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HomeMy WebLinkAboutMINUTES - 11291988 - 1.96 TO: BOARD OF SUPERVISORS ^,,, FROM: Harvey E. Bragdon l�A tr Director of Community Development CJVJIa DATE: November 29 , 1988 Courl. / SUBJECT: Audit of Financial Statements 1982, 1983 , 1984, 1985 and 1987 Contra Costa Home Mortgage Revenue Bonds SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS Accept Audit Report on the Financial Statement of the 1982, 1983, 1984, 1985, and 1987 Contra Costa Home Mortgage Revenue Bond_ Program as completed by Deloitte, Haskins, & Sells. FISCAL IMPACT None BACKGROUND/REASONS FOR RECOMMENDATIONS The Indenture for the above referenced Home Mortgage Revenue Bond Program requires that an annual audit of the financial statement be completed. Deloitte, Haskins, & Sells has completed the audit of the respective program as of June 30, 1988 and submitted its report. CONTINUED ON ATTACB14MT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATI OF BO COMMI APPROVE OTHER SIGNATURE(S) : ACTION OF BOARD ON N n Y 2 9 1999 APPROVED_AS,..,RECONIlKFNDED —__OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A UNANIMOUS (ABSENT ' ) TRUE AND CORRECT COPY OF AN AYES:_ NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. cc: Community Development ATTESTED NOV 29 1988 CAO (via Risk Mgmt. ) PHIL BATCHELOR, CLERK OF County Counsel THE BOARD OF SUPERVISORS Auditor (c/o Nona) AND COUNTY ADMINISTRATOR Contractor BY ! j��(�g DEPUTY JK:cg cd14/audit.mrb elol e o Haskins+Sefls CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended June 30, 1988 and 1987 , 1988 Supplemental Schedules and Independent Auditors ' Report for purposes of additional analysis and are not a required part of the basic financial statements . Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and , in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole . October 6 , 1988 2 CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE-BOND FUND BALANCE SHEETS , JUNE 30 , 1988 AND 1987. 1988 1987 ASSET'S CASH AND INVESTMENTS (Note 4) $ 4 , 940 , 383 $10 , 207 , 193 MORTGAGE LOANS RECEIVABLE (Note 5) 10 , 775 , 451 16 , 765 , 988 MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 49 , 019 542 , 676 INVESTMENT INTEREST RECEIVABLE AND OTHER ASSETS 28 , 760 59 , 840 TOTAL $15 , 793 , 613 $27 , 575 , 697 LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $13 , 513 , 287 $24, 398 , 339 INTEREST PAYABLE 857 , 059 1 , 547 , 328 OTHER LIABILITIES 103 , 649 TOTAL LIABILITIES 14,370, 346 26 , 049 , 316 RETAINED EARNINGS 1 , 423 , 267 1 , 526 , 381 TOTAL $15 , 793 , 613 $27 , 575 , 697 See notes to financial statements . 3 s f CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 1.988 AND 1987 1988 1987 REVENUES : Interest from mortgage loans $1 , 778 , 786 $3 ,312 , 360 Interest from investments 516 , 912 971 , 892 Total revenues 2 , 295 , 698 4, 284 , 252 EXPENSES : Interest 2 , 061 , 420 3 ,897 , 897 Administrative 75 . 594 112 , 427 Total expenses 2 , 137 , 014 4, 010 , 324 INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS 158 , 684 273 , 928 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (Note 6) (261 , 798) (464, 882) NET LOSS (103 , 114) (190 , 954) RETAINED EARNINGS : . Beginning of year 1 , 526 , 381 1, 717 , 335 End of year $1 , 423 , 267 $1 , 526 , 381. See notes to financial statements . ( - 4 - 1 r CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND NOTES TO FINANCIAL STATEMENTS st - n 1 . ENTITY i The Contra Costa County 1982 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between Security Pacific Bank (Trustee) and Contra Costa County (County) dated June 1 , 1982 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home mortgages within the County. Under the terms of the Indenture , the Trustee uses the bond proceeds to purchase investments and mortgage loans . The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture . If the amount available in the Fund is not sufficient to repay the bonds in full , the principal and accrued interest will be paid to the bondholders in accor- dance with the provisions of the Indenture , primarily on a pro rata basis without any discrimination or preference , after the payment of expenses necessary to protect the interest of the bondholders . The financial statements present only the 1982 Mortgage Revenue Bond Fund and are not intended to present the financial position and results of operations of Contra Costa County. 2 . SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The Fund uses the accrual basis of accounting . Revenues are recognized when they are earned and expenses are recognized when they are incurred . Investments are stated at cost . The Trustee has entered into investment agreements with 1st National Bank of St . Paul (Investment Bank) . - Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to bonds payable and are amortized over the term of the bond issue using a method which approximates a level-yield . 3 . FUND DEFINITIONS 3 As provided in the Indenture , the following funds have been established by the Trustee : Revenue Fund - All revenues (except for developer commitment fees 1 I - 6 - i 1. r 1•: =` and revenues to be deposited into the Nonmortgage Investment Income Fund) are deposited in this fund . Capital Reserve Fund -- Monies are used and withdrawn by the Trustee solely for the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund , Interest Fund or r Principal Fund and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture . NonmortF-aF-e Investment Income Fund - All interest , profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund . Principal Fund - Monies are used and withdrawn solely for the paying of the principal of the bonds . Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds . Redemltion Fund - Monies are used and withdrawn for the redeeming of bonds at the next succeeding date of redemption. 4. CASH AND INVESTMENTS The Fund ' s deposits were entirely covered by federal depository insurance or collateral held by the Trustee in the Fund ' s name . The Indenture authorizes the Trustee to invest in interest- bearing time and demand deposits , obligations of the U. S . Treasury and U. S . agencies , repurchase agreements and investment agreements with the Investment Bank. The Trustee has an agreement to invest bond proceeds and other Fund revenues with the Investment Bank. These investments earn interest at a fixed rate of 12 . 34% and are covered by collateral held by the Investment Bank in the Fund ' s name . As of June 30, cash and investments were as follows : Interest Rates 1988 1987 Certificates of deposit 12 . 34% $4 , 561 , 197 $ 8 , 591 , 606 FHLMC repurchase agreement 12 . 34 415 , 186 Cash and equivalents 379 , 186 1 , 200 , 401 Total 14 , 940 , 383 $10 , 207 , 193 4 - 7 5 . MORTGAGE LOANS RECEIVABLE Mortgage loans receivable are secured by first deeds of trust on the related residences , have thirty-year terms and bear interest at 12 . 875%. 6 . HOME MORTGAGE REVENUE BONDS PAYABLE A summary of the maturity dates and interest rates as of June 30 , 1988 for the 1982 Home Mortgage Revenue Bonds follows : Fiscal Year Bond Interest Ending June 30 Type Rates Principal 1989 Serial 10 . 0% - 10 . 5/0 $ 120 , 000 1990 Serial 10 . 5 - 11 . 0 140 , 000 1991 Serial 11 . 0 - 11 . 25 155 , 000 1992 Serial 11 . 25 - 11 . 5 170 , 000 1993 Serial 11 . 5 - 11 . 75 190 , 000 1994-1997 Serial 11 . 75 - 12 . 3 860 , 000 2011 Term 12 . 5 12 , 190 , 000 Total 13 , 825 , 000 Less bond discount and issuance costs , net of accumulated amortization _ (311 , 713) Total $13 , 513 , 287 The effective interest rate on the bonds is 12 . 77%. Bond inter- est is payable semiannually on January 1 and July 1 . Bonds are subject to redemption prior to maturity, from amounts in the Redemption Fund on any interest payment date without premium. The bonds maturing on July 1 , 2010 are subject to mandatory redemption without premium, prior to maturity out of revenues deposited in a mandatory sinking account . The Indenture provides for semiannual deposits into a mandatory sinking fund ranging from $725 , 000 commencing. in 1997 to $4 ,520 , 000 in 2010 . The installments are subject to reduction due to prior redemptions . The Fund retired $10 , 975 , 000 and $15 , 960 , 000 of the bonds prior to scheduled maturity in 1988 and 1987 , respectively. Generally accepted accounting principles require that the difference between the reacquisition price and the net carrying amount of extinguished debt be recorded as an extraordinary loss , if mate- rial . The net carrying amount of the bonds retired in 1988 was $10 , 713 , 202 and accordingly, the Fund recognized an extraor- dinary loss on early retirement in 1988 of $261 , 798 . The early retirement of bonds in 1987 resulted in an extraordinary loss of $462 , 882 . - 8 - M co �o d 1— ON 00 ON �o ,-a h q ON 00 r- 7 M N 't H w w H T D CO 0 Ili M lc M M 10 z ^ ^ ^ ^ ^ ^ i.'T 1/1 c0 h M CT Ul � W 00) O w ,,7 � 11 O O h 1Ni1 T N h Or- ^ ^ ^ ^ V O t� ,y r-a tiG r-+ t� N N N 6F? '6% M H (T O M f, a, h M C:4 00 u"1 r-+ �o H 00 vl �' �.0 W ( M -Y' O h �D :e--00 CIO H 0 O ✓1 � 00 � m t— N h u'1 00 O ^ r-� r-+ r-a r-1 rt y} Ff} ON 4, p M M M P 44 H D\ rT Ln Cn ul Ln � 00 co W i h h h ul G I oO d C) OO U O O P, W q M z>U ozz Z H H a W rt W Ow 0 C c0 00 MM 0,oW � d O M m -�r c0 m 00 q .7 O N M N N CT M 1-3 ^ ^ r?W z z H u1 m M m M M M r-� h +7 Cl) r1 1-1 t- .0r, 1, 00 u1 u'1 10 00 w c11 O O M....... c`) N O w Q. r-1 r-1 s-1 U)to W _ U E W �� E-+ Gz, acrl � ow U w c]H to U W q > ii w z oa W tx H 0 to H fl.' 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"C r,l n l m r. i0ifte Haskins+Sells CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended June 30, 1988 and 1987, 1988 Supplemental Schedules and Independent Auditors' Report f � 4 ' id" e Haskins-,-Sells 44 Montgomery Stree; San Franci=_co,California 94104-4602 (415)393-4300 Telex:340336 INDEPENDENT AUDITORS' REPORT The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1983 Mortgage Revenue Bond Fund (Fund) as of June 30, 1988 and 1987 and the related statements of operations and retained earnings and of changes in financial position for the years then ended. These financial statements and the sup- plemental schedules discussed below are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the accom- panying financial statements present only the 1983 Mortgage Revenue Bond Fund and are not intended to present the financial position and results of operations of Contra Costa County. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1988 and 1987 and the results of its operations and the changes in its financial position for the years then ended in conformity with generally accepted accounting principles. I i - -- ` ��. Our I988 audit was made for the purpose of forming an opinion on the basic 1988 financial statements taken as a whole. The supplemental combining balance ubeet. June 30, I988. and combining statement of operations and retained earnings for the year ended June 30. 1980 (supplemental schedules) are presented for yuzDooen of additional analysis and are not a required part of the basic financial state- ments. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial ' statements and, in our oDioioo, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. October k. 1988 _ - - — -- ' | | ' ! / i | ! ! � | / / ^ - - - CONTRA COSTA COUNTY 1983 MORTGAGE BALANCE SHEETS, JUNE 30, 1988 AND 125-7 1988 1987 AS -ET S CASH AND INVESTMENTS (Note 4) $ 2,112,006 S 1,829,249 MORTGAGE LOANS RECEIVABLE (Note 5) 27,355,348 29,741,734 MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 97,189 158,704 OTHER ASSETS 43,135 53,156 TOTAL 529,607,678 $31,782.853 LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $28,218,560 $30,267,500 INTEREST PAYABLE 220,863 237,578 OTHER LIABILITIES .2-288 - TOTAL LIABILITIES 28,441,711 30,505,078 RETAINED EARNINGS __I__165 96Z 1-277 TOTAL $29,607,678 $31.782.353 See notes to financial statements. CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 1988 AND 1987 1988 1987 REVENUES: Interest from mortgage loans $2,709,544 $3,018,112 Interest from investments 231,312 228,295 Total revenues 2,940,856 3,246,807 EXPENSES: Interest 2,812,024 3,054,387 Administrative 104,105 109,291 Loss on bond prepayments 136,535 51.046 Total expenses 3,052,664 3,214,724 1 NET INCOME (LOSS) (111,808) 32,083 RETAINED EARNINGS: Beginning of year 1,277,775 1,245,692 End of year $1,165,96751,277,775 See notes to financial statements. ^ - _ CONTRA COSTA COUNTY 19L3 MORTGAGE REVENUE BOND-FVND STATEMENTS Or CHANGES IN FINANCIAL r0nzTIOm FOR THE YEARS ENDED JLJNE.30- 1988 AND,.-1987 .1�UL 1987 SOURCES Or FUNDS: Net income (loss) (111.808) 32,00 Add items not involving cash - amortization of: Bond discount and issuance costs 54.525 64.850 Loss on bond prepayments Funds provided from operations /9.252 14/ .9/9 Collection of mortgage loans 2.386.386 2.201.368 Increase in other liabilities 2.288 Decrease in: ` Matured mortgage loans and interest receivable 61.515 Other uaoeto 1-0 031 Total sources of funds 2�5. 9L472 . 49^.37. DGoS OF FUNDS: Retirement of home mortgage revenue bonds 2.240.000 2.495.000 -- Increase in matured mortgage loans and interest receivable 49.425 Decrease in interest payable 16.715 18.464 Increase in other assets 1_4 701 Total uses of funds _�2������ _-2 577.600 '-' INCREASE (DECREASE) IN CASH AND zmvE3zMoNTz 282.757 (22e.253) ' CASH AND z»n/oozmEm7o: Beginning of year 1_829.249 _2J257�502 End of year $2,112^016. ' QJ^��� 242 ( See notes to financial statements. | | ( � / � - � - CONTRA COSTA COnmzr 1983 GAQEREVENUE BOND FUND , qQjaS_T0 FINANCIAL STATEMENTS l. ENTITY The Contra Costa County 1983 Mortgage Revenue Bond Fund (Food) was established under the provisions of the California Health and Safety Code and the indenture between Security Pacific Bank (Trustee) and Contra Costa Ccmot? (Cnoot?) dated June I. 1983 (Indenture). The Fund is authorized to znone revenue bonds for the purpose of financing home mortgages within the C000ty. Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase investments and mortgage loans. The home mortgage revenue bonds are secured by pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture. If the amount available in the ` Fund is not sufficient to repay the bonds in foll, the princi- pal and accrued interest will be paid to the bondholders in accordance with the provisions of the Iodeotoze, primarily on a pro rata basis without any discrimination or yrefezence, after the payment of expenses necessary to protect the interest of the bondholders. -- The financial statements present only the 1983 Mortgage Revenue Bond Fund and are not intended to present the financial posi- tion and results of operations of Contra Costa County. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Acco�int:Lng, - The Fund uoro the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred. . Investments are stated at coot. The Trustee has entered into investment agreements with First matiooal zznnt of 3t. Paul (Investment Bank). associated with the vale of the bonds are recorded as a reduction to bonds payable and are amortized over the term of the bond issue using v method which ! approximates a level-yield. � ' � 2 FUND DEFINITIONS ' ! ' *n provided in the zodcotnre, the following funds have been i � established by the Trustee: / / / - � - ^ -- &evenue Fund - All revenues (except for developer commitment fees and revenues to be deposited into the Nonmortgage Invest- ment locmoe Fund) are deposited in this food. Capital ReQerve Monies used and withdrawn by the Trustee solely for the purpose of (a) making oP any deficiency in the Nonmortgage Investment Income rood` Interest Fund or ' Principal Fund, and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture. - All interest, profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund. Principal Fund - Monies are used and withdrawn solely for the paying of the principal or the bonds. Interest Fund - Monies are used and withdrawn solely for the ` paying of interest on the bonds. , Monies are used and -pitbdzawo for redeeming of bonds at the next succeeding date of redemption. 4. CASH AND INVESTMENTS -- Tbe Fund's deposits were entirely covered by federal depository insurance or collateral held by the Trustee in the Fund's name, The Indenture authorizes the Trustee to invest in interest- bearing time and demand depooito, obligations of the U.S. Trea- sury and U.S. ag000len, repurchase agreements and investment agreements with the Investment Bank. ' The Trustee has an agreement to invest bond proceeds and other Fund revenues with the Investment Bank. These investments earn interest at a fixed rate of 9.14% and are covered by collateral held by the Investment Bank in the Fund's name. f As of June 30. investments were as follows: ( | Interest . / ��z: 1.988l�8Z ` Certificates of deposit 9.I4Z SI.942.423 $1.471.223 FoLMC repurchase agree- ment 5�29 60,080 ' Cash and equivalents 169^58I _298.0l9 ' Total a2_1 1 2^C16 JJ�J�29L^�14I | / - 7 - t� i 5. MORTGAGE LOANS RECEIVABLE Mortgage loans receivable are secured by first deeds" of trust on the related residences, have thirty-year terms and bear interest at 9.5%. i1 6. HOME MORTGAGE REVENUE BONDS PAYABLE i A summary of the maturity dates and interest rates as of June 30, 1988 for the 1983 Home Mortgage Revenue Bonds follows: Fiscal Year Bond Interest Ending June 30 Tap e Rates Principal r 1989 Serial 7.75 $ 275,000 1990 Serial 8.0 300,000 1991 Serial 8.25 325,000 1992 Serial 8.5 350,000 1993 Serial 8.6 380,000 1994-1995 Serial 8.7 - 8.8 865,000 2001 Term 9.125 3,750,000 2015 Term 9.25 22,680,000 Total 28,925,000 Less bond discount and issuance costs, net of accumulated amortization _(706,440) Total $28,218,560 The effective interest rate on the-'bonds is 9.48%. Bond inter- est is payable semiannually on June 1 and December 1. Bonds are subject to redemption prior to maturity, from amounts in the Redemption Fund on any interest payment date without premium. The bonds maturing on June 1, 2015 are subject to mandatory redemption without premium, prior to maturity, out of revenues deposited in a mandatory sinking account. The Indenture provides for semiannual deposits into a manda- tory sinking fund ranging from $305,000 commencing in 1995 to $495,000 in 2001 for the 2001 term bonds and ranging from $515,000 commencing in 2001 to $1,745,000 in 2015 for the 2015 term bonds. The installments are subject to reduction due to prior redemptions. The Fund retired $1,965,000 and $2,230,000 of the bonds prior to scheduled maturity in 1988 and 1987, respectively. :c t:. ,�,•�tq`.vy't2+yr8� �£v� �sr,i#, ,� '"' S3<^'.c mr� ����� ` .. h N h a N h d h 4J N � N LA VY t`- H � i O � i M H L-. a, O N N a�z a �^ N 9� N mS "•W �. � O O o D. ba m m rn r-- L " 1. F'•W ,.'�L-`. J 3 .-k#" �r. W I:7 +.+7 H ; v� 1G � � t�aww N'v ;i r •� � :r C4 !W .i?�,O SO�ti N MM 1 N V1 RST) S nbul M MM M S w R •S^-�n NOM O h+l� O h ,D U� N N hh v iR OO O h h rn H I! 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HHOH ,.. 140 :a iy Deloitte HaskinsAells CONTRA COSTA COUNTY 1984 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended June 30, 1988 and 1987 , 1988 Supplemental Schedules and Independent Auditors ' Report Deloitte Haskin"ells 44 Montgomery Street San Francisco, California 94104-4602 (415) 393-4300 Telex: 340336 INDEPENDENT AUDITORS ' REPORT The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1984 Mortgage Revenue Bond Fund (Fund) as of June 30 , 1988 and 1987 and the related statements of opera- tions and retained earnings and of changes in financial posi- tion for the years then ended . These financial statements and the supplemental schedules discussed below are the responsi- bility of the Fund ' s management . Our responsibility is to express an opinion on these financial statements based on our audits . V We conducted our audits in accordance with generally accepted auditing standards . Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material mis- statement . An audit includes examining , on a test basis , evi- dence supporting the amounts and disclosures in the financial statements . An audit also includes assessing the accounting principles used and significant estimates made by management , as well as evaluating the overall financial statement presen- tation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements , the accom- panying financial statements present only the 1984 Mortgage Revenue Bond Fund and are not intended to present the finan- cial position and results of operations of Contra Costa County . In our opinion, such financial statements present fairly', in all material respects , the financial position of the Fund at June 30 , 1988 and 1987 and the results of its operations and the changes in its financial position for the years then ended in conformity with generally accepted accounting principles . i Our 1988 audit was made for the purpose of forming an opinion j on the basic 1988 financial statements taken as a whole . The supplemental combining balance sheet , June 30 , 1988 , and c combining statement of operations and retained earnings for the year ended June 30 , 1988 (supplemental schedules ) are presented for purposes of additional analysis and are not a i | - 3 - CONTRA COSTA COUNTY 1984 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 , 1988 AND 1987 1988 1987 REVENUES : Interest from mortgage loans $3 , 323 , 149 $3 , 627 , 185 Interest from investments 1 , 011 , 618 3 , 116 , 303 Developer commitment fees (Note 7) 535 , 383 Total revenues 4, 870 , 150 6 , 743 , 488 EXPENSES : Interest 3 , 914, 428 6 , 011 , 876 Insurance and administrative 403 , 438 418, 956 Total expenses 4J17 , 866 6 ,430 ,832 INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS 552 , 284 312 , 656 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (Note 6) (798, 049) - NET INCOME (LOSS) (245 , 765) 312 , 656 RETAINED EARNINGS : Beginning of year 2 , 129 , 129 1 , 816 , 473 End of year $1 , 883 , 364 $2 , 129 ,129 See notes to financial statements . - . 4 t CONTRA COSTA COUNTY 1984 MORTGAGE REVENUE BOND FUND STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED JUNE 30 , 1988 AND 1987 1988 1987 SOURCES OF FUNDS : Income before extraordinary loss on early retirement of bonds $ 552 , 284 $ 312 , 656 Add (subtract) items not involving cash - amortization of : Bond discount and issuance costs 57 , 650 101 , 448 Mortgage loan discounts (62 , 164) (61 , 921) Funds provided from operations 547 , 770 352 , 183 Collection of mortgage loans 3 , 455 , 705 2 , 476 , 545 Decrease in: Interest receivable 875 , 440 46 , 237 Prepaid bond insurance 38 , 223 Matured mortgage loans and interest receivable 354, 821 Increase in: Interest payable 422 , 382 1 , 195 , 427 Other liabilities 55 , 208 Total sources of funds 5 , 749 , 549 4, 070 , 392 USES OF FUNDS : Retirement of home mortgage revenue bonds 30 , 070 , 000 Purchase of mortgage loans 1 , 180 , 605 Decrease in other liabilities 300 , 789 Other 50 , 403 Total uses of funds 30 , 070 , 000 1 , 531 , 797 INCREASE (DECREASE) IN CASH AND INVESTMENTS (24, 320 , 451) 2 , 538 , 595 CASH AND INVESTMENTS : Beginning of year 30 , 529 , 102 27 , 990 , 5-07 End of year $ 6 , 208 , 651 $30 , 529 , 102 See notes to financial statements . 5 - CONTRA COSTA COUNTY 1984 MORTGAGE REVENUE BOND FUND NOTES TO FINANCIAL STATEMENTS 1 . ENTITY The Contra Costa County 1984 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between Manufacturers Hanover Trust Company of California (Trustee) and Contra Costa County (County) dated August 1 , 1984 (Indenture) . The Fund is autho- rized to issue revenue bonds for the purpose of financing home mortgages within the County. Under the terms of the Indenture , the Trustee uses the bond proceeds to purchase investments and mortgage loans . The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture . In addition, the bonds are covered by a Municipal Bond Insurance Policy which uncondi- tionally guarantees the timely payment of principal and inter- est on the bonds . The financial statements present only the 1984 Mortgage Revenue Bond Fund and are not intended to present the financial posi- tion and results of operations of Contra Costa County. 2 . SIGNIFICANT ACCOUNTING POLICIES Basis of Accoun in - The Fund uses the accrual basis of accounting . Revenues are recognized when they are earned and expenses are recognized when they are incurred . Investments are stated at cost . The Trustee has entered into investment agreements with Chemical Bank (Investment Bank) . Mortgage loan discounts associated with the acquisition of new home mortgage loans through developers are recorded as a reduction to mortgage loans receivable and amortized over the estimated life of the loan by a method which approximates a level-yield . Bond discount and issuance costs associated with sale of the bonds are recorded as a reduction to bonds payable and are a amortized over the term of the bond issue by use of a method which approximates a level-yield . 3 . FUND DEFINITIONS As provided in the Indenture , the following funds have been established by the Trustee : i - 6 - I f . L Program Fund - Monies are used and withdrawn solely for (a) the acquisition of home mortgages , (b) payment of costs of issuance of the bonds , and (c) transfers to the Redemption Fund . Pro p,ram .Expense Fund - Monies are used and withdrawn solely for payment of administrative expenses . Revenue Fund - All revenues (except for developer commitment fees , revenues to be deposited in the Nonmortgage Investment Income Fund , and home mortgage principal prepayments) are depo- sited in this fund . Capital Reserve Fund - Monies are used and withdrawn by the Trustee solely for the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund , Interest Fund or Principal Fund and (b) paying fees and expenses of the County (administrator) in each b6nd year not to exceed certain limits outlined in the Indenture . Nonmortgage Investment Income Fund - All interest , profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund . Principal Fund - Monies are used and withdrawn solely for pay- ing of the principal of the bonds . Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds . Redemption Fund - Monies are used and withdrawn for redeeming of bonds at the next succeeding date of redemption. Debt Service Reserve Fund and Supplemental Reserve Account, - Monies are used and withdrawn for the purpose of making up any deficiency in the Nonmortgage Investment Income Fund , Interest Fund and Principal Fund . 4. CASH AND INVESTMENTS The Fund ' s deposits were entirely covered by federal depository insurance or collateral held by the Trustee in the Fund ' s name . The Indenture authorizes the Trustee to invest in interest- bearing time and demand deposits , obligations of the U. S . Trea- sury and U. S . agencies , repurchase agreements and investment agreements with the Investment Bank. The Trustee has an agreement to invest the bond proceeds and other Fund revenues with the Investment Bank. These invest- ments earn interest at a fixed rate of 10 . 58% and are not collateralized . 7 As of June 30 , cash and investments were as follows : Interest Rates 1988 1987 Deposit with Investment Bank 10 . 58% $5 , 452 , 110 $30 , 375 , 169. Cash and equivalents 756 , 541 153 ,933 Total cash and investments $6 , 208 , 651 $20 , 529 , 102 5 . MORTGAGE LOANS RECEIVABLE The mortgage loans receivable are secured by first deeds of trust on the related residences , have thirty-year terms and bear interest at 10 . 9%. Home mortgages allocated to developers for new homes have been acquired at 97 . 75% of their principal amounts . All other home mortgages have been acquired at 100% of their principal amounts . The discount , net of accumulated amortization, was $538 , 393 and $600 , 556 at June 30 , 1988 and 1987 , respectively. 6 . HOME MORTGAGE REVENUE BONDS PAYABLE A summary of the maturity dates and interest rates as of June 30, 1988 for the 1984 Home Mortgage Revenue Bonds follows :, Fiscal Year Interest Ending June 30 Bond Type Rates Princil)al 1989 Serial 8 . 00% $ 220 , 000 1990 Serial 8 . 25 295 , 000 1991 Serial 8 . 50 400 , 000 1992 Serial 8 . 75 475 , 000 1993 Serial 9 . 00, 535 , 000 1994 - 1997 Serial 9 . 20 - 9 . 80 3 , 725 , 000 2001 Term 10 . 25 13 , 640 , 000 2018 Municipal Multiplier 11 . 50 8 , 202 . 609 Total 27 , 492 , 609 Less bond discount and issuance costs , net of accumulated amortization (679 , 160) Total J26 , 813 . 449 The effective interest rate on the bonds is 10 . 7%. Bond interest on the serial and term bonds is payable semiannually on March 1 and September 1 . The Municipal Multiplier Bonds bear interest at a rate of 11 . 5%; interest is compounded semiannually each March 1 and September 1 and is payable at maturity or redemp- tion. Accrued interest payable on the Municipal Multiplier Bonds was $4 , 434, 175 and $3 , 097 ,322 at June 30 , 1988 and 1987 , respectively. 8 .-1 O M N C! u"J N N CT N N J W H H r, O (`J O O of I- O H N I �T M V c0 v O t, N H O rn O w al H N V I ;F: H ul 1l V O c0 O ID c0 U O O H O N N M M ID ID 414 iH H c0 f-1 N m a, h M n V .--1 Q u) 1" co .-I N V O M co �D W �D 1/1 aD V O z W co W ao a, M ID n M V oD V M n w D\ O lD a, Ln Ln H 1, W t\ W /1 O I 0 H N M H N O O ai W c9 MID Ln H r-1 M N M N M M iA {p a FW F rn rn rn WW o W [En U a, rn a W' C m M In M a Jn +a La5 oQ> W v v v v M M M M z N O N N N O V In ol m rn F q M u-) Jb O O W zI sm a, m rn m A I C) ID O H O O O H V) Iri �J H .. 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N > •• w v �l F Ll •o w' W H iF1 00 N U c4 w (n u u w O! v) J-1 U Y.R. W x z G O O q U C >. N Hw q H 6 W C O u > u W JaJ h N oU H H u J�J UO W W N y' F H Q To 'O a x OU N O W G C N O iG G C O z ;� G 7 C 2X w w C P4 H H g F W H H F H H •-I O H H w z CJ W el®itte Haskins+Sefls CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended June 30, 1988 and 1987 , 1988 Supplemental Schedules and Independent Auditors ' Report for purposes of additional analysis and are not a required part of the basic financial statements . Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and , in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole . -Azti�& October 6 , 1988 - 2 - CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND BALANCE SHEETS , JUNE 30 , 1988 AND 1987 1988 1987 ASSETS CASH AND INVESTMENTS (Note 4) $ 900 , 615 $47 , 054 , 748 MORTGAGE LOANS RECEIVABLE - Net (Note 5) 13 , 751 , 161 13 , 012 , 799 MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 64, 446 99 , 009 OTHER ASSETS 60 . 587 242 , 891 TOTAL 114, 776 , 809 160 , 409 , 447 LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $13 , 362 , 768 $56 , 485 , 235 INTEREST PAYABLE 737 , 991 2 , 084, 358 DEFERRED DEVELOPER COMMITMENT FEES (Note 7) 584, 533 OTHER LIABILITIES 31 , 793 3 , 833 TOTAL LIABILITIES 14, 132 , 552 59 , 157 , 959 RETAINED EARNINGS 644,257 - 1 , 251 , 488 TOTAL $14, 7-76 , 809 160 , 409 , 447 See notes to financial statements . 1 I - 3 - CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 , 1988 AND 1987 1988 1987 REVENUES : Interest from investments $1 , 589 , 547 $4, 245 , 249 Interest from mortgage loans 1 , 399 , 978 1 , 251 , 314 Amortization of deferred developer commitment fees (Note 1) 584, 533 813 , 252 Developer commitment fees (Note 7) 298 , 540 57 , 678 Total revenues 3 . 872 , 598 6 , 367 , 493 EXPENSES : Interest 2 , 788 , 851 5 , 445 , 531 Insurance and administrative 323 , 542 290 , 291 Total expenses 3 , 112 , 393 5 , 735 , 822 INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS 760 , 205 631 , 671 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (Note 6) 1 , 367 , 436 - NET INCOME (LOSS) (607 , 231) 631 , 671 RETAINED EARNINGS : Beginning of year 1 , 251 , 488 619 , 817 End of year J--- 644. 2_57 $1 , 251 , 488 See notes to financial statements . 4 - I i CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND s STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED JUNE 30 , 1988 AND 1987 s 1988 1987 SOURCES OF FUNDS : - Income before extraordinary loss on early retirement of bonds $ 760 , 205 $ 631 , 671 Add (subtract) items not involving cash - amortization of : Bond discount and issuance costs 71 , 442 58 , 976 Deferred developer commitment fees (584, 533) (813 , 252) Mortgage loan discounts (15 , 586) (13 , 640) Funds provided from operations 231 , 528 (136 , 245 ) Increase in interest payable 736 , 725 Decrease in interest payable 182 ,304 Collection of mortgage loans 714, 661 181 , 768 Other 69 , 745 33 , 042 Total sources of funds 1 , 198 , 238 815 , 290 USES OF FUNDS : Purchase of mortgage loans 1 , 444, 659 2 , 373 , 950 Retirement of home mortgage revenue bonds 44, 561 , 345 700 , 000 Payment of interest on municipal multiplier bonds 1 , 118 ,201 Increase in other assets 85 , 558 Decrease in interest payable 228 , 166 Total uses of funds 47 . 352 , 371 3 , 159 , 508 DECREASE IN CASH AND INVESTMENTS (46 , 154, 133) (2 , 344, 218) CASH AND INVESTMENTS : Beginning of year 47 , 054, 748 49 , 398 , 966 End of year $ 900 , 615 147 , 054, 748 See notes to financial statements . I 5 - CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND NOTES TO FINANCIAL STATEMENTS 1 . ENTITY The Contra Costa County 1985 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between First Interstate Bank of California (Trustee) and Contra Costa County (County) dated April 1 , 1985 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home mortgages within the County. Under the terms of the Indenture , the Trustee uses the bond proceeds to purchase investments and mortgage loans . The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture . In addition, the bonds are covered by a Municipal Bond Insurance Policy which unconditionally guarantees the payment of that portion of the principal and interest on the bonds which have become due for payment . The financial statements present only the 1985 Mortgage Revenue Bond Fund and are not intended to present the financial position and results of operations of Contra Costa County. 2 . SIGNIFICANT ACCOUNTING POLICIES Basis of Accounti" - The Fund- uses the accrual basis of accounting . Revenues are recognized when they are earned and expenses are recognized when they are incurred . Investments are stated at cost . The Trustee has entered into investment agreements with' Zions First National Bank (Investment Bank) . Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to bonds payable and are amortized over the term of the bond issue by use of a method which approximates a level-yield . Mortgage loan discounts , associated with the acquisition of new home mortgage loans through developers , are recorded as a reduction to mortgage loans receivable and amortized over the estimated life of the loan by a method with approximates a level-yield . Deferred developer commitment fees are amortized on a straight-line basis over the three-year commitment period . 6 ra 3 . FUND DEFINITIONS As provided in the Indenture , the following funds have been established by the Trustee : Program Fund - Monies are used and withdrawn solely for (a) the acquisition of home mortgages , (b) payment of costs of issuance of the bonds , -and (c) transfers to the Redemption Fund . Program Expense Fund - Monies are used and withdrawn solely for payment of administrative expenses . Revenue Fund - All revenues (except for developer commitment fees , revenues to be deposited into the Nonmortgage Investment Income Fund and home mortgage principal prepayments) are deposited in this fund . Capital Reserve Fund - Monies are used and withdrawn by the Trustee solely for the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund , Interest Fund or Principal Fund and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture . Nonmortgage Investment Income Fund - All interest , profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund . Principal Fund - Monies are used and withdrawn solely for the paying of the principal of the bonds . Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds . Redemption Fund - Monies are used and withdrawn for redeeming of bonds at the next succeeding date of redemption. 4. CASH AND INVESTMENTS The Fund ' s deposits were entirely covered by federal depository insurance or collateral held by the Trustee in the Fund ' s name . The Indenture authorizes the Trustee to invest in interest- bearing time and demand deposits , obligations of the U. S . Treasury and U. S . agencies , repurchase agreements and investment a agreements with the Investment Bank. The Trustee has an agreement to invest the bond proceeds and other Fund revenues with the Investment Bank. These investments earn interest at fixed rates in accordance with the investment agreement and are collateralized by certificates of deposit held a in the Trustee ' s name . ( - 7 - As of June 30 , cash and investments were as follows : Interest Rates 1988 1987 Certificates of deposit 8 . 00% $441 , 400 $ 163 , 169 Certificates of deposit 8 . 95 45 ,202 , 625 Certificates of deposit 9 . 52 293 , 312 1 ,397 , 599 Federal Farm Credit bank note 7 . 05 64, 959 Cash and equivalents 100 , 944 291 , 355 Total $900 , 615 J47 , O54 , 748 5 . MORTGAGE LOANS RECEIVABLE Mortgage loans receivable are secured by first deeds of trust on the related residences , have thirty-year terms and bear interest at 10 . 15%. Home mortgages allocated to developers who have paid a 2% cash commitment fee have been acquired at 96 . 5% of their principal amounts . Home mortgages allocated to developers who have paid a 4. 5% cash commitment fee have been acquired at 100% of their principal amounts . The discount on the home mortgages is amortized over the estimated life of the loans by a method that approximates level-yield . The discount , net of accumulated amortization, was $148 , 005 and $156 , 368 at June 30 , 1988 and 1987 , respectively. 6 . HOME MORTGAGE REVENUE BONDS PAYABLE A summary of the maturity dates and interest rates as of June 30 , 1988 for the 1985 Home Mortgage Revenue Bonds follows : Fiscal Year Interest Ending June 30 Bond Type Rates Principal 1989 Serial 6 . 50% $ 135 , 000 1990 Serial 7 . 00 205 , 000 1991 Serial 7 . 25 395 , 000 1992 Serial 7 . 50 - 7 . 75 645 , 000 1993 Serial 7 . 75 - 8 . 00 525 , 000 1994-1996 Serial 8 . 00 - 8 . 50 1 , 515 , 000 1997-2001 Municipal Multiplier 9 . 40 - 9 . 75 997 , 461 2004 Term 8 . 875 1 , 030 , 000 2010 Term 9 . 25 7 , 715 , 000 2018 Municipal Multiplier 10 . 625 575 , 976 Total 13 , 738 , 437 Less bond discount and issuance costs , net of accumulated amortization (375 , 669) Total 113 ,362 ,768 8 _ 9 _ co s O, .-1 h 11) 00 (n M O, 00 t� T 01 O rn T M +n M M U1 00 T (A r•. h 00 T N M �n o0 Oi T T O H co VI m T O oo o0 oo ✓) n O 1 O U T Io ✓) Ln lO #? 119 fF} 44 N H lo haN 00 ri M N h al W O to of O, 11) In O w to T 1) W h CT h ✓1 N W H Oo N T �o CT h h M h M H to h O U M T M T T ir4 i.4 z O O"o i.64 4A, �I A W �o r+ W A rn rn o+ O H w ' Cl) M M 1 M W z a a Ln w H A� Ll z «S m o0 V5 H W ¢ cG 44 is a a ¢ w A Oo v1 M M H£ O� Co 00 Cp A CHf ^ w O u7 rn H ,'7.>O V} h h h N3 w Ozz O U > Q> rpt H HCYiA ^ Oo oo lo In i U T W u"1 T Ln o x > I i w Lr) ID ID 11 oho h N 3 T h N M M oo N �iw oo i N N 'A T rn +.4 + H u.7 T w O ul ul u1 O O SJR W M O h h N M U S Cl Iy T h N .......... 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H H H G O v N v v ro w v aro w ozz w v or•mow 4G Q �w•� z o z 9uuo'O >u o.0 w wu vH6 F uu ca 00 H con F Fwoo v O Cy 5 Z W G C E v 0 >C G G O 7 Z G 7 GZ }C (+7 W CG N G U I-+ V]'� C F H•G; O F W H H F H H N O H ,-+ W T w'`•-w W .. _ WOMB HaskinvSells CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND Financial Statements and Supplemental Schedules for the Period from August 1 , 1987 (Inception) to June 30 , 1988 and Independent Auditors ' Report insDelocitte HaskAells 44 Montgomery Street San Francisco, California 94104-4602 (415) 393-4300 Telex: 340336 INDEPENDENT AUDITORS ' REPORT The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheet of the Contra Costa County 1987 Mortgage Revenue Bond Fund (Fund) as of June 30 , 1988 and the related statements of operations and accumulated deficit and of changes in financial position for the period from August 1 , 1987 (inception) to June 30 , 1988 . These financial statements and the supplemental schedules dis- cussed below are the responsibility of the Fund ' s management . Our responsibility is to express an opinion on these financial statements based on our audit . We conducted our audit in accordance with generally accepted auditing standards . Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement . An audit includes examining , on a test basis , evidence support- ing the amounts and disclosures in the financial statements . An audit also includes assessing the accounting principles used and significant estimates made by management , as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As ,described in Note 1 to the financial statements , the accom- panying financial statements present only the 1987 Mortgage Revenue Bond Fund and are not intended to present the finan- cial position and results of operations of Contra Costa County. In our opinion, such financial statements present fairly, in- all material respects , the financial position of the Fund at June 30 , 1988 and the results of its operations and the changes in its financial position for the period from August 1 , 1987 ( inception) to June 30 , 1988 in conformity with generally accepted accounting principles . Our audit was made for the purpose of forming an opinion on .the basic financial statements taken as a whole . The supple- mental combining balance sheet , June 30 , 1988 , and combining statement of operations and accumulated deficit for the period from August 1 , 1987 (inception) to June 30 , 1988 (supplemental schedules ) are presented for purposes of additional analysis and are not a required part of the basic financial statements . Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and , in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole . 44vi2t A'44 October 6 , 1988 2 is CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND BALANCE SHEETJUNE 30 1988 ASSETS CASH AND INVESTMENTS (Note 4) $24, 697 , 633 GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) SECURITIES - Net (Note 5) 10 , 438 , 438 MATURED GNMA SECURITIES RECEIVABLE 141 , 719 INTEREST RECEIVABLE 350, 309 TOTAL $35 , 628 , 099 LIABILITIES AND ACCUMULATED DEFICIT HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $35 , 154, 542 INTEREST PAYABLE 445 , 148 OTHER LIABILITIES 36 , 850 TOTAL LIABILITIES 35 , 636 , 540 ACCUMULATED DEFICIT (8,441) TOTAL 135 , 099 See notes to financial statements . 3 CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE PERIOD FROM AUGUST 1 , 1987 (INCEPTION) TO JUNE 30 , 1988 REVENUES : Interest from investments $2 , 123 , 812 Interest from GNMA securities - net (Note 5) 158 ,976 Total revenues 2. 282 . 788 EXPENSES : Interest 2 , 287 , 983 Administrative 3 , 246 Total expenses 2 , 291 , 229 NET LOSS AND ACCUMULATED DEFICIT X8 . 441) See notes to financial statements . 4 CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE PERIOD FROM AUGUST 1 1987 (INCEPTION) TO JUNE 30 , 1988 SOURCES OF FUNDS : Net loss $ (8 , 441) Add (subtract) items not involving cash - amortization of : Bond discount and issuance costs 32 , 567 Commitment fees (2 , 474) GNMA discount (387) Funds provided from operations 21 , 265 Proceeds from sale of home mortgage revenue bonds 35 , 447 , 652 Commitment fees 1 , 049 , 600 Increase in: Interest payable 445 , 148 Other liabilities 36 , 850 Collection of GNMA principal 35 , 051 Total sources of funds 37 , 035 , 566 USES OF FUNDS : Purchase of GNMA securities 11 , 520 , 228 Bond issuance costs 325 , 677 Increase in: Interest receivable 350 , 309 Matured GNMA securities receivable 141 , 719 Total uses of funds 12 , 337 , 933 INCREASE IN CASH AND INVESTMENTS $24, 697 , 633 See notes to financial statements . E - 5 - f t L CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND NOTES TO FINANCIAL STATEMENTS 1 . ENTITY The Contra Costa County 1987 Mortgage Revenue Bond Fund (the Fund) was established under the provisions of the California Health and Safety Code and the indenture between First Inter- state Bank of California (the Trustee) and Contra Costa County (the County) , dated August 1 , 1987 (the Indenture) . The Fund is authorized to issue revenue bonds for the purpose of j financing home mortgages within the County. i Under the terms of the Indenture , the Trustee uses the bond I proceeds to purchase investments and Government National Mort- gage Association (GNMA) securities backed by pools of home mortgages within the County. The home mortgage revenue bonds are secured by a pledge of GNMA securities and are repaid solely from loan repayments and other revenues pledged under the Indenture . i The financial statements present only the 1987 Mortgage Revenue Bond Fund and are not intended to present the financial posi- tion and results of operations of Contra Costa County. . � I 2 . SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned , and expenses are recognized when they are incurred . Investments are stated at cost . The Trustee has entered- into i investment agreements with AIG Financial Products Corporation (Investment Bank) . - Bond discount and issuance costs associated with the sale of _ the bonds are recorded as a reduction to bonds payable and are amortized over the term of the bond issue by use of the inter- est method . Commitment fees are deferred until commitment is exercised , at g' which time they are amortized over the life of the GNMA securi- ties by use of the interest method . 0 i - 6 - E f 2 3 . FUND DEFINITIONS As provided in the Indenture , the following funds have been established by the Trustee : Program Fund - Monies are used and withdrawn solely for (a) the acquisition of -GNMA securities , (b) payment of costs of issuance of the bonds , and (c) transfers to the Redemption Fund . Exchange Fund - Monies are used for the purchase of an invest- ment to be exchanged for the assets of the County' s 1985 Home Mortgage Revenue Bond Fund . Such assets are to be transferred to the Program Fund . Program Expense Fund - Monies are used and withdrawn solely for payment of administrative expenses . Revenue Fund - All revenues (except for developer commitment fees) are deposited in this fund . Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds . Inter_. = Reserve Fund - Monies are used and withdrawn by the Trustee solely for the purpose of making up any deficiency in the Nonmortgage Investment Excess Fund , Interest Fund or Prin- cipal Fund . Nonmortgaze Investment Excess Fund - All interest and other revenues earned on the Fund ' s investments in excess of the sum of (a) the amount which would have been earned had such investments been at the yield on the bond issue and (b) the aggregate net amount of losses realized by the Fund upon foreclosure or assignment of home mortgages are deposited in this Fund and remitted to the United States . Principal Fund - Monies are used and withdrawn solely for the paying of the principal of the bonds . 4. CASH AND INVESTMENTS - The Fund ' s deposits were entirely covered by federal depository insurance or collateral held by the Trustee in the Fund ' s name . The Indenture authorizes the Trustee to invest in interest- bearing time and demand deposits , obligations of the U. S . Treasury and U. S . agencies , repurchase agreements and invest- ment agreements with the Investment Bank. The Trustee has an agreement to invest the bond proceeds and other Fund revenues with the Investment Bank. These invest- ments earn interest at fixed rates in accordance with the investment agreement and are collateralized by certificates of deposit held in the Trustee ' s name . i i - 7 - i As of June 30 , 1.988 cash and investments were as follows : Interest Rates Amount Certificates of deposit 7 . 47% $24 , 689 , 021 Cash and equivalents 8 , 612 Total cash and investments $24 , 627 , 633 5 . GNMA MORTGAGE-BACKED SECURITIES GNMA securities , backed by pools of residential mortgage loans originated in Contra Costa County, are acquired at 99 . 5% of the outstanding principal balance amount of the underlying mortgages and bear interest at 7 . 65%. The discount on GNMA securities is amortized over the life of the loans by use of the interest method . Home mortgages are secured by first deeds of trust on the related residences , have terms ranging from 27 to 29 years , and bear interest at 8 . 15%. The interest rate differential between the home mortgages and the GNMA securities represents fees retained by the lender for servicing home mortgages . GNMA securities are shown net of deferred commitment fees . Home mortgages are allocated to developers who have paid com- mitment fees of 3 . 2% of their allocation. A lender has paid an additional commitment fee of 2% of their allocation to origi- nate mortgages not specifically designated to developers . As of June 30, 1988 GNMA securities were as follows : GNMA securities $11 , 543 , 068 Less : Discount on GNMA securities , net of accumulated amortization Deferred commitment fees , net of accumulated. amortization (1 , 047 , 126) Total JI0 ,438 ,438 8 6 . HOME MORTGAGE REVENUE BONDS PAYABLE A summary of the maturity dates and interest rates as of June 30 , 1988 for the 1987 Home Mortgage Revenue Bonds follows : Fiscal Year Interest Ending June 30 Bond Type Rates Principal 1991 Serial 5 . 25% $ 220 , 000 1992 Serial 5 . 25 - 5 . 50 460 , 000 1993 Serial 5 . 50 - 5 . 75 485 , 000 1994-1999 Serial 5 . 75 - 7 . 00 3 , 340 , 000 2014 Term 7 . 50 22 , 690 , 000 2017 Term 7 . 90 8 , 725 , 000 Total 35 , 920 , 000 Less bond discount and issuance costs , net of accumulated amortization (765 , 458) Total $35 , 154, 542 The effective interest rate on the bonds is 7 . 52%. Bond inter- est on the serial and term bonds is payable semiannually each May 1 and November 1 . The term bonds are subject to mandatory redemption without premium prior to maturity out of revenues deposited in a man- datory sinking account . The Indenture provides for semiannual deposits into a manda- tory sinking fund ranging from $375 , 000 commencing in 1999 to $2 , 460 , 000 in 2014 for the Term Bonds maturing in 2014 , and ranging from $2 , 075 , 000 commencing in 2015 to $3 , 140 , 000 in 2017 for the Term Bonds maturing in 2017 . The installments are subject to reduction due to prior redemptions . t i {i i I C j i - 9 - i N 00 s .O c r ^ cn In c cl, o fi M r 0D In ce� ce) 10 p ^ ^ 3( O co � O Cl) N co 3 c� N^ V l 10 A O44 Go UIIN rA^ s r' W W� c1 �' LrN WWW � r+ O �N �^ N ol �^ ccs Cl) O Hyl P O .D O -3 c- N` cn VN N W 0cn r+ ? ^ COrA In Ni O s 4O ce) 14 � W 10 GO r- ID �N �^ N �� colN v w `Go 10 � 14 cl% IS cnp ra ^ oo^ 4PI of el � p o o^ N 1-4 N U vA ZO P cA 7 rte` 6 pra EW p G l� F Y Zp 2 pa U ti a o a' r� r� N IO DO M�O H M M H A H r` 00 7 <T 1010 7 H H M W N 00 M 00 N N r 00 � 00 � 0000 1 N lD O O ^ U N N ^ p p 0000 fR � i U)7 Lr) O O CY.W NOH H H E. 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