HomeMy WebLinkAboutMINUTES - 12121990 - 1.7 TO: BOARD OF SUPERVISORS
FROM: Harvey E. Bragdon `""' 'tom
Director of Community Development Cx)sta
DATE: December 12, 1989 County
SUBJECT: Audit of Financial Statements 1982, 1983, 1984, 1985, 1987, and 1988
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, 1987, and 1988 Contra Costa Home Mortgage Revenue Bond
Programs as completed by Deloitte, Haskins, & Sells.
FISCAL IMPACT
None.
BACKGROUND/REASONS FOR RECOMMENDATIONS
The Indenture for the above referenced Home Mortgage Revenue Bond
Programs 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 ATTACHMENT: YES SIGNATURE:
C�
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATf OF �►RD CO TTEE
APPROVE _ OTHER
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SIGNATURE(S) :
ACTION OF BOARD ON DEC 12- 1424 APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS �
I HEREBY CERTIFY THAT THIS IS A
>C 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 DEC 12 1989
CAO (via Risk Mgmt. ) PHIL BATCHELOR, CLERK OF
County Counsel THE BOARD OF SUPERVISORS
Auditor (c/o Nona) AND COUNTY ADMINISTRATOR
Contractor � ��f!
BY ��1,/� , DEPUTY
JK:cg
cdl4/audit.mrb
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-Haskins+sells
CONTRA COSTA COUNTY
1982 MORTGAGE REVENUE BOND FUND
Financial Statements for the Years Ended
June 30, 1989 and 1988, 1989 Supplemental
Schedules and Independent Auditors' Report
ei01e
rHaskins+Sells
50 Fremont Street
San Francisco, California 94105-2230
(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 1982
Mortgage Revenue Bond Fund (Fund) as of June 30, 1989 and 1988 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 supplemental 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 accompanying 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.
In our opinion, such financial statements present fairly, in all material respects, the
financial position of the Fund at June 30, 1989 and 1988 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.
Our 1989 audit was made for the purpose of forming an opinion on the basic 1989
financial statements taken as a whole. The supplemental combining balance sheet.
June 30, 1989, and combining statement of operations and retained earnings for the year
ended June 30, 1989 (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.
September 22, 1989
Belloifte ,
Haskins—sells
CONTIU COSTA COUNTY
1982 MORTGAGE REVENUE BOND FUND
Financi il Statements for the Years Ended
June 30 1989 and 1988, 1989 Supplemental
Schedu es and Independent Auditors' Report
t
CONTRA COSTA COUNTY
1982 MORTGAGE REVENUE BOND FUND
BALANCE SHEETS JUNE 30 1989 AND 1988
1989 1988
ASSETS
CASH AND INVESTMENTS (Note 4) $2,989,504 $ 4,940,383
MORTGAGE LOANS RECEIVABLE (Note 5) 6,946,082 10,775,451
MATURED MORTGAGE LOANS AND RELATED
INTEREST RECEIVABLE 41,182 49,019
OTHER ASSETS 15,526 28,760
;t
TOTAL $9,992,294 $1.5,793,613
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LIABILITIES AND RETAINED EARNINGS
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HOME MORTGAGE REVENUE BONDS
PAYABLE - Net (Note 6) $7,999,206 $13,513,287
9
1 INTEREST PAYABLE 506,944 857,059
_3
TOTAL LIABILITIES 8,506,150 14,370,346
RETAINED EARNINGS , 1,486,144 1,423,267
:F
TOTAL $9,992,294 $15,793,613
See notes to financial statements.
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CONTRA COSTA COUNTY
1982 MORTGAGE REVENUE BOND FUND
STATEMENTS OF OPERATIONS D RETAINED EARNINGS
FOR THE YEARS ENDED JUNE 0 1989 AND 1988
1989 1988
REVENUES:
Interest from mortgage loans $1,167,628 $1,778,786
Interest from investments 305,514 516,912
Total revenues 1,473,142 2,295,698
EXPENSES:
Interest 1,231,942 2,061,420
Administrative 52,288 75,594
Total expenses 1,284,230 2,137,014
INCOME BEFORE EXTRAORDINARY
LOSS ON EARLY RETIREMEN
OF BONDS 188,912 158,684
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF BONDS (Note 6) (126,035) (261,798)
NET INCOME (LOSS) 62,877 (103,114)
3
RETAINED EARNINGS:
Beginning of year 1 ,423,267 1,526,381
End of year
$1,486,144 $1,423,267
See notes to financial statements.
t
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c'c)`"1 Z:1 COSTA COUNTY
-)s— EZ"1-GAGE REVENUE BOND FUND
STA T E'`A ENTS OF CHANGES IN FINANCIAL POSITION
f'c BIZ "i' 1 F YEARS ENDED JUNE 30, 1989 AND 1988
1989 1988
SOURCES OF FUNDS:
Income before extraordinary loss on early
retirement of bonds $ 188,912 $ 158,684
Add item not involving cash - amorti-:ation of
bond discount and issuance costs 19,884 33,150
Funds provided from operations 208,796 191,834
Collection of mortgage loans 3,829,369 5,990,537
Decrease in matured mortgage loans and related
interest receivable 7,837 493,657
Other - net 13,234 (72,569)
'I'Mal sources of funds 4,059,236 6,603,459
USES OF FUNDS:
Retirement of home mortgage rt-:venue bonds 5,660,000 11,180,000
Decrease in interest payable 350,115 690,269
Total uses of funds 6,010,115, 11,870,269
DECREASE IN CASH ANL, INVESTMENTS (1,950,879) (5,266,810)
CASH AND INVESTMENTS:
Beginning of year 4,940,383 10,207,193
End of year $2,989,504 $ 4,940,383
See notes to financial statem ants.
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CONTRA COSTA COUNTY
q%ti N %IORTGAGE REVENUE BOND FUND
I
NOTES TO FINANCIAL STATEMENTS
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1. ENTITY
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 Tr .stee uses the bond proceeds to purchase
investments and mortgage loans. The hom mortgage revenue bonds are secured by a
pledge of mortgage loans and are repaid soli from loan repayments and other revenues
pledged under the Indenture. If the amou available in the Fund is not sufficient to
repay the bonds in full, the principal and accr .,d interest will be paid to the bondholders
in accordance with the provisjons of the Inder: ure, primarily on a pro rata basis without
any discrimination or preference, after the payment of expenses necessary to protect the
interest of the bondholders.
I
The financial statements present only the 1982 °V[ortgage Revenue Bond Fund and are
x not intended to present the financial position and 'results of operations of the County.
y
I
z 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Fund uses the accrue. basis of accounting. Revenues are
recognized when they are earr4ed and expenses are ecognized when they are incurred.
f
Investments are stated at costs The Trustee has er -ed into investment agreements with
x
First National Bank of St. Paul (Investment Bank).
1i
Bond discount and issuance costs associated with the sale of the bonds are recorded as a
l reduction to home mortgage revenue bonds payable and are amortized over the term of
the bond issue using a method1which approximates a level-yield.
3. FUND DEFINITIONS j
I
As provided in the Indenture, the following funds have )een established by the Trustee:
i
Revenue Fund - All revenues (except for developer cc.:=itment fees and revenues to be
deposited into the Nonmortgage Investment Income Fl.:.-id) are deposited in this fund.
1 �
Capital Reserve Fund - Monies are used and withdr: m by the Trustee solely for the
purpose of (a) making up anyj deficiency in the Nonmi ;tgage investment Income Fund,
Inter ,st Fund or Principal �und and (b) paving fe and :expenses of the County_
(administrator) in each bond yL-ar not to exceed certain : tits outlined in the Indenture.
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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 the redeeming of bonds at the
next succeeding date of redemption.
4 ; CASH AND INVESTMENTS
As of June 30, cash and investments were as follows:
Interest
Rates 1989 1988
j
Certificates of deposit 12.34% $2,635,518 $4,561, 197
a Repurchase agreement 12.34 129,773
Cash and equivalents 224,213 379,186
Total $2,989,504 $4,940,383
The Fund's cash and equivalents 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 fully
covered by collateral held by the Investment Bank in the Fund's name.
5'. MORTGAGE LOANS RECEIVABLE
i
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 -
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I, 6. HOME MORTGAGE REVENJE BONDS PAYABLE
A summary of the maturity dates and interest rates as of June 30, 1989 for the 1982 Home
Mortgage Revenue Bonds follows!
Fiscal Year Bond Interest
Ending June 30 Type Rates Pri nci pal
1
1990 Serial 10.50 - 11.00% $ 85,000
! 1991 Serial 11.00 - 11.25 90,000
1992 Serial 11.25 - 11.50 100,000
1993 Serial 11.50 - 11.75 115,000.
1994 Serial 11.75 - 12.00 125,000
1995-1997 Serial 12.20 - 12.30 385,000
2011 Term 12.50 7,265,000
Total 8,165,000
Less bond discount and issuance costs,
net of accumulated amortization (165,794)
s Total $7,999,206
The effective interest rate on the bonds is 12.77%. Bond interest is payable semiannually
j 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 prepayment
penalty.
l
The term bonds are subject to mandatory redemption without prepayment penalty, prior
to maturity, out of revenues depo ited in a mandatory sinking account. The Indenture
provides for semiannual deposits into the sinking account ranging from $725,000
commencing in 1997 to $4,520,000 din 2010. The installments are subject to reduction due
to prior redemptions.
i
The Fund retired $5,550,000 and $110,975,000 of the bonds prior to scheduled maturity in
1989 and 1988, respectively. GenL-rally accepted accounting principles require that the
difference between the reacquisition price and the net carrying amount of extinguished
debt (net of discount and issuance hosts) be recorded as an extraordinary loss, if material.
The net carrying amount of the bonds retired in 1989 was $5,423,965 and accordingly, the
Fund recognized an extraordinary loss on early retirement of $126,035. The early
retirement of bonds in 1988 resulted in an extraordinary loss of$261,798.
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Deloitte
Haskins-+--Sells
50 Fremont Street
San Francisco, California 94105-2230
(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, 1989 and 1988 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 supplemental 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 accompanying 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, 1989 and 1988 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.
Our 1989 audit was made for the purpose of forming an opinion on the basic 1989
financial statements taken as a whole. The supplemental combining balance sheet,
June 30, 1989, and combining statement of operations and retained earnings for the year
ended June 30, 1989 (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.
September 22, 1989
CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
BALANCE SHEETS JUNE 30 1989 AND 1988
1989 1988
ASSETS
CASH AND INVESTMENTS (Note 4) $ 1,904,022 $ 2,112,006
MORTGAGE LOANS RECEIVABLE (Note 5) 22,999,582 27,355,348
MATURED MORTGAGE LOANS AND RELATED
INTEREST RECEIVABLE 16,821 97,189
OTHER ASSETS 54,873 43,135
TOTAL $24,975,298 $29,607,678
LIABILITIES AND RETAINED EARNINGS
HOME MORTGAGE REVENUE BONDS
PAYABLE - Net (Note6) $23,695,160 $28,218,560
INTEREST PAYABLE 185,400 220,863
OTHER LIABILITIES 2,288
TOTAL LIABILITIES 23,880,560 28,441,711
RETAINED EARNINGS 1,094,738 1,165,967
TOTAL $24,975,298 $29,607,678
See notes to financial statements.
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CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
STATEMENTS OF OPERATIONS RETAINED EARNINGS
FOR THE YEARS ENDED JUNE 30 1989 AND 1988
1989 1988
REVENUES:
Interest from mortgage loans $2,413,038 $2,709,544
Interest from investments 279,195 231,312
Total revenues 2,692,233 2,940,856
EXPENSES:
Interest 2,547,960 2,812,024
Administrative 106,504 104,105
Loss on bond prepayments 108,998 136,535
Total expenses 2,763,462 3,052,664
NET LOSS (71,229) (111,808)
RETAINED EARNINGS:
Beginning of year 1,165,967 1,277,775
End of year $1,094,738 $1,165,967
See notes to financial statements.
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CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
STATEMENTS OF CHANGES IN FINANCIAL POSMON
FOR THE YEARS ENDED JUNE 30, 1989 AND 1988
1989 1988
SOURCES OF FUNDS:
Net loss $ (71,229) $ (111,808)
Add items not involving cash:
Amortization of bond discount and issuance costs 47,602 54,525
Loss on bond prepayments 108,998 136,535
Funds provided from operations 85,371 79,252
Collection of mortgage loans 4,355,766 2,386,386
Decrease in matured mortgage loans and related
interest receivable 80,368 61,515
Other-net (14,026) 12,319
Total sources of funds 4,507,479 2,539,472
USES OF FUNDS:
Retirement of home mortgage revenue bonds 4,680,000 2,240,000
Decrease in interest payable 35,463 16,715
Total uses of funds 4,715,463 2,256,715
INCREASE (DECREASE) IN CASH
AND INVESTMENTS (207,984) 282,757
r
CASH AND INVESTMENTS:
Beginning of year 2,112,006 1,829,249
End of year $1,904,022 $2,112,006
See notes to financial statements.
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CONTRA COSTA COUNTY
1983 MORTGAGE REVENUE BOND FUND
NOTES TO FINANCIAL STATE ENTS
1. ENTITY
The Contra Costa County 198 Mortgage Revenue Bond Fund (Fund) was established
under the provisions of the Cali'ornia Health and Safety Code and the indenture between
Security Pacific Bank (Trustee and Contra Costa County (County) dated June 1, 1983
(Indenture). The Fund is auth rized to issue revenue bonds for the purpose of financing
home mortgages within the Cou ty.
Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase
investments and mortgage loan . The home mortgage revenue bonds are secured by
pledge of mortgage loans and ar repaid solely from loan repayments and other revenues
pledged under the Indenture. f 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 accordance 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 presen only the 1983 Mortgage Revenue Bond Fund and are
not intended to present the finan -ial position and results of operations of the County.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Fun uses the accrual basis of accounting. Revenues are
recognized when they are earned nd expenses are recognized when they are incurred.
Investments are stated at cost. ►e Trustee has entered into investment agreements with
First National Trust of St. Paul (Investment Bank).
Bond discount and issuance costs associated with the sale of the bonds are recorded as a
reduction to home mortgage revenue bonds payable and are amortized over the term of
the bond issue using a method whit approximates a level-yield.
3. FUND DEFINITIONS
As.provided in the Indenture, the f flowing funds have been established by the Trustee:
Revenue Fund - All revenues (exc pt for developer commitment fees and revenues to be
deposited into the Nonmortgage In estment Income Fund) are deposited in this fund.
Capital Reserve Fund - Monies a e used and withdrawn by the Trustee solely for the
purpose of (a) making up any defi iency in the Nonmortgage Investment Income Fund,
nterest Fund or Principal Fund, and (b) paying fees and expenses of the County
(administrator) in each bond year n t to exceed certain limits outlined in the Indenture.
- 5 -
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
As of June 30, cash and investments were as follows:
Interest
Rate 1989 1988
Certificates of deposit 9.14% $1,769,687 $1,942,423
Cash and equivalents 134,335 169,583
Total $1,904,022 $2,112,006
The Fund's cash and equivalents 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 9.14% and are fully
covered by collateral held by the Investment Bank in the Fund's name.
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%.
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6. HOME MORTGAGE REVENL E BONDS PAYABLE
A summary of the maturity dates a d interest rates as of June 30, 1989 for the 1983 Home
Mortgage Revenue Bonds follows:
Fiscal Year Bond Interest
Ending June 30 Type Rates Principal
1990 Serial 8.00% $ 255,000
1991 Serial 8,25 275,000
1992 Serial 8.50 295,000
1993 Serial 8.60 325,000
1994 Serial 8.70 345,000
1995 Serial 8.80 385,000
2001 Term 9.125 3,175,000
2015 Term 9.25 19,190,000
Total 24,245,000
Less bond discount and issuance costs,
net of accumulated amortization (549,840)
4
Total $23,695,160
The effective interest rate on the bnds is 9.48%. Bond interest is payable semiannually
on June 1 and December 1. Bond are subject to redemption prior to maturity, from
amounts in the Redemption Fund o any interest payment date without premium.
The bonds maturing on June 1, 2 15 are subject to mandatory redemption without
premium, prior to maturity, out of revenues deposited in a mandatory sinking account.
The Indenture provides for semian ual deposits into the sinking account ranging from
$305,000 commencing in 1995 to $4 5,000 in 2001 for the 2001 term bonds and ranging
from $515,000 commencing in 2001 o $1,745,000 in 2015 for the 2015 term bonds. The
installments are subject to reduction ue to prior redemptions.
The Fund retired $4,430,000 and $1965,000 of the bonds prior to scheduled maturity in
1989 and 1988, respectively. The net carrying amount of the bonds retired was $4,321,002
in 1989 and $1,828,465 in 1988 resul ing in losses on bond prepayments of $108,998 and
}`! $136,535, respectively.
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{ Deloitte
Haskins+Sells
50 Fremont Street
San Francisco. California 94105-2230
(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, 1989 and 1988 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 supplemental 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 accompanying financial
statements present only the 1984 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, 1989 and 1988 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.
Our 1989 audit was made for the purpose of forming an opinion on the basic 1989
financial statements taken as a whole. The supplemental combining balance sheet,
June 30, 1989, and combining statement of operations and retained earnings for the year
ended June 30, 1989 (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.
September 22. 1989
CONTRA COSTA COUNTY
1984 MORTGAGE REVENUE BOND FUND
BALANCE SHEETS JUNE 30 1989 D 1988
44.
'::;,,,: 1989 1988
�a.
ASSETS
CASH AND INVESTMENTS (Note 4) $ 6,960,794 $ 6,208,651
MORTGAGE LOANS RECEIVABLE - Net (Note 5) 22,9009798 27,369,578
MATURED MORTGAGE LOANS AN RELATED
INTEREST RECEIVABLE 52,026 99,881
INVESTMENT INTEREST RECEIVAB ,E 189,137 153,412
OTHER ASSETS 38,832 26,029
TOTAL $30,141,587 $33,857,551
LIABILITIES AND RETAINED EARNI GS j
HOME MORTGAGE REVENUE BO S I
PAYABLE - Net (Note 6) $21,822,665 $26,813,449
INTEREST PAYABLE 6,407,698 5,074,505
i
OTHER LIABILITIES 84,430 86,233
TOTAL LIABILITIES 28,314,793 31,974,187
RETAINED EARNINGS 1,826,794 1,883,364
TOTAL $30,141,587 $33,857,551
I :
See notes to financial statements.
I '
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- 2-
CONTRA COSTA COUNTY
1984 MORTGAGE REVENUE BOND FUND
a
i
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED JUNE 30 1989 AND 1988
1989 1988
REVENUES:
Interest from mortgage loans $2,937,147 $3,323,149
Interest.from investments 534,520 1,011,618
Developer commitment fees (Note 7) 535,383
Total revenues 3,471,667 4,870,150
EXPENSES:
Interest 3,131,668 3,914,428
Insurance and administrative 266,582 403,438
Total expenses 3,398,250 4,317,866
INCOME BEFORE EXTRAORDINARY
LOSS ON EARLY RETIREMENT
OF BONDS 73,417 552,284
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF BONDS (Note 6) (129,987) (798,049)
NET LOSS (56,570) (245,765) !;
RETAINED EARNINGS:
Beginning of year 1,883,364 2,129,129
End of year $1,826,794 $1,883,364
See notes to financial statements.
i�
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a
CONTRA COSTA COUNTY
1984 MORTGAGE REVENUE BON FUND
STATEMENTS OF CHANGES IN F ANCIAL POSITION
FOR THE YEARS ENDED JUNE 3 1989 AND 1988
1989 1988
SOURCES OF FUNDS:
Income before extraordinary loss on earl
retirement of bonds $ 73,417 $ 552,284
Add (subtract) items not involving cash -
amortixation of:
Bond discount and issuance costs 39,229 57,650
Mortgage loan discounts (62,164) (62,164)
Funds provided from operations 50,482 547,770
Collection of mortgage loans 4,530,944 3,455,705
Decrease in:
Interest receivable 875,440
Prepaid bond insurance 38,223
Matured mortgage loans and related
interest receivable 47,855 354,821
Increase in interest payable 1,333,193 422,382
Other- net (50,331 55,208
Total sources of funds 5,912,143 5,749,549
USES OF FUNDS -
Retirement of home mortgage revenue onds 5,160,000 30,070,000
INCREASE (DECREASE) IN CASH
AND INVESTMENTS 752,143 (24,320,451)
CASH AND INVESTMENTS:
Beginning of year 6,208,651. 30,529,102
End of year $6,960,794 $ 6,208,651
See notes to financial statements. i
f
{
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- 4
• CON'T'RA 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 and Contra Costa County (County)
dated August 1, 1984 (Indenture). In 1989, Bankers Trust Company (Trustee) replaced
Manufacturers Hanover Trust Company of California as Trustee. 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
ledged under the Indenture. In addition, the bonds are covered by a municipal bond
insurance policy which unconditionally guarantees the timely payment of principal and
interest on the bonds.
The financial statements present only the 1984 Mortgage Revenue Bond Fund and are
not intended to present the financial position and results of operations of the 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
hec hBank (Investment Bank).
IVIQrtgage loan discounts associated with the acquisition of new home mortgage loans
thiouah 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 home mortgage revenue bonds payable and are amortized-over the term of
..thy bd issue by a method which approximates alevel-yield.
3. FUND DEFINITIONS
As provided-in the Indenture, the following funds have been established by the Trustee:
Program Expense Fund - Monies are used and withdrawn solely for payment of
administrative expenses.
- 5 - i ;
Revenue Fund - All revenues (ex ept for developer commitment fees, revenues to be
deposited in the Nonmortgage In estment Income Fund, and home mortgage principal .
prepayments) are deposited in this nd.
Capital Reserve Fund - Monies a e used and withdrawn by the Trustee solely for the
purpose of (a) making up any deft iency in the Nonmortgage Investment Income Fund,
Interest Fund or Principal Fundand (b) paying fees and expenses of the County n I
(administrator) in each bond year t to exceed certain limits outlined in the Indenture.
-
Nonmortgage Investment Income ]Fund - All interest, profits and other income derived
from nonmortgage investments of a'll monies in any fund or account established under the
Indenture are to be deposited into this fund.
Principal Fund - Monies are used nd withdrawn solely for paying.of the.principal of.the
bonds.
Interest Fund - Monies are used a d withdrawn solely for the paying of interest on the
bonds.
Redemption Fund - Monies are us d and withdrawn for redeeming of bonds at the next
succeeding date of redemption.
Debt Service Reserve Fund and S DDlemental Reserve Account - Monies are used and
withdrawn for the purpose of maki g up any deficiency in the Nonmortgage Investment
Income Fund, Interest Fund and Pr ncipal Fund.
4. CASH AND INVESTMENTS
As of June 30, cash and investments were as follows:
Interest
Rates 1989 1988
Deposit with Investment Bank 10.58% $6,960,794 $5,452,110
Cash and equivalents 756,541
Total cash and investments 16,960,794 $6,208,651
The Fund's cash and investments were entirely covered by federal depository insurance or
collateral held by the Trustee in theund's name.
The Indenture authorizes the Tru tee 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 the bond proceeds and other Fund revenues with
the Investment Bank. These investments earn interest at a fixed rate of 10.58% and are
not collateralized.
- 6-
5. MORTGAGE LOANS RECEIVABLE I
i
The mortgage loans receivable are secured by first deeds of trust on the related i
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 $476,229 and
$538,393 at June 30, 1989 and 1988, respectively.
6. HOME MORTGAGE REVENUE BONDS PAYABLE
A summary of the maturity dates and interest rates as of June 30, 1989 for the 1984 Home
Mortgage Revenue Bonds follows:
Fiscal Year Interest
Ending June 30 Bond Type Rates Principal
1990 Serial 8.25% $ 35,000
1991 Serial 8.50 45,000
1992 Serial 8.75 55,000
1993 Serial 9.00 65,000
1994 Serial 9.20 70,000
1995 - 1997 Serial 9.40 - 9.80 1,875,000
2001 Term 10.25 11,985,000
2018 Municipal
Multiplier 11.50 8,202,609
Total 22,332,609
Less bond discount and issuance costs, net of
accumulated amortization (509,944)
Total $21,822,665
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 redemption. Accrued interest
payable on the Municipal Multiplier Bonds was $5,929,185 and $4,434,175 at June 30,
1989 and 1988, respectively.
The Term Bonds and the Municipal Multiplier Bonds 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 the
sinking account ranging from $4,575,000 commencing in 1997 to$6,175,000 in 2000 for
the Term Bonds and ranging from $3,325,000 commencing in 2001 to $3,330,000 in 2017
for the Municipal Multiplier Bonds. The installments are subject to reduction due to
prior redemptions.
The Fund retired $4,940,000 and $27,900,000 of the bonds prior to scheduled maturity in
1989 and 1988, 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 material. The net carrying amount of the
bonds retired in 1989 was $4,810,013 and accordingly, the Fund recognized an
i
- 7-
extraordinary loss on early retirerr ent of$129,987. The early retirement of bonds in 1988
resulted in an extraordinary loss o $798,049.
7. DEVELOPER COMMITMENT FEES
Developers provided irrevocableletters of credit to the Trustee, equal to 2.75% of the
funds allocated for home mortgag s on their developments. The letters of credit could be
drawn on if the developer did Inot use the full amount allocated to finance home
mortgages. During 1988 the Fund l received $535,383 as a result of draws on the letters of
credit (none in 1989). These fees ere recognized as revenue when received.
- 8-
r j
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CONTRA COSTA COUNTY
1984 MORTGAGE REVENUE BOND F qGS
)R T
SUPPLEMENTAL COMBINING BAT-AN
CIPAL
COMBINED JND
1988
ASSETS
CASH AND INVESTMENTS $ 6,208,651
MORTGAGE LOANS RECEIVABLE
Net 27,369,578
MATURED MORTGAGE LOANS AND
RELATED INTEREST RECEIVABLE 99,881
INVESTMENT INTEREST RECEIVABLE 153,412
OTHER ASSETS 26,029
TOTAL $33,857,551 0,000
'0,000;
LIABILITIES AND RETAINED
EARNINGS (DEFICI'1�
10,000'
HOME MORTGAGE REVENUE
BONDS PAYABLE - Net $26,813,449
INTEREST PAYABLE 5,074,505 70,000
OTHER LIABILITIES 86,233
TOTAL LIABILITIES 31,974,187 30,000
RETAINED EARNINGS (DEFICIT) 1,883,364 60,000
TOTAL $33,857,551
- 9 -
:t
E YEAR ENDED JUNE 30 1988
DEBT
SERVICE SUPPLEMENTAL
INTEREST REDEMPTION RESERVE RESERVE COMBINED COMBINED
FUND FUND FUND ACCOUNT 1989 1988
$ 2,937,147 $ 3,323,149
534,520 1,011,618
535,383
3,471,667 4,870,150
$ 3,092,439 3,131,668 3,914,428
266,582 403,438
3,092,439 3,398.25 4,317,866
(3,092,439) 73.417 552,284
1,759,246 $5,294,255 13,670,470 66,434,018
(4,944,312) 113,670,470) (66,434,018)
1,759,246 349,943 -
(1,333,193) 349,943 73,417 552,284
(129,987) (798,049)
(1,333,193) 349,943 (56,570) (245,765)
(5,074,505) 1,999,892 $1,134,656 1319,619 1.883.364 2,129,129
6 407 698) 12,349,8351,134,656 319 619 1 826 794 $ 1,883,364
- 10 -
Deloitte
Haskins+Sells
t 50 Fremont Street
San Francisco, California 94105-2230
(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 1985
Mortgage Revenue Bond Fund (Fund) as of June 30, 1989 and 1988 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 supplemental schedules
discussed below are the responsibility of the Fund's management. Our responsibility is
to exTress 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 accompanying 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.
In our opinion, such financial statements present fairly, in all material respects, the
financial position of the Fund at June 30, 1989 and 1988 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.
Our 1989 audit was made for the purpose of forming an opinion on the basic 1989
financial statements taken as a whole. The supplemental combining balance sheet,
June 30. 1989, and combining statement of operations and retained earnings for the year
ended June 30 1989 (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.
September 22, 1989
t
e
4
CONTRA COSTA COUNTY
1985 MORTGAGE REVENUE AOND FUND
BALANCE SHEETS JUNE 30 1989 AND 1988
ASSETS 1989 1988
CASH AND INVESTMENTS (N to 4) $ 1,230,296 $ 900,615
MORTGAGE LOANS RECEIV LE - Net (Note 5) 12,004,073 13,751,161
MATURED MORTGAGE LO S AND RELATED
INTEREST RECEIVABLE 27,767 64,446
OTHER ASSETS 57,28i 60,587
TOTAL $13,319,423 $14,776,809
LIABILITIES AND RETAINED iARNINGS
HOME MORTGAGE REVENUE BONDS
PAYABLE - Net (Note 6) $11,694,978 $13,362,768
INTEREST PAYABLE 898,104 737,991
OTHER LIABILITIES 20,255 31,793
TOTAL LIABILITIES 12,613,337 14,132,552
RETAINED EARNINGS 706,086 644,257
TOTAL $13,319,423 $14,776,809
See notes to financial statements.
- 2-
CONTRA COSTA COUNTY
1985 MORTGAGE REVENUE BOND FUND
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED JUNE 30 1989 AND 1988
1989 1988 f
�I
REVENUES:
Interest from mortgage loans $1,354,310 $1,399,978 i!
Interest from investments 105,507 1,589,547
Amortization of deferred developer commitment fees
(Note 2) 584,533
Developer commitment fees (Note 7) 298,540 I
Total revenues 1,459,817 3,872,598
EXPENSES:
Interest 1,249,172 2,788,851
Insurance and administrative 119,360 323,542 !+
Total expenses 1,368,532 3,112,393
i
INCOME BEFORE EXTRAORDINARY
LOSS ON EARLY RETIREMENT
OF BONDS 91,285 760,205
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF BONDS (Note 6) (29,456) (1,367,436)
NET INCOME (LOSS) 61,829 (607,231)
I
RETAINED EARNINGS: j
Beginning of year 644,257 1,251,488
End of,year $ 706,086 $ 644,257
See notes to financial statements.
a
- 3 -
,i
CONTRA COSTA COUNTY
1985 MORTGAGE REVENUE BOND FUND
STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED JUNE 3011989 AND 1988
1989 1988
SOURCES OF FUNDS:
Income before extraordinary loss on early etirement
of bonds $ 91,285 $ 760,205
Add (subtract) items not involving cash- a ortization of:
Bond discount and issuance costs 20,660 71,442
Deferred developer commitment fees (584,533)
Mortgage loan discounts (15,712) (15,586)
Funds provided from operations 96,233 231,528
Increase in interest payable 160,113
Decrease in interest receivable 182,304
Collection of mortgage loans 1,762,800 714,661
Other-net 28,441 69,745
Total sources of funds 2,047,587 1,198,238 i
USES OF FUNDS: 4'4
Purchase of mortgage loans 1,444,659 i
Retirement of home mortgage revenue boi�ids 1,717,906 44,561,345
Payment of interest on municipal multiplier bonds 1,118,201
Decrease in interest payable 228,166
Total uses of funds 1,717,906 47,352,371
INCREASE (DECREASE) IN CASH AND
INVESTMENTS 329,681 (46,154,133)
CASH AND INVESTMENTS:
Beginning of year 900,615 47,054,748
i
End of year $1,230,296 $ 900,615 F
i
i
See notes to financial statements.
,i
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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 the County.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accountine - 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 home mortgage revenue 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 which approximates a level-
yield (see Note 5).
Deferred developer commitment fees were amortized on a straight-line basis over the
three-year commitment period ended in 1988(see Note 7).
3. FUND DEFINITIONS
As provided in the Indenture, the following funds have been established by the Trustee:
Program Expense Fund - Monies are used and withdrawn solely for payment of
administrative expenses.
-5 -
Revenue Fund - All revenues (ex ept for developer commitment fees, revenues to be
deposited into the Nonmortgage Investment Income Fund and home mortgage principal
prepayments) are deposited in this lu nd.
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 land (b) paying fees and expenses of the County
(administrator) in each bond year n?t 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 t is fund.
Principal Fund - Monies are used a d 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
As of June 30, cash and investments were as follows:
Interest
Rates - 1989 1988 f
Certificates of deposit 8.00% $ 811,979 $441,400
Certificates of deposit 9.52 252,267 293,312 j
Federal Farm Credit bank note 7.05 64,959
Cash and equivalents 166,050 100.944
Total 11,230,296 900 615
The Fund's cash and equivalents are 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 in%est the bond proceeds and other Fund revenues with
the Investment Bank. These investnnents earn interest at fixed rates in accordance with
the investment agreement and are fL lly collateralized by certificates of deposit held in the
Trustee's name.
5. MORTGAGE LOANS RECEIV LE
Mortgage loans receivable are secu ed by first deeds of trust on the related residences,
have thirty-year terms and bear interest at 10.15%.
-6-
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 $132,293 and $148,005 at June 30, 1989 and 1988,
respectively.
6. HOME MORTGAGE REVENUE BONDS PAYABLE
A summary of the maturity dates and interest rates as of June 30, 1989 for the 1985 Home
Mortgage Revenue Bonds follows:
Fiscal Year Interest
Ending June 30 Bond Type Rates Principal
1990 Serial 7.00% $ 185,000
1991 Serial 7.25 360,000
1992 Serial 7.50 - 7.75 585,000
1993 Serial 7.75 - 8.00 475,000
1994 Serial 8.00 505,000
1995-1996 Serial 8.00 - 8.50 865,000
1997-2001 Municipal
Multiplier 9.40 - 9.75 924,555
2010 Term 9.25 7,545,000
2018 Municipal
Multiplier 10.625 575,976
Total 12,020,531
Less bond discount and issuance costs,
net of accumulated amortization (325,553)
'Total $11,694,978
i
The effective interest rate on the bonds is 9.52%. Bond interest on the serial and term
bonds is payable semiannually on May 1 and November 1. The Municipal Multiplier
Bonds bear interest at rates ranging from 9.4% and 10.625%; interest is compounded
semiannually each March 1 and September 1 and is payable at maturity or redemption.
Accrued interest payable on the Municipal Multiplier Bonds was $742,687 and $559,178
at June 30, 1989 and 1988, respectively.
The Term Bonds and the Municipal Multiplier Bonds 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 the
sinking account ranging from $1,155,000 commencing in 2001 to $1,715,000 in 2004 for
the Term Bonds maturing in 2004, ranging from $1,810,000 commencing in 2005 to
$2,980,000 in 2010 for the Term Bonds maturing in 2010 and ranging from $196,000
commencing in 2011 to $95,000 in 2018 for the Municipal Multiplier Bonds. The
installments are subject to reduction due to prior redemptions.
The Fund retired $1,582,876 and $44,181,345 of the bonds prior to scheduled maturity in
1989 and 1988, 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 material. The net carrying amount of the
-7-
bonds retired in 1989 was $1553,420 and accordingly, the Fund recognized an
extraordinary loss on early retire�;ent of $29,456. The early retirement of bonds in 1988
resulted in an extraordinary loss o $1,367,436. `
7. DEVELOPER COMMITMENT FEES
Developers paid cash commitment fees in 1985 equal to either 2% or 4.5% of the funds
allocated for home mortgages on ,their developments. Those who elected to pay the 2%
fee were required to provide an irrevocable letter of credit to the Trustee, equal to 3% of
the funds reserved for them, which would be drawn on if the developer did not construct
and make available residences for purchase in accordance with the delivery schedule in
the Developer Agreement with th County or if the developer did not use the full amount
allocated to finance home mort ages. During 1988 the Fund received $298,540 in
commitment fees drawn on the letters of credit (none in 1989). These fees were
recognized as revenue when recei ed.
-8-
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Deloitte
HaskinsAells
50 Fremont Street
San Francisco. California 94105-2230
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 1987
Mortgage Revenue Bond Fund (Fund) as of June 30, 1989 and 1988 and the related
statements of operations and retained earnings (deficit) and of changes in financial
position for the year ended June 30, 1989 and for the period from August 1, 1987
(inception) to June 30, 1988. These financial statements and the supplemental 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 accompanying financial
statements present only the 1987 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, 1989 and 1988 and the results of its operations
and the changes in its financial position for the year ended June 30, 1989 and for the
period from August 1, 1987 (inception) to June 30, 1988 in conformity with generally
accepted accounting principles.
Our 1989 audit was made for the purpose of forming an opinion on the basic 1989
financial statements taken as a whole. The supplemental combining balance sheet,
June 30, 1989, and combining statement of operations and retained earnings for the year
ended June 30, 1989 (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 pinion, are fairly stated in all material respects when
considered in relation to the basic finan ial statements taken as a whole.
September 22, 1989
- 2 -
CONTRA COSTA COUNTY
1987 MORTGAGE REVENUE BOND FUND
BALANCE SHEETS, JUNE 30, 1989 AND 1988
1989 1988
ASSETS
CASH AND INVESTMENTS (Note 4) $ 9,391,501 $24,697,633
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) SECURITIES - Net (Note 5) 25,872,917 10,438,438
MATURED GNMA SECURITIES RECEIVABLE 195,234 141,719
OTHER ASSETS 114,696 350,309
TOTAL $35,574,348 $35,628,099
LIABILITIES AND RETAINED EARNINGS (DEFICIT)
HOME MORTGAGE REVENUE BONDS
PAYABLE - Net (Note 6) $35,078,596 $35,154,542
INTEREST PAYABLE 443,772 445,148
OTHER LIABILITIES 824 36,850
TO'I"AL LIABILITIES 35,523,192 35,636,540
RETAINED EARNINGS (DEFICIT) 51,156 (8,441)
TOTAL $35,574,348 $35,628,099
See notes to financial statements.
- 3
CONTRA COSTA COUNTY
1987 MORTGAGE REVENUE BOND FUND
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEAR ENDED JUNE 30, 1989 AND
FOR THE PERIOD FROM AUGUST 1, 1987 (INCEPTION) TO JUNE 30, 1988
1989 1988
REVENUES:
Interest from GNMA securities (Note 5) $1,840,888 $ 158,976
Interest from investments 981,628 2,123,812
Total revenues 2,822,516 2,282,788
EXPENSES:
Interest 2,709,365 2,287,983
Administrative 53,554 3,246
Total expenses 2,762,919 2,291,229
NET INCOME (LOSS) 59,597 (8,441)
RETAINED EARNINGS (DEFICIT):
Beginning of year (8,441)
End of year $ 51,156 $ (8,441)
See notes to financial statements.
-4-
CONTRA COSTA COUNTY
1987 MORTGAGE REVENUE BOND FUND
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED JUNE 30, 1989 AND
FOR THE PERIOD FROM AUGUST 1, 1987 (INCEPTION) TO JUNE 30, 1988
1989 1988
SOURCES OF FUNDS:
Net income (loss) $ 59,597 $ (8,441)
Add (subtract) items not involving cash - amortization of:
Bond discount and issuance costs 34,054 32,567
Commitment fees (38,424) (2,474)
GNMA discount (6,045) (387)
Funds provided by operations 49,182 21,265
Proceeds from sale of home mortgage revenue bonds 35,447,652
Commitment fees 1,049,600
Collection of GNMA principal 560,062 35,051
Increase in:
Interest payable 445,148
Other liabilities 36,850
Decrease in other assets 235,613
Total sources of funds 844,857 37,035,566
USES OF FUNDS:
Purchase of GNMA securities 15,950,072 11,520,228
Retirement of home mortgage revenue bonds 110,000
Bond issuance costs 325,677
Increase in:
Other assets 350,309
Matured GNMA securities receivable 53,515 141,719
Decrease in:
Interest payable 1,376
Other liabilities 36,026
Total uses of funds 16,150,989 12,337,933
INCREASE (DECREASE) IN CASH
AND INVESTMENTS (15,306,132) 24,697,633 i
CASH AND INVESTMENTS:
Beginning of year 24,697,633
End of year $ 9,391,501 $24,697,633
See notes to financial statements.
.I�
I�
"f
�i
- 5 -
i
CONTRA COSTA COUNTY
1987 MORTGAGE REVENUE BOND FUND
NOTES TO FINANCIAL STATEMENTS
1. ENTITY
The Contra Costa County 1987 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
August 1, 1987 (Indenture). The and 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 Government National Mortgage Association (GNMA) securities backed
by pools of home mortgages within �he 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 I I denture. GNMA guarantees the timely payment of
principal and interest on the GNMA securities.
The financial statements present on y the 1987 Mortgage Revenue Bond Fund and are
not intended to present the financial osition and results of operations of the County.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Fund us s the accrual basis of accounting. Revenues are
recognized when they are earned, an I expenses are recognized when they are incurred.
Investments are stated at cost. Therustee has entered into investment agreements with
AIG Financial Products Corporation(`i`Investment Bank).
Bond discount and issuance costs asst ciated with the sale of the bonds are recorded as a
reduction to home mortgage revenue bonds payable and are amortized using the interest
method.
Commitment fees are deferred until commitment is exercised, at which time they are
amortized using the interest method.
3. FUND DEFINITIONS
As provided in the Indenture, the foliong funds have been established by the Trustee:
7
Program Fund - Monies are used and withdrawn solely for (a) the acquisition of GNMA
securities, (b) payment of costs of i suance of the bonds, and (c) transfers to the'
Redemption Fund.
Program Expense Fund - Monies are used and withdrawn solely for payment of
administrative expenses.
- 6-
J .
Revenue Fund - All revenues (except for developer commitment fees) are deposited in
v this fund.
Interest Fund - Monies are used and withdrawn solely for the paying of interest on the
bonds.
;^Interest Reserve Fund - Monies are used and withdrawn, by the Trustee solely for the
purpose of making up any deficiency in the Interest Fund.
Redemption Fund - Monies are used and withdrawn for redeeming of bonds at the next
succeeding date of redemption.
4. CASH AND INVESTMENTS
As of June 30, cash and investments were as follows:
Interest
Rates 1989 1988
Certificates of deposit 7.47% $8,651,265 $24,689,021
Certificates of deposit 6.30 735,610
Cash and equivalents 4,626 8,612
'Total cash and investments9 391 501 $24,697,633
'The Fund's cash and equivalents 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 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 in the
Trustee's name.
5. GNMA MORTGAGE-BACKED SECURITIES
GNMA securities, backed by pools of residential mortgage loans originated in the 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 commitment fees of 3.2% of their allocation. A
- 7-
e
lender has paid an additional c mmitment fee of 2% of their allocation to originate
mortgages not specifically designa ed to developers.
As of June 30, GNMA securities ere as follows:
1989 1988
GNMA securities $27,013,229 $11,543,068
Less:
Discount on GNMA securities, iet of
accumulated amortization (131,610) (57,504)
Deferred commitment fees, net of
accumulated amortization (1,008,702) (1,047,126)
Total $25,872,917 $10,438,438
6. HOME MORTGAGE REVEN E BONDS PAYABLE
A summary of the maturity dates nd interest rates as of June 30, 1989 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 Serial 5.75 - 6.00 520,000
1995-1999 Serial 6.00 - 7.00 2,820,000
2014 Term 7.50 22,580,000
2017 Term 7.90 8,725,000
Total 35,810,000
Less bond discount and issuance costs, net of
accumulated amortization (731,404)
Total $35,078,596
The effective interest rate on thea: bonds is 7.52%. Bond interest on the serial and term
bonds is payable semiannually ea�-h May 1 and November 1.
The to bonds are subject to mandato redemption without premium prior to maturity
� term J mandatory , P P P
out of revenues deposited in a m-ndatory sinking account.
The Indenture provides for se annual deposits into a mandatory 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.
The Fund retired $110,000 of the term bonds prior to scheduled maturity in 1989.
- 8-
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Deloitte
Haskinv, Sells
50 Fremont Street
San Francisco, California 94105-2230
(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 1988
Mortgage Revenue Bond Fund (Fund) as of June 30, 1989 and the related statements of
operations and retained earnings and of changes in financial position for the period from
June 15, 1988 (inception) to June 30, 1989. These financial statements and the
supplemental 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 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 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 audit provides a
reasonable basis for our opinion.
As described in Note 1 to the financial statements, the accompanying financial
statements present only the 1988 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, 1989 and the results of its operations and
the changes in its financial position for the period from June 15, 1988 (inception) to
June 30, 1989 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 supplemental combining balance sheet, June 30, 1989,
and combining statement of operations and retained earnings for the period from
June 15, 1988 (inception) to June 30, 1989 (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.
September 22, 1989
- 2
CONTRA COSTA COUNTY
1988 MORTGAGE REVENUE BOND FUND
BALANCE SHEET NNE 30 1989
ASSETS
CASH AND INVESTMENTS (Note 4) $59,547,050
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(G NMA) SECURITIES - Net (Note 5) 10,945,181
MATURED GNMA SECURITIES RECEIVABLE 354,564
INTEREST RECEIVABLE 388,641
TOTAL $71,235,436
LIABILITIES AND RETAINED EARNINGS
HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $70,720,675
INTEREST PAYABLE 467,368
OTHER LIABILITIES 8,305
TOTAL LIABILITIES 71,196,348
RETAINED EARNINGS 39,088
TOTAL $71,235,436
See notes to financial statements.
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"t
CONTRA COSTA COUNTY
1988 MORTGAGE REVENUE BON6 FUND
STATEMENT OF OPERATIONS AJD RETAINED EARNINGS
FOR THE PERIOD FROM JUNE 15 1988 INCEPTION TO JUNE 30 1989
REVENUES:
Interest from investments $5,075,050
Interest from GNMA securities (Note 5) 337,107
Total revenues 5,412,157
EXPENSES:
Interest 5,364,764
Administrative 8,305
Total expenses 5,373,069
NET INCOME AND RETAINED E NINGS $ 39,088
See notes to financial statements.
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CONTRA COSTA COUNTY
1988 MORTGAGE REVENUE BOND FUND
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE PERIOD FROM JUNE 15, 1988 (INCEPTION) TO JUNE 30, 1989
SOURCES OF FUNDS:
Net income $ 39,088
Add (subtract) items not involving cash -amortization of.-
Bond
f:Bond discount and issuance costs 52,436
Commitment fees (11,269)
GNMA discount (1,760)
Funds provided from operations 78,495
Proceeds from sale of home mortgage revenue bonds 71,046,000
Commitment fees 2,020,800
Increase in:
Interest payable 467,368
Other liabilities 8,305
Collection of GNMA securities principal 292,989
Total sources of funds 73,913,957
USES OF FUNDS:
Purchase of GNMA securities 13,245,941
Bond issuance costs 377,761
Increase in:
Interest receivable 388,641
Matured GNMA securities receivable 354,564
Total uses of funds 14,366,907
INCREASE IN CASH AND INVESTMENTS $59,547,050
See notes to financial statements.
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CONTRA COSTA COUNTY
1988 MORTGAGE REVENUE BOND FUND
NOTES TO FINANCIAL STATEMENTS
1. ENTITY
The Contra Costa County 1988ortgage Revenue Bond Fund (Fund) was established
under the provisions of the Califo iia Health and Safety Code and the indenture between
Security Pacific National Bank (Trustee) and Contra Costa County (County), dated
June 15, 1988 (Indenture). The Fund is authorized to issue revenue bonds for the
purpose of financing home mortga es within the County.
Under the terms of the Indentu e, the Trustee uses the bond proceeds to purchase
investments and Government National Mortgage 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. GNMA guarantees the timely payment of
principal and interest on GNMA s curities.
The financial statements present only the 1988 Mortgage Revenue Bond Fund and are
not intended to present the financ al position and results of operations of the 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. Tlie Trustee has entered into investment agreements with
AIG Financial Products Corporat on (Investment Bank).
Bond discount and issuance costs associated with the sale of the bonds are recorded as a
reduction to home mortgage revenue bonds payable and are amortized over the term of
the bond issue by use of the interest method.
Commitment fees are deferred ntil commitment is exercised, at which time they are
amortized over the life of the GN securities by use of the interest method.
3. FUND DEFINITIONS
As provided in the Indenture, the following funds and accounts have been established by
the Trustee:
Program Fund and Target, Are,l Program Account - 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.
Program Expense Fund - Mo ies are used and withdrawn solely for payment of
administrative expenses.
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Revenue Fund - All revenues (except for developer commitment fees and loan
prepayments) are deposited in this fund.
Prepayment Account-All loan prepayments are deposited into this fund.
Capital Reserve Account and Interest Reserve Account - Monies are used and withdrawn
by the Trustee solely for the purpose of making up any deficiency in the Interest Account.
Interest Account - 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
As of June 30, 1989, cash and investments were as follows:
Interest Rates Amount
Certificates of deposit 7.84% $57,334,429
Certificates of deposit 7.75 2,100,000
Certificates of deposit 7.50 112,210
Cash and equivalents 411
Total cash and investments 159,547,050
The Fund's cash and equivalents 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 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 in the
Trustee's name.
5. GNMA MORTGAGE-BACKED SECURITIES
GNMA securities, backed by pools of residential mortgage loans originated in the County,
are acquired at 99.5% of the outstanding principal balance amount of the underlying
mortgages and bear interest at 8.15%. 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
30-year terms, and bear interest at 8.65%. The interest rate differential between the
home mortgages and the GNMA securities represents fees retained by the lender for
servicing home mortgages.
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r
GNMA securities are shown net f deferred commitment fees. Home mortgages are
allocated to developers who have aid commitment fees of 3.2% of their allocation. A
lender has paid an additional commitment fee of 2% of their allocation to originate
mortgages not specifically designated to developers.
As of June 30, 1989 GNMA securities were as follows:
GNMA securities $13,019,517
Less:
Discount on GNMA securities, r et of
accumulated amortization (64,805)
Deferred commitment fees, net f accumulated
amortization (2,009,531)
Total $10,945,181
6. HOME MORTGAGE REVEN E BONDS PAYABLE
A summary of the maturity dates and interest rates as of June 30, 1989 for the 1988 Home
Mortgage Revenue Bonds follows:
Fiscal Year Interest
Ending June 30 Bond Type Rates Principal
1992 Serial 6.25 - 6.50% $ 570,000
1993 Serial 6.50 - 6.70 615,000
1994 Serial 6.70 - 6.90 660,000
1995-2003 Serial 6.90 - 7.90 8,315,000,
2015 Term 8.05 32,400,000
2021 Term 8.25 29,440,000
Total 72,000,000
Less bond discount and issuance costs, net of
accumulated amortization (1,279,325)
Total $70,720,675
The effective interest rate on the bonds is 8.06%. Bond interest on the serial and term
bonds is payable semiannually ea•h June 1 and December 1.
The term bonds are subject to majndatory redemption without premium prior to maturity
out of revenues deposited in a in ndatory sinking account.
The Indenture provides for sem annual deposits into a mandatory sinking fund ranging
from $1,455,000 commencing in ?003 to $3,085,000 in 2015 for the Term Bonds maturing
in 2015, and ranging from $3,05 u,000 commencing in 2016 to $5,115,000 in 2021 for the
Term Bonds maturing in 2021. The installments are subject to reduction due to prior
redemptions.
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