERA Funding Status. The actuarial report prepared by the Association’s independent
actuary, The Segal Company, reflected the financial status of the Association as of December 31, 2007.
The market value of the plan’s assets as of such date was $5,199,116,582 and the return on assets was
7.3%. An updated actuarial report dated as of December 31, 2009 is expected to be accepted by the
Association in October 2010.
The value of the plan’s unfunded actuarial accrued liability (“UAAL”) as of December 31, 2007
was estimated by the actuary to be $564,911,690 using a 7.8% actuarial rate of return. This includes the
County’s portion of the liability in the amount of $430,612,690 as well as that of the other entities
comprising the Association. The GASB Statement No. 25 liabilities calculated for 2007, as shown in the
Actuarial Valuation and Review as of December 31, 2007, showed that the funded ratio was
approximately 89.9%. See also Table B-1–“Contra Costa County Employee’s Retirement Association–
Schedule of Funded Status.”
The Association has established and maintains various reserves and designations from member
and County contributions and the accumulations of investment income thereof, after satisfying investment
and administrative expenses, including a Market Stabilization Account. See “–Market Stabilization
Account.”
Pursuant to provisions of the Retirement Law, the Retirement Board recommends the annual
contribution rates for adoption by the Board of Supervisors. The contribution requirements are
determined as a percentage of payroll.
The employer rates were calculated on the alternate funding method permitted by the California
Government Code Section 31453.5. The “entry age normal funding” method is used to calculate the rate
required to provide all the benefits promised to a new member.
On March 25, 2009, the Retirement Board decided to leave the unfunded actuarial accrued
liability (the “UAAL”) derived from periods on or before the December 31, 2007 valuation date to be
amortized on a level percent closed basis over 14 years on a declining basis.
10014\POS-6 B-31
Subsequent UAAL’s starting with December 31, 2008, will be amortized in multiple layers (each
year will constitute a new layer) with each year’s gains/losses amortized over a separate 18 year period on
a declining basis.
Active plan members are required to contribute an actuarially determined percentage of their
annual covered salary. The required percentage rates vary according to the benefit section and entry age
of the employee. The rates in effect during Fiscal Year 2009-10 (based on covered payroll as of
January 1, 2008) ranged from [4.47% to 29.86]% of the employees’ annual covered salary.
The County employer rates of contribution, calculated as a percentage of the County’s covered
payroll as determined in the actuarial reports are set forth in Table B-12.
Table B-12
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
EMPLOYER CONTRIBUTION RATES†
(CALENDAR YEARS)
2006 2007 2008
General Members, Tier I - Non-Enhanced 34.54% 32.38% 34.35%
General Members, Tier II - Enhanced 29.88 27.41 29.24
General Members, Tier III - Enhanced 26.01 23.03 24.09
Safety Members, Tier A - Non-Enhanced 41.90 34.38 37.41
Safety Members, Tier A - Enhanced 40.96 40.96 42.87
Safety Members, Tier C - Enhanced 38.59 38.89 40.85
CCC Fire Protection District - Safety - Enhanced __.__ __.__ __.__
______________
Source: Association Comprehensive Annual Financial Reports for the Years Ended December 31, 2007 through
December 31, 2009.and __________________.
Table B-13 sets forth the balances as of December 31, 2008 and December 31, 2009, in reserves
and designated net assets:
Table B-13
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
RESERVES AND DESIGNATED NET ASSETS
ASSUMING A 7.8% ACTUARIAL RATE OF RETURN
(AS OF DECEMBER 31, 2008 AND 2009)
Amount
Category 2008 2009
Valuation Reserves $5,282,505,159 $5,290,114,102
Post Retirement Death Benefit 13,455,741 14,147,559
Statutory Contingency Reserve (one percent) 0 0
Market Stabilization Account (1,546,262,088) (827,532,131)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $3,749,698,812 $4,476,729,530
______________
Sources: Association Comprehensive Annual Financial Report for the Year Ended December 31, 2009.
10014\POS-6 B-32
Market Stabilization Account. The Market Stabilization Account represents the deferred return
developed by the smoothing of realized and unrealized gains and losses based on five-year smoothing.
This method smoothes only the semi-annual deviation of total market return (net of expenses) from the
applicable return target per annum. As of December 31, 2009, the net balance in the Market Stabilization
Account was negative $827.5. The assumed rate of return since the Fiscal Year ending June 30, 2007 has
been 7.8%. The Association has reported deferred losses of approximately $155 billion as of December
31, 2009. These losses will be reflected in the updated actuarial report d expected to be available in
October 2010. Unless offset by future investment gains or other favorable experience, the recognition of
the market losses is expected to have a significant impact on the Association’s future funded ratio and
contribution rate requirements.
The revenues of the Association by source, net assets at the end of the year and the total return on
market value for the five years ending December 31, 2008 are set forth in Table B-14. The total return for
the first six months of calendar year 2010 was -1.9%
Table B-14
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
SCHEDULE OF REVENUES, NET ASSETS AT MARKET VALUE
AND RETURN ON MARKET VALUE
2004 THROUGH 2008
Source of Revenues
Year
(December 31)
Employee
Contributions
Employer
Contributions
Investment
Income/
(Loss)(1)
Net Assets
Held in
Interest at
Market Value
End of
Year(2)
Total
Return
on Market
Value(3)
2004 $65,297,397 $118,245,418 $416,012,994 $3,718,615,896 13.4%
2005 73,474,816 300,300,019(4)341,877,365 4,221,722,252 10.8
2006 73,468,648 191,448,711(5)614,912,800 4,871,009,631 15.3
2007 75,590,807 196,929,570 306,459,115 5,199,116,582 6.0
2008 76,452,406 206,518,693 (1,467,872,206) 3,749,698,812 (28.4)
_______________
(1) Net of investment expenses.
(2) Net of benefits paid, administrative costs, refund of contributions and other deductions.
(3) Before deduction of administrative fees and investments costs.
(4) Includes proceeds in the amount of $153,134,911 of pension obligation bonds issued by the Moraga-Orinda Fire
Protection District and the Contra Costa County Fire Protection District in 2005.
(5) Includes proceeds in the amount of $11,693,396 received on June 27, 2006 from pension obligation bonds issued by the
City of Pittsburg.
Sources: Association Comprehensive Annual Financial Reports for the years ended December 31, 2005 through 2009.
(Remainder of this Page Intentionally Left Blank)
10014\POS-6 B-33
Investment Policy of the Association. The Board of Retirement adopted its investment
guidelines in 1985 and has amended those guidelines, the most recent amendment having been adopted on
April 8, 2009 (the “Investment Policy”). The Investment Policy prescribes, among other things, asset
class targets for investment of Association 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 the Association’s
liabilities, currently are set forth in Table B-15.
Table B-15
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
INVESTMENT POLICY ASSET ALLOCATION TARGETS
(AS OF JUNE 30, 2010)
[UPDATE]
Asset Type
Current Investment
Allocation
Target
Allocation Range
Global Equity 49.0% 45% to 53%
Global Fixed Income 24.0 20 to 28
High Yield Fixed Income 3.0 1 to 5
Long Bonds 5.0 4 to 6
Real Estate 11.5 8 to 14
Alternative Investments† 7.0 5 to 9
Cash and Equivalents 0.5 0 to 1
TOTAL 100.0%
_____________
† CCERA does not have any hedge fund investments.
Source: Association.
The Association contracts with [34] 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.
[In June 2008, the Association adopted new asset allocation targets. In addition, they combined
the Domestic and International categories into a new category designated “Global.” Global Equity was
decreased to 49% from 54.5% and Global Fixed Income was decreased to 24% from 27%. High Yield
Fixed Income was increased to 3% from 2%, and a new asset class, Long Bonds, was established at 5%.
Real Estate was increased to 11.5% from 9% and Alternative Investments were increased to 7% from 5%.
The 2% Commodity allocation was eliminated. Cash and Equivalents remains at 0.5%.] [REVIEW /
UPDATE]
The Association 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 C–“AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL
YEAR ENDED JUNE 30, 2009–Note 15–Employees’ Retirement Plan.”
Other Post-Employment Healthcare Benefits
Overview. The County is the plan sponsor and administers a single-employer defined benefit
healthcare plan. This plan provides post-employment medical and dental insurance benefits to eligible
retired employees and their dependents. Benefit provisions are established and may be amended through
negotiations between the County and the respective bargaining units. The County contracts with Kaiser
Permanente, Health Net, Contra Costa Health Plans and PERS to provide medical benefits and Delta
Dental and PMI Deltacare for dental benefits.
10014\POS-6 B-34
Actuarial Reports. Since delivery of the initial actuarial report prepared by Buck Consultants
LLC presenting the initial actuarial analysis of the liability of the County for retiree healthcare and other
post-employment benefits (“OPEB”), the OPEB liability of the County declined from $2.6 billion based
upon a 4.5% discount rate as of _________, 2006 to $1.047 billion based upon a 6.32% discount rate as
of January 1, 2010. The approximately 59.7% reduction in the OPEB liability is a result of the actions
taken by the Board of Supervisors described below.
2006 Actuarial Report. On May 16, 2006, the Board of Supervisors accepted the initial OPEB
actuarial analysis indicating that the then-current OPEB liability was $2.6 billion based upon a discount
rate equal to 4.5%, and if fully amortized over the following 30 years would have required an annual
required contribution (an “ARC”) equal to $216 million, which at that time would have been
approximately six times the amount the County was paying toward retiree health care premiums on a
“pay-as-you-go” basis.
In fall 2006, the County Administrator established an OPEB Task Force (the “OPEB Task
Force”) to manage the long-term liability of the County for OPEB costs. The OPEB Task Force brought
together the breadth of expertise available within the County and through professional contracts in the
financial, audit, budget, personnel, labor relations, benefits and legal areas. In June 2007, following
presentation by the OPEBTask Force of an OPEB update report, the Board of Supervisors established:
• Goals to fully comply with GASB 45
• Adopted an OPEB financing strategy for partial pre-funding phased in over 30 years
• Adopted an initial OPEB funding target of 100% of the potential liability for the retiree
population
• Adopted a specific allocation of resources in the amount of $588 million (plus interest) to
be reserved by the end of Fiscal Year 2022-23 and $100 million to be added thereafter
towards reducing the OPEB liability
• Directed the County Administrator to begin pre-negotiation meeting with County Labor
representatives regarding the development of plans and models for benefit reform
2008 Actuarial Report and Establishment of Section 115 Irrevocable Trust. On January 15, 2008,
the Board of Supervisors approved the establishment of an irrevocable trust under Section 115 of the
Internal Revenue Code (the “OPEB Trust Fund”) for the purpose of depositing OPEB funds, earning
interest thereon and discounting the OPEB liability of the County. In Fiscal Year 2008-09, the County
partially pre-funded the OPEB liability by depositing $20 million into the OPEB Trust Fund in addition to
the annual “pay-as-you-go.” GASB 45 permits the use of a higher discount rate based on the level of
prefunding. On June 16, 2008, Buck Consultants LLC delivered an updated actuarial report (the “2008
Actuarial Report”) based upon the partial pre-funding and determined that the applicable discount rate as
a result of the partial prefunding was 6.32%
In calendar year 2008, the Board of Supervisors adopted certain limitations to the benefits
provided to safety and non-safety unrepresented employees, and appointed and elected officials and
persons who retired from classifications that were unrepresented at the time of retirement, appointment or
election.
2010 Actuarial Report. An updated actuarial analysis of the County’s OPEB liability dated
April 5, 2010 (the “2010 Actuarial Report”) was presented by Buck Consultants LLC to the Board of
Supervisors and was based upon census data for all active employees and retirees and financial data as of
January 1, 2010.
10014\POS-6 B-35
The number of retirees and beneficiaries of retirees receiving OPEB benefits and the annual
required contribution made by the County are set forth in Table B-16.
Table B-16
CONTRA COSTA COUNTY
OTHER POST EMPLOYMENT BENEFIT PLAN SUMMARY OF PARTICIPATING RETIREES
AND CONTRIBUTIONS
Fiscal Year
Number of
Participating
Retirees(1)
County Normal Cost
Contribution
($ in 000’s)
UAAL(2)
Total
ARC
2006-07 5,216 $130,604 $85,721(3) $216,325
2007-08 5,216 116,102 78,909(3) 195,011
2008-09 5,813 76,274 62,641(4) 138,915
2009-10 5,251 29,232 34,066(4) 63,298
_____________
(1) Includes retirees and beneficiaries receiving benefits.
(2) Calculated based upon a 30-year amortization.
(3) Reflects the 4.5% pay-go discount rate.
(4) Reflects the 6.32% discount rate as a result of partial prefunding of the OPEB Trust Fund.
Source: Buck Consultants LLC.
Funded Status and Funding Progress. As of January 1, 2010, the most recent actuarial
valuation date, the actuarial accrued liability for benefits was $1.047 billion of which $25,048,000 was
funded. The covered payroll (annual payroll of active employees covered by the plan) was $_________,
and the ratios of the UAAL to the covered payroll was 163%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past exceptions and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities.
Table B-17
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS
SCHEDULE OF FUNDING PROGRESS
Actuarial Actuarial UAAL as %
Actuarial Value of Accrued Unfunded Funded Covered of Covered
Valuation Assets Liability (AAL) AAL Ratio Payroll Payroll
Date (a) (b) (b - a) (a/b) (c) ((b - a) / c)
01/01/2008 $20,038,000 $1,879,242,000 $1,859,209,000 1% $625,273,000 297%
01/01/2010 $25,048,000 $1,047,028,000 $1,021,980,000 2% $625,273,000 163%
_____________
Source: Buck Consultants LLC.
10014\POS-6 B-36
Annual OPEB Cost and Net OPEB Obligation. The County’s annual OPEB cost (expense) is
calculated based on the ARC, an amount actuarially determined in accordance with the parameters of
GASB Statement 45. The County charges current costs of these benefits to the employee’s department.
The County has determined that the future liability is an obligation of the general government. The
County records the accrued liability and expense in the general government classification of the
Government-Wide Statement of Net Assets and Statement of Activities. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following
table shows the components of the County’s annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the County’s net OPEB obligation ($ in thousands):
Annual required contribution $138,892
Interest on net OPEB obligation 10,043
Adjustment to annual required contribution 0
Annual OPEB cost (expense 148,935
Contributions made (57,582)
Increase in net OPEB obligation 91,353
Net OPEB obligation, beginning of year 158,909
Net OPEB obligation, end of year $250,262
_____________
Source: Buck Consultants LLC.
The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the net OPEB obligation for Fiscal Years 2007-08 and 2008-09 and are set forth in Table B-18:
Table B-18
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
ANNUAL OPEB COST
($ IN THOUSANDS)
Percentage of
Fiscal Year Annual Annual OPEB Net OPEB
Ended OPEB Cost Cost Contributed Obligation
06/30/08 $194,980 18.5% $158,909
06/30/09 148,935 38.7 250,262
_____________
Source: Buck Consultants LLC.
Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are
based on the substantive plan (the plan as understood by the employer and the plan members) and include
the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit
costs between the employer and plan members to that point. The actuarial methods and assumptions used
include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
In the 2010 Actuarial Report, the entry age normal actuarial cost method was used. The actuarial
assumptions included a 7.75% investment rate of return and a discount rate equal to 6.32%. Both rates
included a 3.75% inflation assumption. The UAAL is being amortized as a level dollar amount over 30
years on a closed basis. The remaining amortization period is 30 years.
10014\POS-6 B-37
The County began pre-funding benefits in Fiscal Year 2008-09. The County made a $20 million
deposit into the OPEB Trust for Fiscal Year 2009-10 and expects to pre-fund an additional $20 million
Fiscal Year 2010-11. CCCERA personnel are employees of the County. Their OPEB obligation is
included with the County’s data.
Table B-19 compares the actuarial accrued liability (“AAL”) and the normal cost (”NC”)
calculated at the discount rate equal to 6.32% based upon the 2010 Actuarial Report and the 2008
Actuarial Report.
Table B-19
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
ACTUARIAL ACCRUED LIABILITY AND NORMAL COST AS OF JANUARY 1, 2010 AND 2008†
January 1, 2008 January 1, 2010
AAL @ 6.32% NC @ 6.32% AAL @ 6.32% NC @ 6.32%
Active Employees $1,093,050,000 $76,274,000 $483,190,000 $29,232,000
Retirees 786,192,000 0 563,838,000 0
TOTAL $1,879,242,000 $76,274,000 $1,047,028,000 $29,232,000
______________
† Information presented in this Table B-17 includes all County entities included in the County’s audited financial statements
and utilizing County sponsored health benefit programs.
Source: Buck Consultants LLC.
Table B-20 shows the ARC for all County entities for Fiscal Years 2005-06 and 2007-08 using
the 4.50% pay-as-you-go discount rate and for Fiscal Year 2009-10 using the 6.32% discount rate
assumptions described above.
Table B-20
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
ANNUAL REQUIRED CONTRIBUTION FOR FISCAL YEARS 2008-09 AND 2009-10†
4.50% Discount Rate 4.50% Discount Rate 6.32% Discount Rate
Fiscal Year 2005-06 Fiscal Year 2007-08 Fiscal Year 2009-10
Total APBO $2,571,650,000 $2,367,274,000 $1,047,028,000
Assets 0 20,038,000 25,048,000
UAAL $2,571,650,000 $2,367,274,000 $1,021,980,000
Annual Required Contribution
Normal Cost $130,604,000 $116,102,000 $29,232,000
30 Year Amortization of UAAL 85,721,000 78,909,000 34,066,000
ARC $216,325,000 $195,022,000 $63,298,000
_____________
† Information presented in this Table B-21 includes all County entities included in the County’s audited financial statements
and utilizing County sponsored health benefit programs.
Source: Buck Consultants LLC.
Eligibility. County retirees are eligible for membership in the plans upon retirement from the
County (drawing a pension from CCERA and PERS). Members in deferred retirement status may
maintain membership in County health plans at their own cost and become eligible for coverage as a
retiree upon commencement of their pension.
10014\POS-6 B-38
Funding Strategy. The contribution requirements for program members and the County are
established and may be amended through negotiations between the County and the respective bargaining
units. For over 40 years the County paid for healthcare costs, the funding was based on a pay-as-you-go
(“pay-go”) basis plus a contribution of $20 million to the Contra Costa County Other Postemployment
Benefit Irrevocable Trust Fund. For Fiscal Year 2008-09, the County paid $37.5 million as the pay-go
cost (approximately 86.7% of total premiums). Plan members receiving benefits contributed $5.8 million,
or approximately 13.3% of the total premiums, through their required contribution. The contributions for
Fiscal Year 2008-09, were as follows:
Table B-21
CONTRA COSTA COUNTY
OTHER POST EMPLOYMENT BENEFIT PLAN SUMMARY OF CONTRIBUTIONS
($ IN THOUSANDS)
FISCAL YEAR 2008-09
Active
Employees Retirees Total
Total blended premiums at $7,451 per plan member $0 $43,312 $43,312
Employer pre-funding contributions 0 20,038 20,038
Less: member contributions 0 (5,768) (5,768)
Total Employer Contributions $0 $57,582 $57,582
_____________
Source: Buck Consultants LLC.
The County’s current funding policy is to partially pre-fund the plan with annual trust
contributions of $20 million and future planned increases to this amount while also funding the pay-as-
you-go cost of benefits. This partial pre-funding strategy resulted in the current 6.32% discount rate
which interpolates the lower pay-as-you-go discount rate with a higher full-funding discount rate. In
addition, on June 26, 2007, the Board of Supervisors adopted a plan, that commencing in Fiscal Year
2014-15 will redirect budgeted amounts from pension obligation bond debt service to OPEB costs
following the maturity of all pension obligation bonds in 2022.
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
and has no authorized and unissued general obligation 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. Certain of the lease obligations of the County reflect annual payments made for debt
service on lease revenue bonds issued to finance capital projects. As of July 1, 2010, the County had
approximately $377.2 million in lease revenue obligations outstanding. For a summary of the County’s
lease revenue obligations, see APPENDIX C–“AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR
THE FISCAL YEAR ENDED JUNE 30, 2009–Notes to General Purpose Financial Statements.”
10014\POS-6 B-39
Pension Obligation Bonds. The County issued pension obligation bonds in 1994, a portion of
which were restructured in 2001 and again in 2003 to refund debentures issued to evidence its statutory
obligation to make pension payments with respect to its UAAL to CCCERA. See also “–Pension Plan.”
Fiscal Year debt service for the County’s lease revenue obligations and pension obligation bonds
outstanding as of July 1, 2010 is shown in Table B-22 below.
Table B-22
COUNTY OF CONTRA COSTA
OUTSTANDING LEASE REVENUE OBLIGATIONS AND
PENSION OBLIGATION BONDS
Fiscal Year
Ending
6/30
Total Lease
Debt Service(1)
Total POB
Debt Service
Total
Debt Service(2)
2011 $28,453,956 $59,549,809 $88,003,765
2012 28,460,190 63,262,284 91,722,474
2013 28,474,809 67,939,535 96,414,344
2014 28,095,633 68,401,566 96,497,199
2015 28,138,953 35,409,894 63,548,847
2016 28,133,306 36,914,525 65,047,831
2017 25,729,039 38,484,360 64,213,399
2018 25,204,797 40,114,901 65,319,698
2019 25,076,446 41,821,636 66,898,082
2020 23,561,628 43,600,400 67,162,028
2021 23,560,946 45,452,243 69,013,189
2022 21,038,788 47,382,397 68,421,185
2023 21,028,602 – 21,028,602
2024 11,012,192 – 11,012,192
2025 11,028,642 – 11,028,642
2026 9,224,950 – 9,224,950
2027 8,023,825 – 8,023,825
2028 3,004,350 – 3,004,350
TOTAL(3) $377,251,052 $588,333,550 $965,584,602
_______________
(1) Excludes capital leases and the 2010 Bonds.
(2) Excludes deductions based upon estimated reimbursement from the State for County hospital and pension obligation bond debt
service and estimated earnings on various debt service and debt service reserve funds.
(3) Totals do not add due to independent rounding.
Source: County Administrator’s Office.
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-23 below is a direct and
overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics Inc. that
summarizes such indebtedness as of October 1, 2010. 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.
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.
10014\POS-6 B-40
Table B-23
CONTRA COSTA COUNTY
DEBT STATEMENT
2010-11 Assessed Valuation: $144,144,610,273 (includes unitary utility valuation)
Redevelopment Incremental Valuation: 15,940,570,594
Adjusted Assessed Valuation: $128,204,039,679
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 10/1/10
Bay Area Rapid Transit District 28.802% $ 119,201,397
East Bay Municipal Utility District Special District No. 1 6.495 1,770,212
Contra Costa Community College District 100. 237,095,000
Martinez Unified School District 100. 17,485,592
Mt. Diablo Unified School District 100. 202,385,000
Pittsburg Unified School District 100. 104,255,000
San Ramon Valley Unified School District 100. 276,462,292
West Contra Costa Unified School District 100. 744,126,995
Acalanes and Liberty Union High School Districts 100. 181,417,516
Brentwood Union School District 100. 53,840,289
Lafayette School District 100. 38,930,000
Oakley Union School District 100. 23,035,000
Walnut Creek School District 100. 33,469,628
Other School Districts Various 74,207,206
Cities and City Special Tax Districts 100. 31,069,977
Pleasant Hill Recreation and Park District 100. 20,000,000
East Bay Regional Park District 44.631 75,917,331
West Contra Costa Healthcare District Parcel Tax Obligations 100. 22,420,000
Community Facilities Districts 100. 253,353,691
1915 Act Assessment Bonds (Estimate) 100. 402,319,301
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $2,912,761,427
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Contra Costa County General Fund Obligations 100. % $ 295,456,318 (1)
Contra Costa County Pension Obligations 100. 435,310,000
Alameda-Contra Costa Transit District Certificates of Participation 9.919 3,716,153
Antioch Unified School District Certificates of Participation 100. 46,075,000
Pittsburg Unified School District Certificates of Participation 100. 63,680,000
West Contra Costa Unified School District General Fund Obligations 100. 20,660,000
Other School District General Fund Obligations Various 35,905,386
City of Brentwood General Fund Obligations 100. 56,745,000
City of Concord General Fund Obligations 100. 25,400,000
City of Pittsburg Pension Obligations 100. 39,026,056
City of Richmond General Fund Obligations 100. 136,500,000
City of Richmond Pension Obligations 100. 119,625,133
City of San Ramon General Fund and Pension Obligations 100. 33,030,000
Other City General Fund Obligations 100. 97,212,063
Contra Costa County Fire Protection District Pension Obligations 100. 116,240,000
San Ramon Valley Fire Protection District Certificates of Participation 100. 14,360,000
Other Special District Certificates of Participation 18.176-100. 3,463,318
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $1,542,404,427
Less: Contra Costa County Obligations supported by revenue funds 126,062,344
City of Richmond obligations supported by port revenues 47,110,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $1,369,232,083
GROSS COMBINED TOTAL DEBT $4,455,165,854 (2)
NET COMBINED TOTAL DEBT $4,281,993,510
(1) Excludes the 2010 Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital
lease obligations.
Ratios to 2010-11 Assessed Valuation:
Total Overlapping Tax and Assessment Debt ......................................... 2.02%
Ratios to Adjusted Assessed Valuation:
Gross Combined Direct Debt ($847,006,318) ...................................... 0.66%
Net Combined Direct Debt ($720,943,974) .......................................... 0.56%
Gross Combined Total Debt .................................................................... 3.48%
Net Combined Total Debt ....................................................................... 3.34%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10: $0
_____________
Source: California Municipal Statistics, Inc.
10014\POS-6 B-41
Future Capital Projects
In the future, the County may renovate and improve an administration building for use by the
County Department of Conservation and Development and acquire, construct and install equipment for a
government center to consolidate existing leased space into one location. Other projects within the
County are being postponed until the economic environment improves.
Insurance and Self-Insurance Programs [UPDATE/REVIEW]
The County self-insures its unemployment, dental, management long-term disability.
The County maintains up to $600,000,000 “All Risk” insurance coverage subject to a $50,000
deductible to cover its property, except for loss caused by earthquake or flood. Loss caused by
earthquake is insured to $240,000,000 on a shared aggregate and is subject to a minimum 5% deductible
per location with a minimum $100,000 basis and maximum $500,000 deductible. Loss caused by flood is
insured to $600,000,000 on a shared aggregate and is subject to a minimum 2% deductible per location
with a $100,000 minimum and $500,000 maximum per occurrence deductible. The County has
$100,000,000 boiler and machinery coverage with a $5,000 deductible.
The County is exposed to various risk of loss related to torts, theft or damage to, and destruction
of assets; errors and omissions; injuries to employees; and natural disaster. The County currently reports
its risk management activities in its Workers’ Compensation Insurance, Long-Term Disability Trust,
Employee Benefits Trust, and Personal Injury and Property Damage Funds (Internal Service Funds).
The County is self-insured for most insurable risk, except for excess insurance coverage provided
by commercial insurance and reinsurance companies that are limited to the following:
• Airports hanger keepers liability and property damage coverage is limited to a maximum
of $00 million with no deductible.
• Property insurance - all risk in excess of $50,000 per incident, but limited to $600
million.
• Property insurance - earthquake in excess of 5% per unit, $100,000 minimum and
$500,000 maximum deductible, but limited to a maximum of $240 million shared aggregate.
• Property insurance - terrorism limited to $200 million with a $500,000 deductible.
• Crime bond coverage in excess of $50,000 per incident, but limited to a maximum of $50
million.
• General and auto liability in excess of $1 million per incident, but limited to a maximum
of $50 million.
• Workers’ Compensation in excess of $750,000 per incident, but limited to a maximum of
$50 million; coverage provided by CSAC-EIA (California State Association of Counties Excess
Insurance Pooling Fund).
• Medical malpractice in excess of $500,000 per incident, limited to $11.5 million.
• Watercraft in excess of $1,000 per incident, limited to a maximum of $1 million.
• Sheriff’s helicopters limited to $50 million per incident.
10014\POS-6 B-42
• Boiler and machinery limited to $100 million with a $5,000 deductible.
During the past five years there have been no instances of the amount of claim settlements
exceeding insurance coverage.
Internal service funds are used to account for the County’s self-insurance activities. The
County’s policy is to provide in each fiscal year, by charges to affected operating funds, amounts
sufficient to cover the estimated expenditures for self-insured claims. Charges to operating funds are
recorded as expenditures/expenses of such funds and revenues of the internal service funds. Accrual and
payment of claims are recorded in the internal service funds.
The County has accrued a liability of $117,985,000 at June 30, 2009, for all self-insured claims in
the internal service funds, which includes an amount for incurred, but not reported, claims. The self-
insurance reserve is based on actuarially determined amounts for workers’ compensation, pubic and
automobile liability, and medical liability and based on management’s estimates for all other reserves. In
the opinion of the County, the amounts accrued are adequate to cover claims incurred but not reported in
addition to known claims.
Changes to the internal service funds’ claims liability amount, including medical liability claims
payable, for Fiscal Years 2007-2008 and 2008-09 are as follows ($ in thousands):
Liability at June 30, 2007 $115,849
FY 2007-2008 claims and changes in estimates 18,150
FY 2007-2008 claim payments (26,846)
Liability at June 30, 2008 107,153
FY 2008-2009 claims and changes in estimates 60,181
FY 2008-2009 claim payments (49,349)
Liability at June 30, 2009 $117,985
The actuarially determined claims liabilities, including incurred but not reported claims, are based
on the estimated ultimate cost of settling the claims, using past experience adjusted for current trends, and
any other factors that modify past experience. It also includes incremental claim adjustment expenses. In
addition, estimated recoveries on settled and unsettled claims were evaluated in terms of their estimated
realizable value and deducted from the liability for unpaid claims.
For additional information on the County’s insurance coverage, see APPENDIX C–
“COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,
2009–NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS.”
10014\POS-6 C-1
APPENDIX C
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE COUNTY FOR THE FISCAL
YEAR ENDED JUNE 30, 2009
10014\POS-6 D-1
APPENDIX D
SUMMARY OF THE COUNTY INVESTMENT POLICY
[TO BE INSERTED]
10014\POS-6 E-1
APPENDIX E
SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS
10014\POS-6 F-1
APPENDIX F
PROPOSED FORM OF BOND COUNSEL OPINION
10014\POS-6 G-1
APPENDIX G
PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT
10014\POS-6 H-1
APPENDIX H
DTC AND THE BOOK-ENTRY ONLY SYSTEM