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Home My WebLink AboutMINUTES - 01261993 - 1.53 ,., Contra Costa TO: BOARD OF SUPERVISORS County iT v • '� coor� FROM: Harvey E. Bragdon Director of Community Development DATE: January 26, 1993 SUBJECT: Audit of Financial Statements 1982, 1983 , 1985, 1987 and 1991 Contra Costa Home Mortgage Revenue Bonds SPECIFIC• REQUEST(S) OR RECOMMENDATIONS (S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS Accept Audit Report on the Financial Statements completed by Deloitte and Touche for Fiscal Year 1991/92 of the following programs: 1982 Contra Costa Home Mortgage Revenue Bonds, 1983 Contra Costa Home Mortgage Revenue Bonds, 1985 Contra Costa Home Mortgage Revenue Bonds, 1987 Contra Costa Home Mortgage Revenue Bonds and 1991 Contra Costa Home Mortgage Revenue Bonds. FISCAL IMPACT None. BACKGROUND/REASONS FOR RECOMMENDATIONS The Indenture for the above referenced Home Mortgage Revenue Bond Programs requires that an annual audit of the financial statement be completed. Deloitte and Touche has completed the audit of the respective programs as of June 30, 1992 and submitted its re ort. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RE ENDATIO OF BOARD C ITTEE APPROVE OTHER SIGNATURE(S) : ACTION OF BOARD ON ....` 3 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A �( UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE "BOARD OF SUPERVISORS ON THE DATE SHOWN. cc: Community Development /�/' i CAO (via Risk Management) ATTESTED l//3 County Counsel PH B TCHEL R, CLERK OF Auditor (c/o Nona) THE BOARD OF SUPERVISORS Contractor AND COUNTY ADMINISTRATOR I Ds:ih BY , DEPUTY sra7/bondaud.bos - -53 Deloitte & Touche • CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended • June 30, 1992 and 1991, Supplemental Statements for the Year Ended June 30, 1992 and Independent Auditors' Report • • --- RECEIVED JAN 2 6 I9 • CIEAK BOARD OF 'UPERVISORS CONTRA COSTA Co DeloitteTouche Tohmatsu • International • Deloitte & Touche • /\ 2101 Webster Street Telephone:(510)287-2700 Oakland,California 94612-3027 Telefax:(510)835-4888 • INDEPENDENT AUDITORS' REPORT • The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1982 Mortgage Revenue Bond Fund (Fund) as of June 30, 1992 and 1991 and the related statements of operations and retained earnings and of cash flows for • the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to • obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis • for our opinion. As described in Note 1 to the financial statements, the accompanying financial statements present only the 1982 Mortgage Revenue Bond Fund and are not intended to present the financial position of Contra Costa County and the results of its operations and the cash flows of its proprietary fund types and • similar trust funds in conformity with generally accepted accounting principles. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1992 and 1991 and the results of its operations and its cash flows for the years then ended in • conformity with generally accepted accounting principles. • Deloittebuche Tohmatsu • International • Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental combining balance sheet, June 30, 1992, and combining statement of operations and retained earnings for the year ended June 30, 1992 (supplemental statements) are presented for purposes of additional analysis and are not a required part of the basic financial statements. These supplemental statements are the responsibility of the Fund's management. Such supplemental statements have been subjected to the auditing procedures applied in our audit of the basic • financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. 2 September 18, 1992 • • • • • • • - 2- • CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND • BALANCE SHEETS, JUNE 30, 1992 AND 1991 1992 1991 • ASSETS CASH AND EQUIVALENTS (Note 4) $1,002,024 $ 906,763 MORTGAGE LOANS RECEIVABLE (Note 5) 2,234,013 3,485,236 • MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 2,231 10,942 INTEREST RECEIVABLE AND OTHER ASSETS 60,192 4,729 TOTAL $3,298,460 $4,407,670 • LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $1,206,589 $2,433,669 • INTEREST PAYABLE 76,368 154,099 TOTAL LIABILITIES 1,282,957 2,587,768 RETAINED EARNINGS 2,015,503 1,819,902 TOTAL $3,298,460 $4,407,670 See notes to financial statements. • • • - 3 - • CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND • STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30, 1992 AND 1991 1992 1991 • REVENUES: Interest from mortgage loans $ 373,633 $ 545,094 Interest from cash and equivalents 64,774 94,910 Total revenues 438,407 640,004 • EXPENSES: Interest 194,838 386,240 Administrative 27,626 27,942 Total expenses 222,464 414,182 INCOME BEFORE EXTRAORDINARY LOSS ON EARLY • RETIREMENT OF BONDS 215,943 225,822 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (Note 6) (20,342) (36,264) NET INCOME 195,601 189,558 • RETAINED EARNINGS: Beginning of year 1,819,902 1,630,344 End of year $2,015,503 $1,819,902 • See notes to financial statements. • • • • -4- • CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND • STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1992 AND 1991 1992 1991 CASH FLOWS FROM OPERATING ACTIVITIES: Mortgage loan collections - principal $1,196,672 $1,354,674 Mortgage loan collections - interest 381,923 544,184 Cash paid for operating expenses (27,626) (27,942) Cash provided by operating activities 1,550,969 1,870,916 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Principal paid on revenue bonds (1,250,000) (2,020,000) Interest paid on revenue bonds (269,991) (506,235) Cash used for noncapital financing activities (1,519,991) (2,526,235) CASH FLOWS FROM INVESTING ACTIVITIES - Interest received on cash and equivalents 64,283 98,307 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 95,261 (557,012) CASH AND EQUIVALENTS: Beginning of year 906,763 1,463,775 End of year "$1,002,024 $ 906,763 RECONCILIATION OF INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS TO CASH PROVIDED BY OPERATING ACTIVITIES: Income before extraordinary loss on early retirement of bonds $ 215,943 $ 225,822 Adjustments to reconcile income before extraordinary loss on early retirement of bonds to cash provided by operating activities: Revenue bond interest expense 192,260 380,860 Amortization of bond discount and issuance costs 2,578 5,380 Interest revenue from cash and equivalents (64,774) (94,910) Mortgage loan collections - principal 1,196,672 1,354.,674 • Decrease (increase) in matured mortgage loans and related interest receivable and other assets 8,290 (910) Total adjustments 1,335,026 1,645,094 CASH PROVIDED BY OPERATING ACTIVITIES $1,550,969 $1,870,916 NONCASH OPERATING ACTIVITY: • During 1992, the Fund transferred $59,700 in foreclosed mortgage loans receivable to other assets. See notes to financial statements. • - 5 - • CONTRA COSTA COUNTY 1982 MORTGAGE REVENUE BOND FUND NOTES TO FINANCIAL STATEMENTS 1. ENTITY 0 The Contra Costa County 1982 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between Security Pacific Bank (Trustee) and Contra Costa County (County) dated June 1, 1982 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home mortgages within the • County. Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase investments and mortgage loans. The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture. If the amount 0 available in the Fund is not sufficient to repay the bonds in full , the principal and accrued interest will be paid to the bondholders in accordance with the provisions of the Indenture, primarily on a pro rata basis without any discrimination or preference, after the payment of expenses necessary to protect the interest of the bondholders. • The financial statements present only the 1982 Mortgage Revenue Bond Fund and are not intended to present the financial position of the County and the results of its operations and the cash flows of its proprietary fund types and similar trust funds in conformity with generally accepted accounting principles. • 2. SIGNIFICANT ACCOUNTING POLICIES Basis of . Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred. 0 Cash equivalents are short-term,. highly liquid investments with original maturities of .90 days or less. Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to home mortgage revenue bonds payable and are 0 amortized over the term of the bond issue using a method which approximates the interest method. Other assets includes of $59,700 real estate acquired by foreclosure which is stated at its recorded loan balance. Any loss is recorded when measurable. Gains are recognized upon receipt of related mortgage loan • proceeds. • - 6- • 3. FUND DEFINITIONS As provided in the Indenture, the following funds have been established by the Trustee: Revenue Fund - All revenues (except for developer commitment fees and revenues to be deposited into the Nonmortgage Investment Income Fund) are deposited in this fund. • Capital Reserve Fund - Monies are used and withdrawn by the Trustee solely for. the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund, Interest Fund or Principal Fund and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture. • Nonmortgage Investment Income Fund - All interest, profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund. Principal Fund - Monies are used and withdrawn solely for the paying of the 0 principal of the bonds. Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds. Redemption Fund - Monies are used and withdrawn for the redeeming of bonds • at the next succeeding date of redemption. 4. CASH AND EQUIVALENTS In accordance with the Indenture, the Trustee has entered into an Investment • Agreement (Agreement) dated June 1, 1982 with First National Bank of St. Paul (Bank) . Under the terms of the Agreement, monies invested with the Bank earn interest at rates of 12.34% through December 31, 1994 and 8.00% thereafter, until termination of the Agreement. Monies invested with the Bank totaled $975,015 at June 30, 1992. 40 All other Fund monies are invested with the Trustee and are stated at cost which approximates market value. The Indenture authorizes the Trustee to invest in certain designated investments. At June 30, 1992, such investments were comprised of interest-bearing deposits in financial institutions, mortgage-backed securities and shares in a Trustee sponsored money market fund. All such investments are covered by federal depository • insurance or secured by collateral held by the Trustee in the name of the Fund. Monies invested with the Trustee totaled $27,009 at June 30, 1992. All monies invested with the Trustee and the Bank are subject to withdrawal by the Fund on demand. • • - 7- • 5. MORTGAGE LOANS RECEIVABLE • Mortgage loans receivable are secured by first deeds of trust on the related residences, have thirty-year terms and bear interest at 12.875%. Mortgage loans are also guaranteed by private mortgage insurance. 6. HOME MORTGAGE REVENUE BONDS PAYABLE • A summary of the maturity dates and interest rates as of June 30, 1992 for the 1982 Home Mortgage Revenue Bonds follows: Bond Interest Type Rates Principal • Year ending June 30: 1993 Serial 11.50% - 11.75% $ 10,000 1994 Serial 11.75 - 12.00 15,000 1995 Serial 12.00 - 12.20 25,000 1996 Serial 12.20 - 12.30 30,000 • 1997 Serial 12.30 20,000 2011 Term 12.50 1,125,000 Total 1,225,000 Less bond discount and issuance costs, net of accumulated amortization (18,411) • Total $1,206,589 Bond interest is payable semiannually on January 1 and July 1. Bonds are subject to redemption prior to maturity, from amounts in the Redemption Fund, on any interest payment date without prepayment penalty. • The Term Bonds are subject to mandatory redemption without prepayment penalty, prior to maturity, out of revenues deposited in a mandatory sinking account. The Indenture provides for semiannual deposits into the sinking account ranging from $16,000 commencing in 1997 to $97,000 in 2010. The installments are subject to reduction due to early redemptions. • The Fund retired $1,225,000 and $1,975,000 of the bonds in fiscal years 1992 and 1991, respectively, prior to scheduled maturity. Generally accepted accounting principles require that the difference between the reacquisition price and the net carrying amount of extinguished debt be recorded as an extraordinary loss, if material . The net carrying amount of the bonds retired in fiscal year 1992 was $1,204,658 (1991, $1,938,736) and 0 accordingly, the Fund recognized an extraordinary loss on early retirement of bonds of $20,342 (1991, $36,264) . • • -8- • ko O LMo M � N O^ UD ONL%o O r O1 ^ %0 %0 O 01 %0 m C1 O 00 O M LO c O i MO 'I (n Kra eh .4 LO 00 -:tU M N N .i b4 bq • G N M m t00 00 %00 L1 O %D W O O N ti � LO M 0% LO co ON Cl cnI " CSN ct N O m m i0 N LA m f — N � � N N ^ co 4 O O N O U 1--7 N M N M Z O Ln to Ln jc,�-+ M M M W LimCOm 0: F- 00 m CO 00 CO N %0 LO LD t0 LD W =D %0 t0 t0 t0 LD N VR J ►+ Z I O O O O U H � LO Ln Lf> 11Y Ll • W D C7 Z Z M: > C> Ln I tl'f Lt) Z ' O F y Z J W zl CcW CO Q W LL Ln Ln _ In Ln ri W N M n M 00 00 d M N m = 0 � O N rn C+ LA Ln M O, • Z Z N a- N eF M LO %0 1� M N N m M N N M O M b4 M W W Z Z 7 La_ • O W Q �' S Z N N � J L Z WLj W LL Z O W N N m Q H ¢H¢ N 2!:2!: Q O J J Q ►-i Q O CO W w CD Z W C9 1--4o H w m W Z 00 J Q O O O >- Z Z O ¢LLj Ln z z 00 = w MW F W Om- W H z Ocr- O -i LU LLI W W Jj m cr > N N U U ►-� J w W" Q W w W C4 • Q C'3 J Q > N < W > 0 J i--i Z H Q Q CY U ¢ C7 T J d' N C9 F- Q a W O F- 0WC w 0 Q¢. m W U W O Z O O W x w H H O Q S W U Z cm O = N H O N J W J N Q Q W W W J X: W Z N d S 1- C7 = H w J �--� � J H J Z co W 2 H O Z W Q m w w Q Q Q 0 Ol N a O ¢ z o o w z O w Co • O O N N N N N N d• co -It N 1 p 4m O Cr -d' CO N t0 t0 N to In d' O W O m O N o+ r-t co M M CO N to M M O H CTI to 4 O lO ^ K In N N . to tz 01 O 01 -4 co Ot O�ct CO Nr-1 N U') to N M co M .--t O ."� Ln t0 M - N N N N .+ tO co 1 !if M --:t 1� tb %0 .1d, M N N M N rt N M A p M1- 0 MN %0 -Cd- rlr- V Rt O O O W tO n d CO tO � O1 C7 O 0% M t0 01 to " M tb eF n N tr M M 1 to O to 01 to co cn t0 M 0% N N N N .--� N 0% -4 1-1 M: ti M -d' N N O O N .-+ co O O N Z 0 Co 0 O O to LO OOl O 001 001 OOLn m i -:-t li iW Lp=L ANN N N t0 co p W n V) O O O O O w Z N N N N N 1 1 I ►-i ZI O i(cc-=ll, OOOU- LnO O O of to d • W ~ p != >. ^ n n NN W ^ N V) CCH ZX: to two two Mo to et W O J w tin Im LOn LLnl--M tt) InLfMU OCLIn v v O 1-4 H m Wm M M OtO -:r m NOO N m n tO � O W M M ^ N O N MSO N mt n to Kr C� = tO t0 L' tO N -It co N O M tO tO M p • ZLU wZ M M N n O M n to n t0 O Ln .-4 n Q W L=L M M N M M M tO N LO N M O O ZQ eA .-tti 't O � a Q � W � N d_ Z • CDLL- Z Q] H O 3 H Cl OCN 1- N•--+ wO Z Q Z 0% O� LL- in lN L1 W ++ 0 Q O O tL p- tZ-t W O N M M to > In tY CO W W LL9 In O N W ZOO 0 o H w o ¢ ><co w Z ? mW W t0 IV WV) •• 1 WO O OLW � � � Q) W V) N 0 0Y OCl` ClZZ +' s ClO oC L OF- W) •• V w V W W LV) LL J W tY LL Z N .) N L O rt W La- 4•- W W O V) O to • Q � J � � E V co >- N N co X: J V) Z N F- Q Q Q Q E E W > 4). ¢ ��¢ , to —= r -i Z V) CM �- W W 0 0 •r N N Z L V)P� a' [K4- O � L1ZJ r >- L L C � C N +1 V)F- ¢ Q O L 4- 4- > .. L G OJ.w p y O = A o-Z-t W W Q- W Lu N +1 +� N N +J +� X —Cl Z C v p O d C >1 Q W = = LLJ to to L W . U N W p >- O_' W•� O a) N N N•� W� L- X: QL 4- W J O Z Z C 4- � N Z L- L Z L C -' L x ix O Z c0 a o: cY w W a) to w v to O x w a) O ¢ O� O01 OOO > +1 +J ++ a. ++ E +, U W F- ++ ++ U W • V .-1 V1 LL. LL 0: ►LLJ O-t ►Ci F- W C t-t ¢ p 0 F- o-Z-t tZi r0-t " 0-1 W Z 0: m LLJJ 1 - -53 Deloitte & Touche CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended • June 30, 1992 and 1991, Supplemental Statements for the Year Ended June 30, 1992 and Independent Auditors' Report • • • RECEIVED • JAN 2 6 1993 u CLERK BOARD 0� URERVigORS CONTRA COSTA CO. Deloittebuche Tohmatsu • International � Deloitte & i Touche 0. 2101 Webster Street Telephone:(510)287-2700 Oakland,California 94612-3027 Telefax:(510)835-4888 INDEPENDENT AUDITORS' REPORT The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1983 Mortgage Revenue Bond Fund (Fund) as of June 30, 1992 and 1991 and the related statements of operations and retained earnings and of cash flows for the years then ended. These financial statements are the responsibility of 0 the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. i As described in Note 1 to the financial statements, the accompanying financial statements present only the 1983 Mortgage Revenue Bond Fund and are not intended to present the financial position of Contra Costa County and the results of its operations and the cash flows of its proprietary fund types and similar trust funds in conformity with generally accepted accounting • principles. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1992 and 1991 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. 0 Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental combining balance sheet, June 30, 1992, and combining statement of operations and .retained earnings (deficit) for the year ended June 30, 1992 (supplemental statements) • Deloittebuche Tohmatsu 0 International • are presented for purposes of additional analysis and are not a required part of the basic financial statements. These supplemental statements are the • responsibility of the Fund's management. Such supplemental statements have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. " September 18, 1992 • • • • • • • • - 2- • CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND BALANCE SHEETS, JUNE 30, 1992 AND 1991 1992 1991 • ASSETS CASH AND EQUIVALENTS (Note 4) $ 1,401,400 $ 1,388,296 MORTGAGE LOANS RECEIVABLE (Note 5) 10,685,604 14,455,444 • MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 10,954 48,846 OTHER ASSETS 112,670 20,214 TOTAL $12,210,628 $15,912,800 • LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $11,098,494 $14,768,094 • INTEREST PAYABLE 86,711 115,456 OTHER LIABILITIES 1,316 2,759 TOTAL LIABILITIES 11,186,521 14,886,309 • RETAINED EARNINGS 1,024,107 1,026,491 TOTAL $12,210,628 $15,912,800 • See notes to financial statements. • • • - 3 - • CONTRA COSTA COUNTY • 1983 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 1992 AND 1991 1992 1991 • REVENUES: Interest from mortgage loans $1,232,468 $1,533,789 Interest from cash and equivalents 176,001 198,214 Total revenues 1,408,469 1,732,003 • EXPENSES: Interest 1,281,367 1,600,278 Administrative 60,329 69,068 Total expenses 1,341,696 1,669,346 INCOME BEFORE EXTRAORDINARY LOSS • ON EARLY RETIREMENT OF BONDS 66,773 62,657 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (69,157) (6.7,763) NET LOSS (2,384) (5,106) • RETAINED EARNINGS: Beginning of year 1,026,491 1,031,597 End of year $1,024,107 $1,026,491 • See notes to financial statements. • • • • - 4- • CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND • STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30 1992 AND 1991 1992 1991 CASH FLOWS FROM OPERATING ACTIVITIES: Mortgage loan collections - principal $3,688,945 $2,885,456 Mortgage loan collections - interest 1,264,734 1,500,250 Cash paid for operating expenses (69,192) (56,181) Cash provided by operating activities 4,884,487 4,329,525 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Principal paid on revenue bonds (3,760,000) (3,385,000) Interest paid on revenue bonds (1,288,869) (1,598,420) Cash used for noncapital financing activities (5,048,869) (4,983,420) CASH FLOWS FROM INVESTING ACTIVITIES - Interest received on cash and equivalents 177,486 207,871 • NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 13,104 (446,024) CASH AND EQUIVALENTS: Beginning of year 1,388,296 1,834,320 End of year $1,401,400 $1,388,296 • RECONCILIATION OF INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS TO CASH PROVIDED BY OPERATING ACTIVITIES: Income before extraordinary loss on early retirement 66,773 62,657 of bonds • Adjustments to reconcile income before extraordinary loss on early retirement of bonds to cash provided by operating activities: Revenue bond interest expense 1,260,124 1,572,634 Amortization of bond discount and issuance costs 21,243 27,644 Mortgage loan collections - principal 3,688,945 2,885,456 • Interest revenue from cash and equivalents (176,001) (198,214) Changes in assets and liabilities: (Increase) decrease in matured mortgage loans and related interest 37,892 (33,539) receivable (Increase) decrease in other assets (13,046) 12,062 Increase (decrease) in other liabilities (1,443) 825 • Total adjustments 4,817,714 4,266,868 CASH PROVIDED BY OPERATING ACTIVITIES $4,884,487 $4,329,525 NONCASH OPERATING ACTIVITY: During 1992, the Fund transferred $79,410 in foreclosed mortgage loans receivable to other assets • See notes to financial statements. • - 5 - • CONTRA COSTA COUNTY 1983 MORTGAGE REVENUE BOND FUND • NOTES TO FINANCIAL STATEMENTS 1. ENTITY • The Contra Costa County 1983 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between Security Pacific Bank (Trustee) and Contra Costa County (County) dated June 1, 1983 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home mortgages within the • County. Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase investments and mortgage loans. The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture. If the amount • available in the Fund is not sufficient to repay the bonds in full , the principal and accrued interest will be paid to the bondholders in accordance with the provisions of the Indenture, primarily on a pro rata basis without any discrimination or preference, after the payment of expenses necessary to protect the interest of the bondholders. The financial statements present only the 1983 Mortgage Revenue Bond Fund and are not intended to present the financial position of the County and the results of the operations and cash flows of its proprietary fund types and similar trust funds in conformity with generally accepted accounting principles. • 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred. • Cash equivalents are short-term, highly liquid investments with original maturities of 90 days or less. Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to home mortgage revenue bonds payable and are • amortized over the term of the bond issue using a method which approximates the interest method. Other assets includes $79,410 in real estate acquired by foreclosure which is stated at its recorded loan balance. Losses on real estate are recorded when measurable. Gains are recorded upon receipt of insurance proceeds in • excess of the carrying value. Reclassification - Certain amounts have been reclassified to the 1991 financial statements to conform to the 1992 presentation. • - 6 - • 3:.. FUND DEFINITIONS • As provided in the Indenture, the following funds have been established by the Trustee: Revenue Fund - All revenues (except for developer commitment fees and revenues to be deposited into the Nonmortgage Investment Income Fund) are deposited in this fund. • . Capital Reserve Fund - Monies are used and withdrawn by the Trustee solely for the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund, Interest Fund or Principal Fund, and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture. • Nonmortgage Investment Income Fund - All interest, profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund. Principal Fund - Monies are used and withdrawn solely for the paying of the • principal of the bonds. Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds. Redemption Fund - Monies are used and withdrawn for redeeming of bonds at • the next succeeding date of redemption. 4.. CASH AND EQUIVALENTS In accordance with the Indenture, the Trustee has entered into an Investment • Agreement (Agreement) dated May 1, 1983 with First National Bank of St. Paul (Bank) . Under the terms of the Agreement, monies invested with the Bank earn interest at a rate of 9.14% until termination of the Agreement. Monies invested with the Bank totaled $1,030,169 at June 30, 1992. All other Fund monies are invested with the Trustee and are stated at cost • which approximates market value. The Indenture authorizes the Trustee to invest in certain designated investments. At June 30, 1992, such investments were comprised of mortgage-backed securities and shares in a Trustee sponsored money market fund. All such investments are covered by federal depository insurance or secured by collateral held by the Trustee in the name of the Fund. Monies invested with the Trustee totaled $371,231 at • June 30, 1992. All monies invested with the Trustee and the Bank are subject to withdrawal by the Fund on demand. • • - 7- • 5. MORTGAGE LOANS RECEIVABLE • Mortgage loans receivable are secured by first deeds of trust on the related residences, have thirty-year terms and bear interest at 9.5%. Mortgage loans are also guaranteed by private mortgage insurance. 6, HOME MORTGAGE REVENUE BONDS PAYABLE • A summary of the maturity dates and interest rates as of June 30, 1992 for the 1983 Home Mortgage Revenue Bonds follows: Bond Interest • Type Rates Principal Year ending June 30: 1993 Serial 8.60% $ 160,000 1994 Serial 8.70 170,000 1995 Serial 8.80 185,000 • 2001 Term 9.125 1,530,000 2015 Term 9.25 9,255,000 Total 11,300,000 Less bond discount and issuance costs, net of accumulated amortization (201,506) • Total $11,098,494 Bond interest is payable semiannually on June 1 and December 1. Bonds are subject to redemption on any interest payment date without premium, prior to maturity, from amounts in the Redemption Fund. The Term Bonds are subject to mandatory redemption without premium, prior to maturity, out of revenues deposited in a mandatory sinking account. The Indenture provides for semiannual deposits into the sinking account ranging from $97,000 commencing in 1995 to $163,000 in 2001 for the Term Bonds maturing in fiscal year 2001 and ranging from $167,000 commencing in 2001 to ' $570,000 in 2015 for the Term Bonds maturing in fiscal year 2015. The • installments are subject to reduction due to early redemptions. The Fund retired $3,575,000 and $3,200,000 of the bonds in fiscal years 1992 and 1991, respectively, prior to scheduled maturity. Generally accepted accounting principles require the difference between the reacquisition price and net carrying amount of extinguished debt to be recorded as an • extraordinary loss, if material . The net carrying amount of the bonds retired in fiscal year 1992 was $3,505,843 (1991, $3,132,237) , resulting in an extraordinary loss on early retirement of bonds of $69,157 (1991, $67,763) . • • - 8 - r to v to -�t O ct tO rn Cn -4 O I Cn -ct et O C1 LO LO O O1 O W N -:r OO N co Co Kr rl M et co C*' Z - Ca L' CO O N CO L' N ' %O N �--� C% m LO mt N ti ko ticc) cli f CA M � CT . .� m O CN 64 b4 • Cl Kr Kr O co -* %o r� co p O O LO r\ N O1 .--r -I N O N W ll: to Oi tO lO ll: w M Ln .: lO Z NI -4 Ln O N O m to r+ vC Kt O H 0) O m .-I rl .--I T co co N •"'r co m N O r-4 O N O .� O N fA b9 O m CO m CO I"I co CO CO CO F- OI M M M M d Z W LL. M M M M C3 N N N N W !A IY N N . 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Q _J W I Z W Q p W LL Z O W N m Q J ~ Q z CC • < cmJ H Q On m uI C4 ►+ p W O H W Z Cn W z z �- �'+ m Q W m r--r � Z ZO W I--I U Q NW Z L J > Z J ►r W W = w ca M: W H w o m ~ ==D p O � C) z L) J < W W ¢ CrJ JCL > N ¢U z mrZ-r c7 W a W O' O � FN- In Q Q fJ-+ H 4 W4 W J O ~ W W C7 CL m m W O M: C) m W E WV) F- 0: F- " G ¢ W C) Z 0 p = Q rti O N J J W W M d Z Q C.7 d' ~ CL' J IH L1' [1' J rZr J Z d f'- W 2 F- p W Q m W W W -:c Q Q U -4N Q U f f O J S ►Z+ O H 1 O) -d- M O CO t0 r\ tD tO n M tO n CO -t O - n tD d LO .-+ rq Lf) tD O O) tT O w N O N O Cl) t0 IO LO tO n -4 LO � ~ M CO N O T tT N CO 00 N n to _: tD I �) M O) M 0 %0 %0 t0 O) 01 I CO N LO -4 n tO tO lO t0 O O 8440) CO -t O) n 0% t0 Cl) M M M n ct e-y n O tD O tO tD N O) n M Cl) n tb tT O W cF O n " � N tO co .-I O -4 tD tO tO t0 O) N tO m Cn M n O co tD -* tD M M I 1p tD N N E -) N -t N M Cl O O O O b9 O LO O --:t KrC et M Op )--I O) O O O O H d ZI rt O CO CO co M In Z + C> -:t -d- co M W til IO tO N N W M M w !a4 J H N N N tO tO LO .4 N r•t r-t .--t CO to n n ll� n w Z� O O O tb co CO tb LO tO W = MD tO tO tb co N 00 1- Li N N N N N r+ Z J O O H � Of 00 IV„t M t=i t0O Cl W cc CL W = O �� ^ Q W = O O O q0 C) co CO '-i N � � W OO O cd ct co CC-Ili) r\ cc: N W v O f:0 Z 0 LL, f� n n f� n �• N .--I 0 O _ LLJ LM Z O O O O n Z Z Q LL CO 00 CD CO tNO to r\ Wt a � rnrn V o� Lr) av w O U Z LLIIW Q � 1-4 O 00 M ON N tO tO t0 O tO n tT tD to N W40 tO :d- N r, 01 O N N n LP) .-f LnCC n~ : Id N M to 00 M Ob to M •-+ N O O O = Z Z N N .- O e O LO O Ln to Ch t0 N m I"I Q W =I M M N tO tb LO M O t0 CO tO 1-1 O) O li N N O Cl im W C..)•"I • O S � U- ►-+ 030 to H N M U- O z Z W CT W Z J La_ W = F- �r7 C F Q ►+ • O Q O Z I- M O a) o hz-t cn W Cl Ln W N > m w = > _ �z � •.- W Z = W0 Q w 4J (1) I--• lL Q U Z N C: X O W ►••I 1- WI'+ DQ °) v �tO w W Z> m LLJ LJ W to to LLI J I W Z O = W M: = r 0) O � (n L O � N v O = LU Z L t/I LL- Q W tL U- W N n V) i C> U W W O R) W Z Ii 4-- W O N U t6 W = E u Co + to to CO .+ J to z tL to N (A O Z C H O ►-t f- Q Q Q E E 0) > 0) W rt W r - z V) Lu H W C' O O N N O L V) — = 4-- O H- Z >- O L C V) H 4J N Q Q O L UOC W LL 4- 4- (U to O O O Y Z (A W W 10 > •. L C. -i p 'a J J ►r M g O) C) O ALJ N +1 +' d V) +1 4J X X Z C CC DZ O O C >) Q W S (nW v1 to L W N to G) W = 7 Q C' O U W•.- d' J H J = d 0) to 4)-- W L_ 4- W W O m z z C 4- S-- - L- Z L C - M: C = L X: Q O Z �. Wo) C) t6 W d)•E to O Z W tU O Z Q' W Q•.- • > ++ +1 4J CL 4 E +1 U Q O F- O F- C) m = 00 LJ C C O X c -0 O z z c =3 C z X W W to r_ L.) -4 L/) LL I - CX ► " l- W " Q H I-•i t--I F••I 0 ►••I I--I W Z =in W • 1 - -53, Deloitte & Touche /0 A CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended • June 30, 1992 and 1991, Supplemental Statements for the Year Ended June 30, 1992 and Independent Auditors' Report • • • • • EJAN261993 u CLERK gOARp coNrpA COS qFoVISORS Deloittebuche Tohmatsu • International • Deloitte & Touche • 2101 Webster Street Telephone:(510)287-2700 4S. Oakland,California 94612-3027 Telefax:(510)835-4888 • INDEPENDENT AUDITORS' REPORT • The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1985 Mortgage Revenue Bond Fund (Fund) as of June 30, 1992 and 1991 and the related statements of operations and retained earnings and of cash flows for • the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to • obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as. well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis • for our opinion. As described in Note 1 to the financial statements, the accompanying financial statements present only the 1985 Mortgage Revenue Bond Fund and are not intended to present the financial position of Contra Costa County and the results of its operations and the cash flows of its proprietary fund types and • similar trust funds in conformity with generally accepted accounting principles. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1992 and 1991 and the results of its operations and its cash flows for the years then ended in • conformity with generally accepted accounting principles. • Deloittebuche Tohmatsu • International • Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental combining balance • sheet, June 30, 1992, and combining statement of operations and retained earnings (deficit) for the year ended June 30, 1992 (supplemental statements) are presented for purposes of additional analysis and are not a required part of the basic financial statements. These supplemental statements are the responsibility of the Fund's management. Such supplemental statements have been subjected to the auditing procedures applied in our audit of the basic • financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. • September 18, 1992 • • • • • • - 2 - • CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND • BALANCE SHEETS, JUNE 30, 1992 AND 1991 1992 1991 ASSETS • CASH AND EQUIVALENTS (Note 4) $ 761,359 $1,217,694 MORTGAGE LOANS RECEIVABLE - Net (Note 5) 5,254,776 8,568,706 MATURED MORTGAGE LOANS AND RELATED • INTEREST RECEIVABLE 17,630 39,925 OTHER ASSETS 23,529 40,958 TOTAL $6,057,294 $9,867,283 • LIABILITIES AND RETAINED EARNINGS HOME MORTGAGE REVENUE BONDS PAYABLE - Net (Note 6) $4,102,839 $7,872,891 • INTEREST PAYABLE 1,162,295 1,226,011 OTHER LIABILITIES 19,534 25,209 TOTAL LIABILITIES 5,284,668 9,124,111 • RETAINED EARNINGS 772,626 743,172 TOTAL $6,057,294 $9,867,283 See notes to financial statements. • • • • - 3 - • CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30 1992 AND 1991 1992 1991 • REVENUES: Interest from mortgage loans $795,976 $1,016,521 Interest from cash and equivalents 116,316 106,925 Total revenues 912,292 1,123,446 • EXPENSES: Interest 724,847 958,687 Insurance and administrative 75,854 92,436 Total expenses 800,701 1,051,123 . INCOME BEFORE EXTRAORDINARY • LOSS ON EARLY RETIREMENT OF BONDS 111,591 72,323 EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS (Note 6) (82,137) (53,212) • NET INCOME 29,454 19,111 RETAINED EARNINGS: Beginning of year 743,172 724,061 End of year JIZZ,626 $ 743,172 • See notes to financial statements. • • • • - 4 - • CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND • STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30 1992 AND 1991 1992 1991 CASH FLOWS FROM OPERATING ACTIVITIES: Mortgage loan collections - principal $3,385,232 $1,960,364 Mortgage loan collections - interest 745,039 998,929 Cash paid for operating expenses (64,816) (86,835) Cash provided by operating activities 4,065,455 2,872,458 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: • Principal paid on revenue bonds (3,862,567) (2,312,723) Interest paid on revenue bonds (778,186) (793,776) Cash used for noncapital financing activities (4,640,753) (3,106,499) CASH FLOWS FROM INVESTING ACTIVITIES - Interest received on cash and equivalents 118,963 107,530 • NET DECREASE IN CASH AND EQUIVALENTS (456,335) (126,511) CASH AND EQUIVALENTS: Beginning of year 1,217,694 1,344,205 End of year $ 761,359 $1,217,694 • RECONCILIATION OF INCOME BEFORE EXTRAORDINARY LOSS ON EARLY RETIREMENT OF BONDS TO CASH PROVIDED BY OPERATING ACTIVITIES: Income before extraordinary loss on early retirement of bonds $ 111,591 $ 72,323 .• Adjustments to reconcile income before extraordinary loss on early retirement of bonds to cash provided by operating activities: Revenue bond interest expense 714,471 943,418 Amortization of bond discount and issuance costs 10,376 15,269 Mortgage loan collections - principal 3,385,232 1,960,364 Amortization of discount on mortgage loans (71,301) (15,712) • Interest revenue from cash and equivalents (116,316) (106,925) Changes in assets and liabilities: Decrease in matured mortgage loans and related interest receivables and other assets 37,077 6,221 Decrease in other liabilities (5,675) (2,500) Total adjustments 3,953,864 2,800,135 • CASH PROVIDED BY OPERATING ACTIVITIES $4,065,455 $2,872,458 See notes to financial statements. • • - 5 - • CONTRA COSTA COUNTY 1985 MORTGAGE REVENUE BOND FUND • NOTES TO FINANCIAL STATEMENTS 1. ENTITY The Contra Costa County 1985 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between First Interstate Bank of California (Trustee) and Contra Costa County (County) dated April 1, 1985 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home • mortgages within the County. Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase investments and mortgage loans. The home mortgage revenue bonds are secured by a pledge of mortgage loans and are repaid solely from loan repayments and other revenues pledged under the Indenture. In addition, the • bonds are covered by a municipal bond insurance policy which unconditionally guarantees the timely payment of principal and interest on the bonds. The financial statements present only the 1985 Mortgage Revenue Bond Fund and are not intended to present the financial position of the County and the results of its operations and the cash flows of its proprietary fund types • and similar trust funds in conformity with generally accepted accounting principles. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred. Cash equivalents are short-term, highly liquid investments with original maturities of 90 days or less. • Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to home mortgage revenue bonds payable and are amortized over the term of the bond issue by use of a method which approximates the interest method. • Mortgage loan discounts, associated with the acquisition of new home mortgage loans through developers, are recorded as a reduction to mortgage loans receivable and amortized over the estimated life of the loan by a method which approximates the interest method. • - 6 - 3. FUND DEFINITIONS As provided in the Indenture, the following funds have been established by the Trustee: Program Expense Fund - Monies are used and withdrawn solely for payment of administrative expenses. Revenue Fund - All revenues (except for developer commitment fees, revenues to be deposited into the Nonmortgage Investment Income Fund and home mortgage principal prepayments) are deposited in this fund. Capital Reserve Fund - Monies are used and withdrawn by the Trustee solely for the purpose of (a) making up any deficiency in the Nonmortgage Investment Income Fund, Interest Fund or Principal Fund and (b) paying fees and expenses of the County (administrator) in each bond year not to exceed certain limits outlined in the Indenture. Nonmortgage Investment Income Fund - All interest, profits and other income derived from nonmortgage investments of all monies in any fund or account established under the Indenture are to be deposited into this fund. Principal Fund - Monies are used and withdrawn solely for the paying of the principal of the bonds. Interest Fund - Monies are used and withdrawn solely for the paying of interest on the bonds. Redemption Fund - Monies are used and withdrawn for redeeming of bonds at the next succeeding date of redemption. 4. CASH AND EQUIVALENTS In accordance with the Indenture, the Trustee has entered into an Investment Agreement (Agreement) dated May 15, 1985 with Zions First National Bank (Bank) . Under the terms of the Agreement, monies invested with the Bank earn interest at rates of 8.00% or 9.52%, until termination of the Agreement. Monies invested with the Bank totaled $548,152 at June 30, 1992. All other Fund monies are invested with the Trustee and are stated at cost which approximates market value. The Indenture authorizes the Trustee to invest in certain designated investments. At June 30, 1992, such investments were comprised of interest-bearing deposits in financial institutions, U.S. Treasury Bills and shares in a Trustee sponsored money market fund. All such investments are covered by federal depository insurance or secured by collateral held by the Trustee in the name of the Fund. Monies invested with the Trustee totaled $213,207 at June 30, 1992. All monies invested with the Trustee and the Bank are subject to withdrawal by the Fund on demand. • - 7 - • 5. MORTGAGE LOANS RECEIVABLE Mortgage loans receivable are secured by first deeds of trust on the related residences, have thirty-year terms and bear interest at 10.15%. Mortgages are also partially insured by private mortgage insurance. Home mortgages allocated to developers who have paid a 2% cash commitment fee have been acquired at 96.5% of their principal amounts. Home mortgages • allocated to developers who have paid a 4.5% cash commitment fee have been acquired at 100% of their principal amounts. The discount, net of accumulated amortization, was $29,568 and $100,869 at June 30, 1992 and 1991, respectively. • 6. HOME MORTGAGE REVENUE BONDS PAYABLE A summary of the maturity dates and interest rates as of June 30, 1992 for the 1985 Home Mortgage Revenue Bonds follows: Interest • Bond Type Rates Principal Year ending June 30: 1993 Serial 7.75 - 8.00% $ 80,000 1994 Serial 8.00 - 8.25 80,000 1995 Serial 8.25 - 8.50 85,000 1996 Serial 8.50 50,000 1996-2001 Municipal Multiplier 9.40 - 9.75 513,322 2011 Term 9.25 2,805,000 2018 Municipal Multiplier 10.625 575,977 Total 4,189,299 Less bond discount and issuance costs, net of accumulated amortization (86,460) Total $4,102,839 • Bond interest on the Serial and Term Bonds is payable semiannually on May 1 and November 1. The Municipal Multiplier Bonds bear interest at rates ranging from 9.4% to 10.625%; interest is compounded semiannually each March 1 and September 1 and is payable at maturity or redemption. Accrued interest payable on the Municipal Multiplier Bonds was $1,115,024 and $1,125,892 at June 30, 1992 and 1991, respectively. • The Term Bonds and the Municipal Multiplier Bonds are subject to mandatory redemption without premium, prior to maturity, out of revenues deposited in a mandatory sinking account. The Indenture provides for semiannual deposits into the sinking account ranging from $125,100 commencing in 2005 to $296,000 in 2011 for the Term Bonds maturing in fiscal year 2010 and ranging from $54,000 commencing in 2011 to $26,000 in 2018 for the Municipal Multiplier Bonds. The installments are subject to reduction due to prior redemptions. - 8 - • The Fund retired $3,557,567 and $2,017,727 of the Home Mortgage Revenue Bonds in fiscal years 1992 and 1991, respectively, prior to scheduled • maturity. Generally accepted accounting principles require that the difference between the reacquisition price and the net carrying amount of extinguished debt be recorded as an extraordinary loss, if material . The net carrying amount of the bonds retired in fiscal year 1992 was $3,475,430 (1991, $1,964,515) and, accordingly, the Fund recognized an extraordinary loss on early retirement of bonds of $82,137 (1991, $53,212) . • • 'i • • • - 9 - mr t0 Ln co M CI .-y O CT O N Ln co 01 .-, O1-4 n co L W t0 . 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X Z C O O O O C >> Q LLI x V) W ut V) L W VI C 0) D: W O 3 Q T CLT U W •r �cr' -j -i O d d N N 10 W W LL. w W C¢' J O J Z � CL Q Z L L r• Z L L .- m F- O L M F- JW Q a •-•I Q O co CL >- W N a 16 W N 7 b OZZ W < OXcc > +, +J ++ CL ++ 0 ++ U .•, Q F- 41 4-> U W W F- W F- F- m a O m = C7 O W C C O X C C O Z Z C � C Z X W W d C • V r"I Ln LL F- CX ►-+ ►-I F- W I^^I O I--I I--I W Z m W 1 -9513 Deloitte & Touche CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND Financial Statements for the Years Ended • June 30, 1992 and 1991, Supplemental Statements for the Year Ended June 30, 1992 and Independent Auditors' Report • • • • • Deloittebuche JAN?619 3 Tohmatsu K • International coIN OP Rq CpS �R 5048 Deloitte & Touche 2101 Webster Street Telephone:(510)287-2700 Oakland,California 94612-3027 Telefax:(510)835-4888 INDEPENDENT AUDITORS' REPORT i The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheets of the Contra Costa County 1987 Mortgage Revenue Bond Fund (Fund) as of June 30, 1992 and 1991 and the related statements of operations and retained earnings (deficit) and of cash flows for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis 0 for our opinion. As described in Note 1 to the financial statements, the accompanying financial statements present only the 1987 Mortgage Revenue Bond Fund and are not intended to present the financial position of Contra Costa County and the results of its operations and the cash flows of its proprietary fund types and 0 similar trust funds in conformity with generally accepted accounting principles. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1992 and 1991 and the results of its operations and its cash flows for the years then ended in 0 conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental combining balance sheet, June 30, 1992, and combining statement of operations and retained • DeloitteTouche Tohmatsu • International earnings (deficit) for the year ended June 30, 1992 (supplemental statements) are presented for purposes of additional analysis and are not a required part 6 of the basic financial statements. These supplemental statements are the responsibility of the Fund's management. Such supplemental statements have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. • September 18, 1992 • • • • • • - 2- • CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND • STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) FOR THE YEARS ENDED JUNE 30, 1992 AND 1991 1992 1991 • REVENUES: Interest from GNMA securities $2,089,171 $2,096,529 Interest from cash and equivalents 198,827 496,099 Total revenues 2,287,998 2,592,628 EXPENSES: Interest 2,300,661 2,579,138 Administrative 48,944 51,343 Total expenses 2,349,605 2,630,481 NET LOSS (61,607) (37,853) • RETAINED EARNINGS (DEFICIT) : Beginning of year 5,606 43,459 End of year $ (56,001) $ 5,606 • See notes to financial statements. • • • • • - 4- • CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND • STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1992 AND 1991 1992 1991 • CASH FLOWS FROM OPERATING ACTIVITIES: Maturities of GNMA securities - principal $3,447,838 $3,146,494 Interest received on GNMA securities 2,003,656 2,060,474 Purchases of GNMA securities (3,191,800) Proceeds from developer commitment fees 25,935 Cash paid for operating expenses (51,076) (71,605) • Cash provided by operating activities 2,208,618 5,161,298 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Principal paid on revenue bonds (5,580,000) (3,060,000) Interest paid on revenue bonds (2,176,881) (2,475,888) Cash used for noncapital financing activities (7,756,881) (5,535,888) • CASH FLOWS FROM INVESTING ACTIVITIES - Interest received on cash and equivalents 262,985 493,987 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (5,285,278) 119,397 CASH AND EQUIVALENTS: Beginning of year 6,585,796 6,466,399 End of year $1,300,518 $6,585,796 RECONCILIATION OF NET LOSS TO CASH PROVIDED BY OPERATING ACTIVITIES: Net loss $ (61,607) $ (37,853) • Adjustments to reconcile net loss to cash provided by operating activities: Revenue bond interest expense 2,108,862 2,438,466 Amortization of bond discount and issuance costs 191,799 140,672 Amortization of discount on GNMA securities and deferred commitment fees (87,044) (56,114) Interest revenue from cash and equivalents (198,827) (496,099) • Sales and maturities of GNMA securities - principal 3,447,838 3,146,494 Purchases of GNMA securities (3,191,800) Proceeds from developer commitment fees 25,935 Changes in assets and liabilities: Increase in other assets (2,133) Decrease in interest receivable on GNMA securities 1,530 20,059 Decrease in other liabilities (20,262) • Total adjustments .2,270,225 5,199,151 CASH PROVIDED BY OPERATING ACTIVITIES $2,208,618 $5,161,298 See notes to financial statements. - 5 - • CONTRA COSTA COUNTY 1987 MORTGAGE REVENUE BOND FUND • NOTES TO FINANCIAL STATEMENTS 1. ENTITY • The Contra Costa County 1987 Mortgage Revenue Bond Fund (Fund) was established under the provisions of the California Health and Safety Code and the indenture between First Interstate Bank of California (Trustee) and Contra Costa County (County) , dated August 1, 1987 (Indenture) . The Fund is authorized to issue revenue bonds for the purpose of financing home 0 mortgages within .the County. Under the terms of the Indenture, the Trustee uses the bond proceeds to purchase investments and Government National Mortgage Association (GNMA) securities backed by pools of home mortgages within the County. The home mortgage revenue bonds are secured by a pledge of GNMA securities and are 0 repaid solely from loan repayments and other revenues pledged under the Indenture. GNMA guarantees the timely payment of principal and interest on the GNMA securities. The financial statements present only the 1987 Mortgage Revenue Bond Fund and are not intended to present the financial position of the County and the • results of the operations and cash flows of its proprietary fund types and similar trust funds in conformity with generally accepted accounting princi.ples. 2. SIGNIFICANT ACCOUNTING POLICIES 0 Basis of Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Cash and equivalents are short-term, highly liquid investments with original • maturities of 90 days or less. GNMA Securities are shown at cost less maturities, deferred commitment fees and related discount. The Fund has the ability and intent to hold these securities to maturity. 40 Bond discount and issuance costs associated with the sale of the bonds are recorded as a reduction to home mortgage revenue bonds payable and are amortized over the term of the bond issue using a method which approximates a interest method. Commitment fees are deferred until the related commitment is exercised, at • which time they are amortized over the remaining life of the underlying GNMA securities using a method which approximates a interest method. • - 6 - • GNMA discounts are amortized over the remaining life of the underlying GNMA security using a method which approximates a interest method. • 3. FUND DEFINITIONS As provided in the Indenture, the following funds have been established by the Trustee: • Program Fund - Monies are used and withdrawn solely for (a) the acquisition of GNMA securities, (b) payment of costs of issuance of the bonds, and (c) transfers to the Redemption Fund. Program Expense Fund - Monies are used and withdrawn solely for payment of • administrative expenses. Revenue Fund - All revenues (except for developer commitment fees) are deposited in this fund. Interest Reserve Fund - Monies are used and withdrawn by the Trustee solely • for the purpose of making up any deficiency in the Interest Fund. Principal Fund - Monies are used and withdrawn soley for paying the principal of the bonds. Interest Fund - Monies are used and withdrawn solely for the paying of • interest on the bonds. Redemption Fund - Monies are used and withdrawn for redeeming of bonds at the next succeeding date of redemption. • 4. CASH AND EQUIVALENTS In accordance with the Indenture, the Trustee has entered into an Investment Agreement (Agreement) dated August 27, 1987 with AIG Financial Products Corporation (Corporation) . Under the terms of the Agreement, monies invested with the Corporation earn interest at a rate of 6.30%, until • termination of the Agreement. Monies invested with the Corporation totaled $1,299,088 at June 30,. 1992. All other Fund monies are invested with the Trustee and are stated at cost which approximates market value. The Indenture authorizes the Trustee to invest in certain designated investments. All such investments are covered • by federal depository insurance or secured by collateral held by the Trustee in the name of the Fund. Monies invested with the Trustee totaled $1,430 at June 30, 1992. All monies invested with the Trustee and the Corporation are subject to withdrawal by the Fund on demand. • • - 7 - • 5. GNMA SECURITIES • GNMA securities, backed by pools of residential mortgage loans originated in the County, are acquired at 99.5% of the outstanding principal balance amount of the underlying mortgages and bear interest at 7.65%. Home mortgages are secured by first deeds of trust on the related residences, have terms ranging from 27 to 29 years, and bear interest at • 8.15%. The interest rate differential between the home mortgages and the GNMA securities represents fees retained by the lender for servicing home mortgages. GNMA securities are shown net of deferred commitment fees. Home mortgages are allocated to developers who have paid commitment fees of 3.2% of their • allocation. In addition, a lender has paid a commitment fee of 2% of its allocation to originate home mortgages not specifically designated to developers. As of June 30, GNMA securities were as follows: • 1992 1991 GNMA securities - at cost $24,869,869 $24,996,993 Less: Discount on GNMA securities, net of accumulated amortization (142,041) (136,534) • Deferred commitment fees, net of accumulated amortization (889,457) (965,970) Total $23,838,371 $23,894,489 Market value of these securities was $24,124,179 at June 30, 1992. • • • • • - 8- • 6. HOME MORTGAGE REVENUE BONDS PAYABLE • A summary of the maturity dates and interest rates as of June 30, 1992 for the 1987 Home Mortgage Revenue Bonds follows: Bond Interest Type Rates Principal • Year ending June 30: 1993 Serial 5.50% - 5.75% $ 455,000 1994 Serial 5.75 - 6.00 475,000 1995 Serial 6.00 - 6.25 500,000 1996 Serial 6.25 - 6.50 540,000 1997-1999 Serial 6.50 - 7.00 1,540,000 • 2014 Term 7.50 13,980,000 2017 Term 7.90 8,005,000 Total 25,495,000 Less bond discount and issuance costs, net of accumulated amortization (322,277) • Total $25,172,723 Bond interest is payable semiannually each May 1 and November 1. The Term Bonds are subject to mandatory redemption without premium prior to maturity out of revenues deposited in a mandatory sinking account. The • Indenture provides for semiannual deposits into a mandatory sinking account ranging from $230,000 commencing in 1999 to $768,000 in 2014 for the Term Bonds maturing in fiscal year 2014, and ranging from $1,200,000 commencing in 2015 to $1,440,000 in 2017 for the Term Bonds maturing in fiscal year 2017. The installments are subject to reduction due to early redemptions. • • • • • - 9- • (G 01 0 n O M m CC O G (71 : rn bOi cli 1-4 M � mr W O Oi : OOi r{ Z rtil LO Krtp .--� O Ln %D L.[) rti 1 co ON 421 OO M ^ LO O% LO co (7% On Om O� ~ U 1D M O O O O N M M Cl) Cl) 69 64 n I� ^ LO -1.1 N 01 -4-4 O ti m W Z NI w w w w c' 01 co O M co -1 M n ti M LO Cl) .�-I M 00 N et ti M cF � N N N N N 69 44 Z • O hr H OI CL Z 1 I W LL. 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Tohmatsu -. -.. . • International 0 Deloitte & Touche • /� 50 Fremont Street Telephone:(415)247-4000 San Francisco,California 94105-2230 Facsimile:(415)247-4329 • INDEPENDENT AUDITORS' REPORT • The Honorable Board of Supervisors of Contra Costa County: We have audited the accompanying balance sheet of the Contra Costa County Home Mortgage Finance Authority 1991 Taxable Home Mortgage Revenue Refunding Bond Fund (Fund) as of June 30, 1992 and the related statements of operations and • retained deficit and of cash flows for the period from July 16, 1991 (inception) to June 30, 1992. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing • standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial • statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the accompanying financial statements present only the 1991 Taxable Home Mortgage Revenue Refunding Bond Fund and are not intended to present the financial position of the Contra • Costa County Home Mortgage Finance Authority or Contra Costa County and the results of their operations and cash flows in conformity with generally accepted accounting principles. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Fund at June 30, 1992 and the results • of its operations and its cash flows for the period from July 16, 1991 (inception) to June 30, 1992 in conformity with generally accepted accounting principles. • Deloittebuche Tohmatsu • International Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental combining balance • sheet, June 30, 1992, and combining schedules of operations and retained earnings for the period , from July 16, 1991 (inception) to June 30, 1992 (supplemental schedules) are presented for purposes of additional analysis and are not a required part of the basic financial statements. These supplemental schedules are the responsibility of the Fund's management. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. D .g,� 4 September 18, 1992 • • • • • • - 2 - • CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND • BALANCE SHEET, JUNE 30, 1992 ASSETS • CASH AND EQUIVALENTS (Note 5) $ 4,164,257 MORTGAGE LOANS RECEIVABLE (Note 6) 5,768,960 INTEREST RECEIVABLE 67,899 • OTHER ASSETS 23,947 MATURED MORTGAGE LOANS AND RELATED INTEREST RECEIVABLE 707 • TOTAL. $10,025,770 LIABILITIES AND EQUITY HOME MORTGAGE REVENUE REFUNDING BONDS - Net • (Note 7) $ 8,186,902 INTEREST PAYABLE 880,637 OTHER LIABILITIES 2,333 • TOTAL LIABILITIES 9,069,872 EQUITY: Contributed equity - 1984 Home Mortgage Revenue Bond Fund (Note 2) 1,045,559 Retained deficit (89,661) Total equity 955,898 TOTAL - $10,025,770 See notes to financial statements. • • • - 3 - • CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND • STATEMENT OF OPERATIONS AND RETAINED DEFICIT FOR THE PERIOD FROM JULY 16, 1991 (INCEPTION) TO JUNE 30, 1992 • REVENUES: Interest from mortgage loans $ 959,596 Interest from cash and equivalents 162,237 Total revenues 1,121,833 EXPENSES: • Interest 1,059,156 Administrative 152,338 Total expenses 1,211,494 NET LOSS (89,661) • RETAINED DEFICIT: July 16, 1991 (Note 2) - June 30, 1992 $ (89,661) • See notes to financial statements. • • • • - 4 - • CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND • STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JULY 16, 1991 (INCEPTION) TO JUNE 30, 1992 CASH FLOWS FROM OPERATING ACTIVITIES: Mortgage loan collections - principal $ 6,246,851 Mortgage loan collections - interest 958,889 Cash paid for operating expenses (173,952) Cash provided by operating activities 7,031,788 • CASH FLOWS USED FOR NONCAPITAL FINANCING ACTIVITIES: Cash received from sale of bonds and registered coupons 12,055,027 Cash assumed from 1984 issue 421,071 Cash paid for 1984 escrow fund (11,391,323) Cash paid for costs of insurance (222,557) Principal paid on revenue bonds (3,639,948) Interest paid on revenue bonds (184,139) Cash used for noncapital financing activities (2,961,869) CASH FLOWS FROM INVESTING ACTIVITIES - Interest received on cash and equivalents 94,338 NET INCREASE IN CASH AND EQUIVALENTS 4,164,257 CASH AND EQUIVALENTS: July 16, 1991 - June 30, 1992 $ 4,164,257 RECONCILIATION OF NET LOSS TO CASH PROVIDED BY OPERATING ACTIVITIES: Net loss $ (89,661) Adjustments to reconcile net loss to cash provided by operating activities: • Revenue bond interest expense 1,064,776 Amortization of bond issuance costs 85,585 Amortization of registered coupons (91,205) Interest revenue from cash and equivalents (162,237) Mortgage loan collections - principal 6,246,851 Changes in assets and liabilities: Increase in matured mortgage loans and related interest receivable (707) Increase in other assets (23,947) Increase in other liabilities 2,333 Total adjustments 7,121,449 CASH PROVIDED BY OPERATING ACTIVITIES $ 7,031,788 See notes to financial statements. - 5 - • CONTRA COSTA COUNTY HOME MORTGAGE FINANCE AUTHORITY 1991 TAXABLE HOME MORTGAGE REVENUE REFUNDING BOND FUND • NOTES TO FINANCIAL STATEMENTS 1. ENTITY The Contra Costa County Home Mortgage Finance Authority (Authority) is a public body and agency created pursuant to the provisions of Article 1 of Chapter 5 of Division 7 of Title 1 of the California Government Code by a joint exercise of powers agreement dated as of May 1, 1984 between the County of Contra Costa, California (County) and the City of Antioch, • California. Previously, the Authority issued the 1984 Home Mortgage Revenue Bonds (1984 Bonds) for the purpose of financing home mortgages in the County. The Contra Costa County Home Mortgage Financing Authority 1991 Taxable Home Mortgage Revenue Refunding Bond Fund (Fund) was established under the • provisions of the California Health and Safety Code and the indenture between Bankers Trust Company (Trustee) and Contra Costa County (County) , dated July 1, 1991 (Indenture) . The Fund is authorized to issue revenue bonds and registered coupons (1991 Bonds) for the purpose of refunding the 1984 Bonds (see Note 2) . • The financial statements present only the 1991 Taxable Home Mortgage Revenue Refunding Bond Fund and are not intended to present the financial position of the Authority or the County and the results of the operations and cash flows in conformity with generally accepted accounting principles. 2. 1984 BOND DEFEASANCE The 1991 Taxable Home Mortgage Revenue Refunding Bond Fund was created for the purpose of defeasing the outstanding 1984 Home Mortgage Revenue Bonds. Proceeds from the 1991 Fund along with a portion of funds released from the 1984 Bond Fund were used to purchase U.S. Government Securities. Those • securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service on the 1984 Bonds. Simultaneously to the funding of the escrow for the 1984 Bonds, all remaining Funds and property (Home Mortgage Loans) pledged under the 1984 Fund were released and pledged as security for the 1991 Bonds. The difference between the amount deposited to escrow from the 1991 Bond proceeds and the assets received was • recorded as contributed equity as follows: Cash $ 421,071 Home mortgage loans 12,015,811 Total assets received 12,436,882 • Proceeds from 1991 Bonds deposited to 1984 escrow fund 11,391,323 Contributed equity from 1984 program $ 1,045,559 • - 6 - • 3. SIGNIFICANT ACCOUNTING POLICIES • Basis of Accounting - The Fund uses the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Cash equivalents are short-term, highly liquid investments with original maturities of 90 days or less. • Bond issuance costs are recorded as a reduction to home mortgage revenue bonds payable and are amortized over the term of the bond issue using a method which approximates a level-yield. • 4. FUND DEFINITIONS As provided in the Indenture, the following funds and accounts have been established by the Trustee: Program Fund - Monies are used and withdrawn solely for payment of program • expenses defined in the Health and Safety Code. Program Expense Fund - Monies are used and withdrawn solely for payment of administrative expenses. Revenue Fund - All revenues are deposited in this fund. • Reserve Fund - Monies are used and withdrawn solely for the purpose of funding deficiencies in the Bond Fund. Bond Fund - Monies are required to be used to pay the original principal value of the bonds and accrued interest and registered coupons as the same • become due and payable upon redemption, maturity or acceleration pursuant to the terms of the Indenture. Refunding Fund - Monies were deposited in this fund and transferred into escrow for defeasance of the 1984 Bonds. • Cost of Issuance Fund - Monies are used to pay expenses associated with the issuance of the 1991 Bonds. 5. CASH AND EQUIVALENTS • All available Fund monies are invested with the Trustee and are stated at cost which approximates market value. The Indenture authorizes the Trustee to invest in certain designated investments. At June 30, 1992, such investments were comprised of interest-bearing deposits in financial institutions and shares in a Trustee sponsored money market fund. All such investments are covered by federal depository insurance or secured by • collateral held by the Trustee in the name of the Fund. Monies invested with the Trustee totaled $304,713 at June 30, 1992. In accordance with the Indenture, the Trustee has entered into an Investment Agreement (Agreement) dated July 1, 1991, with Berkshire Hathaway Inc. • - 7 - • (Corporation) . Under the terms of the Agreement, monies invested with the Corporation earn interest at a rate of 6.4% until termination of the • Agreement. Monies invested with the Corporation totaled $3,859,544 at June 30, 1992. All monies invested with the Trustee and the Corporation are subject to withdrawal by the Fund on demand. • 6. MORTGAGE LOANS RECEIVABLE The home mortgages included are secured by first deeds of trust on the related residences, have 30-year terms, and bear interest at 10.9%. • 7. HOME MORTGAGE REVENUE BONDS A summary of the maturity dates and interest rates as of June 30, 1992 follows: • Bond Interest Type Rates Principal Fiscal year ending June 30: 2001 Municipal Multiplier 8.6% $5,352,991 • 2009 Municipal Multiplier 9.5% 2,824,917 Total 8,177,908 Less bond issuance costs, net of accumulated amortization (136,971) • Unamortized portion of proceeds from registered coupon issue 145,965 Total $8,186,902 Bonds - Interest on the Bonds is compounded semiannually each March 1 and • September 1, and is payable at maturity or redemption. Accrued interest payable on the Bonds was $684,393 at June 30, 1992. During fiscal 1992, $3,639,948 of Bonds were redeemed prior to maturity. The related bond issuance costs and registered coupon proceeds were expensed. Registered coupons due March 1, 2009 were issued in conjunction with the • Bonds. Original proceeds of $237,170 are amortized over the term of the bond issue using 'a method which approximates a level-yield. The registered coupons evidence the right to receive of additional interest on the Bonds. Such interest is compounded semiannually at the following rates: (a) at the rate of 1.95% per annum on the unpaid principal amount of • and compounded interest on the bonds maturing on September 1, 2001; (b) at the rate of 1.05% per annum on the unpaid principal amount of and compounded interest on the bonds maturing on March 1, 2009; and (c) at the rate of 10.55% per annum on compounded accrued interest evidenced by the registered coupons. • - 8 - • The outstanding bonds and the registered coupons are subject to mandatory redemption in whole at any time, or in part on any September I or March 1, • from and to the extent of deposits in the Revenue Fund that are in excess of the amount needed to pay Program Expenses and the amount required to be deposited into the Reserve Fund but only after all the Bonds (excluding interest 'thereon evidenced by the registered coupons) are paid in full . 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