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Home My WebLink AboutMINUTES - 02151994 - 1.67 TO: BOARD OF SUPERVISORS Contra FROM: Costa Phil Batchelor, County Administrator �> = s Ss County DATE: February 15, 1994 'a CpUN'r SUBJECT: Pension Obligation Bond Documents SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1 . Adopt resolution prepared by the Bond Counsel ratifying actions, approving forms of the documents, Official Statement, Purchase Contract, and the procurement of bond insurance for the Pension Obligation Bond Issue and execution and delivery of investment agreements . 2 . Authorize the County Administrator to execute any contracts, agreements or other necessary documents to complete the issue. BACKGROUND: The Bond Counsel for the Pension Obligation Bond Issue, Orrick Herrington & Sutcliffe, has asked that the Board adopt a resolution -ratifying actions taken and approving various documents, agreements and contracts related to the issue. The bond issue is being sold on February 15, 1994, in . New York. The Bond Counsel has asked that the documents be approved and filed with- the Clerk as of the day of sale. The County Administrator and the Auditor-Controller are in New York working with the underwriters to obtain the best possible interest rates for the County for the issue. They will be making decisions during the pricing on bond insurance, investment agreements and other matters related to the bond issue. CONTINUED ON ATTACHMENT: YES SIGNATURE: CGl? J RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON February 15 , 1994 APPROVED AS RECOMMENDED X OTHER See Resolution 94/104. VOTE OF SUPERVISORS X _ _ _ I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED February 15 , 1994 Contact: De Bell (646-4093) PHIL BATCHELOR,CLERK OF THE BOARD OF cc: County Administrator Y SUPERVISORS AND COUNTY ADMINISTRATOR County Counsel Treasurer-Tax Collector Auditor-Controller a BY - DEPUTY I RESOLUTION N.O. 94/104 RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA APPROVING AND RATIFYING THE- ISSUANCE OF COUNTY OF. CONTRA COSTA PENSION OBLIGATION DEBENTURE AND COUNTY OF CONTRA COSTA TAXABLE PENSION OBLIGATION BONDS, .APPROVING AND RATIFYING THE OFFICIAL STATEMENT, A TRUST AGREEMENT AND A PURCHASE CONTRACT RELATING TO SUCH BONDS, AND THE EXECUTION AND DELIVERY THEREOF, APPROVING AND RATIFYING THE PROCUREMENT OF BOND INSURANCE, APPROVING THE EXECUTION AND DELIVERY OF INVESTMENT AGREEMENTS, AND AUTHORIZING THE TAKING. OF NECESSARY ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS WHEREAS, the County of Contra Costa (the "County") adopted a retirement. plan under the County Employees Retirement Law of _1937, being Division 4 of Title 3 of the Government Code of the State of California, Sections 31450 through 31898, inclusive, as amended (the "Retirement Law") ; and WHEREAS, the Retirement Law obligates the County to (1) make annual contributions to the Contra Costa County Employees Retirement Association (the "Association"). to fund pension benefits for its employees, (2) amortize the unfunded accrued actuarial liability with respect to such pension benefits over a period not exceeding 30 years, and (3) appropriate funds for such purposes described in clauses (1) and (2) ; ,,and WHEREAS, the Board of Supervisors of the County (the "Board") , by resolution adopted on November 9, 1993 (the "Prior Resolution") determined that its was desirable to evidence its obligation to pay the unfunded accrued actuarial liability of the County and, if the County desired and if authorized bylaw, to fund the unpaid amount of its normal contribution to the Association for Fiscal Year 193-194 and Fiscal Year 194-195 'by issuing a debenture to the Association and to authorize the issuance of additional debentures in the future from time to time; and WHEREAS, the Prior Resolution authorized the issuance of bonds for the purpose of refunding the debenture and thereby providing funds to the.Association for investment and to authorize the issuance of additional bonds in the future from time to time; and WHEREAS, the Prior Resolution approved proposed forms of the 1994 Debenture and a Trust Agreement between the County and First Interstate Bank of California, as trustee thereunder, SF2-26747.1 relating to such bonds and approved other actions to be taken relating to the issuance of such bonds; and WHEREAS, the Prior Resolution authorized the County to bring a validation action under Section 860 of the California Code of Civil Procedure relating to the issuance of such debenture and bonds, and a judgment in such action in favor of the County was issued by the Contra Costa County Superior Court on December 22, 1993; and WHEREAS, the Board by its order given on January 11, 1994, approved the forms of a Purchase Contract, between the County and the purchasers of the Bonds, and an official statement relating to the Bonds; and authorized the execution and delivery thereof by the County Administrator; and WHEREAS, the .Board has determined that it is desirable to issue a debenture (the 111994 Debenture") evidencing its obligation to pay the unfunded accrued actuarial liability of the County to the Association; and WHEREAS, the bonds designated "County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series All (the "Bonds") in the aggregate principal amount not to exceed $345, 000,000 will be sold through negotiated sale .to CS First Boston, Morgan Stanley & Co. , Incorporated and Smith Barney Shearson Inc. (collectively, the "Underwriters") , and there has been submitted to the Board a form of purchase contract between the County and CS First Boston, on behalf of itself and the Underwriters; NOW, THEREFORE, IT IS RESOLVED, DETERMINED AND ORDERED by the Board of Supervisors of the County of Contra Costa (the "Board") as follows: Section 1. The Board hereby approves and ratifies all actions taken by officers and employees of the County in connection with the filing of and perfection of judgment in the validation action entitled The County of Contra Costa v. All Persons Interested, etc. , Case No. C93-05180, filed in the Superior Court for the County of Contra Costa. Section 2. The Board hereby ratifies and approves the issuance of the 1994 Debenture, and additional debentures from time to time in the future, if necessary, and authorizes and directs the Treasurer-Tax Collector of the County (the "Treasurer-Tax Collector") to execute and deliver the 1994 Debenture to the Association, substantially in the form on file with the Clerk of the Board, with such changes therein, deletions therefrom and additions thereto as the Treasurer-Tax Collector shall approve, such approval to be conclusively evidenced by the execution and delivery of the 1994 Debenture to the Association, SM-26747.1 2 and the Clerk of the Board is authorized and directed to affix and attest the seal of the County; provided, however, that the 1994 Debenture shall be in a principal amount not to exceed the total of the unfunded accrued actuarial liability of the County to the Association remaining unpaid on the date of issuance of the 1994 Debenture; the stated interest rate on the 1994 Debenture shall not exceed twelve percent (12%) per annum; the 1994 Debenture shall be prepayable at any time without premium; and the 1994 Debenture shall mature not later than June 1, 2015. Additional debentures authorized hereunder may be issued pursuant to supplemental resolutions hereto. The 1994 Debenture as executed shall constitute an obligation imposed by law, pursuant to the Constitution of the State of California and the Retirement Law and an obligation of the County not limited as to payment from any special source of funds. The 1994 Debenture shall not, however, constitute an obligation of the County for which the County is obligated .or permitted to levy or pledge any form of taxation or for which the County has levied or pledged or will levy or pledge any form of taxation. Section 3. 1 The Board hereby ratifies and approves the issuance of the Bonds and hereby authorizes and directs the Chair of the Board and the Treasurer-Tax Collector to execute the Bonds, and the Clerk of the Board to affix and attest the seal of the County and to cause the Bonds to. be authenticated and delivered in accordance with the Trust Agreement. The Bonds shall be in substantially the form set forth in Exhibit A to the Trust Agreement, with such changes therein, deletions therefrom and additions thereto as the Chair of the Board and the Treasurer-Tax Collector shall approve, such approval to be conclusively evidenced by the execution and delivery of the Bonds; the Bonds may be issued in a single series or in two or more series, provided, however, that the aggregate principal amount of the Bonds shall not exceed the principal amount of the 1994 Debenture and costs of issuance, including premium for bond insurance, relating to the Bonds, the interest rate on the Bonds shall not exceed twelve percent (12%) per annum, and the Bonds shall mature not later than June 1, 2015. The dated date of the Bonds, February 1, 1994, is hereby ratified and approved. The Bonds shall constitute an obligation imposed by law, pursuant to the Constitution of the State of California and the Retirement Law and an obligation of the County not limited as to payment from any special source of funds. The Bonds shall not, however, constitute an obligation of the County for which the County is obligated or permitted to levy or pledge any form of taxation or for which the County has levied or pledged or will levy or pledge any form of taxation. Section 4. The Board hereby ratifies and approves the execution and delivery of the proposed form of Trust Agreement, dated as' of February 1, 1994, between the County and the Trustee, SF2-26747.1 3 on file with the Clerk of the Board. The Chair of the Board is hereby authorized and directed to execute and deliver the Trust Agreement on behalf of the County, substantially in the form on file with the Clerk of the Board, with such changes therein, deletions therefrom and additions thereto as the Chair shall approve, such approval to be conclusively evidenced by the execution and delivery of the Trust Agreement, and the Clerk of the Board is authorized and directed to affix and attest the seal of the County. Pursuant to the terms of the Trust Agreement, the Board hereby approves the issuance of additional series of bonds in the future from time to time pursuant to supplemental trust agreements, subject to the limitations contained in the Trust Agreement presented to this meeting. Section 5. The Board hereby ratifies and approves the Preliminary Official Statement, dated January 24, 1994, relating to the Bonds, on file with the Clerk of the Board of Supervisors, and approves and ratifies the distribution of the Preliminary Official Statement by the Underwriters to potential purchasers of the Bonds. The Board hereby ratifies and approves the execution and delivery by the County Administrator of the County of the certificate pursuant to Rule 15c2-12 (the "Rule") , promulgated by the Securities and Exchange Commission, deeming the Preliminary Official Statement to be final as of its date for purposes of such Rule. The County Administrator is hereby authorized and directed to execute the final Official Statement with such changes therein, deletions therefrom and additions thereto as the County Administrator shall approve, such approval to be conclusively evidenced by the execution and delivery of the final Official Statement. Distribution of the final Official Statement by the Underwriters. to actual purchasers of Bonds is hereby authorized and approved. Section 6. The Board hereby ratifies and approves the execution and delivery of the proposed form of Purchase Contract, to be dated on or about February 16, 1994 (the "Purchase Contract") , between the County and CS First Boston, on behalf of itself and the several Underwriters of the Bonds, on file with the Clerk of the Board of Supervisors. The County Administrator is hereby authorized and directed to execute and deliver the Purchase Contract, substantially in the form on file with the Clerk of the Board, with such changes therein, deletions therefrom and additions thereto as the County Administrator shall approve, such approval to be conclusively evidenced by the execution and delivery of the Purchase Contract. Section 7. The Board hereby authorizes the County Administrator to enter into one or more investment agreements on behalf of the County providing for the investment of moneys in the funds and accounts created under the Trust Agreement, as the County Administrator deems appropriate, including the form of SF2-26747.1 4 Debt Service Forward Delivery Agreement between the County and CS First Boston on file with the Clerk of the Board. The County Administrator is hereby authorized and directed to execute and deliver any such investment agreement or agreements on behalf of the County as may be approved by the County Administrator, such approval to be conclusively evidenced by the execution and delivery of such investment agreement or agreements. Section 8. The. Board hereby ratifies and approves the procurement of municipal bond insurance with respect to some or all of the Bonds, if the County Administrator determines that it will be advantageous to the County to purchase such insurance. The County Administrator or his designee is hereby authorized to purchase such insurance at market rates. Section 9. The supervisors, officers and employees of the County are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. The Chair of the Board of Supervisors, the Clerk of the Board of Supervisors, the County Administrator, the Deputy County Administrator, and the other officers and employees of the County be and they are hereby authorized and directed to execute and deliver any and all certificates and representations, including signature certificates, no-litigation certificates and certificates concerning the official statement describing the Bonds, necessary and desirable to accomplish the transactions set forth above. Section 10. All actions heretofore taken by the , supervisors, officers and agents of the County with respect to the execution and delivery of the Bonds and the other transactions authorized and contemplated herein are hereby approved, confirmed and ratified. Section 11. All other terms and provisions of the Prior Resolution not in conflict with this Resolution shall remain in full force and effect. sF2-26747.1 5 ` (.b7 Section 12. This Resolution shall -take effect from and after its date of adoption. PASSED AND ADOPTED this 15th day of February, 1994 by the following vote: AYES: Supervisors Smith, Bishop, McPeak, Torlakson, Powers NOES: None ABSENT: None ABSTAIN: None d� Cha 'r of the Board of Supervisors County of Contra Costa, California [Seal] ATTEST: Philip J. Batchelor, Clerk of the Board of Supervisors and County Administrator By D16puty Clerk of Vid Board of Supervisors of the County of Contra Costa, State of California SF2-26747.1 6 . CLERK'S CERTIFICATE I, Jeanne 0. Maglio , Deputy Clerk of the Board of Supervisors of the County of Contra Costa (the "County") , hereby certify as follows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Supervisors of said County duly and regularly held at the regular meeting place thereof on the 15th day of February, 1994, of which meeting all of the members of said Board of Supervisors had due notice and at which a majority thereof was present; and at said meeting said resolution was adopted by the following vote: AYES: Supervisors Smith, Bishop, McPeak, Torlakson, Powers NOES: None ABSTENTIONS: None An agenda of said meeting was posted at least 72 hours before said meeting at 6-5l Pine Strppt , Martinez, California, a location freely accessible to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand and the seal of the County of Contra Costa this 15th day of FPh _ 1994. Deputy C1 k of the Board of Supervisors of the County of Contra Costa, State of California (Seal] SF2-26747.1 1,67 AFFIDAVIT OF POSTING OF AGENDA STATE OF CALIFORNIA ) ss. COUNTY OF CONTRA COSTA ) Dineen Burdick hereby declares that [s]he is a citizen of the United States of America, over the age of 18 years; that acting for the Board of Supervisors of the County of Contra Costa [s]he posted on Februaryl_l_, 1994 at 651 Pine Street Martinez, California, a location freely accessible to members of the public, an agenda for the regular meeting of the Board of Supervisors of Contra Costa County to be held on February 15, 1994, a copy of which is attached hereto. Dated: February 11� 1994. I declare under penalty of perjury that the foregoing is true and correct. I LA B SF2-26747.1 s 177 OH&S DRAFT 2/11/94 No. $ COUNTY OF CONTRA COSTA STATE OF CALIFORNIA PENSION OBLIGATION DEBENTURE The County of Contra Costa (the "County" ) , a political subdivision of the State of California, acknowledges itself indebted, and for value received hereby promises to pay, to the Contra Costa County Employees Retirement Association (the "Association" ) , a retirement association existing under the County Employees Retirement Law of 1937 of the State of California, or assigns (the "Holder" ) , the sum of Dollar ($ ) , together with interest thereon from the date hereof at the rate of ( o) per annum. Principal and interest shall be paid at such address as shall have been agreed upon by the Holder hereof and the County. Interest on such principal amount shall be payable from the date of this Debenture or from the most recent interest payment date to which interest has been paid or duly provided for, commencing on June 1, 1994, and semiannually thereafter on December 1 and June 1 at the rate set forth above, until the principal hereof is paid or made available for payment and principal shall be payable in accordance with the following schedule: provided, however, that the County shall prepay each fiscal year' s obligations within thirty days of the commencement of such fiscal year. This Debenture is a duly authorized debenture of the County designated its "Pension Obligation Debenture" (the "Debenture" ) in the aggregate principal amount of $ issued under and if full compliance with the Constitution and statutes of the State of California, particularly the County Employees Retirement Law of 1937, as amended (the "Act" ) , and under and pursuant to Resolution No. adopted by the Board of Supervisors of the County on February 15, 1994 (the "Resolution" ) . This Debenture and payment hereunder are subject to the terms and conditions of the Resolution, copies of which are on file at the office of the Clerk of the Board of Supervisors of the County, and reference to the Resolution and any and all supplements thereto and modifications and amendments thereof and to the Act is made for a complete statement of such terms and conditions . This Debenture may, at any time and from time to time, be prepaid in whole or in part. without premium and without prior notice. The obligations of the County hereunder, including the obligation to make all payments of interest and principal when due, are obligations of the County imposed by law and are absolute and unconditional, without any right of set-off or counterclaim. This Debenture does not constitute an obligation of the County for which the County is obligated or permitted to levy or pledge any form of taxation or for which the County has levied or pledged or will levy or pledge any form of taxation. Neither the Debenture nor the obligation of the County to make payments on the Debenture constitute an indebtedness of the County, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Pursuant to Section 31584 of the Act, the Board of Supervisors of the County is obligated to make appropriations to pay the unfunded accrued actuarial liability which is evidenced by this Debenture and such Section and the Resolution require the Auditor-Controller of the County to transfer from any money available in any fund in the county treasury the sums specified if the Board of Supervisors fails to make such appropriations . Notwithstanding any dispute between the County and the Association, or any assignee of the Association or any assigns of the Association, the County shall make all payments required hereunder when due, unless made earlier pursuant to optional prepayment, and shall not withhold any such payments pending the final resolution of such dispute or for any other reason whatsoever. The County hereby waives presentment, protest, notice, demand or any action on delinquency. It is hereby certified and recited that all conditions, acts and things required by law and the Resolution to exist, to have happened and to have been performed do exist, have happened and have been performed in due time, from and manner as required by law. 2 IN WITNESS WHEREOF, THE COUNTY OF CONTRA COSTA, CALIFORNIA has caused this Debenture to be signed in its name and on its behalf by the manual or facsimile signature of the Treasurer-Tax Collector of the County and its seal (or a facsimile thereof) to be hereunto affixed, imprinted, engraved or otherwise reproduced, as of the 1st day of February, 1994 . COUNTY OF CONTRA COSTA, CALIFORNIA By: Treasurer-Tax Collector [SEAL] Attest : By: Clerk of the Board of Supervisors ACCEPTED BY: COUNTY OF CONTRA COSTA EMPLOYEES' RETIREMENT ASSOCIATION By Title: 3 OH&S DRAFT 2/11/94 TRUST AGREEMENT between the COUNTY OF CONTRA COSTA and FIRST INTERSTATE BANK OF CALIFORNIA, as Trustee Dated as of February 1, 1994 $ County of Contra Costa Taxable Pension Obligation Bonds SF2-23139.5 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.02. Trust Agreement Constitutes Contract. . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE II ISSUANCE OF 1994 SERIES A BONDS; GENERAL BOND PROVISIONS 2.01. Authorization and Purpose of 1994 Series A Bonds . . . . . . . . . . . . . . . . . 11 2.02. Terms of the 1994 Series A Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.03. Redemption of 1994 Series A Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.04. Form of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.05. Execution of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.06. Transfer and Payment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.07. Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.08. Bond Registration Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.09. Mutilated, Destroyed, Stolen or Lost Bonds . . . . . . . . . . . . . . . . . . . . . . 16 2.10. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.11. Procedure for the Issuance of 1994 Series A Bonds . . . . . . . . . . . . . . . . . 17 2.12. Validity of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.13. Special Covenants as to Book-Entry Only System for 1994 Series A Bonds . . . 18 ARTICLE III ISSUANCE OF ADDITIONAL BONDS 3.01. Conditions for the Issuance of Additional Bonds . . . . . . . . . . . . . . . . . . . 20 3.02. Procedure for the Issuance of Additional Bonds . . . . . . . . . . . . . . . . . . . . 21 ARTICLE IV FUNDS AND ACCOUNTS 4.01. Bond Fund; Deposits to Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.02. Allocation of Moneys in Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.03. Deposit and Investments of Money in Accounts and Funds . . . . . . . . . . . . . 24 SF2-23139.5 1 Page ARTICLE V COVENANTS OF THE COUNTY 5.01. Punctual Payment and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 5.02. Extension of Payment of Bonds . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 5.03. Additional Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 5.04. Power to Issue Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.05. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.06. Accounting Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.07. Prosecution and Defense of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.08. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.09. Waiver of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE VI THE TRUSTEE 6.01. The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 6.02. Liability of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 6.03. Compensation and Indemnification of Trustee . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE VII AMENDMENT OF THE TRUST AGREEMENT 7.01. Amendment of the Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 7.02. Disqualified Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 7.03. Endorsement or Replacement of Bonds After Amendment . . . . . . . . . . . . . . 31 7.04. Amendment by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 7.05. Attorney's Opinion Regarding Supplemental Agreements . . . . . . . . . . . . . . 32 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF HOLDERS 8.01. Events of Default and Acceleration of Maturities . . . . . . . . . . . . . . . . . . . 32 8.02. Application of Funds Upon Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 33 8.03. Institution of Legal Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . 34 8.04. Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 8.05. Actions by Trustee as Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . 34 8.06. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8.07. Limitation on Bondholders' Right to Sue . . . . . . . . . . . . . . . . . . . . . . . . 35 8.08. Absolute Obligation of County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SF2-23139.5 ii Page ARTICLE IX DEFEASANCE 9.01. Discharge of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.02. Unclaimed Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE X MISCELLANEOUS 10.01. Benefits of the Trust Agreement Limited to Parties . . . . . . . . . . . . . . . . . 37 10.02. Successor Is Deemed Included In All References To Predecessor . . . . . . . . 37 10.03. Execution of Documents by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 37 10.04. Waiver of Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.05. Acquisition of Bonds by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.06. Destruction of Cancelled Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10:07. Content of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.08. Publication for Successive Weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.09. Accounts and Funds; Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.11. Article and Section Headings and References . . . . . . . . . . . . . . . . . . . . . 39 10.12. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 10.13. Execution in Several Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 10.14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 10.15. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Exhibit A: Form of Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 SF2-23139.5 THIS TRUST AGREEMENT made and entered into as of January 1, 1994 (the "Trust Agreement") by and between FIRST INTERSTATE BANK OF CALIFORNIA, a state banking corporation duly organized and existing under and by virtue of the laws of laws of the State of California, as Trustee (the "Trustee") and the COUNTY OF CONTRA COSTA (the "County"), a political subdivision, duly organized and existing under the Constitution and laws of the State of California, WITNESSETH: WHEREAS, the County is obligated by the County Employees Retirement Law of 1937, Division 4 of Title 3 of the Government Code of the State of California, Sections 31450 through 31899.10, inclusive, as amended (the "Retirement Law"), to make payments to the Contra Costa County Employees Retirement Association (the "Association") relating to pension benefits accruing to the Association's members; and WHEREAS, the County has issued a Pension Obligation Debenture dated as of February 1, 1994 (the "1994 Debenture") in the amount of$ in favor of the Association, evidencing the County's obligation to pay the County's unfunded accrued actuarial liability; and WHEREAS, the County is authorized pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California (the "Act") to issue bonds for the purpose of refunding any evidence of indebtedness of the County; and WHEREAS, for the purpose of refunding the County's obligations to the Association evidenced by the 1994 Debenture, the County has determined to issue its County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A, in the aggregate principal amount of $ (the "Bonds"), all pursuant to and secured by this Trust Agreement providing for the issuance of the Bonds, all in the manner provided herein; and WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal thereof and interest thereon, the County has authorized the execution and delivery of this Trust Agreement; and WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when executed by the County, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the County payable in accordance with their terms, and to constitute this Trust Agreement a valid and binding agreement of the parties hereto for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Trust Agreement have been in all respects duly authorized; SF2-23139.5 NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the County does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any Supplemental Trust Agreement and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified: Act The term "Act" means Articles 10 and 11 (commencing with Section 53570) of Chapter 3, Division 2, Title 5 of the Government Code of the State of California. Association The term "Association" means the Contra Costa County Employees Retirement Association. Board of Retirement The term "Board of Retirement" means the Board of Retirement of the County of Contra Costa, California. Bond Fund The term "Bond Fund" means the Bond Fund established in Section 4.01(b) of this Trust Agreement. Bonds, 1994 Series A Bonds, Additional Bonds, Serial Bonds, Term Bonds The term "Bonds" means the 1994 Series A Bonds and all Additional Bonds. SF2-23139.5 2 The term "1994 Series A Bonds" means all bonds of the County authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance with Article II. The term "Additional Bonds" means all bonds of the County authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance with Article III. The term "Serial Bonds" means Bonds for which no sinking fund payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bond Year The term "Bond Year" means the twelve-month period ending on June 1 of each year to which reference is made; provided that the first Bond Year shall commence on the date the 1994 Series A Bonds are originally delivered and shall end on June 1, 1994. Business Day The term "Business Day" means any day other than a Saturday or Sunday or day upon which the Trustee is authorized by law to remain closed. Certificate of the County The term "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 any other officer of the County duly authorized by the Board of Supervisors of the County in writing to the Trustee for that purpose. If and to the extent required by the provisions of Section 10.07, each Certificate of the County shall include the statements provided for in Section 10.07. Closing Date for the 1994 Series A Bonds The term "Closing Date" means the date on which the 1994 Series A Bonds are delivered to the Original Purchaser for the 1994 Series A Bonds. Code The term "Code" means the Internal Revenue Code of 1986, as amended. SF2-23139.5 3 Corporate Trust Office The term "Corporate Trust Office" means such corporate trust office of the Trustee as may be designated from time to time by written notice from the Trustee to the County, initially being San Francisco, California and Los Angeles, California; provided, however, that for purposes of registration, transfer, exchange, payment or redemption of Bonds, Corporate Trust Office shall initially mean the corporate trust office of the Trustee in Los Angeles, California. The Trustee may designate in writing to the County and the Holder such other office or agency from time to time for purposes of registration, transfer, exchange, payment or redemption of Bonds. Costs of Issuance The term "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the County and related to the 1994 Series A Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, initial fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fees and expenses of the underwriter, fees and charges for preparation, execution and safekeeping of the 1994 Series A Bonds, and any other cost, charge or fee in connection with the original execution and delivery of the 1994 Series A Bonds. Costs of Issuance Fund The term "Costs of Issuance Fund" means the Costs of Issuance Fund established in Section 2.11(c) of this Trust Agreement. Counjy The term "County" means the County of Contra Costa, a political subdivision and body corporate and politic of the State. Financial Newspaper The term "Financial Newspaper" means The Wall Street Journal or The Bond Buyer, or any other newspaper or journal printed in the English language, publishing financial news and selected by the Trustee, who shall be under no liability by reason of such selection. Fiscal Year The term "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the County as its Fiscal Year in accordance with applicable law. SF2-23139.5 4 Holder The term "Holder" means any person who shall be the registered owner of any Outstanding Bond. Independent Certified Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State or a comparable successor, appointed and paid by the County, and who, or each of whom -- (1) is in fact independent according to the Statement of Auditing Standards No. 1 and not under the domination of the County; (2) does not have a substantial financial interest, direct or indirect, in the operations of the County; and (3) is not connected with the County as a member, officer or employee of the County, but who may be regularly retained to audit the accounting records of and make reports thereon to the County. Information Services The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 17302, Attention: Editor; Kenny Information Services' "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard & Poor's Corporation's "Called Bond Service," 25 Broadway, 3rd Floor, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or such services as the County may designate in a Certificate of the County delivered to the Trustee. Interest Account The term "Interest Account" means the account by that name established in Section 4.02 of this Trust Agreement. Interest Payment Date The term "Interest Payment Date" means a date on which interest is due on the Bonds, being June 1 and December 1 of each year to which reference is made, commencing on June 1, 1994. SF2-23139.5 5 1994 Debenture The term "1994 Debenture" means the Pension Obligation Debenture issued by the County on February 1, 1994 in favor of the Association in the principal amount of Opinion of Counsel The term "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. Original Purchaser of the 1994 Series A Bonds The term "Original Purchaser of the 1994 Series A Bonds" means CS First Boston as original purchaser of the 1994 Series A Bonds. Outstanding The term "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 7.02) all Bonds except (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of Section 9.01; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the County pursuant hereto. Permitted Investments The term "Permitted Investments" means any of the following to the extent permitted by the laws of the State: (1) United States Treasury notes, bonds, bills, or certificates of indebtedness, or obligations for which the faith and credit of the United States of America are pledged for the payment of principal and interest (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and securities which represent an undivided interest in such direct obligations), and also any securities now or hereafter authorized, the timely payment of both the principal of and interest on which is guaranteed fully and directly by the full faith and credit of the United States of America; SF2-23139.5 6 (2) Bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under said act; bonds, debentures; participation certificates or other obligations of the Government National Mortgage Association or the Federal National Mortgage Association established under the National Housing Act, as amended; (3) Demand deposits, time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank or trust company, including the Trustee, or a state or national savings and loan association, provided that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation or (ii) issued by any bank or trust company organized under the laws of any state of the United States, or any national banking association (including the Trustee), having a combined capital and surplus of at least $500,000,000, whose non-guaranteed senior debt is rated "A" or equivalent or better by the Rating Agencies and such certificates shall have maturities of six months or less; (4) Any repurchase agreement with any bank or trust company organized under the laws of any state of the United States (including the Trustee) or any national banking association or government bond dealer reporting to, trading with and recognized as a primary dealer by, the Federal Reserve Bank of New York, which agreement is secured at all times by collateral security described in clause (1) or (2) of this definition and in which the Trustee has a perfected security interest, and which collateral (a) is held by the Trustee or a third party agent, (b) is not subject to liens or claims of third parties, (c) has a market value determined as frequently and in an amount sufficient to satisfy the collateralization levels required by the Rating Agencies, and (d) failure to maintain the requisite collateral level will require the liquidation of the collateral; (5) Bankers' acceptances which are issued by a bank or trust company organized under the laws of any state of the United States or any national banking association (including the Trustee) rated "A" or equivalent or better by the Rating Agencies; provided, that such banker's acceptances may not exceed 270 days' maturity; (6) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by the Rating Agencies, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "A" or equivalent or higher rating for the issuer's debentures, other than commercial paper, as provided by the Rating Agencies; provided that purchases of eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10%) of the outstanding commercial paper of an issuer corporation; SF2-23139.5 7 (7) Bonds, notes, warrants or other evidence of indebtedness of any of the states of the United States or of any political subdivision or public agency thereof which are rated in the highest short-term or one of the two highest long-term rating categories by the Rating Agencies; (8) Government money market portfolios or money market funds restricted to obligations issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States, which portfolios shall have an "AAA" or equivalent by the Rating Agencies, including funds for which First Interstate Bancorp, its affiliates or subsidiaries provide investment advisory or other management services; (9) Tax exempt securities rated "AAA" or equivalent by the Rating Agencies, for which the interest and principal has been provided by an escrow deposit which, in the opinion of an Independent Certified Public Accountant, is fully sufficient to pay the principal of and interest and redemption premium, if any, on such tax exempt securities at their stated maturity or redemption date; (10) Guaranteed investment contracts in a form approved by the Rating Agencies with entities the unsecured debt securities of which are rated in one of the two highest long-term rating categories by the Rating Agencies or the equivalent of such ratings by virtue of guarantees or insurance arrangements; (11) The pooled investment fund of the County of Contra Costa, California, which is administered in accordance with the investment policy of said County as established by the Treasurer/Tax Collector thereof, as permitted by Section 53601 of the Government Code of the State, copies of which policy are available upon written request to said Treasurer/Tax Collector; and (12) The Local Agency Investment Fund (as that term is defined in Section 16429.1 of the Government Code of the State, as such Section may be amended or recodified from time to time). Principal Account The term "Principal Account" means the account by that name established in Section 4.02 of this Trust Agreement. Rating Agencies The term "Rating Agencies" means Moody's Investors Service, Inc. and Standard & Poor's Corporation, or, in the event that Moody's Investors Service, Inc. or Standard & Poor's Corporation no longer maintains a rating on the Bonds, any other nationally recognized bond rating agency then maintaining a rating on the Bonds, but, in each SF2-23139.5 8 instance, only so long as Moody's Investors Service, Inc., Standard & Poor's Corporation or other nationally recognized rating agency then maintains a rating on the Bonds. Record Date The'term "Record Date" means, with respect to an Interest Payment Date, the fifteenth day (whether or not such day is a Business Day) of the month immediately preceding such Interest Payment Date. Refunding Fund The term "Refunding Fund" means the fund by that name established in Section 4.02 of this Trust Agreement. Representation Letter The term "Representation Letter" means the letter of representation dated the date of issuance of the 1994 Series A Bonds, to The Depository Trust Company, New York, New York, from the County and the Trustee relating to the 1994 Series A Bonds. Retirement Law The term "Retirement Law" means the County Employees Retirement Law of 1937, consisting of Division 4 of Title 3 of the Government Code of the State of California. Securities Depositories The term "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax-(215) 496-5058; or such other addresses and/or such other securities depositories as the County may designate to the Trustee. State The term "State" means the State of California. Surplus Account The term "Surplus Account" means the account by that name established in Section 4.02 of this Trust Agreement. SF2-23139.5 9 Supplemental Trust Agreement The term "Supplemental Trust Agreement" means any trust agreement then in full force and effect which has been duly executed and delivered by the County and the Trustee amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Trust Agreement is specifically authorized hereunder. Trust Agreement The term "Trust Agreement" means this Trust Agreement, dated as of February 1, 1994, between the County and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions hereof. Trustee The term "Trustee" means First Interstate Bank of California, or any other association or corporation which may at any time be substituted in its place as provided in Section 6.01. Written Request of the County The term "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 any other officer of the County duly authorized by the Board of Supervisors of the County in writing to the Trustee for that purpose. SECTION 1.02. Trust Agreement Constitutes Contract. In consideration of the acceptance of the Bonds by the Holders thereof, the Trust Agreement shall be deemed to be and shall constitute a contract among the County, the Trustee and the Holders from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to provide for the payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the County shall be for the equal and proportionate benefit, protection and security of all Holders of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. SF2-23139.5 10 ARTICLE II ISSUANCE OF 1994 SERIES A BONDS; GENERAL BOND PROVISIONS SECTION 2.01. Authorization and Purpose of 1994 Series A Bonds. The County has reviewed all proceedings heretofore taken relative to the authorization of the 1994 Series A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the 1994 Series A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the County is now duly authorized, pursuant to each and every requirement of the Act, to issue the 1994 Series A Bonds in the form and manner and for the purpose provided herein and that the 1994 Series A Bonds shall be entitled to the benefit, protection and security of the provisions hereof. SECTION 2.02. Terms of the 1994 Series A Bonds. The 1994 Series A Bonds shall be designated "County of Contra Costa Pension Obligation Bonds, 1994 Series A" and shall be in the aggregate principal amount of dollars ($ ). The 1994 Series A Bonds shall be dated as of January 1, 1994, shall be issued only in fully registered form in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of 1994 Series A Bonds maturing at any one time), and shall mature on the dates and in the principal amounts and bear interest at the rates as set forth in the following schedule: Maturity Date Principal Interest June 1 Amount Rate The 1994 Series A Bonds shall bear interest at the rates (based on a 360-day year of twelve 30-day months) set forth above, payable on June 1, 1994, and semiannually thereafter on December 1 and June 1 in each year. The 1994 Series A Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless such date of authentication is an Interest Payment Date or during the period from the SF2-23139.5 1 1 sixteenth day of the month preceding an Interest Payment Date to such Interest Payment Date, in which event they shall bear interest from such Interest Payment Date, or unless such date of authentication is prior to the first Record Date, in which event they shall bear interest from January 1, 1994; provided, however, that if at the time of authentication of any 1994 Series A Bond interest is then in default on the Outstanding 1994 Series A Bonds, such 1994 Series A Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding 1994 Series A Bonds. Payment of interest on the 1994 Series A Bonds due on or before the maturity or prior redemption thereof shall be made to the person whose name appears in the 1994 Series A Bonds registration books kept by the Trustee pursuant to Section 2.08 as the registered owner thereof as of the close of business on the Record Date for an Interest Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on the Interest Payment Date by first-class mail to such registered owner at the address as it appears in such books; provided that upon the written request of a Holder of $1,000,000 or more in aggregate principal amount of Bonds received by the Trustee prior to the applicable Record Date, interest shall be paid by wire transfer in immediately available funds. Any such written request shall remain in effect until rescinded in writing by the Holder. The principal of the 1994 Series A Bonds shall be payable in lawful money of the United States of America at the Corporate Trust Office of the Trustee. Payment of the principal of the 1994 Series A Bonds shall be made upon the surrender thereof at maturity or on redemption prior to maturity at the Corporate Trust Office of the Trustee. The obligations of the County under the Bonds, including the obligation to make all payments of interest and principal when due, are obligations of the County imposed by law and are absolute and unconditional, without any right of set-off or counterclaim. The Bonds do not constitute an obligation of the County for which the County is obligated to levy or pledge any form of taxation. Neither the Bonds nor the obligation of the County to make payments on the Bonds constitute an indebtedness of the County, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Pursuant to Section 31584 of the Retirement Law, the Board of Supervisors of the County is obligated to make appropriations to pay the unfunded accrued actuarial liability which is evidenced by the Bonds and requires the Auditor of the County to transfer from any money available in any fund in the County treasury the sums specified if the Board of Supervisors fails to make such appropriation. SECTION 2.03. Redemption of 1994 Series A Bonds. (a) Optional Redemption. The 1994 Series A Bonds maturing on and after June 1 are subject to redemption prior to their respective stated maturities at the option of the County as a whole on any date, or in part (in such maturities as are designated by the County to the Trustee) on any Interest Payment Date on or after June 1, , at the following redemption prices (expressed as percentages of the principal amount of 1994 Series A Bonds called for redemption), together with accrued interest to the date fixed for redemption: SF2-23139.5 12 Redemption Period (dates inclusive) Redemption Price June 1, through May 31, % June 1, through May 31, June 1, and thereafter (b) Mandatory, Sinking Fund Redemption. The 1994 Series A Bonds maturing on June 1, _, upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption prior to maturity, in part on June 1 of each year on and after June 1, _, by lot, from mandatory sinking account payments in the amounts set forth below at a redemption price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the redemption date. Mandatory Sinking Account Payment Date Mandatory Sinking June 1 Account Payment (c) Selection of Bonds for Redemption. If less than all Outstanding Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the Bonds of such maturity date to be redeemed in any manner that it deems appropriate and fair and shall promptly notify the County in writing of the certificate numbers of the Bonds so selected for redemption. For purposes of such selection, Bonds shall be deemed to be composed of $5,000 multiples and any such multiple may be separately redeemed. (d) Notice of Redemption. If the County elects to redeem Bonds pursuant to Section 2.03(a), it shall notify the Trustee of the redemption date and the principal amount of Bonds to be redeemed at least 45 days before the redemption date. The Trustee may, at its option, waive such notice or accept notice at a later date. Notice of redemption shall be mailed by first-class mail by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective Holders of the Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, (ii) the Securities Depositories and (iii) one or more Information Services. Notice of redemption to the Securities Depositories and the Information Services shall be given by registered mail or overnight delivery or facsimile transmission. Each notice of redemption shall state the date of such notice, the redemption price, if any, (including the name and appropriate address of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such SF2-23139.5 13 maturity, to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the redemption price, if any, thereof and in the case of a Bond to be redeemed in part only, the specified portion of the principal amount thereof to be redeemed, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address of the Trustee specified in the redemption notice. Failure to receive such notice or any defect therein shall not invalidate any of the proceedings taken in connection with such redemption. In the event of redemption of Bonds (other than sinking fund redemptions), the Trustee shall mail a notice of redemption upon receipt of a Written Request of the County but only after the County shall file a Certificate of the County with the Trustee that on or before the date set for redemption, the County shall have deposited with or otherwise made available to the Trustee for deposit in the Principal Account the money required for payment of the redemption price, including accrued interest, of all Bonds then to be called for redemption (or the Trustee determines that money will be deposited with or otherwise made available to it in sufficient time for such purpose), together with the estimated expense of giving such notice. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice Bonds so called for redemption shall become due and payable, and from and after the date so designated interest on such Bonds shall cease to accrue, and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. All Bonds redeemed pursuant to the provisions of this section shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the County and shall not be reissued. The County agrees to reimburse the Trustee for costs incurred in connection with the microfilming or other permanent record relating thereto. SECTION 2.04. Form of Bonds. The Bonds and the authentication endorsement and assignment to appear thereon shall be substantially in the form set forth in Exhibit A hereto attached and by this reference herein incorporated (provided that on the face of each Bond that is not registered pursuant to Section 2.13 at the place where the portion of the form set forth below appears on the reverse side of such Bond, there shall be inserted the following sentence: REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE). SECTION 2.05. Execution of Bonds. The Chair of the Board of Supervisors of the County is hereby authorized and directed to execute each of the Bonds on behalf of the SF2-23139.5 14 County and the Clerk of the Board of Supervisors of the County is hereby authorized and directed to countersign each of the Bonds on behalf of the County. The signatures of such Chair and Clerk may be by printed, lithographed, engraved or otherwise reproduced by facsimile reproduction. ,In case any officer whose signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the Bonds. Only those Bonds bearing thereon a certificate of authentication in the form hereinbefore recited, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof. SECTION 2.06. Transfer and Payment of Bonds. Any Bond may, in accordance with its terms, be transferred in the books required to be kept pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bonds for cancellation at the Corporate Trustee Office of the Trustee, accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the County shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of the same series and maturity for a like aggregate principal amount. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the County. The Trustee shall require the payment by the Holder requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. The County and the Trustee may deem and treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of receiving payment thereof and for all other purposes, whether such Bonds shall be overdue or not, and neither the County nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of and redemption premium, if any, on such Bonds shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on such Bonds to the extent of the sum or sums so paid. The Trustee shall not be required to register the transfer of or exchange any Bond which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redemption in whole or in part as provided in Section 2.03. SECTION 2.07. Exchange of Bonds. Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like aggregate principal amount of Bonds of the same series and maturity of other authorized denominations. The cost of printing Bonds and SF2-23139.5 15 any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the County. The Trustee shall require the payment by the Holder requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to exchange any Bond which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redemption in whole or in part as provided in Section 2.03. SECTION 2.08. Bond Registration Books. The Trustee will keep at its Corporate Trust Office sufficient books for the registration and transfer of the Bonds which shall during normal business hours be open to inspection by the County, and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds in such books as hereinabove provided. SECTION 2.09. Mutilated, Destroyed, Stolen or Lost Bonds. If any Bond shall become mutilated the Trustee at the expense of the Holder shall thereupon authenticate and deliver, a new Bond of like tenor and amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Holder, shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of a reasonable sum for each new Bond issued under this Section 2.09 and of the expenses which may be incurred by the County and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Bonds of the same series secured by this Trust Agreement. Neither the County nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. SECTION 2.10. Temporary Bonds. The Bonds issued under this Trust Agreement may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the County, shall be in fully registered form and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Bond shall be executed and authenticated as authorized by the County, in accordance with the terms of the Act. If the County issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the SF2-23139.5 16 temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Corporate Trust Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Trust Agreement as definitive Bonds delivered hereunder. SECTION 2.11. Procedure for the Issuance of 1994 Series A Bonds: Application of 1994 Series A Bond Proceeds. At any time after the sale of the 1994 Series A Bonds in accordance with the Act, the County shall execute the 1994 Series A Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the 1994 Series A Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request of the County and upon receipt of payment therefor from the purchaser thereof, provided, however, that such delivery to the purchaser shall occur on or after February 23, 1994, or if a notice of appeal has been filed within 60 days from the entry of judgment in the validation action entitled County of Contra Costa v. All Persons. etc., No. C93-05180, such 1994 Series A Bonds shall not be delivered until the validation action has been finally adjudicated in favor of the County. Upon receipt of payment for the 1994 Series A Bonds from the purchaser thereof, the Trustee shall set aside and deposit the proceeds received from such sale in the following respective accounts or funds or with the following respective persons, in the following order of priority: (a) The Trustee shall deposit in the Interest Account established within the Bond Fund pursuant to Section 4.02 hereof the accrued interest received by the Trustee upon the delivery of the 1994 Series A Bonds in the amount of $ (b) The Trustee shall deposit the remainder of the 1994 Series A Bond proceeds in the Refunding Fund, which fund is hereby established. On the Closing Date for the 1994 Series A Bonds, the Trustee shall promptly take all actions required to withdraw from the Refunding Fund an amount equal to the principal amount of the 1994 Debenture, plus accrued interest, if any, to the Closing Date and shall transfer such amount to the Board of Retirement. (c) The Trustee shall deposit $ in the Costs of Issuance Fund, which fund is hereby created and which fund the County hereby agrees to maintain with the Trustee until June 1, 1994. All money in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay or reimburse the Costs of Issuance of the 1994 Series A Bonds upon receipt of a Written Request of the County filed with the Trustee, each of which shall be sequentially numbered and shall state the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On June 1, 1994 or upon the earlier Written Request of the County, any remaining balance in the Costs of Issuance Fund shall be transferred to the Interest Account. SECTION 2.12. Validity of Bonds. The recital contained in the Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of SF2-23139.5 17 their validity and of the regularity of their issuance, and all Bonds shall be incontestable from and after their issuance. The Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. SECTION 2.13. Special Covenants as to Book-Entry Only System for 1994 Series A Bonds. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.13, all of the 1994 Series A Bonds initially issued shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), or such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the interest on any 1994 Series A Bond registered in the name of Cede & Co. shall be made on each Interest Payment Date for such 1994 Series A Bonds to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. (b) The 1994 Series A Bonds initially shall be issued in the form of a single authenticated fully registered bond for each stated maturity of such 1994 Series A Bonds, representing the aggregate principal amount of the 1994 Series A Bonds of such maturity. Upon initial issuance, the ownership of all such 1994 Series A Bonds shall be registered in the registration records maintained by the Trustee pursuant to Section 2.08 hereof in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the County and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the 1994 Series A Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such 1994 Series A Bonds, selecting the 1994 Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders hereunder, registering the transfer of 1994 Series A Bonds, obtaining any consent or other action to be taken by Bondholders of the 1994 Series A Bonds and for all other purposes whatsoever; and neither the Trustee nor the County or any paying agent shall be affected by any notice to the contrary. Neither the Trustee nor the County or any paying agent shall have any responsibility or obligation to any Participant (which shall mean, for purposes of this Section 2.13, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the 1994 Series A Bonds under or through DTC or any Participant, or any other person which is not shown on the registration records as being a Bondholder, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the 1994 Series A Bonds, (iii) any notice which is permitted or required to be given to Holders of 1994 Series A Bonds hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the 1994 Series A Bonds, or (v) any consent given or other action taken by DTC as Holder of 1994 Series A Bonds. The Trustee shall pay all principal of and premium, if any, and interest on the 1994 Series A Bonds only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the County's obligations with respect to the principal of and premium, if any, and interest on the 1994 Series A Bonds SF2-23139.5 18 to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the 1994 Series A Bonds will be transferable to such new nominee in accordance with subsection (f) of this Section 2.13. (c) In the event that the County determines that it is in the best interests of the beneficial owners of the 1994 Series A Bonds that they be able to obtain bond certificates, the Trustee shall, upon the written instruction of the County, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of bond certificates. In such event, the 1994 Series A Bonds will be transferable in accordance with subsection (f) of this Section 2.13. DTC may determine to discontinue providing its services with respect to the 1994 Series A Bonds at any time by giving written notice of such discontinuance to the County or the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the 1994 Series A Bonds will be transferable in accordance with subsection (f) of this Section 2.13. Whenever DTC requests the County and the Trustee to do so, the Trustee and the County will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of all certificates evidencing the 1994 Series A Bonds then Outstanding. In such event, the 1994 Series A Bonds will be transferable to such securities depository in accordance with subsection (f) of this Section 2.13, and thereafter, all references in this Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate. (d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all 1994 Series A Bonds Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal of and premium, if any, and interest on each such 1994 Series A Bond and all notices with respect to each such 1994 Series A Bond shall be made and given, respectively, to DTC as provided in the Representation Letter. (e) The Trustee is hereby authorized and requested to execute and deliver the Representation Letter and, in connection with any successor nominee for DTC or any successor depository, enter into comparable arrangements, and shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this Trust Agreement. (f) In the event that any transfer or exchange of 1994 Series A Bonds is authorized under subsection (b) or (c) of this Section 2.13, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered owner thereof of the 1994 Series A Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.06 and 2.07 hereof. In the event 1994 Series A Bond certificates are issued to Holders other than Cede & Co., its successor as nominee for DTC as holder of all the 1994 Series A Bonds, another securities depository as holder of all the 1994 Series A Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.06 and 2.07 hereof shall SF2-23139.5 19 also apply to, among other things, the registration, exchange and transfer of the 1994 Series A Bonds and the method of payment of principal of, premium, if any, and interest on the 1994 Series A Bonds. ARTICLE III ISSUANCE OF ADDITIONAL BONDS SECTION 3.01. Conditions for the Issuance of Additional Bonds. The County may at any time issue Additional Bonds on a parity with the 1994 Series A Bonds, but only subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Additional Bonds: (a) The County shall be in compliance with all agreements and covenants contained herein. (b) The issuance of such Additional Bonds shall have been authorized pursuant to the Act and shall have been provided for by a Supplemental Trust Agreement which shall specify the following: (1) The purpose for which such Additional Bonds are to be issued; provided that such Additional Bonds shall be applied solely for (i) the purpose of satisfying any obligation to make payments to the Association pursuant to the Retirement Law relating to pension benefits accruing to the Association's members, and/or for payment of all costs incidental to or connected with the issuance of Additional Bonds for such purpose, and/or (ii) the purpose of refunding any Bonds then Outstanding, including payment of all costs incidental to or connected with such refunding; (2) The authorized principal amount and designation of such Additional Bonds; (3) The date and the maturity dates of and the sinking fund payment dates, if any, for such Additional Bonds; (4) The Interest Payment Dates for such Additional Bonds; (5) The denomination or denominations of and method of numbering such Additional Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds; SF2-23139.5 20 (7) The amount, if any, to be deposited from the proceeds of sale of such Additional Bonds in the Interest Account hereinafter referred to; and (8) Such other provisions (including the requirements of a book-entry Bond registration system, if any) as are necessary or appropriate and not inconsistent herewith. SECTION 3.02. Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in accordance with the Act, the County shall execute such Additional Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon such Additional Bonds shall be delivered by the Trustee to the purchaser thereof upon the Written Request of the County, but only upon receipt by the Trustee of the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Additional Bonds by the Trustee: (a) An executed copy of the Supplemental Trust Agreement authorizing the issuance of such Additional Bonds; (b) A Written Request of the County as to the delivery of such Additional Bonds; (c) An Opinion of Counsel to the effect that (1) the County has executed and delivered the Supplemental Trust Agreement, and the Supplemental Trust Agreement is valid and binding upon the County and (2) such Additional Bonds are valid and binding obligations of the County entitled to the benefits of the Act and hereof, and such Additional Bonds have been duly and validly issued in accordance with the Act and herewith; (d) A Certificate of the County containing such statements as may be reasonably necessary to show compliance with the conditions for the issuance of such Additional Bonds contained herein; (e) Such further documents, money or securities as are required by the provisions of the Supplemental Trust Agreement providing for the issuance of such Additional Bonds. ARTICLE IV FUNDS AND ACCOUNTS SECTION 4.01. Bond Fund; Deposits to Bond Fund. (a) The 1994 Debenture provides that the County is obligated to prepay each fiscal year's obligations within thirty days of the commencement of such fiscal year. In SF2-23139.5 21 order to meet the County's obligations under Section 31453.5 of the Retirement Law, the County shall deposit or cause to be deposited with the Trustee the amount of the County's obligations on the Bonds for such fiscal year within thirty days of the commencement of each fiscal year. (b) All amounts payable by the County hereunder shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the "Bond Fund" which fund is hereby created and shall be held in trust by the Trustee. SECTION 4.02. Allocation of Moneys in Bond Fund. At least one (1) Business Day prior to each Interest Payment Date or date fixed for redemption of Bonds, the Trustee shall transfer from the Bond Fund, in immediately available funds, for deposit into the following respective accounts (each of which is hereby created and which the Trustee shall maintain in trust separate and distinct from the other funds and accounts established hereunder), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of funds sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any account subsequent in priority: (a) Interest Account, (b) Principal Account, and (c) Surplus Account. All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section. (a) Interest Account. On each June 1 and December 1, commencing on June 1, 1994, the Trustee shall set aside from the Bond Fund and deposit in the Interest Account that amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on such June 1 or December 1, as the case may be. No deposit need be made in the Interest Account if the amount contained therein is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date.. All money in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (b) Principal Account. On each June 1, the Trustee shall set aside from the Bond Fund and deposit in the Principal Account an amount of money equal to the amount of all sinking fund payments required to be made on such June 1 into the respective sinking SF2-23139.5 22 fund accounts for all Outstanding Term Bonds and the principal amount of all Outstanding Serial Bonds maturing on such June 1. No deposit need be made in the Principal Account if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds maturing by their terms on such June 1 plus the aggregate amount of all sinking fund payments required to be made on such June 1 for all Outstanding Term Bonds. The Trustee shall establish and maintain within the Principal Account a separate subaccount for the Term Bonds of each series and maturity, designated as the Sinking Account" (the "Sinking Account"), inserting therein the series and maturity (if more than one such account is established for such series) designation of such Bonds. With respect to each Sinking Account, on each mandatory sinking account payment date established for such Sinking Account, the Trustee shall apply the mandatory sinking account payment required on that date to the redemption (or payment at maturity, as the case may be) of Term Bonds of the series and maturity for which such Sinking Account was established, upon the notice and in the manner provided in Article H; provided that, at any time prior to giving such notice of such redemption, the Trustee may upon the Written Request of the County, apply moneys in such Sinking Account to the purchase for cancellation of Term Bonds of such series and maturity at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account), as may be directed by the County, except that the purchase price (excluding accrued interest) shall not exceed the redemption price that would be payable for such Bonds upon redemption by application of such Mandatory Sinking Account Payment. If, during the twelve-month period immediately preceding said mandatory sinking account payment date, the Trustee has purchased Term Bonds of such series and maturity with moneys in such Sinking Account, such Bonds so purchased shall be applied, to the extent of the full principal amount thereof to reduce said mandatory sinking account payment. All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds as they shall become due and payable, whether at maturity or redemption, except that any money in any sinking fund account shall be used and withdrawn by the Trustee only to purchase or to redeem or to pay Term Bonds for which such sinking fund account was created. The Trustee shall establish and maintain within the Principal Account separate accounts for the Term Bonds maturing on June 1, _, designated as the _ Term Bonds Sinking Account. Subject to the terms and conditions set forth in this Section and Section 2.03(b), the Term Bonds maturing on June 1, _ shall be redeemed (or paid at maturity, as the case may be) by application of Mandatory Sinking Account Payments in the amounts and upon the dates hereby established for the Term Bonds Sinking Account, as follows: SF2-23139.5 23 Term Bonds Sinking Account Mandatory Sinking Account Mandatory Sinking Payment Date (June 1) Account Payments * *maturity (c) Surplus Account. Following the deposits set forth above, any moneys remaining in the Bond Fund shall be deposited by the Trustee in the Surplus Account. Moneys deposited in the Surplus Account shall be transferred by the Trustee to or upon the order of the County, as specified in a Written Request of the County, provided all of the County's obligations under this Trust Agreement are then otherwise satisfied. SECTION 4.03. Deposit and Investments of Money in Accounts and Funds. All money held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested in Permitted Investments at the Written Request of the County filed with the Trustee at least two Business Days in advance of the making of such investment. If no Written Request of the County is received, the Trustee shall invest funds held by it in Permitted Investments described in clause 8 of the definition thereof. Such investments shall, as nearly as practicable, mature on or before the dates on which such money is anticipated to be needed for disbursement hereunder. All interest, profits and other income received from any money so invested shall be deposited in the Bond Fund. The Trustee shall have no liability or responsibility for any loss resulting from any investment made or sold in accordance with the provisions of this Article IV, except for any loss due to the negligence or willful misconduct of the Trustee. ARTICLE V COVENANTS OF THE COUNTY SECTION 5.01. Punctual Payment and Performance. The County will punctually pay the interest on and the principal of and redemption premiums, if any, to become due on every Bond issued hereunder in strict conformity with the terms hereof and SF2-23139.5 24 of the Bonds, and will faithfully observe and perform all the agreements and covenants to be observed or performed by the County contained herein and in the Bonds. SECTION 5.02. Extension of Payment of Bonds. The County shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Trust Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the County to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds. SECTION 5.03. Additional Debt. The County expressly reserves the right to enter into one or more other agreements or indentures for any of its corporate purposes, and reserves the right to issue other obligations for such purposes. SECTION 5.04. Power to Issue Bonds. The County is duly authorized pursuant to law to issue the Bonds and to enter into this Trust Agreement. The Bonds and the provisions of this Trust Agreement are the legal, valid and binding obligations of the County in accordance with their terms. The Bonds constitute obligations imposed by law. In the event the County fails to deposit with the Trustee the amounts required to pay principal of, premium, if any, and interest on the Bonds by an Interest Payment Date, in accordance with Section 31584 of the Retirement Law, the County Auditor shall forthwith transfer funds from the County Treasury to the Trustee to the extent necessary to pay the principal of, premium, if any, and interest coming due on the Bonds on such Interest Payment Date. SECTION 5.05. ,[Reservedl. SECTION 5.06. Accounting Records and Reports. The County will keep or cause to be kept proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocation and application of moneys on deposit in the funds and accounts established hereunder, and such books shall be available for inspection by the Trustee, at reasonable hours and under reasonable conditions. Not more than one hundred eighty (180) days after the close of each Fiscal Year, the County shall furnish or cause to be furnished to the Trustee a complete financial statement covering receipts, disbursements, allocation and application of moneys on deposit in the funds and accounts established hereunder for such Fiscal Year. SECTION 5.07. Prosecution and Defense of Suits. The County will defend against every suit, action or proceeding at any time brought against the Trustee upon any claim to the extent involving the failure of the County to fulfill its obligations hereunder; SF2-23139.5 25 provided that the Trustee or any affected Holder at its election may appear in and defend any such suit, action or proceeding. The County, to the extent permitted by law, will indemnify and hold harmless the Trustee against any and all liability claimed or asserted by any person to the extent arising out of such failure by the County, and will indemnify and hold harmless the Trustee against any attorney's fees or other expenses which it may incur in connection with any litigation to which it may become a party by reason of its actions hereunder, except for any loss, cost, damage or expense resulting from the active or passive negligence, willful misconduct or breach of duty by the Trustee. Notwithstanding any contrary provision hereof, this covenant shall remain in full force and effect even though all Bonds secured hereby may have been fully paid and satisfied. SECTION 5.08. Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Holder, the County will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Holders all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby. SECTION 5.09. Waiver of Laws. The County shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Trust Agreement or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the County to the extent permitted by law. ARTICLE VI THE TRUSTEE SECTION 6.01. The Trustee. First Interstate Bank of California shall serve as the Trustee for the Bonds for the purpose of receiving all money which the County is required to deposit with the Trustee hereunder and for the purpose of allocating, applying and using such money as provided herein and for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds presented for payment at the Corporate Trust Office of the Trustee with the rights and obligations provided herein. The County agrees that it will at all times maintain a Trustee having a corporate trust office in Los Angeles or San Francisco, California. The County may at any time, unless there exists any event of default as defined in Section 8.01, remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided that any such successor shall be a bank or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of SF2-23139.5 26 borrowed capital) and surplus of at least one fifty million dollars ($50,000,000) and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the County and by mailing to the Holders notice of such resignation. Upon receiving such notice of resignation, the County shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for payment at maturity or on redemption prior to maturity. The Trustee shall cancel all Bonds upon payment thereof or upon the surrender thereof by the County and shall destroy such Bonds and a certificate of destruction shall be delivered to the County. The Trustee shall keep accurate records of all Bonds paid and discharged and cancelled by it. The Trustee shall, prior to an event of default, and after the curing of all events of default that may have occurred, perform such duties and only such duties as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement. The Trustee shall, during the existence of any event of default (that has not been cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. SECTION 6.02. Liability of Trustee. The recitals of facts, agreements and covenants herein and in the Bonds shall be taken as recitals of facts, agreements and covenants of the County, and the Trustee assumes no responsibility for the correctness of the same or makes any representation as to the sufficiency or validity hereof or of the Bonds, or shall incur any responsibility in respect thereof other than in connection with the rights or obligations assigned to or imposed upon it herein, in the Bonds or in law or equity. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence, willful misconduct or breach of duty. The Trustee shall not be bound to recognize any person as the Holder of a Bond unless and until such Bond is submitted for inspection, if required, and such Holder's title thereto satisfactorily established, if disputed. SF2-23139.5 27 The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Trust Agreement. The Trustee shall be under no obligation to exercise any, of the rights or powers vested in it by this Trust Agreement at the request, order or direction of any of the Bondholders pursuant to the provisions of this Trust Agreement unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby. The Trustee has no obligation or liability to the Holders for the payment of interest on, principal of or redemption premium, if any, with respect to the Bonds from its own funds; but rather the Trustee's obligations shall be limited to the performance of its duties hereunder. The Trustee shall not be deemed to have knowledge of any event of default unless and until an officer at the Trustee's Corporate Trust Office responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its Corporate Trust Office. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of a default or event of default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, shall not be answerable for the negligence or misconduct or any such attorney-in-fact, agent or receiver appointed by it in accordance with the standards specified above. The Trustee shall be entitled to advice of counsel and other professionals concerning all matters of trust and its duty hereunder, but the Trustee shall not be answerable for the professional malpractice of any attorney-in-law or certified public accountant in connection with the rendering of his professional advice in accordance with the terms of this Trust Agreement, if such attorney-in-law or certified public accountant was selected by the Trustee with due care. The Trustee shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof. SF2-23139.5 28 Whether or not therein expressly so provided, every provision of this Trust Agreement, or related documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. The Trustee shall be protected in acting upon any notice, resolution, requisition, request (including any Written Request of the County), consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the County, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a Certificate of the County, which certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem reasonable. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. The Trustee shall be entitled to interest on all amounts advanced by it hereunder at its prime rate plus two percent. The Trustee shall have no responsibility, opinion, or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. All immunities, indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, employees, officers and agents thereof. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in Section 6.01, shall be the successor to the Trustee hereunder and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor hereunder, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. SF2-23139.5 29 SECTION 6.03. Compensation and Indemnification of Trustee. The County covenants to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the County will pay or reimburse the Trustee upon its request for all expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, default or willful misconduct, including the negligence or willful misconduct of any of its officers, directors, agents or employees. The County, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee against any loss, damages, liability or expense incurred without negligence, willful misconduct or bad faith on the part of the Trustee, (i) arising out of or in connection with the acceptance or administration of the trusts created hereby or the exercise or performance of any of its powers or duties hereunder, and (ii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering circular utilized in connection with the sale of the Bonds, including costs and expenses (including attorneys' fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the County under this Section 6.03 shall survive the discharge of the Bonds and this Trust Agreement and the resignation or removal of the Trustee. ARTICLE VII AMENDMENT OF THE TRUST AGREEMENT SECTION 7.01. Amendment of the Trust Agreement. The Trust Agreement and the rights and obligations of the County and of the Holders may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 7.02, are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, or extend the time of payment on any Bond without the express written consent of the Holder of such Bond, or (2) reduce the percentage of Bonds required for the written consent to any such amendment. The Trust Agreement and the rights and obligations of the County and of the Holders may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Holders, but only to the extent permitted by law and after receipt of an approving Opinion of Counsel, for any purpose that will not materially adversely affect the interests of the Holders, including (without limitation) for any one or more of the following purposes -- SF2-23139.5 30 (a) to add to the agreements and covenants required herein to be performed by the County other agreements and covenants thereafter to be performed by the County, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power reserved herein to or conferred herein on the County; (b) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein and in any Supplemental Trust Agreement or in regard to questions arising hereunder which the County may deem desirable or necessary and not inconsistent herewith; (c) to provide for the issuance of any Additional Bonds and to provide the terms of such Additional Bonds, subject to the conditions and upon compliance with the procedure set forth in Article III (which shall be deemed not to adversely affect Holders); (d) to modify, amend or add to the provisions herein or in any Supplemental Trust Agreement to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statutes hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by such statute or similar statute; or (e) to modify, amend or supplement this Trust Agreement and any Supplemental Trust Agreement in any manner that does not materially adversely affect the interest of holders of Bonds. SECTION 7.02. Disqualified Bonds. Bonds owned or held by or for the account of the County shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided in this article, and shall not be entitled to consent to or take any other action provided in this article. SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the County may determine that the Bonds may bear a notation by endorsement in form approved by the County as to such action, and in that case upon demand of the Holder of any Outstanding Bonds and presentation of his Bond for such purpose at the office of the Trustee a suitable notation as to such action shall be made on such Bond. If the County shall so determine, new Bonds so modified as, in the opinion of the County, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Holder of any Outstanding Bond a new Bond or Bonds shall be exchanged at the office of the Trustee without cost to each Holder for its Bond or Bonds then Outstanding upon surrender of such Outstanding Bonds. SF2-23139.5 31 SECTION 7.04. Amendment by Mutual Consent. The provisions of this article shall not prevent any Holder from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. SECTION 7.05. Attorney's Opinion Regarding Supplemental Agreements. The Trustee may obtain an opinion of counsel that any amendments or supplements to the Trust Agreement complies with the provisions of this Article VII and the Trustee may conclusively rely upon such opinion. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF HOLDERS SECTION 8.01. Events of Default and Acceleration of Maturities. If one or more of the following events (herein called "events of default") shall happen, that is to say: (a) if default shall be made by the County in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (b) if default shall be made by the County in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by proceedings for redemption; (c) if default shall be made by the County in the performance of any of the agreements or covenants required herein to be performed by the County, and such default shall have continued for a period of sixty (60) days after the County shall have been given notice in writing of such default by the Trustee or the Owners of not less than twenty-five (25%) in aggregate principal amount of the Bonds at the time Outstanding, specifying such default and requiring the same to be remedied, provided, however, if the default stated in the notice can be corrected, but not within the applicable period, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the County within the applicable period and diligently pursued until the default is corrected. (d) if the County shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the County seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the County or of the whole or any substantial part of its property; SF2-23139.5 32 then and in each and every such case during the continuance of such event of default the Trustee may, and upon the written request of the Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding shall, by notice in writing to the County, declare the principal of all Bonds then Outstanding and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become due and payable, anything contained herein or in the Bonds to the contrary notwithstanding. The Trustee shall promptly notify all Holders of any such event of default which is continuing. This provision, however, is subject to the condition that if at any time after the principal of the Bonds then Outstanding shall have been so declared due and payable and before any judgment or decree for the payment of the money due shall have been obtained or entered the County shall deposit with the Trustee a sum sufficient to pay all matured interest on all the Bonds and all principal of the Bonds matured prior to such declaration, with interest at the rate borne by such Bonds on such overdue interest and principal, and the reasonable fees and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of interest on and principal of the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then and in every such case the Holders of not less than fifty-one percent (51 %) in aggregate principal amount of Bonds then Outstanding, by written notice to the County and to the Trustee, may on behalf of the Holders of all the Bonds then Outstanding, rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. SECTION 8.02. Application of Funds Upon Acceleration. All moneys in the accounts and funds provided in Sections 2.11, 4.01, 4.02 and 4.03 upon the date of the declaration of acceleration by the Trustee as provided in Section 8.01 and all amounts in the funds and accounts (other than amounts on deposit in the Rebate Fund) thereafter received by the County hereunder shall be transmitted to the Trustee and shall be applied by the Trustee in the following order-- First, to the payment of the costs and expenses of the Holders in providing for the declaration of such event of default, including reasonable compensation to their accountants and counsel, and to the payment of the costs and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its accountants and counsel and any outstanding fees and expenses of the Trustee; and Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with (to the extent permitted by law) interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, SF2-23139.5 33 principal and (to the extent permitted by law) interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal. SECTION 8.03. Institution of Legal Proceedings by Trustee. If one or more of the events of default shall happen and be continuing, the Trustee may, and upon the written request of the Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Holders of Bonds under this Trust Agreement by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights and duties hereunder. SECTION 8.04. Non-Waiver. Nothing in this article or in any other provision hereof or in the Bonds shall affect or impair the obligation of the County, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon prior redemption as provided herein, or shall affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the Bonds. A waiver of any default or breach of duty or contract by the Trustee or any Holder shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or any Holder to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Holders by the Act or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Holders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned, the County, the Trustee and any Holder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. SECTION 8.05. Actions by Trustee as Attorney-in-Fact. Any action, proceeding or suit which any Holder shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Holders, whether or not the Trustee is a Holder, and the Trustee is hereby appointed (and the successive Holders, by taking and holding the Bonds issued hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attorney-in-fact of the SF2-23139.5 34 Holders for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Holders as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attorney-in-fact. SECTION 8.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. SECTION 8.07. Limitation on Bondholders' Right to Sue. No Holder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon this Trust Agreement, unless (a) such Holder shall have previously given to the Trustee written notice of the occurrence of an event of default as defined in Section 8.01 hereunder; (b) the Holders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) said Holders shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any owner of Bonds of any remedy hereunder; it being understood and intended that no one or more owners of Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of the Trust Agreement shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Holders of the Outstanding Bonds. SECTION 8.08. Absolute Obligation of County. Nothing in Section 8.08 or in any other provision of this Trust Agreement or in the Bonds contained shall affect or impair the obligation of the County, which is absolute and unconditional, to pay the principal of, premium, if any and interest on the Bonds to the respective Holders of the Bonds at their respective due dates as herein provided. SF2-23139.5 35 ARTICLE IX DEFEASANCE SECTION 9.01. Discharge of Bonds. (a) If the County shall pay or cause to be paid or there shall otherwise be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated herein and therein, then all agreements, covenants and other obligations of the County to the Holders of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the County all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the County all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds. (b) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the County shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with Section 2.03, (2) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient or (B) Permitted Investments of the type described in clause (1) of the definition of Permitted Investments and which are not subject to redemption prior to maturity (including any such Permitted Investments issued or held in book-entry form on the books of the County or the Treasury of the United States of America) or tax exempt obligations of a state or political subdivision thereof which have been defeased under irrevocable escrow instructions by the deposit of such money or Permitted Investments and which are then rated in the highest rating category by the Rating Agencies, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the County shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Holders of such Bonds that the deposit required by clause (2) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. SECTION 9.02. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and SF2-23139.5 36 discharge of any of the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds have become due and payable, shall be repaid by the Trustee to the County as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Holders shall not look to the Trustee for the payment of such Bonds; provided, however, that before being required to make any such payment to the County, the Trustee may, and at the request of the County shall, at the expense of the County, cause to be published once a week for two (2) successive weeks in a Financial Newspaper of general circulation in Los Angeles and in San Francisco, California and in the same or a similar Financial Newspaper of general circulation in New York, New York a notice that such money remains unclaimed and that, after a date named in such notice, which date shall not be less than thirty (30) days after the date of the first publication of each such notice, the balance of such money then unclaimed will be returned to the County. ARTICLE X MISCELLANEOUS SECTION 10.01. Benefits of the Trust Agreement Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the County, the Trustee and the Holders any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the County or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Holders. SECTION 10.02. Successor Is Deemed Included In All References To Predecessor. Whenever herein either the County or any member, officer or employee thereof or the Trustee is named or referred to, such reference shall be deemed to include the successor or assigns thereof, and all agreements and covenants required hereby to be performed by or on behalf of the County or the Trustee, or any member, officer or employee thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 10.03. Execution of Documents by Holders. Any declaration, request or other instrument which is permitted or required herein to be executed by Holders may be in one or more instruments of similar tenor and may be executed by Holders in person or by their attorneys appointed in writing. The fact and date of the execution by any Holder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other SF2-23139.5 37 instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn-to before such notary public or other officer. The ownership of any Bonds and the amount, maturity, number and date of holding the same may be proved by the registration books relating to the Bonds at the office of the Trustee. Any declaration, request, consent or other instrument or writing of the Holder of any Bond shall bind all future Holders of such Bond with respect to anything done or suffered to be done by the Trustee or the County in good faith and in accordance therewith. SECTION 10.04. Waiver of Personal Liability. No member, officer or employee of the County or the County of Contra Costa shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds by reason of their issuance, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by the Act or any other applicable provisions of law or hereby. SECTION 10.05. Acquisition of Bonds by County. All Bonds acquired by the County, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. SECTION 10.06. Destruction of Cancelled Bonds. Whenever provision is made for the return to the County of any Bonds which have been cancelled pursuant to the provisions hereof, the Trustee shall destroy such Bonds and furnish to the County a certificate of such destruction. SECTION 10.07. Content of Certificates. Every Certificate of the County with respect to compliance with any agreement, condition, covenant or provision provided herein shall include (a) a statement that the person or persons making or giving such certificate have read such agreement, condition, covenant or provision and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or provision has been complied with; and (d) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or provision has been complied with. Any Certificate of the County may be based, insofar as it relates to legal matters, upon an Opinion of Counsel unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the County, upon a representation by an officer or officers of the County unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which his SF2-23139.5 38 opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. SECTION 10.08. Publication for Successive Weeks. Any publication required to be made hereunder for successive weeks in a Financial Newspaper may be made in each instance upon any Business Day of the first week and need not be made on the same Business Day of any succeeding week or in the same Financial Newspaper for any subsequent publication, but may be made on different Business Days or in different Financial Newspapers, as the case may be. SECTION 10.09. Accounts and Funds; Business Days. Any account or fund required herein to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Holders. Any action required to occur hereunder on a day which is not a Business Day shall be required to occur on the next succeeding Business Day. SECTION 10.10. Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely: If to the County: County of Contra Costa 651 Pine Street, 11th Floor Martinez, CA 94553-0063 Attention: County Administrator If to the Trustee: First Interstate Bank of California 345 California Street, 8th Floor San Francisco, CA 94104 Attention: Corporate Trust Dept. SECTION 10.11. Article and Section Headings and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith," SF2-23139.5 39 "hereunder" and other words of similar import refer to the Trust Agreement as a whole and not to any particular article, section, subdivision or clause hereof. SECTION 10.12. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the County or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the Bonds, and the Holders shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The County and the Trustee hereby declare that they would have executed and delivered the Trust Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 10.13. Execution in Several Counterparts. This Trust Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the County and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 10.14. Governing Law. This Trust Agreement shall be governed by and construed in accordance with the laws of the State of California. SECTION 10.15. CUSIP Numbers. Neither the Trustee nor the County shall be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any redemption notice. The Trustee may, in its discretion, include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Holders and that neither County nor the Trustee shall be liable for any inaccuracies in such numbers. SF2-23139.5 40 IN WITNESS WHEREOF, the COUNTY OF CONTRA COSTA has caused this Trust Agreement to be signed in its name by the Chair of the Board of Supervisors and FIRST INTERSTATE BANK OF CALIFORNIA, in token of its acceptance of the trusts created hereunder, has caused this Trust Agreement to be signed by the officers thereunder duly authorized, all as of the day and year first above written. COUNTY OF CONTRA COSTA By Chair Board of Supervisors r FIRST INTERSTATE BANK OF CALIFORNIA, as Trustee By Vice President By Assistant Vice President SF2-23139.5 41 EXHIBIT A [FORM OF BOND] COUNTY OF CONTRA COSTA TAXABLE PENSION OBLIGATION BONDS SERIES No. R- $ THE OBLIGATIONS OF THE COUNTY HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE OBLIGATIONS OF THE COUNTY IMPOSED BY LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT ANY RIGHT OF SET-OFF OR COUNTER CLAIM. THIS BOND DOES NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE COUNTY IS OBLIGATED OR PERMITTED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE COUNTY HAS LEVIED OR PLEDGED OR WILL LEVY OR PLEDGE ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE COUNTY TO MAKE PAYMENTS ON THE BONDS CONSTITUTE AN INDEBTEDNESS OF THE COUNTY, THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. Interest Maturity Original Rate Date Issue Date CUSIP REGISTERED OWNER: PRINCIPAL SUM: DOLLARS The COUNTY OF CONTRA COSTA, duly organized and validly existing under and pursuant to the Constitution and laws of the State of California (the "County"), for SF2-23139.5 A-1 value received hereby, promises to pay to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest on such principal sum from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated as of an Interest Payment Date or during the period from the sixteenth day of the month preceding an Interest Payment Date to such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated prior to May 15, 1994, in which event it shall bear interest from the original issue date specified above) until the principal hereof shall have been paid at the interest rate per annum specified above, payable on June 1, 1994, and semiannually thereafter on each December 1 and June 1 (each an "Interest Payment Date"). Interest due on or before the maturity or prior redemption of this Bond shall be payable only by check mailed on the Interest Payment Date by first-class mail to the registered owner hereof; provided that upon the written request of a registered owner of$1,000,000 or more in aggregate principal amount of Bonds received by the Trustee (as hereinafter defined) prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds. The principal hereof is payable in lawful money of the United States of America at the Corporate Trust Office of First Interstate Bank of California, as Trustee. This Bond is one of a duly authorized issue of bonds of the County designated as its "Taxable Pension Obligation Bonds, 1994 Series A" (the "Bonds") in aggregate principal amount of dollars ($XXX,000,000), all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 3, Division 2, Title 5 of the Government Code of the State of California and all laws amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions of a trust agreement, dated as of February 1, 1994 (the "Trust Agreement"), between the County and First Interstate Bank of California, as trustee (the "Trustee") (copies of which are on file at the Corporate Trust Office of the Trustee). This Bond is one of the duly authorized series of Bonds designated " Series _" in the aggregate principal amount of$ . Under the Trust Agreement, Additional Bonds and other obligations may be issued on a parity with the Series _ Bonds, but subject to the conditions and upon compliance with the procedures set forth in the Trust Agreement. The Series _ Bonds and any bonds or other obligations issued on a parity with the Series — Bonds are obligations imposed by law payable from funds to be appropriated by the County pursuant to the County Employees Retirement Law of 1937, as amended (the "Retirement Law"). Under the Retirement Law, if the Board of Supervisors of the County fails to appropriate funds to pay the Series _ Bonds, the County Auditor is required to transfer from any money available in any fund in the County Treasury the amount required to pay such obligations, with the same force and effect as such transfer would have had if the required appropriation had been made by the Board of Supervisors of the County. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms on which the SM-23139.5 A-2 Bonds are issued, the rights of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds); and all the terms of the Trust Agreement are hereby incorporated herein and constitute a contract between the County and the registered owner of this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof, agrees and consents. The Bonds are subject to redemption prior to their respective stated maturities at the option of the County, as a whole on any date, or in part (in such maturities as are designated by the County) on any Interest Payment Date on or after June 1, , at the following redemption prices (expressed as percentages of the principal amount of Series Bonds called for redemption), together with accrued interest to the date fixed for redemption: Redemption Period (dates inclusive) Redemption Price June 1, through May 31, % June 1, through May 31, June 1, and thereafter The Bonds maturing on June 1, are also subject to mandatory sinking fund redemption prior to maturity in part on June 1 of each year on and after June 1, , by lot, from mandatory sinking account payments in the amounts and on the dates set forth in the Trust Agreement, at a prepayment price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the redemption date. Notice of redemption of any Bond selected for redemption shall be given by first-class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly given as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Bond shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and from and after the date so designated, interest on this Bond shall cease to accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof. If an event of default, as defined in the Trust Agreement, shall occur, the principal of all Bonds (and any additional bonds authorized by the Trust Agreement) may be declared due and payable upon the conditions, in the manner and with the effect provided in the Trust Agreement; except that the Trust Agreement provides that in certain events such SF2-23139.5 A-3 declaration and its consequences may be rescinded under the circumstances as provided therein. Pursuant to Section 31584 of the County Retirement Law, the Board of Supervisors of the County is obligated to make appropriations to pay the unfunded accrued actuarial liability which is evidenced by the Bonds and such Section requires the Auditor of the County to transfer from any money available in any fund in the County Treasury the sums specified in the Board of Supervisors fails to make such appropriations. This Bond is transferable only on a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person or by his duly authorized attorney upon payment of the charges provided in the Trust Agreement and upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount of authorized denominations will be issued to the transferee in exchange therefor. The County and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the County nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of this Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been executed and dated by the Trustee. It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Bond, together with all other indebtedness of the County, does not exceed any limit prescribed by the Constitution or laws of the State of California and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. SF2-23139.5 A-4 IN WITNESS WHEREOF, the County of Contra Costa has caused this Bond to be executed in its name and on its behalf by the facsimile signature of the Chair of the Board of Supervisors of the County and the Treasurer-Tax Collector of the County, and a facsimile seal of the County to be affixed hereto and attested to by the facsimile signature of the Clerk of the Board of Supervisors of said County, and has caused this Bond to be dated as of the original issue date specified above. COUNTY OF CONTRA COSTA By Chair Board of Supervisors [SEAL] Attest: By Treasurer-Tax Collector Clerk Board of Supervisors Sn-23139.5 A-5 w 1 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within- mentioned Trust Agreement which has been authenticated on FIRST INTERSTATE BANK OF CALIFORNIA, as Trustee By Authorized Signatory [FORM OF ASSIGNMENT] For value received the undersigned hereby sells, assigns and transfers unto (Taxpayer Identification Number: )the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Note: The signature to this Assignment must correspond with the name as written on the face of the Bond in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: Notice: Signature must be guaranteed by an eligible guarantor institution. SF2-23139.5 A-6 COUNTY OF CONTRA COSTA TAXABLE PENSION OBLIGATION BONDS 1994 SERIES A PURCHASE CONTRACT February 15, 1994 County of Contra Costa County Administrator Office 651 Pine Street, 11th Floor Martinez, California 94553-0063 Ladies and Gentlemen: The undersigned (hereinafter sometimes referred to as the "Representative") , acting on its own behalf and on behalf of the other underwriters named on the list attached as Schedule I hereto (the Representative and such other underwriters being hereinafter collectively referred to as the "Underwriters") , hereby offers to enter into this Purchase Contract with the County of Contra Costa (the "County") , which, upon the County's acceptance hereof, will be binding upon the County and the Underwriters. This offer is made subject to the written acceptance of this Purchase Contract by the County and the delivery of such acceptance to the Representative or its attorney at or prior to 5: 00 p.m. , New York time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriters upon notice delivered to the County at any time prior to the acceptance hereof by the County. The Representative represents and warrants to the County that it has been duly authorized to enter into this Purchase Contract and to act hereunder by and on behalf of the Underwriters. 1. Definitions. All capitalized terms not defined herein shall have the meanings assigned to them in that certain Trust Agreement, dated as of February 1, 1994 (the "Trust Agreement") by and between the County and First Interstate Bank of California (the "Trustee") . Unless a different meaning clearly appears from the context, the following words and terms shall have the following meanings, respectively: "Bond Resolution" shall mean the resolution adopted by the Board of Supervisors of the County on November 9, 1993 authorizing the issuance and sale of the 1994 Series A Bonds. LA1-346016.V4 1 "Closing Date" shall mean the date of payment for and delivery of the 1994 Series A Bonds as established pursuant to Section 7 hereof. "Closing Time" shall mean the time at which payment for and delivery of the 1994. Series A Bonds shall occur, as established pursuant to Section 7 hereof. "Legal Documents" shall mean the Trust Agreement, this Purchase Contract and the 1994 Debenture. 111994 Series A Bonds" shall mean $ aggregate principal amount of County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A. "Official Statement" shall mean the Official Statement of the County, dated on or about February 16, 1994 relating to the 1994 Series A Bonds, together with the cover page thereof and all appendices, exhibits, amendments and supplements thereto. "Preliminary Official Statement" shall mean the Preliminary Official Statement of the County, dated January 24, 1994 relating to the '1994 Series A Bonds, together with the cover page thereof and all appendices, exhibits, amendments and supplements thereto. "State" shall mean the State of California. 2. Delivery of Official Statement. Subject to preparation of the Official Statement with the assistance of the Underwriters, the County shall deliver or cause to be delivered to the Underwriters within seven Business Days after acceptance and execution hereof copies of the Official Statement approved for distribution by resolution of the County. The County shall deliver sufficient copies of the Official Statement to enable the Underwriters to distribute a single copy to any potential customer of the Underwriters requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending on a date referred to herein as the "End Date, " which is the date when the Official Statement becomes available from a nationally recognized municipal securities information repository (I'NRMSIR") , but in no event less than 25 days after the end of the underwriting period (as defined in Rule 15c2-12 of the Securities and Exchange Commission) . The Underwriters agree to file a copy of the Official Statement with a NRMSIR. Unless the Representative otherwise notifies the County, the end of the underwriting period shall be deemed to be the Closing Date. If the end of the underwriting period is not the Closing Date, the Underwriters shall promptly notify the County when the end of the underwriting period has occurred. 3 . (a) Purchase and Sale of the 1994 Series A Bonds. Upon the terms and conditions and in reliance upon the LA1-346016.V4 2 representations, warranties and agreements set forth herein, the Underwriters jointly and severally hereby agree to purchase from the County for offering to the public, and the County hereby agrees to sell to the Underwriters, all (but not less than all) of the $ aggregate principal amount of the 1994 Series A Bonds. The aggregate purchase price to be paid by the Underwriters for the 1994 Series A Bonds shall be $ (equal to the aggregate principal amount less Underwriters' discount in the amount of $ and less net original issue discount in the amount of $ ) plus accrued interest on the 1994 Series A Bonds from February 1, 1994 to the Closing Date (the "Purchase Price") . (b) Good Faith Check. The Representative herewith delivers to the County a check payable to the County's order in the amount of $400,000 as security for the performance by the Underwriters of their obligation to accept and pay for the 1994 Series A Bonds on the Closing Date in accordance with the provisions of this Purchase Contract. In the event that the County accepts this offer, such check shall be held by the County, uncashed, in trust. The check shall be returned to the Underwriters at the Closing Time. In the event the County does not accept this offer, or upon the County's failure to deliver the 1994 Series A Bonds on the Closing Date, or if the County shall be unable to satisfy the conditions to the obligations of the Underwriters contained in this Purchase Contract, or if such obligations shall be terminated for any reason permitted by this Purchase Contract, such check shall be immediately returned to the Representative. In the event that the Underwriters fail (other than for a reason permitted by this Purchase Contract) to accept and pay for the 1994 Series A Bonds on the Closing Date, the check may be cashed and the principal amount of said check shall be retained by the County and shall constitute full liquidated damages for such failure and for any and all defaults hereunder on the part of the Underwriters and shall constitute a full release and discharge of all claims and damages of the County for such failure and for any and all defaults on the part of the Underwriters. 4. The 1994 Series A Bonds. The amounts, maturity dates, redemption provisions, interest rates and prices with respect to the 1994 Series A Bonds shall be as described in the Official Statement. 5. Public Offering of the 1994 Series A Bonds. Except as otherwise disclosed and agreed to by the County, the Underwriters agree to make a bona fide public offering of all of the 1994 Series A Bonds at the initial public offering price or prices (or yields) set forth on the cover page of the Official Statement, plus accrued interest on the 1994 Series A Bonds from February 1, 1994; provided, however, that the Underwriters reserve the right to change such initial public offering prices as the Underwriters deem necessary or desirable, in their sole LA1-346016.V4 3 discretion, in connection with the marketing of the 1994 Series A Bonds, and to sell the 1994 Series A Bonds to certain dealers (including dealers depositing the 1994 Series A Bonds into investment trusts) and others at prices lower than the initial offering prices or higher than the yields set, forth in the Official Statement. The Underwriters also reserve the right (a) to over-allot or effect transactions that stabilize or maintain the market price of the 1994 Series A Bonds at a level above that which might otherwise prevail in the open market and (b) to discontinue such stabilizing, if commenced, at any time. A "bona fide public offering" shall include an offering to institutional investors or registered investment companies, regardless of the number of such investors to which the 1994 Series A Bonds are sold. The Representative shall provide to the County on the Closing Date a certificate setting forth the offering prices to the public of each maturity of the 1994 Series A Bonds at which a substantial amount of such maturity was sold. 6. Use of Documents. The County hereby authorizes the Underwriters to use, in connection with the public offering and sale of the 1994 Series A Bonds, the Official Statement and the Legal Documents, and the information contained herein and therein. 7 . Closing. The Closing Time shall be no later than 8:00 a.m. , California time, on March 1, 1994, or at such other time or on such later date as shall have been mutually agreed upon by the County and the Representative (the "Closing Date") . At the Closing Time, the County will deliver or cause to be delivered the 1994 Series A Bonds to the Underwriters through The Depository Trust Company (11DTC11) in definitive or temporary form, duly executed by the County, together with the. other documents hereinafter mentioned; and the Underwriters will accept such delivery and pay the Purchase Price to the County. The 1994 Series A Bonds will be registered in the name of "Cede & Co. " as nominee of DTC. It is anticipated that CUSIP identification numbers will be inserted on the 1994 Series A Bonds, but neither the failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure or refusal by the Underwriters to accept delivery of the 1994 Series A Bonds in accordance with the terms of this Purchase Contract. Delivery of the 1994 Series A Bonds will be made at the offices of DTC in New York, New York, or such other place as shall have been mutually agreed upon by the County and the Representative, and all other actions to be taken at the Closing Time, including the delivery of the items set forth in Section 9 hereof, shall take place at the offices of Orrick, Herrington & Sutcliffe, San Francisco, California or at such other place as shall have been mutually agreed upon by the County and the Representative. LA1-346016.V4 4 8. Representations, Warranties and Agreements of the County. The County hereby represents, warrants and agrees with the Underwriters that: (a) The County has been duly created and is validly existing under the laws of the State and has the power to issue the 1994 Series A Bonds pursuant to the Act, the Bond Resolution and the Legal Documents. (b) The County has full legal right, power and authority under the Constitution of the State of California and the laws of the State to adopt the Bond Resolution, to enter into the Legal Documents and to sell, issue and deliver the 1994 Series A Bonds to the Underwriters as provided herein; the County has full legal right, power and authority to perform its obligations under the Bond Resolution and the Legal Documents, and to carry out and consummate the transactions contemplated thereby and by the Official Statement; the County has complied with, or will at the Closing Time be in compliance with, in all respects material to this transaction, the Constitution, the Act, and laws of the State, and the terms of the Bond Resolution, the 1994 Series A Bonds, and the Legal Documents. (c) By all necessary official action, the County has duly adopted the Bond Resolution, has duly authorized the preparation, execution and delivery of the Official Statement, has duly authorized and approved the execution and delivery of, and the performance of its obligations under, the 1994 Series A Bonds and the Legal Documents, and the consummation by it of all other transactions contemplated by the Bond Resolution, the Legal Documents, the Preliminary Official Statement and the Official Statement. When executed and delivered by their respective parties, the Legal Documents (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the County, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) The 1994 Series A Bonds, when issued, authenticated and delivered in accordance with the Bond Resolution and the Trust Agreement and sold to the Underwriters as provided herein, will constitute legal, valid and binding obligations of the County, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally, the exercise of judicial discretion and the LA1-346016,V4 5 limitations on legal remedies against public entities in the State, and will be entitled to the benefits of the laws of the State, the Trust Agreement and the Bond Resolution. (e) All consents, approvals, authorizations, orders, licenses or permits of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or that would constitute a condition precedent to or the absence of which would materially adversely affect the issuance, delivery or sale of the 1994 Series A Bonds and the execution, delivery of and performance of the Legal Documents by the County, have been duly obtained (except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the 1994 Series A Bonds, as to which no representation is made) . (f) The County is not in any material respect in breach of or default under any constitutional provision, law or administrative regulation of the State or of the United States or any agency or instrumentality of either or any judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or to which the County or any of its property or assets is otherwise subject (including, without limitation, the Bond Resolution and the Legal Documents) , and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the adoption of the Bond Resolution, the issuance and delivery of the 1994 Series A Bonds and the execution and delivery of the Legal Documents and compliance with the County's obligations therein will not in any material respect conflict with, violate or result in a breach of or constitute a default under, any constitutional provision, laws, administrative regulation, judgment, decree, loan agreement, indenture, agreement, mortgage, lease or other instrument to which the County is a party or to which the County or any of its property or assets is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the County or under the terms of any such law, regulation or instruments, except as provided by the Bond Resolution and the Legal Documents. (g) As of the date hereof, no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, is pending or, to the best of the County's knowledge, threatened against the County: (i) in any way affecting the existence of the County or in any way challenging the respective powers of the several offices or the titles of the officials of the County to such offices; or (ii) affecting or seeking to prohibit, restrain LA1-346016.V4 6 or enjoin the issuance, sale or delivery of any of the 1994 Series A Bonds, the application of the proceeds of the sale of the 1994 Series A Bonds, or in any way contesting or affecting, as to the County, the validity or enforceability of the Act, the Bond Resolution, the 1994 Series A Bonds, or the Legal Documents, or contesting the powers of the County or its authority with respect to issuance of the 1994 Series A Bonds, the adoption of the Bond Resolution, or the execution and delivery of the Legal Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the completeness or accuracy of the Official Statement, or in any way contesting or challenging the consummation of the transactions contemplated thereby or which might materially adversely affect the ability of the County to perform and satisfy its obligations under the Legal Documents or the 1994 Series A Bonds; nor is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the Act, the Bond Resolution, or the Legal Documents or the performance by the County of its obligations thereunder, or the authorization, execution, delivery or performance by the County of the 1994 Series A Bonds, the Bond Resolution, or the Legal Documents. (h) Between the date hereof and the Closing Time, the County will not, without the prior written consent of the Underwriters, offer or issue in any material amount any bonds, notes or other obligations for borrowed money, or in any material amount incur any material liabilities, direct or contingent, except in the course of normal business operations of the County or except for such borrowings as may be described in or contemplated by the Preliminary Official Statement and the Official Statement. (i) The County will furnish such information, execute such instruments, and take such other action in cooperation with the Representative as the Representative may reasonably request in order (i) to, qualify the 1994 Series A Bonds for offer and sale under the Blue Sky or other securities laws of the United States as the Representative may designate and (ii) to determine the eligibility of the 1994 Series A Bonds for investment under the laws of such states and other jurisdictions, provided that in no event shall the County be required to subject itself to service of process in any state in which it is not already so subject. (j) As of the date thereof, and at the time of the County's acceptance hereof, for solely the purposes for which it is intended, the Preliminary Official Statement (excluding therefrom the information under the caption "UNDERWRITING" as to which no representations or warranties are made) did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements LA1-346016.V4 7 in the Preliminary Official Statement, in light of the circumstances under which they were made, not misleading. ° (k) The Preliminary Official Statement has been deemed final by the County, as required by Rule 15c2-12 of the Securities and Exchange Commission, with the exception of certain final pricing and related information. ' As of the date hereof, and (unless an event occurs of the nature described in paragraph (m) of this Section 8) at all times subsequent thereto, up to and including the Closing Time, the Official Statement (excluding therefrom the information under the caption "UNDERWRITING" as to which no representations or warranties are made) did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Official Statement, in light of the circumstances under which they are made, not misleading. (1) If the Official Statement is supplemented or amended pursuant to paragraph (m) of this Section 8, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Time, the Official Statement as so supplemented or amended will not contain, to the best of the County's knowledge, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (m) The County shall not amend or supplement the Official Statement without the prior written consent of the Representative. If between the date hereof and the Closing Time, any event shall occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue. statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circum- stances under which they were made, not misleading, the County shall notify the Representative thereof, and if, in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official State- ment, the County shall forthwith prepare and furnish (at the expense of the County) a reasonable number of copies of an amendment of or supplement to the Official Statement in form and substance satisfactory to the Representative. (n) The County is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (o) Except as disclosed in the Official Statement or otherwise disclosed in writing to the Representative, there has not been any materially adverse change in the financial condition of the County or in its operations since June 30, 1993 LAI-346016.V4 8 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. 9. Conditions to the Underwriters' Obligations. The Representative has entered into this Purchase Contract on behalf of itself and the other Underwriters in reliance upon the representations, warranties and obligations of the County contained herein and upon the documents and instruments to be delivered at the Closing Time. Accordingly, the Underwriters' obligations under this Purchase Contract shall be subject to the following conditions: (a) The representations and warranties of the County contained herein shall be true and correct in all material respects at the date hereof and at and as of the Closing Time, as if made at and as of the Closing Time and will be confirmed by a certificate or certificates of the appropriate County official or officials dated the Closing Date, and the County shall be in compliance with each of the agreements and covenants made by it , in this Purchase Contract; (b) At the Closing Time, the Bond Resolution and the Legal Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to by the County and the Representative, and the County shall perform or have performed all of its obligations required under or specified in the Bond Resolution, the Legal Documents, and the Official Statement to be performed at or prior to the Closing Time; (c) As of the date hereof and at the Closing Time, all necessary official action of the County relating to the Legal Documents and the Official Statement shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; (d) Subsequent to the date hereof, up to and including the Closing Time, there shall not have occurred any change in the County, the Act or the 1994 Series A Bonds as the foregoing matters are described in the Official Statement, which in the reasonable professional judgment of the Representative materially impairs the investment quality of the 1994 Series A Bonds; (e) At or prior to the Closing Date, the Representative shall receive copies of each of the following documents: (1) The Official Statement delivered in accordance with Section 2 hereof and each supplement or amendment, if any, executed on behalf of the County by its County Administrator. LA1-346016.V4 9 (2) An approving opinion of Orrick, Herrington & Sutcliffe, Bond Counsel, dated the Closing Date, as to the validity of the 1994 Series A Bonds and the exclusion of interest on the 1994 Series A Bonds from State income taxation, addressed to the County substantially in the form attached as Appendix D to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriters and the Trustee. (3) A supplemental opinion of Orrick, Herrington & Sutcliffe, Bond Counsel, addressed to the Underwriters to the effect that: (i) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended. (ii) The Purchase Contract has been duly executed and delivered by the County and (assuming due authorization execution and delivery by the other parties thereto) is a valid and binding agreement of the County enforceable in accordance with its terms, except that the rights and obligations thereunder may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent, conveyance, .moratorium and other laws relating to or affecting creditors' rights, to the . application of equitable principles and to the exercise of judicial discretion in appropriate cares and to the limitations on legal remedies against counties in the State. No opinion is expressed with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the Purchase Contract. (iii) The statements contained in the Official Statement dated February 16, 1994 with respect to the Bonds (the "Official Statement") , on the cover thereof and under the captions ".INTRODUCTORY STATEMENT, " "THE BONDS" (other than "Book-Entry System") , "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS, " "TAX MATTERS, " "APPROVAL OF LEGALITY,, " "APPENDIX D -- PROPOSED FORM OF BOND COUNSEL OPINION" and "APPENDIX C -- SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT" insofar as such statements expressly summarize certain provisions of ,the Trust Agreement, and our opinion concerning State of California tax matters relating to the 1994 Series A Bonds, are accurate in all material respects. (4) The opinion of O'Melveny & Myers, Underwriters' Counsel, addressed to the Underwriters, in form and substance acceptable to the Underwriters. LA1-346016.V4 10 (5) The opinion of Counsel to the County, dated the Closing Date, addressed to .the Underwriters and the Trustee, to the effect that: (i) The County has been duly organized and is validly existing under the Constitution and laws of the State of California, and has all requisite power and authority thereunder (a) to adopt the Bond Resolution, and to enter into and perform its covenants and agreements under the Legal Documents; (b) .to approve and authorize the use and distribution of the Preliminary Official Statement and the Official Statement; (c) to issue the 1994 Series A Bonds; and (d) to carry on its business as currently conducted; (ii) The County has taken all actions required to be taken by it prior to the Closing Date material to the transactions contemplated by the aforesaid documents and the Official Statement and the County has duly authorized the execution and delivery of, and the due performance of its obligations under, the Legal Documents and the 1994 Series A Bonds; (iii) the Bond Resolution adopted November 9, 1993 was duly adopted at a meeting of the Board of Supervisors of the County which was called and held pursuant to law and with all required notices and in accordance with all applicable open meetings laws and at which a quorum was present and acting at the time of the adoption of the Bond Resolution; (iv) the adoption of the Bond Resolution, and the execution and delivery by the County of the Legal Documents and the 1994 Series A Bonds and compliance with the provisions of the Legal Documents and the 1994 Series A Bonds, do not and will not conflict with or violate in any material respect any California constitutional, statutory or regulatory provision, or conflict with or constitute on the part of the County a material breach of or default under any agreement or instrument to which the County is a party or by which it is bound; (v) the 1994 Series A Bonds and the Legal Documents constitute binding and legal obligations of the County and are enforceable according to the terms thereof, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights generally, and by the application of equitable principles if equitable remedies are sought, by the exercise of judicial discretion and the limitations on legal remedies against public entities in the State; LAI-346016.V4 1 1 (vi) no litigation is pending or, to the best of such counsel's knowledge after due inquiry, threatened in any court in any way affecting the titles of the officials of the County to their respective positions, or seeking to restrain or to enjoin the issuance, sale or delivery of the 1994 Series A Bonds or in any way contesting or affecting the validity or enforceability of the 1994 Series A Bonds, the Bond Resolution, or the Legal Documents, or contesting in any way the completeness or accuracy of the Official Statement, or contesting the powers of the County or its authority with respect to the 1994 Series A Bonds, the Bond Resolution, or the Legal Documents; (vii) the information contained in the Official Statement under the caption "LITIGATION" does not contain any untrue statement of a material fact and does not omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (viii) no authorization, approval, consent or other order of the State or any local agency of the State, other than such authorizations, approvals and consents which have been obtained, is required for the valid authorization, execution and delivery by the County of the Legal Documents and the authorization and distribution of the Preliminary Official Statement and the Official Statement (provided that no opinion need be expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution of the 1994 Series A Bonds by the Underwriters) ; and (ix) the County is not in breach of or default under any applicable law or administrative ,regulation of the State or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject which breach or default would materially adversely affect the County's ability to enter into or perform its obligations under the Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument and which would materially adversely affect the County's ability to enter into or perform its obligations under the Legal Documents. (6) A certificate, dated the Closing Date and signed by such officials of the County as shall be satisfactory to the Representative, to the effect that (i) the representations, warranties and covenants of the County contained herein are true and correct in all material respects on and as of the Closing Time with the same effect as if made at the Closing LAI-346016.V4 12 Time; (ii) the Bond Resolution is in full force and effect at the Closing Time and has not been amended, modified or supplemented, except as agreed to by the County and the Representative; (iii) the County has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Time; and (iv) subsequent to the date of the official Statement and on or prior to the date of such certificate, there has been no material adverse change in the condition . (financial or otherwise) of the County. (7) A certificate, dated the Closing Date and signed by such officers of the Trustee as shall be satisfactory to the Representative, to the effect that: (i) to the best of the knowledge of such officer, the execution, delivery and performance of the Trust Agreement on the part of the Trustee will not conflict with or cause a default under any law, ruling, agreement, administrative regulation or other instrument by which the Trustee is bound; (ii) all authorizations and approvals required by law and the articles and bylaws of the Trustee in order for the Trustee to execute and deliver and perform its obligations under the Trust Agreement have been obtained; and (iii) no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or to the best of the knowledge of such officer threatened against the Trustee in any way affecting the existence of the Trustee or the titles of its directors or officers to their respective offices, or seeking to restrain or enjoin the issuance, sale or delivery of the 1994 Series A Bonds, the application of proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the 1994 Series A Bonds or the Trust Agreement. (8) The opinion of counsel of the Trustee, dated the Closing Date, addressed to the County and the Underwriters, to the effect that: (i) the Trustee is duly incorporated as a California banking corporation, validly existing and in good standing under the laws of the State of California with full authority to conduct a trust business; and (ii) the Trust Agreement has been duly authorized, executed and delivered by the Trustee and constitutes the valid and binding obligations of the Trustee enforceable against the Trustee in accordance with its terms, except as enforcement thereof may be limited by LA1-346016.V4 13 bankruptcy, insolvency or other laws affecting enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. (9) Evidence as of the Closing Date satisfactory to the Representative that the 1994 Series A Bonds have received, at a minimum, a rating of A-1 by Moody's Investors Service and AA- by Standard & Poor's Corporation (or such other equivalent rating as Moody's Investors Service and Standard & Poor's Corporation shall issue) and that such ratings have not been revoked or downgraded. (10) Two transcripts of all proceedings relating to the authorization and issuance of the 1994 Series A Bonds. (11) If the County purchases a municipal bond insurance policy (the "Municipal Bond Insurance Policy") guaranteeing scheduled payments on the 1994 Series A Bonds: (i) Certificate. A certificate of certificates, satisfactory in form and substance to the Representative, of an authorized officer or officers of the municipal bond insurer ("Insurer") dated the date of the Closing that the information about the Insurer and the Municipal Bond Insurance Policy in the Official Statement conform to the information provided by the Insurer in its insurance commitment; (ii) Opinion of Counsel to the Insurer. An opinion of counsel to the Insurer, in form and substance satisfactory to the Representative, to the effect that the Municipal Bond Insurance Policy is in effect and is valid and binding upon the Insurer; and (iii) Municipal Bond Insurance Policy. A copy of the executed Municipal Bond Insurance Policy issued by the Insurer. (12) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Representative, Underwriters' Counsel or Bond Counsel may reasonably request to evidence compliance by the County with legal requirements, the truth and accuracy, as of the Closing Time, of the representations of the County herein contained and of the Official Statement and the due performance or satisfaction by the County at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the County. 10. Termination. If the County shall be unable to satisfy the conditions of the Underwriters' obligations contained in this Purchase Contract or if the Underwriters' obligations shall be terminated for any reason permitted by this Purchase LA1-346016.V4 14 Contract, this Purchase Contract may be cancelled by the Underwriters at, or at any time prior to, the Closing Time. Notice of such cancellation shall be given to the County in writing, or by telephone or telegraph confirmed in writing. Notwithstanding any provision herein to the contrary, the performance of any and all obligations of the County hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriters may be waived by the Representative at its sole discretion. The Underwriters shall also have the right, prior to the Closing Time, to cancel their respective obligations to purchase the 1994 Series A Bonds, by written notice to the County, if between the date hereof and the Closing Time: (i) any event occurs or information becomes known, which, in the reasonable professional judgment of the Representative, makes untrue any statement of a material fact set forth in the Official Statement or results in an omission to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ii) the market for the 1994 Series A Bonds or the market prices of the 1994 Series A Bonds or the ability of the Underwriters to enforce contracts for the sale of the 1994 Series A Bonds shall have been materially and adversely affected, in the reasonable professional judgment of the Representative, by: (A) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war; or (B) a general suspension of trading on the New York Stock Exchange, or fixing of minimum or maximum prices for trading or maximum ranges for prices for securities on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority; or (C) a general banking moratorium declared by federal, State or New York authorities having jurisdiction; or (iii) additional material restrictions not in force or being enforced as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which, in the reasonable professional judgment of LA1-346016.V4 15 the Representative, materially and adversely affect the market or market price for the 1994 Series A Bonds; or (iv) an event described in paragraph (m) of Section 8 hereof shall have occurred which, in the reasonable professional judgment of the Representative, requires the preparation and publication of a supplement or amendment to the Official Statement; or (v) any litigation shall be instituted or be pending at the Closing Time to restrain or enjoin the issuance, sale or delivery of the 1994 Series A Bonds, or in any way contesting or affecting any authority for or the validity of the proceedings authorizing and approving the 1994 Series A Bonds, the Act, the Bond Resolution, the Legal Documents or the existence or powers of the County with respect to its obligations under the Legal Documents or the 1994 Series A Bonds; or (vi) any rating of the 1994 Series A Bonds by a national rating agency shall have been withdrawn or downgraded. If the Underwriters terminate their respective obligations to purchase the 1994 Series A Bonds because any of the conditions specified in Section 9 or this Section 10. shall not have been fulfilled at or before the Closing Time, such termination shall not result in any liability on the part of the Underwriters. 11. Conditions to Obligations of the County. The performance by the County of its obligations is conditioned upon (i) the performance by the Underwriters of their respective obligations hereunder and (ii) receipt by the County and the Underwriters of opinions addressed to the Underwriters and certificates being delivered at the Closing Time by persons and entities other than the County. 12 . Amendment of Official Statement. For a period beginning on the date hereof and continuing until the End Date, (a) the County will not adopt any amendment of, or supplement to, the Official Statement to which the Underwriters shall object in writing or which shall be disapproved by counsel for the Underwriters and (b) if any event relating to or affecting the Trustee or the County shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriters, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser of the 1994 Series A Bonds, the County will forthwith prepare and furnish to the Underwriters a reasonable number of copies of an amendment of, or supplement to, the Official Statement (in form and substance satisfactory to counsel for the Underwriters) which LA1-346016.V4 16 will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser of the 1994 Series A Bonds, not misleading. 13 . Expenses. (a) Whether or not the 1994 Series A Bonds are issued as contemplated by this Purchase Contract, the Underwriters shall be under no obligation to pay and the County hereby agrees to pay any expenses incident to the performance of the County's obligations hereunder, including but not limited to the following: (i) the cost of preparation, printing, engraving, execution and delivery of the 1994 Series A Bonds; (ii) the acceptance fees of the Trustee and any fees and expenses of the Trustee's counsel; (iii) any fees charged by any rating agency for rating the 1994 Series A Bonds; (iv) the cost of printing, distribution and delivery of the Preliminary Official Statement, the Official Statement, any amendments and/or supplements thereto, this Purchase Contract and the Blue Sky Surveys (v) the fees and disbursements of Bond Counsel, accountants, consultants and any financial advisor; and (vi) any out-of-pocket disbursements of the County. (b) Whether or not the 1994 Series A Bonds are issued as contemplated by this Purchase Contract, the Underwriters shall pay (i) the research costs incurred in the preparation of Blue Sky Surveys; (ii) any fees assessed upon the Underwriters with respect to the 1994 Series A Bonds by the MSRB, PSA or the NASD; (iii) all advertising expenses in connection with the public offering and distribution of the 1994 Series A Bonds (excluding any expenses of the County and its employees or agents) ; (vi) fees payable to the California Debt Advisory Commission; (v) all other expenses incurred by them or any of them in connection with the public offering and distribution of the 1994 Series A Bonds, including the fees and disbursements of Underwriters' Counsel and all CUSIP, DTC and Dalenet charges; and (vi) expenses to qualify the 1994 Series A Bonds for sale under any state securities or blue sky laws. 14. Notices. Any notice or other communication to be given under this Purchase Contract (other than the acceptance hereof as specified in the first paragraph hereof) may be given by delivering the same in writing, if to the County, addressed to: County of Contra Costa County Administrators Office 651 Pine Street, 11th Floor Martinez, California 94553-0063 Attention: County Administrator LA1-346016.V4 17 or if to the Representative or the Underwriters, addressed to: CS First Boston 101 California Street, Suite 4300 San Francisco, California 94111 Attention: Public Finance Department 15. Parties in Interest: Survival of Representations and Warranties. This Purchase Contract when accepted by the County in writing as heretofore specified shall constitute the entire agreement between the County and the Underwriters and is made solely for the benefit of the County and the Underwriters (including the successors or assigns of the Underwriters) . No other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements- of the County in this Purchase Contract or in any certificate delivered pursuant hereto shall survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriters, (b) delivery of and payment by the underwriters for the 1994 Series A Bonds hereunder, and (c) any termination of this Purchase Contract. 16. Execution in Counterparts. This Purchase Contract may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. 17. Applicable Law. This Purchase Contract shall be interpreted, governed and enforced in accordance with the laws of the State of California. CS FIRST BOSTON, as Representative of the several Underwriters By The foregoing is hereby agreed to and accepted as of the date first above written: COUNTY OF CONTRA COSTA By County Administrator LA1-346016.V4 18 SCHEDULE I TO THE PURCHASE CONTRACT LIST OF UNDERWRITERS CS First Boston 101 California Street, Suite 4300 San Francisco, California 94111 Morgan Stanley & Co. Incorporated 555 California Street San Francisco, California 94104 Smith Barney Shearson Inc. 350 California Street, 21st Floor San Francisco, California 94104 LAI-346016.V4 OFFICIAL STATEMENT 1. 67 . L7 NEwISSUE—FULL BOOK ENTRY ONLY RATINGS (See "RATINGS" herein): Moody's Al TAXABLE(FEDERAL),TAX-EXEMPT(CALIFORNIA) Standard & Poor's RA- NO ATTEMPT HAS BEEN OR WILL BE MADE TO COMPLY WITH CERTAIN REQUIREMENTS RELATING TO THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE BONDS. In the opinion of Orrick,Herrington&Sutcliffe,Bond Counsel based upon an analysis of existing laws,regulations,rulings,and court decisions,interest on the Bonds is exempt from State of California personal income razes. Bond Counsel expresses no opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds or regarding any other federal or state tax consequences relating to the accrual or receipt of interest on the Bonds. See 'TAX MATTERS"herein. j- - $337,365,000 COUNTY OF CONTRA COSTA, CALIFORNIA TAXABLE PENSION OBLIGATION BONDS, C, 1994 SERIES A Dated: February 1, 1994 Due: June 1,as shown below The County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A (the "Bonds") will be dated February 1, 1994, and will mature in the years and amounts as set forth below. Pursuant to the County Employees Retirement Law of 1937, as amended (the "Retirement Law"), the County Board of Supervisors is obligated to appropriate and make payments to the County of Contra Costa Employees' Retirement Association (the "Association") for pension benefits accruing to members of the Association. In respect of such statutory obligation, the County of Contra Costa (the "County") will execute a debenture (the "Debenture"), dated as of March 1, 1994, in favor of the Association. The Bonds are being issued pursuant to a Trust Agreement,dated as of February 1, 1994(the "Trust Agreement")by and between the County and First Interstate Bank of California, as trustee (the "Trustee"), to refund the obligations from the County to the Association evidenced by the Debenture. The Bonds are absolute and unconditional obligations imposed upon the County by law. The Bonds are not limited as to payment to any special source of funds of the County. THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE COUNTY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE COUNTY TO MAKE PAYMENTS WITH RESPECT TO THE BONDS CONSTITUTE A DEBT OR AN INDEBTEDNESS OF THE COUNTY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. The Bonds are subject to optional and mandatory redemption prior to maturity as described herein. Interest on the Bonds will be payable semiannually on June 1 and December 1 of each year,commencing June 1, 1994. The Bonds will be initially delivered in book-entry form, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), in denominations of$5,000 or any integral multiple thereof. Principal, premium, if any, and interest,due on the Bonds will be paid by the Trustee to DTC. DTC is required to remit such principal and interest to its participants for disbursement to the beneficial owners of the Bonds. See "THE BONDS— Book-Entry-Only System." PAYMENT DATES,PRINCIPAL AMOUNTS, INTEREST RATES,YIELDS AND PRICES $196,205,000 Serial Bonds Payment Principal Interest Payment Principal Interest Date Amount Rate Yield Price Date Amount Rate Yield Price 06/01/95 $590,000 4.35% 4.37% 99.970 06/01/01 $13,350,000 6.20% 6.23% 99.815 06/01/96 3,245,000 4.90 4.90 100.000 06/01/02 16,060,000 6.30 6.34 99.733 06/01/97 4,920,000 5.20 5.24 99.873 06/01/03 19,045,000 6.40 6.45 99.643 06/01/98 6,715,000 5.55 5.56 99.953 06/01/04 22,340,000 6.50 6.55 99.617 06/01/99 8,705,000 5.80 5.82 99.900 06/01/05 25,975,000 6.55 6.60 99.594 06/01/00 10,915,000 5.95 5.96 99.937 06/01/06 29,970,000 6.65 6.67 99:820 06/01/07 34,375,000 6.70 6.72 99.812 $141,160,000 6.85%Term Bonds Due June 1, 2011@ 6.95%Yield and 98.989 Price (plus accrued interest from February 1, 1994) The Bonds will be offered when, as and if executed and delivered to the Underwriters, subject to the approval of validity by Orrick, Herrington &Sutcliffe. Certain legal matters will be passed upon for the Underwriters by O'Melveny &Myers and for the County by County Counsel. The Bonds, in book-entry form, will be available for delivery in New York, New York on or about March 1, 1994. CS FIRST BOSTON MORGAN STANLEY & CO. SMITH BARNEY SHEARSON INC. INCORPORATED THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. February 16, 1994 COUNTY OF CONTRA, COSTA, CALIFORNIA BOARD OF SUPERVISORS Tom Powers (District 1)' Chair Jeffrey Smith Gayle Bishop (District 2) (District 3) Sunne Wright McPeak, Tom Torlakson (District 4) (District 5) COUNTY OFFICIALS Philip J. Batchelor Clerk of the Board and County Administrator.. DeRoyce Bell Deputy County Administrator Kenneth J.-Corcoran Alfred P. Lomeli . Auditor-Controller Treasurer-Tax Collector Victor J. Westman Stephen L. Weir County Counsel County Clerk-Recorder BOND COUNSEL FINANCIAL ADVISOR Orrick,Herrington & Sutcliffe Prager, McCarthy & Sealy San'Francisco, California San Francisco, California TRUSTEE/REGISTRAR/PAYING AGENT COUNSEL TO THE UNDERWRITERS First Interstate Bank of California, O'Melveny &Myers San Francisco, California Los Angeles, California i SUMMARY STATEMENT This Summary Statement is subject in all respects to the more complete information contained in this Official Statement, and the offering of the County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A (the "Bonds") referred to herein to potential purchasers is made only by means of the entire Official Statement. The County of Contra Costa The County of Contra Costa (the "County") incorporated in 1850 is one of the original 27 counties of the State of California. The County 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. For the fiscal year that_will end on June 30, 1994, the County's General Fund budget totals $612.8 million. The Bonds .. The County Employees Retirement Law of 1937, Government Code Sections 31450 et. . seq. (the "Retirement Law") obligates the County to i) appropriate annual contributions to the Contra Costa County Employees Retirement Association (the "Association") to fund pension benefits for its employees, and ii) to amortize the unfunded actuarial liability with respect to such pension benefits. The County will issue a debenture (the "Debenture") to the Association.as evidence of the County's obligations to the Association. The County will issue the Bonds pursuant to a trust agreement(the"Trust Agreement") in an aggregate principal amount equal to the principal amount of the debenture for the purpose of refunding the Debenture and thereby providing funds to the Association for investment. Security and Source of Payment for the Bonds The obligation of the County to make payments with respect to the Bonds is an absolute and unconditional obligation of the County imposed upon the County by law and enforceable against the County pursuant to the Retirement Law. .Payment of principal:of and interest on the Bonds is not limited to any special source of funds.. The Trust Agreement provides that the County is obligated to deposit or cause to be deposited with the Trustee the amount, which together with amounts transferred from the Surplus Account, will be sufficient to pay the County's obligations on the Bonds for each fiscal year within thirty days of the commencement of said fiscal year. In the event that the County fails or neglects to make appropriations and transfers in respect of the obligations to pay the Bonds, the Retirement Law requires that the County Auditor shall transfer from funds available in the County treasury amounts necessary to make such payments, with such transfer having the same force and effect as an appropriation by the Board of Supervisors of the County. No assurance can be given as to the amount and source of funds available in the County treasury for such transfer at any particular time. ll In terms of the credit quality of the County's long-term marketable debt obligations, the rating agencies have indicated that pension obligation bonds rank below general obligation bonds and above lease obligation debt. The County does not currently have any outstanding general obligation bonds and has approximately $268.1 million of outstanding marketable lease obligations. The Bonds do not constitute an obligation of the County for which the County is obligated to levy or pledge any form of taxation. Neither the Bonds nor the obligation of the County to make payments with respect to the Bonds constitute an indebtedness of the County, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Bond Registration and, Book-Entry System The Bonds will be in fully registered form and will be issued in denominations of$5,000 or any integral multiple thereof. The Bonds, when issued,will be registered in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ('DTC"): Ownership interests in the Bonds may be purchased in book- entry form only, in authorized denominations. Principal of, premium, if any, and interest on the Bonds will be paid by the Trustee to DTC or its nominee, which will in turn remit such principal,premium,if any, and interest to its participants for subsequent disbursement to the beneficial owners of interests in the Bonds. Redemption of Bonds The Bonds are not subject to optional redemption prior to their respective maturities. The Bonds maturing on June 1, 2011 are subject to mandatory sinking fund redemption as described herein. Purpose of the Issue The Bonds are being issued to provide funds to allow the County to make payments in respect of its unfunded actuarial accrued liability with respect to retirement benefits for County employees. Validation t The authorization by the County of the issuance of the Debenture and the Bonds as obligations of the County imposed by law, and certain other matters, were validated by judgment of the SuperiorCourt of the State of California rendered on December 22, 1993. E iii I��IoNALLY .. �� . f OFFICIAL STATEMENT $337,365,000 COUNTY OF CONTRA COSTA,CALIFORNIA TAXABLE PENSION OBLIGATION BONDS 1994 SERIES A INTRODUCTORY STATEMENT The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement, including the cover page .and the appendices hereto (the "Official Statement"). The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive and.are qualified in their entirety by reference to each document. For definitions of certain words and terms used but not otherwise defined herein, see "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT" attached hereto. The purpose of this Official Statement is to provide certain information concerning the issuance, sale and delivery of the County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A (the "Bonds"), in the aggregate principal amount of$337,365,000. All capitalized terms used in this.Official Statement and not otherwise defined herein have the same meanings as in the Trust Agreement dated as of February 1, 1994 (the "Trust Agreement"), by and between the County of Contra Costa, California (the "County"), and First Interstate Bank of California, as trustee (the "Trustee"). Pursuant to Section 31584 of the County Employees Retirement Law of 1937, as amended (the "Retirement Law"), the County Board of Supervisors (the "Board") is.obligated to appropriate and make payments to the County of Contra Costa Employees' Retirement Fund (the "Retirement Fund") arising as a result of retirement benefits accruing to.members of,the County of Contra Costa Employees' Retirement Association (the "Association"). In respect of such statutory obligation of the County to make such payments, the County will execute a debenture (the "Debenture"), dated as of March 1, 1994 in favor of the Association. The Debenture was authorized and will be issued pursuant to resolutions adopted by the County Board of Supervisors on November 9, 1993 and February 15, 1994, respectively (collectively, the "Resolution"). The Debenture is an absolute and unconditional obligation imposed upon the County by law and enforceable against the County pursuant to the Retirement Law and is not limited as to payment to any special source of funds of the County. The Bonds are to be issued and delivered pursuant to the Trust Agreement and the proceeds from the sale of the Bonds (excluding accrued interest) will be used to refund the obligation of the County to the Association.evidenced by the Debenture. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. UPON PAYMENT OF THE DEBENTURE,THE COUNTY'S OBLIGATION WITH RESPECT TO THE BONDS IS AN ABSOLUTE AND UNCONDITIONAL OBLIGATION IMPOSED UPON THE COUNTY BY LAW AND ENFORCEABLE AGAINST THE COUNTY PURSUANT TO THE RETIREMENT LAW AND IS NOT LIMITED AS TO PAYMENT TO ANY SPECIAL SOURCE OF FUNDS OF THE COUNTY. THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE COUNTY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE COUNTY, THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATIONS OR RESTRICTION. 1 THE BONDS.. General The Bonds will be dated February 1, 1994, will bear interest at the rates and mature on the dates set forth on the cover of this Official Statement and will be issued as fully registered Bonds in denominations of$5,000 or any integral multiple thereof. Interest on the Bonds will be payable on June 1, 1994 and semiannually thereafter on December 1 and June 1 in each year. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The Bonds, when issued, will be registered in the name of Cede & Co., as registered owner and.nominee of The Depository Trust.Company,New York, New York ("DTC", and together with any successor,securities.depository, the "Securities Depository"). DTC will act as Securities Depository for the Bonds. So long as Cede & Co. is the registered owner of.the Bonds, as nominee of DTC, references herein to the Bondholders or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as defined herein) of the Bonds. So long as Cede& Co. is the registered owner.of the Bonds, principal and interest on the Bonds are payable by wire transfer.of same day funds by First Interstate Bank of California;as trustee (the "Trustee"), to Cede & Co., as-nominee for DTC. DTC is obligated; in turn; to remit such amounts to the DTC.Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. If the book-entry system is,discontinued, payments of principal of,and premium, if-any, on any Bonds shall be made only upon the, surrender of.such Bonds at the corporate trust office of the Trustee in Los Angeles, California. See 'Book-Entry-System" herein. Interest Payment Dates Interest on the Bonds is payable semiannually on June 1 and December I.of,each,year (each an "Interest,Payment Date"), commencing June 1, 1994.- Redemption-of 994.Redemption of the Bonds The Bonds are subject to redemption prior to their stated maturity as described below. ,µ' (a) Optional Redemption. The Bonds are not subject to redemption at the option of the County: (b) Mandatory Sinking Fund.Redemption. The Bonds maturing on June 1, 2011 are subject-to mandatory sinking fund redemption.prior to maturity in part:- on June 1 of each year on and after June 1, 2008, by lot, from mandatory sinking account payments in the amounts set below at a redemption price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the date fixed for redemption: 2 Mandatory.Sinking Account Payment Date Mandatory Sinking June 1 Account Payment 2008 $39;210,000 2009 . 44,560,000 2010 40,645,000 2011* 16,745,000 *Fin maturity (c) Selection of Bonds for Mandatory Sinking Fund Redemption., If less than .. all Outstanding Bonds maturing by their terms on any one date are-to be redeemed at any one time, the Trustee shall select the Bonds of such maturity date to be redeemed in any manner that it deems appropriate and fair and shall promptly notify the County in writing of the distinctive-certificate numbers of the Bonds so, selected for redemption. For purposes of such selection;Bonds shall be deemed to be composed of $5,000-multiples and any'such multiple may be separately redeemed. (d) Notice-of Redemption. •Notice of redemption shall be mailed by first-class mail by the Trustee, not..less than thirty (30) nor more than sixty (60) days prior to the redemption date to the respective Holders-of the Bonds designated for redemption at their addresses appearing on.the bond registration books of.the Trustee. Each notice of redemption shall state the date of.such notice, the redemption price, if any (including-the name and appropriate address of the Trustee),the CUSIP number (if any) of the,maturity or maturities, and,;if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to_ be redeemed and, in the case of Bonds to be. redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state'that on said date there will become due and payable on each of said Bonds the redemption price, if any, thereof and in the case of;a Bond to be redeemed in part only, the specified portion of the principal amount thereof to be redeemed,'together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address of the Trustee specified in the redemption notice. Failure to receive such notice or any defect therein shall not invalidate any of the~proceedings-taken in ' connection with such redemption. If notice of redemption has- been duly givens as aforesaid and money for the payment of the redemption price of the Bonds called'for redemption is held by the Trustee, then on the redemption date designated in such notice Bonds mcalled for redemption shall become due and payable; -and from and after the date so designated interest on such Bonds shall cease to accrue, and the Holders of such Bonds shall have no rights in respect-thereof except to receive payment of the redemption price thereof. Book-Entry System DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered•in the-name'of Cede & Co. (DTC's partnership nominee). One 3 fully registered Bond for each maturity of the Bonds as set forth on the cover page hereof, each in the aggregate principal amount of such maturity, 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 for physical movement of securities certificates. Direct Participants ("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 custodian 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 Bonds under the DTC system must be made by or through Direct Participants; which shall receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("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 each Beneficial Owner is expected to receive written confirmation providing details of the transaction, as well as periodic statements of such Beneficial Owner's holdings, from the Direct or Indirect_Participant through which the.Beneficial Owner eniered'into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. . BENEFICIAL OWNERS WILL NOT RECEIVE BONDS REPRESENTING THEIR OWNERSHIP INTEREST IN BONDS,EXCEPT IN THE EVENT THAT USE OF THE BOOK-ENTRY SYSTEM FOR THE BONDS.IS DISCONTINUED. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of D_TC's partnership nominee, Cede& Co. The deposit of Bonds with DTC and their.registrations in the name of.Cede & Co. effect no change in beneficial ownership. DTC has no knowledge, of the actual Beneficial Owners for the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds 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. Redemption notices shall be sent to Cede & Co. If less than all of the.Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of. each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. will consent or.vote with respect to Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record . date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct 4 Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds 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 now 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 or the County, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Trustee, as set forth in the Trust Agreement, provided the Trustee receives funds from the County, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at anytime by giving reasonable notice to the County and 'the Trustee. Under such circumstances, in the event that a successor securities depository is not appointed, the Bonds are required to be printed and delivered as described in the Trust Agreement. The County may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the Trust Agreement. No Assurance Regarding DTC Practices The foregoing information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the County believes to be reliable, but neither the County nor the Trustee takes any responsibility for the accuracy thereof. AS LONG AS CEDE& CO. OR ITS SUCCESSOR IS THE REGISTERED HOLDER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE REGISTERED HOLDERS OF THE BONDS SHALL MEAN CEDE & CO., AS AFORESAID, AND SHALL NOT MEAN THE BENEFICIAL'OWNERS OF THE BONDS, 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 REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. Each person for whom a Participant acquires an interest in the Bonds,as nominee, may desire to make arrangements with such Participant to receive a credit balance in the records of such Participant, and may desire to make arrangements with such Participant to have all notices of redemption or other communications to DTC, which may affect such person, forwarded in writing by such Participant and to receive notification of all interest payments. NEITHER THE COUNTY, THE TRUSTEE NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION WITH RESPECT TO THE PAYMENTS TO THE DIRECT PARTICIPANTS, ANY INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS, THE SELECTION OF THE BENEFICIAL INTERESTS IN THE BONDS TO BE PREPAID IN THE EVENT OF REDEMPTION OF LESS THAN ALL BONDS OF A PARTICULAR MATURITY OR THE PROVISION OF NOTICE TO THE DIRECT PARTICIPANTS,ANY INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO THE BONDS. NO ASSURANCE CAN BE GIVEN BY THE COUNTY, THE TRUSTEE OR THE UNDERWRITERS THAT DTC, DIRECT PARTICIPANTS, INDIRECT PARTICIPANTS OR OTHER NOMINEES OF THE BENEFICIAL OWNERS WILL MAKE PROMPT TRANSFER OF PAYMENTS TO THE BENEFICIAL OWNERS, THAT THEY WILL DISTRIBUTE NOTICES, INCLUDING REDEMPTION NOTICES (REFERRED 5 TO ABOVE),RECEIVED AS THE REGISTERED HOLDER OF THE BONDS TO THE BENEFICIAL OWNERS, THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACTIN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. In the event the County and the Trustee determine not to continue the book-entry system or DTC determines to discontinue its services with respect to the Bonds and the County does not select another qualified securities depository, the County shall deliver one or more Bonds 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 Bonds will be governed by the provisions of the Trust Agreement. Risks of Book-Entry System „ Neither the County nor,the Trustee makes any assurances, and neither the.County nor the Trustee shall incur any liability, regarding the fulfillment by DTC of its obligations under the book-entry system with respect to the Bonds. In.addition, the Beneficial Owners of the Bonds may experience.some delay in.their receipt of distribution of principal of, and interest on;, the Bonds since such distribution will be forwarded by the Trustee.to DTC and DTC will credit such distributions to the accounts of the Direct Participants which will thereafter credit them to the,accounts.of the Beneficial,Owners either directly or through Indirect Participants. Delivery of the Bonds in book-entry form may also reduce the liquidity of the Bonds in the secondary trading market since investors may be unwilling to purchase bonds for which they . cannot obtain physical certificates. In addition, since transactions in the Bonds can be effected only through DTC, Direct,Participants, Indirect Participants and certain banks, the ability of a Beneficial Owner to pledge Bonds to persons or entities that do not participate in the DTC system, or otherwise to take actions in.respect of such Bonds; may be limited due to lack of'a physical certificate. Beneficial Owners will not be recognized by the Trustee as registered holders for purposes of the Trust Agreement, and Beneficial Ownerswill be.permitted to exercise the rights of registered holders indirectly through DTC and its Participants.; Additional Bonds The County may at any time issue Additional Bonds on a parity with the Bonds but only subject to certain conditions including, but not limited to, the County's compliance with all agreements and.covenants contained in.the Trust Agreement and the provision'of an authorized Suppleriiental Trust Agreement specifying, among other things, that the Additional'Bonds are being issued i) for the purpose of satisfying any obligation to make payments to the Association pursuant to the Retirement Law, and/or for payment of all.costs incidental to the issuance of Additional Bonds, and/or ii) for the purpose of refunding the Bonds, including payment of all costs incidental to such refunding. See APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT- TRUST AGREEMENT- Additional Bonds" attached hereto. , PLAN OF FINANCING The Bonds are being issued for the purpose of refunding the Debenture and. the obligations of the,County•with respect to the retirement benefits represented thereby.-._. The Debenture is an. absolute and unconditional obligation imposed upon the County by law and enforceable against the County pursuant to the Retirement Law and is not limited as to payment as to any special source of funds of the County. Upon the refunding of the Debenture with the 6 net proceeds of the Bonds (excluding accrued interest), the County's obligation with respect to the Bonds will be an absolute and unconditional obligation imposed upon the County by law and enforceable against the County pursuant to the Retirement Law and will not be limited as to payment to any special source of funds the County: Pursuant to Section 31584 of the Retirement Law, the Board.is required to appropriate and pay amounts determined to be owing to the Retirement Fund. The Debenture and, upon refunding of the Debenture with Bond proceeds, the Bonds, are issued in respect of the County's statutory obligation to amortize the unfunded actuarial accrued liability imposed by the Retirement Law. The County will use the net proceeds of the Bonds (excluding accrued interest) to refund the Debenture and the obligations represented thereby. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. In terms of the credit quality of the County's long-term marketable debt obligations, the rating agencies have indicated that pension obligation bonds rank below general obligation bonds and above lease obligation debt. The County does not currently have any outstanding general obligation bonds and has approximately $268.1 million of outstanding lease obligations. See "APPENDIX A - COUNTY FINANCIAL INFORMATION - Long-term Obligations - Direct and Overlapping Debt" attached hereto. SECURITY AND SOURCE OF PAYMENT FOR THE BONDS Bond Payments The obligation of the County to make payments with respect to the Bonds is an absolute and unconditional obligation of the County imposed upon the County by law and enforceable against the County pursuant to the Retirement Law and payment of principal of and interest on the Bonds is not limited to any special source of funds. The Trust Agreement provides that the County is obligated to deposit or cause to be deposited with the Trustee the amount, which together with moneys transferred from the Surplus Account, is sufficient to pay the County's obligations on the Bonds for each fiscal year within thirty days of the commencement of such fiscal year. See "APPENDIX C - SUMMARY OF CERTAIN PROVISONS OF THE TRUST AGREEMENT - Bond Fund; Deposits to Bond Fund" attached hereto. In the event that the County fails or neglects to make appropriations and transfers in respect of its obligation to pay the Bonds, the Retirement Law requires that the County Auditor transfer from any money available in any fund in the County treasury amounts necessary to make such payments; with such transfer having the same force and effect as an appropriation by the Board. No assurance can be given as to the amount and source of money available in the County treasury for such transfer at any particular time. THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE COUNTY OR THE STATE OF CALIFORNIA (THE "STATE") FOR WHICH THE COUNTY OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE COUNTY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE COUNTY TO MAKE PAYMENTS WITH RESPECT TO THE BONDS CONSTITUTE AN INDEBTEDNESS OF THE COUNTY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. 7 ESTIMATED SOURCES AND USES OFF UNDS The proceeds to be received from the sale.of the Bonds (excluding accrued,interest), togethermith certain funds to be provided from other sources, are estimated to be applied asset forth in the following table. Estii'na ed Sources of Funds Principal Amount of Bonds $337,365,000.00 . . Less: Original Issue Discount (1.897.450.55) Total Estimated Sources $335,467,549.45 . Estimated Uses of Funds Refunding of Debenture( ) $333,724,000.00 Costs of Issuance(2)' $1,743.549.45 Total Estimated Uses of Funds $335,467;549.45 (1) See "PLAN OF FINANCING" herein. (2) Includes underwriting, legal, printing, and accounting fees, and other costs of.issuance. 8 ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth the amounts required to be made available for the payment of principal of the Bonds on the Principal Payment Date or by mandatory redemption, for the payment of interest on the Bonds, and for the total payments with respect to the Bonds. ANNUAL DEBT.SERVICE TAXABLE PENSION OBLIGATION BONDS,.1994 SERIES A Annual Semi-Annual Total Debt Payment Date Principal Payment . Interest Payment ; • Service Payment June 1, 1994 $7,381,645.83 $7,381,645.83 December 1, 1994. 11,072;468.75 11,072,468.75 June 1, 1995 $590,000.00 .11,072,468.75 11,622,468.75 December 1, 1995 .11,059,636.25 11,059,636.25 . June 1, 1996. 3.,245,000.00 111;059,636.25 14,304,636.25 December 1, 1996 10,980,133.75 10,980,133.75 June 1, 1997 4,920,000.00 10,980,133.75 15,900,133.75 December 1, 1997 . 10,852,213.75 10,852,213.75 June 1, 1998 61715,000.00 10,8521213.75 17,567,213.75.. December 1; 1998 10,665,872.50 10,665,872.50 June 1, 1999 8,705,000.00 10,665,872.50 19,370,872.50 December 1, 1,999 10,41.3,427.50, 10,413,427.50 June 1, 2000 , 10,9.15,000.00 10,413,427.50 21,328,427.50 December 1, 2000 '10,088,706.25 10,088,706.25 June 1, 2001 13,350,000.00 10,088,706.25 23,438,706.25 December 1, 2001 9,674,856.25. 9,674,856.25 , June 1, 2002 16,060,000.00 9,674,856.2-5 25,734,856.25 December 1, 2002 9,168,966.25 9,168,966.25 June 1, 2003 - 19,045,000.00 9,168,966.25 28,213,966.25 December 1;2003 8,559,526.25 8,559,526.25 June 1, 2004` 22,340,000.00 8,559,526.25. 30,899,526.25 . December 1,;2004 7,833,476.25 7,833,476.25 June 1, 2005 25,975,000.00 7,833,476.25 33,808,476:25 December 1, 2005 6,982,795.00 6,982,795.00 June 42006 . . 29,970,000.00 6,982,795.00 36,952,795.00 December 1, 2006 5,986,292.50. 5,986,292:50 June 1, 2007 34,375,000.00 5,986,292.50 40,361,292.50 December 1, 2007 4,834,730.00 4,834,730.00 June 1, 2008* 39,210,000.00 4,834,730.00 44,044,730.00 December 1;2008 . 3,491,787:50. 3,491,787.50 June 1, 2009* 44,560,000.00 3,491,787.50 48,051,787.50 December 1, 2009 1,965,607.50 1,965,607.50 June 1, 2010* 40,645,000.00 1,965,607:50 42,61.0,607.50 December 1, 2010 573,516:25 573,516.25. June 1, 2011* 16,7451000.00 573,516.25 17,318,516.25 TOTAL $337,365,000.00 $275,789,670.83 $613,154,670.83 *Sinking Fund Payment Date 9 THE COUNTY General Contra Costa County was incorporated in 1850 as one of the original 27 counties of the State of California, 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 approximately 733 square miles and extends from the northeastern shore of San Francisco Bay easterly about 50 miles to San Joaquin County. Contra Costa County is bordered on the south and west by Alameda County and on.the north by Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized, while the interior sections are comprised of suburban/residential, commercial, and light industrial areas. Historically, the County's economic growth began with the development of the petroleum refining industry in the early 1900's, an'economic activity that still remains a very important component of.the County's economy and tax base. The major petroleum refining companies have located their operations near terminal and port facilities such as the Port of Richmond in:the western portion of the County. Largely driven by the needs of a growing residential population, however, the.County's economic:structure has shifted over time and is now,primarily comprised of service sector activity. A large-part of the interior of the County is served by the Bay Area Rapid Transit District (:BART"), a situation that has encouraged both residential and commercial.development in the proximity'of BART lines'and stations. Economic development has also been substantial along the north-south Interstate 680 corridor in the County and features Bishop Ranch, a master planned industrial park where approximately 26,000 employees are expected to work when current expansion is completed in -1996 and where Chevron,. Inc., Pacific Telesis Group, and Toyota Motor Company currently hold long-term leases. The County is expected to continue to grow in both population and economic diversity over the next two decades. In a study of the long-term economic outlook for the Bay Area completed in December, 1993, the Association of Bay Area Governments (ABAG) projected that the County would add approximately 145,120 jobs by the year 2010, a growth rate.of,50.9 percent from the County's 1992 job base. In addition, County population is expected to reach 1,104,700 by the year 2010, an increase of 29.2 percent from the County's 1993 population base. For information on the finances of.the County, see "APPENDIX A COUNTY FINANCIAL INFORMATION" attached hereto. 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, 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. As shown in the table below, Contra Costa County's population grew 21.5 percent during the 1980's, a moderate acceleration from.the 17.7 percent growth rate achieved in the decade of the 1970's. The County's population growth ranked first among the 10 nine Bay Area counties for the 1980 - 1990'.period and was slightly below the 24.9 percent growth rate for the entire state of California. 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. Population in.the unincorporated regions,of the County dropped by 21.2 percent.during the 1970's when Clayton, Moraga, Lafayette, and Pleasant Hill were incorporated as cites.* Reflecting strong growth in the local economy, however, population in the unincorporated regions of the County registered a 17.8 .percent increase during the 1980's despite the incorporation of the cities of Danville, Orinda, and San Ramon. Most Recent Annual Performance. The California State Department of Finance reported that the County's population stood at 855,100 as of January 1993, an increase of 7.2. percent since 1990. The strongest growth is concentrated in the eastern portions of the County; particularly in Clayton, Antioch and Brentwood, although very strong growth was noted in Hercules and Richmond in the western part of the County., COUNTY OF COSTA CONTRA POPULATION�l� 1960 1970 1975 1980 1990 1993 Antioch 17,305 28,060 33,215 42,683 60,900 69,600 Brentwood 2,186 2,649 3,662 4,434 7,500 9,675 Clayton' 1,385' 1,790 4;325 7J50 8,375 Concord 36,208 85;164 94,673 103,763 110,900 113,200 Danville* 26,143 31,200 .• 34,100 El Cerrito 25,437 25,190 22,950 22,731 22,850 23,450 Hercules 310 252 121 5,963 16,400 18,600 Lafayette 20,484 19,628 20,837 23,450 23,700 Martinez 9,604 16,506 18,702 22,582 31,700 35,000 Moraga 14,205 14,418 15,014 15,850 16,550 Orinda* 17,070 16,650 17,050 Pinole 6,064 15,850 15,337 14,253 17,000 18,150 Pittsburg 19,062 20,651 24,347 33,465 47,250 50,400 Pleasant Hill 24,610 25,398 25,547 31,550 31,850 Richmond 71,584 79,043 70,126 74,676 86,600 92,200 San Pablo 19,687 21,461 19,392 19,750 25,000 26,150 San Ramon* 20,511 35,100 38,900 Walnut Creek 9,903 39,844 46,034 54,033 60,400 62,400 Unincorporated 191,680 163,035 173,036 128,551 150,100 165,700 ------------- ----------- ---------- --------- -------------- ----------- Total 409,030 558,389 582,829 656,331 797,600 855,100 California 15,717,204 18,136,045 21,185,000 23,668,145 28,558,000 31,552,000 (t) Totals may not equal sums due to independent rounding. * Dates of incorporation:Danville(7/1/82);Orinda(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: 1960-1990;State Department of Finance: 1993 11 Long-term Population Projections As discussed earlier, the County is expected to experience significant population growth over the next two decades (see "THE COUNTY - General" herein). According to the study of Bay Area projected demographic and economic performance prepared'by ABAG in December, 1993, the County's population is expected to reach 968,700 by the year 2000, representing a growth rate of 21.5 percent for the decade of the 1990's and matching the County's growth rate in the decade of the 1980's. From the year 2000 to 2010, the County's population is expected to increase by 14.1% to 1,104,700. Industry and Employment Contra Costa County has one of the fastest-growing 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 migration of white-collar jobs into the County due to the relocation of companies from costlier locations in the Bay Area. The combined impact of population growth and job migration has resulted in significant job creation in the County, with the job base having grown 50 percent since 1980. 'As shown below, the County's labor force stood at 438,200 in 1992. With average 1992 unemployment rates of 6.5 percent and 9.1 percent for the County and the State, respectively, the County has achieved a lower unemployment rate than the State in four of the past five years. In addition, the County achieved the fifth lowest unemployment rate in the State of California for calendar year 1992. Based upon preliminary labor force data for January through November of 1993, the County's unemployment rate has averaged 6.7 percent versus 9.4 percent for the State. The table below also presents data`on the County's' wage and salary employment by industry. The results for calendar year 1992 are based upon benchmark data for March 1992 and are not comparable to earlier years. Until the revised data for years prior to 1992 is made available in the spring of 1994, it is not_possible to gauge the magnitude of any shifts in the industrial composition of the County's job base. The 1992 data does indicate, however, that the services sector accounts for the greatest fraction of overall jobs (27.1 percent). The retail trade sector comprises approximately 19.5 percent of the job base, with the government and manufacturing sectors accounting for 15.5 percent and 10.5 percent,respectively. The remaining 27.4 percent of the County's employment base consists of jobs in the mining, construction, transportation and public utilities, wholesale trade, and finance, insurance and real estate industries. • it 12 COUNTY OF CONTRA COSTA EMPLOYMENT AND UNEMPLOYMENT OF RESIDENT LABOR FORCE WAGE AND SALARY.WORKERS.BY INDUSTRY ANNUAL AVERAGES,(IN;THOUSANDS) 1988 , 1989: 1990 1991 _ 1992, Civilian LaborForce(l) 410:8" 421.9 427.4 430.5 438.2 Employment . 392,3 404.4 -'410,0• 407.1 409.61 i County Unemployment 18.5 17.5 17.4 23.4 28.6 Unemployment Rate: County 4.5%- 4.2% ' 4.1% 5.4% 6.5% State of California., 4.3% 4.8% , '5.6% 7.5%' 9.1% United States 5.5% 5'.3% 5.3%. 6.7% 7.4%' Wage and Salary Employment�2� 1989 1990'- '1991 1992 Agriculture 1.2 1.3 1.2 1:1 Mining -3k . 2.8. 2.6 2.9 Construction 21.1 21.4 18.6 16.8 Manufacturing 31.7 31.7 31.1 30.0 Transportation and Public Utilities 18.9 20.0 20.0 . 18.3; Wholesale Trade 10.9" 11.1 11.0 11.8 Retail Trade 57.7- 61.6 58.8, 55.6 Finance,Insurance,and Real Estate 26.9 27.3_ 26.8. .27.2 '"Services 73.2 71.3' 78.2 77:2 Government Federal 7.1 7.1 6.9 6.8 State and Local 35.6 36.6 37.0 37.3 ,,----- ----- ------ TOTALM 287.7 298.2 292.2: 285.0 (t) Based on place of residence;because of a change in'survey methods,the 1990 labor'force'data are not strictly comparable to the 1988 and 1989 data: (2) The 1992 results are based upon' March 1992 benchmark data and are not comparable to data published prior to 1992. The Department of Employment Development will be releasing revised data for years prior.to 1992. in the spring of 1994. (3) "Total"may not be precise due to independent rounding. Source: Employment Development Department;•State of California Health and Welfare Agency The'County is expected to•experience,significant employment growth over the next two decades in tandem with an expanding population base (see "TBE COUNTY.-,General" herein). According to the study of Bay Area projected demographic and economic performance,prepared by ABAG in December, 1993, the County's job base is expected to expand by 20.1 percent to a level of 342,160 by the year 2000. In the decade from the year 2001 through•2010,job creation. is expected to accelerate at a"rate.of 25.7.percent,resulting in a job base of 430,120. Major Industries Major industries in the County include petroleum refining,financial services, health care, food processing, and telecommunications, In addition, significant employment.is provided by the manufacturing, retail trade, and construction industries and by.the government sector. Descriptions of employers in selected industries follow. 13 ;f Petroleum and Petroleum Products.'- The'production of petroleum products formed.the initial basis of industrial development in the County.and has grown.to represent one of the most stable' economic'sectors in the entire Bay. Area. Currently, four companies manufacture products 'crude oil and engage: in ' variety of related activities in facilities located in the County. f, The largest in.terms of capacity.i.s Chevron Corporation's ("Chevron") 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. Che,vron`operates a fleetof 53 tankers, of which nine are for intrastate,business. Petroleum products are also shipped by truck and by two railroad carriers, as well as distributed by 1 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 in Richmond and is the•o,nly 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 a 400,000 square=foot building in Concord and serves.as,a finance.arid computer center for Chevron's entire domestic operations.`'The'company also constructed a facility in San Ramon where 3,900 employees are involved in computer, marketing, consumer services and other administrative functions. Reporting approximately 49,277 people on. its worldwide. payrolls as of December, 1992, Chevron currently'has the fifth largest work force.of any employer,in the,.Bay•Area. The.company is also the,largest employer-'.iii the County, reporting nearly 10,000.employees on payrolls: among its various,.. facilities. Although,-a corporate consolidation"of the°company's 'domestic exploration''and production 'subsidiary, Chen'ron'U:'S:A:`Pro duction'Company;, eliminated approximately 200 positions in. 1992 and 1993, Chevron:'expects:its:: employment levels to remain stable in,County over the foreseeable,future:, :Shell OilCompany.("Shell"),began operating 4n Martinezxin 1915: -The"Shell Oil and Chemical`Martinez.Manufacturing Complex,is.located on I;10G acres and-.. features..a-combined oil,refinery and industrial chemical production plant....It.is one of three:Shell facilities-on theWest Coast which supply:all Shell products to the western`states: The complex,has the capacity,to process about,145,000 to 160,000'barrels'of crude oil per day that arrive.at,the complex from California,oil,-.,.. fields through the company's pipeline and from crude oil'shipped from Alaska. Shell operates sophisticated docking facilities that can accommodate two-,tankers and two barges that are delivering Alaskan crude .simultaneously. Finished petroleum products are.distributed thr ough:.a,company=owned pipeline,.through Southern"..Pacific Railroad's pipeline,and by,railcar and-truckj6,destinations throughout.California'uhd the:western states.- -Shell tates-Shell employs approximately 850 people in the County, with 800`employees working at the Martinez complex and 50 working at a retail district office in Concord. 14 Union 0il 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'-1 00,000-barrels,of crude oil per.day. Approximately 600 full-time employees.work.at-the,refinery, while 75 employees are stationed 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. In operation since 1913,:the refinery utilizes crude oil from theNorth Slope of Alaska, as.well as the heaviest crude oil from California's oil fields,.and refines them into high grade light fuel products.-. The refinery;is located on a 2,200-acre site and employs- approximately, 700 people.- Tosco moved its corporate headquarters from Bakersfield to Concord in the fall of 1990,.with the relocation adding.another 80 employees to payrolls in-the County. f Each of the four major oil products companies are currently implementing significant capital expenditure programs to comply with federal Clean,Air Act requirements,by"the 1995'deadline. Itis estimated that approximately$2:5 billion of equipment and capital expenses will be spent, by these companies to_upgrade their physical plant, storage facilities, and emission systems to standards required under the terms of the Clean Air.Act. Financial Services. A number of banks, savings and loan associations, real estate and title insurance companies, and insurance companies are located throughout the County. The largest employer among firms in the financial services industry is Bank of America National Trust and'Savings Association ("Bank of America"), a company that operates several retail branches in the County, as well as-a large complex in Concord where the. systems engineering division, computer development division, and technical training centers of the company are located. Following its merger with Security Pacific National Bank in 1992, Bank of America reduced its.worldwide workforce by approximately 20,000 positions. In September,x1993, the'company announced that'approximately 3,400 additional positions wi'li be'eliminated over the next two years.. Approximately 6,500 Bank of America employees work at the company's various_facilities in the•County. . Food Processing. A number of food processing and food retailing companies operate in the County; including Safeway, Raley;Markets, Save Mart, Lucky -Stores, and.0&H Sugar Company. Safeway, the:Bay.Area's largest employer, reported 104,900 employees worldwide as of December 1992, a reduction of 5,200 jobs compared to 1991. Most of the employment decline came as a result of replacement 'of part-time with full-time workers. Safeway employs approximately'3,000 people in the County. C&H Sugar Company operates a refinery in Crockett,an unincorporated area of the County.. Approximately 1,000 employees are located at the "refinery where white and brown sugar products are manufactured,packaged, and shipped to retail distribution centers throughout the western states. In 1993, C&H announced a major$350 million modernization project-for the Crockett facility, an indication. 'of the company's long-term commitment to�conducting business in' the County. Health Care. The County's health services sector has grown significantly over the past fifteen years in response to the large increase in the County's resident population. In addition to County-operated hospital and clinic facilities, 15 consumers,obtain their.health'care. services from a wide array of providers; including three district. hospitals, nine private hospitals, several health maintenance organizations ("HMOs"), and home-health-care companies: One of the Bay Area's largest private employers is Kaiser Permanente Medical Group- ("Kaiser"), an HMO that employs-approximately 3,300 employees in the County. Kaiser provides medical coverage to.about=one in three Bay Area residents and operates hospital and clinic'facilities in Richmond, Martinez;,Antioch and Walnut Creek and is exploring other sites in the County for future construction. Telephone Services. The principal provider of telephone services in the Bay Area is Pacific Telesis Group,.the Bay Area's fourth largest employer. Reporting 61;346 worldwide employees as of December 1992, the company.announced in' December, 1993 that it will reduce its payroll by approximately 14,000 employees over-the next few-years as a result of ongoing cost'reductions, restructuring; technological changes; and buyouts that began in 1991.�'The company has.not announced details of the composition of and location of the employee reductions. The San Ramon Chamber of Commerce reported in. early 1.993 that Pacific Telesis Group,employs approximately 7,500 people at its Bishop Ranch offices in the County. The following table provides a listing of large companies headquartered,in the County and employers who account for at least 1,000 jobs in the County. COUNTY OF,CONTRA COSTA MAJOR COMPANIESMEADQUARTERED IN THE COUNTY AND EMPLOYERS,WITH MORE THAN 1,000 EMPLOYEES, Firm Primary Locations Product Employment([) Longs Drugs Store(3) Walnut Creek Drug Stores 12,000 Chevron Corporation Richmond,Concord,San Ramon Petroleum Products_. 10,504 Pacific Telesis . - San Ramon , Telecommunications :7;500(2) County of Contra:CostaM. Martinez County Government 6,764 Bank of America(4) Concord Financial Services 6,500 Kaiser Permanente Medical Group 'Martinei;Walnut Creek Health Care Service 3,300 Safeway Countywide Retail Food Outlets 3,000 Biorad(3) Hercules Clinical Testing Equipment 2,500 Fibreboard(3)" Concord Wood Products. 2,000' Village Resorts(3) Lafayette " j ResomCondominiums 1,800 Lesher Communications Inc. Walnut Creek.- Newspapers 1,267 Naval Weapons Station(3j Concord 'Munitions Depot• ,.1-175 North American Title Co. Walnut Creek Title Insurance 1,140 City of Concord(3) Concord City Government 1,025. Central Garden 8upply(3) Lafayette Wholesale Garden Supplies 1,000 C&H Sugar Co. . , Concord. Sugar Refinery 1,000 (1) Estimates;may include entire Bay Area workforce (2) As of April';1992i (3) Headquartered in the County.' (4) Company made acquisitionduring 1992. Source: The San.Francisco Chronicle,"The Chronicle 1007,April i90;;San Ramon C hamber of Commerce;.Contra Costa Times,"Top SO",July, 1992. 16 Median Income As a consequence of its strong employment sector, the County achieves high rankings among all California counties on a variety of income measurements. As reported in the 1990 U.S. Census, the County ranked fifth in terms of median family income ($51,651), sixth in terms of median household income ($45,087), and third in terms_of per capita income ($20,748). The medians for the State of California were$40,559 (family income), $35,798 (hou'sehold), and $16,409 (per capita). Commercial'Activity Commercial activity forms an important part of Contra. Costa County's'economy, with total dollars generated by taxable transactions rising by 11.6 percent between 1989 and 1992. Sales rose annually during that period except during 1991 when the economic recession iri. California triggered a 1.4 percent decline in commercial activity. Taxable sales recovered in 1992 and surpassed all prior annual levels by reaching $7.6 billion, a gain of 2.8 percent from 1991. For the first quarter of 1993, taxable transactions totaled.$1.7 billion.. COUNTY OF CONTRA COSTA TAXABLE TRANSACTIONS 1989 TO 1993 (IN THOUSANDS) 1989 1990 1991 1992 1993* Apparel Stores $ 250,721 $ 268,874 $ 270,580 $ 273,882 . $ 57,616 General Merchandise Stores 1,081,849 1,300,383 1,154,519 1,201,982 258,822 Specialty Stores. 599,770 700,909 684,931 . 702,994, 154,271 Food Stores 415,268 432,071 479,104 512,196 103,087 Packaged Liquor Stores 49,993 48,669 47,049 50195 10,122 Eating and Drinking Places 474,132 513,257 533,763 546,431 131;494. Home Furnishings and Appliances 277,961, 268,755 -257,102 265,447 62,191 Building Materials and Farm Implements 480,531 .-•497,273- ._443869 432,665 91,393. Service Stations 414,623 528,802.- 481,101 519,478118,987 Automotive and Vehicle Dealers,Parts and Supplies 836,470 853,970 796,285 795,286 194,611 -- 'Total Retail Outlet`s $4,881,318 $5,242,963 $5,148,303 $5,300,556' . .$1,182,593 Business and Personal Services $ 298,832 $ 333,588 $ 323,284 $ 308,261 74,925 All Other Outlets 1,596,291 1,888,513 1,888,979 1,956,354 438,476 Total All Outlets $6,776,441 $7,465,064 $7,360,566 $7,565,171 $1,695,994 *Through first 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. In 1992, the top five cities accounted for 51.4 percent of taxable transactions while comprising only 46 percent of'the County's population. Taxable sales in the five largest cities grew by approximately 4.0% in 1992 compared to 1-991 and stood at$864.3 million for the first quarter of 1993. „I 17 COUNTY OF CONTRA COSTA TAXABLE TRANSACTIONS OF TOP FIVE-CITIES a (IN,THOUSANDS)K 1991 Taxable_ _. 1992 Taxable', 1993*Taxable 'City M. Transactions Transactions Transactions Concord $1;467;383 $1;495,209 '" :`' :$342,103 Walnut Creek 919,273 966,526 216,459 Richmond 737,520 740,439 155,022 Antioch 374,119 399,956 87,906. Pittsburg 241,654 288,944 62,833 TOTAL $3,739,949 $3,891;074. `' - . $864,323 *Tlirough'first-quarter only. Source: State:Board of,Equalization Much of the County'''s commercial"activity is concentiated in central business•districts of the cities and unincorporated towns. In addition, four regional shopping centers and numerous, smaller centers serve County residents. The regional renters`located in the cities of Richmond, Concord, Walnut Creek and Antioch each'are anchored'by at least three major department stores. The largest regional shopping center in,the County is Sun Valley Shopping Center which features 130 stores including Macy's, Sears, Penney's, Mervyn's and Emporium-Capwell. In addition,.two large discount warehouse stores (Costco and Price Club) are located in Richmond. The County is served by all major banks including Bank of America, Wells Fargo Bank, and First Interstate Bank. In addition there are numerous 1'ocal'•banks and branches,of smaller California''and foreign banks. There are over.3o savings and loan associations in the County, including,'Home Savings, Great Western, San Francisco Federal and California Federal. Construction Activity,;; While construction sectors,in.other counties continued to decline in California:in,1992, building activity increased in Contra Costa to its highest level since 1-989.' 11,-Building ,permit valuations increased-24 percent in 1992, led by a resurgence,in single-family home construction. Multi=family housing permits declined in 1992;`however, while nonresidential construction was' little changed from the,prior year. .,The following tableprovides„a summary. of.building permit valuations and number of new dwelling units`authorized in the County since 1981. + •.tj:'1 '.0.. .(s. t:'.r , s 4 ...., 18 COUNTY OF CONTRA COSTA BUILDING PERMIT VALUATIONS 1981- 1992 Valuation($millions) Number.of New Dwelling Units Residential Multiple Year (New) Nonresidential Total Single Family Family Total 1981 $ 227,924 $ 205,905 $_433,829 -2,523 585 .3,108 1982 201,256 218,496 419,752 1,930 858 2,788 1983 432,291 362,939 795,230 4,588 1,968 6,556 1984 408,161 ' 445,003 853,565 4,162' 2,255 6,417 1985 579,867 511,120 1,090,987 4,650 . 4,672 9,322 1986 808,639 325,046 1,133,6856;186 . 6,766. 12,952 1987 670,747 305,953 976,700 5,481 2,950 8,431 1988 785,925 214,201 1,000,126 5,853 2,171 8,024 1989 863,313 264,020 1,127,333 5,504 2,219 . 7,723 •1990 560,193 252,443 812,636 3,132 1,149 4,281 1991 488,939 196,165 685,104=. ;2,705 1,275 .3,980 1992 638,714 207,099 845,812 3,279 .614 3,893 Note: Totals may not be precise due to independent rounding Sources:' Data Resources Ina: 1981 A988; Economic Sciences Corporation: 1989- 1992. 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 8.5 million square feet of office space will be constructed in Bishop Ranch by 1996 and that the 585-acre business park will be the workplace for 26,000 employees. Six million square feet have already been completed and are occupied by companies such as Pacific Telesis Group,Chevron Corporation, Toyota Motor Company, United Parcel Service, American Express, and Marriott Hotels: 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 companies migrating into the County. Shappell Industries and Windemere are two companies that have initiated the development of a major residential area that will include 11.,000'new homes near Bishop Ranch. The estimated total cost of the project is $4.0 billion, with construction expected to occur between 1995 and the year 2000. 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 Francisco, Sacramento and points north to Interstate 5, the major,north-south highway from Mexico to Canada. Interstate 680 connects the central County communities to the rest of the Bay Area via State Routes 4 and 24, the County's major east-west arteries. On April 23, 1992; Northern California's, largest freeway interchange reconstruction project began at the intersection-of Interstate 680 and Highway 24 in Walnut Creek. The $310 million project will add traffic lanes, an elevated bypass, and redesigned access patterns. With the majority of the work being conducted at night, the project is scheduled to finish in 1996. In addition to private automobiles, ground transportation is available to county residents from the following service providers: 19 • Central Contra Costa Transit Authority (.'CCCTA") provides local bus service to the central area of the'County including Walnut Creek,'Pleasant Hill and Concord. • Bay;Area Rapid-Transit.("BART") connects,the ,County to Alameda County, San Francisco and.Daly City in San Mateo County with two main lines, one from the.San Francisco area to Richmond and the other to the.Concord/Walnut' Creek area. In May, 1992,BART announced plans to extend service to Pittsburg and'Antioch in the eastern portion of the County.' Construction of above-'ground access down-the middle of Highway 4 and the widening of Highway 4 in the affected region will provide approximately 5,000 jobs 'during the-construction period. In addition, BART has ordered an additional eighty,transit cars,-fifty of which are expected to'be-used'in both- the Pittsburg extension and .the Dublin extension in-a nearby county: The eighty transit cars.will be built in a former steel facility in Pittsburg, adding an estimated 200 to 500 jobs in.the County: • AC Transit,'a daily commuter bus service based in Oakland, provides local service and connects Contra Costa communities to San,Francisco`and Oakland. • Other bus and rail passenger service is provided by Greyhound, Trailways Bus;Viand Amtrak. In 1991, Amtrak introduced a;special commuter line between Oakland.and; Sacramento that makes several daily stops at the Martinez station. The Santa Fe and Southern Pacific Railroads' main lines.service the County,both in the industrial coastal areas and the inland farm section. Commercial water transportation and docking facilities are.available through.a-number of port and marina locations in the-County. ThePort of Richmond on San Pablo Bay and-several privately owned industrial docks on both San Pablo and Suisun Bays,serve the,heavy,industr* located in the area. The Port.of Richmond, owned and operated.by,the.City of;Richmond,.covers 202 acres and handled 25,964,983 metric tons in 1992. The majority,of.the shipments,are bulk liquids with the remainder consisting of scrap metal, autos, and gypsum rock. Major scheduled airline.passenger-and freight transportation for County residents is available at either Oakland or San Francisco International Airports, located about 20 and 30 miles, respectively, from the County. In addition there are two general aviation fields,,one at. Antioch and the other at Concord. Environmental Control Services Water. The-East Bay Municipal Utilities District '("EBMUD") and the Contra Costa County Water District ("CCCWD") 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 from-the Mokelumne River stored at the 68 billion gallon capacity Pardee Dam. EBMU6 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.dayunder a contract with the U.S. Water and Power Resources Service (formerly;the U.S' Bureau. of,,-Reclamation). EBMUD does. not plan to draw- on its,,federal . entitlement for the foreseeable future. CCCWD 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 20 110,000 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. Between 1987 and 1992, Northern California experienced below average rainfall. Beginning as early as .1989, EBMUD's and CCCWD's Boards of Directors implemented voluntary and mandatory water conservation programs to compensate for,short-term deficiencies in supply. The programs succeeded due.to vigorous public,information campaigns;the implementation of rate incentives and excess use charges, the adoption of conservation ordinances, and the promotion of water reuse and reclamation for appropriate purposes. . All of California has experienced above-average rainfall in the latest rain season, resulting in EBMUD's declaration in early 1993 that the drought has officially ended.. Sewer. Sewer services for the County are provided by approximately 20 sanitation districts and municipalities. Federal and State environmental requirements, plus grantmoney available from these two sources, have resulted in about 14 agencies upgrading;expanding and/or building new facilities. Flood Control. 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. Having completed'a number of projects since its inception,the District is currently working on the West Antioch Capacity Improvement Project and recently awarded a construction contract for the'-Miranda Creek Project. Education and Community Services a Graded public school education in the County is:available through 9 elementary school districts, 2 high school districts, and 7 unified school districts. These districts provide 125 elementary schools, 29 middle, junior high, and intermediate schools, 24 high schools, and a number of preschool, adult school, and special education facilities. Inaddition, there are .104 private schools with six or more students in the County. School enrollment in the fall'of 1993 numbered approximately 135,000 students in public schools and 15;000 students in regular graded private schools. - Higher education 'is available in the County through a combination of two-year community colleges and four-year colleges. 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 where late afternoon and evening classes in business, education and liberal arts are offered. 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, three:district hospitals, and one public hospital in Contra Costa County, with a combined total.of 1,900 beds. Three of the private 21 hospitals are run by Kaiser Permanente, the largest health maintenance organization in the United States. The public.hospital is Merrithew Memorial Hospital, a 192-bed facility that the County is currently preparing to replace on the existing campus in Martinez. : TAX MATTERS. In.the opinion of Orrick, Herrington & Sutcliffe, Bond Counsel, based.upon ananalysis . of existing laws; regulations, rulings, and court decisions, interest on the Bonds,is exempt from State of California personal income taxes. Bond Counsel expresses no opinion as to the exclusion from gross income for federal income:taxies purposes of.interest on the Bonds or regarding any other federal or State tax consequences relating to the accrual or receipt of interest on the Bonds. NO ATTEMPT HAS BEEN OR WILL BE MADE TO_COMPLY WITH CERTAIN REQUIREMENTS RELATING TO THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE BONDS. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Bond Counsel is of the opinion, based upon an analysis of existing laws, regulations, rulings, and court decisions, that the difference between the initial offering prices to the public (excluding bond houses and brokers),at which a substantial amount of any maturity of the Bonds is sold and the amount payable at maturity thereof constitutes "original issue discount" for purposes of State of California personal income taxes. Such discount is treated as interest 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 maturity of each Bond on.the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between I compounding dates). The .amount of original.issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Special rules apply with respect to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of.Bonds with' original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a.deduction-for any loss on a sale or other disposition. Although Bond Counsel has rendered an opinion that interest on the Bonds is exempt from California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Bondholder's federal or state tax liability. The nature and extent of these other'tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction. Bond Counsel expresses.no opinion regarding any such other tax consequences. APPROVAL OF LEGALITY Validation On November 19, 1993, the County, acting pursuant to the provisions of Sections 860 et se___Ic.. of the California Code of Civil Procedure, filed a complaint in the Superior Court of the State of California for the County of Contra Costa seeking judicial validation of the transactions relating to the issuance.of the Debenture and the Bonds and certain other matters (The County of Contra Costa vs. All Persons Interested etc., Case,No. C93-05180). On December 22, 1993, the 22 court entered a default judgment to the effect; among other things, that the Debenture, the Bonds, and the Trust Agreement are valid, legal, and binding obligations of the County in accordance with their terms and were and are in conformity with applicable provisions of all laws. As with any judgment, there can be no assurance that this judgment will not be challenged. No such challenge has been filed, and the County is not aware of any threatened challenge to this judgment. In issuing its approving opinion, Orrick, Herrington & Sutcliffe has relied, among other things, upon the above-described validation of proceedings. Opinions of Counsel The validity of the Bonds and certain other legal matters are subject to:.the approving opinion of Orrick, Herrington & Sutcliffe, Bond Counsel. Bond Counsel undertakes no responsibility for the accuracy, fairness or completeness of this Official Statement. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto, which opinion is in the customary form of opinion of Orrick, Herrington & Sutcliffe. Such opinion provides, among other things, that it may be affected by actions taken or omitted or events occurring after the date of such opinion. Certain other matters will be passed upon for the Underwriters by O'Melveny 8r Myers; Counsel to the .Underwriters, and for the-County' by County Counsel. LITIGATION There is no action, suit or proceeding know to be pending or threatened, restraining or enjoining the issuance of the Debenture or of the Bonds, or the execution and delivery of the Trust Agreement,or in any way contesting or affecting the validity of any of the foregoing or any proceedings of the County taken with respect to'any of the foregoing. See "APPROVAL OF LEGALITY- VALIDATION" herein. RATINGS Moody's Investors Service ("Moody's") and Standard &Poor's Corporation ("S&P") have given the Bonds a rating of A 1 and AA-, respectively. Any explanation-of the significance of such a rating may only be obtained from the rating agency furnishing the same. The County furnished to Moody's and S&P certain information and materials concerning the Bonds and the County. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies themselves. There is no assurance that any rating assigned to the Bonds by a rating agency will be maintained for any given period of time or that itwill not be lowered or withdrawn entirely by such rating agency if in its judgment circumstances so warrant. 'Neither the County nor the Underwriters have undertaken any responsibility either to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of such rating or to oppose any such proposed revision or . withdrawal. Any such downward change in or withdrawal of the rating may have an adverse effect on the market price of the Bonds. UNDERWRITING The Bonds are being purchased by CS First Boston, Morgan Stanley & Co. Incorporated, and Smith Barney Shearson Inc. (the "Underwriters"). The Underwriters have agreed to 23 purchase the Bonds at a purchase price of$337,365,000.00 plus accrued interest to the date of delivery less an.underwriting discount of$1.,342,712.70 and less net original issue discount of $1,897,450.55. The Bond Purchase Agreement provides that the Underwriters will purchase all of the Bonds„if any are purchased. The obligation of the Underwriters to accept delivery of the Bonds is subject to various conditions contained in.the Bond Purchase Agreement. The Underwriters intend to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which may subsequently change without any requirement of prior notice. The Underwriters reserve the right to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) at prices lower than the public offering prices. MISCELLANEOUS The foregoing and subsequent summaries or descriptions of provisions of the Bonds and the Trust Agreement and all references to other materials not purporting to be quoted.in full,:are only brief outlines of some of the provisions thereof. Reference is made to said documents for full and complete statements of the provisions of such documents. The appendices attached hereto are a part of the Official Statement. Copies, in reasonable quantity, of the Trust Agreement may be obtained during the offering period from the Underwriters and thereafter upon request to the corporate trust offices of the Trustee in San Francisco, California. and Los Angeles, California. The County regularly prepares a variety,of reports, including audits, budgets, and related . documents. Any owner of a Bond may obtain a copy of-any such report from the.County by submitting a written request to the.Office of the County Auditor-Controller, 625 Court.Street, Martinez, California 94553-0063. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement have been approved by the County. This Official Statement is not to be construed as a contract or agreementbetween the County and the.purchasers or owners of any Bonds. COUNTY OF CONTRA COSTA, CALIFORNIA By: /s/ Philip J. Batchelor County Administrator and Clerk,of the Board 24 APPENDIX A COUNTY FINANCIAL INFORMATION (THIS PAGE INTENTIONALLY LEFT BLANK) 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 fiscal year 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 countries enhanced program flexibility in the administration of certain health and welfare programs. Under this plan, the sales tax was increased.by 1/2-cent 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 under 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 revenue 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 State Budget Fiscal Years 1990-91 through 1992-93. During the three fiscal years from 1990-91-through 1992-93,the State of California experienced budget deficits largely attributable to the most severe economic recession in California since the 1930's. Diminished revenues and increased expenditures among nearly all categories of the State's General Fund budget resulted in a cumulative budget deficit of$25.8 billion over the three-fiscal-year period. To close the budget gaps, the State at various times enacted tax and fee increases, temporary and permanent changes in laws, shifts of funding responsibility, program reductions, one-time adjustments, and accounting changes. The two most significant changes that impacted California counties were i) the fiscal year 1991-92 realignment program that shifted $2.2 billion in health and welfare programs to counties (see "Funding of Certain Programs by the State of California" herein), and ii) the fiscal year 1992-93 reduction of$1.3 billion in aid to local governments. Fiscal Year 1993-94. The 1993-94 fiscal year represents the fourth consecutive year that the Governor and the Legislature were faced with a very difficult budget environment,. requiring revenue actions and expenditure cuts totaling multiple billions of dollars to produce a balanced budget. As menti oned.above, many program cuts and budgetary adjustments had already been made in the prior three fiscal years. The 1993-94 Budget Act (the "Budget Act") was signed by the Governor on June 30, 1993 along with implementing legislation. The Budget Act was predicated,on General Fund A-1 revenues and transfers estimated at$40.6 billion, about $400 million below fiscal year 1992-93 levels. The overall level of revenues and transfers represented the second consecutive year of actual decline. The principal reasons for declining revenue were the continued weak economy and the expiration (or repeal)of three fiscal steps taken in 1991—a 1/2-cent temporary sales tax . (although this.tax was later extended temporarily for six months and then extended permanently by voters in the November 1993 election), a deferral of operation loss carry forwards, and repeal.by initiative of a sales tax on candy and snack foods. The Budget Act included General Fund expenditures of$38.5 billion,representing.a„6.3., percent.reduction from 1992-93 expenditures of,$41.1 billion. The reduced level of,,,,, expenditures was enacted in order to-keep a balanced budget-within the available revenues and, was comprised of the following major adjustments: 1. Changes in local government financing to shift about $2.1 billion in property taxes from counties and$500.million from cities, special districts; and redevelopment agencies to school and community college.districts, thereby_reducing General Fund support by an equal amount. About.$2.5. billion of the $2.6 billion shift is permanent, reflecting termination of the State's "bailout" of local governments following the property tax, cuts mandated under the.terms of Proposition 13 in 1978...: The property tax revenue losses for cities and counties were offset in.part by additional sales tax revenues and mandate relief. The temporary 1/2-cent sales tax was extended through December 31, 1993 for allocation to counties for public. safety programs. On November.3, 1993, voters approved Proposition 172 to permanently extend the 1/2-cent,sales tax for . public safety purposes. In addition, legislation was enacted to eliminate, .. state mandates in order to provide local. governments flexibility in making their programs responsive to local needs. Legislation provides mandate relief for local justice systems which affect county audit requirements, court reporter fees, and court consolidation; health and welfare relief involving advisory boards, family planning, state audits and realignment maintenance efforts; and relief in areas such as county welfare department self- . evaluations, noise guidelines and recycling requirements. , For fiscal year 1993-94, the County's share,of property tax revenues declined by approximately $58.5 million, largely.as a result:of the shift in: property tax revenue to school districts (see "County Budget Process Fiscal Year 1993-94" herein). As a result of passage of Proposition 172, however,,the County restored approximately $19.1,million in revenue for the last six months of fiscal year 1993-94 and will restore an estimated $38.2 million in fiscal year 1994-95. Thus, on.balance, the nef.impact on an annual fiscal year basis of the property tax shift has been a loss of approximately $20.3 million of County General Fund revenue. Lawsuits have been filed by several local governmental entities challenging the 'shift of property taxes. The court.in one case, County of Los Angeles v. Sasaki,has already ruled in.favor of the State although the ruling has been appealed. In addition, a lower court hearing for eight separate challenge`s to the State's property tax shift is scheduled in Los Angeles County Superior Court for March 18, .a.result. of the,granting of the State's• petition to. coordinate the lawsuits into a single proceeding. The eight cases will not be consolidated into a single case, however, and each case is expected to receive its own separate ruling from the judge. The eight cases involve the A-2 County, San Diego County, Monterey, County, Kern County, Butte County, Novato Fire Protection District in Marin County,. the City of Alhambra and its redevelopment agency, and various special districts in Ventura County. Another tax shift challenge is pending in the California Third District Court of Appeal involving San Miguel Fire Protection District, but no date has yet been set for oral arguments. 2. The Budget Act maintained-K=12 Proposition 98 funding on a'cash basis at the same,per-pupil level as 1992-93 by providing schools a $609 million loan payable from future years' Proposition 98 funds. The County of Sacramento Superior Court ruled on November 12, however, that schools do riot have to repay the loan. The State is expected to appeal the court ruling. 3. The Budget Act also included i) approximately.$692 million of aid to the State from the federal government to offset health.and welfare costs associated with foreign immigrants living in the State;ii)reductions'of$600 - million in health and welfare programs; iii) reductions of$400 million in support for higher education,to be partlyoffset by fee increases, iv) a two- year suspension of the renters' tax credit, representing a $390 million expenditure reduction in 1993-94, v) various miscellaneous cuts in State government services, totaling approximately $150-mi11'ion, and vi) several one-time items, including deferral of a$339 million payment to the Public', Employees Retirement Fund and a change in accounting for debt service from an,accrual'to a cash basis, saving$107 million. Subsequent. Developments for. Fiscal Year 1993-94.� The Department of Finance reported in December 1993 that General Fund revenues through November 1993 were $402 million above the Budget Act forecast of$2.9 billion and$605 million above the forecast for the year to date. Adjusted for cash flow and timing issues, year-to-date revenues would be approximately$116 million above forecast. Fiscal Year 1994-95. The Governor-announced the Proposed Budget for fiscal year 1994-95 on January 7, 1994. Totaling $55.3 billion, the budget calls for a reduction of$733 million in health and welfare programs, an increase of$700 million in prison programs,and no change from the current spending levels for K-12 education. A key assumption used in balancing the budget is that federal reimbursement funds .will total $3.0 billion, compared to $324 million in the 1993-94-fiscal year. The $3.0 billion in'federal reimbursement funds is comprised of $2.3 billion to .cover State and local costs of providing services to illegal immigrants and$800 million to cover increased funds for refugee and welfare programs. In terms of the Generaf Fund portion of the Proposed Budget,revenues are expected to total$41.1 billion, a 3.5 percent increase from fiscal year 1993-94. Projected expenditures total $38.8 billion,.a 1.3% decrease from fiscal year 1993-94. The $2.3 billion difference between revenues-and expenditures is intended to be used to pay off an estimated$1.8 billion deficit that the State will carry over,from fiscal year 1993-94 and to provide a$447 million reserve. A key component in the proposed budget is the transfer of certain programs to counties along with both the authority 1to tailor those programs to local needs and new revenues to pay, for them,an extension of the realignment program undertaken in fiscal year 1991-92 that shifted $2.2 billion of mental health and.other programs to counties (see "Funding of Certain Programs by the State of California" herein). Among items to be shifted in fiscal year 1994-95 are a. portion of the administrative costs of Medi-Cal (the medical program for indigents), a larger share of Medicare administrative costs, a greater portion of the costs of the Aid to Families with A-3 Dependent Children program, the cost of the In-Home Supportive Services program aimed at keeping elderly people in their homes rather than in nursing homes,foster care, and alcohol and drug programs. The. shift-of programs to counties is intended to be "revenue neutral'; with certain additional sources of revenue expected to offset the costs of the transferred programs. The proposed additional sources of revenue include a 1/2-cent sales tax that is currently collected by the State but will be diverted to counties (estimated to total$1.4 billion annually), $1.2 billion in property tax revenue shifted from school districts to local governments, and an estimated $740 million in vehicle license fees that are currently collected.by the State. In.addition,the State will increase its share of trial funding costs from 41 percent to 65 percent of operating expenses (an estimated.$370 million in additional cost to the State annually)while allowing.counties to keep the fines and penalty fees that they currently must send to the State., Following announcement of the Proposed Budget, the State Legislature is required to hold hearings, propose.budget alternatives, and submit a budget bill to the Governor. In addition,the Governor will revise the Proposed Budget in May,;1994 after the level of April tax collections is known. The constitutional deadline for passage of the budget is June 15, 1994, although prior fiscal year budgets have been passed after their respective constitutional deadlines. Prior to the announcement of the Proposed Budget, the Commission on State Finance reported in December, 1993 that the State faces an estimated minimum budget deficit of$3.8 billion by the end of fiscal year 1994-95. The budget deficit could swell to an estimated $6 billion to$8 billion if the State loses a.court action concerning the payment of-certain corporate income taxes and if the County of Sacramento Superior Court's ruling on November 12, 1993 that public schools do not have to repay certain prior State loans to schools is upheld. The County is not able to predict the budget package that will ultimately be negotiated,by• the Governor and the Legislature and, therefore cannot determine what impact, if any, the budget package and the projected State deficit in.fiscal year 1994-95 will have on the County's finances. The County remains committed,however, to maintaining its historical track record of balanced budgets, financial prudence, and timely debt repayment, including repayment of the Bonds. County Budget Process The County is required by State law to adopt a balanced budget by August 30 of each year, a process that involves number of steps. First,' upon release of the Governor's Proposed Budget in. January, the County Administrator prepares a preliminary forecast of the County's budget based,on current year expenditures,`the Governor's budget and other projected revenue trends. Second, the County Administrator presents the Proposed Budget to the Board of Supervisors. Absent the adoption of a final County budget by June 30, the current existing budget is.continued into the new fiscal,year until a final.budget is adopted. Third, .between January and the time the State adopts its own budget, legally due no later than June 15, representatives of the County Administrator monitor, review and analyze the State budget and all adjustments-made by the State legislature. Upon adoption of the final State budget, the County Administrator recommends_revisions to the Proposed Budget to align County expenditures with approved State revenue. After conducting public hearings and deliberating the details of the budget,.the Board adopts the County's Final Budget by August 30. A-4 The timely,signing of the 1993-94 State Budget by the Governor on June 30, 1993 enabled the Couniy to adopt its Final Budget for 1993-94 on September 28, •1993.. See ".Revenues and Expenditure Trends-.Fiscal Year.'1993-94 herein. In order to ensure that the budget remains in balance.throughout the fiscal year, each month the County Administrator monitors actual expenditures,and revenue receipts. In the event.of;a' projected year-end deficit, immediate steps are taken,in accordance with the State Constitution, to reduce expenditures. The County's ability to increase its revenues is limited by State laws which prohibit the imposition of fees to.raise general,revenue, except to recover the cost of regulation or provisions of services: Revenues•and Expenditure Trends State.and federally mandated expenditures injustice, health and welfare have grown at a greaterrate than the County's discretionary general purpose revenues over the last several:years.At the same.time„decreased State revenues have resulted in fewer State funds being available,to the County. The result has been that:the County has increased its contribution to maintain mandated services while optional local services have been reduced. The Board has responded to this trend in part by instituting measures to improve management, thereby reducing costs and increasing productivity and maintaining service s.with diminished funding. 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 land 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. Set forth below is a description of the County's comparative budgetary and expenditure experience since fiscal year 1992-93. For a summary of the actual audited financial results of the County for fiscal year 1992-93, see "AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 1993” in Appendix B attached hereto. Fiscal Year 1992-93. The County's fiscal year 1992-93 Final Budget was based in part on an assumed increase of 5 percent in the gross assessed value of land, improvements, and personal property on the local secured roll. Using this assumption,property taxes accounted for approximately 23.1 percent ($145.2 million) of the expected $628.2 million of revenues (which excludes budgeted fund balance.available of $18.8 million) during the fiscal year. State and federal.aid continued to provide the greatest portion of revenues (54.6 percent, or $342.8 million). In the aggregate, budgeted fiscal year 1992-93 revenues of$628.2 million represented a decrease of 2.7 percent over fiscal year 1991-92 revenues. Including projected $18.8 million fund balance, the decrease in fiscal year 1992-93 available funds was 4.5 percent over fiscal year 1991-92. Budgeted expenditures for fiscal year 1992-93 indicated that close to 37.6 percent of the budget was spent on public assistance, approximately equal to its 36.0 percent.share in 1991-92. Approximately 25.5 percent of the budget was spent on law enforcement and the justice system compared to 25.2 percent in 1991-92, and 18.9 percent of the budget was allocated for health care services, nearly identical to the percentage in fiscal year 1991-92. Fiscal Year 1993-94. As a result of the 1993-94 State Budget Act, a total of $2.1 billion of property tax revenue was shifted from counties to public schools (see "The State Budget A-5 - Fiscal Year 1993-94" herein). Due primarily to the property tax shift, the County's expects a decline of approximately$58.5 million in property tax revenue in fiscal year 1993-94. The shift is partially offset by approximately $38.2 million expected to be collected-as a result of the extension of the temporary 1/2-cent sales tax through December 31, 1993 and the permanent extension thereof beyond December 31, 1993 that was approved by voters on November 2, 1993. Thus, the net impact on the County's General.Fund revenues is an annual fiscal year decline of approximately$20.3 million. In order for the County to maintain maximum:budget flexibility in light of the property tax shift, the County designed a three-phase budget cycle for the 1993-94 fiscal year. Phase I occurred during May, 1993 and included, among other things, $20.5 million of budget cuts adopted by the Board on May 25, 1993 in anticipation of reduced State funding sources. The County implemented an additional $26 million of budget cuts during Phase II as a result of the known reductions in county fundingcontained in the 1993-94 State Budget Act, including the property tax shift. Public budget hearings were held in July, after which the County adopted the, . Final Budget on"September 28, 1993.' -The County -was prepared to undertake further budget cuts, if necessary, during-Phase III budget hearings in'late 1993 if Proposition 172-had not been passed. A comparison of the County's Final General Fund Budgets for fiscal years 1992-93 and 1993-94 is shown on the next page. While the County adopted its 1992-93 Final Budget on October 27, 1992, the figures presented in the table below include adjustments made to the budget through August 20, 1993. The figures for 1993-94 represent the Final-Budget.adopted by the Board on September 28, 1993, as amended through November 12, 1993. A-6 COUNTY OF CONTRA COSTA FINAL GENERAL FUNDM BUDGET FOR FISCAL YEARS 1992-93 AND 1993-94 (IN THOUSANDS) Change from Final 1992-93 Budget Final ' Final Amount of Percent 1992-93 1993-94 Increase Increase Budget(2). Budget(3) (Decrease) (Decrease) REQUIREMENTS General government $ 69,396 $ 63,716 $. (5,680) (8.2) Public protection 155,174 154,189 (985) (0.6) Health and sanitation 127,610 124,184 (3,426) J2.7) Public assistance 244,755 241,259 (3,496) (1.4) Education 102 199 97 95.0 Public way's and facilities 25,852 14,674 (11,178) '(43.2) Recreation-and culture - 1 1 0 0.0 Reserves and debt service, 15,100 14300. (400) (2.6) Total Requirements $637,990 $612,822 $ (25,168) (3.9) AVAILABLE FUNDS Property taxes $138,169 $79,690 $ (58,479) (42.3) Funds balance available •17,848 24,160 6,312 35.4 Taxes other than current property 16,271 19,015 2,744 16.9 Licenses,permits and franchises 5,052. 5,778 726 14.4 Fines,forfeitures and penalties 2,945 3,042 97 3.3 Use of money and property 11,145 10,106 (1,039) (9.3).' Aid from other governmental agencies 351,880 382,259 30,379 •8.6 Charges for current services 80,993 75,655 (5,338) (6.6) Other revenue 13,687 13,017 (670) (4.9) Total Available Funds $637,990 $612,822 $ (25,168) (3.9) (t) The table presents budget information for the'General'Fund only. This is different from the budget information typically presented in the County's Tax and Revenue Anticipation Notes Official Statements that incorporates the Library Fund and certain other funds. (Z) Final Budget adopted on October 27, 1992 as amended through August 20, 1993. (3) Final Budget, adopted by the Board on September 28, 1993, as amended through November 12, 1993. Source: County Auditor-Controller Reflecting the property tax shift to school districts, property tax revenues are expected to account for approximately 13.5 percent ($79.69 million) of the expected $588.7 million of revenues (which excludes a budgeted fund balance available of$24.16 million) during the 1993- 94 fiscal year, compared to 23.1 percent in the prior fiscal year. State and federal aid is expected to contribute the greatest portion of revenues -(64.9 percent, or $382:3 million), with the contribution 10.3 percent higher than in fiscal year 1992-93. In the aggregate, budgeted fiscal year 1993-94 revenues of $588.7 million represent a decrease of 5.0 percent over fiscal year 1992-93 revenues. Including a projected$24.16 million fund balance, the decrease in fiscal year 1993-94 available funds was 3.9 percent over fiscal_year 1992-93. Budgeted expenditures for fiscal year 1993-94 indicate that close to 39.4 percent of the . budget will be spent on public assistance,'a slight increase from the 37.6 percent share in the prior fiscal year: Approximately 25.2 percent of the budget will be spent on law enforcement and the A-7 justice system compared to 25.5 percent in,1992-93, and 20.3 percent of the budget will be allocated for health care services, an increase from the 18.9 percentage share in fiscal year 1991 92. Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property that is situated in the County as.:of the preceding March 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed:accordingly on separate parts of the assessment roll...The "secured roll" is that part of the assessment roll containing State assessed property and property secured by a lien on real property which is sufficient, in the-opinion of the Assessor, to secure payment of the taxes. Other property is assessed on "unsecured roll." Property taxes on'the secured roll are due in two.installments,on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and'a ten percent penalty attaches to any delinquent.payment. In addition,property on the secured roll with respect to which taxes are delinquent is declared to be in.default,on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty,plus a redemption penalty of one and one half percent per month to the time of redemption. .If taxes are unpaid for a period of five years or more,,the tax-defaulted property is declared to be subject to the Treasurer-Tax Collector's power of 'sale and, may be subsequently sold by the County Treasurer-Tax Collector. Legislation established the "supplemental roll" in 1984 which directs the Assessor to re- assess real property, at market value, on the date the property changes 'ownership or upon completion of construction. Property on the supplemental roll is eligible for billing 30 days after the reassessment and notification to the new,assessee. The resultant charge (or refund) is a one-time levy on the increase (or decrease) in value for the period between the date.'of the change in ownership or completion of construction and the date of the next regular tax'iroll upon which the assessment is entered. Billings are made on a monthly�basis and due on the date mailed. If mailed between the months of July through October,the first installment Becomes delinquent on December 10th and the second on April 10th. If mailed within the months of November through June, the first installment becomes delinquent on the last day-of the month,following the.month of.billing.: The second installment becomes delinquent on the last day of the fourth month following the date the first installment is delinquent. Property taxes on the unsecured roll are due as of the March.1 lien; date and become delinquent, if unpaid,on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of one and one-half percent per month begins to accrue.beginning November 1. The taxing authority has four ways of collecting unsecured personal . property taxes: (1) by filing a civil action against the taxpayer; (2) by filing a certificate in the office of the County Clerk._specifying certain facts in order to.obtain a judgment lien on certainproperty of the taxpayer; (3) by filing a certificate of delinquency for recordation in the County Recorder's office,in order to obtain a lien on certain property of the.taxpayer; and (4) by the seizure and sale of personal property, improvements or possessory interest, belonging to the,taxpayer. _ The County and its political subdivisions operate under the 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 tax.rolls are credited.with 100 percent 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 A-8 countywide delinquent penalties are deposited. The County Has used this method since fiscal year 1950-51. Historically, the County has borne the full cost.of property assessment and revenue collection and distribution; Senate Bill 2557, passed in 1990, allowed counties to charge cities, schools, special districts and redevelopment agencies for their share of property tax administrative costs.' This legislation was subsequently repealed as to charges against school districts. In 1992, Senate Bill 1559 was passed which reinstated the authorization for counties to charge a property tax administrative fee to schools, but the amount of the fee is limited-and is determined by a State formula. In addition, the legality of the property tax administrative charge has been challenged by the other affected taxing entities. While the County is unable to predict the ultimate outcome of such litigation,the County has prevailed at the Court of Appeals'level on the issue of the viability of tax administrative charges to redevelopment agencies and at the Superior',Court level as to all other challenged fees. The amount in.question, approximately $4 million per year, does not represent a large proportion of the County's annual General Fund Budget,,which exceeds$650 million. A recent history of Contra Costa County tax levies, delinquencies and the Tax Losses Reserve Fund cash balances as of June 30 is shown below.. . COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND" AD VALOREM PROPERTY TAXATION. FOR FISCAL'YEARS 1984-85 THROUGH 1994-95 Secured' Current` Percentage Tax Losses Property LevyCurrent 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 2.94 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 58,422,186,087 714,963,082 24,787,991 3.47 . 26,558,333 1992-93 61,393,320,088 760,559,294 24,239,204 3.19 29,042,152 1993-94 63,427,696,578 800,000,0000Y 25,500,0000) 3.191) 31,000,0000) 1994-951. 65,500,000,000Q.) . (1) Estimated Source: County Auditor-Controller . During each fiscal year, the Tax Losses Reserve Fund is reviewed and when the amount of the fund reaches a certain percentage of the levy, the excess is 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. Largest Taxpayers The ten largest taxpayers in the County, as shown on the fiscal":year 1992-93'secured tax roll, and the approximate amounts of their property tax payments are shown below. These ten largest taxpayers paid a total of$87.5 million in taxes, or about 11.7 percent of the County's 1992-. 93 secured tax collection. A-9 COUNTY OF,CONTA;A COSTA TEN LARGEST PROPERTY TAXPAYERS • TOW Taxes Paid Company 1992-93 - , •- , , Chevron USA $25,916,291 Pacific,Gas,&,Electric Co_ mpany,, 46,488,902 Y Pacific Bell .. , 11,338,875 'Shell Oil Cotnpany s t 8,317;318 Tosco Corporation 5,454,696 4` Union Oil Company of California °' 5,295,280` USS POSCO: . 41837,445' :Presley' 4;3'13,806 Bank of America Gaylotd-Container' - 2,516,31.6 TOTAL §87,459,5041. ————————————— .,-a•. r f-. ,', l"' ., .}. , ,s. ... - Source: County,Treasurer-Tax Collector Redevelopment Agencies The California Community Redevelopment i,aw authorizes.city county redevelopment agencies to issue bonds payable from the allocation`o:f 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. COMMUNITY REDEVELOPMENT AGENCYPROJECTS FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS`:". FISCAL YEARS 1983-84 THROUGH' 1992-93 Fiscal Full Cash Value, Total,Tax , Year .,Base Year Value Inctment.,. Allocation's'..*, 1983-84 $ 834,968;224 $1;382,950,214.;. ' $15,949,939} 1984-85 '` 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 1,342,442,03.1 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=w2, 1;806,223,553 -, .4,573;718;772(3) 48,590,841 -y' _ . 1992 93 : 1,864;029,147 - 5,009,792,773(3> 53,485:;897 (t). Full,cash values for all redevelopment projects above the."frozen" base year valuations. .These data represent.. growth in full cash values generating tax revenues'foi use by the commuriity 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 a r 5r J S 76, A-10 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 financial 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 autonomous districts and various trust transactions of the County'Treasury. Under California law,independent audits are required of all operating funds under the control of the Board of Supervisors. -The County has had independent audits for more than'40'years. 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 oilier 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 bylaw 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. Speciale 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 areused to account for money and other assets received and held as trustee, custodian or agent for individuals and governmental agencies. Presented on the following pages are the ,County's.General Fund Balance Sheets for the three most recent fiscal years and.the Schedule.of Revenues, Expenditures and.Changes in Fund Balances as of June 30, 1993, with'comparative"totals for June 30, 1992. A-11 COUNTY OF CONTRA COSTA GENERAL-FUND BALANCE SHEET JUNE 30, 1993 (WITH' COMPARATIVE TOTALS FOR JUNE 30, 1991 AND 1992) (IN THOUSANDS) 1993 1992 1991 ASSETS:.. . Cash and investments $ 222,616 $ 240,737 $ 81,572 Accounts receivable.and accrued revenues "43,41:9 41;120 42,787 , Inventories 1,602 1,255 1,217 °Due from other funds 36,791 56,535 32,637: Advances to other funds; 1,441 2,539 2,137 Prepaid items and other assets 8,037 5,060 5,227 TOTAL ASSETS:. `, $ 313,906 $ 347,246 $ 165,577.; LIABILITIES Short term notes $ 117,000 $ 75,000 $ 65,000 Accounts payable and accrued ; liabilities 22,341 24,444 . 22,743 Due to other funds 25,972 42,412 14;299 Welfare program advances, 11,640 9,084 6,856 Obligations under'reverse repurchase agreements, 811502 1`51,875 0 Deferred revenue and credits 7,853 3,093 5,054 TOTAL LIABILITIES $ 266,308 $ 305,908 $ 113,952 FUND EQUITY: . Reserved for: Encumbrances $ 7,22:5 $' 7,867 $ 10,119 Inventories 1,602 1,255 1,217 -Prepaid items and other assets. 7,639 4;680 5,227- Advances to other funds 1.,441. 2,539 2,137 Unreserved: Designated for authorized expenditures 1,051 780 2,325 Designated for equipment replacement 1,_692 2,568 49814 Designated for trial court funding 495 495 '495 Undesignated 26,45:3 21,154 -25,291 TOTAL FUND EQUITY $ 47,593 $ 419338 $ 51,625 TOTAL LIABILITIES AND'FUND EQUITY - $ 313,906 $.347,246-, $ 165>577 Source: County Auditor-Controller A-12 COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - BUDGETARY BASIS YEAR ENDED JUNE 30,.1993 (WITH COMPARATIVE.TQTALS FOR JUNE 30, 1992) (IN THOUSANDS) A992-93 1991-92 Budget Actual Variance Actual REVENUES Taxes $154,440 $153,044 $(1,396) $158,664 Licenses,permits&franchises 5,052 6,964 11912 4,150 Fines,forfeitures&penalties 2,945 3,732 •787 .3,437 Use of money&property 11,145 14,876 3;731 13,899 Aid from other government agencies 351,880 344,534 (79346) 331,602 Charges for services' 80,993 78,572 (2;421) 81,528 Other revenue ¢' 2,836 2,234 (602) 17,275 TOTAL REVENUES $ 609,291 $ 603,956 $(5,335) $ 610,555 EXPENDITURES General government $70,180 $63,389 ,. $6,791 $67,563 ' Public protection 156,587 151,322 5,265 157,650 Health& sanitation 97,503 96,928 575 97,764 Public assi•'stan ce 'w245;143 237,559 7584• 242,186 Education' ` 103 `101 2 127' Public ways and facilities ' ` 25,915 20,652 5,263• 18',831. ' Recreation and park 1. 0 1 0 Interest 4,851 4,760 91 3,991 Capital outlay(') 773,x' 773. 0 - 1,083 'TOTALEXPENDITURES' :' ' ",$601;056 h $589;195 $28,680 $589,195 Excess(deficiency)of revenues over (under)expenditures >; $i 8;235, ,$ 28;472 $20,237 $ 21,360 OTHER FINANCING SOURCES (USES) Operating transfers in $ 10,851 $ 10,851 $ 0 $ 0 Operating transfers out (32,768) (32,768) 0 (31;665) Proceeds from issuance of debt 0 0 0 895 Capital lease financing(l) :3x..: 0 7.73 . 773 1,083 TOTAL OTHER FINANCING' -SOURCES•(USES): : =. ,`,' $(21.;917)': $(21;144) $: 773 $(29,687) Excess(deficiency)of revenue&and other. financing sources over.(under) expenditures and other financing use's $(13,682) $., 7,328•,. $ 21,010 $ (8,327) Fund balance at beginning of year. 41;338 41,338" 0 51,625 Residual equity transfers out, 0 (1,068) (1,068) - , (1,960).,' Adjustments to fund balance 0 . 0 0 0 FUND BALANCE AT END OF YEAR $27,656 $47,598 $19,942 $41,338 fit) :These entries are required'-by'NCGAS tatement 5 to disclose the.value'of fined'as'sets acquired during:the year under.lease purchase,agreements:--n- e.County,.does not appropriate these amounts:since..they apply to,future years. Source: `County Auditor Controller s s. .. - a i A-13 County .Employees A summary of County employment follows: COUNTY OF-CONTRA COSTA COUNTY EMPLOYEES(') Number of Number of As of Permanent, As of Permanent - June 30 Employees June 30 . Employees 1980 5,960 1987 6,111 1981 6,052, 1988 6,317 1982 6,063 1989 6,463 . 1983 5,915 1990 .6,635 . 1984 5,743 1991 7,008 1985 5,791 . 1992 7,080-- 1986 5,968 1993 6,764,(?) �t> Excludes temporary or seasonal employees: (2) As of March 31, 1993 Source: County Personnel Department County employees are represented by 30 bargainingunits of 11 labor organizations, the principal ones being Local 1 of the County.Employees Association and the Clerical Employees Union which, combined, represent approximately 34 percent 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 County completed its latest contract negotiations with labor representatives in January, 1.994, with the agreement providing for, among other things, a 1 percent salary increase effective July 1, 1994 and a 1 percent salary increase effective January, 1995. The agreement covers approximately 75 percent of the, County's employees and expires in September, 1995. Retirement Programs The County.has a retirement plan administered.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, 1993 there were 6,081 active general members and 1,510 active safety members (police and fire) including employees of certain other governmental agencies: Retired members total 3,981. Beginning August 1, 1980 the County Retirement System 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. County contributions are based on percentages of salaries as determined by an actuary and adopted by the Retirement 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 a 16.5 year period from the actuarial,date of January 1, 1994. The actuary calculates the present value of the County's unfunded actuarial accrued liability (UAAL) and the projected amortization schedule of the UAAL A-14 using a statistical model that is driven by certain actuarial interest rate, inflation rate, salary scale, demographic,and mortality rate assumptions. As of the January 1, 1994 valuation date and assuming an actuarial interest rate of 8.0%, an inflation rate of 4.75%, and a salary scale rate of 6.00%, the County's estimated UAAL is approximately $333.6 million. The purpose of the County's issuance of the Bonds is to fund the estimated UAAL. While the Bonds will extinguish the County's UAAL as of a given moment, a variety of factors couldresult in the creation of a new UAAL in the future. Such factors include higher-than-expected inflation and salay growth rates,lower-than-expected investment returns, and longer-than-expected retiree lifetimes. Pursuant to the County Employees' Retirement Law of 1937,. actuarial valuations of the retirement system are required at least evey three years. The County Retirement System's actuaries estimated the minimum contribution provision'for the year ended December 31, 1992 to be approximately $60.6 million..The Retirement Board agreed to transfer approximately $7.6 million from its undistributed earnings account against contributions from employer and employees for the cost of living program during calendar year 1992. Contributions made by the County and by County employees for the year ended December 31, 1992 were approximately $43.6 million and $11.4 million,respectively. For the year ended December 31, 1992, total earnings of the County's Retirement Fund were $94.9 million, with.payment to current retired employees.of$52.9 million: The Retirement Fund is approximately 67 percent funded on a book value of assets basis. In previous years, funding levels have been reported under "Plan Termination" assumptions which would be 100 percent at December 31, 1992. The County has.chosen to begin reporting fund levels under the Government Accounting Standards Board Statement#5- ','Plan Continuation" assumptions: . Long .Term Obligations. . The County has never defaulted on the payment of principal or. interest on -any of its indebtedness.,. Following. is 'a brief summary of the County's general obligation debt, lease obligations, and direct and overlapping debt. General Obligation, Debt. 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 and has approximately$286.5 million of outstanding lease obligations, of which $268.1 million are marketable lease obligations. The projects are then leased to the County for a period of 15 to 30 years. The longest capital lease ends in 2023. For a complete summary of the County's lease obligations as of June 30, 1993, see "APPENDIX B -AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE YEAR ENDED JUNE 30, 1993 - Notes to General-Purpose Financial Statements Note 7 -Long-.term Obligations" attached hereto. Direct and Overlapping Debt. 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 and lease indebtedness. Set forth on the page following the next page is a direct and'overlapping debt report.(the "Debt Report") prepared by California Municipal Statistics Inc. that summarizes.such indebtedness as of January 1, 1994. The Debt A-15 Report is included for general information purposes only: The County has not reviewed the Debt Report for completeness or accuracy and makes.no representations;in connection. therewith. The Debt Report generally includes long-term obligations sold in the public credit markets ' by public agencies whose boundaries overlap,the boundaries of the County. Such,long.. term.obligations generally are:not;payable from revenues-of the County "(except as indicated) nor.are they.necessarily obligations secured by land within the.County. ,In many cases, long-term obligations,issued by a private-agency,are payable only,from,the general fund or other revenues of such public agency. As of'January 1„ 1994, and excluding tax;arid revenue.ariticipation notes and the Contra Costa County Taxable Pension Obligation Bonds, .1994 Series A; the..County had ,outstanding publicly held long-term debt.obligations of$268:1 million; the County 's total long-term net,direct and overlapping debt as of that date was $1.15 billion:.. . Future Financings " 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 19.94 or 1995. Longer-range plans are,on-going for additional-and replacement court facilities for both the Superior.and Municipal Courts.in the County. Insurance-and Self-.Insurance Programs 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. A-16 . CONTRA COSTA COUNTY ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT AS OF JANUARY 1, 1994 .1993-94 Assessed Valuation: $58,191,152,882 (after deducting $5,236,543,696 redevelopment increment; includes unitary utility valuation) % Applicable Debt as of Direct and Overlapping Bonded Debt: to the County January 1, 1994 Contra Costa County Authorities 100.000% $ 268,125,0120) Contra Costa County Board of Education 100.000 4,750,000 Alameda-Contra Costa Transit District Certificates of Participation 11.804 3,213,049 San Francisco Bay Area Rapid Transit District 30.909 75,464,324 East Bay Municipal Utility District and Special District#1 48.910 & 5.985 17,505,346 Antioch Unified School District Certificates of Participation 100.000 7,080,505 San Ramon Valley Unified School District and Educational Facilities Corporation 100.000 82,890,000 Martinez Unified School District 100.000 30,805,000 Acalanes and Liberty Union High School District 100.000 42,875,000 Oakley Union High School District Certificates of Participation 100.000 8,425,000 Other School Districts and School Building Corporations 100.000 (2) 11,982,331 City of Concord and Authorities 100.000 15,846,695 City of Richmond General Fund Obligations 100.000 14,835,000 City of Antioch General Fund Obligation 100.000 16,777,476 City of Pleasant Hill and General Fund Obligations 100.000 14930,000 City of Hercules and General Fund Obligations 100.000 12,370,000 City of San Ramon General Fund Obligations 100.000 18,380,380 Other Cities and City Authorities 100.000 16,391,856 Hospital Districts and Hospital Authorities 100.000 13,405,000 Sanitation and Sanitary Districts .100.000 3,265,000 County Water Districts 100.000 2,365,000 East Bay Regional Park District 44.171 52,724,714 Other Special Districts 100. 000(2) 17,763,241 Community Facilities Districts 100.000 123,310,000 1915 Act Assessment Bonds (Estimate) 100.000 315,269,914 Total Gross Direct and Overlapping Bonded Debt $1,190,749,843(3) Less: East Bay Municipal Utility District and Special District 17,505,346 #1 (100% self-supporting) San Ramon Unified School District Certificates of Participation (self-supporting from GIC from Bayerische Landisbank) 17,705,000 Other self-supporting bonds 4,770,000 Total Net Direct and Overlapping Bonded Debt $1,150,769,497(3) State School Building Aid Repayable as of 6130193: $0 (t) Excludes pension bonds to be sold. (2) Various, but mostly 100% applicable (3) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratio to Assessed Valuation Direct Debt ($268,125,012)................0.46% Total Gross Debt..............................2.05% Total Net Debt .................................1.98% Source: California Municipal Statistics Inc. A-17 4 (THIS PAGE INTENTIONALLY LEFT BLANK) • APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE YEAR ENDED .JUNE. 309 1993 • (THIS-PAGE INT.ENTIONALLY,LEFT'BLANK) Peat Marwick Independent Auditors' Report The Honorable 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, 1993, 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, 1993, 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. November 1, 1993 Oakland,California COUNTY OF CONTRA COSTA COM SINE D BALANCE SBEET=ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30,1993 (1n Thousands) Governmental Fund Types.: Special :.Debt Capital : Assets 8t:Other Debits General Revenue Service Projects Cash and investments .$ 222,616,`; 52,326 10,791 24572 Land held for sale 4,102 Accounts receivable and accrued revenue 43,419 4,832 231 173: Inventories 1,602 Due from other funds 36,791 • 12;173. 299 Taxes receivable Advances to other funds 1,4,41 9,734 Prepaid items and deposits 8,037 363 Fixed assets,net Amouiitavailable in'debt service funds Amount to be provided for retirement of tong termobligations Total Assets&Other Debits $' 313906_ 83530 11022 25044 Liabilities,.Equity& Otber Credits Liabilities: Warrants outstanding . Short term notes 117 PW Accounts payable and accrued liabilities 2241 7,364 857 216 v. Employee benefits payable Due to other funds 25,972 9,345. 146 Welfare.program advances 11,640 Obligations under reverse repurchase agreements 81,502 Capital lease obligations Unapportionedtaxes Tax loss,guarantees Due to other agencies and districts Certificates of participation,net Advances from other funds 2,902 10 Deferred revenue and credits7,853 3,978 S6 Deferred compensation Notes payable . Bonds payable Other non—current liabilities. Total-Liabilities 266 • 23,589 857. ' 428 Equity&Other CYedits: Contributed capital Investment in general fixed assets Retained earnings: Reserved for,debt service Unreserved.. Fund balances Reserved 17,907 19 54 10,165 11,782 Unreserved: Designated 3,238 3,719 -11,944 Undesignated 26,453 36,968 890 Total,Equity &Other Credito _47,598 59,941 10,165 24,616 Total Liabilities, Equity &Other Credits $ 313906 83_530 11022 25044 See accompanying notes to general—purpose financial statements. Fiduciary Proprietary Fund Types Fund Types Account Groups General (Memorandum Internal Trustand General Long-Term Only) Enterprise Service Agency Fixed Assets . Obligations Totals 129,793 59,643 1,555,927 2,055,668 4,102 11,568 883 25,261 8667 779 2,381 17,236 1,063 34,511 102;073 70,640 70,640 3,025 14,200 840 48 9,288 40,097 104 ' 403924 444,125 10,165 10,165 176,007 176,007 200 313 61589 1.689516 403324 186,172 2.975 A 16 61,312 61,312 117;000 16;609 60,026 29,246 136,659 3,281 38 17,447 20,766 11,153 979 55,450 103,045 11,640 10,733 92,235 1,043 31,247 32,290 65,451 65,451 29,042 29,042 450,574 450,574 122,565 91,155 213,720 61.5 10,673 14,200 9,82.5 21,712 59,713 59,713 1,785 1,250 3,035 34,400 34,400 1,031 1,031 167,907 61905 761,559 186,172 1,467,825 24,582 24,582 403,924 40,924 3,549 3,549 4,775 584 4,859 927,957 987,065 18,901 64,311 32,406 584 927957 403,924 1507,191 200,3: 13 61-5891.689516' 403 324 186.172 2.975 p 16 3 • : �� Imo,: •J•a � � `` clou 4 • COUNTY OF CONTRA COSTA COMBINED STATEMENT OF REVENUES,EXPENDM JRFS AND CHANGES IN FUND BALANCES-ALL GOVFRNMIIVTAL FUND TYPES YEAR DSDM JUNE 30,1993 (In Thousands) (Memorandum Special Debt Capital only) General Revenue Service Projects Totals Revenues: Taxes $. . .153,044 69,162 2,137 2,222 226,565 Licenses,permits and franchise fees 6,%4 7,481 14,445 Fines,forfeitures and penalties 3,732 2,996 6,728 Use of money and property 14,876 1,809 9,886 709 27,280 Aid from other governmental agencies 344,534 22,547 13 18 367,112 Charges for current services 78,572 14,287 7 92,866 Other revenue 2,2-U 5,449 10 7,693 Total Revenues 603,956 123,731 12,036 2,966 742,689 Expenditures: Current: General government 63,389 2,822 66,211 Public protection 151,322 . 74,926 226,248 Health and sanitation 96,928 9,151 106,079 Public assistance 237,559 1,592 239,151 Education 101 11,241 11,342. Public ways and facilities 20,652 21,890 42,542 Recreation and culture 330 330 Debt Service: Principal 3,740 3,740 Interest 4,760 8,999 13,759 Capital outlay 773 4,306 4,160 9,239 Total Expenditures 575,484 121,952 17,045 4,160. 718,641 Excess (deficiency)of revenues over (under)expenditures 28,472 1,779 (5,009) (1,194) 24,048 Other Financing Sources (Uses): Operating transfers in 10,851 1,241 898 12,990 Operating transfers out (32,768) (572) (144) (33,484) Capital lease financing 773 773 Proceeds from issuance of debt 4,619 4,619 Total Other Financing Sources(Uses) (21,144) 669 5,517 (144) (15,102) Excess (deficiency)of revenues and other financing sources over(under) expenditures and other financing uses 7,328 2,448 508 (1,338) 8,946 Fund Balances at Beginning of Year 41,338 51,714 9,657 30,057 132,826 Adjustment to fund balance 585 585 Residual equity transfer in 5,808 5,808 Residual equity transfer out (1,068) (674) (4,103) (5,845) Fund Balances at End of Year $ 47,598 59,941 10,165 24,616 142,320 See accompanying notes to general-purpose financial statements. 5 COUNTY OF-CONTRA COSTA COMBINED STATEMENT OF REVENUES, EXPENDMJRES AND CHANGES Z IN FUND BALANCES-BUDGET AND ACTUAL-,ALL GO AL FUND TYPES YEAR ENDED.JUNE 30,1993 (In Thousands) General Fund _. Variance Favorable Budget Actual (Unfavorable) Revenues: ',Taxes $ 154;440 153,044 (1,396) ;licenses,permits and franchise fees 5,052 6,964. 1,912 Fnes,forfeitures and penalties 2,945 3,732 787 ;;:Use of money and property 11,145 14;876 3,731 Aid from other governmental agencies .351,880. 344,534 . (7,346) , Charges for current services 80,993 78,572 (2,421) Other revenue •. 2,836 2,234 (602) Total Revenues 609,291 603,956 (5,335) Expenditures: Current: General government 70,180 63,389 6,79.1 Public protection 156,587 151,322 5,265 Health and sanitation 97,503 96,928 575 Public assistance 245,143 237,559 7,584 Education 103 101 2. Public ways and facilities 25,915 20,652 5,263 Recreation and culture 1 1 Debt service 4,851 4,760 91 Capital outlay 773 773 Total Expenditures 6011056 575,484 2.5,572 Excess(deficiency)of revenues over (under)expenditures 8,235 28,472 20,237 Other Financing Sources'(Uses): Operating transfers in 10,851 10,851 Operating transfers out (32,768) (322768) Capital lease financing 773 773 Proceeds from issuance of debt Total Other Financing Sources(Uses) 2( 1,917) (21,144) 773 Excess(deficiency)of revenues and other financing sources over(under)expenditures and other financing uses (13,682) 7,328 21,010 Fund Balances at Beginning of Year 41,338 413s Fund balance adjustment Residual equity transfer In Residual equity transfer out (1,068)` (1,068) Fund Balances'at End of Year $ 27,6.56 47,598 19,942 See accompanying notes to general=purpme financial statements. 6 Special Revenue Funds Debt Service Funds Capital Projects Funds Variance Variance Variance Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) 66,710 69,162 2,452 2,063 2,137 74 1,978 2,222 244 7,716 7,481 (235) 3,557 2,996 (561) 1,099 1,809 710 564 564 386 709 323 26,838 22,547 (4,291) 13 13 175 18 (157) 13,434 14,287 853 7 7 8,220 5,449 (2,771) 3,735 10 (3,725) 127,574 123,731 (3,843) 2,063 2,714 651 6,274 2,966 (3,308) 3,493 2,822 671 91,161 74,926 16235 10,719 9,151 1,568 7,987 1,592 6,395 12,168 11,241 927 } 32,763 21,890 10,873 2,350 330 2,020 2,095 2,841 (746) 1 (1) 9,078 4,160 4;918 160,641 121,952 38,689 2,095 2,842 (747) 9,078 4,160 4,918 (33,067) 1,779 34,846 (32) (128) (96) (2,804) (1,194) 1,610 1,241 1,241 224 224 (14) (572) (558) (144) (144) 1,227 669 (558) 224 224 (144) (144) (31,840) 2,448 34,288 (32) 96 128 (2,804) (1,338) 1,466 51,774 51,774 30 30 30,057 30,057 585 585 5,808 5,808 (674)" (674) (4,103) (4,103) 19,934 59,941 40,007 (2) 126 128 27 53 24,616 (2,637) COUNTY OF CONTRA COSTA COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS/FUND BALANCES-ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS YEAR ENDED JUNF_30, 1993 (In Thousands) (Memorandum Proprietary Fiduciary; Only) Fund Types Fund Type Totals Internal Pension Enterprise. Service Trust 1993 Operating Revenues: Charges for current services s 145002 34,498 180,400 Earnings on investments 52,298 52,298 Net gain on investments 44,048 44,048 Contributions60,588 60,588 Total Operating Revenues 145,902 34,498 156,934 337,334 Operating Expenses: Salaries and employee benefits 80,717 289 797 81,803 Services and supplies 77,158 5,726 594 83,478 Other charges 4,486 4,486 Benefit and claim payments 35,946-- 53,710 89656 Depreciation 2,647 ' ,2,647 Total Operating Expenses 165,008 41,961 55,101. 262,070 Operating Income(Lass) (19,106) (7,463) 101,833 75,264 .Nonoperating Revenue(Expenses): . Interest income 19442 1,685. 3,127 Loss on disposal of fixed assets ' (154) (154) Total Nonoperating Revenues(Expenses) 1,288 1,685 2,973 Income(Loss) Before Operating Transfers (17,818) (5,778) 101,833 78,237 Operating transfers in 31,222 500 31,722 Operating transfers out 10,728) (500) (11,228) Net Income(Loss) 2,676 (5,778) 101,833 98,731 Add depreciation on contributed capital - 364 364 Increase(Decrease) in Retained Earnings - 3,040 (5,778) 101,833 . 99,095 Retained Earnings/ Fund Balance at Beginning of Year 3,835 6,362 8222M, 832,485 Residual equity transfers in 122 122 Retained earnings adjustment 827 3,8_-36 4,663 Retained Earnings/Fund Balance at Beginning of Year as Restated 4:,784 6,362 ' 826,124- 837,270 Retained Earnings/ . Fund Balances'at End of Year $ 7,824 584 921#57 936 j65 See accompanying notes to general-purpose financial statements. 8 COUNTY OF CONTRA COSTA COMBINED I STATEMENT' OF. CASH FLOWS ALL PROPRIETARY FUND TYPE$ YEAR ENDED NNE 30,1993, r(1n Thousands) Proprietary Fund Types (Memorandum Internal only) Enterprise service Totals Operating Income(Loss) $. (19,106) (7,463) (26,569) Adjustments.to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation 2,647 2,647 Changes in assets and liabilities: `=Decrease(increase)inl*counts receivable and-accnied irvenue; •`.3,027 { ,;99 :: 3,126 Decrease(increase)in inventories 7 7 ,. ._. Decrease(increase)in amounts the from other funds 4577- 3,304 7,881 Decrease(increase)in prepaid items and deposits (440) (449) Increase(decrease)in accounts payable and accrued liabilities 3,780 7,37 11,153 . Increase(decrease)in employee benefits payable 273 x 273 Increase(decrease)in amounts due to other funds (14,479) (949) (15,428) Increase(decrease)in advances,fmm other funds •(280) ; . (280) Inciease(decrease)'ih deferred revenue and credits 2 70 . `' 2,370 Inawea (decrease]in other non-current liabilities 1;031` 1,031 Net Cash Provided by(Used for)Operating Activities (1693) 2,364 '" (14,719). Cash,Flows.from Noncapital.Financing Activities: Opera6rig.transfers in 31,222 500' 31,712 Operating transfers out .,.;. (10,728),.. (500),_, (1148) Net Cash Provided by(Used'for)No icapital Finartcing.Activities 20,494 20,494 Cash Flows ffom Capital and Related Financing Activities ; Proceeds from(payments on)state loans 404,. 404 Increase(decrease)in lease purchase obligations __(712) (712) Capital contritiutions 3,974 3,974 Acquisitions offixed assets,netoflossondisposal of (12,949)f Net Cash Pvvided by(Used for)Capital and Related Financing Activities (9283) (9183) Cash Flows from Investing Activities: Interest income 1,442. 1,685 3,127 .,.Net Cash Provided by(Used for)by Investing Activities . 1,442.: 1,685, 3,127 Net increase(decrease) in cash and'cash equivalents " (3,940) :4,049 109 Cash and Cash Equivalents—July 1; 1992 132,906 . .55,594., .. 188,500 Prior period adjustment, 827 827 Cash and Gash Equivalents-June 30, 1993. $ 129,793 59,643 189,436 Noncash Investing,Capital:and Financing Activities: Fixed assets acquired through lease purchase $ 12 12 Capitalized interest $ 1270.. 1270 9 COUNTY,OF CONTRA COSTA NOTES TO GENERAL-PURPOSE,FINANCIAL STATEMENTS June 30, 1993 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 governed by a five member elected Board of Supervisors. The County reporting entity includes all significant organizations,departments and'agencies over whicli"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 management,' ability to significantly influence operations,accountability for fiscal matters.and the scope of public service.- Included in the County reporting entity are,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, Internal Service'Funds; Long—Term Obligations Account Group,General Fixed Assets Account Group,and the enterprise operations of the Hospital,Health Maintenance Organization, Major Risk Medical; Airport and Employee Fitness Center. As discussed in Note:18,the financial position and results of operations of the Contra Costa County Employees'Retirement Association are reported on a calendar year basis. The reporting entity,excludes certain separate legal entities which may have "Contra Costa" in their title, or which are required to keep their funds in the County Treasury or receive their tax apportionment from the County: Examples are school districts, community college'districts, cities, redevelopment agencies established..by local city governments, the Bay:Area Rapid Transit.District,.the Metropolitan Transit;, Authority, 'the.'Contra Costa Transportation Authority and a variety of special*purpose districts for cemeteries, mosquito abatement, recreation and parks, e:tc. These entities are autonomous organiiations with their own=governmental powers and constituencies for which the Board of Supervisors tris no oversight. responsibility. Accordingly, they are not included in the accompanying general—purpose financial- 'statements, inancial_'statements,except,for.the assets held by the County (principally cash andz investments held'by the County Treasurer)as"discus's d under "Fiduciary Funds". 10 . COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS B. Fund Accounting The County uses funds and account groups to report 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 liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds are 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 projects funds), and the servicing of general long—term obligations (debt service funds). The General Fund is used to account for all activities of the County not accounted for in one of the other funds. Effective July 1, 1992, reporting of the County Redevelopment Agency is by the fund type appropriate to its activities,rather than consolidated as a capital projects fund. As-a result, it is now reported within capital projects; debt service and special revenue funds. Proprietary funds are used to account for activities similar to those in the private sector, where the measurement focus is upon'determination of net income and capital maintenance. Goods 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 are 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. 11 COUNTY OF CONTRA COSTA NOTES TO GENERAL—PURPOSE; FINANCIAL STATEMENTS 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 spending or funds flow measurement focus. Only current assets and current liabilities generally are included on the balance sheet. Fixed assets am recorded in the General,Fixed Assets account group. Liabilities, which are estimated to be payable within the.next year, .are considered.current liabilities and are recorded in.the governmental fund types;.remaining amounts are shown in the General Long—Term Obligations account group. Operating statements of,the governmental funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other,financing uses) in net current assets. All proprietary funds and the pension trust fund are accounted for using a flow of economic resources measurement focus. With this measurement focus,all assets and all liabilities associated with the.operation .;of these funds are 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:apd agency funds:, Under the modified accrual basis of accounting,revenues are 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 are collected within 60 days after year end. A one—year availability period,is used for.revenue recognition for all other governmental fund revenues. Expenditures, other than interest,on long--:term obligations, are recorded when the related fund liability is incurred. Principal and interest on general long—term obligations are 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.. _ Revenues susceptible to accrual are property taxes,franchise fees, aid from.other governmental,agencies, interest revenue and charges for services. Sales taxes collected 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 are incurred. 12 COUNTY OF.CONTRA COSTA NOTES TO-GENERAL-PURPOSE FINANCIAL STATEMENTS The County reports deferred revenue on its combined balance sheet. Deferred revenue.arises when a potential revenue transaction does not meet both the,"measurable" and "available" criteria for recognition in the current period. Deferred revenue also.arises when resources are received by the County before it has a legal claim to them,as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods,when both revenue recognition criteria are 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 29000 through 29144 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,special revenue, debt service and capital projects funds 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. Fordebt service funds the difference between the Budget Basis and GAAP Basis is as follows (in thousands): Excess of revenues and other financing sources over expenditures and other financing uses (budget basis) $ 96 Adjustment: Budgets not adopted for the Public Facilities Corporation 412 Excess of revenues and other financing sources over expenditures and other.. financing uses (GAAP basis). $ 508 Expenditures are controlled at the,object.level .within departments for all adopted budgets. Any amendments of appropriations for a department, or transfers of appropriations between departments are approved by the Board: of Supervisors, as are supplemental appropriations normally financed by -.unanticipated revenues received during the year. Approximately $37,297,000 in supplemental appropriations were added to the budgets for all governmental fund types during the fiscal year,of which, $36,400,000 was for the General Fund. The Board has delegated authority to the County Administrator 13 COUNTY OF CONTRA"COSTA NOTES TO GENERAL—PURPOSE ]FINANCIAL STATEMENTS to approve transfers of appropriations between object level classifications 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. Cash Flows , For the purposes of the statement of cash flows, the County considers all highly liquid investments with_ an initial maturity of three months or less to be cash equivalents. F. 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 projects funds. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. G. Inventories Inventories are valued at cost on a first—in,first—out basis. The cost is recorded as_an expenditure/expense at the time individual items are withdrawn from inventory(consumption method)in both governmental and proprietary funds. H. 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) are accounted for in the general fixed assets account group rather than in the 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 are not capitalized as these assets are immovable and of value only to the County. No depreciation has been provided on general fixed assets. 14 COUNTY OF CONTRA COSTA NOTES,TO GENERAL-PURPOSE FINANCIAL STATEMENTS . Depreciation has been provided on all 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. Depreciation recognized on assets acquired,or.constructed through resources externally restricted for,:capital acquisitions are closed,to. the appropriate.contributed capital account:and reported on the „operating statement as an adjustment to retained earnings. I. Vacation and Sick Leave Under terms of union contracts,County employees are 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 except management employees who are eligible for a payoff of unused sick leave accruals at resignation. Management employees must have a balance of at least 70% of their sick leave accruals and have been employed at three years or more to be eligible for this benefit. The maximum amount payable under this Sick Leave Incentive Plan is 50%of accrued sick leave. Accrued vacation at June 30, 1993,equals$20,728,000 including$17,447,000 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 proprietaryfunds,accumulated vacation is recorded as an expense and liability as the,benefits accrue to employees. J. Total. Columns on Combined Statements Total columns on the accompanying combined statements are captioned "Memorandum.Only" to indicate that .they are-,.presented only_to,facilitate financial analysis. Data,in.,these columns does not present financial.position,-results of operations, or changes in financial position in,conformity with generally accepted accounting principles. Such data is not comparable to a consolidation since interfund eliminations have not been made. 15 , COUNTY OF CON'IGR-A COSTA . N0T ' S TO.GENERAL=PURPOSE FINANChAL STATEMENTS" , 2.;"-CASH AND INVESTMENTS The cash ; balances of substantially all;f rods`except the pension trust fund are pooled and invested by the County Treasurer,for the purpose of maximizing investment yearnings. " ,s permitted by'true `Goveniment 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. Income from pooled investments is'. allocated to the funds based on average daily balances. " '° `Cash.and'investments at'June-30, 1993, (December 31;, 1992 for the pension trust fund) are as,follows. (in County & 'Pension'Trust" . A"encies. _Fund Deposits $ ` `352,582` ,: 54,909 :., 407;491' x investments 754.354 ` '893.823 1,648,177 `Total $ 4.j 06416 A. Deposits : . - ' The carrying amount of deposits includes a bank balance, of$85,368,000.. 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 not rely on FDIC insurance, and banks fully collateralize all 'balances by°pledging mortgages'or govemment�securities aspcollateral. 1b'e market`value of mortgages must equal':at`least 150%; and the markeCvalue ofgovernment securities must equal at least 1=.10% of the value of the•balanceSuch collateral must be held-in the pledging bank's tcust'department or in a sepazate depository'in an'account for the'County. The remaining deposits of$322,123;000 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-1 by Standard & Poor's Corporation or P71 by Moody's. 16 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 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 on the following page to give an indication of the level of credit risk assumed by each investment portfolio for their respective year ends. Category I includes investments that are insured or registered or the securities are held by the County or its agent in the County's name. Category 2 includes uninsured and unregistered investments where the securities are held by the counterparty's trust department or agent in the County's name or in agent's nominee name with subsidiary records listing the County as the legal owner. Category 3 includes uninsured and unregistered investments in which'securities are held by the counterparty or by its trust department or agent but not in the County's name. Investments(recorded at cost)and related market values as of June 30, 1993,(December 31, 1992,for the Pension Trust Fund) are shown on the following page (in thousands): 17 COUNTY OF CONTRA COSTA NOTES, TO GENERAL-PURPOSE FINANCIAL STATEMENTS Category. Carrying Market 1 2 Amount Value County.and Agencies Negotiable C.D.s $ 204,476 204,476 203,985 U.S. Government Securities; 102,025 . 102,025 . 97,421 Commercial Paper 78,193 r - 78,193 78,306 Medium Term Notes 32,860 32,860 . 33,155 Bankers' Acceptances 56,550 „ . 56,550 55,916 Repurchase Agreements .:.5089 54,989 55,299 Total $ 54"989 529,093 524,082 State Treasurer's Investment Pool 141,017 141,017 Other Investments 2,742 2,742 Investments Held by Broker-Dealer under F Reverse Repurchase Agreements 1 2 81,502 Total Investments $ 754,3 249-UL Pension Trust Fund Common & Preferred Stocks $ 316,261 316,261 431,271 Corporate & Government Bonds 456,988 456,988 467,860 Short Term Notes 24,726 24,726 24,726 Other Investments 122 122 122 Total $ 798_()97 798,097 923,979 Real Estate 95,726 81,562 Total Investments $ 823.1323 i41 The investments of the Pension Trust,except real estate, which is recorded at carrying value, are recorded at cost. The Pension Trust has the ability and intent to hold real estate investments long term and recognizes a loss from these investments only if the loss is deemed other than temporary or if the property is being offered, for sale at a price less than book value. It is the policy of the Pension Trust to have bi-annual appraisals performed on real estate holdings. 18 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 3. PROPERTY TAX The County is responsible for assessing,collecting,and.apportioning property taxes. Taxes are levied for each fiscal year on taxable real and personal property situated in the County. The levy is based on the assessed values as of the preceding March 1, which is also the lien date. State code requires tax rates to be set no later than the first workday in September unless the Board of Supervisors elect to extend the deadline to October 3rd. Property:taxes.on the secured roll are due in two installments: November 1 and February 1 and 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 day of the month following the date of such occurrence. Property taxes on the unsecured roll are due on the lien date (March 1), and become delinquent if unpaid by 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 are recorded as deferred revenue. 19 COUNTY OF CONTRA COSTA NOTES TO GENERAL—PURPOSE FINANCIAL STATEMENTS 4. FIXED ASSETS Following is a summary of changes in general fixed-assets for the year ended June 30, 1993, (in thousands): Balance Balance July 1, June 30, 1992 Additions Deletions . 1993 Land $ 31,059 311 549, 30,821 Buildings.& improvements 186,932 11,073 8,881.. 189,124 Buildings & improvements- lease purchase 112,820 , 1 1 5,182 8-519, 109,483 Equipment 62,140 5,878 3,905 64,113 Equipment-lease purchase 10.939 369 92 10,383 Total $ 403-990 22.813. 22.772 .403,924 Additions to fixed assets include transfers between funds,lease purchase refinancings and classification changes to county owned from lease purchases in the amount of$10,239,000. Deletions include transfers between funds, transfers to autonomous districts,lease purchase refinancings and changes from lease purchases to county owned in the amount of$19,567,000. Enterprise fund type fixed assets at June 30, 1993, were as follows (in thousands): Employee Health Total Fitness County Maintenance Enterprise Airport Cen er Hospital Organization Funds Land $ 8,102 426 8,528 Buildings & improvements 15,383 27 14,244 73 29,727 Construction in progress 7,999 17,999 Equipment 634 81 11,361 218 12,294 Equipment-lease purchase . 2.627 2.642 Total 24,119 108 36,657 306 61,190 Less accumulated depreciation 4.984 L j 87 199. 21,093 Net fixed assets $ 19.135 26 2(,779 102 40. 97 . 20 COUNTY OF CONTRA COSTA NOTES TO'GENERAL-PURPOSE FINANCIAL: STATEMENTS 5. SHORT TERM NOTES -On June 30, 1993,the County had tax and revenue anticipation notes outstanding in the amount of$117,000,000. The notes incurred interest.at 3.75%per.annum. These notes, issued July 1;1992 were redeemed on July 30, 1993,from taxes and other revenues transferred to':a fiscal%gent during the fiscal year. Total interest incurred on these notes during 1992-93 was $4,388,000, with an additional $366,000 incurred in July, 1993... 6. LEASE COMMITMENTS A. Operating Leases Total rental expense for the year ended June 30, 1993,for all operating leases and month—to—month lease arrangements amounted to $5,790,000 for the general fund, $587,000 for the special revenue funds, and $1,278,000 for the enterprise funds. At June 30, 1993,the future minimum rental payments required under noncancelable operating leases 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 1994 2,828 3 567 1995. 2,118 3 370 1996 1,621 3 260 .1997: .,.. 1,210 4 -,4 .. 114 1998 565, 4 97 Thereafter 3.595 7 144 Total' $ 11,937 24 1= 21; COUNTY OF CONTRA COSTA' NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS. B. Capital Leases The County has capital lease purchase agreements with a 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 fixedassets.assets. The obligations related to;these.lease purchase agreements are included in the.County's general long—term obligations,,,and are,:summarized in Note 7. 7. LONG—TERM OBLIGATIONS. Following is a summary of changes in long—term obligations for the year ended June 30, 1993, (in thousands): Balance Balance July 1, June 30, 1992 Additions Retirements 1993 General Employee benefits payable $ 17,454 227 234 17,447 Capital lease obligations 36,525 773 6.051 31,247 Advances from other funds 7,305 5.,223. 1,855 10,673 Public facilities corporation obligations 89,825 4,750 3,420 91,155 Notes payable 1,650 400 1,250, Bonds payable 34,720 _ 320:: 34.40U Total $ 187-4.74 10 413 12.2Rn 1 Rfi,172 Enterprise Employee benefits payable $ 3,008. 273 3,281 Capital lease obligations 1;766 11 . 734 1,043 Certificates of Participation,net 122,459 106 122,565 Advances from other funds 895 280 615 'Notes payable 1.381 _485 81 1.785 Total $ _ �Q 22�" COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 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, 1993, (in thousands): Public Enterprise Fiscal Year Capital Bonds Facilities Note & Enterprise ending Lease & Notes Corporation Lease C.O.P. * June 30, Obligation Payable Obligations Obligations Obligations Total 1994 $ 4,022 2,756 10,779 737 7,775 26,069 1995 3,749 2,757 10,482 554 7,775 25,317 1.996 3,422 3,121 11,407 433 7,775 26,158 1997 2,996 4,316 11,325 327 7,775 126,739 1998 21745 3,117 9,926 222 7,775 23,785 1999-2003 12,131 14,919 46,244 995 52,801 127,090 2004-2008 9,858 13,214 32,406 498 49,534 105,510 Thereafter 24.452 36.200 19,298 123 140,906 220,979 Total 63,375 80,400 151,867 3,889 282,116 581,647 Less Amount Representing Interest 32,128 44,750 60,712 1.061 156,532 295,183 Liability at $ 11.2-42 35" 41.155 2.828 125,5 4 28�x,4h4 June 30, 1993 * Enterprise Certificates of Participation (C.O.P.) obligations are reported before discount of$3,019,000. Advances from other funds included in the general long-term obligations account group represent obligations of the Contra Costa County Redevelopment Agency, which are expected to be repaid from tax increment financing in future years, and are not to be repaid in the fiscal year ending June 30, 1994. Interest is accrued at the lesser of prevailing rates which vary with the prime interest rate or 12% per annum. 23 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS Individual issues of bonds;.notes and certificates of participation payable at June 30; 1993, are as•follows (in thousands): Outstanding Original Annual. Final Interest at June 30, Issue Issue Installments Payment Rates 1993 Public Facilities Corporation 1) 1988 Consolidated Capital Projects $ 61,690, $ 2,645-2,730: 2008 5.6-7.8% $ 49,495 1992 Consolidated. Capital Projects 37,300 1,035-2,220 2019 5.5-9.5 37,300 Hospital Replacement Project 125,584 2,885-9,995 2023 5.7-7.05 125,584 1992 Municipal Court Project 4,750 390-590 2002 3.0-5.5, 4.360 $216,734 Special Revenue General Obligation Bonds(2) Sanitation 1,475 40-120 1998 6.00 540 Recreation and Park 6,750 - 135=540 2004 7.2-7.5 , 4,485 Storm Drainage 200 5 2005 4.25Q Redevelopment Agency Notes and Bonds Payable 3) Tax Allocation Bonds 29,315 295-15,500 2023 5.25-7.02 . 29,315 Property Note 2 1,200 1997 9.0 1.200 Special Revenue Notes Payable (4) Flood Control 50 50 . 1994 - 4.11-6.29 �Q 24 COUNTY OF CONTRA COSTA' NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 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. (4) Debt service payments are made from drainage fees. There are a number of limitations and restrictions contained in the various bond indentures. County management believes that the County is incompliance with all significant limitations and restrictions. A. Issuance of New Debt and Advance Refundings On September 1, 1992, the Public Facilities Corporation(PFC) issued $4,750,000 in 1992 Certificates of Participation(C.O.P.)with,interest rates ranging from 3.0%to 5.5%,to refinance the County's capital lease obligation for a two building complex in Walnut Creek,occupied by the Municipal Court Department. The principal outstanding at September 1, 1992,under the old capital lease obligation was $4,128,000,with a stated interest rate of 9%. This C.O.P..issue represented a refinancing from the County's perspective, however to PFC, it was a capital outlay for the purchase of the buildings. Accordingly, the retirement of debt is shown as an expenditure rather than as an other financing use. The refinancing reduced;total debt service payments over the next 10 years by approximately$450,000 and resulted in an economic gain(difference between the present value of debt service payments of refinanced and refinancing issues) to the County of approximately $745,000. At June 30, 1993,the amount of outstanding obligations considered defeased;including obligations defeased in prior years is $58,860,000. 25 'COUNTY.-OF CONTRA COSTA NOTES..TO GENERAL=PURPOSE FI[NANOIAL''STATEMENTS 8. INTERFUND BALANCES Accounfrbalances at June 30, 1993; are as follows(in thousands} Due From Due To Advances From Advances To Other Funds Oiher Funds Other Funds Other Funds General Fund $36,791 25,972 19441 Special Revenue Funds: Road 2,351 1,910 Library 3 251 Fire Protection 3,533 673 Health and Sanitation 77 1,098 Service Areas 666 838 E 1,317 Flood Control 2,024 2,747 65 5,930 Law Enforcement 789 420 Courts & Criminal Justice 1,359 428 400 Recorder/Clerk Modernization ' 4- 244 Other Special Revenue 89 13 2,487 Land Development 1,204 723 v 'Redevelopment .74 2;437' . CapitaVProjects Funds: Redevelopment Agency 294'. 142 -West County Jail 5' 4 . Enterprise Funds: Airport 485 113 Employee Fitness Center. 1 19 County Hospital 13,118 5,164' k '.` 61,5" 3,625: 5,843- Major Major Medical Risk - 7 Internal Service Funds: Self-Insurance 9.79 Subtotal 67,562 47,595 3,527 . . 11,175• 26 COUNTY OF'CONTRA COSTA NOTES.TO.-GENERAL-PURPOSE FINANCIAL STATEMENTS Due From ... Due To Advances From Advances To Other Funds Other Funds Other Funds Other Funds Balance Forward from previous page 67,562 47,595 3,527 11,175 Trust and Agency Funds: Tax Distribution 10,485. 12,525 Schools & Special Districts 18,183 19,992 3,000 Other Agency 3,386 22,933 25 Pension Trust 2,457 Long—Term Obligations 10,673 Subtotal 102,073 103,045 14,200 14,200 Adjustment for Pension Trust reported as of December:-31, 1992 3.599 2,627 Total: $ 105..5.22 105..522 14.200, 14-200 27. COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL: STATEMENTS` 9. RESERVES AND DESIGNATIONS' OF FUND BALANCE Following is a summary of reserved and designated fund balances at June 30, 1993, (in thousands): Special Debt Capital Pension General Revenue Service Projects Trust Fund Funds Funds Funds Fund* Total Reserved for: Encumbrances $ 7,225 3,448 . 162 10,835 Inventories 1,602 1,602 Debt service 10,165 10,165 Prepaid items and deposits **,7,639 363 8,002 Advances to other funds 1,441 9,734 11,175 Land held for sale 4,102 4,102 Employee retirement benefits 027,057, 927,957 Redevelopment Projects:**.* ;11,620 11,620-'--,- General 1,620 _- General reserve 1.607 __ 1.607 'Total $ 17,E 19-254 10.165 11.782 222.M 987(�S Designated for: Authorized expenditures $ 1,051 1,034 2,085 Equipment replacement 1,692 2,685 4,377 Trial court funding 495 495 Future Redevelopment projects 11.944 11,944 Total $ —3-M aM9-- 11944 18 jll * Pension Trust Fund reported as of December 31, 1992. ** Reserves are.less than total prepaid items and deposits because the General Fund advanced $398,000 of Federal program monies to subgrantees who will be expending the funds within the fust quarter of fiscal year 1994. **" $6,780,000 of this reserve is unavailable for projects until certain tax increment levels are reached. 28 COUNTY OF CONTRA COSTA NOTES TO GENERAL—PURPOSE.FINANCIAL STATEMENTS 10. ADJUSTMENTS TO FUND BALANCES Special Revenue Funds had prior period 'adjustments to fund balances in the amount.of $585,000. Of this amount $581`,000 represents a change to'conform to accounting standards in the reporting of interfund loans in the Flood Control group of funds in regards to the recognition of non—operating revenue in the form of"proceed of debt". In addition,'the Health and Sanitation group of funds' had a fund balance adjustment of $4,000 required to correctly report the balance due on a State loan. The $827,000 prior period adjustment to fund balance in the County Hospital Enterprise represents interest earnings not reported at June 30, 1992 by the trustee for the Certificates of Participation issued in 1992 to construct the new hospital. The Pension Trust had an adjustment to fund balance in the amount of$3,836,000 of which $3,665,000was attributable to the net gains and losses not previously recognized on investments managed by Capital Guardian Trust from September 1988 through December 1991. Initially, Retirement Management determined that no income or change in value should be recognized except when units were bought or sold. ,In 1992; this policy was reassessed and accordingly, net gains/losses are recognized as reported by the Trustee. 11. RESIDUAL EQUITY TRANSFERS The General Fund transferred vehicle replacement reserve monies to the funds where the related assets are booked. The amounts and receiving funds were: $139,000 to the Land Development Fund; $10,000'to the Road Fund; $36,000 to the Library Fund; $40,000 to the-Airport Enterprise'Fund. The General Fund also transferred$837,000 to the special Support Enforcement Incentive Fund(within the Law Enforcement group of funds). This represents revenues in excess of expenditures in the Family Support Division of the District Attorney's office. These funds arerestricted to use for family support collection efforts and can not be used io fund any other General Fund activity. The General Fund transferred$6,000 to the Land Development special revenue fund,an amount in Encumbrance Reserves at June 30, 1992 but expended in fiscal year 1992-93 by the Land Development Fund. A transfer of$666,000 from Service Area special revenue funds to Health and Sanitation special revenue fund was due to reporting changes. It was determined that Emergency Medical Service Areas were more appropriately reported within the Health and Sanitation functional area. 29 COUNTY OF CONTRA COSTA NOTES .TO GENERAL-PURPOSE FINANCIAL STATEMENTS By resolution, the Board of Supervisors established a.new fund,for Crockett Recreation District which is reported in the Service Areas group of funds. Previously these recreation activities were'combined.with the Crockett Police service area and reported within the Law Enforcement special revenue funds. At the time of the equity transfer, Crockett Recreation activities had a $7,000 negative fund balance, therefore the Crockett Police service area received cash as a result of the transfer. The Board also created new services areas under Oakley Sanitation District which received $1,000 in equity from the dissolved Sanitation District 15,Zones 2 and 3. Other actions by the Board resulted in a$3,000 transfer to,the Law Enforcement special revenue funds from autonomous districts reported within the School and Special Districts fiduciary funds. Redevelopment historically has been reported-as a capital projects funds. This year reporting is within the fund type which most accurately reflect their activities; capital projects, debt service and special (restricted use) revenue funds. For reporting purposes only, this required showing the equity transfers of $4003,000 from capital projects to special revenue funds. 12. DEFICIT FUND BALANCES The Employee Fitness Center Enterprise fund had an accumulated deficit of approximately $107,000. It is expected that during fiscal year 1993-94,net income will be adequate to begin funding this accumulated deficit. The Airport Enterprise fund had a deficit of$37,000 due to construction of the new Byron Airport. Once the airport is operational, revenues will be adequate to eliminate any retained earnings deficit. The Courts&Criminal Justice special revenue group of funds had a fund balance deficit of$101,000. This was due to the continuing decline in Fine and Forfeiture revenues available to the County for Court related projects. The deficit will be funded from fiscal year 1993-94 revenues. The Automotive.Liability Insurance,Public Liability Insurance,Medical Liability and Workers'Compensation— County General internal.service funds had deficit balances of $1,482,000, $2,323,000, $677,000 and $2,603,000 respectively, resulting from estimating claims liabilities to reflect the methodology used by the ' insurance industry. These funds will have sufficient funding from investment earnings and from operating funds to cover disbursements when they become payable. r 50 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 13. CONTRIBUTED CAPITAL CHANGES The contributed capital of the enterprise funds.ch;nged as follows.(in thousands): Health County Maintenance Airport Hospital Organization Total Balance as of July 1, 1992 $ 13,339 6,664 1,009 21,012 Federal and state construction grants 3,834 3,834 Depreciation relatedto grants (364) (364) Federal Surplus 100 100 Balance as of June 30, 1993 $ 42 -6.664 1,004 31 COUNTY OF CONTRA COSTA NOTES-TO GENERAL-PURPOSE, ENERAL-PURPOSE :FINANCIAL STATEMENTS 14. SEGMENT INFORMATION FOR ENTERPRISE FUNDS Financial data for the enterprise funds for the year ended.June 30; 1993; are" re as follows (in'thousarids): " Employee Health Major Risk Fitness County Maintenance Medical Airport Center Hospital Organization Insurance Total Operating revenues $ 193 170 116,856 . 28,362 321 ' 145,902 Operating expenses (other than depreciation) 1,879 174 117;122' 42,969 217-1 . 162,361 Depreciation and amortization 500 12 2.104, ' 31 .2,647 Operating gain (loss). (2,186) (16) (2,370) (14,638) 104 (19,106) Nonoperating revenues,net 1,437 5 (154) 1,288 Operating transfers,net 5.:525 14,969 20,494 Net income (loss) (7491 11 .(11?1 —331 _x(14 �,6Z6 Fixed assets: Additions 5,020 9,702 409 15,131 Deletions, 10 1,742 407 2,159 Net working capital (428) (183) 120,763 2,344 132 122,628 Total assets 23,076 94 167,258 9,723 162 200,313 Capital lease obligations 1,034 9 1,043 Advances from other funds 615 615 Total equity (deficit) $ 16,872 (107) 14,1178 1,330 133 32,406 The County pays a subsidy to the County 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 1991 $ 26,555 1992 27,537 1993 30,854 32 , COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS 15. 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 annual salary until future years. Monies in the deferred compensation plan are 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 are (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 fiduciary duty of due care that would be requiredof 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, 1993, the assets of the plan, recorded in an agency fund at their fair market value, amounted to $59,713,000. 16. MORTGAGE REVENUE BONDS Home mortgage revenue bonds have been issued to provide mortgage loans secured by first trust deeds on newly constructed and existing residences. The program provides low interest rate mortgage loans to persons who find it difficult to qualify for conventional mortgages at market rates. The bonds do not constitute an indebtedness of the County. They are 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. These 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 for the payment of the principal or interest on the bonds. Accordingly, no liability has been recorded in the General Long—Term Obligations account group. The total amount of mortgage revenue bonds outstanding at June 30,1993, was $81,071,000. 33 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS .17. COMMITMENTS AND CONTINGENCIES A. .Grants The County participates in a number of Federal and State grant programs subject to:fuiancial and compliance audit by the grantors or their representatives. Audits of certain grant programs through June 30, 1993,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 general-purpose financial 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 rand its management employees' long-term disability program. Intemal.service funds are 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. Accrual and payment of claims are recorded in the internal service funds. Claims incurred but not reported have been estimated and accrued. C. Health Insurance . Health care benefits'for active.and.retired einployees 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); First Choice Health Plan,a preferred provider.plan(PPO); and the Contra'Costa Health Plan(CCHP),operated by the County Medical Services Department: The County subvents 77%of Kaiser and First Choice and 98%'of CCHP.premiums for health plan members. A dental plan is also offered to all employees. The County's contribution to health and dental plans during 1992-93 for active employees was $27,182,000. The County's liability for health care benefits is limited to its annual contribution. ,34 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS D. Post-Employment Benefits Other Than Pensions In addition to providing retirement benefits as described in Note 18 below,retired employees are allowed to continue participation in the medical and dental.plans described above.. As of June 30, 1993,there were 2654 retired employees participating in the..health plans,,and the County.contributed $7,873,156 toward payment of,the premiums.. The cost.of retiree health-care is recognized when the County.makes its contribution-and,is accounted for in the General Fund, Library Fund,_Fire:..District:Funds,_or.Enterprise Funds as appropriate. This post retirement benefit was approved by Board of Supervisor resolution number 264 on August 22, 1961 with an effective date of October 1, 1961. To be eligible, the retiring employee must have been a member of a participating health plan for at least 5,consecutive years., E. Pending Legal Matters The County is a named defendant in two legal proceedings brought by the operator of a landfill site within the County boundaries. The merits of the first case,focus'on:whether the County is.deemed.to be an operator.of,the landfill and seeks payment for various closure,and.monitoring-costs of the landfill. The total costs. of the landfill closure are estimated by plaintiff to be between$40 and,$80 million. Amore definite estimate of the total cost will-not be available until late.Spring 1994.:.At this-time, the extent,of the County's obligation and that'of the numerous other,defendaiits named in the case,cannot be determined due to,the limited discovery that has taken place. It is the opinion of the County and County's General Counsel that the County is not an operator of the landfill. In the event the County is found not to be an operator of the landfill,it may,still be.liable for some portion of the closure costs. However, it is the opinion of the County and County's General Counsel that this amount wbuld not'have a material adverse impact.. In the second matter,the landfill operator has alleged a breach of oral contract over the operator's right to increase usage fees and is seeking an unspecified amount of damages. It is the opinion of the County and County's General Counsel that the County:will not be held liable. Consequently,no liability has been recorded in:the accompanying�combined.financial statements for these two legal proceedings. 35 COUNTY OF CONTRA.COSTA NOTES TO .GENERAL-PURPOSE FINANCIAL STATEMENTS, 18. EMPLOYEES' RETIREMENT ASSOCIATION A. Plan Description and Provisions The Contra Costa County Employees Retirement Association 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, its special districts and fourteen other member agencies: The total membership of 12,118 is divided among general and safety,members, and retired members as follows: Retirees and beneficiaries currently receiving benefits 3,981 Terminated employees entitled to benefits but not yet receiving them 546 Active members with vested benefits 5,095 Active members without vested benefits 2.496 Total membership _12.118 , The plan provides.for retirement,disability,death and survivor benefits.,Annual cost-of—living adjustments (C.O.L.A.)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 final 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 MembershiQ. 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 H. Tier H 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 enrolled 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. 36 COUNTY'OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS Safety Membership Safety 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. 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. The pension benefit obligation was computed as part of an actuarial evaluation performed as of December 31, 1992. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets of 8.25,percent per year,,(b) projected salary,increases of 5.25 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 1I, attributable to inflation as measured by the Consumer Price Index. The 1983 Group Annuity Mortality tables are 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 association's employees was $452.0 million at,December 31, 1992, as follows (in millions): 37 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS Pension benefit obligation: Retirees and beneficiaries currently receiving benefits=and terminated employees not yet receiving benefits $ 625.6 Current employees:. Accumulated employee contributions including allocated investment income 163.3 Employer—financed vested 539.8 Employer—financed nonvested 49.1 Other reserves (post-retirement death benefit and C.O.L. supplement) 2.2 Total pension benefit obligation 1,380.0 . Net assets available for benefits at cost (market value is $1,042.7 million) 928.0 -Unfunded pension benefit obligation (all member entities) $ 452.0. C. Contributions Required and Contributions Made New contribution rates based on the actuarial study of January 1, 1992, became effective July 1, 1992. The employer rates were calculated on the altemate funding method permitted by Section 31453.5 of the Govemment 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 are amortized ':over 18.5 years from the January 1, 1992,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,$327.4 million. The total payroll for the County was $328:2 million, of which$299.4'million was for County employees covered by the plan. Contributions for all participating agencies,totaling$60.6 million for 1992, were made in accordance with actuarially determined contribution requirements determined through actuarial valuations performed at January 1, 1992, and January 1, 1991, and adopted by the Retirement Board. The County's contribution of $43.6 million and the employees' contribution of $11.4 million were 14.6% and 3.8% respectively of the $299.4 million covered payroll. The County's contribution was 89.9% of the $48.5 million 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 liability (8.75 percent of 38 COUNTY OF CONTRA COSTA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS current covered payroll). 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$7.3 million in 1992. D. Historical Trends Historical trend information designed to provide information about the association'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 calendar years as follows: 1990* 1991 1292 Ratio of net assets available for benefits to pension benefit obligation 66.2% 66.7% 67.2% Ratio of unfunded pension benefit obligation to annual covered payroll 130.3% 134.4% 138.0% Ratio of employer contributions to annual covered payroll 14.3% 14.6% 14.8% • Restated November 22, 1991,by actuary based on corrected salary data for the January 1, 1991, actuarial study. 19. SUBSEQUENT EVENTS 1993-94 Tax and Revenue Anticipation Notes On July 1, 1993, the County issued Series A of short—term tax and revenue anticipation notes of $125,000,000. The notes bear interest at 3.25% and will mature July 29, 1994. On August 5, 1993, the County issued Series B of short—term tax and revenue anticipation notes in the amount of $15,000,000. This series of notes bear interest at 3.5% and will mature August 26, 1994. 39 -X-A ter tl 40 • APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT ..... • (THIS PAGE-INTENTIONALLY LEFT BLANK) APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE TRUST.AGREEMENT The following summary discussion of selected features of the Trust Agreement, dated,as. of February 1, 1994(the "Trust Agreement"), are made subject to all of the provisions of such document and to the discussion of such document 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 Bonds are referred to.the complete text of the Trust Agreement, copies.of which are available upon request from the office of.the County Administrator, County of Contra Costa. . CERTAIN DEFINITIONS The following are definitions of certain of the terms used in the Trust Agreement and this, Official Statement, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Certain capitalized terms used in the Official Statement but not defined in this Appendix-C are defined elsewhere in the Official Statement. "Act" means Articles 10 and 11 (commencing with Section 53570)of Chapter 3, Division 2, Title 5 of the Government Code of the State of California. "Association" means the-Contra Costa-County Employees Retirement Association. "Board of Retirement" means the Board of Retirement of the County of Contra Costa. "Bonds" means the 1994 Series A Bonds and all Additional Bonds. The term "1994 Series A Bonds" means all bonds of the County authorized by and at any time Outstanding pursuant to the Trust Agreement and executed, issued and delivered in accordance with Article-11,of the Trust Agreement. The term "Additional Bonds" means all bonds of the County authorized by and at any time Outstanding pursuant to the Trust Agreement and executed, issued and delivered in accordance with Article III of the Trust Agreement. The.term "Serial Bonds" means Bonds for which no sinking fund payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. "Business Day" means any day other than a Saturday or Sunday or day upon which the Trustee is authorized by law to•remain closed. "Certificate of the County" means an instrument in writing signed by the County Administrator,of the County or his designee, or by a Deputy Administrator of the County, or by any other officer of the County duly authorized by the Board of Supervisors of the County in writing to the l.r Trustee for that purpose. - "Closing Date for the 1994 Series A Bonds" means the date on which the 1994 Series A Bonds are delivered to the Original Purchaser. "Code" means the Internal Revenue Code of 1986, as amended. C-1 "Corporate Trust Office" means such-corporate trust office of the Trustee as may be designated from time to time by written notice from the Trustee to the County, initially being San Francisco, California and Los Angeles, California; provided, however, that for purposes of registration, transfer, exchange; payment or redemption-of Bonds; Corporate Trust offices shall initially mean Los Angeles, California. The Trustee may designate in writing; to the County and the Owners such other office or agency from-,time to time. for purposes of registration, transfer; exchange, payment or redemption of.Bonds. "Costs of Issuance" means all, items of expense directly or indirectly payable by or reimbursable to the-County and related to the 1994 Series A Bonds, including, but not limited to,-costs of preparation and reproductiori 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, fees and charges for preparation, execution and safekeeping of the 1994 Series A Bonds, and any other cost, charge or fee in connection with the original execution and delivery of the 1994 Series A Bonds: "Event of Default" shall have the meaning specified in the-Trust,Agreement: .. - . "County" means the County of Contra Costa, a political subdivision and body corporate and politic of the State. "Holder" means any person who shall be the registered owner of any Outstanding Bond. "Interest Payment Date' means a date on which interest is due on the Bonds, being June '1 and December 1 of each year to which reference is made, commencing on June 1, 1994. "1994 Debenture" means the Pension Obligation Debenture issued by the County in fayor of the Association in the principal amount of$333,724,000. "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.. ; "Original Purchaser ofthe 1994 Series A-Bonds" means CS First..Boston.as original purchaser of the 1994 Series A Bonds. ,,, •. "Outstanding," when used as:of any particular time with reference to Bonds, means (subject to the provisions of the Trust Agreement pertaining to Bonds owned or-held by or for the account of the County).all Bonds except -- (1).. ;Bonds cancelled by the Trustee or surrendered.to the.Trustee for cancellation;,. ; (2) Bonds paid or deemed to have been paid within the meaning,of the defeasance section of the Trust Agreement; and (3) Bonds in lieu of or in substitution for which other Bonds shall•have been executed,'. issued and delivered by the County pursuant to the Trust Agreement. C-2 . i "Permitted Investments" means any.,.of the following to the extent permitted by the laws of the State: (1) United.=States Treasury -notes,- bonds; bills; or certificates ofindebtedness; or' obligations for which the faith and credit of the United States of America,are pledged for the payment of principal and.interest (including obligations issued or held in book-entry.form on the books of the Department of the Treasury of the United States of'America and securities which represent an undivided interest:in such.direct obligations);and also any authorized securities, the timely payment of.both the principal of,and interest on which is guaranteed fully and directly by the full faith and credit of the United States-of America; (2) Bonds or debentures of the Federal Home Loan Bank Board established,under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under said act; bonds; debentures, participation certificates or other obligations of the Government National . . Mortgage- Association or. the. Federal National Mortgage Association established under the f. National Housing Act; as amended; (3) Demand deposits, time certificates of deposit or negotiable certificates of deposit issued by,a state or nationally chartered bank or trust company, including the Trustee, ora state or. national-savings and loan association, provided that such. certificates of deposit shall be (i),continuously and.fully insured by the Federal Deposit Insurance Corporation or (ii) issued by ,any bank or trust company organized;under the laws..of any state of the United States, or any national banking association (including the Trustee), having a combined capital and surplus of at least $500,000,000, whose non-guaranteed senior debt is rated in one of the two highest long- term rating'categories by the Rating."Agencies and such.certificates shall have.maturities of six months or less; (4) .Any.repurchase-agreement with any bank or-trust company organized under the laws of any state of the United States (including the Trustee) or any national banking association or` government bond dealerreporting to, trading withand recognized as a primary dealer by, the -Federal Reserve Bank of New York, which agreement is secured at.all times by collateral security described in clause (1) or (2) of this definition and in which the Trustee has.a,perfected security interest, and which collateral (a) is held by the Trustee or a thirdparty agent, (b) is not subject to liens,or claims,of third parties, (c) has a market value determined as frequently and in an amount sufficient to satisfy the collateralization levels required by.the Rating Agencies, and (d) failure to maintain the requisite collateral level will require the liquidation of the collateral; (5) Bankers' acceptances which"are,;issued by a bank or trust company organized under, the laws'of any state of the United States or any.nationalbanking association.(including the"° Trustee) rated in one of the two highest:long-term rating. categories'by the Rating Agencies; provided, that such banker's acceptances may.not=exceed 270 days maturity; (6) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical.rating as provided by the Rating,Agencies, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America,and that have total assets in excess of five hundred million dollars ($500,000,000) and whose debentures„ other than commercial paper; are rated in one of the two highest long-term rating categories by the Rating Agencies; rop vided that purchases of eligible commercial paper may not exceed 180 C-3 days'=,:maturity nor represent-more than. 10% of the outstanding commercial paper of an issuer corporation; (7) Bonds;.notes, warrants or other evidence of indebtedness.of any of the states of the United States or of any. political subdivision or public agency:thereof which are rated in the highest'short-termor.one�of the two highest long-term rating categories by the Rating.Agencies; 1;(g)'•.Government nioney.market portfolios or money markeffundsrestricted.to obligations ''.,4ssued�or!guaranteed as.to payment of principal and interest by,the full faith and credit of the United States, which portfolios shall-have_an:"AAA'.'. or-equivalent by the Rating Agencies, including funds for which First Interstate Bancorp, its affiliates or subsidiaries provide investment ;advisory or other management services; ,, . r "(9) Tax exempt securities rated "AAA"-or equivalent by the Rating Agencies;for,which the interest and principal has been provided by an escrow deposit which; in the.opinion..of an Independent Certified Public Accountant, is fully sufficient to pay the principal of and`interest and redemption premium; if any, on such tax exempt securities at their stated maturity or redemption'date; Guaranteed investment contracts in ai.form approvedt by the Rating Agencies with :entities the unsecured debt securitiesof which are ratted in one of the two highest'long-term rating categories by the Rating Agencies or-,the equivalent,of such ratings by virtue.of.guarantees or ,i1nsurance arrangements; ; r (1 l) The pooled investment fund of the-Countk of=.Contra Costa;.Cal ifornia;-which is . . administered in accordance with the investment policy of said County-as.established' by the Treasurer/Tax Collector thereof, as permitted by Section 53601 of the Government Code of the iState; copies of which;policy are available,upon written request,to;said Treasurer/Tax Collector;, (12)' The Local Agency Investment Fund (as•that term,is.defined in Section.-16429.1 of the:Government Code of the State, as such Section may be,amended,or recodified":from time to,time);.and (13) Any other investment authorized by the'County which does.,not,adversely affect the >r- tlen current ratings on the Bonds: "Rating Agencies". means Moody's Investors Service, Inc. and Standard & Poor's Corporation, or; in the'eventl that Moody's Investors.Service, Inc:.or Standard &Poor's Corporation no longer--maintains..a .rating on the.-Bonds, any other�nationally recognized bond rating agency then maintaining a rating.on the Bonds,but, in each instance,only'so long as Moody's Investors Service, Inc., Standard_& Poor's Corporation or'other nationally recognized rating agency.then-maintains,a_rating on the Bonds. -. "Record••Date" means, with respect to :an Interest Payment.Date,: >the -fifteenth:day (whether or not such day is a:Business Day) of the month immediately preceding such Interest Payment Date: : . C-4 "Retirement Law" means the County Employees Retirement Law of 1937, consisting of Division 4 of Title 3 of the Government Code of the State. "State" means.the State of California. "Supplemental Trust Agreement" means any trust agreement then in full force and effect which basbeen duly executed and delivered by the County,and the Trustee amending or supplementing the Trust Agreement, but only if.and to the extent that such Supplemental Trust Agreement is specifically authorized under the Trust.Agreement. "Trust Agreement means the trust agreement, entitled "Trust Agreement and dated as of February 1, 1994, between the County and the Trustee, as originally executed or as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions of the Trust Agreement. "Trustee" means First.,Interstate Bank of California, or any other association or corporation which may,at any time be substituted in its place as provided in the Trust Agreement. "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 any other officer of the County duly authorized by the Board of Supervisors of the County in writing to the Trustee for that purpose. THE TRUST AGREEMENT The Trust Agreement to be entered into between the County and the Trustee will be dated as of February 1, 1994 and will be executed prior to the delivery of the 1994 Series A Bonds. The Trust Agreement, among,other,things. provides for the issuance, execution and delivery of the Bonds and sets forth the terms thereof, provides for the creation of certain of the funds described below,,includes certain covenants of the County, 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 1994 Series A Bonds; the redemption provisions thereof and the use of the proceeds of the. 1994 Series A Bonds are set forth elsewhere in this Official.Statement. See "THE BONDS:" The Trustee First Interstate Bank•of California;.San Francisco, California and Los Angeles, California, has been appointed by the County.as Trustee. The Trustee will receive all of the Bond proceeds for disbursement in conformity with the Trust Agreement. In addition, the Trustee will.act as registrar of the Bonds. Payments of principal of, interest or.premium, if any, on the Bonds and the transfer or exchange of Bonds will be made,through-the Los Angeles.corporate trust office of the Trustee. C-5 Creation of Special Funds and Accounts ,The Trust Agreement provides for the establishment of the following special trust funds and:,accounts, among others, all to be held and administered by the Trustee: the Bond Fund (within which.the.Interest'Account, the Principal.Account and the Surplus Account will, be established and maintained), the Costs of Issuance Funds and the Refunding.Fund. Moneys in the Interest Account will be:used to;make interest payments on all Outstanding Bonds:. Moneys in the Principal Account.will:be used to make principal payments on all Outstanding Bonds and any sinking fund payments.required to be.made. Moneys in the Costs of Issuance Fund will be used to pay the.-Costs of Issuance.of the 1994 Series A Bonds. Moneys in the Refunding Fund are to be used to pay the principal amount of the 1994 Debenture, plus accrued interest, if any, on the Closing Date. Bond,Fund: Deposits to Bond Fund . The 1994 Debenture provides that the County is obligated to prepay each fiscal year's obligations within thirty days of the commencement of such fiscal year. In order to meet the County's obligations under Section 31453.5 ofthe Retirement Law, the County is required to deposit or cause to be deposited with the Trustee the amount which, together with any moneys transferred from the Surplus Account, is sufficient to pay the County's obligations on the Bonds for such fiscal year within thirty days of the commencement of each fiscal year.. All amounts payable by.the County under the Trust Agreement is required-to,be promptly deposited by the Trustee upon receipt.thereof into the Bond Fund,., .<< Moneys in the Bond Fund will be transferred to and deposited in the following respective accounts in the following order of priority: (a) Interest Account. On each June 1.and December 1.(commencing on June 1, 1994), that amount of.money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on such June l or December 1,•as the case may be. No deposit.!need be made to the Interest Account if the amount contained therein is at least equal to the,aggregate amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. (b) Principal Account. On each June 1, that amount of money equal.to,the amount.of all sinking fund payments required to be made on such June 1 into the respective sinking funds accounts for all Outstanding Term Bonds and the principal amount of all Outstanding Serial Bonds maturing on such June 1. No deposit need be made in the Principal Account if the amount contained therein is at least equal to the aggregate amount of the principal. of all Outstanding Serial Bonds maturing by their terms on such June 1 plus the aggregate amount of all sinking fund payments required to be made on such June 1 for all Outstanding Term Bonds (c) Surplus Account. Following the:deposits set forth above, any moneys remaining in ••the Bond Fund shall be deposited by the Trustee in.the Surplus Account. Moneys deposited in the Surplus Account,'including any earnings thereon, shall be transferred by the Trustee to the -Bond Fund at least one (1) Business Day prior to`the first Business Day of.each fiscal year. Any moneys remaining in the Surplus Account after the final payment of the Bonds is made on June 1, 2011 shall be returned to the County. I C-6 Investments Subject to certain provisions of the Trust Agreement, all money held by the Trustee in any of the accounts or funds established pursuant to the Trust Agreement is required to be invested in Permitted Investments at the Written Request of the County filed with the Trustee at•least two Business Days in advance of the making of such investment. If no Written Request of the County is received, the. Trustee`is required to.invest funds held by it in Permitted Investments described in clause S of the definition thereof. Such investments are required to mature, as nearly as practicable, on or before the dates on which such money is anticipated to be needed for disbursement under the Trust Agreement. All interest; profits and other income received from any money so-invested-will be deposited in the Bond Fund. Additional Bonds The County may,at anytime issue Additional Bonds on:a parity with the 1994 Series A Bonds, but only subject to the following specific conditions.as set.forth in the Trust Agreement: '(a), The,County,will be in compliance with all agreements and covenantscontained in the Trust Agreement. (b)• The.issuance of such Additional Bonds will have been authorized pursuant to the Act and will have been provided for by a Supplemental Trust Agreement.which shall specify the following: (1) The purpose for;which such.Additional Bonds are to beissued; provided thiit•such'Additional Bonds will be'applied solely for (i).the.purpose of satisfying any obligation to make payments to the Association pursuant to the Retirement Law relating to pension benefits accruing to the Association's members, and/or for ,payment.of all costs incidental to or connected with the issuance of Additional Bonds for such purpose; and/or (ii)'the purpose of refunding any Bonds then:Outstanding, including payment of all costs:incidental to or connected with such refunding; (2) The authorized principal amount and designation of such Additional. Bonds; (3) The'date and the maturitydates of and the sinking fund payment-dates;. 'if any; for such Additional--Bonds; (4) " The Interest Payment Dates for such Additional Bonds; (5) The denomination or denominations of and method of numbering such Additional Bonds- (6), onds;(6)" The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds;. ; (7) The amount, if any, to-be-deposited from the proceeds of sale of such Additional Bonds.in the Interest Account;.and C-7 (8) Such other provisions (including the requirements of a book-entry Bond, registration system, if any) as are'necessary or appropriate and not inconsistent with the Trust Agreement. 4;. P,rocedu're for Issuance of Additional Bonds . Before.Additional Bonds may be issued,the County is required to file or cause to be filed thei4ollowing documents with the Trustee: It (a). An executed,copy of the Supplemental.Trust Agreement authorizing the.issuance.of , such Additional Bonds; (b) A Written Request of the County as to the delivery of such Additional Bonds; , (c) An Opinion of Counsel to the effect that: (1) the County has executed and delivered the.Supplemental TrustAgreement, and the Supplemental Trust Agreement.is valid and,binding upon the County and (2) such Additional Bonds are valid and binding obligations of the County entitled to the benefits of the.Act and the Trust'Agree:ment, and such Additional:Bonds have been duly`and validly issued in accordance with the Act and with the Trust.Agreement; (d) At Certificate of the County. containing such .statements:as may be reasonably 'necessary to;show compliance with the conditions for the issuance,of such .Additional Bonds contained in the Trust Agreement; (e) . Such further documents, money or securities as are required by the provisions of the Supplemental)Trust Agreement providing for the issuance of such Additional Bonds. Eveints'of Default-,: Events which constitute an "event of. default'' under the Trust Agreement include: nonpayment by the County of the interest on and the principal of or redemption premium, if any, on any Bond when due and payable; nonperformance by the County of any of the agreements or covenants of the Trust Agreement required therein to,-be.performed by the County for a period of,60 days after written notice thereof by the Trustee; the filing of a petition or answer seeking arrangement or reorganization of the'County'under bankruptcy laws or any other applicable law. In the event of the continuance of such event of default,,the.Trustee may; and,upon the written request of,the Holders of not less than 51.% in aggregate principal amount of Outstanding Bonds is.required to declare,,by notice in writing to the County, the principal of and interest on all Outstanding Bonds to be due and payable immediately; provided, however;,that if such default is cured, then,the Holders.of not less than 51% in aggregate principal amount of Outstanding Bonds.may rescind and annul such declaration and its consequences. . Limitation on Bondholders' Right to Sue ` No;Holder of any Bond issued under the Trust Agreement shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon the Trust Agreement, unless (a) such Holder shall have previously given to the Trustee written notice of the occurrence of an event.of:default as defined in the Trust Agreement; (b) the Holders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall-have made written request-upon the Trustee to C-8 exercise the powers granted to it in the Trust Agreement or to institute such suit, action or proceeding in its own name; (c) said Holders shall have tendered to the Trustee reasonable security or indemnity against the costs,..expenses and liabilities to be incurred in compliance:with such .request; and (d) the Trustee shall,have refused or omitted to comply with such request -for:a.period of 60 days after such request-shall have been,received:by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request,.tender of indemnity and refusal or omission are conditions precedent to the exercise by any owner. of Bonds of any remedy under the Trust Agreement. Application of Funds Upon Acceleration All moneys in the Costs of Issuance Fund, the Refunding Fund and the Bond Fund (including the Interest Account, Principal Account and Surplus.Account therein) upon the date of the declaration of acceleration by the Trustee and all amounts in the funds and accounts (other than amounts on deposit in the Rebate Fund) thereafter received by the County under the Trust Agreement is required to be transmitted to the Trustee and is required to be applied by the Trustee in the following order-- First, to the payment of the costs and expenses of the Holders in providing for the declaration of such event of default, including reasonable compensation to their accountants and counsel, and to the payment of the costs and expenses of the Trustee, if any, in carrying out remedies provided for in the Trust Agreement, including reasonable compensation to its accountants and counsel and any outstanding fees and expenses of the Trustee; and Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with (to the extent permitted by law) interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and (to the extent permitted by law) interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal. Amendment of Trust Agreement The Trust Agreement provides that amendments are permitted under certain conditions when the written consents of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such amendment, however, may (a) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, or extend the time of payment on any Bond without the express written consent of the Holder of such Bond, or (b) reduce the percentage of Bonds required for the written consent to any such amendment. The Trust Agreement may also be amended without the consent of the Holders, but only to the extent permitted by law and after receipt of an approving opinion of counsel, but only for purposes which do not materially adversely affect the interests of the Holders. C-9 I Discharge of Bonds , If the County pays or. causes to-be paid or there shall otherwise be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any; thereon at the times,and in the-manner stipulated in the Trust Agreement and in the Bonds';'then all agreements; covenants and other'obligations of the County to the'Holders of such Bonds under the Trust Agreement will thereupon cease,terminate and become void and be discharged and satisfied-. In such: event, and the Trustee is required to pay over or deliver to the County all money or securities held by it pursuant to the Trust Agreement which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds. • 1 C-10 l APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION f 10� i APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION [CLOSING DATE] County of Contra Costa Martinez, California County of Contra Costa Taxable Pension Obligation Bonds, 1994 Series A (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the County of Contra Costa (the "Issuer") of $337,365,000 aggregate principal amount of County of Contra Costa Taxable Pension Obligation Bonds, 1994'Series A.(the "Bonds"), issued pursuant to Articles 10 and 11 of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California (the "Act") and a trust agreement, dated as of February 1, 1994(the "Trust Agreement"),.between the Issuer and First Interstate Bank of California, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Trust Agreement. In such connection, we have reviewed the Trust Agreement,:an opinion of counsel to the Issuer, certificates of the Issuer, the Trustee and others, and such other documents, opinions.and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Trust Agreement and other relevant documents may be changed and certain actions (including, without limitation, defeasance of Bonds)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 Bond 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, the default judgment rendered on December 22, 1994 by the Superior Court of the County of Contra Costa in the action entitled The County of Contra Costa v. All Persons Interested, etc., No. C93-05180, filed November 12, 1993, and cover certain matters not directly raddressed 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 are taken or omitted or events do occur. Our engagement with respect to the Bonds has concluded with their issuance, 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, and validity against, any parties other than the Issuer. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters D-1 represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph-hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Trust Agreement. We call attention to the fact that the rights and obligations under the Bonds and the Trust Agreement may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,,moratorium and otherlaws relating to or affecting creditors' rights,,to the application of equitable principles and 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 anyindemnification, contribution, choice of law, choice of forum or waiver,provisions contained in the foregoing documents. Finally, we undertake no responsibility for the. accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds 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 Bonds constitute valid and binding obligations of,theIssuer., 2. The Trust Agreement has been duly executed and delivered by, and (assuming due authorization and execution thereof by the Trustee) constitutes the valid and binding obligation of, the Issuer. 3', The Bonds do not constitute a debt,of the County or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and do 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. The Bonds are not a debt of the State of California, and said State is not liable for the payment thereof.. 4. Interest on the Bonds is exempt from State of California personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE per 4 D-2 (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS,PAGE INTENTIONALLY LEFT BLANK) 1 I TABLE OF CONTENTS ae CONTRA COSTA COUNTY BOARD OF $3375365,000 SUPERVISORS AND COUNTY OFFICERS...........................i SUMMARY STATEMENT............................................................ii INTRODUCTORY STATEMENT................................................1 THEBONDS.................................................................................2 IGeneral................. ..........................................................2 COUNTY OF CONTRA. COSTA, nterest Payment Dates.........................................................2 Redemption of the Bonds......................................................2 Book-Entry System................................................................3 CALIFORNIA No Assurance Regarding DTC Practices..............................5 Risks of Book-Entry System..................................................6 Additional Bonds..................................................................6 PLAN OF FINANCING................................................................6 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS....................................................................7 TAXABLE PENSION Bond Payments......................................................................7 OBLIGATION BONDS ESTIMATED SOURCES AND USES OF FUNDS...............................................................................8 1994 SERIES A ANNUAL DEBT SERVICE REQUIREMENTS............................9 j THECOUNTY..............................................................................10 General.................................................................................10 County Government...............................................................10 Population............................................................................10 Industry and Employment..................................... Major Industries....................................................................13 Median Income.....................................................................17 �E.- S E"L• O Commercial Activity............................................................17 •_ Construction Activity 18 ' ,• Transportation........................... ...19 Environmental Control Services............................................20 Education and Community Services......................................21 •' _ = _ , TAX MATTERS.................. 01 4' APPROVAL OF LEGALITY.........................................................22 7 Validation.............................................................................22 � O Opinions of Counsel.............................................................23 �'•, _ ti1�i LITIGATION.................................................................................23 Op•;• -= G4• RATINGS......................................................................................23 ZS q.COUIZ UNDERWRITING........................................................................23 MISCELLANEOUS......................................................................24 APPENDIX A—COUNTY FINANCIAL INFORMATION.......................................................................A-1 APPENDIX B—AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE YEAR ENDED JUNE 30,1993.......................................B-1 li APPENDIX C—SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT.....................................................C-1 OFFICIAL STATEMENT APPENDIX D—PROPOSED FORM OF BOND COUNSEL OPINION..................................................D-1 i i No dealer,broker,salesperson or other person has been authorized by the County or the Underwriters to give any information or to make any representations other than as set forth herein and,if given or made,such other information or representation must not be relied upon as having been authorized n by any of the foregoing This Official Statement docs not constitute an offer to CS FIRST BOSTON sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates,forecasts or matters of opinion,whether or not expressly so MORGAN STANLEY &.CO. described herein,are intended solely as such and should not be interpreted as INCORPORATED statements of fact. Summaries of documents do not purport to be complete statements of their provisions. The information set forth in this Official Statement has been obtained from official sources and other sources which are bclicv d to be reliable,but it is not guaranteed as haccuracy completeness,and is not to be construed as a SMITH BARNEY SHEARSON representation er tion by e Underwriter;. The information and expressions of opinion herein aro subject to change without notice,and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances INC. 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 Bonds referred to herein and may not.be reproduced or used,in whole or in part,for any other purpose. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING TRANSACTIONS,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE OF THIS OFFICIAL STATEMENT,AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. February 16, 1994 I