HomeMy WebLinkAboutMINUTES - 12111993 - 1.1 r
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
DATE: Saturday, December 11, 1993 MATTER OF RECORD
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The Chair convened the meeting of the Board of Supervisors
and the Boards of Directors of the Mt. Diablo Hospital District,
Brookside Hospital District, and Los Medanos Hospital District at
the Training Institute, Bay Room, 500 Court Street, Martinez.
Following introductory comments of Phil Batchelor, County
Administrator, on the purpose of this meeting, Grace Ellis,
spokeperson for the Hospital District Boards, presented the Joint
Hospital District Proposal to the Contra Costa County Board of
Supervisors. The proposal consisted mainly of offering available
beds in the district hospitals to County patients, thereby
eliminating the need to construct a replacement County hospital.
She stressed the cost savings potential that could be achieved not
only to the district hospitals but to the County as well.
Speakers in support of the Hospital District Proposal cited
the convenience to the poor and disadvantaged in providing medical
services within the district hospitals as opposed to requiring
these patients to travel to the County Hospital in Martinez;
transportation issues; maximizing the utilization of district
hospitals; and the extention of the operation of the prepaid
health plan to all district hospitals.
Mark Finucane, Health Services Director, presented "The 12
Point Plan for A County Wide Blended System of Care, " which
included a joint venture with Brookside Hospital for obstetric
patients, expansion of the advice nurse service to the entire
County, expansion of the availability of the Home Health Agency to
hospital patients throughout the County, expansion of primary care
activities, relocation of acute psychiatric services, expansion of
the family practice residency training program by 1996, and the
appointment of a Medi-Cal Advisory Planning Commission. In
conclusion, Mr. Finucane advised that Contra Costa is committed to
building additional successful working relationships with the
district hospitals, community hospitals, tertiary care facilities,
private and publicly sponsored health maintenance organizations,
federal and state facilities, the private business sector, and
private medical providers.
Speakers in support of continuing with the replacement of
Merrithew Memorial Hospital commented on the decision of the Board
to proceed with the construction of a new County Hospital, the
initial sale of a Bond Issue and costs associated with the
defeasance of those bonds should the replacement hospital project
be abandoned, the quality of care provided by the medical staff at
Merrithew, the lack of interest of the district hospitals to
participate in a program to accpt County patients, and the
financial problems of the district hospitals.
At the conclusion of the meeting, Sunne W. McPeak, Chair of
the Board of Supervisors, requested the County Administrator and
Health Services Director to review the issues associated with the
current partnership, functional integration in joint management
and shared hospital facilities, possibilities for the Series B
Bond Issue, and other options as identified by staff with reports
to the Board as required.
Matter of Record
Saturday, December 11, 1993
Page 2
The Chair then adjourned this meeting to the Monday December
13 , 1993, 10: 30 a.m. meeting of the Finance Committee, County
Administration Building, Room 108, 651 Pine Street, Martinez,
California.
THIS IS A MATTER FOR RECORD PURPOSES ONLY.
cc: Health Services Director
County Administrator
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JOINT HOSPITAL DISTRICT
Proposal to:
CONTRA COSTA COUNTY
BOARD OF SUPERVISORS
December 11, 1993
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
I. INTRODUCTION
In July, 1993, an ad hoc committee of the Mt. Diablo Hospital District Board of Directors
consisting of Grace Ellis and Mary Mahoney, as well as Michael L. Wall, President and
CEO, met with Supervisors Sunne McPeak and Tom Powers to discuss the proposed
County Hospital and the role the Hospital District could play in providing an alternative
to its construction. Since that date several additional meetings have occurred among
Contra Costa County, Brookside Hospital District, Los Medanos Hospital District and Mt.
Diablo culminating in this proposal for a cost effective delivery of health care services to
the residents of Contra Costa County and others served by the County.
The basic elements which form the basis for this alternative are:
1. The Districts would contractually assume responsibility for providing or
arranging to provide for the bulk of services now performed at Merrithew,
including: acute inpatient, extended care, comprehensive acute psychiatric
services and emergency services
2. There would be some consideration paid by the County for these District
services.
3. The County would be relieved of its obligation to rebuild Merrithew
Hospital
4. The County would retain its clinics and Health Plan and continue to
channel its patients through the HMO
In an effort to facilitate this decision process, the three Districts have jointly prepared this
document and financial analysis. This document is intended to identify potential financial
savings and key issues and to offer alternatives for discussion. In addition, the County
has raised the possibility of purchasing needed beds at the District hospitals which would
save the County from the obligation to go forward with planned hospital construction.
It is our hope that through the development of a joint work plan these proposals can be
fully explored. The Districts are willing to consider any proposal from the County Health
Services Department which indicates a cooperative effort among District and County
facilities.
1
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
II. THE FINANCIAL ANALYSIS
As stated, the financial analysis attached assumes that all acute medical-surgical, extended
care, comprehensive acute psychiatric and emergency services now provided at Merrithew
Memorial would be provided by the Districts. The net patient revenues and related
expenses associated with these services and functions are included in the profit and loss
statement presented. The analysis also assumes that the County continues to operate its
full array of clinics now operated through Merrithew Memorial.
In any financial projection, historical data must be used to project future events. The
development of funding projections required the use of a variety of assumptions and
projections based upon available historical information about this patient population.
These assumptions present risks of over and under estimation. In addition, certain
estimates were necessarily based upon the Districts' operational cost information which
may be unfamiliar to the County. We recognize that the County may wish to confirm the
analysis through the use of a neutral outside parry with greater access to Merrithew's
internal data. While we are comfortable with the costs projected in this analysis, we
would be willing to participate in any effort which would increase the level of assurance
surrounding this proposal.
III. OTHER FINANCIAL ISSUES
A. Basis of and Parties to the Arrangement
The Districts are willing to enter a long-term contractual relationship with the County and
its Health Plan and commit their resources to provide in-patient services for the entire
volume of Merrithew patients in the local community.
B. Operational Financing
The agreement would need to contain several financial provisions including:
1. A substantial reduction and redirection of the County's current and
projected expenses for inpatient, emergency, psychiatric and extended care.
2. A specific, pre-determined supplemental payment based on cost necessary
to cover marginal losses experienced at any of the District Hospitals in
relation to providing the required services.
2
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
3. Clear agreements on how any annual supplemental payment would be
adjusted over time for changes in volume and inflation
4. A mechanism for channelling funds that could include capitation, utilization
based reimbursement or block grant.
5. The structure of the funding mechanism to be designed to limit the
County's and the Districts' risk for the costs of services over time.
6. Flexibility to respond to major changes brought about through national
healthcare reform.
According to the analysis, the Districts would assume the described service responsibilities
and provide or arrange to provide for them. All payor sources would be billed and
revenues collected by the Districts to the extent possible. Upon reviewing the volume and
patient mix allocation at each hospital, it is projected that a shortfall at each facility would
range from $0 to approximately $5 million, based on expected patient revenues minus
incremental costs. Currently, the County subsidizes Merrithew for its shortfall for these
services through transfers from its general fund and from revenues provided by the State
and Federal government and used historically by the County for indigent care. Based
upon Merrithew Memorial's 1992 OSHPD Disclosure Report, it received around $29.9
million in subsidies, of which $13.1 million was allocated to acute inpatient and
emergency services proposed to be accommodated by the Districts, plus $16.5 million in
Medi-Cal disproportionate share dollars.
C. Capital Financing
An initial assessment has been made to evaluate the physical capability of the District
facilities to accept the County's patients. It has been determined that there is adequate
capacity for the acute medical/surgical population of Merrithew. Certain minor
modifications would be needed to District plant and equipment to accommodate the
service requirements of this population. These costs have been included in the proforma
financial projections.
3
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
IV. SYSTEM ISSUES
A. Medical Staff
1. Medical Staff Application Process
The District Hospitals' Medical Staffs commit that all County physicians who would serve
County patients at the Hospitals through any future formal affiliation between the County
and the three Districts would be integrated within the Hospitals' organized Medical Staffs.
Presently, a number of County physicians maintain full medical staff membership and
clinical privileges at the Hospitals. Additional County physicians who would practice at
the Hospitals under a future formal affiliation would make application to the Hospitals'
Medical Staffs, and would be credentialed and appointed to the Hospitals' organized
medical staffs in accordance with their demonstrated training and experience in
accordance with the Hospitals' medical staff bylaws/rules and regulations.
2. Emergency Department Call Roster
Under an integrated medical staff scenario, as presented above, County physicians who
are granted membership on the Hospitals' medical staffs would serve on the Hospitals'
emergency department on-call rosters, providing specialty consultation to the Emergency
Department in accordance with their medical staff department assignment and clinical
privileges held. County physicians participating on such call rosters would do so on an
equal basis as all other members of the Hospitals' medical staffs who meet qualifications
for providing emergency back-up specialty consultation. It is assumed that under an
affiliation arrangement between the County and Districts the County will maintain an
adequate number of specialists. The Districts would work with the medical staffs to
ensure that County physicians are not overburdened or inappropriately "stretched"
between the Hospitals.
Under the District Hospitals' emergency department back-up systems, patients arriving
in the Emergency Departments are asked to identify their personal physician at
registration. This physician is contacted by the hospital-based Emergency Department
staff when the personal physician has indicated his/her preference to be called. If the
patient is unstable, or if the personal physician prefers, or at the patient's request, the
Emergency Department physician will initiate treatment, and the personal physician will
be contacted for additional care or consultation. County physicians serving on the
Hospitals' Medical Staffs would be contacted by the Emergency Department physician as
needed to treat County patients. (It should be noted that, under a potential future
Residency Program affiliation arrangement between the County and the District, the initial
4
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
assessment of County patients in the Emergency Department might be performed by
County Residents.)
The patient's personal physician is also consulted by the Hospitals' Emergency
Department physician should the patient require additional specialty consultation. In the
event the Emergency Department physician determines specialty consultation is required
for an "unassigned patient" (who has not indicated a personal physician on registration),
the Emergency Department physician seeks such consultation from the appropriate on-
call physician as noted on the Hospitals' Emergency Department on-call roster.
3. Family Practice Residency Program
The Hospitals' organized medical staffs desire that the Family Practice Residency Program
remain intact through any future formal affiliation between the County and the District
Hospitals. Under any future formal affiliation between the County and the Districts, it
is suggested that the District Hospitals serve as the acute hospital settings for the
Residency Program recognizing that consultation with Residency Program leadership must
occur to determine the most appropriate "home base" hospital setting. It is hoped that
this affiliation may be accomplished by contractual arrangement between the County and
the Districts, whereby the County continues to provide administrative coordination of the
Program, salarying the residents and Program faculty/support team,while contracting with
the District Hospitals for the provision of appropriate hospital settings and support
services. If this is not feasible, the District Hospitals are prepared to assume full
responsibility for the Program, employing the Residents and Faculty/support staff, and
assuring access to the organized clinics needed to continue accreditation.
With either Residency Program scenario, it is estimated that Program transition would
occur over a period of approximately six to nine months. During such time, negotiations
between the County, the Districts and the University of California at Davis, (if necessary)
would occur, as would development of all appropriate affiliation documents.
B. Patient Identification
The following principles should guide the development of patient identification
procedures:
r Under any payment scheme that ties initial payments and/or escalators to
the count of"eligible" patients served at the Districts, there must be clear
eligibility standards defining an "eligible" patient;
5
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
► The County and the Districts will mutually agree on these eligibility
standards, subject to the County's obligations under law, and any
subsequent modification of them;
► The County and the Contra Costa Health Plan (CCHP) will retain primary
responsibility for eligibility determination based on these standards;
► The County will station eligibility workers at the Districts to facilitate the
eligibility process of newly eligible patients;
► The Districts will work closely with County and CCHP staff to facilitate a
smooth patient identification process.
C. Employment Issues
The Districts are committed to ensuring a fair and equitable process for integrating
Merrithew Hospital employees into the Districts' workforce. The consolidation of the
patient population of Merrithew at the Districts will result in a lower staffing requirement
than the four hospitals separately employ.
In filling a vacant position, the Districts would seek to reemploy workers from its laid-off
staff and displaced employees of Merrithew. Prior to implementation of this process each
employer will have "meet and confer" obligations with the unions representing its
employees covered by labor agreements.
The Districts will work closely with the County to ensure that the process used to staff
the new organization is workable and has the broadest possible support. The Districts'
Boards have expressed their intent to preserve a spirit of open communication by
including a variety of interested parties in the planning process.
D. Psychiatry Services
The Districts are prepared to provide or arrange for the provision of comprehensive acute
psychiatric care for the adult population. Space for day treatment services, if needed, will
be developed off campus. Increases in acuity would be addressed through changes in
patient staff ratios and intensive staff training programs.
6
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
E. Urgent Care
The highest shift of emergency services will occur at Mt. Diablo due to Merrithew's
residency characteristics. MDMC acknowledges the need to increase urgent care
emergency room capacity. MDMC would triage non-emergent cases which would
normally end up in the Emergency Department to an urgent care track to help control
costs and speed appropriate services to the patient population. An expanded facility
would be developed with adequate staffing so that the issues of space, comfort, waiting
times and other special needs can be most effectively handled. We would expect to
coordinate these urgent care services closely with the clinic programs maintained by the
County. The other district facilities can incorporate the additional emergency patient
volume with minor impact on existing costs and facilities.
F. Patient Access
The system being proposed would fall under the quality review program of the District
hospitals. A collaborative partnership among County physicians, County clinics, District
Medical Staffs and urgent and emergent care services would ensue under this
arrangement and hold patient access/coordination of care as a principal quality factor.
The Districts would commit to an active outreach program to facilitate a smooth
transition for this new configuration of services. Recognizing the special needs of the
County's patients, the arrangement would eliminate the present two-tier system of service
provision for inpatients and the geographic inaccessibility of existing services. In order
to meet the special needs of this patient population the Districts commit to expanding
its social services, assuring that translation and other special needs are met and working
cooperatively with the County to maximize coordination of care, e.g., sharing medical
records and other patient information as needed.
7
JOINT HOSPITAL DISTRICT PROPOSAL
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
VIII. CONCLUSION
The economics and the landscape of healthcare have changed dramatically since the
County began its planning process for the replacement of Merrithew Memorial Hospital.
The issues of quality and access to the underserved and indigent populations and the cost
of services to the taxpayers of Contra Costa County are the driving principles of this
proposal. The benefits of this proposal are the utilization of existing capacity within the
Districts' hospital system, the favorable geographic location of these existing facilities
which are willing to address the service needs of this population and the savings in terms
of tax dollars for capital and operational costs.
Our goal is to formalize a joint workplan with the County evidencing our willingness to
work together to resolve the many details this proposal engenders. During this process,
it is likely other factors now on the horizon will emerge that we can incorporate into our
plan, including new health care reform legislation, changes in State financing of
psychiatric care and other rapidly occurring changes in the health care environment.
8
JOINT HOSPITAL DISTRICT
Proposal to:
CONTRA COSTA COUNTY
BOARD OF SUPERVISORS
FINANCIAL ANALYSIS
December 11, 1993
JOINT HOSPITAL DISTRICT PROPOSAL FINANCIAL ANALYSIS
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
ASSUMPTIONS
The development of this Analysis required the use of a variety of assumptions and
projections based upon available historical information about this patient population.
Due to the availability of time and information, these assumptions present risks of over
and under estimation.
AREAS OF ANALYTICAL ASSUMPTIONS
1. Inpatient and outpatient volume
2. Payor mix
3. Payor reimbursement assumptions
4. Assumes current governmental reimbursement
5. Cost assumptions
6. Inflation assumptions
7. Facility costs
8. Data timeliness
1
JOINT HOSPITAL DISTRICT PROPOSAL FINANCIAL ANALYSIS
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
STATEMENT OF INCREMENTAL OPERATIONS FOR DISTRICT HOSPITALS
LOS MEDANOS, MT. DIABLO AND BROOKSIDE
(Expressed
in "000's")
Net Service Revenues $29,938
Operating Expenses
Salaries and Benefits $17,060
Professional Fees 1,577
Supplies and other Expenses 12,069
Depreciation and Interest 650
Bad Debt 1,072
Total Operating Expenses $32,428
Net Income/(Loss) from Operations ($2,490)
2
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JOINT HOSPITAL DISTRICT PROPOSAL FINANCIAL ANALYSIS
TO CONTRA COSTA COUNTY BOARD OF SUPERVISORS
December 11, 1993
ANALYSIS OF SERVICE STATISTICS AND EXISTING CAPACITY
COMBINED LMCH MDMC BH
HOSPITAL BED CAPACITY
MEDICAL/SURGICAL 388 86 183 119
CRITICAL CARE 112 8 75 29
OBSTETRICS 48 7 18 23
NEWBORN ICU 19 0 7 12
PSYCHIATRY 24 N/A 24 N/A
CHEMICAL DEPENDENCY 24 N/A 24 0
SKILLED NURSING 261 123 24 114
PROJECTED CONSOLIDATED AVERAGE DAILY CENSUS
MEDICAL/SURGICAL 234 59 85 90
CRITICAL CARE 72 7 46 19
OBSTETRICS 20 7 8 5
NEWBORN ICU 10 0 7 3
PSYCHIATRY 28 N/A 28 N/A
CHEMICAL DEPENDENCY 12 0 12 0
SKILLED NURSING 237 111 24 102
PERCENT OCCUPANCY
MEDICAL/SURGICAL 60.3% 68.6% 46.4% 75.6%
CRITICAL CARE 64.3% 87.5% 61.3% 65.5%
OBSTETRICS 41.7% 100.0% 44.4% 21.7%
NEWBORN ICU 52.6% N/A 100.0% 25.0%,
PSYCHIATRY N/A N/A 116.7% N/A
CHEMICAL DEPENDENCY N/A N/A 50.0% N/A
SKILLED NURSING 90.8% 90.2% 100.0% 89.5%
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STATEMENT OF CONTRA COSTA COALITION FOR MANAGED CARE
Pauline Wills, M.D. Chair 510 235-8870
Randy Clark, M.D. 510 778-7040
In light of current state and federal initiatives ,
reconstruction of Merithew Hospital to serve low income patients
at a central county location can not be justified on any grounds
whatsoever.
Ample resources now exist in every part of the county to
integrate the poor completely into existing tax supported
district hospitals. This is especially pertinent in east and
west county where a large percentage of low income minority
people now reside. Predictably, minorities will continue to
settle in these parts of the county in future years .
The incredible folly of adding surplus° beds in face of marginal
hospital occupancy everywhere in the county must not be
tolerated. It runs directly counter to the well established
national trend to reduce use of in-patient beds
in favor of providing, on an ambulatory 'basis in community
hospitals, a rapidly expanding number of diagnostic and treatment
procedures at far less cost .
For poor people with limited mobility, ready access is
indispensable to early intervention, effective case management
and improved clinical outcomes .
The public needs to be fully aware that district hospitals for
several years , joined more recently by a county-wide coalition
of other health providers , have asked the county repeatedly _
to join them in serious explorations of this far preferable
alternative to rebuilding. No documentation is on hand to show
that the county has explored this alternative eithern good
faith or at any depth.
Our coalition comes today in unison with district hospitals
and county taxpayers to ask the Supervisors to impose aru
immediate moratorium on all expenditures being made in relation
to hospital reconstruction.
We ask that the Board enter now, for the first time, into serious
collaboration with district hospitals and the Coalition of
private providers with an historic commitment to serve low income
minority patients .
STATEMENT of CCCMC page two
In order to assure cost containment, we propose expansion of
the county ' s HMO to all people residing in east and west county
whose enrollment in the plan is negligible at this time.
To succeed in the expansion, full participation as providers
in the county ' s HMO must be accorded to all interested private
providers . Enrollment in the expanded plan must be accompanied
with the assurance that use of the district hospitals in their
respective communities is an intrinsic right of their membership
in the expanded county pre-paid plan.
Too much is at stake to ignore such a promising alternative.
Susan Prather
THE ADVOCACY PROJECT
Richmond, CA 94801
December 11, 1993
The debate rages over the County Hospital. West County politico's, and others, who oppose
the plans for a new, state-of-the-art hospital claim that it is difficult to travel to Martinez,
but no one has spoken to the people who use the hospital. Typically, politicians, CEO's and
members of the various hospital boards are speaking for the poor without consulting them.
This discussion must be opened up to include the consumer. The Advocacy Project 800# is a
toll-free, county wide number. If you have been turned away from Los Medanos, John Muir,
or Mt. Diablo hospital, or had a bad experience in any emergency room or hospital situation,
call me, toll-free, at 1-800-675-6758 and leave a detailed message. All comments will be
recorded and I will forward the report to the appropriate people.
What truly concerns me, however, is the opponents use of racism to fight this battle. In my
opinion, stopping construction and "buying beds" will not end their perceived "racism." In
fact, what could possibly be more racist and classist than preventing a modern, state-of-the
art hospital, whose sole purpose is to serve the poorest of the poor, the severely mentally
disabled and the homeless, from being built?
If beds were purchased at John Muir, Mt. Diablo and Los Medanos, I'll guarantee you that the
staff would have a fit when they were required to serve people who are the long-term, hard-
core homeless and those with the most severe and complex mental disabilities. With
homelessness and poverty growing at such an alarming rate, the public health practitioners I
know have said again and again that they are "practicing third world medicine." Those in the
medical field who have spent careers serving the middle-class and the privileged have little
understanding about this kind of medicine. If they were forced to care for the people who are
my friends, I'm willing to bet that the treatment given would not be as it is at Merrithew.
There is more involved here than hospital beds. The attitude of the staff and the treatment of
the people who are in those beds must be considered. The staff at Merrithew not only
understands, but is dedicated to, the population that they serve. People are treated with
dignity, respect and understanding. I've been around a long time and can honestly say that
it is only since Managed Care and Medi-Cal came to Contra Costa that I've seen so many "high
class" hospitals claim to care about the people that Merrithew Memorial has served for so many
years.
In fact, I'll take it a step further: In more than eight years as an Advocate for the Homeless,
my experience is that only two hospitals serve the poorest and most troubled part of our
population decently and without discrimination: Merrithew Memorial and Brookside. When the
people that I know and work with are hospitalized, I visit them. I have never visited people
at Los Medanos, Mt. Diablo or John Muir. NEVER.
I know which providers talk a good game and I know which providers truly serve the people.
Based on that experience and knowledge, I have never referred one of my clients or friends
anywhere other than Merrithew or Brookside because, along with decent medical care, it is
imperative that people be treated with dignity, respect and understanding. We must build a
new County Hospital. Nothing less is acceptable.
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NEW ISSUE—FULL BOOK ENTRY ONLY RATINGS: Moody's: Al (cond.)
Standard&Poor's: A+(prov.)
In the opinion of Orrick,Herrington&Sutcliffe and Pamela S.Jut,Attorney at Law,Co-Special Counsel,based on existing laws,regulations,rulings and court decisions and assuming,
among other matters,compliance with certain covenants,the portion of each Base Rental Payment designated as and constituting interest paid by the County under the Facility
Lease and received by the Owners of the 1992 Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue
Code of 1986 and is exempt from State of California personal income taxes. Such interest is not a specific preference item for purposes of the federal individual
or corporate alternative minimum taxes,although Co-Special Counsel observes that it is included in adjusted current earnings when calculating corporate
alternative minimum taxable income. Co-Special Counsel exprasea no opinion regarding other tax consequences related to the ownership or dis-
position of the 1992 Certificates or accrual or receipt of the interest portion of the Base Rental Payments. See"TAX EXEMPTION"herein.
$12595849011.80
CERTIFICATES OF PARTICIPATION
(MERRITHEW MEMORIAL HOSPITAL REPLACEMENT PROJECT)
SERIES OF 1992
Evidencing Fractional Undivided Interests of the Registered Owners Thereof in Base Rental Payments to be Made by the
COUNTY OF CONTRA COSTAp CALIFORNIA
to the
CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION
Current Interest Certificates Dated:May 1,1992 Due:November 1,as shown below
Capital Appreciation Certificates Dated:Date of Original Delivery
The 1992 Certificates are being issued to finance the design and construction of the replacement of Merrithew Memorial Hospital,the primary county hospital located in the City of
Martinez,California. See"TILE PROJECT." Interest will be payable semiannually on November 1 and May 1 of each year,commencing November 1.1992. No payments are due to the
owners of 1992 Capital Appreciation Certificates until the payment dates of the respective 1992 Capital Appreciation Certificates or the earlier prepayment thereof. The 1992 Certificates
will be initially delivered in book-entry form,registered in the name of Cede&Co.as nominee of DTC. Principal,prepayment premium,if any,and interest due with respect to the 1992
Certificates will be paid by U.S.Trac Company of California,N.A.,Los Angeles,California,as Trustee,to DTC. DTC is required to remit such principal and interest to its Participants
for disbursement to the beneficial owners of the 1992 Certificates. See"THE 1992 CERTIFICATES-Book-Entry-Only System" The 1992 Certificates are subject to prepayment as
described herein.
The 1992 Certificates are being executed and delivered pursuant to a Tout Agreement,dated as of May 1,1992,(the"Trust Agreement")among the County of Contra Costa(the
"County"),the Contra Costa County Public Facilities Corporation and the Trustee.
The 1992 Certificates represent a fractional undivided interest in Base Rental Payments payable by the County pursuant to a Facility Lease,dated as of May 1,1992(the"Facility Lease").
The County has agreed in the Facility Lease to make all Base Rental Payments subject to abatement of such Base Rental Payments in the event of material damage to or destruction or
condemnation of the Project and the Demised Premises. The County has covenanted in the Facility Lease to take such action as may be necessary to include such rental payments in its
annual budgets and to make the necessary annual appropriations therefor.
THE OBLIGATION OF THE COUNTY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE
COUNTY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE COUNTY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
NEITHER THE 1992 CERTIFICATES NOR THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS UNDER THE FACILITY LEASE CONSTITUTE A
DEBT OF THE COUNTY OF CONTRA COSTA,THE STATE OF CALIFORNIA,OR ANY POLITICAL SUBDIVISION THEREOF,WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIM177ATION OR RESTRICI70N.
$33,155,000 Current Interest Serial Certificates
Certificate Payment Date Principal Interest Yield or Certificate Payment Date Principal Interest Yield or
(November 1) Amount Rate Price (November 1) Amount Rate Price
1998 S2,885,000 5.70% 5.80% 2003 S3,855,000 6.30% 6.45%
1999 3,045,000 5.80 5.95 2004 4,100,000 6.40 6.50
2000 3,225,000 6.00 6.10 2005 4,360,000 6.40 6.55
2001 3,415,000 6.20 6.25 2006 4,640;000 6.50 6.60
2002 3,630,000 6.25 6.35
$28,190,000 6.60% Current Interest Term Certificate due November 1,2012,Yield 6.75%
$58,195,000 6.625%Current Interest Term Certificate due November 1,2022,Yield 6.80%
(Plus Accro d lowna tine,May 1,1"2)
$6,044,011.80 Initial Amount of Capital Appreciation Certificates
Certificate Payment Date Aggregate Initial Amount Per Maturity Yield to
(November 1) Initial Amount 55,000 Accreted Value Amount Maturity
2007 $1,731,788.45 51,751.05 $4945,000 6.90%
2013 1.537,725.85 1,129.85 6,805,000 7.05
2014 1,434,766.20 1,054.20 6,805,000 7.05
2015 1,339,731.30 983.65 6,910,000 7.05
The 1992 Certificates will be offered when,as and if executed and delivered and received by the Underwriters,subject to approval by Orrick,Herrington&Sutcliffe,San Francisco,
California and Pamela S.Jue,Attorney at Law,San Francisco,California,Co-Special Counsel. Certain other legal matters were passed upon for the Underwriters by Nossaman,Guthner,
Knox&Elliott,Los Angeles,California and for the County and the Corporation by County Counsel. The Certificates,in book-entry form,will be available for delivery in New York,
New York on w about May 13,IM.
PRUDENTIAL SECURITIES INCORPORATED
BANK OF AMERICA NT&SA
April 29,1992 ARTEMIS CAPITAL GROUP, INC.
TIIIS COVER PAGE CONTAINS INFORMATION FOR REFERENCE ONLY. rr IS NOT A SUMMARY OF THE ISSUE. INVESTORS MUST READ THE ENTIRE
OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
No dealer, broker, salesperson or other person has been authorized to
give any information or to make any representation other than those
contained herein and, if given or made, such other information or
representation must not be relied upon as having been authorized. This
Official Statement does not constitute an offer to sell or the solicitation
of any offer to buy nor shall there be any sale of the 1992 Certificates by
a person in any jurisdiction in which it is unlawful for such person to make
an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the
purchasers of the 1992 Certificates. Statements contained in this Official
Statement which involve estimates, forecasts or matters of opinion, whether
or not expressly so described herein, are intended solely as such and are
not to be construed as representations of facts.
The information set forth herein has been obtained from the County and
from other sources and is believed to be reliable, but is not guaranteed as
to accuracy or completeness. The information and expressions of opinions
herein are subject to change without notice and neither the delivery of this
Official Statement nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the County since the date hereof. This Official Statement is
submitted in connection with the sale of the 1992 Certificates referred to
herein and may not. be reproduced or used, in whole or in part, for any other
purpose, unless authorized in writing by the County. All summaries of the
documents and laws are made subject to the provisions thereof and do not
purport to be complete statements of any or all such provisions. All
capitalized terms used herein, unless noted otherwise, shall have the
meanings prescribed in the Trust Agreement and Facility Lease.
In connection with this offering, the Underwriters may overallot or
effect transactions which stabilize or maintain the market price of the 1992
Certificates at a level above that which might otherwise prevail in the open
market. Such stabilizing, if commenced, may be discontinued at any time.
r
COUNTY OF CONTRA COSTA, CALIFORNIA
BOARD OF SUPERVISORS
Sunne Wright McPeak
(District 4)
Chair
Tom Powers Robert I. Schroder
(District 1) (District 3)
Nancy C. Fanden Tom Torlakson
(District 2) (District 5)
COUNTY OFFICIALS
Philip J. Batchelor
Clerk of the Board and
County Administrator
Kenneth J. Corcoran Alfred P. Lomeli
Auditor-Controller Treasurer-Tax Collector
Victor J. Westman Stephen L. Weir
County Counsel County Clerk-Recorder
CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION
John E. Whalen
President and Director
Jay De 1'Eau Linton L. Emerson, Jr.
Vice President and Director Secretary and Director
Gerald Feagley Ronald R. McCreary
Treasurer and Director Director
CO-SPECIAL COUNSEL FINANCIAL ADVISOR
Orrick, Herrington & Sutcliffe Prager, McCarthy & Lewis
San Francisco, California San Francisco, California
Pamela S. Jue, Attorney at Law
San Francisco, California
TRUSTEE
U.S. Trust Company of California, N.A.
Los Angeles, California
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ESTIMATED SOURCES AND USES OF FUNDS 3
THE 1992 CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 3
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Current Interest Certificates 3
Capital Appreciation Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Book-Entry Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Prepayment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notice of Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selection of Certificates for Prepayment . . . . . . . . . . . . . . . . . . . 9
Effect of Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Base Rental Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Source of Revenues for Base Rental Payments . . . . . . . . . . . . . . . . 14
Pledge of Base Rental Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Certificate Reserve Fund Requirement . . . . . . 16
Additional Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Full Faith and Credit Not Pledged . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Noncompletion of Project; Abatement . . . . . . . . . . . . . . . . . . . . . . . . 22
Cost Overruns; Construction Delays . . . . . . . . . . . . . . . . . . . . . . . . . 22
Limited Recourse on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
No Acceleration Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
No Liability of Corporation to the Owners . . . . . . . . . . . . . . . . . . 23
Effect of Termination of Facility Lease On
Transfer of Certificates and Tax Exemption . . . . . . . . . . . . . . . 23
Risk of Earthquake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Litigation Affecting Proposition 13 . . . . . . . . . . . . . . . . . . . . . . . . 24
CONSTITUTIONAL LIMITATIONS ON TAXES AND APPROPRIATIONS . . . . . . . . . 24
Article XIII A of the California Constitution . . . . . . . . . . . . . . 24
Court Challenges to Article XIII A . . . . . . . . . . . . . . . . . . . . . . . . . 25
Legislation Implementing Article XIII A . . . . . . . . . . . . . . . . . . . . 25
Article XIII B of the California Constitution
-Appropriations Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Unitary Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Statutory Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Proposition 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Proposition 111: Revisions to Proposition 98
and Article XIII B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Further Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Location of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Replacement of Merrithew Memorial Hospital . . . . . . . . . . . . . . . . . 32
Design and Project Management 32
ProjectCost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Payment of Construction and Services
from Proceeds of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
THE CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . 35
Powers and Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
COUNTY FINANCIAL INFORMATION . . . . 36
Funding of Certain Programs by
the State of California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
County Budget . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
AdValorem Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
LargestTaxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Redevelopment Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Accounting Policies, Reports and Audits . . . . . . . . . . . . . . . . . . . . 42
Tax and Revenue Anticipation Notes Borrowing . . . . . . . . . . . . . . . 47
County Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Retirement Programs and Pension Obligations 48
Insurance and Self-Insurance Program 49
Future Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
County Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Outstanding Long Term Debt and Lease Obligations 52
THE COUNTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
County Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Population . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Industry and Employment . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . 54
Major Industrial Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Impact of Military Base Closings . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Commercial Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Construction Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Environmental Control Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Impact of Current Drought . . . . . . . . . . 66
Education and Community Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
TAX EXEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
APPENDIX A - FINANCIAL STATEMENTS OF THE COUNTY FOR THE
FISCAL YEAR ENDED JUNE 30, 1991 . . . . . . . . . . . . . . . A-1
APPENDIX B - SUMMARY OF CERTAIN PROVISIONS OF
PRINCIPAL LEGAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C - FORM OF OPINION OF CO-SPECIAL COUNSEL . . . . . . . . . . . . C-1
APPENDIX D - TABLE OF ACCRETED VALUES. . . . . . . . . . . . . . . . . . . . . . . . . . D-1
OFFICIAL STATEMENT
$125,584,011.80
CERTIFICATES OF PARTICIPATION
(MERRITHEW MEMORIAL HOSPITAL REPLACEMENT PROJECT)
SERIES OF 1992
Evidencing the Fractional Undivided Interests
of the Owners Thereof
in Base Rental Payments to be Made by the
COUNTY OF CONTRA COSTA, CALIFORNIA
to the
CONTRA COSTA COUNTY
PUBLIC FACILITIES CORPORATION
INTRODUCTION
This Official Statement (which includes the cover page and Appendices
hereto) (the "Official Statement") , provides certain information concerning
the sale and delivery of Certificates of Participation (Merrithew Memorial
Hospital Replacement Project) , Series of 1992 (the "1992 Certificates") , in
an aggregate principal amount of $125,584,011.80 evidencing the fractional
undivided interests of the registered owners (the "Owners") thereof in Base
Rental Payments (defined herein) to be made by the County of Contra Costa
(the "County") , as rent for the Project (as defined herein) . The Project
will be leased by the County pursuant to a Facility Lease, dated as of May
1, 1992 (the "Facility Lease") , between the County, as lessee, and the
Contra Costa County Public Facilities Corporation, a California nonprofit
public benefit corporation (the "Corporation") , as lessor, and more fully
described therein. The 1992 Certificates are being executed and delivered
to finance the design and construction of the replacement of the Merrithew
Memorial Hospital (the "County Hospital") in the City of Martinez,
California. See' "THE PROJECT. " Prior to entering into the Facility Lease,
the County will lease to the Corporation, pursuant to a Site Lease, dated as
of May 1, 1992 (the "Site Lease") , the site for construction and
installation of Phase I of the Project (as described herein) . Such site-and
all real property subsequently leased by the County to the Corporation under
the Site Lease in connection with the Project are herein referred to as the
"Demised Premises. "
The County of Contra Costa lies northeast of San Francisco and is the
ninth most populous county in California. The County seat is in the City of
Martinez. Major industries in the County include oil refining and
telecommunications.
The 1992 Certificates will be executed and delivered pursuant to a Trust
Agreement, dated as of May 1, 1992 (the "Trust Agreement") , by and among the
County, the Corporation and U.S. Trust Company of California, N.A. , Los
Angeles, California, as trustee (the "Trustee") . Pursuant to the Assignment
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Agreement, dated as of May 1, 1992 (the. "Assignment Agreement") , the
Corporation will assign to the Trustee, for the benefit of the Owners,
substantially all of its rights under the Facility Lease and the Site Lease,
including its right to receive and collect rental payments (the "Base Rental
Payments") from the County under the Facility Lease and its right, as may be
necessary, to enforce payment of Base Rental Payments. The County may incur
in the future additional obligations under the Facility Lease, and may cause
the execution of one or more additional : series of Certificates (the
"Additional Certificates") , secured on a parity with the 1992 Certificates,
to finance other capital improvements to be included in the Project. See
"SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES - Additional
Certificates. " The 1992 Certificates, together with any Additional
Certificates executed pursuant to the Trust Agreement, are herein referred .
to as the "Certificates. "
The County has covenanted under the Facility Lease that as long as the
Project and the Demised Premises are available for the County' s use and
occupancy, it will take such action as may be necessary to include all Base
Rental Payments and Additional Payments (as defined below) for such
properties in its annual budgets and to make the necessary annual
appropriations therefor. See "SECURITY AND SOURCES OF PAYMENT FOR THE
CERTIFICATES. "
Base Rental Payments are subject to complete or partial abatement
resulting from substantial interference with the use and possession by the
County of the Project and the Demised Premises caused by damage to or
destruction or condemnation of the Project and the Demised Premises. See
"RISK FACTORS. " Abatement of Base Rental Payments under the Facility Lease
could result in Certificate Owners receiving less than the full amount of
principal and interest represented by the Certificates, except to the extent
proceeds of insurance are available or there are moneys in the Certificate
Reserve Fund or Lease Fund (as described herein) to make Base Rental
Payments (or a portion thereof) during periods of abatement.
Summaries of certain provisions of the principal legal documents
relating to the Certificates and the Facility Lease are contained in
Appendix B. The summaries and descriptions in this Official Statement of
the Trust Agreement, the Facility Lease, the Site Lease and other agreements
relating to the Certificates are qualified in 'their entirety by reference to
such documents, and the descriptions herein of the Certificates are
qualified in their entirety by the form thereof and the information with
respect thereto included in such documents. , All capitalized terms used
herein, unless noted otherwise, shall have the meanings prescribed in the
Trust Agreement and Facility Lease.
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ESTIMATED SOURCES AND USES OF FUNDS
The Proceeds to be received from the sale of the 1992 Certificates are
estimated to be applied as set forth below.
Sources
1992 Certificate Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,584,011.80
Less: Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . . . (2,057,409.75)
Less: Underwriters' Discount (1,076,003.81)
Accrued Interest (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259.167.46
Total Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $122,709,765.70
Uses
Net Deposit to Acquisition and Construction Fund. . . . . . . . . . . $ 70,257,443.97
Deposit to Certificate Reserve Fund (2) . . . . . . . . . . . . . . . . . . . . 10,665,418.75
Deposit to Lease Fund (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,409,746.24
Deposit to Trust Administration Fund. . . . . . . . . . . . . . . . . . . . . . . 5,000.00
Costs of Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.156.74
Total Uses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $122,709,765.70
(1) Represents interest on the 1992 Current Interest Certificates from
May 1, 1992 to the delivery date thereof..
(2) Certificate Reserve Requirement.
(3) Represents interest on the 1992 Current Interest Certificates from
May 1, 1992 to the delivery date thereof and capitalized interest to
approximately May 1, 1998.
THE 1992 CERTIFICATES
General Provisions
The Certificates evidence and represent the fractional undivided
interests of the Owners thereof in Base Rental Payments to be made by the
County under the Facility Lease.
The Certificates will be prepared in the form of fully registered
Certificates and, when executed and delivered, will be registered in the
name of Cede & Co. , as nominee of The Depository Trust Company, New York,
New York ("DTC") . DTC will act as securities depository of the
Certificates. Ownership interests in the Certificates may be purchased in
book-entry form only, in the denominations hereinafter set forth. See
"Book-Entry Only System", below.
Current Interest Certificates
Ownership interests in 1992 Current Interest Certificates will be in
$5,000 denominations or any integral multiple thereof. Interest represented
by the 1992 Current Interest Certificates will be calculated on the basis of
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a 360-day year composed of twelve 30-day months and is payable on May 1 and
November 1 (each a "Payment Date") of each year, commencing November 1,
1992. The 1992 Current Interest Certificates will evidence and represent
interest from May 1, 1992. The 1992 Current: Interest Certificates will
mature on the dates and in the principal amounts, and the interest
represented thereby shall be computed at the rates, all as set forth on the
cover page of this Official Statement (each a "Certificate Payment Date") .
Capital Appreciation Certificates
Ownership interests in 1992 Capital Appreciation Certificates will be in
denominations such - that the Accreted Value on each such Certificate on the
stated maturity date thereof will be $5,000 or an integral multiple
thereof. The initial principal amount of each 1992 Capital Appreciation
Certificate per $5,000 Accreted Value at the stated maturity thereof and the
approximate yield to maturity on such Certificates is set forth on the cover
of this Official Statement. No payments of principal or interest will be
made with respect to the 1992 Capital Appreciation Certificates prior to the
maturity or earlier prepayment thereof. Interest with respect to the 1992
Capital Appreciation Certificates shall accrue on such Certificates,
compounded from the date of initial delivery at the approximate yield set
forth on the cover of this Official Statement on May 1 and November 1 of
each year, commencing November 1, 1992, assuming in any year that the
Accreted Value of such 1992 Capital Appreciation Certificates increases in
equal daily amounts on the basis of a 360-day year composed of twelve 30-day
months and shall be payable only at maturity or the earlier prepayment
thereof. A Table of Accreted Values (as of May, 1 and November 1) of the
1992 Capital Appreciation Certificates of each maturity per $5,000 Accreted
Value at the stated maturity is attached hereto as Appendix D. Any Accreted
Value determined by computing interest in accordance with the terms of the
Trust Agreement shall control over any different Accreted Value determined
by reference to such table.
Book-Entry Only System
The Depository Trust Company ("DTC") , New York, will act as securities
depository for the 1992 Certificates. The 1992 Certificates will be
executed and delivered as fully-registered certificates registered in the
name of Cede & Co. (DTC' s partnership nominee) . One fully-registered
certificate will be executed and delivered for each Certificate Payment Date
of the 1992 Certificates, each in the aggregate principal amount due on such
Certificate Payment Date, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934. DTC holds securities that its
participants ( "Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through' electronic computerized
book-entry changes in Participants ' accounts, thereby eliminating the need
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for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of
its Direct Participants and by the New York Stock Exchange, Inc. , the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants") . The Rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission.
Purchases of 1992 Certificates under the DTC system must be made by or
through Direct Participants, which will receive a credit for the 1992
Certificates on DTC's records. The ownership interest of each actual
purchaser of each 1992 Certificate ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the
Beneficial Owner entered 'into the transaction. Transfers of ownership
interests in the 1992 Certificates are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive 1992 Certificates representing their ownership
interests, except in the event that use of the book-entry system for the
1992 Certificates is discontinued.
To facilitate subsequent transfers, all 1992 Certificates deposited by
Participants with DTC are registered in the name of DTC' s partnership
nominee, Cede & Co. The deposit of 1992 Certificates with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the 1992
Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such 1992 Certificates are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the 1992
Certificates. Under its usual procedures, DTC mails an Omnibus Proxy to the
issuer of the securities as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those
Direct Participants to whose accounts the 1992 Certificates are credited on
the record date (identified in a listing attached to the Omnibus Proxy) .
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it
Principal and interest payments with respect to the 1992 Certificates
will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the payable date in accordance with their respective holdings
shown on DTC' s records unless DTC has reason . to believe that it will not
receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as
is the case with securities held for the accounts of customers in bearer
form or registered in "street name, " and will be the responsibility of such
Participant and not of DTC, the Trustee, the Corporation or the County,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the
responsibility of the Corporation or the Trustee, fiscal agent or other
designated agent, disbursement of such payments to Direct Participants shall
be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the 1992 Certificates at any time by giving reasonable notice to
the Trustee and the County. Under such circumstances, in the event that a
successor securities depository is not obtained, physical certificates are
required to be printed and delivered.
In the event the County and the Trustee determine not to continue the
DTC book-entry only system or DTC determines to discontinue its services
with respect to the 1992 Certificates and the County does not select another
qualified securities depository, the County shall deliver one or more 1992
Certificates in such principal amount or ; amounts, in authorized
denominations, and registered in whatever name or names, as DTC shall
designate. In such event, transfers and exchanges of 1992 Certificates will
be governed by the provisions of the Trust Agreement.
AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR .THE 1992 CERTIFICATES, THE
TRUSTEE WILL SEND ANY NOTICE OF PREPAYMENT OR OTHER NOTICES TO HOLDERS ONLY
TO DTC. ANY FAILURE OF DTC TO ADVISE ANY PARTICIPANT, OR OF ANY PARTICIPANT
TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL
NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE
PREPAYMENT OF THE 1992 CERTIFICATES CALLED FOR PREPAYMENT OR OF ANY OTHER
ACTION PREMISED ON SUCH NOTICE.
THE COUNTY, THE TRUSTEE, THE CORPORATION AND THE UNDERWRITERS HAVE NO
RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS RELATING TO OR
PAYMENTS MADE ON ACCOUNT OF BENEFICIAL OWNERSHIP, OR FOR MAINTAINING,
SUPERVISING OR REVIEWING ANY RECORDS RELATING TO BENEFICIAL OWNERSHIP OF
INTERESTS IN THE 1992 CERTIFICATES.
THE COUNTY, THE TRUSTEE, . THE CORPORATION AND THE UNDERWRITERS CANNOT AND DO
NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC
PARTICIPANTS OR THAT PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH
RESPECT TO THE 1992 CERTIFICATES RECEIVED BY DTC OR ITS NOMINEES AS THE
HOLDER OR ANY PREPAYMENT NOTICES OR OTHER NOTICES TO THE BENEFICIAL HOLDERS,
OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL SERVICE AND ACT
IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.,
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The foregoing description of the procedures and record keeping with respect
to beneficial ownership interests in the 1992 Certificates, payment of
principal, prepayment premium, if any, and interest with respect to the 1992
Certificates to DTC, its Participants or Beneficial Owners, confirmation and
transfers of beneficial ownership interests in the 1992 Certificates and
other related transactions by and between DTC, its Participants and the
Beneficial Owners is based solely on the County'_s and the Trustee's
understanding of such procedures and record keeping from information
provided by DTC. Accordingly, no representations can be made concerning
these matters and neither DTC, its Participants nor the Beneficial Owners
should rely on the foregoing information with respect to such matters, but
should instead confirm the same with DTC or its Participants, as the case
may be. The County and the Trustee understand that the current "Rules"
applicable to DTC are on file with the Securities and Exchange Commission
and that the current "Procedures" of DTC to be followed in dealing with
Participants are on file with DTC.
Prepayment Provisions
Capital Appreciation Certificates
The 1992 Capital Appreciation Certificates are not subject to prepayment
except as described below under "Extraordinary Prepayment. "
Extraordinary Prepayment
The 1992 Certificates are subject to prepayment on any date prior to
their respective Certificate Payment Dates, as a whole, or in part by lot
within each Certificate Payment Date so that the aggregate annual amounts of
principal, interest and Accreted Interest, as the case may be, represented
by the Certificates which shall be payable after such prepayment date shall
correspond to the principal component, interest component and Accreted
Interest component, as the case may be, of the reduced Base Rental Payments
resulting from an insured loss to or governmental taking of the Demised
Premises and the Project or portions thereof, from prepaid Base Rental
Payments made by the County from funds received by the County due to such
insured loss or governmental taking, if such amounts are not used to repair
or replace the Demised Premises and the Project in accordance with the
provisions of the Facility Lease, under the circumstances and upon the
conditions and terms prescribed in the Trust Agreement and in the Facility
Lease, at a prepayment price equal to the sum of the principal amount and
Accreted Interest, if any, represented thereby, in the case of 1992 Capital
Appreciation Certificates, and equal to the sum of the principal amount
thereof, plus accrued interest represented thereby to the date fixed for
prepayment, in the case of 1992 Current Interest Certificates, without
premium. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES -
Insurance. "
Optional Prepayment
The 1992 Current Interest Certificates payable after November 1, 2002
are subject to prepayment prior to their respective Certificate Payment
Dates, at the option of the County, as a whole, or in part in any order of,
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and in any amounts of 1992 Current Interest Certificates payable on,
Certificate Payment Dates specified by the County, and by lot within any
such Certificate Payment Date if less than all of the 1992 Current Interest
Certificates of such Certificate Payment Date are prepaid, from any source
of available funds, on any Interest Payment Date on or after November 1,
2002, at the principal amount represented thereby plus accrued interest
represented thereby to the date fixed for prepayment, plus the premium, if
any, set forth below as a percentage of said principal. amount:
Prepayment Dates Premiums
November 1, 2002 and May 1, 2003 22
November 1, 2003 and May 1, 2004 1Z
November 1, 2004 and thereafter OX
Mandatory Prepayment
1992 Current Interest Certificates with a Certificate Payment Date of
November 1, 2012 are subject to mandatory prepayment prior to their stated
Certificate Payment Date in part on November 1 of each year on and after
November 1, 2008, by lot, from and in the amount of the principal components
of Base Rental Payments applicable thereto and due and payable on such
dates, at a prepayment price equal to the sum of the principal amount
represented thereby plus accrued interest to the date of prepayment, without
premium according to the following schedule (subject to modification in the
event of optional prepayment or extraordinary prepayment) :
Prepayment Date Principal
(November 1) Amount
2008 $4,940,000
2009 5,270,000
2010 5,615,000
.2011 5,985 ,000
2012 (maturity) 6,380,000
1992 Current Interest Certificates with a Certificate Payment Date of
November 1, 2022 are subject to mandatory prepayment prior to their stated
Certificate Payment Date in part on November 1 of each year on and after
November 1, 2016, by lot, from and in the amount of the principal components
of Base Rental Payments applicable thereto and due and payable on such
dates, at a prepayment price equal to the sum of the principal amount
represented thereby plus accrued interest to the date of prepayment, without
premium according to the following schedule (subject to modification in the
event of optional prepayment or extraordinary prepayment) :
I,
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Prepayment Date Principal
(November 1) Amount
2016 $6,800,000
2017 7,255,000
2018 7,735,000
2019 8,245,000
2020 8,790,000
2021 9,375,000
2022 (maturity) 9,995,000
Notice of Prepayment
So long as the Book-Entry system is used for the 1992 Certificates, the
Trustee will give any notice of prepayment or any other notices required to
be given to Owners only to DTC. Any failure of DTC to advise any DTC
Participant, or of any DTC Participant to notify the Beneficial Owner, of
any such notice and its content or effect will not affect the validity of
the prepayment of the 1992 Certificates called for prepayment or any other
action premised on such notice. Beneficial Owners may desire to make
arrangements with a DTC Participant so that all notices of prepayment or
other communications to DTC which affect such Beneficial Owners, including
notification of all interest payments, will be forwarded in writing by such
DTC Participant. See "THE 1992 CERTIFICATES - Book-Entry Only System"
herein.
In the event that the Book-Entry system shall no longer be used, notice
of prepayment is to be mailed, first class postage prepaid, to the
respective Owners of any 1992 Certificates designated for prepayment at
their addresses appearing on the registration books required to be kept by
the Trustee not less than 30 nor more than 60 days prior to the prepayment
date. Each notice of prepayment shall state the prepayment date, the
prepayment place and the prepayment price, shall designate the serial
numbers of the Certificates to be prepaid, and in the case of each
Certificate called for prepayment in part, state the amount which is to be
prepaid. Any notice mailed as provided in the Trust Agreement shall be
conclusively presumed to have been given, whether or not such Owner receives
the notice.
Selection of Certificates for Prepayment
Whenever less than all the Outstanding Certificates payable on any one
Certificate Payment Date are to be prepaid on any one date, the Trustee
shall select the Certificates of such Certificate Payment Date to be prepaid
from the Outstanding Certificates payable on such Certificate Payment Date
by lot in any manner that the Trustee deems fair. For purposes of such -
selection, Certificates shall be deemed to be composed of $5,000 portions,
and any such portion may be separately prepaid.
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Effect of Prepayment
From and after the date of prepayment of the Certificates in accordance
with the Trust Agreement, interest or Accreted Interest, as the case may be,
represented by the Certificates called for prepayment shall cease to accrue,
such Certificates shall cease to be entitled to any benefit or security
under the Trust Agreement and the Owners of such Certificates shall have no
rights in respect thereof except to receive payment of the prepayment price
represented thereby. The Trustee shall, upon surrender for payment of any
of the Certificates to , be prepaid, pay such Certificates at the prepayment
price thereof. All Certificates prepaid pursuant to the provisions of the
Trust Agreement shall be cancelled by the Trustee and shall not be
redelivered.
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SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
General
Pursuant to the Facility Lease, the Corporation leases the Demised
Premises and the Project to the County. As rental for the use and occupancy
of the Demised Premises and the Project, the County covenants to pay to the
Trustee Base Rental Payments. The Base Rental Payments are composed of
principal, interest and Accreted Interest components represented by the
Certificates.
Each Certificate represents a fractional undivided interest in the Base
Rental Payments. The County has covenanted in the Facility Lease to include
all Base Rental Payments in its annual budgets and to make the necessary
annual appropriations therefor. The Trustee, as assignee of the
Corporation, will receive such Base Rental Payments for the benefit of the.
Certificate Owners. Additionally, the Corporation, pursuant to the
Assignment Agreement, will assign all of its rights to receive Base Rental
Payments to the Trustee for the benefit of the Owners of the Certificates.
By the 15th day of the month immediately preceding each semi-annual Payment
Date, the County must pay to the Trustee Base Rental Payments (to the extent
required under the Facility Lease) which will be sufficient to pay, when
due, the principal and interest represented by the Certificates.
Under the Facility Lease the County agrees to pay Additional Payments
for the payment of all expenses and all administrative costs of the
Corporation related to the Demised Premises and the Project, including
expenses of the Trustee, and fees of accountants, attorneys and
consultants. A Trust Administration Fund is established under the Trust
Agreement for the payment of all administrative costs of the Corporation and
the County is obligated under the Facility Lease to maintain a minimum
balance of $5,000 in the Trust Administration Fund, which will be funded
initially from 1992 Certificate proceeds. The County is responsible for
repair and maintenance of the Project during the term of the Facility Lease.
Except to the extent of amounts held by the Trustee in the Lease Fund or
in the Certificate Reserve Fund are otherwise available to the Trustee for
payments in respect of the Certificates, the Base Rental Payments shall be
abated proportionately, during any period in which by reason of any damage
to or destruction or condemnation of the Demised Premises and the Project,
there is substantial interference with the use and occupancy of the Demised
Premises and the Project by the County, in the proportion in which the
initial cost of that portion of the Demised Premises and the Project
rendered unusable bears to the initial cost of the whole of the Demised
Premises and the Project, with respect to damage or destruction, and in an
amount equivalent to the amount by which the annual payments of principal
and interest represented by the Certificates then Outstanding will be
reduced by the application of the award in eminent domain to the prepayment
of Outstanding Certificates, with respect to a taking of less than the whole
of the Demised Premises and the Project by condemnation. Such abatement
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shall continue for the period commencing with such damage or destruction and
ending with the substantial completion of the work of repair or
reconstruction.. In the event of any such . damage or destruction, the
Facility Lease shall continue in full force and effect and the County waives
any right to terminate the Facility Lease by virtue of any such damage or
destruction.
Should the County default under the Facility Lease, the Trustee, as
assignee of the Corporation under the Facility Lease, may terminate the
Facility Lease and recover certain damages from the County, or may retain
the Facility Lease and hold the County liable for all Rental Payments
thereunder on an annual basis. See "APPENDIX A - SUMMARY OF CERTAIN
PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS Facility Lease - Default;
Remedies. Rental Payments may not be accelerated. See "RISK FACTORS. "
Base Rental Payments
Base Rental is calculated on an annual basis, for twelve-month periods
commencing on April 1 and ending on March 31; andeach annual Base Rental .
Payment includes two interest components, payable on April 15 and October 15
pf each rental payment period, and one principal component, payable on
October 15 of each rental payment period (commencing on October 15, 1998) ,
except that the first Base Rental Payment period shall commence on the date
of recordation of the Facility Lease and shall end on March 31, 1993 and the
first annual payment of Base Rental shall consist of one interest component,
payable on October 15, 1992. Each Base Rental 'Payment installment shall be
payable on the 15th day of the month immediately preceding its due date and
any interest or other income with respect thereto accruing prior to such due
date shall belong to the County and shall be returned by the Corporation to
the County on May 1 and November 1 of each year. Each annual Base Rental
Payment (to be payable in installments as aforesaid) shall be for the use of
the Demised Premises and the Project following completion of construction
thereof for the twelve-month period commencing on April 1 of the period in
which such installments are payable.
The Trust Agreement requires that Base Rental Payments be deposited in
the Base Rental Payment Fund maintained by the Trustee. Pursuant to the
Trust Agreement, on May 1 and November 1 of each year, commencing November
1, 1992, the Trustee will .transfer such amounts as are necessary to the
Interest Fund, the Principal Fund or the Prepayment Fund, as the case may
be, to pay principal, interest and Accreted Interest with respect to the
Certificates as the same shall become due and payable.
THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS IS A SPECIAL
OBLIGATION OF THE COUNTY, AND DOES NOT CONSTITUTE A DEBT OF THE COUNTY OR OF
THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR
AN OBLIGATION FOR WHICH THE COUNTY IS OBLIGATED , TO. LEVY OR PLEDGE, OR HAS
LEVIED OR PLEDGED, ANY FORM OF TAXATION.
The following page shows the rental payment schedule for the 1992
Certificates.
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RENTAL PAYMENT SCHEDULE
Annual Semi-Annual Payment for Total
Principal Interest Accreted Semi-Annual
Payment Date Payments Payments(1) Interest Requirement
10/15/92 3,887,511.88 3,887,511.88
04/15/93 3,887,511.88 3,887,511.88
10/15/93 3,887,511.88 3,887,511.88
04/15/94 3,887,511.88 3,887,511.88
10/15/94 3,887,511.88 3,887,511.88
04/15/95 3,887,511.88 3,887,511.88
10/15/95 3,887,511.88 3,887,511.88
04/15/96 3,887,511.88 3,887,511.88
10/15/96 3,887,511.88 3,887,511.88
04/15/97 3,887,511.88 3,887,511.88
10/15/97 3,887,511.88 3,887,511.88
04/15/98 3,887,511.88 3,887,511.88
10/15/98 2,885,000.00 3,887,511.88 6,772,511.88
04/15/99 3,805,289.38 3,805,289.38
10/15/99 3,045,000.00 3,805,289.38 6,850,289.38
04/15/2000 3,716,984.38 3,716,984.38
10/15/2000 3,225,000.00 3,716,984.38 6,941,984.38
04/15/2001 3,620,234.38 3,620,234.38
10/15/2001 3,415,000.00 3,620,234.38 7,035,234.38
04/15/2002 3,514,369.38 3,514,369.38
10/15/2002 3,6300000.00 3,514,369.38 7,144,369.38
04/15/2003 3,400,931.88 3,400,931.88
10/15/2003 3,855,000.00 3,400,931.88 7,255,931.38
04/15/2004 3,279,499.38 3,279,499.38
10/15/2004 4,100,000.00 3,279,499.38 7,379,499.38
04/15/2005 3,148,299.38 3,148,299.38
10/15/2005 4,360,000.00 3,148,299.38 7,508,299.38
04/15/2006 3,008,779.38 3,008,779.38
10/15/2006 4,640,000.00 3,008,779.38 7,648,779.38
04/15/2007 2,857,979.38 2,857,979.38
10/15/2007 1,731,788.45 2,857,979.38 3,213,211.55 7,802,979.38
04/15/2008 2,857,979.38 2,857,979.38
10/15/2008 4,940,000.00 2,857,979.38 7,797,979.38
04/15/2009 2,694,959.38 2,694,959.38
10/15/2009 5,270,000.00 2,694,959.38 7,964,959.38
04/15/2010 2,521,049.38 2,521,049.38
10/15/2010 5,615,000.00 2,521,049.38 8,136,049.38
04/15/2011 2,335,754.38 2,335,754.38
10/15/2011 5,985,000.00 2,335,754.38 8,320,754.38
04/15/2012 2,138,249.38 2,138,249.38
10/15/2012 6,380,000.00 2,138,249.38 8,518,249.38
04/15/2013 1,927,709.38 1,927,709.38
10/15/2013 1,537,725.85 1,927,709.38 5,267,274.15 8,732,709.38
(continued next page)
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Rental_ Payment Schedule (continued)
Annual Semi-Annual Payment for Total
Principal Interest 'Accreted Semi-Annual
Payment Date Payments Payments(1) Interest Requirement
04/15/2014 1,927,709.38 1,927,709.38
10/15/2014 1,434,766.20 1,927,709.38 5,370,233.80 8,732,709.38
04/15/2015 1,927,709.38 1,927,709.38
10/15/2015 1,339,731.30 1,927,709.38 51,470,268.70 8,737,709.38
04/15/2016 1,927,709.38 1,927,709.38
10/15/2016 6,800,000.00 1,927,709.38 8,727,709.38
04/15/2017 1,702,459.38 1,702,459.38
10/15/2017 7,255,000.00 1,702,459.38 8,957,459.38
04/15/2018 1,462,137.50 1,462,137.50
10/15/2018 7,735,000.00 1,462,137.50 9,197,137.50
04/15/2019 1,205,915.63 1,205,915.63
10/15/2019 8,245,000.00 1,205,915.63 9,450,915.63
04/15/2020 932,800.00 932,800.00
10/15/2020 8,790,000.00 932,800.00 9,722,800.00
04/15/2021 641,631.25 641,631.25
10/15/2021 9,375,000.00 641,631.25 10,016,631.25
04/15/2022 331,084.38 331,084.38
10/15/2022 9,995,000.00 331,084.38 10,326,084.38
(1) The interest components to October 15, 1997, plus a portion of the
interest component due April 15, 1998, are funded from proceeds of the
1992 Certificates.
Source of Revenues for Base Rental Payments
The County expects to receive moneys from capital cost reimbursement as
a result of the acquisition of the Project which will be used in their
entirety to supplement amounts in the County's General Fund available for
the payment of Base Rental Payments. The following are anticipated sources
of moneys as a result of the construction and acquisition of the Project.
(a) SB 1732. Section 14085.5 of the California Welfare and
Institutions Code ("Section 14085.5") was adopted by the
Legislature of the State of California (the "State") in 1988.
Section 14085.5 permits hospitals which contract to provide
inpatient hospital services under the State's Medi-Cal program
("Medi-Cal") , or which contract with county organized health
systems, and which meet specified criteria, to receive
reimbursement, in addition to their medical reimbursement, from
the State for a portion of the 'costs of certain capital
projects. Supplemental reimbursement received under Section
14085.5 is required to be placed by the hospital in a special
account exclusively for debt service with respect to bonds
issued to finance any such capital project. The obligations of
the State to make supplemental reimbursement pursuant to
Section 14085.5 are subject to passage of annual appropriations
therefor through the normal State budget process.
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1 F
For any fiscal year during which a hospital is eligible to
receive the supplemental reimbursement under Section 14085.5,
the amount of supplemental reimbursement is calculated annually
by multiplying the amount of annual debt service with respect
to bonds issued to finance the project by the ratio of the
hospital's total paid Medi-Cal patient days to total patient
days, except that in no instance shall the percentage figure
determined pursuant to the ratio of the total paid Medi-Cal
patient days to total patient days be decreased by more than
101 of the initial ratio prior to retirement of the debt.
The State has informed the County that the County Hospital
currently meets the requirements and regulations with respect
to eligibility for receipt of supplemental reimbursements for a
portion of the cost of the Project, and the County anticipates
that upon performance of certain stipulated conditions the
Project will qualify for supplemental reimbursement payments
calculated pursuant to Section 14085.5. Based upon data
available as of February, 1992, the supplemental reimbursement
for the Project would equal approximately 52.81 of the eligible
debt service with respect to the Project, however, the State
has the ability to adjust the supplemental reimbursement
annually as described in the paragraph above, subject to the
limitation that it shall not be reduced to less than
approximately 47.51 of the eligible debt _service, even if the
County' s Medi-Cal participation rate were to full below that
percentage. The County cannot predict, however, whether the
State will appropriate in its annual budgets the supplemental
reimbursement payments payable to the County. Under the
Facility Lease, the County has covenanted and pledged that all
supplemental reimbursements received by the County pursuant to
Section 14085.5 shall be used for the payment of Base Rental
Payments.
(b) Medicare Payment. In addition to payments received as
reimbursement for the County Hospital's inpatient operating
costs for services provided to Medicare beneficiaries, the
Federal Medicare program reimburses providers for capital
related costs including depreciation and interest.
(c) SB 855. Senate Bill 855 was passed by the California
Legislature and signed into law by Governor Wilson during July
1991. The bill provides for supplemental Medi-Cal payments to
hospitals which serve a disproportionately high percentage of
Medi-Cal and other low-income patients. These hospitals are
called "disproportionate share hospitals" and comprise a
medical service "safety net" for the State's uninsured and
underinsured patients. Generally, the higher the percentage of
services provided to indigent patients by a disproportionate
share hospital, the higher the hospital's supplemental payment
rate will be under SB 855. Funding for the supplemental
payment is derived one-half from State sources and one-half
from federal matching funds.
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The County anticipates receiving in excess of $3.5 million per
year under SB 855. The Board of Supervisors of the County has
adopted an order that, beginning , in fiscal year 1992-93 and
continuing through 1997-98, $3,5 _ million of the County
Hospital's annual supplemental payment, together with interest
earnings thereon, will be reserved as a special fund for cost
overruns and other capital needs with respect to the Project.
Amounts in the special fund will be available for capital
improvements, expenses and obligations with respect to the
County Hospital.
Although the County anticipates the receipt of moneys in connection with
the construction and acquisition of the Project from the above-mentioned
sources, the amount, timing and the continuation of payments in the future
cannot be projected with any degree of certainty. To the extent any such
moneys are received by the County, the County anticipates that such moneys
will be available to supplement the amounts ' in the General Fund to be
appropriated on an annual basis for the payment of Base_ Rental Payments.
Pledge of Base Rental Payments
In accordance with the Trust Agreement, the Base Rental Payments are
irrevocably pledged to and shall be used for the punctual payment of the
interest and principal represented by the Certificates (including Additional
Certificates delivered pursuant to the Trust Agreement) , and the Base Rental
Payments shall not be used for any other purpose while any of the
Certificates (including Additional Certificates) remain Outstanding. This
pledge constitutes a first and exclusive lien on the Base Rental Payments in .
accordance with the terms of the Trust Agreement.,
All Base Rental Payments are paid directly by the County to the Trustee
to be held in trust by the Trustee in the Base Rental Payment Fund for the
benefit of the County until deposited in the Interest Fund, Principal Fund
or Prepayment Fund, whereupon they are held in trust by the Trustee for the
benefit of the holders of the Certificates. The County has covenanted under
the Facility Lease that as long as the Project and the Demised Premises ate
available for the County's use and occupancy, it will take such action as
may be necessary to include all Base Rental Payments and Additional Payments
for such properties in its annual budgets and to; make the necessary annual
appropriations therefor.
Certificate Reserve Fund Requirement
The amount of $10,665,418.75 will be deposited in the Certificate
Reserve Fund from 1992 Certificate proceeds. Moneys in the Certificate
Reserve Fund will be applied solely for the payment of Base Rental Payments
due and payable by the County if and when rental shall be abated or when
other moneys of the County are not otherwise available to make such Base
Rental Payments; provided that certain excess amounts in the Certificate
Reserve Fund will be transferred to the Acquisition and Construction Fund
until completion of the Project and thereafter to fund the Trust
Administration Fund to its required level; provided that if the Trust
Administration Fund is at the required level, any excess will be transferred
to the County. The Certificate Reserve Fund is pledged to the payment of
Base Rental Payments.
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The Trust Agreement requires that, as a condition to the execution and
delivery of Additional Certificates, an amount shall be deposited in the
Certificate Reserve Fund so that following such deposit there shall be on
deposit in the Certificate Reserve Fund an amount at least equal to the
Certificate Reserve Fund Requirement.
The term "Certificate Reserve Fund Requirement" means the sum of the
portions of the Certificate Reserve Fund Requirement applicable to all
outstanding series of Certificates. The portion of the Certificate Reserve
Fund Requirement applicable to the 1992 Certificates is $10,665,418.75. The
portion of the Certificate Reserve Fund applicable to subsequent series of
Certificates is the least of: (i) the maximum amount of Base Rental Payments
remaining to be made by the County pursuant to the Facility Lease during any
twelve-month period ending on November 1 and attributable to such subsequent
series of Certificates, (ii) 125% of the average of all such remaining
annual Base Rental Payments, and (iii) 10i of the proceeds derived from the
sale, of such subsequent series of Certificates. The Certificate Reserve
Fund Requirement may be provided by a policy of insurance issued by a
municipal bond insurance company, obligations insured by which have a rating
by Moody' s Investors Service and by Standard & Poor's Corporation which is
in one of the two highest ratings then issued by said rating agencies or by
a Letter of Credit issued by a bank qualified under the terms of the
Facility Lease.
If at any time the balance in the Certificate Reserve Fund shall be
reduced below the Certificate Reserve Fund Requirement, the first payments
of Base Rental Payments thereafter payable by the County and not needed to
pay Base Rental Payment interest and principal components payable to the
Certificate Owners on the next Base Rental Payment due date shall be used to
increase the balance in the Certificate Reserve Fund to the required
Certificate Reserve Fund Requirement.
Additional Certificates
The 1992 Certificates are being executed and delivered to finance the
construction of the County Hospital building, together with parking, site
development, landscaping, utilities, fixtures, furnishings, equipment,
improvements and appurtenant and related facilities on the Demised Premises
("Phase I of the Project") . See "THE PROJECT. " The County may incur
additional lease obligations to finance public health care facilities and
buildings in the County and additions, extensions or improvements thereto
which are added to the Project pursuant to an agreement amending or
supplementing the Facility Lease entered into pursuant to the terms of the
Trust Agreement ("Subsequent Phases of the Project") . The County
anticipates that such additional lease obligations, if any, will be incurred
under the Facility Lease and will involve the execution and delivery of
Additional Certificates under the Trust Agreement and supplements thereto
(each a "Supplemental Trust Agreement") . Neither the Facility Lease nor the
Trust Agreement in any manner limit the amount of additional lease
obligations payable from amounts legally available from the County's General
Fund or other revenue sources.
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1
The Trust Agreement provides that Additional Certificates may be
executed and delivered thereunder subject to the following conditions:
(a) The County and the Corporation shall not be in default under
the Trust Agreement or any Supplemental Trust: Agreement or under the
Site Lease or the Facility Lease;
(b) A Supplemental Trust Agreement shall require that the proceeds
of the sale of such Additional Certificates, shall be applied (i) to the
construction or acquisition of Subsequent :Phases of the Project,
provided that a Subsequent Phase of the Project shall have a scheduled
completion date on or before March 1, 1997, and the acquisition and
construction costs of all Subsequent Phases of the Project not located
in the City of Martinez, California shall not, in the aggregate, exceed
$20,000,000, (ii) if necessary, for the completion . of the Project or .
rebuilding or replacement of the Project following a casualty loss, or
(iii) for the refunding or repayment of any Certificates then
Outstanding, including the payment of costs and expenses of and incident
to the authorization and sale of such Additional Certificates. A
Supplemental Trust Agreement may also provide that a portion of such
proceeds shall be applied to the payment of the interest components due
or to become due with respect to said Additional Certificates during the
estimated period of any construction and for a period of not to exceed
twelve months thereafter;
(c) A Supplemental Trust Agreement shall provide that from such
proceeds or other sources an amount shall be deposited in the
Certificate Reserve Fund so that following such deposit there shall be
on deposit in the Certificate Reserve Fund an amount at least equal to
the Certificate Reserve Fund Requirement;
(d) The Additional Certificates shall be payable as to principal on
November 1 of each year in which principal components and Accreted
Interest Components, if any, are due and shall be payable as to interest
as specified in a Supplemental Trust Agreement;
(e) The aggregate principal amount of Certificates at any time
Outstanding shall not exceed any limit imposed by law or by the Trust
Agreement or by any Supplemental Trust Agreement;
(f) The Facility Lease shall have been amended, if necessary, so
that the Base Rental Payments payable by the County thereunder will
equal the principal and interest and Accreted Interest components, if
any, represented by such Additional Certificates and all other
Certificates to be Outstanding after such Additional Certificates are
executed and delivered, payable at such times and in such manner as may
be necessary to provide for the payment of .the principal and interest
represented by such Certificates;
(g) A supplemental Trust Agreement shall provide for Certificate
Payment Dates and mandatory prepayments of Certificates in amounts
sufficient to provide for payment of the Certificates when principal and
interest components of Base Rental Payments are due;
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(h) The Facility Lease shall have been amended so as to lease to
the County the Phase of the Project being financed from the proceeds of
such Additional Certificates;
(i) All construction to be financed from the proceeds of such
Additional Certificates shall either be performed pursuant to a
construction contract or contracts between the Corporation and a
contractor or, where permitted by statute, shall be performed by the
County by force account or by its own staff. Each construction contract
shall provide for a guaranteed maximum price for the construction to be
performed thereunder, which price shall be in an amount clearly
available from the proceeds of said Additional Certificates and any
other moneys legally available therefor; and
(j ) If the proceeds of such Additional Certificates are to be used,
in whole or in part, to finance construction on real property not
described in the Site Lease, (1) the Site Lease shall have been amended
so as to lease to the Corporation such additional real property; and (2)
the Facility Lease shall have been amended so as to lease to the County
such additional real property.
In addition, before any Additional Certificates shall be executed and
delivered, there shall be filed with the Trustee an opinion of nationally
recognized bond counsel to the effect that, among other things, the
execution and delivery of the related amendment to the Facility Lease and
the related Supplemental Trust Agreement, when duly executed by the County
and the Corporation, will be valid and binding obligations of the County.
Additional Certificates will be secured on a parity basis with the 1992
Certificates. Failure to pay any Base Rental Payment because of damage or
destruction to, or failure to complete construction of, a Subsequent Phase
of the Project financed with the proceeds of Additional Certificates, could
result in a proportionate default in payment of the 1992 Certificates.
Insurance
The Facility Lease requires the County to maintain or cause to be
maintained, throughout the term of the Facility Lease (but during the period
of construction of any Phase of the Project only if such insurance is not
provided by a contractor under a construction contract as required by the
Facility Lease) , insurance against loss or damage to any structures
constituting any part of the Project by fire and lightning, with extended
coverage insurance, vandalism and malicious mischief insurance and sprinkler
system leakage insurance. Such extended coverage insurance shall, as nearly
as practicable, cover loss or damage by explosion, windstorm, riot,
aircraft, vehicle damage, smoke and such other hazards as are normally
covered by such insurance. Such insurance shall be in an amount equal to
the replacement cost (without deduction for depreciation) of all structures
constituting any part of the Project, excluding the cost of excavations, of
grading and filling, and of the land (except that such insurance may be
subject to deductible clauses for any one loss of not to exceed $5,000) , or
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in the alternative, shall be in an amount and in a form sufficient (together
with moneys in the Certificate Reserve Fund) , in the event of total or
partial loss, to enable all Certificates then Outstanding to be prepaid.
In the event of any damage to or destruction of any part of the Project
caused by the perils covered by such insurance, 'the Corporation, except as
hereinafter provided, shall cause the proceeds of such insurance to be
utilized for the repair, reconstruction or replacement of the damaged or
destroyed portion of the Project, to at least the same condition as they
were in prior to the damage or destruction, insofar as the same may be
accomplished by the use of said proceeds. The, Trustee . shall hold such
proceeds in the Insurance and Condemnation Fund and shall permit withdrawals
upon written request for such purposes. Any balance of said proceeds not
required for such repair, reconstruction or replacement shall be treated by
the Trustee as Base Rental Payments. Alternatively, the Corporation, at its
option, with the written consent of the County, and if the proceeds of such
insurance together with any other moneys then available for the purpose are
at least sufficient to prepay an aggregate principal amount represented by
Outstanding Certificates equal to the amount of. Outstanding Certificates
attributable to the portion of the Project so destroyed or damaged
(determined by reference to the proportion which the construction cost of
such portion of the Project bears to the construction cost of the Project) ,
may elect not to repair, reconstruct or replace the damaged or destroyed
portion of the Project and thereupon shall cause said proceeds to be used
for the prepayment of Outstanding Certificates pursuant to the provisions .of
the Trust Agreement.
The Corporation and the County covenant to promptly apply for federal
disaster aid or State disaster aid in the event that the Project is damaged
or destroyed as a result of an earthquake occurring, at any time. Any
proceeds received as a result of such disaster aid shall be used to repair,
reconstruct, restore or replace the damaged or destroyed portions of the
Project, or, at the option of the County and the Corporation, to prepay
outstanding Certificates if such use of such disaster aid is permitted.
The Facility Lease requires the County to. maintain or cause to be
maintained, throughout the term of the Facility Lease (but during the period
of construction of any Phase of the Project only , if :such insurance is not
provided by a contractor under a construction contract. as required by the
Facility Lease) , rental interruption or use and occupancy insurance to cover
loss, total or partial, of the rental income from or the use of the Project
as the result of any of the hazards covered by the fire and extended
coverage insurance required by the Facility Lease described in the preceding
paragraphs, in an amount sufficient to pay the part. of the total rent
attributable to the portion of the Project rendered unusable (determined by
reference to the proportion which the construction cost of such portion
bears to the acquisition and construction cost of the Project) for a period
of at least two years, except that such insurance may be subject to a
deductible clause of not to exceed $1,000. Any proceeds of such insurance
shall be used by the Trustee to reimburse to the County any rental
theretofore paid by the County under the Facility Lease attributable to such
structure for a period of time during which the payment. of rental under the
Facility Lease is abated, and any proceeds of such insurance not so used
shall be applied to pay Base Rental Payments and Additional Payments.
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As an alternative to providing the fire and extended coverage insurance
and rental interruption insurance, or any portion thereof, required by the
Facility Lease, the County may provide a self insurance method or plan of
protection if and to the extent such self insurance method or plan of
protection shall afford reasonable coverage for the risks, required to be
insured against, in light of all circumstances, giving consideration to
cost, availability and similar plans or methods of protection adopted by
public entities in the State other than the County (provided that, in the
case of rental interruption insurance, a self insurance fund shall be
maintained and accounted for on a separate basis by the County and such self
insurance fund shall be fully funded). Before another method or plan may be
provided by the County, there shall be filed with the Trustee a certificate
of an actuary, insurance consultant or other qualified person, stating that,
in the opinion of the signer, the substitute method. or plan of protection is
in accordance with the requirements of the Facility Lease and, when
effective, would afford reasonable coverage for the risks required to be
insured against (provided that, in the case of rental interruption
insurance, such certificate must state that the method or plan is fully
funded) . There shall also be filed a Certificate of the County (as defined
in the Trust Agreement) setting forth the details of such substitute method
or plan. In the event of loss covered by any such self-insurance method,
the liability of the County under the Facility Lease shall be limited to the
amounts in the self insurance reserve fund or funds created under such
method. The County is not planning to self-insure at this time although it
may do so in the future.
The County is also required to obtain certain liability insurance
coverage in protection of the Corporation and the Trustee as described under
"APPENDIX B - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS -
Facility Lease. "
RISK FACTORS
The following factors, along with the other information in this Official
Statement, should be considered by potential investors in evaluating the
purchase of 1992 Certificates. However, the following does not purport to
be an exhaustive listing of risks and other considerations which may be
relevant to investing in the 1992 Certificates. In addition, the order in
which the following information is presented is not intended to reflect the
relative importance of any such risks.
Full Faith and Credit Not Pledged
The obligation of the County under the Facility Lease does not
constitute an obligation of the Corporation or of the County for which the
County is obligated to levy or pledge any form of taxation or for which the
County has levied or pledged any form of taxation. The obligation of the
County to make Base Rental Payments and Additional Payments does not
constitute a debt or indebtedness of the Corporation, the County, the State
or any of its political subdivisions, within the meaning of any
constitutional or statutory debt limitation or restriction.
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Noncompletion of Project; Abatement
In the event the construction of any component of any Phase of the
Project is not completed within the time for. which capitalized interest has
been provided for such Phase, or in the event of loss or substantial
interference in the use and occupancy of the Demised Premises and the
Project by the County caused by damage or destruction or condemnation of the
Project and the Demised Premises, Base Rental Payments will be subject to
abatement. In the event that the Project and the Demised Premises, if
damaged or destroyed by an insured casualty, could not be replaced during
the period of time that proceeds of the Country's rental interruption
insurance will be available in lieu of Base Rental Payments plus the period
for which funds are available from the Certificate Reserve Fund or the Lease
Fund, or in the event that casualty insurance proceeds or condemnation
proceeds are insufficient to provide for complete repair or replacement of
such component of the Project or prepayment of the Certificates, there could
be insufficient funds to make payments to Owners. in full.
Because the Certificates will be secured on a parity basis, an abatement
with respect to a Subsequent Phase of the Project could result in a partial
failure to make payments on the 1992 Certificates.
Cost Overruns; Construction Delays
There can be no assurance that construction of the Project will be
completed within its estimated budget or by its expected completion date.
Pursuant to the Trust Agreement, Additional Certificates can be executed and.
delivered upon compliance with certain conditions to pay the costs of
completing the Project, but there is no assurance that the County can cause
the Trustee to execute and deliver Additional Certificates. See "SECURITY
AND SOURCES OF PAYMENT FOR THE CERTIFICATES Additional Certificates"
herein. If the County is unable to take possession of the Project, the
County will be under no legal obligation to make Base Rental Payments with
respect to the Project.
Limited Recourse on Default
If the County defaults on its obligations to make Base Rental Payments
with respect to the Project, the Trustee, as assignee of the Corporation,
may (subject to the restrictions described below) retain the Facility Lease
and hold the County liable for all Base Rental Payments on an annual. basis
and will have the right to re-enter and re-let the Project. In the event
such re-letting occurs, the County will be liable for any resulting
deficiency in Base Rental Payments. Alternatively, the Trustee may
terminate the Facility Lease with respect to the Project and proceed against
the County to recover damages pursuant to the Facility Lease.
Due to the specialized nature of the Project, no assurance can be given
that the Trustee will be able to re-let any component of the Project so as
to provide rental income sufficient to make principal. and interest payments
with respect to the Certificates in a timely manner, and the Trustee is not
empowered to sell the Project for the benefit of the Owners of the
Certificates. In addition, due to the governmental function of the Project,
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r r
it is not certain whether a court would permit the exercise of the remedies
of repossession and re-letting with respect thereto. Any suit for money
damages would be subject to limitations on legal remedies against counties
in California, including a limitation on enforcement of judgments against
funds needed to serve the public welfare and interest.
No Acceleration Upon Default
If the County defaults on its obligations to make Base Rental Payments,
the Trustee may have limited ability to re-let the Project so as to preserve
the tax exempt nature of the interest component of the Base Rental Payments
and the Certificates. In the event of a default, there is no available
remedy of acceleration of the total Base Rental Payments due over the term
of the Facility Lease. The County will only be liable for Base Rental
Payments on an annual basis, and the Trustee would be required to seek a
separate judgment in each fiscal year for that fiscal year's rental payments.
No Liability of Corporation to the Owners
Except as expressly provided in the Trust Agreement, the Corporation
shall not have any obligation or liability to the Owners of the Certificates
with respect to the payment when due of the Base Rental Payments by the
County, or with respect to the performance by the County of other agreements
and covenants required to be performed by it contained in the Facility Lease
or the Trust Agreement, or with respect to the performance by the Trustee of
any right or obligation required to be performed by it contained in the
Trust Agreement.
Effect of Termination of Facility Lease on Transfer of Certificates and Tax
Exemption
No opinion has been rendered with respect to the applicability of the
registration requirements of the Securities Act of 1933, as amended, to any
Certificate subsequent to termination of the Facility Lease due to an Event
of Default. If the Facility Lease is terminated following a default, no
assurance can be given that the Certificates may be transferred by their
Owner without compliance with the registration provisions of the Securities
Act of 1933, as amended, or that an exemption from such provisions will be
available.
No opinion has been rendered as to the treatment for federal or State of
California income tax purposes of any moneys received by an Owner of
Certificates subsequent to a termination of the Facility Lease due to an
Event of Default. No assurance can be given that any moneys received by the
Owners of such Certificates subsequent to such event will be excluded from
gross income for federal income tax purposes or exempt from State of
California personal income taxes.
Risk of Earthquake
There are several faults in the greater San Francisco bay area that
potentially could result in damage to buildings, roads, bridges, and _
property within the County in the event of an earthquake. Past experiences,
-23-
1
I .
including the 1989 Loma Prieta earthquake, have resulted in minimal damage
to the infrastructure and property in the County. Faults that could affect
the County are the San Andreas and Hayward Faults west of the County and the
Calaveras Fault within portions of the County., The Facility Lease does not
require the County to maintain insurance on, the Project against certain
risks such as earthquakes. The Project will be constructed to meet or
exceed applicable earthquake requirements. If, the Project were damaged or
destroyed due to earthquake or flood or other catastrophic events which are
not covered under the hazard or rental interruption insurance required by
the Facility Lease, an abatement of Base Rental Payments would likely occur
and continue until the Project was repaired or; replaced. See "SECURITY AND
SOURCES OF PAYMENT FOR THE CERTIFICATES - General" above.
Litigation Affecting Proposition 13
Recent lawsuits contend that California' s two-tiered property tax
assessment system violates federal constitutional equal protection
guarantees by taxing new property owners at a rate higher than long-time
owners. A reduction in assessed values of taxable property in the County or
a reduction in the allowable year to year adjustment (currently not to
exceed 22 per year) of the assessed value of real property for tax purposes
could reduce revenues of the County and have an adverse effect on the
County' s ability to make timely payments of Base. Rental Payments. See
"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS. "
CONSTITUTIONAL LIMITATIONS ON TAXES AND APPROPRIATIONS
Article XIII A of the California Constitution
On June 6, 1978, California voters approved. Proposition 13, which added
Article XIII A to the California Constitution ;( "Article XIII A") . Article
XIII A limits the amount of any ad valorem tax on real property to one
percent of the full cash value thereof, except that additional ad valorem
taxes may be levied to pay debt service on indebtedness approved by the
voters prior to July 1, 1978 and (as a result of an amendment to Article
XIII A approved by California voters on June 3, 1986) on bonded indebtedness
for the acquisition or improvement of real property which has been approved
on or after July 1, 1978 by two-thirds of the voters voting on such
indebtedness. Article XIII A defines full cash value to mean "the county
assessor's valuation of real property as shown on the 1975-76 tax bill under
'full cash value' , or thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership have occurred after
the 1975 assessment" . This full cash value may be .increased at a rate not
to exceed two percent per year to account for inflation.
Article XIII A has subsequently been amended. to permit reduction of the
"full cash value" base in the event of declining property values caused by
damage, destruction or other factors and to provide that there would be no
increase in the "full cash value" base in the event of reconstruction of
property damaged or destroyed in a disaster and in other minor or technical
ways.
-24-
1 Y
Court Challenges to Article XIII A
The U.S. Supreme Court in 1989 struck down as a violation of equal
protection certain property tax assessment practices in West Virginia, which
had resulted in vastly different assessments of similar properties. Since
Proposition 13 provides that property may only be reassessed up to 22 per
year, except upon change of ownership or new construction, recent purchasers
of taxable property in California may pay substantially higher property
taxes than long-time owners of comparable property in a community. The
Supreme Court in the West Virginia case expressly declined to comment in any
way on the constitutionality of Proposition 13.
Based on this decision, however, several property owners in California
have brought suits challenging the acquisition value assessment provisions
of Proposition 13. After losing in the trial courts, property owners'
appeals were heard before three State Courts of Appeal in late 1990. On
December 3, 1990, the Court of Appeal for the Second District in the case
of Nordlinger v. Lynch, 225 Cal.App.3d 1259, upheld Proposition 13's
assessment rules. On February 28, 1991, the State Supreme Court denied the
property owners request to review that decision. On December 19, 1990, the
State Court of Appeal for the First District reached a similar conclusion in
the case of R.H. Macy & Co. v. Contra Costa County, 226 Cal.App.3d 352, as
did the State Court of Appeal for the Fourth District on April 10, 1991 in
Northwest Financial. Inc. v. State Board of Equalization. et al. The State
Supreme Court also denied review in the R.H. Macy case on February 28, 1991,
however the United States Supreme Court on June 3, 1991 agreed to hear an
appeal by R.H. Macy challenging Proposition 13 as a violation of the equal
protection and commerce clauses of the federal Constitution. R. H. Macy
subsequently withdrew the case for business reasons. Subsequent to such
withdrawal, on October 7, 1991 the United States Supreme Court accepted
review of Nordlinger v. Lynch. Oral arguments in Nordlinger v. Lynch were
held in February, 1992, and a decision is expected before the end of the
Court' s term in July 1992. If the courts strike down the assessment rules
of Article XIII A, it is not known what rules will then become operative.
Further legislation is also possible. The County cannot predict what impact
any of these developments might have on the County or on the County's
ability to meet its obligations.
Legislation Implementing Article XIII A
Legislation has been enacted and amended a number of times since 1978 to
implement Article XIII A. Under current law, local agencies are no longer
permitted to levy directly any property tax (except to pay voter-approved
indebtedness) . The property tax is automatically levied by the county and
distributed according to a formula among taxing agencies. The formula
apportions the tax roughly on proportion to the relative shares of taxes
levied prior to 1978.
Increases of assessed valuation resulting from reappraisals of property
due to new construction, change in ownership or from the 2X annual
adjustment are allocated among the various jurisdictions in the "taxing
area" based upon their respective "situs" . Any such allocation made to a
local agency continues as part of its allocation in future years.
-25-
All taxable property is now shown at full market value on the tax roll.
Consequently, the tax rate is expressed as $1 per $100 of taxable value.
All taxable property value included in this Official Statement is shown at
1002 of market value (unless noted differently) and all tax rates reflect
the $1 per $100 of taxable value.
Article XIII B .of the California Constitution - Appropriations Limitations
An initiative to amend the California constitution entitled "Limitation
of Government Appropriations" was approved on September 6, 1979 thereby
adding Article XIII B to the California Constitution ("Article XIII B") .
Under Article XIII B state and local governmental entities have an annual
"appropriations limit" and are not permitted to spend certain moneys which
are called "appropriations subject to limitation" (consisting of tax
revenues, unrestricted state subventions and certain other funds) in an.
amount higher than the "appropriations limit" . Article XIII B does not
affect the appropriation of moneys which are excluded from the definition of
"appropriations subject to limitation", including debt service on
indebtedness . existing or authorized as of January 1, 1979, or bonded
indebtedness subsequently approved by voters.. In general terms, the
"appropriations limit" is to be based on certain 3.978-79 expenditures, and
is to be adjusted annually to reflect changes in consumer prices,
populations and services provided by these entities. Among other provisions
of Article XIII B, if these entities' revenues in any year exceed the
amounts permitted to be spent, the excess would have to be returned by
revising tax rates. or fee schedules over the , subsequent two years. See
"Proposition 111: Revisions to Proposition 98 and Article XIIIB" below.
On June 25, 1991 the County Board of Supervisors adopted an
appropriations limit of $548,236,739 for the 1991-92 fiscal year. Based on
the proposed budget, the appropriations subject to the limit will be
approximately $333,841,380 below the limit. The County does not anticipate
any difficulty in operating within the appropriations limit.
Following is a comparison of the County's appropriations limit and
appropriations subject to the limit for the years 1984-85 through 1991-92.
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COUNTY OF CONTRA COSTA APPROPRIATIONS LIMITS
FISCAL YEARS 1984-85 THROUGH 1991-1992
Appropriations Appropriations Amount Under
Limit Subject to Limit Limit
1984-85 $159,594,636 $117,679,677 $ 41,914,959
1985-86 167,670,124 138,715,182 28,954,942
1986-87 175,792,151 164,371,632 11,420,519
1987-88(1) 230,358,035 158,992,009 71,366,026
1988-89(1) 291,748,451 173,744,698 118,003,753
1989-90(1) 359,638,316 185,769,935 173,868,381
1990-91(1) 438, 794,709 202,766,955 236,017.,754
1991-92 548,236,739 214,395,359 333,841,380
(1) Modified based on Proposition 111 requirements
Source: County Auditor-Controller
Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived
from most utility property assessed by the State Board of Equalization
("Unitary Property") , commencing with the 1988/89 Fiscal Year, will be
allocated as follows: (1) each jurisdiction will receive up to 1022 of its
prior year State-assessed revenue; and (2) if county-wide revenues generated
from Unitary Property are less than the previous year's revenues or greater
than 1022 of the previous year' s revenues, each jurisdiction will share the
burden of the shortfall or excess revenues by a specified formula. This
provision applies to all Unitary Property except railroads, whose valuation
will continue to be allocated to individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of the
assessment of any State assessed properties nor a revision of the methods of
assessing utilities by the State Board of Equalization. Generally, AB 454
allows valuation growth or decline of Unitary Property to be shared by all
jurisdictions in a county.
Statutory Limitations
On. November 4, 1986, California voters approved an initiative statute
known as Proposition 62, which added section 53720 et sec . to the California
Government Code. This initiative (i) requires that any tax for general
governmental purposes imposed by local government be approved by resolution
or ordinance adopted by two-thirds vote of the governmental entity's
legislative body and by a majority of the electorate of the government
entity, (ii) requires that any special tax (defined as a tax levied for
other than general government purposes) imposed by a local governmental
entity be approved by . a two-thirds vote of the voters within that
jurisdiction, (iii) restricts the use of revenues from a special tax to the
purposes or for the service for which the special tax is imposed, (iv)
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1 1
prohibits the imposition of ad valorem taxes on real property by local
governmental entities except as permitted by Article XIII A, (v) prohibits
the imposition of transaction taxes and sales taxes on the sale of real
property by local governments, (vi) requires that any tax imposed by a local
government on or after August 1, 1985 be ratified by a majority vote of the
electorate within two years of the adoption' of the initiative or be
terminated by November 15, 1988, (vii) requires that, in the event a local
government fails to comply with the provisions of this measure, a reduction
in the amount of property tax revenues allocated to such local government
must occur in an amount equal to the revenues received by such entity
attributable to the tax levied in violation of the initiative, and (viii)
permits these provisions to be amended exclusively by the voters of the
State of California.
Recent decisions of the State Court of Appeal (City of Westminister v.
County of Orange) held that the provisions of Proposition 62 insofar as they
purported to apply to a city's utility user tax enacted after August 1, 1985
and prior to November 15, 1988, being the so-called "window period, " was
unconstitutional. The case of Woodlake v. Logan, rendered in May, 1991,
struck down the provisions requiring submission of general fund tax measures
to the electorate leaving only the question of validity and effect of the
provisions requiring a 2/3rds electorate approval of special tax measures.
This issue is involved in the case of Rider v.. County of San Diego,
wherein the plaintiffs challenged the validity of the San Diego County
Regional Justice Facility Financing Act authorizing it county-wide sales tax
to finance criminal justice facilities by majority vote of the electorate.
The Court of Appeal, Fourth District, Division 'Two, held that even though
the sales tax be considered a special tax, it was still valid because
Proposition 62 violated Article II, Section 9, Subdivision (a) of the State
Constitution by submitting a tax levied for the "usual current expenses" of
local government to an election requirement. The State Supreme Court
reversed the Court of Appeal decision on Article XIII A, but specifically
declined to address the question under Proposition 62.
Proposition 98
On November 8, 1988 voters approved an initiative known as Proposition
98, a combined initiative constitutional amendment and statute called the
"Classroom Instructional Improvement and Accountability Act" (the "Act") .
The Act changed State funding of public education below the university level
and the operation of the State' s Appropriations limit. by guaranteeing State
funding for K-12 school districts and community college districts
(hereinafter referred to as "K-14 school districts") at a level equal to the
greater of (a) the same percentage of General ,Fund revenues as actually
appropriated to such districts in 1986-87, and (b) the amount actually
appropriated to such districts from the General Fund in the previous year,
adjusted for increases in enrollment and changes in the cost of living. See
"Proposition 111: Revisions to Proposition 98 and Article XIII B" below.
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1
Proposition 111: Revisions to Proposition 98 and Article %III B
On June 5, 1990 the voters approved "The Traffic Congestion Relief and
Spending Limitation Act of 1990", hereafter "Proposition 111", which
modified the Constitution to alter the spending limit and the education
funding provisions of Proposition 98. Proposition 111 took effect on July
1, 1990.
The most significant provisions of Proposition 111 are summarized below:
Adjustments. The annual adjustments to the spending limit were
liberalized to be more closely linked to the rate of economic growth.
Instead of being tied to the Consumer Price Index, the "change in the
cost of living" will be measured by the change in California per capita
personal income. The definition of "change in population" specifies
that a portion of the State's spending limit will be adjusted to reflect
changes in school attendance.
Treatment of Excess Tax. "Excess" tax revenues were determined based on
a two-year cycle, so that the State can avoid having to return to
taxpayers excess . tax revenues in one year if its appropriations in the
next fiscal year were under its limit.
Exclusions from Spending Limit. Two new exceptions were added to the
calculation of appropriations which are subject to the limit. First,
there are excluded all appropriations for "Qualified Capital Outlay
Projects" as defined by the Legislature. Second, there are excluded any
increases in gasoline taxes above their current 9 cents per gallon
level, sales and use taxes on such increment in gasoline taxes, and
increases in receipts from vehicle weight fees above the levels in
effect on January 1, 1990. These latter provisions are needed to make
effective the transportation funding package approved by the Legislature
and the Governor, which counts on raising over $15 billion in additional
taxes over the next several years to fund transportation programs.
Recalculation of Appropriations Limit. The Appropriations Limit for
each unit of government, including the State, is recalculated beginning
in the 1990-91 fiscal year, based on the actual limit for the 1986-87
fiscal year, adjusted forward to 1990-91 as if Proposition 111 had been
in effect.
Further Initiatives
Article XIII A, Article XIII B and Propositions 62, 98 and 111 were each
adopted as measures that qualified for the ballot pursuant to California's
initiative process. From time to time other initiative measures could be
adopted, further affecting County revenues or the County's ability to expend
revenues.
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THE PROJECT
i
Proceeds from the sale of the 1992 Certificates will be used (i) to
finance all of the cost of the design, engineering, construction management
and construction of the replacement of the major county hospital facility
located in Martinez, California, known as ,Merrithew Memorial Hospital;
(ii) to fund capitalized interest on the 1992 Certificates to March 1, 1998,
(iii) to fund a Certificate Reserve Fund deposit and (iv) to pay certain
expenses of the 1992 Certificate transaction.
I
Background
Contra Costa County Hospital was established in 1914. The major
portions of the current main hospital were constructed in the 1940' s and
1950' s. Though still in service, a majority of the hospital' s physical
plant and systems are out-of-date and at or beyond the limits of their
projected "useful life" . Many of the facilities generally do not meet the
standards of current health, safety, building, and engineering codes,
although code divergences have been allowed under "grandfather" concepts.
Working closely with State and federal officials, the County has already
taken action to rectify certain code violations in order to keep the
facilities certified. Moreover, when the new 'County Hospital is completed,
the County anticipates that all facilities located on the existing hospital
campus will meet or exceed certification requirements.
The County receives funds from the federal Medicare program, the State
of California Medi-Cal program ("Medi-Cal") and private payor payments from
the operation of the County Hospital. The Medicare system reimburses
hospitals for inpatient operating costs for services provided for Medicare
beneficiaries at a predetermined fixed rate established by the Federal
government, which rate is subject to revision. ' Under the Medi-Cal program,
the State of California selectively contracts with hospitals to provide
acute inpatient services to Medi-Cal patients., Stich selective contracting
is made on a flat per diem basis for all srvices provided to Medi-Cal
beneficiaries and, generally, such payments have not increased in relation
to inflation, costs, or other factors. The County renewed its Medi-Cal
contract for one year effective July 9, 1991 through July 10, 1992.
The Board of Supervisors of the County (the "Board") originally adopted
the recommendation to construct a new County Hospital in August, 1983 and
reevaluated the hospital construction proposal in April, 1985. The
evaluation effort culminated in the presentation of a report entitled "The
Future of Publicly-Sponsored Health Services" to' the Board of Supervisors in
January, 1986. The report included a summary of various options reviewed by
the hospital task force, including maintaining; the status quo, remodeling
the existing hospital structure, rebuilding the hospital, closing the
hospital, creating a countywide hospital district, leasing space in other
facilities, transfering governance to a nonprofit organization and
contracting- for services in other hospitals.
As a consequence of the task force's recommendation and upon further
analysis of the physical and medical programming aspects of the hospital,
the County has determined that the new hospital campus will be comprised of
-30-
a new, five-story hospital structure dedicated solely to delivery of medical
services, with. existing buildings utilized for hospital administrative
functions, housing of the psychiatric ward, support services, and food
service. The current 144-bed proposal reflects the policy of the Board ,to
build a smaller project and to contract with private hospitals to meet some
of the growing needs for health care services in the County. The County's
population has more than doubled since the 1950's when much of the current
facility was built, yet the hospital as proposed will be smaller than the
current facility in terms of bed capacity. This proposal is consistent with
recommendations from the 1988-89 grand jury that called for a combination of
replacing the hospital and contracting as the best way to ensure the
availability of health-care services in a large and growing county.
In 1989, the Board contracted with Kaplan/McLaughlin/Diaz to provide
conceptual architectural drawings for the Project. The Board also selected
financial advisors to recommend funding mechanisms for the hospital and
contracted with Medical Planning Associates to work closely with the Health
Services Administration to develop a Master Plan and Facilities. Program to
address the medical programming aspects of the new hospital.
At a public hearing and review of the Project in February 1991, the
Board approved the Master Plan and Facilities Program, authorized the
contract for schematic drawings of the Project, and directed County
officials to prepare a final report concerning the financing and feasibility
of the Project. On March 3, 1992, the Board approved the schematic
drawings, financing plan, and Project schedule for the replacement of
Merrithew Memorial Hospital and directed that construction plans be
completed.
On March 10, 1992, the Board adopted findings that the Project is exempt
from the California Enviromental Quality Act, owing to the fact that it is a
replacement of an existing facility.
In addition to the current Project, the County anticipates spending an
additional $20 million to finance the acquisition, construction, and
equipping of emergency health care facilities and public health clinics in
the eastern and western portions of the County. The cost of these projects
will be paid from additional certificates of participation, State and
federal reimbursements, patient revenue, or a combination thereof.
Location of the Project
The Project site is located on the current campus of Merrithew Hospital
in the City of Martinez. The location is on Alhambra Street and is
accessible from Highway 4 and Interstate 680. The site is comprised of
approximately 16.2 acres, on the majority of which existing hospital
operations will continue to be conducted as the new hospital is being
constructed. The County has owned the site for one hundred and twenty years
and has determined that it is unencumbered and free of any liens.
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I
Replacement of Merrithew Memorial Hospital
The Project will provide a new, five-floor facility that will serve a
full-service teaching and tertiary care hospital. The new hospital will be
a public hospital owned and operated by the County. In its new quarters,
Merrithew Memorial Hospital will continue its; current affiliation with the
University of California, Davis Medical School.1
i
The Project will consist of one hospital building, landscaping, and
equipment and related facilities. Comprising I approximately 190,000 square
feet, the main hospital building will house approximately 144 inpatient beds
and an emergency room capable of handling 36,600 emergency visits per year.
Together with the County's private contractor 'prog;ram, the new hospital has
been designed to fully meet the County's mandated health care requirements
well into the next century.
Design and Project Management
I
The County has retained Kaplan/McLaughlin/Diaz as design architects for
the Project. This firm will provide all of the design services, with
engineering subspecialities subcontracted toIvarious professional firms.
The basic design contract is estimated to cost approximately $3 million,
with final compensation to be determined during the design development
period that is scheduled to be completed in September, 1992.
I
The County is in the process of selecting a Construction Manager for the
Project. The Construction Manager will formulate a, critical-path timetable
and responsibility schedule for the Project and will be involved in every
step of the process until the Project is completed. The master schedule
calls for the preparation of construction ) documents once the design
development phase is finished in September, 1.992. The construction
documents will required six-month period for completion, during which the
architectural plan will be submitted to ` the State for approval.
Construction contracts limited to site workfare expected to be awarded
during 1993, with the target date for State approval of final contracts
being May, 1994. �.
Construction of the hospital is expected to commence in 1994, with
equipment purchase contracts expected to be awarded in 1994 and 1995. Some
equipment will be utilized in existing facilities awaiting permanent
installation in the completed hospital.
i
The Project is expected to be completed and available to County
residents in 1997.
Project Cost i
I
The County' s current estimate of the total cost of the acquisition,
construction, installation, and equipping of the Project is approximately
$85 million, in dollars inflated to their time of expenditure. The
preconstruction and construction costs are estimated to total $56 million
and the cost of equipment is estimated to total $12 million, with the
balance primarily attributable to design,] project management and
II
I
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I
construction contingencies. The proceeds of the 1992 Certificates will be
used to fund all of these anticipated costs, as well as the Certificate
Reserve Fund, capitalized interest and the costs of issuance. The County
will monitor inflationary trends for equipment and construction costs
throughout the construction period and will adjust these estimates as
appropriate. To guard against unforeseen costs, "the County will incorporate
not-to-exceed clauses in every construction and equipment contract.
To date, the County has negotiated contracts for design services,
construction management, and specialized services, representing $3.5 million
of the $5.0 million total contracted costs estimated for the entire Project.
Payment of Construction and Services from Proceeds of Certificates
As indicated in the Sources and Uses table (see "ESTIMATED SOURCES AND
USES OF FUNDS") , a total of $70,257,443.97 will be deposited into the
Acquisition and Construction Fund and, together with earnings thereon, will
be used to pay all of the design, engineering, construction management,
construction, and equipping of the Project.
The following table indicates the projected monthly funding requirements
for construction of the Project. The County anticipates that sufficient
funds will be available in the Acquisition and Construction Fund, together
with estimated earnings thereon, to meet the indicated schedule.
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MERRITHEV MEMORIAL HOSPITAL REPLACEMENT PROJECT
Projected Monthly Funding Requirements 1992-1997
(In Millions)
Project Pre- Total
Date Desion Management Construction Construction Contingency gouigment OSHPD Misc. -Requirements
.05/13/92 $2,048,000 $2,048,000
06/01/92 0
07/01/92 209,333 $70,000 $33,333 $100,000 412,667
08/01/92 209,333 70,000 33,333 100,000 412,667
09/01/92 209,333 70,000 33,333 100,000 412,667
10/01/92 209,333 70,000 33,333 50,000 362,667
11/01/92 209,333 70,000 33,333 350,000 662,667
12/01/92 209,333 70,000 33,333 50,000 362,667
01/01/93 209,333 70,000 $206,667 $200,000 66,667 752,667
02/01/93 209,333 70,000 206,667 200,000 66,667 752,667
03/01/93 209,333 70,000 206,667 200,000 66,667 752,667
04/01/93 209,333 70,000 206,667 166,667 66,667 719,333 .
05/01/93 209,333 70,000 206,667 166,667 66,667 719,333
06/01/93 209,333 70,000 206,667 166,667 66,667 719,333
07/01/93 15,667 70,000 206,667 166,667 66,667 525,667
08/01/93 15,667 70,000 206,667 166,667 66,667 525,667
09/01/93 15,667 70,000 206,667 166,667 66,667 525,667
10/01/93 15,667 70,000 206,667 166,667 66,667 16,667 542,333 .
11/01/93 15,667 _ 70,000 206,667 166,667 $2,000,000 66,667 16,667 2,542,333
12/01/93 15,667 70,000 206,667 166,667 66,667 16,667 542,333
01/01/94 15,667 70,000 $2,026,667 166,667 850,000 3,129,000
02/01/94 15,667 70,000 2,026,667 166,667 850,000 3,129,000
03/01/94 15,667 70,000 2,026,667 166,667 8:50,000 3,129,000
04/01/94 15,667 70,000 2,026,667 166,667 850,000 3,129,000
05/01/94 15,667 70,000 2,026,667 166,667 8:50,000 3,129,000
06/01/94 15,667 70,000 2,026,667 166,667 8!50,000 3,129,000
07/01/94 15,667 70,000 206,667 2,026,667 166,667 8!$0,000 3,335,667
08/01/94 15,667 70,000 206,667 2,026,667 166,667 8!iO,000 3,335,667
09/01/94 15,667 70,000 206,667 2,026,667 166,667 850,000 3,335,667
10/01/94 15,667 70,000 2,026,667 166,667 850,000 3,129,000
'1/01/94 15,667 70,000 2,026,667 166,667 850,000 3,129,000
12/01/94 15,667 70,000 2,026,667 166,667 850,000 3,129,000
01/01/95 15,667 70,000 2,026,667 133,333 2,245,667
02/01/95 15,667 70,000 2,026,667 133,333 2,245,667
03/01/95 15,667 70,000 2,026,667 133,333 2,245,667
04/01/95 15,667 70,000 2,026,667 116,667 2,229,000
05/01/95 15,667 70,000 2,026,667 116,667 2,229,000
06/01/95 15,667 70,000 2,026,667 116,677 2,229,000
07/01/95 15,667 70,000 1,300,000 116,667 1,502,333
08/01/95 15,667 70,000 1,300,000 116,667 1,502,333
09/01/95 15,667 70,000 1,300,000 116,667 1,502,333
10/01/95 15,667 70,000 1,300,000 116,667 1,502,333
11/01/95 15,667 70,000 1,300,000 116,667 1,502,333
12/01/95 15,667 70,000 1,300,000 116,667 1,502,333
01/01/96 15,667 70,000 1,300,000 16,667 1,402,333
02/01/96 15,667 70,000 1,300,000 16,667 1,402,333
03/01/96 15,667 70,000 1,300,000 16,667 1,402,333
04/01/96 15,667 70,000 1,600,000 16,667 1,702,333
05/01/96 15,667 70,000 1,600,000 16,667 1,702,333
06/01/96 15,667 70,000 1,600,000 16,667 1,702,333
07/01/96 15,667 70,000 6,667 16,667 109,000
08/01/96 15,667 70,000 6,667 16,667 109,000
09/01/96 15,667 70,000 6,667 16,667 109,000
10/01/96 15,667 70,000 85,667
11/01/96 15,667 70,000 85,667
12/01/96 15,667 70,000 85,667
01/01/97 70,000 70,000
02/01/97 70,000 70,000
03/01/97 70,000 70,000
TOTAL $5.218,000 S3,990,000 $3,100,000 $53,000,000 $5.700,000 $12,200.000 $1,000,000 5800,000 $85,008,000
-34.
THE CORPORATION
The Corporation was organized on November 12, 1981, as a nonprofit
public benefit corporation pursuant to the Nonprofit Public Benefit
Corporation Law of the State of California (Title 1, Division 2, Part 2 of
the California Corporations Code) . The Corporation's principal place of
business is in the County.
Powers and Purposes
The purpose of the Corporation is to provide financial assistance to the
County by financing the acquisition, construction, improvement and
remodeling of public buildings and facilities and the acquisition of
equipment for the County and for the Contra Costa County Board of Education,
together with parking, site development, landscaping, utilities, equipment,
furnishings, improvements and all appurtenant and related facilities.
Under its Articles of Incorporation, the Corporation has all powers
conferred upon nonprofit public benefit corporations by the laws of the
State of California, with the limitation that the Corporation shall never
engage in any activity other than such activities as may be incidental to
the purpose of carrying out the primary purpose for which the Corporation
was formed.
Organization
The Corporation functions as an independent entity. The Board of
Directors that governs the Corporation consists of five persons who are
approved by the County and who receive no compensation. The Directors of
the Corporation are as follows:
John E. Whalen, President and Director
Jay de 1'Eau, Vice President and Director
Linton L. Emerson, Jr. , Secretary and Director
Gerald Feagley, Treasurer and Director
Ronald R. McCreary, Director
The Corporation has no employees. All staff work is performed by the
County.
Financial Statements
A copy of the Corporation's latest financial statements will be provided
upon request directed to: Contra Costa County, County Administrator, 651
Pine Street, Martinez, California 94553.
-35-
COUNTY FINANCIAL INFORMATION
Funding of Certain Programs by the State of California
California counties administer numerous health and social service
programs as the administrative agent of the State and pursuant to State
law. Many of these programs have been either wholly or partially funded
with State revenues which have been subject each year to the State budget
and appropriation process. Due to competing program priorities and the lack
of available State funds, some of these programs have had reduced State
support without a corresponding reduction in program responsibilities for
county governments.
In 1991-92, the State and county governments collectively developed a
program realignment system to remove State funding for certain programs from
the State budget process, and at the same time, give counties enhanced
program flexibility in the administration of certain health and welfare
programs. Under this plan, the sales tax was increased by 1/2C and
dedicated to the support of specific health and welfare programs
administered by counties. In addition, vehicle license fees were increased
and this increase was similarly dedicated to supporting these programs.
Thus, counties now receive these funds on a fixed formula under State law
and the flow of these funds is no longer subject to the State budget
process. The program shifted approximately $2.2 billion out of the State
budget process.
There is risk for county governments in this program realignment if
sales tax and vehicle license fee revenues are not realized as expected. If
this occurs, it will be the responsibility of county government to manage
these programs within available funding levels utilizing more flexible
program administrative capacity than has previously been permitted.
The Governor' s Budget for the 1992-93 Fiscal Year, submitted on January
10, 1992, indicated that the State's financial condition had deteriorated
significantly since enactment of the 1991-92 Budget Act on July 16, 1991,
1991. Because of the recession, all major State tax sources were running
below estimates, and estimates for certain expenditure categories were
increased. As a result, the January 1992 Governor's Budget projected that
the General Fund would end the 1991-92 fiscal year in a deficit position,
and that a total budget gap of $1.3 billion needed to be closed by June 30,
1993, in order to pay for programs, pay for the 1991-92 deficit and restore
a $105 million budget reserve.
The County cannot predict what actions ultimately will be taken by the
State Legislature and the Administration to adjust to the 1991-92 State
Budget and deal with the gap for 1992-93. The estimates in the Governor's
Budget will be affected by the future course of the current national
economic recession and other factors.
The Governor and the Legislature are currently considering revisions to
the Governor' s Proposed Budget for 1992-93.
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County Budget
The County has implemented a number of programs to reduce costs,
maximize revenues and maintain sound business practices. The Board of
Supervisors has committed to maintain established reserves and to spend "one
time revenues" on "one time expenditures" . In order to ensure that the
budget remains in balance throughout the fiscal year, periodic reviews are
made of actual receipts and expenditures. On a quarterly basis, the County
Administrator' s staff prepares a report that details the activity within
each budget category and provides summary information on the status of the
budget. Actions which are necessary to ensure a healthy budget status at
the end of the fiscal year are recommended in the quarterly budget status
reports. Other items which have major fiscal impacts are also reviewed
quarterly.
Due to continuing uncertainties over the State budget, the Board of
Supervisors maintained the precautionary freeze imposed on April 17, 1990 on
certain hirings and equipment acquisitions in order to maximize funding
availability for fiscal year 1991-92. The County anticipates a continuation
of the freeze into the 1992-93 fiscal year at the present time.
The County is required by State law to adopt a final balanced budget
each year by the end of August, although the State legislature allows an
annual election by the Board of Supervisors to extend the deadline to
October 2nd of the Budget Year. The Board is reviewing revisions to reflect
projected revenue shortfalls that will require reductions in expenditures.
The following table compares the Proposed and Final 1991-92 Budget totals to
the Proposed and Final 1990-91 Budget totals.
-37-
COUNTY OF CONTRA COSTA
BUDGETS FOR FISCAL YEARS 1990-91 AND 1991-92
(In Thousands)
Proposed Final Proposed Final
1991-92 1991-92 1990-91 1990-91
Bud eg t(1) Budget(2) Bud9,et(3) Budget(4)
REQUIREMENTS
General Government $ 73,234 $ 77,668 $ 67,379 $ 82,497
Public Protection 160,684 160,363 152,277 160,801_
Health & Sanitation 93,163 94,541 86,357 93,237
Public Assistance 217,920 221,287 211,606 227,838
Education 11,358 12,098 10,564 11,928
Public Ways & Facilities 28,519 25,430 12,371 17,211
Recreation & Culture 1 .1 1 1
Reserves & Debt Service 15.100 15.100 14.324 14.936
Total Requirements $599,979 $606,488 $554,879 $608,449
AVAILABLE FUNDS
Property Taxes $ 159,048 $ 155,048 $ 147,072 $ 146,346
Funds Balance Available 18,322 23,427 17,139 30,418
Taxes Other Than Current
Property 16,807 16,912 18,206 15,613
Licenses, Permits
& Franchises 7,677 7,897 8,022 8,271
Fines, Forfeitures
& Penalties 4,419 4,619 5,235 5,039
Use of Money & Property 15,494 14,354 13,459 15,831
Aid from Other Govern-
mental Agencies 300,119 299,132 273,260 288,361
Charges for Current
Services 75,602 81,962 69,622 89,902
Other Revenue 2.491 3.131 2.864 8.668
Total Available Funds $599,979 $606,488 $554,879 $608,449
(1) Proposed Budget adopted on May 21, 1991.
(2) Final Budget undergoing revisions as of March ll, 1992.
(3) Proposed Budget adopted on May 22, 1990.
(4) Adjusted Final Budget as of June 30, 1991.
Source: County Auditor-Controller
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Ad Valorem Property Taxes
Taxes are levied for each fiscal year on taxable- real and prti.-rsonal
property that is situated in the County as of the preceding March 1:... For
assessment and collection purposes, property- is class-ified eithce r as
"secured" or "unsecured, " and is listed accordiing;ly on:. separate pwzts of
the assessment roll. The "secured roll" is that part of the assEUSsment
roll containing State assessed property and p.rape-rty secured., by a-. X114ien on
real property which is sufficient, in the opinion of the-: Asses.&^.nor, to
secure payment .of the taxes. Other property..? is a.s:stess'ed on. "`unsaecured
roll. "
Property taxes on the secured roll are due: in two installmeuAts, .on
November 1 and February 1 of each fiscal year:: If unpaid, such ;:taxes
become delinquent on December 10 and April 1111, respectively, and ra ten
percent penalty attaches to any delinquent~ payment. In add_,;�tion,
property on the secured roll with respect to. which taxes are delirnquent
is declared to be in default on or about June 30 of. the- fiscal Yyear.
Such property may thereafter be redeemed by- payment of- the- delirnpuent
taxes and the delinquency penalty, plus a redemption penalty af- once and
one half percent per month to the time of redemption. It taxes are
unpaid for a period of five years or more, thew tax-defaultedproper-tty is
declared to be subject to the Treasurer-Tax Callector:'s power of sala-e and
may be subsequently sold by the Treasurer-Tax CA lector..
Legislation established the "supplemental roll" i.n:. 19.84` which.- charects
the Assessor to reassess real property, at market value,. on the datme -the
property changes ownership or upon completion. of construction. Pr.ce'perty
on the supplemental roll is eligible for bialing 30. days: after the
reassessment and notification to the new assessees. The result:ant: ccharge
(or refund) is a one.-time levy on the increase Cor decrease)= in v.a:l-ue for
the period between the date of the change in•. ownership or- c-amplet>ion of
construction and the date of the next regul&.r tax roll, upon. whir<h the
assessment is entered.
Billings are made on a monthly basis and due on the. dAte: maileed. If
mailed between the months of July through October, the £.first. inst&)llment
becomes delinquent on December 10th and the second on. AFraa. Wttc.. -If
mailed within the months of November through ,Tune, the fa'rst.. i7rRta,lllment
becomes delinquent on the last day of the mouth following.. the mviTith of
billing. The second installment becomes delinquent on the las=t cday of
the fourth month following the date the first i rs:tallment . ks deairrgwent.
Property taxes on the unsecuredroll are due as of. the. March. -'Q lien
date and become delinquent, if unpaid, on August 31.. A t=en 1p:ercent
penalty attaches to delinquent taxes on prope-rty on the: unse:cure& Droll,
and an additional penalty of one and one-half pe=rcent pe:r month bee,�ins to
accrue beginning November 1. The taxing at ha=s four ways of
collecting unsecured personal property taxes:: (1) by filing: a civil
action against the taxpayer, (2) by filing a certificate in the,, off ice of
the County Clerk specifying certain facts in ox.der to obtain a j:ux4gment
lien on certain property of the taxpayer; (3) by filing a cer.ti:fic.:ate of
delinquency _ for recordation in the County Reco der's officey_, int: arrUer to
-39-
obtain a lien on certain property of the taxpayer; and (4) by the seizure
and sale of personal property, improvements or possessory interest,
belonging to the taxpayer.
The County and its political subdivisions operate under the
provisions of Sections 4701-4717 of the California Revenue and Taxation
Code. Pursuant to those sections, the accounts of all political
subdivisions that levy taxes on the County secured -tax roll are credited
with 100x of :their respective tax levies regardless of actual payments
and delinquencies. The County Treasury's cash position (from taxes) is
protected by a special fund (the "Tax Losses Reserve Fund") into which
all county-wide delinquent penalties are deposited. The County has used
this method since fiscal year 1950-51.
4
A recent history of Contra Costa County tax levies, delinquencies and
the Tax Losses Reserve Fund cash balances as of June 30 of various years
is shown below.
I
�. COUNTY OF CONTRA COSTA
SUMMARY OF ASSESSED VALUATIONS
AND
AD VALOREN PROPERTY TAXATION
FISCAL YEARS 1984-85 THROUGH 1992-93
Secured Current Percentage Tax Losses
Property Levy Current Levy Reserve Fund
Fiscal Assessed Tax Delinquent DeLinquent Balance
Year Valuation Levies June 30 June 30 June 30
1984-85 $29,373,354,335 $356,956,194 $10,646,452 2.98% $18,166,548
1985-86 32,341,318,373 403,053,585 11,865,967 2.514 22,766,159
1986-87 35,941,605,782 436,570,280 12,330,764 2.82 17,393,902
1987-88 40,083,490,940 487,158,795 13,955,266 2.86 18,430,198
1988-89 44,101,311,276 535,212,918 13,387,564 2.50 20,125,551
1989-90 48,641,369,485 593,937,412 14,746,710 2.48 21,797,766
1990-91 54,114,860,918 669,071,124 19,762,687 2.95 24,093,615
1991-92 58,422,186,087 720,000,000* 21,240,000* 2.95* 26,400,000*
1992-93 62,500,000,000* -- -- -- --
* Estimated
Source: County Auditor-Controller
During fiscal year 1990-91, the Tax Losses Reserve Fund grew to
$28.2 million and was reduced to $24.1 million, with the difference credited
to the County General Fund as provided by Section 4703 of the California
Revenue and Taxation Code. Section 4703 allows any county to draw down the
Tax Losses Reserve Fund to a balance equal to three percent of the total of
all taxes and assessments levied on the secured roll for that year if the
-40-
secured tax delinquency has been three percent or less for the preceding
three consecutive years. After utilizing this procedure, if the County has
a rate of secured tax delinquency that exceeds three percent of the ,total of
all taxes and assessments levied on the secured roll, the Tax Losses Reserve
Fund must accumulate to a balance equal to four percent of the total of all
taxes and assessments levied on the secured roll for that fiscal year and
remain at that level until the County has three consecutive years in which
the secured tax delinquency rate is under three percent.
Largest Taxpayers
The ten (10) largest taxpayers in the County, as shown on the fiscal
year 1990-91 secured tax roll, and the approximate amounts of their property
tax payments for all taxing jurisdictions within the County, are shown
below. These ten largest taxpayers paid a total of $84.2 million in taxes,
or about 13.2 percent of the County's 1990-91 secured tax collection.-
COUNTY
ollection:COUNTY OF CONTRA COSTA
TEN LARGEST PROPERTY TAXPAYERS
Total Taxes
Company Paid 1990-91
Chevron USA $23,877,566
Pacific Gas & Electric Company 16,365,677
Pacific Bell 11,811,418
Shell Oil Company 7,876,403
USS POSCO 5,555,444
Union Oil Company of California 5,452,473
Tosco Corporation 5,156,635
Gaylord Container 3,141,568
Dow Chemical Company 2,552,627
Bank of America 2,401,613
TOTAL $84,191,474
Source: County Treasurer-Tax Collector
Redevelopment Agencies
The California Community Redevelopment Law authorizes city or county
redevelopment agencies to issue bonds payable from the allocation of tax
revenues resulting from increases in full cash values of properties within
designated project areas. In effect, local taxing authorities other than
the redevelopment agency realize tax revenues only on the "frozen" tax
base. The following table shows redevelopment agency full cash value
increments and tax allocations for agencies within the County.
-41-
COMMUNITY REDEVELOPMENT AGENCY PROJECTS
FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS
FISCAL YEARS 1983-84 THROUGH 1991-92
Fiscal Base Year Full Cash Value Total Tax
Year Value Increment(1) Allocations(2)
1983-84 $ 834,968,224 $ 1,382,950,214 $15,949,939
1994-85 860,524,411 1,406,614,952 16,213,428
1985-86 896,827,692 1,660,846,273 19,399,159
1986-87 896,827,692 2,032,691,693 22,571,035
1987-88 969,566,378 2,618,912,341 28,863,403
1988-89 1,342,442,031 2,845,683,596(3) 33,282,273
1989-90 1,591,934,101 3,275,371,212(3) 35,326,113
1990-91 1,696,768,706 3,966,154,674(3) 42,171,285
1991-92 1,806,223,553 4,573,718,772(3) 48,590,841
(1) Full cash values for all redevelopment projects above the "frozen"
base year valuations. These data represent growth in full cash
values generating tax revenues for use by the community redevelopment
agencies.
(2) Actual tax revenues collected by the County and subsequently paid to
the community redevelopment agencies.
(3) Does not include unitary and operating non-unitary utility roll
values which, starting with fiscal year 1988-89, are determined by
the State Board of Equalization on a countywide basis as provided by
Assembly Bill 454, Chapter 921, Statutes of 1987.
Source: County Auditor-Controller
Accounting Policies, Reports and Audits
The County's accounting policies used in preparation of its audited
financial statements conform to generally accepted accounting principles
applicable to counties. The County's governmental funds and fiduciary
funds use the modified accrual basis of accounting. This system
recognizes revenues when they become available and measurable.
Expenditures, with the exception of unmatured interest on general
long-term debt, are recognized when the fund liability is incurred.
Proprietary funds use the accrual basis of accounting, and revenues are
recognized when they are earned and become measurable, while expenses are
recognized when they are incurred.
The County Treasurer also holds certain trust and agency funds not
under the control of the Board of Supervisors, such as those of school
districts, which are accounted for on a cash basis.
The California Government Code requires every county to prepare an
annual report. The Auditor-Controller prepares the Comprehensive Annual
Financial Report for the County. This annual report covers financial
operations of the County, County districts and service areas, local
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51
1 1
autonomous districts and various trust transactions of the County
Treasury. Under California law, independent audits are required of all
operating funds under the control of the Board of Supervisors. The
County has had independent audits for more than 20 years. Additionally,
the County Grand Jury may also conduct management audits of certain
offices of the County. Funds accounted for by the County are categorized
as follows:
General County Funds. The general County funds consist of the
General Fund and other operating funds. The General Fund is used to
account for the revenues and expenditures of the County that are not
accounted for by other funds. The other operating funds are used to
account for the proceeds from specific revenue sources (other than
special assessments) or to account for the financing of specific
activities as required by law or administrative regulations.
Special District Funds Under Control of Board of Supervisors. These
funds are used to account for the transactions of fire protection
districts, flood control and storm drainage districts, sanitation
districts and county service areas under the control of the Board of
Supervisors.
Special District_ Funds Under Control of Local Boards and School
District Funds. These funds are used to account for cash received
and disbursed and cash and investments held by the County for
districts controlled by local boards. These districts maintain their
own accounting records supporting their separate financial statements
which are subject to separate audit under California law.
Trust and Agency Funds. Trust and Agency funds are used to account
for money and other assets received and held as trustee, custodian or
agent for individuals and governmental agencies.
Hospital Enterprise Fund. In 1978-79 Contra Costa County established
an enterprise fund (the "Hospital Enterprise Fund") to account for
activities of the County Hospital, the outpatient clinics located
throughout the county and various other facilities involved in
providing health care services to County residents. Under the
enterprise fund basis of accounting, the accounts and records of the
Hospital Enterprise Fund are maintained in essentially the same
manner as those of private sector hospitals. Revenues (primarily
revenues from patient services, state and federal grants and
operating transfers from the General Fund) and expenses (including
depreciation and overhead) are accounted for on a full accrual basis.
The Hospital Enterprises Fund is an integral part of the County's
Comprehensive Annual Financial Report (CAFR) . As such, the accounts
and records of the fund are reviewed as part of the County' s annual
financial audit.
The Balance Sheet and Statement of Revenues, Expenses and Changes in
Retained Earnings for the County General Fund and for the Hospital
Enterprise Fund for the 1988-89, 1989-90 and 1990-91 fiscal years are
presented below:
-43-
COUNTY OF CONTRA COSTA
GENERAL FUND BALANCE SHEET
JUNE 30, 1991
(WITH COMPARATIVE TOTALS FOR JUNE 30, 1989 and 1990)
(In Thousands)
Assets 1991 1990 1989
I
Cash and investments $ 81,572 $ 79,886 $ 61,658
Accounts receivable and accrued
revenues 42,787 39,067 30,339
Due from other funds 32,637 25,292 26,540
Inventories 1,217 1,112 11190
Prepaid expenses and deposits 5,227 I 5,540 10,706
Advances to other funds 2,137 ( 2.211 2.922
TOTAL ASSETS $165,577 $153,108 $133.355
Liabilities:
Short term obligations $ 65,000 $ 57,000 $ 45,000
Accounts payable and accrued
liabilities 22,743 20,499 16,024
Due to other funds 14,299 5,994 10,100
Welfare program advances 6,856 4,989 6,071
Deferred revenue 5,054 4.343 4.263
TOTAL LIABILITIES S113.952 f S 92,825 S 81.458
Fund Balance:
Reserved for:
Encumbrances $ 10,119 $ 10,125 $ 6,802
Inventories 1,217 I 1,112 1,190
Prepaid expenses and deposits 5,227 5,540 10,706
Advances to others . 2,137 2,211 2,922
Unreserved:
Designated for authorized
expenditures 2,325 j 13,165 6,491
Designated for equipment `
replacement 4,814 4,544 3,589
Designated for trial f
court funding 495 ---- ----
Undesignated 25.291 23.586 20.197
Total fund equity 51,625 60,283 51,897
TOTAL LIABILITIES AND
FUND EQUITY $165.577 . $153.108 $133.355
4
Source: County Auditor-Controller `
I
-44-
i
COUNTY OF CONTRA COSTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL - BUDGETARY BASIS
YEAR ENDED JUNE 30, 1991
(VITH COMPARATIVE TOTALS FOR JUNE 30, 1990)
(In Thousands)
1990-91
Variance
Favorable 1989-90
Budget Actual (Unfavorable) Actual
Revenues:
Taxes 5152,311 $151,363 $ (948) $141,830
Licenses, permits & franchises 8,271 7,100 (1,171) 7,.271
Fines, forfeitures & penalties 51039 4,530 (509) 4,525
Use of money & property 15,806 14,598 (1,208) 16,242
Aid from other government agencies 287,596 286,543 (1,053) 261,611
Charges for services 89,662 77,306 (12,356) 69,274
Other revenue 8,575 7,584 (991) 2,455
TOTAL REVENUES 567,260 549,024 (18,236) $503,208
Expenditures:
Current:
General government 82,369 68,201 14,168 S 58,592
Public protection 159,324 151,801 7,523 137,486
Health & sanitation 66,682 64,543 2,139 59,528
Public assistance 227,838 224,794 3,044 201,808
Education 116 112 4 108
Public ways and facilities 17,211 14,189 3,022 8,355
Recreation and park 1 -- 1 --
Interest 4,687 4,642 45 3,943
Capital outlay* 25,815 (25,815) 15,251
TOTAL EXPENDITURES 558,228 554,097 4,131 $485,071
Excess (deficiency) of revenues
over (under) expenditures 9,032 (5,073) (14,105) 18,137
Other financing sources (uses):
Operating transfers in --- _ --- --- 194
Operating transfers out (28,032) (29,372) (1,340) (25,196)
Capital lease financing 25,815 25,815 -- 15,251
Total other financing
sources (uses) (2,217) (3,557) (1,340) (9,751)
Excess (deficiency) of revenues
and other sources over (under)
expenditures and other
financing uses 6,815 (8,630) (15,445) 8,386
Fund balances at beginning of year 60,283 60,283 -- 51,897
Adjustment of fund balance (28) (28) - --
FUND BALANCES AT END OF YEAR S 67.070 S 51.625 5(15.445) $ 60.283
* These entries are required by NCGA Statement 5 to disclose the value of fixed assets
acquired during the year under lease purchase agreements. The County does not
appropriate these amounts since they apply to future years.
Source: County Auditor-Controller
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COUNTY OF CONTRA COSTA
HOSPITAL ENTERPRISE FUND
COMBINING BALANCE SHEET
FOR YEARS ENDING JUNE 30, 1989, 1990 fx 1991
(In Thousands)
I
1991 1990 1989
Assets•
Cash and investments $ 9,429 $ 10,624 $ 9,157
Accounts receivable
and accrued revenue 11,143 8,496 3,756
Due from other funds 4;485 5,723 4,106
Inventories 738 619 477
Prepaid items and deposits 5 0 3
Fixed assets, net 11.627 1.2.183 9.985
Total Assets 37 27 , 7.645 27 484
LIABILITIES AND FUND EQUITY
Liabilities:
Accounts payable and
accrued liabilities $ 8,333 $12,774 $ 8,385
Employee benefits payable 2,687 2,353 2,088
Due to other funds 5,510 5,611 4,838
Capital lease obligations 2,771 i 3,517 1,882
Deferred credits 6.978 i _ -- --
Total Liabilities $26,279 ,, 24.255 $17,193
Fund Equity:
Contributed- capital $ 6,613 $ 7,850 $ 7,700
Retained earnings 4.535 _5.540 2,591
Total Fund Equity S11.148 ,$113.390 $10,291
i
TOTAL LIABILITIES
AND FUND EQUITY 37 427 , 37.645 $27,484
f
I
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I
I
i
COUNTY OF CONTRA COSTA
HOSPITAL ENTERPRISE FUND
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN RETAINED EARNINGS
FOR YEARS ENDING JUNE 30, 1989, 1990 & 1991
(In.Thousands)
1991 1990 1989
Operating, Revenues:
Charges for current services S74.541 $68,968 S54,994
Total Operating Revenues 74.541 68.968 54.994
Operating Expenses:
Salaries and employee benefits 63,491 . 55,030 48,270
Services and supplies 30,696 29,583 23,184
Depreciation 1.888 1.457 1.238
Total Operating Expenses 96.075 86.070 72.692
Operating loss before
operating transfers (21,534) (17,102) (17,698)
Nonoperating revenues (expenses) :
Nonoperating expense --- (365) ---
Interest Income 156 --- ---
Total nonoperating revenues
(expenses) 156 (365) 0
Operating transfers in 20,598 20,416 18,563
Operating transfers out (225) --- - -
Total operating transfers 20,373 20,416 18,563
Net income (loss) (1,005) 2,949 865
Retained earnings at
beginning of year 5.540 2.591 1.726
Retained earnings (deficit)
at end of year 535 5.540 2,591
Tax and Revenue Anticipation Notes Borrowing
For the last several years, the County has issued tax and revenue
anticipation notes to cover temporary deficits occurring in the fiscal
year during which they were issued. The County has not failed to repay
any of these notes. The County anticipates issuing tax and revenue
anticipation notes during July of 1992 in the approximate amount of
$70,000,000.
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i
County Employees
i
A summary of County employment follows:
i
COUNTY OF CONTRA COSTA
COUNTY EMPLOYEES (1)
Number of Number of
As of Permanent As of Permanent
June 30 Employees June 30 Employees
I
1980 5,960 1986 5,968
1981 6,052 1987 6,111
1982 6,063 1988 6,317
1983 5,915 198.9 6,463
1984 5,743 1990 6,635
1985 5,791 1991 7,008
(1) Excludes temporary or seasonal employees.
Source: County Personnel Department
I
County employees are represented by 25 bargaining units of 11 labor
organizations, the principal ones being Local 1 of the County Employees
Association and the Clerical Employees Union which, combined, represent
approximately 43Z of all County employees in a variety of classifications.
The County, has had a positive employee relations program, and has
enjoyed successful negotiations of cost effective agreements over the
years. The current labor agreements covering the majority of county
employees expire on September 30, 1993.
I
Retirement Programs and Pension Obligations
The County has a retirement plan administeired by the " Employees'
Retirement System of the County that covers substantially all employees
and to which contributions are made by both the County and the
employees. The plan provides basic death, disability and service
retirement benefits based on specified percentages of monthly salaries
and, in addition, provides annual cost-of-living adjustments after
retirement. As of January 1, 1991 there were 62331 active general members
and 1552 active safety members (police and fire) including employees of
certain other governmental agencies. Retired members total 3718.
County contributions are based on percentages of salaries as
determined by an actuary and adopted by the Board. The County' s policy
is to fund expected basic benefits over the average working lifetime of
present members, except that unfunded prior service costs arising from
plan amendments, actuarial gains and losses or, other factors are funded
over 21.5 years. Beginning August 1, 1980 the County Retirement System
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implemented a new system whereby new general employees participate in a
reduced program, paying roughly half of the premiums and receiving half
of the benefits at retirement. Existing general employees were permitted
to transfer to the new program for .future credit only.
Pursuant to the County Employees' Retirement Law of 1937, actuarial
valuations of the retirement .system are required at least every three
years. The County Retirement Systems actuaries estimated the minimum
contribution provision for the fiscal year ended June 30, 1990 to be
approximately $43.3 .million. Contributions made by the County and by
County employees for the year ended June 30, 1990 were approximately
$31.3 million and $7.7 million, respectively. The Retirement Board has
agreed to transfer approximately $9.5 million from its undistributed
earnings account against contribution from employer and employees for the
cost of living program.
For the year ended December 31, 1990, total contributions to and
earnings of the Country' s Retirement Fund were $102.8 million, with
payment to current retired employees of $42 million. The Retirement Fund
is approximately 96Z funded.
Insurance and Self-Insurance Program
The County is self-insured for claims relating to public liability
(excluding the airport) , automobile accidents and medical malpractice.
It is the County' s policy to appropriate annually sufficient funds to
cover the estimated liability of the County for self-insurance claims to
be made during the upcoming fiscal year. Whenever a claim is made, the
claim is evaluated and a portion of the appropriated funds is reserved to
satisfy the County' s estimated liability for such claim. Although the
County believes that its past experience enables it to evaluate
reasonably its liability for self-insurance claims, no assurance can be
made that the amount reserved for such purpose will be adequate, nor can
there be any assurance that the funds appropriated to satisfy claims
arising during any fiscal year will be sufficient.
Future Financings
The County intends to issue approximately $70 million of short-term
notes during the 1992 calendar year, and is presently considering
refunding an outstanding issue in the amount of $30 million.
The County Capital Program includes current planning for conversion
of leased buildings for Social Service, Probation and Health Services to
long-term, lease purchase Certificate of Participation issues during
calendar year 1992. Longer-range plans are on-going for additional and
replacement court facilities for both the Superior and Municipal Courts .
in the County.
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County Debt
While the County has no direct general obligation bonds outstanding,
the County does have lease revenue obligations. ) In addition, the County
contains numerous municipalities, school districts and special purpose
districts, as well as the overlapping Bay Area Rapid Transit District and
the East Bay Municipal Utility District, which have issued general
obligation bonded indebtedness. A statement hof overlapping debt is
presented on the next page. Some of these debt issues may be payable
from self-supporting enterprises or revenue sources other than property
taxation. j
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CONTRA COSTA COUNTY
Direct and Overlapping Bonded Debt
1991-92 Assessed Valuation: $53,729,295,285 (after deducting $4,692,890,798 redevelopment
incremental valuation; includes unitary utility valuation)
DIRECT AND OVERLAPPING BONDED DEBT: % Applicable Debt 4/1/92
Contra Costa County Authorities 100.% $ 226,855,000(1)
Contra Costa County Board of Education 100. 4,260,000
Alameda-Contra Costa Transit District Certificates of Participation 11.837 3,310,809
San Francisco Say Area Rapid Transit District 30.846 97,288,284
East Bay Municipal Utility District and Special District #1 48.770 9 5.857 23,586,976
Richmond Unified School District Certificates of Participation 100. 7,535,000
San Ramon Valley Unified School District and
Educational Facilities Corporation 100. 64,445,000
Martinez Unified School District 100. 24,570,000
Acalanes and Liberty Union High School District 100. 43,440,000
Oakley Union School District Certificates of Participation 100. 8,520,000
Other School Districts and School Building Corporations 100.(2) 19,877,992
City of Richmond General Fund Obligations 100. 16,660,000
City of Antioch and General Fund Obligations 100. 16,208,699
City of Pleasant Hill and General Fund Obligations 100. 15,890,000
City of Hercules and General Fund Obligations 100. 12,830,000
City of San Ramon General Fund Obligations 100. 19,570,120
Other Cities and City Authorities 100. 20,235,346
Hospital Districts and Hospital Authorities 100. 14,775,000
Sanitation and Sanitary Districts 100. 8,482,000
County Water Districts 100. 3,095,000
East Say Regional Park District 45.976 26,752,853
Other Special Districts 100.(2) 8,184,918
Community facilities Districts 100. 74,080,000
1915 Act Assessment Bonds (Estimate) 100. 264,947,473
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT $1,025,400,470(3)
Less: East Bay Municipal Utility District and Special
District #1 (100% self-supporting) 23,586,976
Other self-supporting bonds 5,845,000
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT $ 995,968,494(3)
(1) Includes certificates of participation described herein expected to be sold after April 1, 1992
based on $120,000,000 principal amount.
(2) Various, but mostly 100% applicable.
(3) Excludes revenue, mortgage revenue and tax allocation and non-bonded capital lease obligations.
Ratios to Assessed Valuation:
Direct Debt ($226,855,000) .... 0.42%
Total Gross Debt ........ .. .... 1.91%
Total Net Debt 1.85%
SHARE OF AUTHORIZED AND UNSOLD GENERAL OBLIGATION BONDS:
East Bay Municipal Utility District Special District #1 ......... $948,834
Cities ... . ... ............................................ $7,305,000
Other School Districts .......................................... $358,000
Special Districts ............... ............................. $11,687,000
STATE SCHOOL BUILDING AND REPAYABLE AS OF 6/30/91: $0
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Outstanding Long Term Debt and Lease Obligations
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General Obligation Debt. The County has never defaulted on the payment
of principal or interest on any of its indebtedness. The County has no
direct general obligation bonded indebtedness, the last issue having been
redeemed in fiscal year 1977-78. The County has no authorized and unissued
debt.
Lease Obligations. The County has made use 'of various lease
arrangements with joint powers authorities, nonprofit corporations, and the
County Employees' Retirement Association for the development of capital
projects. The projects are leased to the Countyfor a period of 15 to 30
years. The latest expiration date of these leases is in 2020. As of July
1, 1991, total base rentals payable as pledged security over the remaining
life of these issues was $224,025,000. A summary of base rental payments
for the next five fiscal yearsis as follows.
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COUNTY OF CONTRA COSTA
SUMMARY OF LEASE RENTAL OBLIGATIONS
(In Thousands)
Fiscal Principal Interest Total
Year Due Due Debt Service
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1991-92 $6,274 $8,872 $15,146
1992-93 5,649 8,474 14,123
1993-94 5,503 8,036 13,539
1994-95 5,372 7642 13,014
. 1995-96 6,447 7,,251 13,698
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Source: County Auditor-Controller j
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THE COUNTY
General
Contra Costa County was incorporated in 185,0 as one of the original 27
counties of the State, with the City of Martinez as the County Seat. It is
one of the nine counties in the San Francisco-Oakland Bay Area. The County
covers about 733 square miles and extends from the northeastern shore of San
Francisco Bay easterly about 20 miles to San Joaquin County. Contra Costa
is bordered on the south and west by Alameda Country and on the north by
Suisun and San Pablo Bays. The western and northern shorelines are highly
industrialized, while the interior sections ) are suburban/residential,
commercial and light industrial.
A large part of the interior of the County is served by the Bay Area
Rapid Transit District ("BART") , a situation that has encouraged the
expansion of both residential and commercial development. In addition,
economic development along the Interstate 680 corridor in the County has
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been so substantial that three cities -- Concord, Walnut Creek and San Ramon
-- placed among the top four cities accounting for the greatest percentage
increases in jobs in the entire Bay Area from 1985 through 1990.
County Government
The County has a general law form of government. A five-member Board of
Supervisors, each of whom is elected to a four-year term, serves as the
County's legislative body. Also elected are the County Assessor,
Auditor-Controller, Clerk-Recorder, District Attorney-Public Administrator,
Sheriff-Coroner and Treasurer-Tax Collector. A County Administrative
Officer appointed by the Board of Supervisors runs the day-to-day business
of the County.
Population
1980 Through 1990. Contra Costa County' s population grew 21.52 during
the 19801x, a moderate acceleration from the 17.52 growth rate achieved in
the decade of the 1970's. The County's population growth ranked first among
the nine Bay Area counties for the 1980-1990 period and was slightly below
the 24.9X growth rate for the entire state of California.
As detailed in the table on the next page, population growth within the
County was positive during the 1980's in every city except Orinda. Cities
experiencing the strongest growth include Hercules, Brentwood, Clayton,
Antioch, Pleasant Hill, San Ramon and Martinez. Population growth in
Concord, the County' s largest city, was relatively static by comparison
during the 1980' s.
Of particular significance is the resumption of population increases in
the western portion of the County, particularly in Pinole, Richmond and San
Pablo. Each of these older cities experienced population declines during
the 1970' s, but a number of factors have gradually reversed the population
erosion. The availability of rapid transit, close proximity to the major
employment hubs in San Francisco and Oakland, and relatively affordable
existing and new housing have combined to attract more residents to these
cities.
The unincorporated regions of the County registered a 17.8X increase in
population during the 1980's after having dropped by 21.22 during the 1970's.
Most Recent Annual Performance. The California State Department of
Finance reported that the County's population stood at 819,300 as of January
1991, an increase of 2.7X over the previous year. With the exception of
Pleasant Hill where a small decline occurred, every other city posted
positive growth on a year-over-year basis. The strongest growth continues
to be concentrated in Antioch, Brentwood and Clayton in the eastern portions
of the County, and Hercules, Pinole and San Pablo in the western portion of
the County.
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COUNTY OF CONTRA COSTA
POPULATION (1)
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Special
Census Change % Change
1960 1970 1975 1980 1990 1991 1980-1990 1990-1991
Antioch 17,305 28,060 33,215 42,683 1 60,900 64,500 42.7% 5.9%
Brentwood 2,186 2,649 3,662 4,434 7,500 8,250 69.1 10.0
Clayton --- 1,385 1,38 1,790 4,325 7,150 7,925 65.3 10.8
Concord 36,208 85,164 94,673 103,763 '110,900 112,200 6.9 1.2
Danville* --- --- --- 26,143 31,200 32,200 19.3 3.2
El Cerrito 25,437 251190 22,950 22,731 122,850 23,000 0.5 0.7
Hercules 310 252 121 5,963 16,400 17,650 175.0 7.6
Lafayette --- 20,484 19,628 20,837 23,450 23,550 12.5 0.4
Martinez 9,604 16,506 18,702 22,582 31,700 32,050 40.4 1.1
Moraga --- 14,205 14,418 15,014 15,850 15,950 5.6 0.6
Orinda* --- --- --- 17,070 16,650 16,700 -2.5 0.3
Pinole 6,064 15,850 15,337 14,253 ; 17,000 17,900 19.3 5.3
Pittsburg 19,062 20,651 24,347 33,465 , 47,250 48,600 41.2 2.9
Pleasant Hill --- 24,610 25,398 25,547 31,550 31,500 23.5 -0.2
Richmond 71,584 79,043 70,126 74,676 186,600 89,300 16.0 3.1
San Pablo 19,687 21,461 19,392 19,750 ' 25,000 25,800 26.6 3.2
San Ramon* --- --- --- 20,511 ' 35,100 35,950 71.1 2.4
Walnut Creek 9,903 39,844 46,034 54,033 160,400 61,000 11.8 1.0
Unincorporated 191.680 163,035 173,036 128.551 150,100 155.200 16.8 L.44
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Total 409,030 558,389 582,829 656,331 797,600 819,300 21.5% 2.7%
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California 15,717,204 18,136,045 21,185,000 23,668,145 29,558,000 30,351,000 24.9% 2.7%
(1) Totals may not equal sums due to independent rounding.
* Dates of incorporation: Denville (7/1/82); Orinde (7/1/85); San Ramon (7/1/83). The 1990 Census
Report created 1980 population levels for these cities prior to official incorporation.
Source: United States Census: 1940-1990; State Department of Finance: 1991.
Industry and Employment
Contra Costa County has one of the fastest-gr'owin13 work forces among
Bay Area counties, with growth in its employment base being driven
primarily by the need to provide services to an increasing local
population. Concomitantly, the County has experienced. an immigration of
white-collar jobs due to the relocation of companies from costlier
locations in the Bay Area. The combined impact of population growth and
immigration has resulted in significant job creation in the County, with
the job base having grown 492 during the 1980's and 2.72 in 1990.
As detailed in the table below, all major industry sectors
experienced job growth during the past decade. The mining sector
registered the fastest overall growth (3832) , although the number of jobs
in this sector is fairly low (2,900 in 1990) . Employment in the finance,
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insurance and real estate sectors more than doubled (228X) during the
decade, culminating in 27,200 jobs for 1990. The services sector posted
a gain of 901, finishing the decade at 76,200 jobs. Other sectors
posting strong growth included transportation and public utilities (751)
and construction (55X) . The remaining sectors expanded at more moderate
paces, with the retail and wholesale trade areas growing by about 36Z and
24X, respectively, manufacturing by 162, federal government by 13Z, and
state and local government by 102.
NONAGRICULTURAL WAGE AND SALARY WORKERS BY INDUSTRY
COUNTY OF CONTRA COSTA
ANNUAL AVERAGES
(In Thousands Of Workers)
1980 1986 1987 1988 1989 1990.
INDUSTRY
Mining 0.6 2.2 2.7 3.0 3.4 2.9
Construction 13.5 17.8 19.1 21.2 21.1 20.9
Manufacturing 27.1 28.4 29.2 30.5 31.7 31.5
Transportation and
Public Utilities 11.8 18.3 20.7 19.2 18.9 20.7
Wholesale Trade 8.7 10.8 10.7 11.0 10.9 10.8
Retail Trade 44.1 53.0 54.3 57.0 57.7 60.1
Finance, Insurance
and Real Estate 11.9 21.1 25.0 26.6 26.9 27.2
Services 40.0 56.1 61.7 68.2 73.2 76.2
Government
Federal 6.2 7.0 7.0 7.0 7.1 7.0
State and Local 33.5 32.5 33.2 34.0 35.6 36.8
TOTAL 197.4 247.2 263.6 277.7 289.1 294.1
Source: Employment Development Department, State of California Health and Welfare Agency.
In the latest year for which statistics are available (1990) ,
however, nonagricultural employment grew by only 2.7x. Reflecting
economic weakness that was particularly evident in the last six months of
1990, the mining, construction, manufacturing, wholesale trade and
federal employment sectors each declined. Other sectors posted job
increases that more than offset the weaker industries, with
transportation (9.52) , retail trade (42) , services (42) , and state and
local hiring (3.4Z) reporting increases in employment.
In terms of the County's distribution of employment, the following
pie chart shows that the services sector comprised the largest fraction
of jobs (25.91X) in 1990. The retail sector accounted for 20.441,
followed by state and local government (12.511) , manufacturing (10.71X) ,
finance (9.252) , construction (7.111) , transportation (7.04X) , federal
government (2.38X) , and mining ( .992) .
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CONTRA COSTA COUNTY EXPLOYM ENT
PERCENTAGE DISTRIBUTION, 1990
M CNG
CONTRA COSTA COUNTY EMP'LLOYNIE TT
PERCENTAGE DISTRIBUTION,1990 ❑ CONSTR
12.11% 0.99% 7.11% ® MANUF
2.38% 10.71% ® TRANS
WHSL TRADE
7.04% ® RETAIL
25.91% 3.6796
® FINANCE
® SERVICES
9.25% 20.44% ® FED GOVT
® STATE GOVT
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The average number of employed and unemployed residents of the
County, together with the average annual unemployment rate, is summarized
in the following table. The difference in the total employment by
industry shown in the preceding table from the total number of employed
shown in the following table arises from the fact that the former
includes nonresidents who commute to work in the County, while the latter
includes County residents who commute to work in other counties. As
shown below, the County's labor force continues to post healthy growth,
having increased nearly 7.91 between 1987 and .1991. With average 1991
unemployment rates of 5.61 and 7.51 for the County and the State,
respectively, the County has achieved a lower unemployment rate than the
State in five of the past six years.
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COUNTY OF CONTRA COSTA
ESTIMATED AVERAGE ANNUAL EMPLOYMENT AND
UNEMPLOYMENT OF RESIDENT LABOR FORCE
(In Thousands)
1987 1988 1989 1990(1) 1991(2)
Employment 370 392 408 399 396.2
Unemployment 19 11 18 17.8 23.7
Civilian Labor Force 389 411 426 411 419.9
Unemployment Rate 4.92 4.52 4.12 4.32 5.61
State Unemployment Rate 5.81 4.3,2 4.82 5.62 7.52
(1) Because of a change in survey methods, the 1990 labor force data are
not strictly comparable to the 1988 and 1989 data.
(2) Preliminary estimates, to be revised in May 1992.
Source: Employment Development Department, State of California Health and
Welfare Agency
In addition to its solid employment and unemployment performance, the
County also ranks first among all of California's 58 counties in terms of
median income. According to state tax returns, median income in the
County in the 1990 taxable year was $27,787.
Major Industrial Employers
Most of the County' s heavy manufacturing is located along the
County's northern boundary fronting on the Suisun and San Pablo Bays
leading to San Francisco Bay and the Pacific Ocean. Major industries
include petroleum refining, steel manufacturing, prefabricated metals,
chemical, electronic equipment, paper products and food processing.
Descriptions of major industries and companies follow.
Petroleum and Petroleum Products. The production of petroleum
products formed the initial basis of industrial development in the
County: Currently, four companies manufacture products from crude oil.
The largest in terms of capacity is Chevron Corporation' s (Standard
Oil Company of California) Richmond Refinery, which began operations in
1902 and is the company's oldest and fourth-largest refinery. The
Richmond refinery, located on 3,000 acres, has a capacity of 365,000
barrels per day although typical production is between 230,000 and
250,000 barrels per day. The refinery produces a complete line of
petroleum products and imports the bulk of the crude oil from Alaska.
Shipping facilities include the company's own wharf, which is capable of
handling four tankers at a time, making it the largest in the Bay Area in
terms of tonnage. Chevron operates a fleet of 53 tankers, of which nine
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are for intrastate business. Petroleum products are also shipped by
truck and by two railroad carriers as well as 'distributed by pipeline.
The company is presently constructing a $160 million natural-gas-fired
cogeneration plant to fulfill its own requirements for electricity and
steam.
A number of Chevron's divisions are located throughout the County.
Chevron Research and Technology Company is located in Richmond and is the
only non-geological research arm of the company. This facility is used
by Chevron Research in its continuing program to improve the efficiency
of conventional auto, aircraft and marine fuels. Chevron Accounting
Division is located in Concord and serves as , a finance and computer
center for Chevron' s entire domestic operations. The Accounting Division
is quartered in a 400,000 square foot building which was completed in
early 1982. In 1987, a San Ramon facility was, opened and houses 4,100
employees involved in computer, marketing, consumer services and other
administrative functions.
Chevron currently is the largest employer in the County and reported
approximately 11,000 people on its payrolls as of' March, 1992.
Shell Oil Company ("Shell") began operating in Martinez in 1915. The
Shell Oil and Chemical Martinez Manufacturing Complex, located on 1,100
acres, is a combined oil refinery and industrial chemical production
plant. It is one of two Shell facilities on the West Coast which
supplies all Shell products to the western states. The complex processes
about 145,000 to 160,000 barrels of crude oil per day. About 70-80
percent of this crude oil is transferred via the company' s pipeline from
California oil fields, while the remainder is shipped from Alaska.
Shell' s docking facilities can handle two tankers and two barges
simultaneously. Finished petroleum products are shipped via a company
owned pipeline, Southern Pacific Railroad' s pipeline, and by railcar and
truck.
Shell employees in the County total approximately 845, of whom
approximately 800 work at the Martinez complex and 45 work at a retail
district office in Concord.
Union Oil Company ("Unocal") operates an oil refinery at Rodeo
between the cities of Richmond and Martinez, and a distribution terminal
for Northern California at Richmond. The oil refinery, which began
operations in 1896, occupies 1,100 acres and processes up to 100,000
barrels of raw materials per day. There are 600 full-time employees at
the refinery and 85 at the distribution terminal. Unocal also operates a
chemical plant on Franklin Canyon Road near Highway 4 in the County.
Tosco Corporation operates a refinery with a capacity of 140,000
barrels per day. The refinery, which has been in operation since 1913,
uses crude oil from the North Slope of Alaska, as well as the heaviest
crude oil from California oil fields, and refines it into high grade
light fuel products. It is located on a 2,200-acre site and employs 700
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people. Tosco moved its corporate Headquarters from Bakersfield to
Concord in the fall of 1990. The relocation added another 80 employees
to payrolls in the County.
Health Care. Kaiser Permanente Medical Group (KPMG) , the Bay Area's
top employer in 1991 (according to a San Francisco Chronicle Survey
conducted in April 1991) , employed 25,273, with 3,194 of its personnel
located in Contra Costa County, representing a gain of approximately 100
jobs in 1990. Kaiser provides medical coverage to about one in five Bay
Area residents and added nearly 100,000 members in Northern California in
1990. KPMG currently operates hospital and clinic facilities in
Richmond, Martinez and Walnut Creek and is exploring other sites in the
County for future consideration.
Telephone Services. Pacific Telesis, the Bay Area's second largest
employer (23,823 as of April, 1991) , saw its total regional employment
decrease by 625 jobs in 1990, although 16 jobs were added in the County.
Pacific Telesis has a corporate goal of trimming 10,000 jobs throughout
the Bay Area over the next several years, reflecting the increasing use
of automated technologies.
Grocery Stores. Safeway, the Bay Area' s eighth largest employer
(15,453 employees as of April, 1991) , grew nationally in 1990 but reduced
Bay Area employment by 480, mostly due to displaced employees who
accepted severance packages after the company's Richmond warehouse was
destroyed by fire. Despite the loss of jobs due to the Richmond fire,
strong population growth and economic development elsewhere in the County
resulted in a net addition of 100 jobs at new stores opened and/or
remodeled in 1990.
The following table provides a listing of the top ten employers in
the County reported in the San Francisco Chronicle's April 1991 survey.
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COUNTY OF CONTRA COSTA
MAJOR EMPLOYERS
Firm Primary Location Product Employment*
Chevron Corporation Richmond, Refined Petroleum 10,504
Concord &
San Ramon Products
Pacific Telesis San Ramon Telecommunications 8,217
County of Contra Costa Martinez County Government 6,635
Bank of America Concord Financial Services 4,939
Kaiser Permanente Martinez & Health Care Service 3,194
Medical Group Walnut Creek
Safeway Countywide Retail Food Outlets 3,179
Naval Weapons Station Concord Munitions Depot 1,175
Shell Oil Company Martinez & Petroleum Products,
San Ramon Administration 1,075
City of Concord Concord City Government 1,000
California & Hawaiian
Company & C & H
Sugar Refinery Crockett & Concord Sugar Refinery 975
Source: The San Francisco Chronicle, *The Chronicle 100', April 1991 and telephone
survey.
* Estimates as reported by firms.
Impact of Military Base Closings
The U.S. Congress enacted legislation in 1990 to close a number of
domestic and international military bases, including several in the Bay
Area. Secretary of Defense Cheney announced, on April 13, 1991 that
several Bay Area bases would be closed in addition to those identified in
1990. The list of recommended major base closures included San
Francisco' s Presidio and Letterman Hospital, Fort Ord in Seaside,
Sacramento Army Depot, Hunter's Point Annex of. Treasure Island Naval Air
Station in San Francisco and Moffett Field Naval Station in Sunnyvale.
These cutbacks, if they occur, in nearby facilities are not expected to
affect the County. Furthermore, the only military installation located
in Contra Costa County is the Naval Weapons Station in Concord, a
facility that is not slated for closure.
Commercial Activity
Commercial activity forms an important part, of Contra Costa County' s
economy. The table below shows the County' s, taxable transactions for
1987 through part of fiscal year 1991. Between 1987 and 1990, the total
dollars generated by taxable transactions rose 27.9X. The data available
for 1991 indicates that the annual pace of recent taxable transactions
will exceed the $8 billion mark for the first time in 1991.
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In 1990, the County's share of total California sales volume inched
ahead to 2.61, compared to 2.51 reported in the prior six years. Contra
Costa's percentage share of state sales tax permits has held steady at
2.51.
COUNTY OF CONTRA COSTA
TAWLE TRANSACTIONS
(In Thousands Of Dollars)
1987 1988 1989 1990 1991(1)
Apparel Stores $ 230,294 $ 227,202 S 250,721 S 268,874 $ 122,600
General Merchandise Stores 879,451 974,820 1,081,849 1,130,383 499,316
Specialty Stores 503,431 561,585 599,770 700,909 324,513
Food Stores 370,734 383,373 415,268 432,071 207,866
Package Liquor Stores 56,414 50,082 49,993 48,669 21,859
Eating and Drinking Places 431,090 465,809 474,132 513,257 263,513
Home Furnishings and 255,839 272,754 277,961 268,755 122,039
Appliances
Building Materials and Farm
Implementations 396,553 404,283 480,531 497,273 214,454
Service Stations 378,484 451,661 414,623 528,802 236,807
Automobile, Boat, Motorcycle
i Plane Dealers and
Parts Outlets 728,917 785,864 836,470 853,970 394,293
Total Retail Outlets 4,231,207 4,577,433 4,881,318 5,242,963 2,407,260
Business and Personal Services 219,262 246,422 298,832 333,588 162,653
All Other Outlets 1,384,881 1,539,235 1,596,291 1,888,513 916,460
Total All Outlets $5,835,350 $6,363,090 $6,776,441 $7,465,064 $3,486,373
(1) Figures represent 1991 first and second quarter only.
Source: State Board of Equalization
Taxable transactions are skewed toward the largest cities in the County,
where the concentration of retail establishments is greatest. After the
second quarter in 1991, the top five cities accounted for 541 of taxable
transactions while comprising only 45.81 of the County's population.
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COUNTY OF CONTRA COSTA
TAXABLE TRANSACTIONS
TOP FIVE CITIES
(In Thousands Of Dollars)
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1990 1 1991
Taxable Taxable
Transactions Transactions
Concord $1,496,514 ! $ 686,964(1)
Walnut Creek 984,058 441,281(1)
Richmond 778,008 337,210(1)
Antioch 382,004 f 171,358(1)
Pittsburg 228.888 104.618(1)
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TOTAL $3,869,472 j $1,741,431
(1) Figure represents 1991 first and second quarter only.
source: State Board of Equalization and California Department of iFinance
Much of the County's commercial activity; is concentrated in central
business districts of the cities and unincorporated towns. In addition,
four regional shopping centers and numerous smaller centers serve County
residents. The regional centers located in the cities of Richmond, Concord,
Walnut Creek and Antioch each are anchored by at least three major
department stores. The largest regional shopping center in the County is
Sun Valley Shopping Center which opened in 1967. Macy's, Sears, Penney' s,
Mervyn' s and Emporium-Capwell serve as anchors; the total number of stores
is 130.
The County is served by all major banks including Bank of America NT&SA,
Security Pacific National Bank, Wells Fargo Bank and First Interstate Bank.
In addition there are numerous smaller banks and branches of smaller
California and foreign banks. There are over 30 savings and loan
associations in the County, including Home Savings, Great Western, American
Savings, San Francisco Federal and California Federal.
Construction Activity
In 1991, the County experienced weakness! in building activity that
mirrored the national and regional -slumps in both residential and commercial
construction. As a consequence of the recession, the value of building
permits issued in the County fell to $685 million in 1991. The 1991 level
of total permit activity represented a 162 decline compared to 1990 and the
lowest level of permit valuation since the deeper recession of 1982. The
principal source of the decline was weakness . in the nonresidential sector
where valuation slipped by 222 to $196 million, , although the 132 decline in
the residential sector was also significant. Residential building permits
totaled 3,980 in 1991, constituting a 72 decline from the 1990 level. The
single-family sector accounted for a decline of 14X, while the relatively
affordable multi-family sector posted a respectable gain of 112. While
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multi-family construction is well below the 1987 peak levels of permit
activity, the sector has recovered from its 1990 low. The reduction in 1991
permit valuation resulted in a decline in the average valuation per dwelling
unit (both single-family and multi-family) to $122,849 compared to $130,855
in 1990.
Preliminary data released for the months of January and February, 1992
indicate that the decline in mortgage rates during the last two months of
1991 led to sharp increases in building permit activity in the County.
While the early-1992 pace is not sustainable, the County anticipates that
continued low mortgage rates and improved economic conditions will favorably
impact residential building activity over the next few years.
The following table provides a summary of building permit valuations and
number of new dwelling units authorized in the County since 1987.
COUNTY OF CONTRA COSTA
BUILDING PERMIT VALUATIONS
1987 - 1991
(In Thousands Of Dollars)
1987 1988 1989 1990 1991
Valuation ($ millions)
Residential (New) $670,747 $785,925 $863,313 $560,193 $488,939
Nonresidential 305,953 214,20162 4,020 252,443 196.165
Total $976,700 $1,000,126 $1,127,333 $812,636 $685,104
New Dwelling Units:
Single Family. 5,481 5,853 5,504 3,132 2,705
Multiple family 2,950 2,171 2,219 1,149 1,275
Total 8,431 8,024 7,723 4,281 3,980
Average Valuation
per Dwelling Unit $79,557 $97,946 $111,784 $130,855 $122,849
Note: Totals may not be precise due to independent rounding.
Sources: 'California Construction Trends,' Security Pacific National Bank: 1987 and 1988; Economic
Sciences Corporation: 1989-91.
In the last few years, office construction and leasing has been a
much-publicized engine of the County's economy, especially in the Bishop
Ranch area of San Ramon along Interstate 680. It is estimated that over
five million square feet of office space will be constructed in Bishop
Ranch during the next five years and that the 585-acre business park will
be the workplace for 20,000 employees. Two million square feet have been
completed and -are occupied by International Harvester, Union Carbide,
Western Electric, Toyota, IBM, Chevron, Pacific Bell and Beckman
Instruments. Bishop Ranch offers lower land and labor costs than San
Francisco and the East Bay and is surrounded by communities that provide
a large labor pool to immigrating companies.
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Environmental Control Services
The East Bay Municipal Utilities District ' ("EBMUD") and the Contra
Costa County Water District supply water to the County. EBMUD, the
second largest retail water distributor west of the Mississippi, supplies
water to the western part of the County. Ninety-five percent of its
supply .is the Mokelumne River stored at the 68 billion gallon capacity
Pardee Dam. EBMUD is entitled to 325 million , gallons per day under a
contract with the State Water Resources Control Board, plus an additional
325 million gallons per day under a contract with the U.S. Water and
Power Resources Service (formerly the U.S. Bureau of Reclamation) . The
District does not plan to draw on its federal entitlement for the
foreseeable future. As of April 15, 1992, the District' s reservoirs were
at 59 percent of capacity versus a normal-to-date capacity of
approximately 80 percent. See "Impact of Current Drought" below.
The Contra Costa County Water District obtains its water from the
Sacramento-San Joaquin Delta and serves 400,000 customers in Concord,
Pleasant Hill, Martinez, Clayton, Pittsburg and ,Antioch. It is entitled
under a contract with the U.S. Water and Power Resources Service to
195,000 acre-feet per year. Water sold has ranged between 80,000 and
110,000 acre-feet annually. In addition, a number of industrial users
and several municipalities draw water directly from the San Joaquin River
under their own riparian rights, so that actual water usage in the
service area averages about 125,000 acre-feet annually. See "Impact of
Current Drought" below.
Sewer services for the County are provided 'by approximately 20
sanitation districts and municipalities. Federal and State environmental
requirements, plus grant money available from 'these two sources, have
resulted in about 14 agencies upgrading, expanding and/or building new
facilities.
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The Contra Costa County Flood Control District has been in operation
since 1951 to plan, build, and operate flood control projects in
unincorporated areas of the County except for the Delta area on its
eastern border. The Delta is interspersed with inland waterways which
fall under the jurisdiction of the U.S. Corps of Engineers and the State
Department of Water Resources. The County has experienced no major
flooding in urbanized areas since October 1962. The District has
completed and is nearing completion of construction on two major
projects: the $25 million Upper Pine Creek Project in the vicinity of
Concord, and the $37 million San Ramon Bypass Project near Walnut Creek.
The construction portion of the Upper Pine Creek Project has been
completed, with final landscaping expected to be completed by fall of
1992. The San Ramon Bypass Project was completediin the fall of 1991.
Transportation
Availability of a broad transportation network has been one of the
major factors in the County' s economic and population growth. Interstate
80 connects the western County to San Francisca, Sacramento and points
north to Interstate 5, the major north-south highway from Mexico to
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Canada. Interstate 680 connects the central County communities to the
rest of the Bay Area via State Routes 4 and 24, the County's major
east-west arteries.
AC Transit, a daily commuter bus service based in Oakland, provides
local service and connects Contra Costa communities to San Francisco and
Oakland. Central Contra Costa Transit Authority ("CCCTA") was formed in
1981 to provide local bus service to the central area of the County.
CCCTA is currently providing service in Walnut Creek, Pleasant Hill and
Concord and other central County areas. Since 1974, Bay Area Rapid
Transit ("BART") with two main lines, one from the San Francisco area to
Richmond and the other to the Concord/Walnut Creek area, connects the
County to Alameda County, San Francisco and Daly City in San Mateo
County. Other bus and rail passenger service is provided by Greyhound,
Trailways Bus, and Amtrak. The Santa Fe and Southern Pacific Railroads'
main lines service the County, both in the industrial coastal areas and
the inland farm section.
The Port of Richmond on San Pablo Bay and several privately owned
industrial docks on both San Pablo and Suisun Bays serve the heavy
industry located in the area. The Port of Richmond, owned and operated
by the City of Richmond, now covers 202 acres and handled 517,091 short
tons in 1989. The majority of the shipments are bulk liquids with the
remainder consisting of scrap metal and autos.
Private terminals near Richmond service additional shipping traffic
and handled 20,784,710 short tons in 1989. The largest shipper is
Chevron.
Major scheduled airline passenger and freight transportation for
County residents is available at either Oakland or San Francisco
International Airports, located about 20 and 30 miles, respectively, from
the County. In addition there is a general aviation fields at Concord.
Agriculture
Ranking thirty-seventh among California counties in agricultural crop
production in 1990, the County has posted stable farm revenues over the
past five years. The value of agricultural production is illustrated in
the table below:
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COUNTY OF CONTRA COSTA .
AGRICULTURAL PRODUCTION;
1987 - 1990
1987 1988 _1989 1990
Nursery Products $20,030,000 $20,401,000 ;$21,594,000 $22,539,000
Livestock & Poultry 6,959,000 5,975,000 4,652,000* 6,704,000
Field Crops 7,820,000 8,139,500 9,745,400 9,879,000
Vegetable & Seed Crops 14,659,600 14,506,600 13,947,000 12,390,000
Fruit & Nut Crops 7,065,700 8,058,557 9,821,900 9,235,000
Livestock, Diary &
Poultry Products 4,321,800 4,410,095 5,424,920* 5,637,060
Total $60,856,100 $61,490,752 $65,157,220 $66,384,560
Source: Contra Costa County Department of Agriculture
* Revised from prior data.
Impact of Current Drought
California experienced five successive years of drought conditions
from 1986 to 1991, with the 1992 rainfall season predicted to be below
normal. As a result of the drought conditions', the farm sector in the
State may expect reduced water allocations -this year, however the
residential and commercial sectors within California are in no immediate
danger of significant water shortages. Owing to its predominantly
nonagricultural economy, the County does not anticipate any serious loss
due to a water shortage this year.
Precautionary measures have been taken by both water districts that
serve the County. EBMUD implemented mandatory rationing plans in May,
1991 that will continue in effect for 1992 and require customers to
reduce usage by 15 percent. The typical household allocation is 250
gallons per day with higher incremental rates charged for excessive use.
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Contra Costa Water District has imposed a 1.5 percent voluntary
reduction plan for its residential and commercial customers and has been
able to avoid larger reductions or mandatory rationing programs by
purchasing water from the State.
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Rationing programs throughout the Bay Area have been very successful,
reporting average cutbacks of 20 to 50 percent in 1991. Adherence to
rationing programs has resulted in lower revenues for some water
districts, however, with some districts increasing water rates in order
to offset revenue losses. EBMUD, where usage has fallen about 30
percent, implemented a 25 percent rate increase beginning on July 1,
1991. CCWD reported that water consumption dropped 58 percent in April
compared to 1986 levels, but the District currently does not, have plans
to increase water rates.
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Education and Community Services
Public school education in the County is available through 119
elementary schools, 23 high schools and 18 unified school districts. In
addition there are a number of private schools in the County. School
enrollment in the fall of 1990 numbered approximately 130,439 students in
public schools.
The Contra Costa County Community College District has campuses in
Richmond, Pleasant Hill and Pittsburg. California State University at
Hayward opened a branch campus, called Contra -Costa Center, in the City
of Pleasant Hill in the fall of 1981. The Center currently offers late
afternoon and evening classes in business, education and liberal arts.
In addition, the California State University currently has a campus under
construction in Concord. St. Mary's College of California, a four-year
private institution, is located on a 100-acre campus in Moraga. Also
located within the County, in Orinda, is John F. Kennedy University. In
addition, County residents are within easy commuting distance of the
University of California at Berkeley.
There are nine privately operated hospitals and two public hospital
districts in Contra Costa County, with a combined total of 1,900 beds.
Three of the private hospitals are run by Kaiser Permanente, the largest
health maintenance organization in the United States. In addition to the
County Hospital, the 443-bed Veteran' s Administration Hospital is located
in Martinez; however, the Veteran's Administration is presently
considering relocating, refurbishing or rebuilding the facility. If
relocated, it is likely that the new location will be outside of the
County. A study of the alternatives is expected to be completed by the
Veteran's Administration during July of 1992.
RATINGS
The 1992 Certificates are rated "Al" (conditional) by Moody' s
Investors Service and "A+" (provisional) by Standard & Poor's
Corporation. Such ratings reflect . only the views of such rating
agencies. An explanation of the significance of such ratings may be
obtained from the rating agency furnishing the same at the following
addresses: Moody's Investors Service, 99 Church Street, New York, New
York 10007; Standard & Poor's Corporation, 25 Broadway, New York, New
York 10004. There is no assurance that such ratings will continue for
any given period of time or that they will not be revised downward or
withdrawn entirely by the rating agencies if, in the judgment of such
rating agencies, circumstances so warrant. Any such downward revision or
withdrawal of such ratings may have an adverse effect on the market price
of the 1992 Certificates.
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LITIGATION
At the time of delivery of and payment for the 1,992 Certificates, the
County and the Corporation will each certify that there is no action,
suit, litigation, inquiry or investigation before or by any court,
governmental agency, public board or body served, or to the best
knowledge of the County or the Corporation threatened, against the County
or the Corporation in any material respect affecting the existence of the
County or the Corporation or the titles of their officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale,
execution or delivery of the 1992 Certificates, !the Trust Agreement, the
Facility Lease, the Assignment Agreement, the Site 'Lease or the payment
of Base Rental Payments or challenging, directly or indirectly, the
proceedings to lease the Project from the Corporation. .
In 1987, the County instituted eminent domain proceedings for the
acquisition of land to be used as the site of a new jail facility. The
owner of the land and the County are presently parties in a court
proceeding wherein the value of the land is disputed. If this dispute is
decided in favor of the owner of the land, the County may be required to
pay substantially in excess of the approximate $4,400,000 amount
deposited by the County as part of the eminent domain proceeding. The
County has the ability to pay the higher amount in the event it is
ordered by the court to do so, and paying such amount will not, in the
opinion of the County, materially affect the County' s finances or impair
its ability to make Base Rental Payments under the Facility Lease.
The County does not have any major claim pending against it. The
aggregate amount of the uninsured liabilities of the County which may
result from all claims will not, in the opinion of the County, materially
affect the County' s finances or impair its ability to make Base Rental
Payments under the Facility Lease.
TAR EXEMPTION
In the opinion of Orrick, Herrington & 'Sutcliffe and Pamela S. Jue,
Attorney at Law, Co-Special Counsel, based on existing laws, regulations,
rulings and court decisions, the portion of each Base Rental Payment
designated as and constituting interest paid by the County under the
Facility Lease and received by the Owners of the :1992 Certificates is
excluded from gross income for federal income tax purposes under Section
103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from
State of California personal income taxes. A complete copy of the
proposed form of opinion of Special Counsel is ; set forth in Appendix C
hereto.
The Code imposes various restrictions, conlditions and requirements
relating to the exclusion from gross income for federal income tax
purposes of interest on obligations such as that represented by the 1992
Certificates. The County has covenanted to comply with certain
restrictions designed to assure that the interest portion of each Base
Rental Payment will not be included in federal gross income. Failure to
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comply with these covenants may result in the interest portion of each
Base Rental Payment being included in federal gross income, possibly from
the date of issuance of the 1992 Certificates. The opinion of Co-Special
Counsel assumes compliance with these covenants. Co-Special Counsel has
not undertaken, to determine (or to inform any person) whether any actions
taken (or not taken) or events occurring (or not occurring) after the
date of issuance of the 1992 Certificates may affect the tax status of
the interest portion of any Base Rental Payment.
Co-Special Counsel is further of the opinion that the interest
portion of each Base Rental Payment is not a specific preference item for
purposes of the federal individual or corporate alternative minimum
taxes. Co-Special Counsel observes, however, that such interest with
respect to the 1992 Certificates is included in adjusted current earnings
when calculating corporate. alternative minimum taxable income.
Certain agreements, requirements and procedures contained or referred
to in the Trust Agreement, Facility Lease and other relevant documents
may be changed and certain actions (including, without limitation,
defeasance of the Facility Lease) may be taken or omitted, under the
circumstances and subject to the terms and conditions set forth in such
documents, upon the advice or with the approving opinion of nationally
recognized bond counsel. Co-Special Counsel expresses no opinion as to
any 1992 Certificate or the interest portion of any Base Rental Payment
if any such change occurs or action is taken upon the advice or approval
of counsel other than Co-Special Counsel.
Co-Special Counsel is of the opinion, based on existing laws,
regulations, rulings and judicial decisions, that the difference between
the initial offering prices to the public (excluding bond houses and
brokers) at which a substantial amount of each maturity of the 1992
Capital Appreciation Certificates (as identified on the cover of this
Official Statement) are sold and the amount payable at maturity thereof
constitutes "original issue discount" for purposes of federal income
taxes and State of California personal income tax. Such discount is
treated as interest excluded from federal gross income and exempt from
State of California personal income taxes to the extent properly
allocable to each owner thereof. The original issue discount accrues
over the term to maturity of each such Certificate on the basis of a
constant interest rate compounded at the end of each six month period (or
shorter period from the date of original issue) with straight-line
interpolations between compounding dates. The amount of original issue
discount accruing during each period is added to the adjusted basis of
such Certificates to determine taxable gain upon disposition (including
sale, redemption or payment on maturity) of such Certificates.
The Code contains certain provisions relating to the accrual of
original issue discount in the case . of purchasers of the 1992
Certificates who purchase such 1992 Certificates after the initial
offering of a substantial amount thereof. Owners who do not purchase
such Certificates in the initial offering at the initial offering price
should consult their own tax advisors with respect to the tax
consequences of ownership of such Certificates. All owners of the 1992
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Certificates should consult their own tax advisors with respect to the
allowance of a deduction or any loss on a sale ior other disposition to
the extent that such loss is attributable toj accrued original issue
discount.
Although Co-Special Counsel has rendered an opinion that the interest
portion of each Base Rental Payment paid by the Country under the Facility
Lease and received by the Owners of the 1992 Certificates is excluded
from federal gross income, the ownership or disposition of the 1992
Certificates, or the accrual or receipt of such interest, may otherwise
affect a 1992 Certificate Owner's tax .liability.! The nature and extent
of these other tax consequences will depend upon the 1992 Certificate
Owner's particular tax status and the 1992 Certificate Owner' s other
items of income or deduction. Co-Special Counsel expresses no opinion
regarding any such other tax consequences.
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LEGAL NATTERS
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Orrick, Herrington & Sutcliffe, San Francisco, California, and
Pamela S. Jue, Attorney at Law, San Francisco,; California, Co-Special
Counsel, will render an opinion with respect to the validity of the
County's obligations under the Facility Lease. Copies of such approving
opinion will be available at the time of ' delivery of the 1992
. Certificates. Certain legal matters will be passed upon for the
Underwriters by Nossaman, Guthner, Knox & lElliott, Los Angeles,
California. The form of the legal opinion proposed to be delivered by
Co-Special Counsel is included as Appendix C to this Official Statement.
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UNDERWRITING
The 1992 Certificates are to be purchased by Prudential Securities
Incorporated, Bank of America NT&SA and Artemis Capital Group, Inc. (the
"Underwriters") . The Underwriters have agreed, subject to certain terms
and conditions set forth in the Contract of Purchase, to purchase the
1992 Certificates at a price of $122,450,598.24 ;(equal to the principal
amount of the 1992 Certificates less the Underwriters' discount and the
original issue discount) , plus accrued interest.! The Underwriters will
purchase all the 1992 Certificates if any are purchased. The 1992
Certificates may be offered and sold to certain dealers (including
dealers depositing said 1992 Certificates into jinvestment trusts) and
others- at prices lower than the initial public offering price, and the
public offering price may . be changed from itime to time by the
Underwriters.
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MISCELLANEOUS INFORMATION )
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References are made herein to certain documents and reports which are
brief summaries thereof which do not purport to be complete or definitive
and reference is made to such documents and reports for full and complete
statements of the contents thereof.
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Any statements in this Official Statement involving matters of
opinion, whether or not expressly so stated, are intended as such and not
as representations of fact. This Official Statement is not to be
.construed as a contract or agreement between the County and the
purchasers or Owners of any of the 1992 Certificates.
The execution and delivery of this Official Statement has been duly
authorized by the County.
COUNTY OF CONTRA COSTA
Philip J. Batchelor
County Administrator
By: Isl DeRoyce Bell
Deputy County Administrator
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APPENDIX A
Peat Marwick
Independent Auditors' Report
The Honorable Grand Jury and
the Board of Supervisors
County of Contra.Costa, California
We have audited the accompanying general purpose financial statements of the County of
Contra Costa as of and for the year ended June 30, 1991, as listed in the table of contents.
These general purpose financial statements are the responsibility of the County's
management.Our responsibility is to express an opinion on these general purpose 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 general purpose financial statements are free of material misstatement. An audit
includes examining,on a test basis, evidence supporting the amounts and disclosures in the
general purpose 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.
In our opinion, the general purpose financial statements referred to above present fairly, in
all material respects, the financial position of the County of Contra Costa, as of June 30,
1991, and the results of its operations and the cash flows of its proprietary fund type for
the year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the general purpose financial
statements taken as a whole.The combining, individual fund, and individual account group
financial statements and schedules listed in the accompanying table of contents are
presented for purposes of additional analysis and are not a required part of the general
purpose financial statements of the County of Contra Costa. Such information has been
subjected to the auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
general purpose financial statements taken as a whole.
As discussed in note 1 to the general purpose financial statements, the County of Contra
Costa adopted Statement No. 9 of the Governmental Accounting Standards Board which
requires the presentation of a statement of cash flows and certain other disclosures. .
November 13, 1991
Walnut Creek, California
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COUNTY OF CONTRA COSTA
COMBINED BALANCE SHEET - ALL FUND TYPES SAND ACCOUNT GROUPS
JUNE 30, 1991
(In Thousands)
Governmental Fund Types
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Special Debt Capital
Assets & Other Debits General R6venuc:_ Service Projects
Cash and investments $ 81,572 46,778 3,851 8,730
Accounts receivable and accrued revenue 42,787 '6,716 39 1,341
Due from other funds 32,637 10,104 6,448
Inventories 1,217
Prepaid items and deposits 5,227 11,478 9
Advances to other funds 2,137 13,020
Taxes receivable I
Fixed assets, net
Amount to be provided for retirement
of long-term debt
Amount available in debt service funds
Total assets&other debits $ 165,577 681096 3,890 16,528
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Liabilities, Equity & Other Credits
Liabilities: I
Warrants outstanding
Short term notes - 65,000
Accounts payable anaccrued liabilities 22,743 8,343 14,045
Employee benefits payable i
Due to other funds 14,299 10,822. 86
Welfare program advances 6,856
Capital lease obligations
Unapportioned taxes
Due to other agencies and districts
Bonds payable
Advances from other funds 481
Deferred revenue and credits 5,054
Deferred compensation
Notes payable
Total liabilities 113,952 19,165; 14,612
Equity&Other Credits:
Contributed capital
Investment in general fixed assets
Retained earnings
Fund Balance:
Reserved 18,700 13,195 3,890 693
Unreserved:
Designated 7,634 2,007
Undesignated 25,291 33,72S, 1,223
Total equity&other credits 51,625 48,931_ 3,890 1,916
Total liabilities, equity&other credits $ 165,577 68,09(; 3,890 16,528
See accompanying notes to financial statements
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Fiduciary
Proprietary Fund Types Fund Types Account Groups
(Memorandum
Internal Trust and General General Long- Only)
Enterprise Service Agency Fixed Assets term Obligations Totals
10,760 50,613 1,323,130 1,525,434
11,919 513 29,198 92,513
8,787 1,29? 65,787 125,056
738 1,955
113 50 6,877
55 5,212
65,802 65,802
24,988 385,190 410,178
153,264 153,264
3,890 3,890
57,305 52,419 1,484,022 385,190 157,154 2,390,181
63,731 63,731
65,000
10,616 46,438 33,966 136,151
2,795 24 16,737 19,556
7,995 1,143 92,636 126,981
6,856
2,866 64,376 67,242
61,240 61,240
448,278 448,278
63,410 63,410
4,731 5,22
7,664 12,718
38,655 38,655
1,093 7,900 8,993
33,029 47,581 738,530 157,154 1,124,023
19,530 19,530
385,190 385,190
4,746 4,838 9,584
745,492 781,970
9,641
60,243
24,276 4,838 745,492 385,190 1,266,158
57,305 52,419 1,484,022 385,190 157,154 2,390,181
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COUNTY OF CONTRA COSTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 1991
(in Thousands)
(Memorandum
Special Debt Capital Only)
General Revenue Service Projects Totals
Revenues:
Taxes $ 151,363 65,824 693 2,367 220,247
Licenses, permits and franchises 7,100 3,241 10,341
Fines, forfeitures and penalties 4,530 5,227 9,757
Use of money and property 14,598 2,362 7,473 442 24,875
Aid from other governmental agencies 286,543 28,292 15 6,039 320,889
Charges for current services 77,306 11,516 98 88,920
Other revenue 7,584 1,647 1,649 10,880
Total revenues 549,024 118,109 8,181 10,595 685,909
Expenditures:
Current:
General government 68,201 6,124 74,325
Public protection 151,801 66,278 218,079
Health and sanitation 64,543 9,652 74,195
Public assistance 224,794 65 224,859
Education 112 11,123 11,235
Public ways and facilities 14,189 22,326 36,515
Recreation and culture 271 271
Debt Service:
Principal 4,000 4,000
Interest 4,642 4,924 9,566
Capital outlay 25,815 915 15,477 42,207
Total expenditures 554,097 115,839 9,839 15,477 695,252
Excess (deficiency)of revenues over(under)
expenditures (5,073) 2,270 (1,658) (4,882) (9,343)
Other financing sources (uses):
Operating transfers in 617 674 1,625 2,916
Operating transfers out (29,372) (99) (29,471)
Capital lease financing 25,815 25,815
Total other financing sources (uses) (3,557) 518 674 1,625 (740)
Excess (deficiency) of revenues and other financing
sources over(under)expenditures and other
financing uses (8,630) 2,788 (984) (3,257) (10,083)
Fund balances at beginning of year 60,283 45,432 4,874 4,540 115,129
Adjustment to fund balance (28) 711 633 1,316
Fund balances at end of year $ 51,625 48,931 3,890 1,916 106,362
See accompanying notes to financial statements.
5
COUNTY OF CONTRA COSTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL - ALL GOVERNMENTAL
FUND TYPES - BUDGETARY BASIS
YEAR ENDED JUNE 30, 1991
(In Thousands)
General Fund _
Variance
Favorable
Budget Actual (Unfavorable)_
Revenues: j -
Taxes $ 152,311 IS 1,36:3 (948)
Licenses, permits and franchises 8,271 7,100 (1,171)
Fines, forfeitures and penalties 5,039 4,530 (509)
Use of money and property 15,806 114,598 (1,208)
Aid from other governmental agencies 287,596 286,54:3 (1,03)
Charges for current services 89,662 77,306 (12,350)
Other revenue 8,575 1 7,584 . (991)
Total revenues 567,260 549,0?4 (18,236)
Expenditures:
Current:
General government 82,369 68,201 14,168
Public protection 159,324 151,801 7,523
Health and sanitation 66,682 j64,543 2,139
Public assistance 227,838 224,794 3,044
Education 116 112 4
Public ways and facilities 17,211 14,189 3,012
Recreation and culture 1 I
Debt Service:
Principal
Interest 4,687 4,642 45
Capital outlay ;25,81.5_ (25,815) _
I
Total expenditures 558,228 554,097_ 4,131
Excess (deficiency)of revenues over
(under)expenditures 9,032 (5,073) (14,105)
Other financing sources (uses):
Operating transfers in
Operating transfers out (28,032) (29,372) (1,340)
Capital lease financing 25,815 125,815
Total other financing sources (uses) (2,217) (3,557) (1,340)
Excess (deficiency)of revenues and other
financing sources over(under)expenditures
and other uses 6,815 (8,630) (15,445)
i
Fund balance at beginning of year 60,283 160,283
Adjustment to fund balance (28) (28)
i -
Fund balance at end of year $ 67,070 151,625 (15,445)
Su:accompanying notes to fwancial statements. 1
6
I
Special Revenue Funds Debt Service Funds Capital Projects Funds
Variance Variance Variance
Favorable Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable)
66,354 65,824 (530) 812 693 (119) 1,959 2,367 408
1,823 3,241 1,418
4,431 5,227 796
1,019 2,362 1,343 60 104 44 385 442 57
26,606 28,292 1,686 15 15 6,321 6,039 (282)
13,154 11,516 (1,638) 585 98 (487)
933 1,647 714 4,498 1,649 (2,949)
114,320 118,109 3,789 872 812 (60) 13,748 10,595 (3,153)
7,644 6,124 1,520
81,278 66,278 15,000
11,397 9,652 1,745
85 65 20
12,075 11,123 952
31,555 22,326 9,229
1,317 271 1,046
338 475 (137)
639 628 11
23,185 15,477 7,708
145,351 115,839 29,512 977 1,103 (126) 23,185 15,477 7,708
(31,031) 2,270 33,301 (105) (291) (186) (9,437) (4,882) 4,555
1,098 617 (481) 3,642 1,625 (2,017)
(99) (99)
999 518 (481) 3,642 1,625 (2,017)
(30,032) 2,788 32,820 (105) (291) (186) (5,795) (3,257) 2,538
45,432 45,432 2,169 2,169 4,540 4,540
711 711 633 633
16,111 48,931 32,820 2,064 1,878 (186) (622) 1,916 2,538
7
COUNTY OF CONTRA COSTA
i
COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN RETAINED EARNINGS/FUND BALANCES - ALL PROPRIETARY
FUND TYPES AND SIMILAR TRUST FUNDS
YEAR ENDED ]UNE 30 1991
(In Thousands)
i
Proprietary Fiduciary
Fund Types Fund Type
(Memorandum
Internal Pension Only)
Enterprise Service Trust Totals
Operating revenues:
Charges for current services $ 100,875 29,865 130,740
Earnings on investments 47,411 47,411
Net gain on disposal of investments 590 590
Contributions 50,843 50,843
Total operating revenues 100,875 29,865 98,844 229,584
Operating expenses:
Salaries and employee benefits 65,875 181 626 66,682
Services and supplies 60,395 6,001 451 66,847
Depreciation 2,072 2,072
Benefits and claims 1,723 23,331 43,894 68,948
Total operating expenses 130,065 29,513 44,971 204,549
Operating income (loss)
before operating transfers (29,190) 352 53,873 25,035
I
Nonoperating revenue (expenses):
Interest income 1,650 3,826 5,476
Total nonoperating revenues
(expenses) 1,650 3,826 5,476
Income (loss)before
operating transfers (27,540) 4,178 53,873 30,511
i
Operating transfers in 26,780 1,000 27,780
Operating transfers out (225) (1,000) (1,225)
I
Total operating transfers in(out) 26,555 j 26,555
Net income(loss) (985) 4,178. 53,873 57,066
i
Retained earnings/fund balances at
beginning of year as previously reported 5,734 660 714,868 721,262
Adjustment of pension trust to 12/30/90 (22,834) (22,834)
Adjustment to fund balance (3) _ (415) (418)
Retained earnings/fund balance as restated 5,731 666 _ 691,619 698,010
Retained earnings/fund
balances at end of year $ 4,746 4,838! 745,492 755,076
See accompmtying notes to financial statements.
!
1; I
'I
f
COUNTY OF CONTRA COSTA
COMBINED STATEMENT OF CASH FLOWS
ALL PROPRIETARY FUND TYPES
YEAR ENDED JUNE 30, 1991
(In Thousands)
Proprietary
Fund Types (Memorandum
Internal only)
Enterprise Service Totals
Operating income (loss) $ (29,190) 352 (28,838)
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation 2,072 2,072
Change in assets and liabilities:
Decrease (increase) in accounts receivable and accrued revenues (2,824) (410) (3,144)
Decrease (increase) in amounts due from other funds (568) (526) (1,094)
Decrease (increase) in inventories (1 19) (1 19)
Decrease (increase) in prepaid items and deposits (1 13) (1 13)
Increase (decrease)in accounts payable and accrued liabilities (4,126) 2,005 (2,121)
Increase (decrease) in employee benefits payable 339 339
Increase (decrease) in amounts due to other funds 84 125 209
Increase (decrease) in deferred credits 7,664 7,664
Net cash provided by (used for) operating activities (26,781) 1,536 (25,245)
Cash flows from noncapital financing activities:
Operating transfers in 26,780 1,000 27,780
Operating transfers out (225) (1,000) (1,225)
Net cash provided by (used for) noncapital financing activities 26,555 26,555
Cash flows from capital and related financing activities:
Payments on state loans (58) (58)
Payments on lease purchase obligations (937) (937)
Capital contributions 3,108 3,108
Acquisitions of fixed assets (5,061) (5,061)
Net cash provided by (used for)capital and related financing activities (2,948) (2,948)
Cash flows from investing activities:
Interest income 1,650 3,826 5,476
Net cash provided by (used for) investing activities 1,650 3,826 5,476
Net increase (decrease) in cash and cash equivalents (1,524) 5,362 3,838
Cash and cash equivalents —July 1 12,284 45,251 57,535
Cash and cash equivalents —June 30 $ 10,760 50,613 61,373
Noncash investing, capital and financing activities:
Fixed assets acquired through lease purchase 913 913
Sec accompanying notes to financial statements. 9
COUNTY OF CONTRA COSTA
i
NOTES TO FINANCIAL STATEMENTS
June 30, 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the County of Contra Costa (the "County") conform to generally accepted
accounting principles as applicable to governmental entities. The following is a summary of the more
significant policies:
A. Definition of Reporting Entity
The County of Contra Costa is a political subdivision created by the State of Califomia. As such. it
can exercise the powers specified by the Constitution and statutes of the State. The County is gw cored
by a five member elected Board of Supervisors.
The County reporting entity includes all significant organizations, departments and agencies over which
the Board of Supervisors exercises oversight and budgeting responsibilities. Oversight responsibility is
determined on the basis of appointment or selection of the governing board, designation of inanagenrcnt.
ability to significantly influence operations, accountability for fiscal matters and the scope of public
service. Included in the County reporting entity arc the following: the County's General Fund, Public
Facilities Corporation, Redevelopment Agency, Special Districts under the Board of Supervisors.
Special Revenue Funds. Capital Projects Funds, Debt Service Funds,,lntemal Service Funds. Long-tern
Obligations Account Group. General Fixed Assets Account Group, and the enterprise operations of tic
Hospital, Health Maintenance Organisation, Airport and Employee Fitness Center. As discussed in
Note 10. the financial position and results of operations of the Contra Costa County Employees'
Retirement Association arc being reported on a calendar year basis. This change in reporting period
has resulted in differences in intcrfund balances which arc disclosed in Note 8.
The reporting entity excludes certain separate legal entities which may have "Contra Costa" in their
title, or which arc required to keep their funds in the County Treasury or receive their tax
apportionment from the County. Examples arc school districts, community college districts, cities.
various redevelopment agencies established by local city governments, the Bay Arca Rapid Transit
District, the Metropolitan Transit Authority, and a variety of special purpose districts for cemeteries.
mosquito abatement, recreation and parks, etc. These entities arc autonomous organizations with their
own governmental powers and constituencies and over which the Board of Supervisors has no oversight
responsibility. Accordingly, they are not included in the accompanying financial statements, except as
to their assets held by the County (principally cash and investments held by the County Treasurer) as
discussed under "Fiduciary Funds".
1(l
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
B. Fund Accounting
The County uses funds and account groups to report on its financial position and the results of its
operations. Fund accounting is designed to demonstrate legal compliance and to aid financial
management by segregating transactions related to certain government functions or activities.
A fund is a separate accounting entity with a self—balancing set of accounts. An account group. on the
other hand, is a financial reporting device designed to provide accountability for certain assets and
liahilitics.thal arc not recorded in the funds because they do not directly affect net cxpcndahlc available
financial resources.
Funds arc classified into three categories: governmental, proprietary and fiduciary. Each category. In
tum, is divided into separate "fund types"
Governmental funds are used to account for all or most of the County's general activities, including the
collection and disbursement of earmarked monies (special revenue funds), the acquisition or construction
of general fixed assets (capital project funds), and the servicing of general long—term obligations (dcht
service funds). The General fund is used to account for all activities of the County not accounted for in
sonic other fund.
Proprietary funds are used to account for activities similar to those found in the private sector, where
the determination of net income is necessary or useful to sound financial administration. G(x)ds or
services from such activities can be provided either to outside parties (enterprise funds) or to other
departments or agencies primarily within the County (internal service funds).
Fiduciary funds arc used to account for assets held by the County in a trustee capacity or as an agent
for individuals, private organizations, other governments, and/or other funds. These include pension
trust and agency funds. The pension trust fund is accounted for in essentially the same manner as
proprietary funds since capital maintenance is critical. Agency funds are custodial in nature (assets
equal liabilities) and do not involve measurement of results of operations.
C. Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its measurement
focus. All governmental funds are accounted for using a current financial resources measurement focus.
With this measurement focus, only current assets and current liabilities generally arc included on the
balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing
sources) and decreases (i.e..expenditures and other financing uses) in net current assets.
11
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
All proprietary funds and the pension trust fund are accounted for on a flow of economic resources
measurement focus. With this measurement focus, all assets and all liabilities associated with the
operation of these funds arc included on the balance sheet. Fund equity (i.e., net total assets) is
segregated into contributed capital and retained earnings components. Proprietary fund—type operating
statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets.
The modified accrual basis of accounting is used by all governmental fund types and agency funds.
Under the modified accrual basis of accounting, revenues arc recognized when susceptible to accrual
(i.e.. when they become both measurable and available). "Measurable" means the amount of the
transaction can be determined and "available" means collectible within the current period or soon
enough thereafter to be used to pay liabilities of the current period. The County considers property
taxes as available if they arc collcctcd within 60 days after year end. A one—year availability period is
used for revenue recognition for all other governmental fund revenues. E.xpcndilures arc recorded when
the related fund liability is incurred. Principal and interest on general long—term obligations arc
recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund
for payments to be made early in the following year.
Those revenues susceptible to accrual arc property taxes, franchise, fees, aid from other governments.
interest revenue and charges for services. Sales taxes collcctcd and held by the State at year end on
behalf of the County are also recognized as revenue. Fines, fees and permits are not susceptible to
accrual as they generally are not measurable until received in cash.
The accrual basis of accounting is utilized by proprietary fund types and the pension trust fund. Under
this method. revenues are recorded when earned and expenses are recorded when liabilities arc incurred.
The County reports deferred revenue on its combined balance sheet. Deferred revenues arise when a
potential revenue docs not meet both the "measurable" and "available" critcria for recognition in the
current period. Deferred revenues also arise when resources arc received by the County before it has a
legal claim to them, as when grant monies arc received prior to the incurrence of qualifying
expenditures. In subsequent periods. when both revenue recognition criteria arc met, or when the
County has a legal claim to the resources, the liability for the deferred revenue is removed from the
combined balance sheet and revenue is recognized.
D. Budgets and Budgetary Accounting
In accordance with the provisions of Sections 290W through 29143 of the Government Code and other
statutory provisions, commonly known as the County Budget Act, the County prepares and legally
adopts a budget on or before October 2 for each fiscal year. Budgets are adopted for the general,
12
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
special revenue, debt service and capital project funds. Budgets arc adopted on the modified accrual
basis.
Except for debt service funds, the results of operations as presented in the budget—to—actual comparison
statements are on the generally accepted accounting principles (GAAP) basis. For debt service funds
the difference between the Budget Basis and GAAP Basis is as follows (in thousands):
Excess (deficiency) of revenues and other financing
sources over (under) expenditures and other
financing uses (budget basis) S ( 291)
Adjustment:
Budgets arc not adopted for.the
Public Facilities Corporation LED
Excess (deficiency) of revenues and other financing
sources over (under) expenditures and other
financing uses (GAAP basis) 5
Expenditures are controlled on the object level within departments for all adopted budgets. Any
amendments of appropriations for a department, or transfers of appropriations between departments arc
approved by the Board of Supervisors, as arc supplemental appropriations necessary and normally
financed by unanticipated revenues received during the year. $104,343,689 in supplemental
appropriations were added to the budgets for all governmental fund types during the fiscal year. Of
this amount, $48,208,641 was for the General Fund. The Board'has delegated authority to the County
Administrator to approve transfers of appropriations between objects within a department. Budgeted
amounts are reported as amended. Individual amendments were not material in relation to the original
appropriations. All appropriations lapse at year end.
E. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. is
employed as an extension of formal budgetary integration in the general,special revenue,debt service
and capital project funds. Encumbrances outstanding at year end arc reported as reservations of fund
balances since they do not constitute expenditures or liabilities.
13
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
F. Inventories
Inventories are valued at cost on a first—in, first—out basis. The cost is recorded as an expenditure at
the time individual items arc withdrawn from inventory (consumption method).
G. Fixed Assets
Fixed assets are valued at historical cost. Contributed fixed assets are recorded at fair market value at
the time received. Certain assets, for which actual costs are not available, have been valued on the
basis of a professional valuation which determined their approximate historical cost.
Fixed assets used in governmental fund type operations (general fixed assets) arc accounted for in the
general fixed assets account group, rather than in governmental funds. Public domain ("infrastructure")
general fixed assets consisting of certain improvements other than buildings, such as roads, bridges,
streets and sidewalks, curbs and gutters, drainage systems, and lighting systems, arc not capitalized as
these assets arc immovable and of value only to the County. NoAcprcriation has been provided on
general fixed assets.
Depreciation has been provided on proprietary fund assets using the straight—line method over the
following estimated useful lives: buildings, 25-40 years; improvements, 10-20 years: and equipment.
3-20 years.
H. Vacation and Sick Leave
Under terms of union contracts. County employees arc granted vacation and sick leave in varying
amounts. In the event of termination, an employee is reimbursed for accumulated vacation days.
Employees are not reimbursed for accumulated sick leave. Accrued vacation at June 30, 1991 equals
$19,556,000 including $16,737,000 attributable to the general and special revenue funds. The latter
amount is not expected to be fully liquidated in the following year with expendable or available
financial resources. Accordingly, this liability is reflected in the general long—term obligations account
group. In proprietary funds, accumulated vacation is recorded as an expense and liability as benefits
accrue to employees.
a
14
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
1. Total Columns on Combined Statements
Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are
presented only to facilitate financial analysis. Data in these columns docs not present financial
position, results of operations,or changes in financial position in conformity with generally accepted
accounting principles nor is such data comparable to a consolidation. lnterfund eliminations have not
been made in the aggregation of this data.
I Cash Flows
For the purposes of the statement of cash flows, the County considers all highly liquid invcstmcits with
an initial maturity of three months or less to be cash equivalents.
K. Accounting Reclassifications
Certain reclassifications have been made to amounts previously reported to conform to the current
year's report format.
2. CASH AND INVESTMENTS
The cash balances of substantially all funds except the pension trust fund are pooled and invested by the
County Treasurer for the purpose of maximizing investment earnings. As permitted by the Government
Code,depositing entities may direct the County Treasurer to make specific investments separate from the
pool. The Retirement Board directs the investment activity of the pension trust fund.
Cash and investments at June 30, 1991 (December 31, 1990 for the pension trust fund) arc as follows (in
thousands):
Pension Trust
Countv Fund 191811
Deposits S 467,967 31,775 499.742
Investments 307,898 717,794 1,025.692
Total $125 244S64 L525"
15
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
A. Deposits
'ilio carrying amount of deposits included a bank balance of $124,892,212. The Government Code
requires.California banks and savings and loan associations to secure the County's bank balance not
covered by federal deposit insurance. The County does riot rely on FDIC' insurance, and banks fully
collateralize all bank balances by pledging mortgages or government securities as collateral. The
market value of mortgages must equal at least 150%, and the market value of government securities
must equal at least 110% of the value of the balance. Such collateral must be held in the pledging
bank's trust department or in a separate depository in an account for the County.
The remaining deposits of $374,849,788 include uninsured and/or uncollateralized deposits being held
by trustees for the benefit of the County and/or the pension trust fund.
B. Investments
Statutes authorize the County to invest in obligations of the United States Treasury, federal agencies.
municipalities, commercial paper rated A—I by Standard & Poor's Corporation or P-1 by Mexxiy's
Commercial Paper Record, bankers' acceptances, repurchase agreements and reverse repurchase
agreements.
Pension trust fund investments are authorized by the County Employees' Retirement Law of 1937.
Statutes authorize a "prudent expert" guideline as to the form and types of investments which may be
purchased.
The County's investments and those of the pension trust fund are categorized separately below to give
an indication of the level of risk assumed by each investment portfolio as of year end. Category 1
includes investments that are insured or registered or for which the securities are held by the County or
its agent in the agent's nominee name, with subsidiary records listing the County as the legal owner.
Category 2 includes uninsured or unregistered investments for which the securities are held for the
County by its agent in the agent's nominee name with subsidiary records listing the County as the legal
owner.
16
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
Investments (recorded at cost) and related market values as of June 30, 1991 (December 31, 1990 for
the Pension Trust Fund) are as follows (in thousands):
Category Carrying Market
County 2 Amount Value
U. S. government securities $ 113,676 113,676 114.145
Bankers' acceptances 194,222 194222 194,192
Total $ 302JM 3t&lu
Category Carrying Market
Pension Trust Fund 1 Amount Value
Common and preferred stock S 258,474 258,474 307,017
Corporate Wads 367,778 367,778 377,888
Real estate 67,776 67,776 59,994
Other 23.766 23.766 23.766
Total $ 717,794 717 744 ,{
The investments of the Pension Trust, including real estate, arc recorded at cost. The County has the ability
and intent to hold all real investments long term and does not recognize a loss from real estate investments
for market declines deemed to be temporary.
3. PROPERTY TAX
The County is responsible for assessing, collecting, and apportioning property taxes. Taxes arc levied for
each fiscal year on taxable real and personal property which is situated in the County based on the assessed
values as of the preceding March 1. March I is also the lien date. Tax rates arc set no later than the first
workday in September. Property taxes on the secured roll are due in two installments: November 1 and
February 1. If unpaid, such taxes become delinquent after December 10 and April 10, respectively.
Supplemental property taxes are levied based on changes in assessed values between the date of real
property sales and construction and the next normal assessment date. The additional supplemental property
taxes are prorated from the first of the month following the date of such occurrence. Property taxes on the
17
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
unsecured roll arc due on the lien date (March 1), and become delinquent, if unpaid, on August 31.
Property taxes are recorded as revenue when apportioned, in the fiscal year of the levy. The County
apportions secured property tax revenue in accordance with the alternate method of distribution prescribed
by Section 4705 of the State Revenue and Taxation Code. This alternate method provides for crediting each
applicable fund with its total secured taxes upon completion of the secured tax roll, approximately October
1 of each year.
Under the alternate apportionment method, specified amounts of penalties, interest collected on delinquent
secured taxes, and funds from sales of tax—deeded properties are held in trust in the secured tax losses
reserve fund. This reserve is used to fund the apportionment of secured taxes. In accordance with the
modified accrual basis of accounting, property taxes which have been collected in advance of the levy year
have been recorded as deferred revenues.
4. FIXED ASSETS
Following is a summary of changes in general fixed assets for the year ended June 30, 1991 (in thousands):
Balance Balance
July 1, June 30,
1990 Additions 1 ins 1991
Land $ 21,364 381 21,745
Buildings and improvements 158,013 21,048 , 179,061
Buildings and improvements—
lease purchase 90,326 24,028 1,449 112,905
Equipment 50,149 9,671 , 11 . 59,809
Equipment—lease purchase 11.370 2,181 1,881 11,670
Total $ —Ul 7-3 ; � 4 3&%10_
1 t;
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
Proprietary fund type fixed assets at June 30, 1991 were as follows (in thousands):
Employee Health Total
Fitness Maintenance Enterprise
AiMg Center Hospital Or¢aniiation Funds
Land $ 6,351 426 6,777
Buildings and improvements 10,170 12,673 73 22,916
Equipment 588 6,482 473 7,543
Equipment—lease purchase 82 4.679 73 4,834
17,109 82 24,260 619 42.070
Less accumulated
depreciation. 3,968 — 9 12,633472 17.082
Net fixed assets $ 1 ,141 73 11-527 147 24.9RR
5. SHORT TERM NOTES
On June 30, 1991, the County had tax and revenue anticipation notes outstanding of $65,000,000. The notes
incurred interest at 6.25% per annum. These notes, issued July 2, 1990 were redeemed on August 3. 1991
from taxes and other revenues transferred to a fiscal agent during the fiscal year. Total interest incurred on
these notes during 1990-91 was $4,062,500, with an additional $338,542 incurred in July, 1991.
6. LEASE COMMITMENTS
A. Operating Leases
Total rental expense for the year ended June 30, 1991 for all operating leases and month—to—month
lease arrangements amounted to $5,372,169 for the general fund, $713,198 for the special revenue
funds, and $1,001,066 for the enterprise funds.
19
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
At June 30, 1991, the future minimum rental payments required under noncancellablc operating
Imes for buildings and equipment, other than month—to—month lease arrangements, are as follows
(in thousands):
Special
Fiscal year General Revenue Enterprise
ending June 30. Fund Funds Funds
1992 $ 2,809 21 520
1993 2,574 11 387
1994 2,021 394
1995 1,293 340
1996 597 227
Thereafter 3.867 _ 30
Total $ 13.16 t 32 2.171
B. Capital Leases
The County has capital lease purchase agreements with non—profit public facilities corporation, with the
Employees' Retirement Association, and with third parties. The assets acquired under these lease
agreements are included in the County's general fixed assets. The obligations related to these lease
purchase agreements are included in the County's general long—term obligations, and arc summarized in
Note 7.
i
20
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
7. LONG-TERM OBLIGATIONS
Following is a summary of changes in long—term obligations for the year ended June 30, 1991 (in
thousands):
Balance Balance
July 1, June 30,
1990 Additions Retirements 1991
General
Employee benefits payable $ 15,188 1,549 16,737
Notes payable 7,900 7,900
Capital ]case obligations 40,787 25,815 2.226 64,376
Bonds payable 7,740 475 7,265
Public facilities
corporation obligations 59,670 3,525 56,145
Advances from other funds 3,299 1,948 516 4,731
Total $ 1. 8 9 1 Fi_742 l�y54
Ebte&pfise
Employee benefits payable $ 2,456 339 2,795
Notes payable 1,151 58 1,093
Capital lease obligations 3.650 153 937 2.866
Total $
21
I
COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
i
Following is a schedule of debt payment requirements to maturity for long-term obligations, excluding
advances from other funds and employee benefits payable, outstanding at June 30, 1991 (in thousands):
i
Public Enterprise
Fiscal year Capital Bonds Facilities Note. and
ending Lease And Notes Corporation Lcasc
Junc 30, Obligations Payable Obligations Obligations Total
i
1992 $ 7,452 1,463 7,701 1„286 17,902
1993 7,239 9,072 6,883 L082 24,276
1994 6,917 961 6,620 750 15,248
1995 6,630 961 6,375 591 14,557
1996 6,349 967 7,349 148 14,813
1997-2001 29,142 4,427 30,066 552 64,187
2002-2006 22,825 2,539 22,146 432 47,942
Thereafter 44,513 5.748 _6 50,527
Total $ 131,067 20,390 92,888 5,107 249,452
Less amount
representing
i
interest 66,691 5,225 36,743 1,148 109,807
i
Liability at
June 30, 1991 $ _64-U6 X .3.2 4 134.645
Advances from other funds included in the general long-term obligations account group arc obligations of
the County Redevelopment Agency, which are expected to be repaid from tax increment,financing in future
years, and arc not to be repaid in the fiscal year ending June 30, 1992. interest is accrued at the prevailing
rates which vary with the prime interest rate or at 12% per annum, whichever is less.
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
Individual issues of bonds. notes and certificates of participation payable at June 30, 1991 are as follows
(in thousands):
Outstanding
Original Annual Final Interest at June 30,
Issue
issue Installments Payment 1991
Public Facilities Co ration(1)
2425 Bisso Lane S 1,810 $ 100-155 1992 7.0-8.5%n S 44.5
1988 Consolidated
Capital Projects 61,690 2,645-2,730 2008 5.6-7.8 55,7(0
56,145
Soecial Revenue General
Oblieation Bond (2)
Sanitation 4,760 231-1,066 2002 3.875-11.75 2,275
Recreation and Park 6,750 135-540 2004 8A-7.5 4.920
Storm Drainage 600 5-35 2005 4.0-4.6 70
7,265
Redevelopment Agency
Notes Payable(3)
Tax Allocation Notes 7,500 1992 6.0 7,500
Property Note 400 1992 12.0 400
.7,900
NOTES:
(1) Debt service payments are made from lease payments by the County general and special
revenue funds to the Public Facilities Corporation.
(2) Debt service payments are made from restricted property taxes and other revenues recorded
in the debt service funds.
(3) Debt service payments are made from tax increment financing.
There are a number of limitations and restrictions contained in the various bond indentures. County
management believes that the County is in compliance with all significant limitations and restrictions.
23
COUNTY OF CONTRA COSTA.
NOTES TO FINANCIAL STATEMENTS
8. INTERFUND BALANCES
Account balances at June 30. 1991 arc as follows (in thousands):
Due from Due to Advances to Advances from
Other Funds Other Funds cr F ups Other Funds
General Fund $ 32,637 14,299 2,137
Special Revenue Funds:
Road 1,998 1,969
Library 31 187
Fire Protection 708 625
Health and sanitation 465 471
Service Areas 9 489 1,197
Flood Control 5,465 6,080 1,780
Law Enforcement 110 745
Courts & Criminal Justice 1,261 226
Recorder/Clerk Modernization 4 13
Other Special Revenue 53 17 43
Capital Projects Funds:
Redevelopment Agency 229 86 481
West County Jail 6,219
Enterprise Funds:
Airport 18 101
Employee Fitness Center 1 14
County Hospital 4,485 5,510
Health Maintenance Organization 4.283 2,370
Internal Service Funds:
Self Insurance 1,293 1,143
Trust and Agency Funds:
Tax Distribution Trusts 47,520 51,212
Schools and Special Districts 14,392 14,608
Other Agency 3,875 26,816 55
Lang—Term Obligations 4.731
Subtotal $ 125,056 126,981 5.212 5,212
Adjustment for Pension Trust reported
as of December 31. 1990 4,263 2.338
Total $ 124 19 _U,U
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
9. RESERVES AND DESIGNATIONS OF FUND BALANCE
Following is a summary of reserved and designated fund balances at lune 30, 1991 (in thousands):
Special Debt Capital
General Revenue Service Projects Fiduciary I
Fund Funds Funds Funds Funds Total
Reserved liar.
Encumbrances $ 10,119 8.697 684 19,5(x)
Inventories 1,217 1.217
Debt service 3,890 3.800
Prepaid items and
deposits 5,227 1,478 9 6.714
Advances to other funds 2,137 3,020 5,157
Employee retirement
benefits 745.492 745,492
Total $ 1 x_7txa _13.195 3.99( _b93 745-49 7�L9D
Designated for:
Equipment replacement $ 4,814 2,(X)7 6,821
.Trial Court Funding
Agreement 495 495
Authorized expenditures 2125 2,325
Total $ 2" 2.00 9.641
10. ADJUSTMENTS TO FUND BALANCES
The General Fund had a $28,058 prior period adjustment of an asset transferred to the Road Fund. Flood
Control Special Revenue Funds had a $710,600 fund balance adjustment resulting from reclassifying notes
from current liabilities to long—term debt. The Redevelopment Agency Capital Projects Fund had a
$633,132 adjustment resulting from forgiveness of a note to the Pleasant Hill—BART District with which it
merged. The Employee Fitness Center Enterprise Fund had a $2,517 adjustment to fixed assets. The
Pension Trust Fund had a $415,000 write down for adjustments of prior years,
Reporting of the Pension Trust Fund was changed from a fiscal year to a calendar year basis. This resulted
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENT'S
in a restatement of fund balance from $714,868,000 as of June 30, 1990 to $692,034,000 as of December
31, 1989, a difference of$22,834,000.
11. DEFICIT FUND BALANCES
The Employee Fitness Center enterprise fund had deficit retained earnings of approximately 562,000
resulting from operations. This deficit will be funded by user charges resulting from increased mcmbcrship.
The internal,service fund for Employee Dental Insurance had an operating deficit of 5416,0()). This deficit
is expected to be funded by increased premiums. The West County Jail Capital Project Fund had a deficit
fund balance of$2.0 million. This deficit will be covered by future transfers from the General Fund and
other funding sources.
The Automotive Liability and Public Liability Insurance internal service funds had deficit balances of
$976,000 and $2,196,000 respectively, resulting from estimating claims liabilities to reflect the methodology
used by the insurance industry. These funds will receive sufficient funding from investment earnings and
from operating funds to cover disbursements during the years when they become payable.
12. CONTRIBUTED CAPITAL CHANGES
The contributed capital of the enterprise funds changed as follows (in thousands):
Health
County Maintenance
Airoon liospital Ori ization Total
Balance as of July 1, 1990 $ 8,809 7,850 Sb 16,749
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Federal and state
construction grants . 3,108 3,108
Transfer between funds (921) 921
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Transfer of fixed assets (to)
and from General Fund (316) 0-U (327)
Balance as of June 30, 1991 $ _11 1 _6-613_ Lao- 19530
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STA'T'EMENTS
13. SEGMENT INFORMATION FOR ENTERPRISE FUNDS
Financial data for the enterprise funds for the year ended June 30, 1991 are as follows (in thousands):
Employee Health
Fitness County Maintenance
A Center Hospital Organization Total
Operating revenues $ 443 168 74,541 25,723 100,875
Operating expenses (other
than depreciation) 1,587 202 94,187 32,017 127,993
Depreciation and
amortization 148 9 1.888 27 2.072
Operating loss (1,292) (43) (21.534) (6,321) (29,190)
Non-operating revenues, net 1,346 9 156 139 1,650
Operating transfers in — — 20.373 6.182 26.555
Net income (loss) $ 54 (34) (11005) ( 985)
Fixed assets:
Additions $ 3,553 2,411 10 5,974
Deletions 10 1,094 12 1,116
Net working capital 70 (78) 4,979 1,071 6.042
Total assets 13,925 84 37,427 5,869 57,305
Capital lease obligations 57 2,771 38 2,866
Total equity (deficit) 12,080 (62) 11,148 1,110 24,276
The County pays a subsidy to the Hospital and Health Maintenance Organization Enterprise Funds to
provide resources for operating costs which are in excess of operating revenues. Subsidies for the last three
years are as follows (in thousands):
Year Ended June 30. Total Subsidy
1989 $ 21,920
1990 24,448
1991 26.555
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
14. DEFERRED COMPENSATION PLAN
The County offers its employees a deferred compensation plan created in accordance with Internal Revenue
Code Section 457. The plan, available to all County employees, permits them to defer a portion of their
salary until future years. The deferred compensation is not available to employees until termination,
retirement, death, or unforseen emergency.
All amounts of compensation deferred under the plan, all property and rights purchased with those amounts.
and all income attributable to those amounts, property, or rights arc (until paid or made available to the
employee or other beneficiary) solely the property and rights of the County (without being restricted to the
provisions of benefits under the plan), subject only to the claims of the County's general creditors.
Participants' rights under the plan are equal to those of general creditors of the County in an amount equal
to the fair market value of the deferred account for each participant.
It is the opinion of the County's legal counsel that the County has no liability for losses under the plan but
does have the duty of due care that would be required of an ordinary prudent investor. County
management believes that it is unlikely that the County will use the assets to satisfy the claims of general
creditors in the future.
As of June 30, 1991, the assets of the plan, recorded in an agency fund at their fair market value. amounted
to $38,102,000.
15. MORTGAGE REVENUE BONDS
Home mortgage revenue bonds have been issued to provide mortgage loans secured by first trust deeds on
newly consuuctcd and existing residences. The program provides low interest rate mortgage loans to
persons unable to qualify for conventional mortgages at market rates. The original issue amounts for the
program have been as follows:
Year Original Issue
1982 $ 62,400,000
1983 37,100,000
1984 57,562,609
1985 58,999,782
1987 35,920,000
1988 72,000,000
1989 44,960,000
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
The bonds do not constitute an indebtedness of the County. The bonds arc payable solely from payments
made on and secured by a pledge of the acquired mortgage loans and certain funds and other monies held
for the benefit of the bondholders pursuant to the bond indentures. Thesc bonds are not payable from any
revenues or assets of the County, and neither the full faith and credit nor the taxing authority of the County,
the State, or any political subdivision thereof is obligated to the payment of the principal or interest on the
bonds. Accordingly, no liability has been recorded in the general long—term obligations account group.
16. COMMITMENTS AND CONTINGENCIES
A. Grants
The County participates in a number of Federal and State grant programs subject to financial and
compliance audit by the grantors or their representatives. Audits of certain grant programs including the
year ended lune 30. 1991 have not yet been conducted. Accordingly, the County's compliance with
applicable"grant requirements will be established at some future date. The amount, if any, of
expenditures which may be disallowed by the granting agencies cannot be determined at this time. The
County believes that such disallowances, if any, would not have a material effect on the combined
statements.
B. Self Insurance
The County is self—insured for claims relating to public liability (excluding the airport, which is
insured), automobile accidents, medical malpractice, and unemployment. The County is also self
insured for claims related to workers' compensation but minimizes risk by purchasing coverage for
liabilities in excess of$500,000 per occurrence. In addition, the County is self—insured for costs of its
employees' dental program, it's management employees' long—term disability program, and for a
medical plan which is offered to employees as an alternative to third party medical coverage. Internal
service funds arc used to account for the County's self—insurance activities. It is the County's policy to
provide in each fiscal year, by charges to affected operating funds. amounts sufficient to cover the
estimated charges for self—insured claims. Charges to operating funds are recorded as expenditures of
such funds and revenues of the internal service funds. Accruals and payments of claims are recorded in
the internal service funds. Claims incurred but not reported have been accrued.
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL. STATEMENTS
C. Health Insurance
Health care benefits for active and retired employees are jointly financed by the beneficiaries and by
the County. Employees have a choice of participation in three medical plans: Kaiser Permanente, a
private health maintenance organization (HMO); the First Choice Health Plan, a County self—insured
plan. and the Contra Costa Health Plan (CCHP),operated by the County Medical Services Department.
The County subvents all but a penny of the total premium for members of the CCHP. A dental plan is
also offered to all employees. The County's contribution to health and dental plans during 1990-91 for
active employees was $21,857,000. The County's liability for health care benefits is limited to its
annual contribution.
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D. Post—Employment Benefits
In addition to providing retirement benefits as described in Note 17;below, retired employees arc
allowed to continue participation in the medical and dental plans described above. As of June 30.
1991, there were 2,563 retired employees participating in the health, plans, and the County contributed
$5,967,000 toward payment of the premiums. The cost of retiree health care is recognized when the
County makes its contribution.
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E. Property Taxation
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Pacific Bell has challenged the property assessment practices of the State Board of Equalization in
producing the Utility Tax Roll. This challenge has implications for every taxing agency in the State,
and every effort is being made to negotiate a settlement. County management believes that any
settlement would be prospective in its application, and that if there were to be a liability for past
assessments, it would be spread over a number of years in the future. As of June 30, 1991, it is not
possible to reasonably estimate the ultimate outcome of the pending litigation. Management believes
that any resulting liability would not have a material adverse effect bn the County's combined financial
position.
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NOTES TO FINANCIAL STATEMENTS
17. EMPLOYEE RETIREMENT SYSTEM
A. Plan Description and Provisions
The Contra Costa County Employees' Retirement System is a cost—sharing multiple—employer defined
benefit pension plan governed by the County Employees' Retirement Law of 1937, as amended. The
plan covers substantially all of the employees of the County and fourteen other member agencies. The
total membership of 11,850 is divided among general and safety members, and retired members as
follows:
Retirees and beneficiaries currently receiving benefits 3,718
Terminated employees entitled to benefits but not yet receiving them 470
Active members with vested benefits 4,721
Active members without vested benefits 2.941
Total membership i l_M
The plan provides for retirement, disability, death, and survivor benefits. Annual cost—of—living
(C.O.L.) adjustments to retirement allowances can be granted by the Retirement Board as provided by
State statutes. Service retirements are based on age, length of service and fatal average salary..
Subject to vested status, employees can withdraw contributions plus interest credited or leave them as a,
deferred retirement when they terminate or transfer to a reciprocal retirement system. Specific
provisions are as follows:
General Membership
This membership is divided into two tiers. Tier II includes all employees who became members
after August 1, 1980, and those Tier I members who elected to transfer to Tier Il. Tier II members
contribute less and receive lower benefits than the Tier I members. All members may elect service
retirement at age 50.with 10 years of service or with 30 years of service regardless of age.
Disability retirement may be granted as service-connected with no years of employment required,
or, for members prior to August 1, 1980, non—service—connected with five years of service credit
required. The definition of disability is stricter for Tier II than for Tier I. The retirement benefit is
based on a one year(three for Tier II) final average salary.
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NOTES TO FINANCIAL STATEMENTS
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Safety Membership
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This membership covers all members who are in active law enforcement, active fire suppression
work or certain other "safety" classifications as designated by the Retirement Board. Members may
elect service retirement at age 50 with 10 years of service, or with 20 ;years of service regardless of
age. Disability retirements may be granted as service-connected with no years of employment
required or non—service—connected with five years of service credit required. The retirement benefit
is based on a one year final average salary.
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B. Funding Status and Progress
The amount shown below as "pension benefit obligation" is a standardized disclosure measure of the
present value of pension benefits, adjusted for the effects of projected salary increases and any step—
rate benefits, estimated to be payable in the future as a result of employee service to date. The
measure is intended to help users assess the funding status of the system on a going—concern basis,
assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons
among employers. The measure is the ratio of assets available to pay benefits to the actuarial present.
value of credited projected benefits and is independent of the funding method used to determine
contributions to the system. i
The pension benefit obligation was computed as part of an actuarial!evaluation performed as of
December 31, 1990. Significant actuarial assumptions used in the valuation include (a) a rate of retum
on the investment of present and future assets of 8.25 percent per year, (b)projected salary increases of
5.5 percent per year compounded annually, attributable to inflation, (c) additional projected salary
increases of 1 percent per year, attributable to longevity and merit, and (d) post—retirement benefit
increases of 3 percent for Tier I and Safety and 4 percent for Tier II attributable to inflation as
measured by the Consumer Price Index. The 1983 Group Annuity Mortality tables arc used as part of
the assumptions for actuarial valuation for service retirements, and the 1981 Disability Mortality table
for valuation for disability retirements. Total unfunded pension benefit obligation applicable to the
system's employees was $378.8 million at December 31, 1990, as follows (in millions):
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NOTES TO FINANCIAL STATEMENTS
pension benefit obligation:
Retirees and beneficiaries currently receiving benefits and terminated
employees not yet receiving benefits $ 502.7
Current employees:
Accumulated employee contributions including allocated investment
income 137.3
Employer-financed vested 434.6
Employer-financed nonvested 43.4
Other reserves (post-retirement death benefit and C.O.L. supplement) 2.1
Total pension benefit obligation 1,120.1
Net assets available for benefits at cost (market value is $768.5 million) 741.3
Unfunded pension benefit obligation $ 37R_R
C. Contributions Required and Contributions Made
New contribution rates based on the actuarial study of January 1. 1990, became effective July 1, 1990.
The employer rates were calculated on the alternate funding method permitted by Section 31453.5 of
the Government Code. The "entry age normal funding" method is used to calculate the rate required to
provide all the benefits promised to a new member. Unfunded costs resulting from this calculation arc
amortized over 20.5 years from the January 1, 1990 valuation date. The significant actuarial
assumptions used to compute the actuarially determined contribution requirements are the same as those
used to compute the pension benefit obligation as described in "Funding Status and Progress".
Total payroll for all employers participating in the plan was $292.8 million. The total payroll for the
County was $269.0 million; of which $236.7 million was for County employees covered by the plan.
Contributions for all participating agencies, totaling $50,842,941 for 1990, were made in accordance
with actuarially determined contribution requirements determined through actuarial valuations performed
at January 1. 1990 and January 1, 1989, and adopted by the Retirement Board. The County's
contribution of$34,804.060 and the employees'contribution of$8.032,574 were 14.7% and 3.4%
respectively of the $236.7 million covered payroll. The County's contribution was 85.6% of the
$40,662,786 total contributions of all participating employers. These contributions consisted of normal
costs (8.5 percent of current covered payroll) and amortization of the unfunded actuarial accrued
33
COUNTY OF CONTRA COSTA i
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NOTES TO FINANCIAL STATEMENTS
liability (8.75 percent of current covered payroll).
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The 1937 Act statutes require employees to pay 50% of the basic!retirement benefit (Tier II — 40% of
Tier I rate) and 50% of future C.O.L. costs, with employers making up the balance of the basic and
C.O.L. contributions needed. Pursuant to agreements reached during salary negotiations, the County
generally pays 50% of employees' basic contributions. This amounted to $5,111,068 in 1990.
I
D. Historical Trends
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Ten—year historical trend information designed to provide information about the system's progress made
in accumulating sufficient assets to pay benefits when due is presented as statistical information. This
.trend information is summarized for the three most recent calendars years as follows:
1988, L9 8-1) 1990
Ratio of net assets available for benefits to
pension benefit obligation 67.8% 1 69.5% 66.2%
Ratio of unfunded pension benefit obligation
to annual covered payroll 121.9% 118.2% 129.410
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Ratio of employer contributions to annual
covered payroll 12.2% i 13.6% 14.310
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18. DEFEASANCE OF DEBT
In prior years, the Public Facilities Corporation defeased certain lease revenue bonds and certificates of
participation by placing the proceeds of the refunding obligations in an irrevocable trust to provide for all
future debt service payments on the old obligations. Accordingly, the trust account assets and the related
liabilities of the defeased obligations are not reflected in the County's financial position. At June 30, 1991,
the amount of outstanding obligations considered defeased was $73,795,000.
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COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STA'T'EMENTS
19. SUBSEQUENT EVENTS
1991-92 Tax and Revenue Anticipation Notes
On July 1, 1991, the County issued short—term tax and revenue anticipation notes of $75,000,WO. The
notes bear interest at 4.75% and will mature July 30, 1992.
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APPENDIX B
SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS
The following summary discussion of selected features of the Site
Lease, dated as of May 1, 1992 (the "Site Lease") , the Facility Lease,
dated as of May 1, 1992 (the "Facility Lease") , the Assignment Agreement,
dated as of May 1, 1992 (the "Assignment Agreement") , the Trust
Agreement, dated as of May 1, 1992 (the "Trust Agreement") , and the
Agency Agreement, dated as of May 1, 1992 (the "Agency Agreement") , are
made subject to all of the provisions of such documents and to the
discussions of such documents contained elsewhere in this Official
Statement. This summary discussion does not purport to be a complete
statement of said provisions, and prospective purchasers of the
Certificates are referred to the complete texts of said documents, copies
of which are available upon request from the office of the Superintendent.
CERTAIN DEFINITIONS
The following are definitions of certain of the terms used in this
Official Statement. Certain capitalized terms used in the Official
Statement are either defined elsewhere in the Official Statement or in
the Facility Lease or Trust Agreement, to which reference is hereby
made. Unless the context otherwise requires, the terms defined in this
Official Statement will have the meanings defined herein, the following
definitions to be equally applicable to both the singular and plural
forms of any of the terms defined herein:
"Accreted Interest" means, with respect to the Capital Appreciation
Certificates, as of the date of calculation, the Accreted Value thereof
minus Denominational Amount thereof.
"Accreted Value" means, with respect to the Capital Appreciation
Certificates, as of the date of calculation, the Denominational Amount
thereof plus the interest accrued thereon to such date of calculation,
compounded from the date of initial delivery at the interest rate thereof
on each May and November 1, as determined in accordance with the Trust
Agreement, assuming in any year that such Accreted Value increases in
equal daily amounts on the basis of a year of 360 days composed of 12
months of 30 days each.
"Additional Certificates" means additional series of certificates of
participation executed and delivered under the Trust Agreement.
"Additional Payments" means all amounts payable to the Corporation or
the Trustee or any other person from the County as Additional Payments
pursuant to the Facility Lease.
"Agency Agreement" means that certain agency agreement by and between
the Corporation and the County, dated as of May 1, 1992, and any duly
authorized and executed amendment thereto.
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"Architects" means the architects, engineers or designers of Project
Phase I listed on Exhibit C to the Facility Lease, the architects,
engineers or designers of any Subsequent Phase : of the Project, and any
successor or successors to any thereof.
"Base Rental Payments" mean the base rentalpayments with interest
components and principal components payable by the County under and
pursuant to the Facility Lease.
"Capital Appreciation Certificates" means Certificates the interest
component of which is compounded semiannually on each Interest Payment
Date to the Certificate Payment Date as specified in the accreted value
table for such Certificates in the Trust Agreement or in a similar
Exhibit to a Supplemental Trust Agreement.
"Certificate of Completion" means a Certificate of the County
certifying that any Phase of the Project has been completed, stating the
date of such completion and stating that all of the Project Costs thereof
and incidental expenses have been determined and paid (or that all of
such costs and expenses have been paid less specified claims which are
subject to dispute and for which a retention' in the Acquisition and
Construction Fund is to be maintained in the full amount of such claims
until such dispute is resolved) .
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"Certificate of the Corporation" means an instrument in writing
signed by the President or the Vice President 'or the Treasurer or the
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, or by any other officer of the Corporation duly authorized
by the Corporation in writing to the Trustee for 'that purpose.
"Certificate of the County" means an instrument in writing signed by
the County Administrator of the County or his designee, or by a Deputy
County Administrator of the County, or by the Director of the Merrithew
Memorial Hospital Replacement Project or the Supervising Architectural
Engineer, or by any other officer of the County duly authorized by the
Board of Supervisors of the County in writing to the Trustee for that
purpose.
"Certificate Payment Date" means, with respect to any Certificate,
the November 1 designated therein, which is ithe date on which the
principal component of the Base Rental Payments evidenced and represented
thereby shall become due and payable.
"Certificate Reserve Fund" means the Facility Lease Certificate
Reserve Fund established pursuant to the Facility' Lease.
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"Certificate Reserve Fund Requirement" means the sum of the portions
of the Certificate Reserve Fund Requirement applicable to all Outstanding
series of Certificates. The portion of the Certificate Reserve Fund
Requirement applicable to the 1992 Certificates. is $10,665,418.75. The
portion of the Certificate Reserve Fund Requirement applicable to each
subsequent Outstanding series of Certificates is the least of (i) the
maximum amount of Base Rental Payments remaining to be made by the County
pursuant to the Facility Lease during any twelve-month period ending on
B-2
November 1 and attributable to such subsequent series of Certificates,
(ii) 1252 of the average of all such remaining annual Base Rental
Payments, and (iii) 1OX of the proceeds derived from the sale of such
subsequent series of Certificates; provided, however, that all or a part
of such Certificate Reserve Fund Requirement may be provided by a policy
of insurance issued by a municipal bond insurance company, obligations
insured by which have a rating by . Moody's Investors Service and by
Standard and Poor' s Corporation which is in one of the two top highest
rating then issued by said rating agencies or by a Letter of Credit
issued by a Qualified Bank.
"Certificates" means the certificates of participation executed and
delivered by the Trustee pursuant to the Trust Agreement and then
Outstanding.
"Code" means the Internal Revenue Code of 1986.
"Contractors" means the construction contractor for Project Phase I,
the construction contractors of any subsequent Phase of the Project and
any successor or successors to any thereof.
"Costs of Issuance" means all items of expense directly or indirectly
payable by or reimbursable to the County or the Corporation and related
to the authorization, execution and delivery of the Facility Lease, the
Site Lease, the Assignment Agreement and the Trust Agreement and the
related sale of the Certificates, including, but not limited to, costs of
preparation and reproduction of documents, costs of rating agencies and
costs to provide information required by rating agencies, filing and
recording fees, initial fees and charges of the Trustee, legal fees and
charges, fees and disbursements of consultants and professionals, fees
and expenses of the underwriter of the Certificates, fees and charges for
preparation, execution and safekeeping of the Certificates, fees of the
Corporation and any other cost, charge or fee in connection with the
original execution and delivery of the Certificates.
"Current Interest Certificates" means Certificates the interest
component of which is payable on each Interest Payment Date to the
Certificate Payment Date specified for each such Certificate.
"Demised Premises" means that certain real property situated in the
County of Contra Costa, State of California, described in Exhibit A
attached to the Facility Lease, together with any additional real
property added thereto by any supplement or amendment to the Facility
Lease; subject, however, to any conditions, reservations and easements of
record or known to the County.
"Denominational Amount" means, with respect to the Capital
Appreciation Certificates, the initial offering price thereof, which
represents the principal amount thereof, and, with respect to the Current
Interest Certificates, the principal amount thereof.
"Event of Default" shall have the meaning specified in the Trust
Agreement and in the Facility Lease.
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"Facility Lease" means that lease, entitled "Facility Lease
(Merrithew Memorial Hospital Replacement Project) " and dated as of May 1,
1992, between the Corporation, as lessor, and the County as lessee, as
originally executed and recorded or as it may', from time to time be
supplemented, modified or amended pursuant to the provisions thereof and
of the Trust Agreement.
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"Interest Payment Date" means a date on which interest evidenced and
represented by the Certificates becomes due and payable, being May 1 and
November 1 of each year to which reference is made (commencing on
November 1, 1992) .
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"Letter of Credit" means an irrevocable and unconditional letter of
credit, a standby purchase agreement, a line of credit or other similar
credit arrangement issued by 'a Qualified Bank toprovide all or a portion
of the Certificate Reserve Fund Requirement and submitted to and reviewed
by Moody's Investors Service and Standard & Poor' s Corporation.
"1992 Certificates" means the Certificates executed and delivered by
the Trustee pursuant to the Trust Agreement and then Outstanding, the
proceeds of which are for the acquisition and ',construction of Project
Phase I.
"1992 Purchaser" means Prudential Securities Incorporated as
representative of the underwriters and purchasers of the 1992
Certificates.
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"1992 Rebate Fund" means the fund by that 'name established in the
Trust Agreement.
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"Opinion of Counsel" means a written opinion of counsel of recognized
national standing in the field of law relating to municipal bonds,
appointed and paid by the County or the Corporation and satisfactory to
and approved by the Trustee (who shall be under no liability by reason of
such approval) .
"Outstanding, " when used as of any particular time with reference to
Certificates, means (subject to the provisions of the Trust Agreement
pertaining to Certificates owned or held by or for the account of the
County) all Certificates except --
(1) Certificates cancelled by the Trustee or delivered to the Trustee
for cancellation;
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(2) Certificates paid or deemed to have been paid within the meaning
of the defeasance section of the Trust Agreement; and
(3) Certificates in lieu of or in substitution for which other
Certificates shall have been executed and delivered by the Trustee.
"Owner" means any person who is the registered owner of any
Outstanding Certificate.
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"Payment Date" means that May 1 or November 1 during the period
beginning November 1, 1992 and terminating on November 1, 2022 to which
reference is made.
"Permitted Investments" means any of the following to the extent then
permitted by the laws of the State of California;
(1) Direct and general obligations of the United States of
America, or obligations that are unconditionally guaranteed
as to principal and interest by the United States of
America, including such obligations which have been
stripped of their unmatured interest coupons (in the case
of direct and general obligations of the United States of
America) which evidence ownership of proportionate
interests in future interest or principal payments of such
obligations. Investments in such proportionate interests
must be limited to circumstances wherein (a) a bank or
trust company acts as custodian and holds the underlying
United States obligations; (b) the owner of the investment
is the real part in interest and has the right to proceed
directly and individually against the obligor of the
underlying United States obligations; and (c) the
underlying United States obligations are held in a special
account, segregated from the custodian's general assets,
and are not available to satisfy any claim of the
custodian, any person claiming through the custodian, or
any person to whom the custodian may be obligated. The
obligations described in this paragraph are hereinafter
called the ."United States Obligations" ;
(2) Obligations issued or guaranteed by the Federal National
Mortgage Association or the following instrumentalities or
agencies of the United States of America (the obligations
described in this paragraph being called the "Federal
Agency Obligations") :
(a) Federal Home Loan Banks;
(b) Government National Mortgage Association;
(c) Farmers Home Administration;
(d) Federal Home Loan Mortgage Corporation;
(e) Federal Housing Administration;
(f) Farm Credit Banks ' (Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives) ;
(g) Student Loan Marketing Association; and
(h) Resolution Funding Corporation obligations consisting
of the right to receive interest which has been
separated from the right to receive principal;
(3) Long-term obligations of any state or authority or local
agency thereof and that are rated Aa or better by Moody's
Investors Service and AA or better by Standard and Poor's
Corporation, including bonds payable solely out of the
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revenues from a revenue-producing property owned,
controlled or operated by the County or any state or by a
department, board, agency or authority', thereof;
(4) Short-term obligations of any state !or authority or local
agency thereof and that are rated in :one of the two highest
rating categories assigned by Moody' s;! Investors Service and
Standard and Poor's Corporation, including bonds payable
solely out of the revenues from' a revenue-producing
property, owned, controlled or operated by the County or a
state or by a department, board, ' agency or authority
thereof;
(5) Interest-bearing demand or time deposits (including
certificates of deposit) in a nationally or state-chartered
bank, or state or federal savings ;and loan association,
including the Trustee or any affiliate thereof, which are
either (i) fully insured by the Federal Deposit Insurance
Corporation, or (ii) issued by any national or
state-chartered bank, or state or federal. savings and loan
association whose interest-bearing demand or time deposits
(including certificates of deposit) are rated at the time
of their issuance at least Aa by Moody's Investors Service
and at least AA by Standard & Poor's Corporation;
(6) Investments in repurchase agreements, the maturities of
which are thirty (30) days or less, entered into with
financial institutions such as banks or trust companies
organized under state law or national banking associations,
insurance companies, or government bond dealers reporting
to, trading with, and recognized as a primary dealer by,
the Federal Reserve Bank of New York and a member of the
Security Investors Protection Corporation (SIPC) or with a
dealer or parent holding company, in each such case the
debt of which is rated at least Aa or P-1 by Moody' s
Investors Service and at least AA or A-1+ by Standard and
Poor' s Corporation. Such repurchase agreements shall be
collateralized by United States Obligations or Federal
Agency Obligations the fair market value of which, together
with the fair market value of the repurchase agreement
securities, shall be maintained at � the collateralization
levels required by Moody's Investors Service and Standard
and Poor's Corporation (as certified to the Trustee by a
Certificate of the County) , and the provisions of the
repurchase agreement shall meet the following additional
criteria:
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(a) the Trustee (who shall not ;be the provider of the
collateral) has possession of the United States
Obligations or Federal Agency Obligations;
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(b) failure to maintain the requisite collateral
levels will require the Trustee to liquidate the
United States Obligations or Federal Agency
Obligations immediately;
(c) the Trustee has a perfected, first priority
security interest in the United States Obligations or
Federal Agency Obligations; and
(d) the United States Obligations or Federal Agency
Obligations are free and clear of third-party liens,
and in the case of an SIPC broker, were not acquired
pursuant to a repurchase or reverse repurchase
agreement;
(7) Pre-refunded municipal obligations rated Aaa by Moody's
Investors Service and AAA by Standard and Poor' s
Corporation and meeting the following conditions:
(a) the municipal obligations are (i) not to be
redeemed prior to maturity or the trustee has been
given irrevocable instructions concerning their
calling and redemption and (ii) the issuer has
covenanted not to redeem such municipal obligations
other than as set forth in such instructions;
(b) the municipal obligations are secured by cash or
United States Obligations that may be applied only to
interest, principal, and premium payments of such
municipal obligations;
(c) the principal of interest on the United States
Obligations (plus any cash in the escrow fund) are
sufficient to meet the liabilities on the municipal
obligations;
(d) the United States Obligations serving as security
for the municipal obligations are held by an escrow
agent or trustee; and
(e) the United States Obligations (plus any cash in
the escrow fund) are not available to satisfy any
other claims, including those against the trustee or
escrow agent;
(8) Prime commercial paper of ,a United States corporation,
finance company or banking institution of the highest
ranking or of the highest letter and numerical rating as
provided for by Moody's Investors Service and Standard &
Poor's Corporation; eligible paper is further limited to
issuing corporations that are organized and operating
within the United States and having total assets in excess
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of $500,000,000 and have an "A" or higher rating for the
issuer's debt, other than commercial paper, if any, as
provided for by Moody' s Investors', Service and Standard &
Poor's Corporation; purchases of eligible commercial paper
may not exceed 180 days maturity ;nor represent more than
101 of the outstanding paper of an 'issuing corporation;
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(9) Shares of a diversified open-end management investment
company (as defined in the Investment Company Act of 1940)
or shares in a regulated investment company (as defined in
Section 851(a) of the Code) that; is a money market fund
(whose shares are registered under the Federal Securities
Act of 1940) that has been rated in the highest rating
category by Moody's Investors Service and AAAm, AAAm-g or
AAm by Standard and Poor' s Corporation, investing in the
securities and obligations as authorized by clauses (1) to
(10) , inclusive, of this definition, and which comply with
the investment restrictions of Articles 1 and 2 of Chapter
4 of Title 5 of the California Government Code (commencing
with Section 53630) ; to be eligible for investment pursuant
to this clause these companies shall either: (1) attain
the highest ranking or the highest letter and numerical
rating provided by not less than two of the three largest
nationally recognized rating services, or (2) have an
investment advisor registered with the Securities and
Exchange Commission, if applicable, : with not less than five
years experience investing in; the securities and
obligations as authorized by clauses (1) through (4) , (6)
through (10) and (11) , inclusive,, of this definition and
with assets under management in excess 'of $500,000,000.
The purchase price of shares of beneficial interests
purchased pursuant to this clause shall not include any
commission that these companies may" charge;
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(10) Negotiable certificates of deposit secured at all times by
United States Obligations or Federal Agency Obligations
issued by a nationally or state-chartered bank or a state
or federal association (as defined by Section 5102 of the
California Financial Code) or by a state-licensed branch of
a foreign bank, any of the above sof which are rated A or
better by Standard & Poor's Corporation. and A or better by
Moody's Investors Service; provided, that such collateral is
at all times held by a third party and Certificate owners
have a perfected first security interest in such collateral;
(11) Shares in the California Arbitrage Management Trust, a
California common law trust established pursuant to Title
1, Division 7, Chapter 5 of the Government Code of the
State of California which invests exclusively in
investments permitted by Section 53635 of Title 5, Division
2, Chapter 4 of the Government Code of the State of
California, as it may be amended,
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(12) Investment in the Local Agency Investment Fund (as that
term is defined in Section 16429.1 of the California
Government Code, as such Section may be amended or
recodified from time to time).; and
(13) Any other investments which the County deems to be prudent
investments and in which the County directs the Trustee to
invest, provided that such investments are either: (i)
rated AA or better by Standard & Poor's Corporation and Aa
or better by Moody's Investor's Service at the time of such
investment; or (ii) are issued by an entity the corporate
debt of which is rated AA or better by Standard & Poor's
Corporation and Aa or better by Moody's Investor's Service;
or (iii) are issued by an insurance company with a claims
paying rating of AA or better by Standard & Poor's
Corporation and Aa or better by Moody's Investors Service.
"Phase of the Project" means Project Phase I or such Subsequent Phase
of the Project to which reference is made.
"Project" means Project Phase I and all Subsequent Phases of the
Project.
"Project Costs" means all costs of acquisition and construction of
the Project and of expenses incident thereto (or for making
reimbursements to the Corporation or the County or any other person, firm
or corporation for such costs theretofore paid by him or it) , including,
but not limited to, architectural and engineering fees and expenses,
interest during construction, furnishings and equipment, tests and
inspection, surveys, land acquisition, insurance premiums, losses during
construction not insured against because of deductible amounts, costs of
accounting, feasibility, environmental and other reports, inspection
costs, permit fees and charges and fees in connection with the foregoing.
"Project Phase I" means those public facilities and buildings
described in the Facility Lease, together with parking, site development,
landscaping, utilities, fixtures, furnishings, equipment, improvements
and appurtenant and related facilities, all to be acquired and
constructed on the Demised Premises pursuant to the Facility Lease.
"Qualified Bank" means a state or national bank or trust company or
savings and loan association or a foreign bank with a domestic branch or
agency which is organized and in good standing under the laws of the
United States or any state thereof or any foreign country, which has a
capital and surplus of $25,000,000 or more, which has an
uncollateralized, unsecured short term debt rating by Moody's Investors
Service of At least "P-1" and by Standard & Poor's Corporation of at
least "A-1+ and which has an uncollate ralized, unsecured long-term debt
rating by Moody's Investors Service of at least "Aa" and by Standard &
Poor' s Corporation of at least "AA" at the time of issuance of the Letter
of Credit.
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"Rental Payments" means the Base Rental Payments.
"Site Lease" means that lease, entitled ! 'site Lease (Merrithew
Memorial Hospital Replacement Project) " and dated as of May 1, 1992,
between the County, as lessor, and the Corporation, as lessee, as
originally executed and recorded or as it may! from time to time be
supplemented, modified or amended pursuant to the provisions thereof and
of the Trust Agreement.
"Subsequent Phase of the Project" means any and all public health
care facilities and buildings, whether within or: without the County, and
all additions, extensions or improvements thereto hereafter added to the
Project and hereafter described by an amendment or supplement to the
Facility Lease and by a Supplemental Trust Agreement.
"Supplemental Reimbursement" means all supplemental Medi-Cal
reimbursement received by the County pursuant to California Welfare and
Institutions Code Section 14085.5, as such section may be amended from
time to time.
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"Supplemental Trust Agreement" means any supplement or amendment to
the Trust Agreement hereafter duly authorized and entered into between
the Corporation, the County and the Trustee in accordance with the
provisions of the Trust Agreement.
"Tax Certificate" means the certificate relating to Section 103 of
the Code, executed by the County on the date of delivery of the
Certificates to the Purchaser, as originally delivered and as it may be
amended from time to time.
"Trust Agreement" means the trust agreement dated as of May 1, 1992,
by and among the Trustee, the Corporation and ithe County, pursuant to
which the Trustee will execute and deliver the 1992 Certificates, as
originally executed or as it may from time to time be supplemented,
modified or amended by a Supplemental Trust Agreement entered into
pursuant to the provisions of the Trust Agreement:
"Trustee" means U.S. Trust Company of California, N.A. , a national
banking corporation duly organized and existing ' under and by virtue of
the laws of the United States of America, or any other bank or trust
company which may at any time be substituted in -its place as provided in
the Trust Agreement.
"Written Request of the Corporation" means an instrument in writing
signed by or on behalf of the Corporation by its President or a Vice
President or its Treasurer or its Assistant Treasurer or its Secretary or
an Assistant Secretary or by any other person (whether or not an officer
of the Corporation) who is specifically authorized by resolution of the
Board of Directors _of the Corporation to sign or execute such a document
on its behalf.
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"Written Request of the County" means an instrument in writing signed
by the County Administrator of the County or his designee, or by a Deputy
County Administrator of the County, or by the Director of the Merrithew
Hospital Replacement Project, or by any other officer of the County duly
authorized by the Board of Supervisors of the County in writing to the
Trustee for that purpose.
SITE LEASE
The Site Lease (Merrithew Memorial Hospital Replacement Project) ,
between the County and the Corporation, dated as of May 1, 1992, will be
executed prior to the delivery of the 1992 Certificates.
The County is the owner in fee of the Demised Premises underlying
Project Phase I. Pursuant to the Site Lease, the County will lease the
Demised Premises to the Corporation. The term of the Site Lease will
commence on the date of recordation of the Site Lease in the office of
the County Recorder of Contra Costa County, State of California, or on
August 1, 1992, whichever is earlier, and will end on March 31, 2023
unless such term is extended or sooner terminated as hereinafter
provided. If on March 31, 2023 the Certificates are not fully paid, or
if the rental payable under the Facility Lease has been abated at any
time and for any reason, then the term of the Site Lease will be extended
until 10 days after the Certificates have been fully paid, except that
the term of the Site Lease will in no event be extended beyond April 1,
2027. If prior to April 1, 2023 the Certificates are fully paid, the
term of the Site Lease will end 10 days thereafter or 10 days after
written notice by the County to the Corporation, whichever is earlier.
The County covenants that it is the owner in fee of the Demised
Premises, as described in Exhibit . A to the Site Lease. The County
further covenants and agrees that if for any reason this covenant proves
to be incorrect, the County will either institute eminent domain
proceedings to condemn the property or institute a quiet title action to
clarify the County' s title, and will diligently pursue such action to
completion. The County further covenants and agrees that it will hold
the Corporation harmless from any loss, cost or damages resulting from
any breach by the County of the covenants contained in this paragraph.
FACILITY LEASE
The Facility Lease (Merrithew Memorial Hospital Replacement Project) ,
between the Corporation and the County, dated as of May 1, 1992, will be
. executed prior to the delivery of the 1992 Certificates.
Design, Approval and Construction of Project Phase I
The County retained the Architect to prepare the plans and
specifications for Project Phase I and agrees to comply with all State
approval, environmental and construction permit requirements applicable
to the design and construction thereof. The County further agrees to
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obtain in the name of the Corporation competitive bids for the
construction of Project Phase I, and to enter into, on behalf of the
Corporation, a construction contract shall require the Contractors to
complete construction by.February 1, 1998.
The Corporation and the County agree that Project Phase I will be
constructed in accordance with the plans and specifications prepared and
to be prepared by the Architects and approved and to be approved by the
County. The Corporation and the County further agree that Project Phase
I will be substantially completed in accordance with said plans and
specifications within the time limits to be� set forth in said
construction contracts.
The County agrees that upon substantial completion of Project
Phase I, it will take possession of and occupy Project: Phase I under the
terms and provisions of the Facility Lease. Such substantial completion
shall be evidenced either by a certificate of the Architects or by the
occupancy by the County of Project Phase I. The, time within which the
Contractors are required to complete Project Phase I will be extended for
a period equal to any extensions of time to which the Contractors are
entitled under the construction contracts (except extensions resulting
from acts of the Corporation) and any delays in ', construction resulting
from other causes and events not within the reasonable control of the
Contractors or of the Corporation.
The County may request the Corporation to; issue change orders
altering the construction contract plans and specifications during the
course of construction, if such changes do not' materially reduce or
diminish the capacity, adaptability or usefulness of Project Phase I, and
the Corporation agrees to cooperate fully with the County to cause such
change orders to be implemented. Before the Corporation issues any such
change orders which, together with all other !; change orders, would
increase the aggregate cost of construction of Project Phase I above the
moneys available for such purpose in the Acquisition and Construction
Fund, or delay completion of Project Phase I beyond; February 1, 1998, the
County will arrange with the Corporation to pay the increased cost
resulting from such change orders, or to pay the Base Rental Payments to
become due and payable after February 1, 1998 until such time as Project
Phase I is scheduled to be completed, and, if required 'by the Corporation
or by the terms of the Trust Agreement, shall deposit funds sufficient to
pay such increased cost or such Base Rental Payments, as the case may be,
with the Trustee.
Changes to the Project
The County has the right, at its own expense, jto remodel the Project
or to make additions, modifications and improvements to the Project and
the Demised Premises. All such additions, modifications and improvements
will thereafter comprise part of the Project and the Demised Premises and
be subject to the provisions of the Facility Lease. Such additions,
modifications and improvements will not in any way !dama.ge the Project or
cause it to be used for purposes other than those authorized under the
provisions of state and federal law; and the Project, upon completion of
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any additions, modifications and improvements made pursuant to the
Facility Lease will be of a value which is at least equal to the value of
the Project immediately prior to the making of such additions,
modifications and improvements.
Installation of County's Equipment
The County and any sublessee may at any time and from time to time,
in its sole discretion and at its own expense, install or permit to be
installed other items of equipment or other personal property in or upon
the Project and the Demised Premises. All such items will remain the
sole property of such party, in which neither the Corporation nor the
Trustee will have any interest, and may be modified or removed by such
party at any time provided that such party will repair and restore any
and all-damage to the Project resulting from the installation,
modification or removal of any such items. Nothing in the Facility Lease
will prevent the County from purchasing items to be installed pursuant to
the Facility Lease under a conditional sale or lease purchase contract,
or subject to a vendor' s lien or security agreement as security for the
unpaid portion of the purchase price thereof, provided that no such lien
or security interest will attach to any part of the Project or Demised
Premises.
Commencement of Lease Term as to Project; Occupancy
The term of the Facility Lease will commence on the date of
recordation of the Facility Lease in the office of the County Recorder of
Contra Costa County, State of California, or on August 1, 1992, whichever
is earlier, and will end on March 31, 2023, unless such term is extended
or sooner terminated as hereinafter provided. If on March 31, 2023, the
Certificates are not fully paid, or if the rental payable under the
Facility Lease has been abated at any time and for any reason, then the
term of the Facility Lease shall be extended until 10 days after all
Certificates are fully paid, except that the term of the Facility Lease
will in no event be extended beyond April 1, 2027. If prior to April 1,
2023, all Certificates are fully paid, the term of the Facility Lease
will end 10 days thereafter or 10 days after written notice by the County
to the Corporation, whichever is earlier.
It is contemplated that the County will take possession of Project
Phase I on or before April 1, 1998. If Project Phase I is substantially
completed before April 1, 1998, the County may take possession of Project
Phase I upon such substantial completion. If the Corporation, for any
reason whatsoever, cannot deliver possession of Project Phase I to the
County by April 1, 1998, the Facility Lease will not be void or voidable,
nor will the Corporation be liable to the County for any loss or damage
resulting therefrom; but in that event the rent payable under the
Facility Lease will be abated proportionately, in the proportion which
the construction cost of the partor parts of Project Phase I not yet
delivered to the County bears to the construction cost of the entire
Project, with respect to the period between April 1, 1998 and the time
when the Corporation delivers possession, except that amounts held by the
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Trustee in the Lease Fund or in the Certificate Reserve Fund or otherwise
available to the Trustee for payments in respect of the Certificates will
not be subject to abatement.
Lease Fund
In consideration for the agreements and covenants of the County in
the Facility Lease, upon the sale and delivery of the 1992 Certificates a
sum (which will include the amount of accrued !interest received by the
Trustee upon the sale of the Certificates) equal to the Base Rental
Payments due from the County to the Corporation from November 1, 1992 to
and including November 1, 1997 and attributable to the months of November
and December 1997, and January 1998, will be paid directly to the Trustee
for deposit in the Lease Fund. The Trustee will maintain the Lease Fund
and apply the moneys on deposit therein for paymentof the Base Rental
Payments due from the County on November 1„ 19512 to and including
November 1, 1997, and for payment of a portion of the Base Rental
Payments due from the County on May 1, 1998,' as shown in the Rental
Payment Schedule attached to the Facility Lease. On such date as no
funds remain in the Lease Fund, the Lease Fund Will be closed. On May 1
and November 1 of each year, the Trustee will ;transfer any earnings on
investments of money in the Lease Fund to the Acquisition and
Construction Fund.
Certificate Reserve Fund
In further consideration for the agreements and covenants of the
County in the Facility Lease, the Corporation further agrees to pay to
the County upon the sale and delivery of the 1992 Certificates a sum
equal to the Certificate Reserve Fund Requirement for deposit with the
Trustee in the Certificate Reserve Fund. If on .May 1 or November 1 of
any year the amount in the Certificate Reserve Fund exceeds the
Certificate Reserve Fund Requirement, the Trustee, if the County is not
then in default under the Facility Lease and if the Corporation and the
County are not then in default under the Trust , Agreement, will pay the
amount of such excess to the County, unless any portion of such excess is
needed to increase the balance in the Trust Administration Fund
established pursuant to the Trust Agreement to the amount required to be
on deposit in said fund, in which event the Trustee will transfer such
portion to the Trust Administration Fund, or if' sucla May or November is
prior to the date of receipt by the Trustee of a Certificate of the
County stating that the construction of the relevant Phase of the Project
has been completed, in which event the Trustee will transfer such portion
to the Acquisition and Construction Fund established pursuant to the
Trust Agreement. Except for such withdrawals, the County agrees that the
Trustee shall apply the moneys on deposit in the Certificate Reserve Fund
solely for the payment of Base Rental Payments' due and payable by the
County if and when rental is abated in accordance with the Facility Lease
or when other moneys of the County are not othrwise available to make
such Base Rental Payments.
Supplemental Reimbursement Account
In consideration for the agreements and covenants of the Corporation
in the Facility Lease, the County hereby agrees to establish and maintain
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a special account, to be held by the County, known as the "Facility Lease
(Merrithew Memorial Hospital Replacement Project) Supplemental
Reimbursement Account" (the "Supplemental Reimbursement Account") and the
County agrees and covenants that all Supplemental Reimbursement received
by it shall be deposited when and as received in the Supplemental
Reimbursement Account, and all money on deposit in such account,
including earnings thereon, will be applied only to the payment of Base
Rental Payments for Project Phase I due and payable by the County.
Pursuant to California Welfare and Institutions Code Section 14085.5, the
County pledges in the Facility Lease that Supplemental Reimbursements
will be used for the payment of Base Rental Payments, and the County
incorporates into the Facility Lease the agreement with the State made
pursuant to California Welfare and Institutions Code Section
14085.5(b) (5) . In addition, the County pledges and grants a lien on and
security interest in the Supplemental Reimbursement Account to the
Corporation in order to secure the County' s obligation to pay the Base
Rental Payments for Project Phase I as provided in the Facility Lease.
Investments
Upon the Written Request of the County any moneys held by the Trustee
in the Lease Fund will be invested by the Trustee in Permitted
Investments, as set forth in the Trust Agreement, which will mature on or
before the date when such funds are needed for expenditure from such
fund. Upon the Written Request of the County any moneys held by the
Trustee in the Certificate Reserve Fund will be invested by the Trustee
in Permitted Investments which will mature on or before the date of the
last scheduled Base Rental Payment. If no such Written Request is filed
with the Trustee, the Trustee shall invest such moneys in Permitted
Investments described in clauses (1) and (9) of the definition thereof.
Rental Payments
Base Rental Payments The County agrees to pay to the Corporation, as
Base Rental Payments for the use and occupancy of the Project and the
Demised Premises (subject to the provisions of the Facility Lease) annual
rental payments with principal, Accreted Interest and interest
components, the interest components being payable semi-annually, in
accordance with the Rental Payment Schedule attached to the Facility
Lease. Base Rental Payments will be calculated on an annual basis, for
the twelve-month periods commencing on April 1 and ending on March 31,
and each annual Base Rental Payment will be divided into two interest
components, payable on April 15 and October 15 of each rental payment
period, and one principal component, payable on October 15 of each rental
payment period (commencing on October 15, 1998) , except that the first
Base Rental Payment period will commence on the date of recordation of
the Facility Lease or a memorandum thereof in the office of the County
Recorder of Contra Costa County and will end on March 31, 1993, and the
first annual payment of Base Rental will consist of one interest
component, payable on October 15, 1992. Each Base Rental Payment will be
payable on the 15th day of the month immediately preceding its due date
and any interest or other income with respect thereto accruing prior to
such due date will belong to the County and will be returned by the
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Corporation to the County on May 1 and November 1 of each year. The
interest components, including Accreted Interest components, of the Base
Rental Payments will be paid by the County asIand constitute interest
paid on the principal components of the Base Rental Payments to be paid
by the County under the Facility Lease, computed on the basis of a
360-day year composed of twelve 30-day months. ; Each annual payment of
Base Rental will be for the use of the Demised Premises and the Project
following completion of construction thereof for the twelve-month period
commencing on April 1 of the period in which such installments are
payable. If the term of the Facility Lease has been -extended, Base
Rental Payment installments will continue to be due and payable on May 1
and November 1 in each year, and payable prior thereto, continuing to and
including the date of termination of the Facility Lease. Upon such
extension of the Facility Lease, the County willldeliver to the Trustee a
Certificate setting forth the extended rental ;payment schedule, which
schedule will establish the principal, Accreted Interest and interest
components of the Base Rental Payments so that 'the principal components
will in the aggregate be sufficient to pay a7.1 unpaid principal
components and Accreted Interest components with interest components
sufficient to pay all unpaid interest components plus interest on the
extended principal and Accreted Interest components at a rate equal to
the rate of interest on the principal component of the Base Rental
payable on November 1, 2022. If at any time the Base Rental under the
Facility Lease has not been paid by the Country, for any reason
whatsoever, and no other source of funds is available to make the
payments of principal, Accreted Interest and interest represented by the
Certificates to the persons entitled to receive such payments, the
principal, Accreted Interest and interest components of the Base Rental
will be recalculated by the County to reflect ' interest on the unpaid
principal and Accreted Interest components at the rage or rates specified
in the Trust Agreement, and a revised rental payment: schedule, attached
to the Facility Lease as Exhibit B, will be prepared by the County and
supplied to the Corporation and the Trustee reflecting such
reallocation. The County agrees that all Base Rental Payments for
Project Phase I will be paid by the County first! from amounts on deposit
in the Supplemental Reimbursement Account and then from other lawfully
available funds of the County. !
Additional Payments The County will also pay such amounts (herein
called the "Additional Payments") as will be required by the Corporation
for the payment of all costs and expenses incurred by the Corporation in
connection with the execution, performance or enforcement of the Facility
Lease or any assignment thereof, the Trust Agreement, its interest in the
Demised Premises and the lease of the Demised Premises and the Project to
the County, including but not limited to payment of all fees, costs and
expenses and all administrative costs of the Corporation related to the
Demised Premises and the Project, including �sala.ries and wages of
employees, all expenses, compensation and indemnification of the Trustee
payable by the Corporation under the Trust Agreement_-, fees of auditors,
accountants, attorneys or architects, and � all other necessary
administrative costs of the Corporation or charges required to be paid by
it in order to maintain its existence or to comply with the terms of the
Certificates or of the Trust Agreement; but not' including in Additional
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Payments amounts. required to pay the principal, Accreted Interest or
interest represented by the Certificates. Additional Payments will be
billed to the County by the Corporation or the Trustee on behalf of the
Corporation from time to time.
The Corporation has issued and may in the future issue bonds and has
entered into and may in the future enter into leases to finance
facilities other than the Demised Premises and the Project. The
administrative costs of the Corporation will be allocated among such
facilities and the Project.
Fair Rental Value
Base Rental Payments for each rental period during the term of the
Facility Lease will constitute the total rental for said rental period
and will be paid by the County in each. rental payment period for and in
consideration of the right of use and occupancy of, and continued quiet
use and enjoyment of, the Demised Premises and, following completion of
construction, each Phase of 'the Project during each such period for which
said rental is to be paid. The parties hereto have agreed and determined
that such total rental payable for each twelve-month period beginning
March 1 represents the fair rental value of the Demised Premises and the
Project for each such period.
Abatement of Rental
Except to the extent of amounts held by the Trustee in the Lease Fund
or in the Certificate Reserve Fund or otherwise available to the Trustee
for payments in respect of the Certificates, the Base Rental Payments
will be abated proportionately during any period in which by reason of
any damage or destruction (other than by condemnation which is provided
for in the Facility Lease) there is substantial interference with the use
and occupancy of the Demised Premises and the Project by the County, in
the proportion in which the initial cost of that portion of the Demised
Premises and the Project rendered unusable bears to the initial cost of
the whole of the Demised Premises and the Project. Such abatement will
continue for the period commencing with such damage or destruction and
ending with the substantial completion of the work of repair or
reconstruction. In the event of any such damage or destruction, the
Facility Lease will continue in full force and effect and the County
waives any right to terminate the Facility Lease by virtue of any such
damage or destruction.
Agnlication of Payments
All rental payments received will be applied first to the interest
components of the Base Rental Payments due under the Facility Lease, then
to the principal and Accreted Interest components of the Base Rental
Payments due under the Facility Lease and thereafter to all Additional
Payments due under the Facility Lease, but no such application of any
payments which are less than the total payment due and owing will be
deemed a waiver of any default under the Facility Lease.
B-17
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Payments to be Unconditional
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The County will make all rental .payments when due without deduction
or offset of any kind and will not withhold rental payments pending final
resolution of any dispute with the Corporation . In the event of a
determination that the County was not liable for said rental payments or
any portion thereof, said payments or excess of payments, as the case may
be, will be credited against subsequent rental payments due under the
Lease or be refunded at the time of such determination. Any installment
of rental accruing under the Facility Lease which has not been paid when
due will bear interest at the rate of 12Z per annum, or such lesser rate
of interest as may be permitted by law, from the date when the same is
due until the same has been paid.
Appropriations Covenant
I
The County covenants to take such action 'as may be necessary to
include all such Base Rental Payments and Additional Payments due under
the Facility Lease in its annual budgets, to make the necessary annual
appropriations for all such Base Rental Payments and Additional
Payments. The County will deliver to the Corporation and the Trustee
within 60 days of adoption of the County budget it Certificate of the
County Stating that the budget as adopted appropriates all moneys
necessary for the payment of Base Rental Payments and Additional Payments
under the Facility Lease.
The Corporation and the County understand and intend that the
obligation of the County to pay Base Rental iPayments and Additional
Payments under the Facility Lease constitute it current expense of the
County and will not' in any way be construed to be a debt of the County in
contravention of any applicable constitutional ; or statutory limitation
requirement concerning the creation of indebtedness by the County, nor
will anything contained in the Facility Lease constitute a pledge of the
general tax revenues, funds or moneys of the County. Base Rental
Payments and Additional Payments due under the Facility Lease will be
payable only from current funds which are budgeted and appropriated or on
deposit in the Lease Fund or Certificate Reserve Fund or otherwise
legally available for the purpose of paying Base Rental Payments and
Additional Payments or other payments . due under the Facility Lease as
consideration for use of the Project. The Facility Lease will not create
an immediate indebtedness for any aggregate payments which may become due
under the Facility Lease in the event that the term of the Facility Lease
is continued. The County has not pledged the full faith and credit of
the County, the State of California or any agency o:r department thereof
to the payment of the Base Rental Payments and Additional Payments or any
other payments due under the Facility Lease. j
Maintenance Utilities Taxes and Assessments
During such time as the County is in possession of the Demised
Premises and the Project, all maintenance and repair, both ordinary and
extraordinary, of the Project will be the responsibility of the County.
The County will pay for or otherwise arrange !for the payment of all
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utility services supplied to the'"'Project and will pay for or otherwise
arrange for the payment of the costs of the repair and replacement of the
Project resulting from ordinary wear and tear or want of care on the part
of the County or any assignee or sublessee or any other cause and will
pay for or otherwise arrange for the payment of all insurance policies
required to be maintained with respect to the Project.
The County will pay or cause to be paid all taxes and assessments of
any type or nature charged to the Corporation or affecting the Project
and the Demised Premises or the respective interests or estates therein;
provided that with respect to special assessments or other governmental
charges that may lawfully be paid in installments over a period of years,
the County will be obligated to pay only such installments as are
required to be paid during the term of the Facility Lease as and when the
same become due.
The County will also pay directly such amounts, if any, in each year
as will be required by the Corporation for the payment of all license and
registration fees and all taxes (including, without limitation, income,
excise, license, franchise, capital stock, recording, sales, use,
value-added, property, occupational, excess profits and stamp taxes) ,
levies, imposts, duties, charges, withholdings, assessments and
governmental charges of any nature whatsoever, together with any
additions to tax, penalties, fines or interest thereon, including,
without limitation, penalties, fines or interest arising out of any delay
or failure by the County to pay any of the foregoing or failure to file
or furnish to the Corporation or the Trustee for filing in a timely
manner any returns, hereinafter levied or imposed against the Corporation
or the Project, the rentals and other payments required under the
Facility Lease or any parts thereof or interests of the County or the
Corporation or the Trustee therein by any governmental authority.
Insurance
The County shall procure or cause to be procured and maintain or
cause to be maintained, throughout the term of the Lease, insurance
against loss or damage to any structures constituting any part of the
Project by fire and lightning, with extended coverage insurance,
vandalism and malicious mischief insurance and sprinkler system leakage
insurance. Extended coverage insurance shall, as nearly as practicable,
cover loss or damage by explosion, windstorm, riot, aircraft, vehicle
damage, smoke and such other hazards as are normally covered by such
insurance. Such insurance shall be in an amount equal to the replacement
cost (without deduction for depreciation) of all structures constituting
any part of the Project, excluding the cost of excavations, of grading
and filling, and of the land (except that such insurance may be subject
to deductible clauses for any one loss of not to exceed $5,000) , or, in
the alternative, shall be in an amount and in a form sufficient (together
with . moneys in the Certificate Reserve Fund) , in the event of total or
partial loss, to enable all Certificates then Outstanding to be prepaid.
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Except as provided in the Facility Lease, the County will procure or
cause to be procured and maintain or cause to be maintained, throughout
the term of the Facility Lease (but during the period of construction of
any Phase of the Project only if such insurance ;is not provided by a
contractor under a construction contract), a standard comprehensive
general liability insurance policy or policies in protection of the
Corporation, and its members, directors, officers,' agents and employees
and the Trustee, indemnifying said parties against all direct or
contingent loss or liability for damages for personal injury, death or
property damage occasioned by reason of the operation of the Project,
with minimum liability limits of $1,000,000 for personal injury or death
of each person and $3,000,000 for personal injury or deaths of two or
more persons in each accident or event, and in ' a minimum amount of
$200,000 for damage to property resulting from each accident or event.
Such public liability and property damage insurance ma;y, . however, be in
the form of a . single limit policy in the amount of $3,000,000 covering
all such risks. Such liability insurance .may be maintained as part of or
in conjunction with any other liability insurance carried by the County.
The County shall procure or cause to be procured. and maintain or
cause to be maintained, rental interruption or use and occupancy
insurance to cover loss, total or partial, of the ;rental income from or
the use of the Project as the result of any of the hazards covered by the
fire and extended coverage insurance described !above, in an amount
sufficient to pay the part of the total rent under the Facility Lease
attributable to the portion of the Project rendered unusable (determined
by reference to the proportion which the construction cost of such
portion bears to the construction cost of the Project) for a period of at
least two years, except that such insurance may be subject to a
deductible clause of not to exceed $1,000. Any proceeds of such
insurance shall be used by the Trustee to reimburse to the County any
rental theretofore paid by the County underi the Facility Lease
attributable to such structure for a period of itime during which the
payment of rental under the Facility Lease is abated, and any proceeds of
such insurance not so used will be applied as a credit against Base
Rental and Additional Payments.
As an alternative to providing the. insurance described in the
preceding paragraphs, the County, with the written. consent of the
Corporation, may provide self insurance methods or' plans of protection if
and to the extent such self insurance methods or plans of protection will
afford reasonable coverage for the risks to be insured against as to fire
and extended coverage and rental interruption or use and occupancy
insurance, or will afford reasonable protection to the Corporation, its
members, directors, officers, agents and employees and the Trustee as to
liability insurance, in light of all circumstances, giving consideration
to cost, availability and similar plans or methods of protection adopted
by public entities in the State of California other- than the County.
Before such other methods or plans may be provided by the County, and
annually thereafter so long as such methods or plans are being provided
to satisfy the requirements of the Facility Lease, a certificate of an
actuary, independent insurance consultant or other qualified person will
be filed with the Trustee, stating that, in the opinion of the signer,
B-20
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the substitute methods or plans of protection are in accordance with the
requirements of the Facility Lease and, when effective, would afford
reasonable coverage for the risks required to be insured against as to
fire and extended coverage insurance and rental interruption or use and
occupancy insurance, or would afford reasonable protection to the
Corporation, its members, directors, officers, agents and employees and
the Trustee against loss and damage from the hazards and risks covered
thereby as to liability insurance. There will also be filed a
certificate of the County setting forth the details of such substitute
methods or plans. Any self insurance method or plan as to the rental
interruption or use and occupancy insurance shall require a self
insurance fund to be maintained and accounted for on a separate basis by
the County and to be fully funded for such insured risks.
Eminent Domain
If the whole of the Demised Premises and the Project or so much,
thereof as to render the remainder unusable for the purposes for which it
was used by the County is taken under the power of eminent domain, the
term of the Facility Lease will cease as of the day that possession is so
taken. If less than the whole of the Demised Premises and the Project is
taken under the power of eminent domain and the remainder is usable for
the purposes for which it was used by the County at the time of such
taking, then the Facility Lease will continue in full force and effect as
to such remainder, and the parties waive the benefits of any law to the
contrary, and in such event there is a partial abatement of the rental
due under the Facility Lease in an amount equivalent to the amount by
which the annual payments of principal and interest represented by
Certificates then Outstanding will be reduced by the application of the
award in eminent domain to the prepayment of Outstanding Certificates.
So long as any of the Certificates are Outstanding, any award made in
eminent domain proceedings for taking the Demised Premises and the
Project or any portion thereof will be applied to the prepayment of Base
Rental Payments as provided in the Facility Lease. Any such award made
after all of the Base Rental Payments and Additional Payments have been
fully paid, or provision made therefor, will be paid to the County.
Default: Remedies
(a) If the County fails to pay any rental payable under the
Facility Lease when the same becomes due, time being expressly
declared to be of the essence of the Facility Lease, or the County
fails to keep, observe or perform any other term, covenant or
condition contained in the Facility Lease to be kept or performed by
the County for a period of 30 days after notice of the same has been
given to the County by the Corporation or the Trustee or for such
additional time as is reasonably required, in the sole discretion of
the Trustee, to correct the same, or upon the happening of any of the
events specified in subparagraph (b) below (any such case above being
an "Event of Default") , the County will be deemed to be in default
under the Facility Lease, and it will be lawful for the Corporation
to exercise any and all remedies available pursuant to law or granted
B-21
pursuant to the Facility Lease. Upon any such default, the
Corporation, in addition to all other rights and remedies it may have
at law, will have the option to do any of the following:
(1) To terminate the Facility Lease in the manner hereinafter
provided on account of default by the, County, notwithstanding
any re-entry or re-letting of the Demised Premises and the
Project as hereinafter provided for in subparagraph. (2) below,
and to re-enter the Demised Premises and the Project and remove
all persons in possession thereof and all personal property
whatsoever situated upon the Demised Premises or the Project and
place such personal property in storage in any warehouse or
other suitable place in the County of Contra Costa, California.
In the event of such termination, the County, agrees to surrender
immediately possession of the Demised Premises and the Project,
without let or hindrance, and to pay the Corporation all damages
recoverable at law that the Corporation'; may incur by reason of
default by the County, including, without limitation, any costs,
loss or damage whatsoever arising out of, in connection with, or
incident to any such re-entry upon the ;Demised Premises and the
Project and removal or storage of such property by the
Corporation or its duly authorized agents in accordance with the
provisions contained in the Facility Lease. Neither notice to
pay rent or to deliver up possession of' the Demised Premises and
the Project given pursuant to law nor any entry or re-entry by
the Corporation nor any proceeding in unlawful detainer, or
otherwise, brought by the Corporation for the purpose of
effecting such re-entry or obtaining possession of the Demised
Premises and the Project nor the appointment: of a receiver upon
initiative of the Corporation to protect. the Corporation' s
interest under the Facility Lease will of itself operate to
terminate the Facility Lease, and no termination of the Facility
Lease on account of default by the County will become effective
by operation of law or acts of the parties thereto or otherwise,
unless and until the Corporation has given written notice to the
County of the election on the part of the Corporation to
terminate the Facility Lease. The County covenants and agrees
that no surrender of the Demised Premises and the Project or of
the remainder of the term of the Facility Lease or any
termination of the Facility Lease will be valid in any manner or
for any purpose whatsoever unless stated or accepted by the
Corporation by such written notice.
i
(2) Without terminating the Facility Lease, (i) to collect each
installment of rent as it becomes due and enforce any other term
or provision of the Facility Lease to be kept or performed by
the County, regardless of whether or not the County has
abandoned the Project, or (ii) to exercise any and all rights of
entry and re-entry upon the Demised Premises and the Project.
In the event the Corporation does not - elect to terminate the
Facility Lease in the manner provided ,for in subparagraph (1)
above, the County will remain liable and agrees to keep or
perform all covenants and conditions contained in the Facility
B-22
Lease to be kept or performed by the County and, if the Demised
Premises and the Project are not re-let, to pay the full amount
of the rent to the end of the term of the Facility Lease or, in
the event that the Demised Premises and the Project are re-let,
to pay any deficiency in rent that results therefrom; and
further , agrees to pay said rent and/or rent deficiency
punctually at the same time and in the same manner as provided
above for the payment of rent under the Facility Lease (without
acceleration) , notwithstanding the fact that the Corporation may
have received in previous years or may receive thereafter in
subsequent years rental in excess of the rental therein
specified and notwithstanding any entry or re-entry by the
Corporation or suit in unlawful detainer, or otherwise, brought
by the Corporation for the purpose of effecting such entry or
re-entry or obtaining possession of the Demised Premises and the
Project. Should the Corporation elect to enter or re-enter as
provided in the Facility Lease, the County will irrevocably
appoint the Corporation as the agent and attorney-in-fact of the
County to re-let the Demised Premises and the Project, or any
part thereof, from time to time, either in the Corporation' s
name or otherwise, upon such terms and conditions and for such
use and period as the Corporation may deem advisable, and to
remove all persons in possession thereof and all personal
property whatsoever situated upon the Demised Premises and the
Project and to place such personal property in storage in any
warehouse or other suitable place in the County of Contra Costa,
California, for the account of and at the expense of the County,
and the County exempts and agrees to save harmless the
Corporation from any costs, loss or damage whatsoever arising
out of, in connection with, or incident to any such re-entry
upon and re-letting of the Demised Premises and the Project and
removal of and storage of such property by the Corporation or
its duly authorized agents in accordance with the provisions
contained in the Facility Lease. The County agrees that the
terms of the Facility Lease constitute full and sufficient
notice of the right of the Corporation to re-let the Demised
Premises and the Project and to do all other acts to maintain or
preserve the Project as the Corporation deems necessary or
desirable in the event of such re-entry without effecting a
surrender of the Facility Lease, and further agrees that no acts
of the Corporation in effecting such re-letting will constitute
a surrender or termination of the Facility Lease, irrespective
of the use or the term for which such re-letting is made or the
terms and conditions of such re-letting, or otherwise, but that,
on the contrary, in the event of such default by the County the
right to terminate the Facility Lease shall vest in the
Corporation to be effected in the sole and exclusive manner
provided for in subparagraph (1) above. The County further
waives the right to rental obtained by the Corporation in excess
of the rental specified in the Facility Lease and thereby
conveys and releases such excess to the Corporation as
compensation to the Corporation for its services in re-letting
the Demised Premises and the Project or any part thereof. The
B-23
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County further agrees to pay the Corporation the cost of any
alterations or additions to the Demised' Premises and the Project
or any part thereof necessary to place the Demised Premises and
the Project or any part thereof in condition for re-letting
immediately upon notice to the County of the completion and
installation of such additions or alterations.
The County waives any and all claims for damages caused or which may
be caused by the Corporation in re-entering and; taking possession of the
Demised Premises and the Project as provided in the Facility Lease and
all- claims for damages that may result from the destruction of or injury
to the Demised Premises and the Project and all claims for damages to or
loss of any property belonging to the County, or any other person, that
may be in or upon the Demised Premises and the Project.
(b) If (1) the County' s interest in the Facility Lease .or any
part thereof is assigned or transferred, either voluntarily or by
operation of law or otherwise, without the written consent of the
Corporation, or if (2) the County or any assignee files any petition
or institutes any proceeding under any act or acts, state or federal,
dealing with or relating to the subject or :subjects of bankruptcy or
insolvency, or under any amendment of such 'act or acts, either as a
bankrupt or as an insolvent, or as a debtor, or in any similar
capacity, wherein or whereby the County asks or seeks or prays to be
adjudicated a bankrupt, or is to be discharged from any or all of the
County's debts or obligations or offers to the County's creditors to
effect a composition or extension of time 'to pay the County' s debts
or asks, "seeks or prays for reorganization or to effect a plan of
reorganization, or for a readjustment of the County' s debts, or for
any other similar relief, or if any such petition or any such
proceedings of the same or similar kind or character are filed or
instituted or taken against the County, or if a receiver of the
business or . of the property or assets of the County is appointed by
any court, except a receiver appointed at the instance or request of
the Corporation, or if the County makes a general or any assignment
for the benefit of the County' s creditors, or if (3) the County
abandons or vacates any part of the Demised Premises and the Project
(except pursuant to certain provisions of the 'Facility Lease) , then
the County will be deemed to be in default under the Facility Lease.
(c) The Corporation will in no event be in default in the
performance of any of its obligations under the Facility Lease or
imposed by any statute or rule of law; unless and until the
Corporation has failed to perform such obligations within 30 days or
such additional time as is reasonably required to correct any such
default after notice by the County to the Corporation properly
specifying wherein the Corporation has failed to perform any such
obligation. In the event of default by the Corporation, the County
will be entitled to pursue any remedy provided b, law.
(d) In addition to the other remedies 'set forth above, upon the
occurrence of an event of default, the Corporation is entitled to
proceed to protect and enforce the rights 'vested in the Corporation
B-24
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by the Facility Lease or by law. The provisions of the Facility
Lease and the duties of the County and of its trustees, officers or
employees are enforceable by the Corporation by mandamus or other
appropriate suit, action or proceeding in any court of competent
jurisdiction. Without limiting the generality of the foregoing, the
Corporation has the right to bring the following actions:
(1) Accounting. By action or suit in equity to require the
County and its trustees, officers and employees and its assigns
to account as the trustee of an express trust.
(2) Injunction. By action or suit in equity to enjoin any
acts or things which may be unlawful or in violation of the
rights of the Corporation.
(3) Mandamus. By mandamus or other suit, action or
proceeding at law or in equity to enforce the Corporation' s
rights against the County (and its board, officers and
employees). and to compel the County to perform and carry out its
duties and its covenants and agreements with the County as
provided in the Facility Lease.
Each and all of the remedies given to the Corporation under the
Facility Lease or by any law now or hereafter enacted are cumulative and
the single or partial exercise of any right, power or privilege under the
Facility Lease will not impair the right of the Corporation to other or
further exercise thereof or the exercise of any or all other rights,
powers or privileges. The terms "re-let" or "re-letting" as used in the
Facility Lease include, but are not limited to, re-letting by means of
the operation by the Corporation of the Demised Premises and the
Project. If any statute or rule of law validly will limit the remedies
given to the Corporation under the Facility Lease, the, Corporation
nevertheless will be entitled to whatever remedies are allowable under
any statute or rule of law.
In the event the Corporation prevails in any action brought to
enforce any of the terms and provisions of the Facility Lease, the County
agrees to pay a reasonable amount as and for attorney's fees incurred by
the Corporation in attempting to enforce any of the remedies available to
the Corporation under the Facility Lease, whether or not a lawsuit has
been filed and whether or not any lawsuit culminates in a judgment.
Purpose of Lease: Option to Purchase: Sale of Personal Property
The County covenants that during the term of the Facility Lease,
except as provided in the Facility Lease, (a) it will use, or cause the
use of, the Demised Premises and the Project for public purposes and for
the purposes for which the Project facilities are customarily used, (b)
it will not vacate or abandon the Project or any part thereof, and (c) it
will not make any use of the Demised Premises and the Project which would
jeopardize in any way the insurance coverage required to be maintained
pursuant to the Facility Lease.
B-25
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The County will have the option to purchase the Corporation' s
interest in any part of the Demised Premises and the Project upon payment
of an option price consisting of moneys or securities of the category
specified in clause (1) of the definition of the term Permitted
Investments contained in the Trust Agreement (noticallable by the issuer
thereof prior to maturity) in an amount sufficient (together with the
increment, earnings and interest on such securities) to provide funds to
pay for the entire remaining term of the Facility Lease of the part of
the total rent under the Facility Lease attributable to such part of the
.Project (determined by reference to the proportion which the acquisition,
design and construction cost of such part of the Project bears to the
acquisition, design and construction cost of all - of the Project) . Any
such payment will be made to the Trustee and will be treated as rental
payments and will be applied by the Trustee to pay the interest and
principal components of the Certificates and to 'prepay Certificates if
such Certificates are subject to prepayment pursuant to the terms of the
Trust Agreement. Upon the making of such payment to the Trustee, (a) the
interest and principal components of each installment of Base Rental
thereafter payable under the Facility Lease will be reduced by the amount
thereof attributable to such part of the Project; and theretofore paid
pursuant to this paragraph, (b) the abatement provision of the Facility
Lease and this paragraph will not thereafter be applicable to such part
of the Project, (c) the insurance required by the Facility Lease need not
be maintained as to such part of the Project, and (d) title to such part
of the Project and of the portion of the Demised Premises upon which such
part of the Project is located will vest in the County and the term of
the Facility Lease will end as to the portion of; the Demised Premises
upon which such part of the Project is located and to such part of the
Project.
The County, in its discretion, may request the Corporation to sell or
exchange any personal property which may at any time constitute a part of
the Project, and to release said personal property from the Facility
Lease, if (a) in the opinion of the County the ; property so sold or
exchanged is no longer required or useful in connection with the
operation of the Project, (b) the consideration to be received from the
property is of a value substantially equal to the value of the property
to be released, and (c) if the value of any such ;property will, in the
opinion of the Corporation, exceed the amount of $50,000, the Corporation
will have been furnished a certificate of an independent engineer or
other qualified independent professional consultant I (sat:isfactory to the
Corporation): certifying the value thereof and further certifying that
such property is no longer required or useful in, connection with the
operation of the Project. In the event of any such 'sale, the full amount
of the money or consideration received for the personal property so sold
and released will be paid to the Corporation. Any money so paid to the
Corporation may, so long as the County is not in default under any of the
provisions of the Facility Lease, be used upon the Written Request of the
County to purchase personal property, which property will become a part
of the Project leased under the Facility Lease. The Corporation may
require such opinions, certificates and other documents as it may deem
B-26
necessary before permitting any sale or exchange of personal property
subject to the Facility Lease or before releasing for the purchase of new
personal property money received by it for personal property so sold.
THE ASSIGNMENT AGREEMENT
Pursuant to the Assignment Agreement between the Corporation and the
Trustee dated as of May 1, 1992, the Corporation will assign to the
Trustee without recourse (i) all its rights to receive the Rental
Payments scheduled to be paid by the County under and pursuant to the
Facility Lease for the benefit of the owners of the Certificates, (ii)
all rents, profits, products and offspring from the Project to which the
Corporation has any right or claim whatsoever, (iii) the security
interest granted by. the County in the Lease Fund and the Certificate
Reserve Fund, (iv) the right to take all actions and give all consents
under the Facility Lease, (v) the right of access more particularly
described in the Facility Lease, and (vi) effective immediately on
default by the County under the Facility Lease and without further action
on the part of the Corporation, any and all other rights and remedies of
the Corporation in the Facility Lease as lessor thereunder for the
purpose of securing: (a) the payment of all sums due and owing to the
owners of the Certificates under the terms of the Trust Agreement; and
(b) the performance and discharge of each agreement, covenant and
obligation of the Corporation contained in the Facility Lease and in the
Trust Agreement.
THE TRUST AGREEMENT
The Trust Agreement to be entered into among the County, the
Corporation and the Trustee will be dated as of May 1, 1992 and will be
executed prior to the delivery of the 1992 Certificates. The Trust
Agreement, among other things, provides for the execution and delivery of
the Certificates and sets forth the terms thereof, provides for the
creation of certain of the funds described below, includes certain
covenants of the County and the Corporation, defines events of default
and remedies therefor, and sets forth the rights and responsibilities of
the Trustee.
Certain provisions of the Trust Agreement setting forth the terms of
the 1992 Certificates, the prepayment provisions thereof and the use of
the proceeds of the Certificates are set forth elsewhere in this Official
Statement. See "THE 1992 CERTIFICATES. "
Principal Represented by Certificates
The principal evidenced and represented by the 1992. Current Interest
Certificates is payable on November 1 of each year, beginning on November
1, 1998 and continuing to and including November 1, 2006 and on November
1 2012, and on November 1, 2022. The 1992 Current Interest Certificates
with a Certificate Payment Date of November 1, 2012 evidence and
represent, in the aggregate, the principal components of Base Rental
B-27
� 1
I`I
I
Payments due on November 1, 2008 through November 1, 2012 and a portion
of such Certificates is subject to mandatory prepayment on such dates
pursuant to the Trust Agreement. The 1992 Current Interest Certificates
with a Certificate Payment Date of November ' 1, 2022 evidence and
represent, in the aggregate, the principal components of Base Rental
Payments due on November 1, 2016 through November, 1, 2022, and a portion
of such Certificates is subject to mandatory prepayment on such dates
pursuant to the Trust Agreement. The 1992 Current Interest Certificates
with Certificate Payment Dates other than November 1, 2012 and on
November 1, 2022 evidence and represent the principELl component of the
Base Rental Payments coming due on their respective Certificate Payment
Dates.
The Trustee
The Trustee will receive all of the Certificate proceeds and Rental
Payments under the Facility Lease, execute and deliver the Certificates
and act as a depository of amounts held thereunder. The Trustee is
required to make deposits into and withdrawals from funds, and upon the
Written Request of the County will invest amounts held under the Trust
'Agreement in Permitted Investments. _ In the event of a default by the
County under the Facility Lease, the Trustee will exercise the rights of
the Corporation with respect to such default.
Removal and Resignation of the Trustee
I
So long as no Event of Default has occurred and is continuing, the
Corporation and the County, or the Owners of a majority in aggregate
principal amount represented by the Certificates at the time Outstanding,
may by an instrument in writing remove the Trustee and any successor
thereto and may appoint a successor Trustee, but any Trustee under the
Trust Agreement shall be a bank or trust company doing business and
having a principal corporate trust office in California, having a
combined capital (exclusive of borrowed capital) !and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities.
i
The Trustee may at any time resign by giving written notice of such
resignation to the Corporation, the County and the Owners, which notice
to the Owners will be mailed, first class postage prepaid. Upon
receiving such notice of resignation, the Corporation and the County will
promptly appoint a successor Trustee by, an ;instrument in writing;
provided, however, that in the event the Corporation and the County do
not appoint a successor Trustee within 30 days following receipt of such
notice of resignation, the resigning Trustee may petition the appropriate
court having jurisdiction to appoint a successor Trustee. Any
resignation or removal of a Trustee and appointment of a successor
Trustee will become effective only upon acceptance of appointment by the
successor Trustee.
i
Costs of Issuance Fund j
The Trustee will deposit into the Cost of Issuaiace Fund, which the
Trustee will establish and maintain, from the proceeds of the
B-28
Certificates an amount which will be used and withdrawn by the Trustee to
pay the Costs of Issuance of the Certificates upon receipt of a Request
of the Corporation filed with the Trustee.
Acquisition and Construction Fund
The Trustee will deposit from the proceeds of the Certificates in the
Acquisition and Construction Fund an amount which will be held by the
Trustee in trust and applied for the payment of Project Costs and of
expenses incident thereto (or for making reimbursements to the
Corporation or County or any other person, firm or corporation for such
costs theretofore or thereafter paid by him or it) .
Pledge of Base _Rental Payments; Base Rental Payment Fund
The Base Rental Payments are irrevocably pledged under the Trust
Agreement to and for the punctual payment of interest and principal
represented by the Certificates (included Additional Certificates
delivered pursuant thereto) , and the Base Rental Payments will not be
used for any other purpose while any Certificates (including Additional
Certificates) remain Outstanding.
All Base Rental Payments will be paid directly by the County to the
Trustee, and if received by the Corporation at any time will be deposited
by the Corporation with the Trustee within one business day after the
receipt thereof.
Deposit of Base Rental Payments
The Trustee will deposit the Base Rental Payments contained in the
Base Rental Payment Fund at the times and in the manner provided for in
the Trust Agreement in the following respective funds, each of which the
Trustee under the Trust Agreement agrees to establish and maintain so
long as any Certificates are Outstanding, and the moneys in each of such
funds will be disbursed only for the purposes and uses authorized in the
Trust Agreement.
(a) Interest Fund. The Trustee, on May 1 and November 1 of each
year (commencing on November 1, 1992) , will deposit in the Interest
Fund that amount of moneys representing the portion of the Base
Rental Payments designated as interest components coming due on each
such May 1 and November 1 date, respectively. Moneys in the Interest
Fund will be used and withdrawn by the Trustee solely for the purpose
of paying the interest represented by the Certificates when due and
payable.
(b) Principal Fund. The Trustee, on November 1 of each year
(commencing on November 1, 1998) , will deposit in the Principal Fund
that amount of moneys representing the portion of the Base Rental
Payments designated as the principal component and as Accreted
Interest coming due on such November 1 date. Moneys in the Principal
Fund will be used and withdrawn by the Trustee solely for the purpose
of paying the principal and Accreted Interest represented by the
B-29
Certificates when due and payable, including the mandatory prepayment
of any Certificates representing the principal and Accreted Interest
components of Base Rental Payments payable in more than one year.
(c) PreQavment Fund. The Trustee, on the prepayment date
specified in the Written Request of the County filed with the Trustee
at the time that any prepaid Base Rental Payment is paid to the
Trustee pursuant to the Facility Lease, will deposit in the
Prepayment Fund that amount of moneys representing the portion of the
Base Rental Payments designated as prepaid Base Rental Payments.
Moneys in the Prepayment Fund will be used and withdrawn by the
Trustee solely for the purpose of paying the interest and principal
and any applicable premium represented by the Certificates to be
prepaid.
Trust Administration Fund
The Trustee will deposit in the Trust Administration Fund (the initial
payment into which is provided for in the Trust 'Agreement and which fund
the Trustee agrees to establish and maintain so long as any Certificates
are Outstanding) all amounts received from the County to be applied as
Additional Payments under the Facility Lease, to be held by the Trustee
for the benefit of the County until disbursed. The moneys in the Trust
Administration Fund will be disbursed by the Trustee for the payment of
administrative costs of the Corporation.
1992 Rebate Fund
The Trustee will establish and maintain a fund separate from any
other fund established and maintained under the Trust Agreement
designated as the "1992 Rebate Fund" and will establish and maintain
separate subaccounts within the 1992 Rebate Fund to the extent requested
by the Tax Certificate. There will be deposited in the 1992 Rebate Fund
from lawfully available funds such amounts as are required to be
deposited therein pursuant to the Tax Certificate and instructions of the
County given pursuant to the Tax Certificate. All money at any time
deposited in the 1992 Rebate Fund and any subaccount therein will be held
by the Trustee in trust, to the extent required to satisfy the Rebate
Amount (as defined in the Tax Certificate) , for. payment to the United
States of America. All amounts required to be deposited into or on
deposit in the 1992 Rebate Fund shall be governed by the Trust Agreement,
by the Facility Lease and by the Tax Certificate :
Compliance with or Amendment of Site Lease or Facility Lease
The Corporation and the County will faithfully comply with, keep,
observe and perform all the agreements, conditions, covenants and terms
contained in the Site Lease and the Facility Lease required to be
complied with, kept, observed and performed by them and will enforce the
Site Lease and the Facility Lease against the other party thereto in
accordance with its terms.
B-30
The Corporation and the County will not alter, amend or modify the
Site Lease or the Facility Lease without the prior written consent of the
Trustee, which consent of the Trustee will be given only (i) if, in the
opinion of the Trustee (which opinion will be based upon an opinion of
Counsel or a .Certificate of the County) , such alterations, amendments or
modifications are not materially adverse to the interests of the Owners,
or (ii) to add to the covenants and agreements of any party, other
covenants to be observed, or to surrender any right or power therein
reserved to the County, or (iii) to cure, correct or supplement any
ambiguous or defective provision contained therein, or (iv) to resolve
questions arising thereunder, as the parties thereto may deem necessary
or desirable and which do not materially adversely affect the interests
of the Owners of the Certificates, or (v) to modify the legal description
of the Demised Premises to conform to the requirements of title
insurance, if any, or otherwise to add or delete property descriptions to
reflect accurately the description of the parcels intended to be included
therein, or (vi) to provide for the execution and delivery of Additional
Certificates pursuant to the terms of the Trust Agreement, or (vii) to
provide for the requirements of any Certificate Insurer in connection
with the issuance of any Certificates Insurance Policy or any entity
providing a policy of municipal bond insurance or letter of credit or
similar financial instrument for deposit in the Certificate Reserve Fund
established pursuant to the Facility Lease to satisfy all or a portion of
the Certificate Reserve Fund Requirement, so long as such alterations,
amendments or modifications are not materially adverse to the interests
of the Owners, or (viii) if the Trustee first obtains the written
consents of the Owners of at least a majority in aggregate principal
amount of the Certificates then Outstanding and of any Certificate
Insurer to such alterations, amendments or modifications; provided;
however, that no such alteration, amendment or modification will extend
the date for the making of any Rental Payment, extend a Certificate
Payment Date or reduce the rate of interest or Accreted Interest, as the
case may be, represented by any Certificate or extend the time of payment
of such interest or Accreted Interest or reduce the amount of principal
or Accreted Value represented thereby without the prior written consent
of the Owner of any Certificate so affected, nor will any such
alteration, amendment or modification reduce the percentage of Owners
whose consent is required for the execution of any alteration, amendment
or supplement.
Action on Default
If an Event of Default (as that term is defined in the Facility
Lease) occurs, then such Event of Default will constitute a default under
the Trust Agreement, and in each and every such case during the
continuance of such Event of Default the Trustee or the Owners of not
less than a majority in aggregate principal amount represented by the
Certificates at the time Outstanding will be entitled, upon notice in
writing to the County and the Corporation, to exercise the remedies
provided to the Corporation in the Facility Lease and to the Trustee in
the Assignment Agreement.
B-31
Other Remedies of the Trustee
The Trustee shall have the right --
(i) by mandamus or other action or proceeding or suit at law or
in equity to enforce its rights and the rights of the Owners against
the Corporation or the County or any member, director, officer or
employee thereof, and to compel the Corporation or the County or any
such member, director, officer or employee to perform or carry out
its or his or her duties under law and the agreements and covenants
required to be performed by it or him or her contained in the Trust
Agreement;
(ii) by suit in equity to enjoin any acts or things which are
unlawful or violate the rights of the Trustee; or
(iii) by suit in equity upon the happening of any default under
the Trust Agreement to require the Corporation and the County and any
members, directors, officers and employees thereof to account as the
trustee of an express trust.
Execution and Delivery of Additional Certificates
In addition to the Certificates, the County, the Corporation and the
Trustee may by Supplemental Trust Agreement provide for the execution and
delivery of Additional Certificates representing Base Rental Payments,
and the Trustee may execute and deliver to or upon the Written Request of
the Corporation, such Additional Certificates, in such principal amount
as will reflect the additional principal component of the Base Rental
Payments, but only upon compliance by the County and the Corporation with
the provisions of the Trust Agreement.
No Liability by the Corporation to the Owners
Except as expressly provided in the Trust Agreement, the Corporation
shall not have any obligation or liability to .the Owners with respect to
the payment when due of the Rental Payments by the County, or with
respect to the performance by the County of the other agreements and
covenants required to be performed by it contained in the Facility Lease
or in the Trust Agreement, or with respect to the performance by the
Trustee of any right or obligation required to be performed by it
contained in the Trust Agreement.
No Liability by the County to the Owners
Except for the payment when due of the Rental Payments and the
performance of the other agreements and covenants required to be
performed by it contained in the Facility Lease or in the Trust
Agreement, the County shall not have any obligation or liability to the
Owners with respect to the Trust Agreement or the preparation, execution,
delivery or transfer of the Certificates or the disbursement of the Base
B-32
1 r
Rental Payments by the Trustee to the Owners, or with respect to the
performance by the Trustee of any right or obligation required to be
performed by it contained in the Trust Agreement.
No Liability by the Trustee to the Owners
The Trustee shall not have any obligation or liability to the Owners
with respect to the payment when due of the Base Rental Payments by. the
County, or with respect to the performance by the County of other
agreements and covenants required to be performed by it contained in the
Facility Lease or in the Trust Agreement.
Amendment or Supplement
The Trust Agreement and the rights and obligations of the Corporation
and the County and the Owners and the Trustee under the Trust Agreement
may be amended or supplemented at -any time by an amendment thereof or
supplement thereto which will become binding when the written consents of
the Owners of a majority in aggregate principal amount of the
Certificates then Outstanding, exclusive of disqualified Certificates,
are filed with the Trustee. No such amendment or supplement will (1)
change the fixed Certificate Payment Date of any Certificate or reduce
the rate of interest represented thereby or extend the time of payment of
such interest or Accreted Interest or reduce the amount of principal or
Accreted Value represented thereby without the prior written consent of
the Owner of the Certificate so affected, or (2) reduce the percentage of
Owners whose consent is required for the execution of any amendment
thereof or supplement thereto, or (3) modify any of the rights or
obligations of the Trustee without its prior written consent thereto, or
(4) amend the provisions of the Trust Agreement concerning amendments and
supplements without the prior written consent of the Owners of all
Certificates then Outstanding.
The Trust Agreement and the rights and obligations of the Corporation
and the County and the Owners and the Trustee under the Trust Agreement
may also be Amended or supplemented at any time by an amendment or
supplement to the Trust Agreement which will become binding upon
execution without the written consents of any Owners, but only to the
extent permitted by law and after receipt of an approving Opinion of
Counsel and only for any one or more of the following purposes --
(a) to add to the agreements, conditions, covenants and terms
required by the Corporation or the County to be observed or performed
in the Trust Agreement, other agreements, conditions, covenants and
terms thereafter to be observed or performed by the Corporation or
the County, or to surrender any right or power reserved to or
conferred on the Corporation or the County, and which in either case
will not materially adversely affect the interests of the Owners; or
(b) to make such provisions for the purpose of curing any
ambiguity or of correcting, curing or supplementing any defective
provision contained in or in regard to questions arising under the
B-33
Trust Agreement which the Corporation or the County may deem
desirable or necessary and not inconsistent with the Trust Agreement,
and which will not materially adversely affect the interests of the
Owners; or
(c) to modify, amend or supplement the Trust Agreement or any
agreement supplemental to the Trust Agreement in such manner as to
permit the qualification of the Trust Agreement either under the
Trust Indenture Act of 1939 or any similar federal statute hereafter
in effect or to permit the qualification of the Certificates for sale
under the securities laws of the United States of America or of any
of the states of the United States of America, and, if they so
determine, to add to the Trust Agreement or any agreement
supplemental thereto such other terms, conditions and provisions as
may be permitted by said Trust Indenture Act of 1939 or similar
federal statute; or
(d) to make any modifications or changes necessary or
appropriate in the Opinion of Counsel to preserve or protect the
exclusion from gross income of interest represented by the
Certificates for federal income tax purposes; or
(e) to make any modifications or changes necessary or
appropriate in connection with the execution and delivery of
Additional Certificates, including without limitation provisions
which would allow such Additional Certificates to be issued in the
form of term Certificates in addition to serial Certificates; or
(f) to provide for the requirements of any Certificate Insurer
in connection with the issuance of any Certificates Insurance Policy
or any entity providing a policy of municipal bond insurance or
letter of credit or similar financial instrument for deposit in the
Certificate Reserve Fund established pursuant to the Facility Lease
to satisfy all or a portion of the Certificate Reserve Fund
Requirement, so long as such alterations, amendments or modifications
are not materially adverse to the interest of the Owners.
Discharge of Certificates and Trust Agreement
If the County will pay or cause to be paid or there is otherwise paid
to the Owners of outstanding Certificates the interest, Accreted
Interest, principal and premium, if any, represented thereby at the times
and in the manner stipulated in the Trust Agreement and therein, then
such Owners will cease to be entitled to the pledge of and lien on the
Base Rental Payments as provided in the Trust Agreement, and all
agreements and covenants of the Corporation, the County and the Trustee
to such Owners under the Trust Agreement will thereupon cease, terminate
and become void and will be discharged and satisfied, except only as
provided below.
Any Outstanding Certificates' will be deemed to have been paid within
the meaning of and with the effect expressed in the above paragraph if
there is on deposit with the Trustee moneys or securities of the category
B-34
F
specified in subparagraph (1) of the definition of the term Permitted
Investments contained in the Trust Agreement in an amount sufficient
(together with the increment, earnings and interest on such securities)
to pay the interest and principal and premium, if any, represented by
such Certificates payable on their Payment Dates or on any dates of
prepayment prior thereto, except that the Owners thereof will be entitled
to the principal, premium and interest represented by such Certificates,
and the County will remain liable for such Base Rental Payments, but only
out of such moneys or securities deposited with the Trustee for such
payment.
Investments
Upon the Written Request of the County, any moneys held by the
Trustee in the Base Rental Payment Fund, in the Acquisition and
Construction Fund or in the Trust Administration Fund will be invested as
directed by the County by the Trustee in Permitted Investments which
will, as nearly as practicable, mature on or before the dates when such
moneys are anticipated to be needed for disbursement under. the Trust
Agreement or under the Facility Lease. If no such Written Request is
filed with the Trustee, the Trustee will invest such moneys in Permitted
Investments described in clauses (1) and (9) of the definition thereof.
THE AGENCY AGREEMENT
Under the Agency Agreement to be entered into between the County and
the Corporation dated as of May 1, 1992, the Corporation will appoint the
County to act as the agent of the Corporation in connection with the
design and construction of the Project. As the agent of the Corporation,
the County will cause the design and construction of the Project to be
completed in accordance with the plans and specifications, bidding
documents and construction contract for the Project as have been or will
be approved by the County and with the Facility Lease and Trust Agreement
and any applicable requirements of governmental authorities and law.
B-35
'j APPENDIX C
(FORM OF PROPOSED OPINION OF CO—SPECIAL COUNSEL]
May 1992
County of Contra Costa
651 Pine Street
Martinez, California 94553
County of Contra Costa
Certificates of Participation
(Merrithew Memorial Hospital Replacement Project)
Series of 1992
(Final Opinion)
Ladies and Gentlemen:
We have acted as co-special counsel in connection
with the execution and delivery of $125, 584 , 011 . 80 aggregate
principal amount of County of Contra Costa Certificates of
Participation (Merrithew Memorial Hospital Replacement
Project) , Series of 1992 (the "Certificates") . In such
connection, we have reviewed a Facility Lease (Merrithew
Memorial Hospital Replacement Project) , dated as of May 1,
1992 (the "Lease") , between the County of Contra Costa (the
"County") and the Contra Costa County Public Facilities
Corporation (the "Corporation" ) , a Site Lease (Merrithew
Memorial Hospital Replacement Project) , dated as of May 1,
1992 (the "Site Lease") between the County and the
Corporation, ,a Trust Agreement, dated as of May 1, 1992 (the
"Trust Agreement" ) , among U. S. Trust Company of California,
N.A. , as trustee (the Trustee") , the County and -the
Corporation, a Tax Certificate of the County, dated the date
hereof (the "Tax Certificate") , an Assignment Agreement, dated
as of May 1, 1992 (the "Assignment Agreement") , between the
Corporation and the Trustee and an Agency Agreement, dated as
of May 1, 1992 , between the County and the Corporation,
opinions of counsel to the County, the Corporation and the
Trustee, certificates of the County, the Corporation, the
C-1
County of Contra Costa
May _, 1992
Page 2
Trustee and others and such other documents , opinions and
matters as and to the extent we deemed necessary to render the
opinions set forth herein. Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the
Lease.
Certain agreements, requirements and procedures
contained or referred to in the Trust Agreement, the Lease,
the Site Lease, the Tax Certificate and other relevant
documents may be changed and certain actions (including,
without limitation, defeasance of the Lease) may be taken or
omitted under the circumstances and subject to the terms and
conditions set forth in such documents . No opinion is
expressed herein as to any Certificate or the interest portion
of any Base Rental Payment if any such change occurs or action
is taken or omitted upon the advice or approval of counsel
other than ourselves .
The opinions expressed herein, are; based on an
analysis of existing laws, regulations, rulings and court
decisions and cover certain matters not, directly addressed by
such authorities . Such opinions may be affected by actions
taken or omitted or events occurring after the date hereof .
We have not undertaken to determine, or to inform any person,
whether any such actions or events are 'taken or do occur . Our
engagement with respect to the Certificates has concluded with
their execution and delivery, and we disclaim any obligation
to update this letter . We have assumed the genuineness of all
documents and signatures presented to us (whether as originals
or as copies) and the due and legal execution and delivery
thereof by any parties other than the County and the
Corporation. We have not undertaken to verify independently,
- and have assumed, the accuracy of the factual matters
represented, warranted or certified in ' the documents, and of
the legal conclusions contained in the opinions, referred to
in the first paragraph hereof . Furthermore, we have assumed
compliance with all covenants and agreements contained in the
Lease, the Site Lease, the Trust Agreement , the Tax
Certificate and the Assignment Agreement including (without
limitation) covenants and agreements compliance with which is
necessary to assure that future actions, omissions or events
C-2
County of Contra Costa
May _, 1992
Page 3
will not cause the interest portion of Base Rental Payments to
be included in gross income for federal income tax purposes .
In addition, we call attention to the fact that the
rights and obligations under the Certificates, the Lease, the
Site Lease, the Trust Agreement, the Tax Certificate and the
Assignment Agreement are subject to bankruptcy, insolvency,
reorganization, arrangement , fraudulent conveyance, moratorium
and other laws relating to or affecting creditors ' rights, to
the application of equitable principles , to the exercise of
judicial discretion in appropriate cases, and to the
limitations on legal remedies against counties in the State of
California . We express no opinion with respect to any
indemnification, contribution, choice of law, choice of forum
or waiver provisions contained in the foregoing documents nor
do we express any opinion with respect to the state or quality
of title to any of the real or personal property described in
the Site Lease, the Lease or the Trust Agreement or the
accuracy or sufficiency of the description of any such
property contained therein. We also express no opinion
regarding the accreted value table set forth in the
Certificates or in the Trust Agreement . Finally, we undertake
no responsiblity for the accuracy, completeness or fairness of
the Official Statement or other offering material relating to
the Certificates and express no opinion with respect thereto .
Based on and subject to the foregoing, and in
- reliance thereon, as of the date hereof, we are of the
following opinions :
1 . The County is a political subdivision of the
State of California organized and existing under and by virtue
of the laws of the State of California.
2 . The Lease, the Site Lease and the Trust
Agreement have been duly executed and delivered by the County
and the Corporation, and the Assignment Agreement has been
duly executed and delivered by the Corporation and, assuming
due authorization, execution and delivery by the other parties
thereto, constitute the respective valid and binding
obligations of the County and the Corporation.
C-3
� 11
County of Contra Costa
May _, 1992
Page 4
3 . The obligation of the County to make the Base
Rental Payments during the term of the Lease constitutes a
valid and binding obligation of the County, payable from funds
of the County lawfully available therefor, and does not
constitute a debt of the County or of the State of California
within the meaning of any constitutional or statutory debt
limit or restriction, and does not constitute an obligation
for which the County or the State of California is obligated
to levy or pledge any form of taxation or for which the County
or the State of California has levied or pledged any form of
taxation.
4 . Assuming due authorization, execution and
delivery of the Trust Agreement and the Certificates by the
Trustee, the Certificates are entitled to the benefits of the
Trust Agreement .
5 . The portion of each Base: Ren.tal Payment
designated as and constituting interest paid by the County
under the Lease and received by the registered owners of the
Certificates is excluded from gross income for federal income
tax purposes under Section 103 of the Internal Revenue Code of
1986 and is exempt from State of California personal income
taxes . Such interest is not a specific preference item for
purposes .of the federal individual or corporate alternative
minimum taxes, although we observe that it is included in
adjusted current earnings when calculating corporate
alternative minimum taxable income. We express no opinion
regarding other tax consequences related to the accrual or
receipt of such interest or the ownership or disposition of
the Certificates .
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE
per
PAMELA S'. JUE
Attorney at Law
C-4
APPENDIX D
TABLE OF ACCRETED VALUES
Period 2007 2013 2014 2015
Ending
05/13/92 1,751.05 1,129.85 1,054.20 983.65
11/01/92 1,807.40 1,166.95 1,088.85 1,015.95
05/01/93 1,869.75 1,208.10 1,127.25 1,051.80
11/01/93 1,934.25 1,250.70 1,166.95 1,088.85
05/01/94 2,000.95 1,294.80 1,208.10 1,127.25
11/01/94 2,070.00 1,340.45 1,250.70 1,166.95
05/01/95 2,141.40 1,387.70 1,294.80 1,208.10
11/01/95 2,215.30 1,436.60 1,340.45 1,250.70
05/01/96 2,291.75 1,487.25 1,387.70 1,294.80
11/01/96 2,370.80 1,539.65 10436.60 1,340.45
05/01/97 2,452.60 1,593.95 1,487.25 1,387.70
11/01/97 2,537.20 1,650.10 1,539.65 1,436.60
05/01/98 2,624.75 1,708.30 1,593.95 1,487.25
11/01/98 2,715.30 1,768.50 1,650.10 1,539.65
05/01/99 2,808.95 1,830.85 1,708.30 1,593.95
11/01/99 2,905.90 1,895.40 1,768.50 1,650.10
05/01/2000 3,006.15 1,962.20 1,830.85 1,708.30
11/01/2000 3,109.85 2,031.35 1,895.40 1,768.50
05/01/2001 3,217.15 2,102.95 1,962.20 1,830.85
11/01/2001 3,328.15 2,177.10 2,031.35 1,895.40
05/01/2002 3,442.95 2,253.85 2,102.95 1,962.20
11/01/2002 3,561.75 2,333.30 2,177.10 2,031.35
05/01/2003 3,684.60 2,415.55 2,253.85 2,102.95
11/01/2003 3,811.75 2,500.70 2,333.30 2,177.10
05/01/2004 3,943.25 2,588.85 2,415.55 2,253.85
11/01/2004 4,079.30 2,680.10 2,500.70 2,333.30
05/01/2005 4,220.00 2,774.60 2,588.85 2,415.55
11/01/2005 4,365.60 2,872.40 2,680.10 2,500.70
05/01/2006 4,516.25 2,973.65 2,774.60 2,588.85
11/01/2006 4,672.05 3,078.45 2,872.40 2,680.10
05/01/2007 4,833.25 3,186.95 2,973.65 2,774.60
11/01/2007 5,000.00 3,299.30 3,078.45 2,872.40
05/01/2008 3,415.60 3,186.95 2,973.65
11/01/2008 3,536.00 3,299.30 3,078.45
05/01/2009 3,660.65 3,415.60 3,186.95
11/01/2009 3,789.70 3,536.00 3,299.30
05/01/2010 3,923.30 3,660.65 3,415.60
11/01/2010 4,061.60 3,789.70 3,536.00
05/01/2011 4,204.75 3,923.30 3,660.65
11/01/2011 4,353.00 4,061.60 3,789.70
05/01/2012 4,506.40 4,204.75 3,923.30
11/01/2012 4,665.25 4,353.00 4,061.60
05/01/2013 4,829.75 4,506.40 4,204.75
11/01/2013 5,000.00 4,665.25 4,353.00
05/01/2014 4,829.75 4,506.40
11/01/2014 5,000.00 4,665.25
05/01/2015 4,829.75
11/01/2015 5,000.00
D-1
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