HomeMy WebLinkAboutMINUTES - 10172006 - SD.7 TO: BOARD OF SUPERVISORSoC
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FROM: JOHN CULLEN, COUNTY ADMINISTRATOR
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DATE: OCTOBER 17, 2006
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SUBJECT: FISCAL YEAR 2006-2007 TAX AND REVENUE
ANTICIPATION NOTES (TRANS)
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
CONSIDER adoption of Resolution No. 2006/587 authorizing the issuance and sale of 2006-2007 Tax and
Revenue Anticipation Notes (TRANS) not to exceed $145,000,000; approving the forms and distribution of
a Notice of Intention to Sell, an Official Notice of Sale and an Official Statement; and authorizing the
County Administrator, or designee, to award bids and to take any other necessary actions to execute the
sale and issuance of said Notes.
FISCAL IMPACT
Tax and Revenue Anticipation Notes are a cash management tool used to eliminate/reduce the need for
inter-fund and/or intra-fund borrowing. Reducing and/or eliminating the.need for inter-fund and/or intra-
fund borrowing reduces the likelihood other County funds will experience cash flow disruption.
BACKGROUND
Historically, the County has issued Tax and Revenue Anticipation Notes to meet General Fund cash
requirements during periods in a fiscal year when receipt of anticipated revenues lags behind
expenditures. Each year, the County Auditor-Controller develops a cash flow projection for the County
General Fund, showing the expected levels of expenditures and revenues for each month. Typically,
General Fund expenditures exceed revenues by the end of the first half of each fiscal year, as the County
incurs expenses more rapidly than it receives revenues that are anticipated during the course of the year.
This cash flow shortfall typically reaches its peak prior to the due date for the first installment of property
taxes in early December. TRANS, which are a short-term debt instrument, allow the County to have
sufficient cash on hand to pay General Fund expenses prior to the receipt of anticipated revenues. For FY
06-07, the County will seek to issue TRANS in an amount not to exceed $145,000,000, based on the cash
flow analysis prepared by the Auditor-Controller's Office. The notes will mature not more than 13 months
after the date of issue. The Federal Tax Code allows the County to invest the proceeds from TRANS (and
subsequent pledged Repayment Fund). Such amounts held in the Repayment Fund shall be invested as
permitted by Section 53601 and Section 53635 of the California Government Code as defined on pages 6
and 7 of the attached Resolution. This investment income will help the County to offset the interest cost of
the TRANS.
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BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA
RESOLUTION NO. 200687
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO
EXCEED $145,000,000 COUNTY OF CONTRA COSTA, CALIFORNIA, 2006=
2007 TAX AND REVENUE ANTICIPATION NOTES; APPROVING THE
FORMS OF AND DIRECTING THE DISTRIBUTION OF A NOTICE OF
INTENTION TO SELL, AN OFFICIAL NOTICE OF SALE, AN OFFICIAL
STATEMENT AND A CONTINUING DISCLOSURE CERTIFICATE;
DELEGATING TO COUNTY ADMINISTRATOR OR HIS DESIGNEE
AUTHORIZATION TO AWARD BIDS FOR SAID NOTES; AND
AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION
OF NECESSARY DOCUMENTS
WHEREAS, pursuant to Sections 53850 et seq. of the Government Code of the
State of California (the "Government Code"), this Board of Supervisors (the "Board") has found
and determined that the sum of not to exceed One Hundred Forty-Five Million Dollars
($145,000,000) is needed for the requirements of the County of Contra Costa (the "County") to
satisfy obligations payable from the general fund of the County (the "General Fund") and that it
is necessary that said sum be borrowed for such purpose at this time by the issuance of
temporary notes (the "Notes") therefor in anticipation of the receipt of taxes, revenue and other
moneys to be received by the County for the General Fund of the County allocable to Fiscal Year
2006-2007;
WHEREAS, it appears, and the Board hereby finds and determines, that said sum
of One Hundred Forty-Five Million Dollars ($145,000,000) when added to the interest estimated
to be payable thereon, does not exceed eighty-five percent (85%) of the estimated amount of the
uncollected taxes, income, revenue, cash receipts and other moneys of the County for the
General Fund of the County attributable to Fiscal Year 2006-2007 and available for the payment
of the principal of and interest on the Notes;
WHEREAS, no money has heretofore been borrowed by the County through the
issuance of any temporary notes in anticipation of the receipt of, or payable or secured by, taxes,
income, revenue, cash receipts or other moneys of the County received or accrued during or
allocable to Fiscal Year 2006-2007.
WHEREAS, pursuant to Section 53856 of the Government Code, certain revenues
which will be received by the County for the General Fund and attributable to Fiscal Year 2006-
2007 can be pledged for the payment of the principal of and interest on the Notes;
WHEREAS, the County wishes to authorize the issuance of one or more series of
the Notes in an aggregate amount not to exceed $145,000,000;
WHEREAS, the Notes shall be sold to the highest bidder or bidders pursuant to a
competitive sale to be held on November 9, 2006 or on such earlier or later date as is established
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by the County Administrator of the County (the "County Administrator") in accordance with the
terms of the Official Notice of Sale for the Notes;
WHEREAS, an Official Statement describing the Notes and an Official Notice of
Sale for the sale of the Notes will be distributed to potential purchasers of the Notes and a Notice
of Intention to Sell Notes will be published in THE BOND BUYER;
WHEREAS, this Board has been presented with the form of each document
hereinafter referred to, relating to the Notes, and the Board has examined and approved the form
of each document and desires to authorize and direct the execution of such documents and the
issuance of the Notes; and
WHEREAS, the County has full legal right, power and authority under the
Constitution and the laws of the State of California to enter into the transactions hereinafter
authorized;
NOW THEREFORE, BE IT RESOLVED by the Board of Supervisors of the
County of Contra Costa, as follows:
Section 1. Recitals. The foregoing recitals are true and correct and this Board
hereby so finds and determines.
Section 2. Authorization and Issuance.
(A) Solely for the purpose of anticipating taxes, income, revenues, cash
receipts and other moneys to be received by the County for the General Fund of the County
allocable to Fiscal Year 2006-2007, and not pursuant to any common plan of financing, the
County hereby determines to and shall borrow the aggregate principal sum of not to exceed One
Hundred Forty-Five Million Dollars ($145,000,000), by the issuance of temporary notes in one
or more series under Sections 53850 et seq. of the Government Code, designated the "County of
Contra Costa, California, 2006-2007 Tax and Revenue Anticipation Notes." A first series of
Notes labeled "Series A" (the"Series A Notes") shall be issued pursuant hereto in the aggregate
principal amount of not to exceed $145,000,000. A second series of Notes labeled "Series B"
(the "Series B Notes") may hereafter be issued prior to January 1, 2007, in an amount not to
exceed the difference between $145,000,000 and the principal amount of the Series A Notes.
The Notes of each series shall be payable on a parity with each other.
(B) The Series A Notes shall be initially issued and registered as provided in
Section 9 hereof and otherwise shall be in the denominations of$5,000 or any integral multiple
thereof, and shall be dated the date of issuance thereof, shall mature (without option of prior
redemption) not more than thirteen (13) months thereafter, and shall bear interest, payable at
least one year from the date of issuance and at maturity and computed on the basis of a 360-day
year composed of twelve 30-day months, at the rate per annum determined in accordance with
this Resolution.
(C) Interest due on the Notes,prior to the maturity thereof, shall be payable to
the person in whose name such Note is registered on the registration books of the County,
maintained by the Paying Agent (hereinafter defined), as of the close of business on the 15th day
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of the calendar month immediately preceding the interest payment date (the "Record Date"),
such interest to be paid by check mailed to such registered owner. Both the principal of the
Notes and interest due on the Notes at maturity shall be payable in lawful money of the United
States of America, only to the registered owners of the Notes upon surrender thereof at the office
of the Treasurer-Tax Collector of the County, as initial paying agent for the Notes (the "Paying
Agent") in Martinez, California upon the maturity thereof. No interest shall be payable on any
Note for any period after maturity during which the registered owner thereof fails to properly
present such Note for payment.
(D) The Series B Notes shall be dated the date of issuance thereof, shall
mature (without option of prior redemption) not more than thirteen (13) months thereafter and
shall bear interest payable at least one year from the date of issuance and at maturity computed
on the basis of a 360-day year composed of twelve 30-day months at the rate or rates determined
in accordance with this Resolution. The issuance of the Series B Notes shall be subject to the
following conditions:
(1) Receipt of confirmation from Moody's Investors Service ("Moody's") and
Standard & Poor's Ratings Service ("S&P") (each an "Agency") (if such respective
rating agency rated the Series A Notes) that the issuance of the Series B Notes will not
cause a reduction or withdrawal in such Agency's rating on the Series A Notes; and
(2) Receipt of an opinion of Bond Counsel to the effect that the interest on the
Series B Notes is excludable from gross income for federal income tax purposes.
(E) At any time after the sale of a series of the Notes, the County shall execute
the Notes of such series for issuance hereunder and shall deliver them to the Paying Agent, and
thereupon such Notes shall be authenticated and delivered by the Paying Agent to the purchaser
thereof upon the written request of the County and upon receipt of payment therefor from the
purchaser thereof.
Section 3. Sale of Notes. The proposed form of the Official Notice of Sale
for the Series A Notes, in substantially the form presented to this meeting (a copy of which is on
file with the Clerk of the Board), is hereby approved arid adopted as the Official Notice of Sale
for the Series A Notes. The County Administrator is hereby authorized and directed, for and in
the name of and on behalf of the County, to execute and deliver such Official Notice of Sale,
with such changes, additions, completions and corrections therein as the County Administrator
shall require or approve, including specifying the term of the Series A Notes and the interest
payment dates therefor, such approval to be conclusively evidenced by the execution and
delivery thereof. All of the Series A Notes shall be offered for public sale in accordance with the
Official Notice of Sale. Tamalpais Advisors, Inc. (the "Financial Advisor") is hereby authorized
and directed to cause to be delivered to prospective bidders for the Notes copies of said Official
Notice of Sale, subject to such changes, additions and completions as may be acceptable to the
County Administrator.
The proposed form of the Notice of Intention to Sell Notes, in substantially the
form presented to this meeting (a copy of which is on file with the Clerk of the Board), is hereby
approved. The County Administrator is hereby directed to cause said Notice of Intention to Sell
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Notes to be published once, no later than 5 days before the date of sale of the Notes, in THE
BOND BUYER, a financial publication generally circulated throughout the State of California.
Electronic bids shall be received by the County Administrator or his designee up
to the hour of 9:00 a.m. California time on November 9, 2006, or on such earlier or later date or
time as determined by the County Administrator as set forth in the Official Notice of Sale for the
purchase of the Series A Notes, for immediately available funds at not less than their principal
amount and accrued interest thereon to the date of their delivery, the interest rate or rates (which
shall not exceed 12% per annum) to be designated in the bid or bids, with the County
Administrator reserving the right to reject any and all bids, in accordance with the terms and
conditions of said Official Notice of Sale. The County Administrator is hereby authorized to
determine whether to accept partial bids in increments of a specified denominational amount,
such as $5,000,000, and to award the Series A Notes to the highest responsible bidder or bidders
resulting in the lowest true interest cost to the County or to reject any or all bids. If the Series A
Notes are awarded to more than one bidder and at different rates of interest, each incremental
amount of Series A Notes of the same interest rate shall be given the same designation with the
number of designations equal to the number of different interest rates.
The County Administrator may, in his sole discretion, cancel the public sale of the
Series A Notes and negotiate for the sale of the Series A Notes with an underwriter or
underwriters, and enter into an agreement for the purchase of the Notes by said underwriter or
underwriters, upon such terms and conditions as he shall deem appropriate.
The County Administrator and the Senior Deputy County Administrator/Debt
Manager are hereby authorized, upon a determination it is in the best interest of the County, to
sell the Series B Notes prior to January 1, 2007, by negotiated or public sale at not less than the
principal amount thereof, which principal amount shall not exceed the difference between
$145,000,000 and the principal amount of the Series A Notes, and at an interest rate or rates not
to exceed 12% per annum.
Section 4. Disposition of Proceeds of Notes. The County shall, immediately
upon receiving the proceeds of the sale of the Notes, place in the County General Fund
maintained in the County Treasury all amounts received from such sale. Such amounts held in
the County General Fund shall be invested as permitted by Section 53601 or Section 53635 of
the Government Code provided that no such investments shall consist of reverse repurchase
agreements. Such amounts may be commingled with other funds of the County.
Amounts in the County General Fund attributable to the sale of the Notes shall be
withdrawn and expended by the County for any purpose for which the County is authorized to
expend funds from the General Fund of the County, but (except for costs related to the issuance
of the Notes) only after exhausting funds otherwise available for such purposes (which are not
restricted funds), and only to the extent that on any given day such other funds are not then
available, and for purposes of this section, otherwise available funds excludes amounts that are
held or set aside in a reasonable working capital reserve (as described in the tax certificate of the
County delivered upon issuance of the Notes and, in any event, not exceeding five percent (5%)
of the County's total working capital expenditures from its available funds in Fiscal Year 2005-
2006). If on the date that is six months from the date of issuance of a series of the Notes all
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amounts attributable to the proceeds of the Notes of such series (including investment earnings
thereon) have not been so expended, the County shall promptly notify Orrick, Herrington &
Sutcliffe LLP(`Bond Counsel') and, to the extent of its power and authority, comply with the
instructions from Bond Counsel as to the means of satisfying the rebate requirements of Section
148 of the Internal Revenue Code of 1986 (the "Code").
Section 5. Source of Payment.
(A) The principal of and interest on the Notes shall be payable from taxes,
income, revenue, cash receipts and other moneys which are received by the County for the
General Fund for the Fiscal Year 2006-2007 and which are lawfully available for the payment of
current expenses and other obligations of the County (the "Unrestricted Revenues").
(B) As security for the payment of the principal of and interest on the Notes,
the County hereby pledges to deposit in trust in a special fund established by the County
Auditor-Controller and designated as the "2006-2007 Tax and Revenue Anticipation Note
Repayment Fund" (the "Repayment Fund") (i) an amount equal to fifty percent (50%) of the
aggregate principal amount of the Notes from the first Unrestricted Revenues received by the
County during the accounting period commencing on December 13, 2006 and ending
January 11, 2007, inclusive (the "First Pledge Period"), and (ii) an amount equal to 50% of the
principal amount of Notes from the first Unrestricted Revenues received by the County during
the accounting period commencing on April 12, 2007 and ending May 11, 2007, inclusive (the
"Second Pledge Period"), together with an amount sufficient (net of anticipated earnings on
moneys in the Repayment Fund) (x) to satisfy and make up any deficiency in the Repayment
Fund with respect to the prior Pledge Period and (y) to pay the interest on the Notes due on and
prior to maturity. The amounts pledged by the County for deposit into the Repayment Fund
from the Unrestricted Revenues received during each indicated accounting period, which
accounting periods are subject to change at the discretion of the County, are hereinafter called
the "Pledged Revenues.
(C) In the event that there have been insufficient Unrestricted Revenues
received by the County by the third business day prior to the end of any such Pledge Period to
permit the deposit into the Repayment Fund of the full amount of the Pledged Revenues required
to be deposited with respect to such Pledge Period, then the amount of any deficiency in the
Repayment Fund shall be satisfied and made up from any other moneys of the County lawfully
available for the payment of the principal of the Notes and the interest thereon (all as provided in
Sections 53856 and 53857 of the Government Code) (the "Other Pledged Moneys") on such date
or thereafter on a daily basis, when and as such Pledged Revenues and Other Pledged Moneys
are received by the County.
Section 6. Pledged Revenues.
(A) The Pledged Revenues shall be deposited by the Treasurer-Tax Collector
of the County (the "Treasurer") in the Repayment Fund on or prior to the last business day of
each respective Pledge Period, and applied as directed in this Resolution; and the Other Pledged
Moneys, if any, shall be deposited by the Treasurer in the Repayment Fund on the last business
day of such Pledge Period and on each business day thereafter, until the full amount of the
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moneys required by Section 5(B)has been so deposited in the Repayment Fund; provided that, if
on the date that is six months from the date of issuance of a series of the Notes all amounts
attributable to the proceeds of the Notes of such series (including investment earnings thereon)
have not been expended in accordance with Section 4, the amounts to be deposited in the
Repayment Fund during the period in which received shall be deposited as soon as received.
The principal of and interest on the Notes constitute a first lien and charge on, and shall be
payable from, moneys in the Repayment Fund. Moneys in the Repayment Fund shall be applied
only as hereinafter in this Section 6 provided.
(B) The Treasurer shall use the moneys in the Repayment Fund on the
respective interest payment dates to pay interest on the Notes then due and on the respective
maturity dates of the Notes to pay the principal of and interest on the Notes then due. Any
moneys remaining in the Repayment Fund after all such payments, or after provision for such
payments have been made, shall be transferred to the General Fund of the County. If for any
reason amounts in the Repayment Fund are insufficient to pay the Notes in full, such amounts
shall be applied pro rata to the payment of each series of Notes based on the total principal of
and interest payable upon the Notes at the respective maturities thereof, taking into account
anticipated earnings to be received on amounts in the Repayment Fund prior to the final maturity
date thereof.
(C) Moneys in the Repayment Fund Moneys shall be invested in Permitted
Investments as defined below, which will, as nearly as practicable, mature on or before the dates
on which such money is anticipated to be needed for disbursement hereunder. The proceeds.of
any such investments shall be retained in the Repayment Fund until payment of principal of and
interest on the Notes (or provision therefor) has been.made in accordance with paragraph (B), at
which time any excess amount shall be transferred to the General Fund of the County.
(D) Permitted Investments mean any of the following;
(1) United States Treasury notes, bonds, bills or certificates of indebtedness, or
those for which the full faith and credit of the United States are pledged for
the payment of principal and interest.
(2) Obligations of instrumentalities or agencies of the United States of
America limited to the following: (a) the Federal Home Loan Bank Board
(FHLB); (b) the Federal Home Loan Mortgage Corporation (FHLMC);
(c) the Federal National Mortgage Association (FNMA); (d) Federal Farm
Credit Bank (FFCB); (e) Government National Mortgage Association
(GNMA); (f) Student Loan Marketing Association (SLMA); Federal
Agricultural Mortgage Association and (g) guaranteed portions of Small
Business Administration (SBA)notes.
(3) Bills of exchange or time drafts drawn on and accepted by a commercial
bank, otherwise known as bankers acceptances. Purchases of bankers
acceptances may not exceed a maturity of 180 days. The financial
institution must have a minimum short-term rating of"A-1" and"P-1" by
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S&P and Moody's, respectively, and a long-term rating of no less than
"A„
(4) Commercial paper of"prime" quality of the highest ranking or of the
highest letter and numerical rating as provided for by Moody's ("P-1") or
S&P ("A-V), Eligible paper is further limited to issuing corporations that
are organized and operating within the United States and having total
assets in excess of five hundred million dollars ($500,000,000). Purchases
of eligible commercial paper may not exceed a maturity of 270 days.
(5) Negotiable certificates of deposits issued by a nationally or state-chartered
bank or a state or federal association (as defined by Section 5102 of the
California Financial Code) or by a state-licensed branch of a foreign bank
in each case which has, or which is a subsidiary of a parent company which
has, the highest letter and numerical rating from Moody's ("P-1") and S&P
("A-1"), respectively.
(6) Investments in repurchase agreements of any securities listed in (1) through
(4) above. Investments in repurchase agreements may be made with
financial institutions which are rated in one of the two highest long-term
rating categories by Moody's and S&P, when the term of the agreement
does not exceed 30 days and are fully secured at or greater than 102% of
the market value plus accrued interest by obligations of the United States
Government, its agencies and instrumentalities, in accordance with number
(2) above.
(7) Deposits in the State of California Treasurer's Local Agency Investment
Fund (LAIF).
(8) Shares of beneficial interest issued by the Investment Trust of California
(Ca1TRUST) pursuant to California Government Code Section 6509.7 and
authorized for local agency investment pursuant to California Government
Code Section 53601(o).
(9) The Contra Costa County Treasurer's Investment Pool.
Section 7. Execution of Notes. The Treasurer or his designee is hereby
authorized to execute the Notes by use of his manual or facsimile signature, and the Clerk of the
Board of Supervisors of the County (the "Clerk of the Board") or one of his assistants is hereby
authorized to countersign, by manual or facsimile signature, the Notes and to affix the seal of the
County thereto by impressing the seal or by imprinting a facsimile of the seal thereon. Said
officers are hereby authorized to cause the blank spaces in Exhibit A to be filled in as may be
appropriate and to deliver the Notes to the respective purchasers thereof. In the case of Notes
executed by facsimile signature of both the Treasurer and the Clerk of the Board, the Notes shall
not be valid unless and until the Paying Agent or his designee shall have manually authenticated
such Notes.
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In case any officer whose signature appears on the Notes shall cease to be such
officer before the delivery of the Notes 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 Notes.
Section 8. Form of Notes and Certificate of Authentication and Registration.
The Notes shall be issued in fully registered form without coupons and the Notes and the
Certificate of Authentication and Registration shall be substantially in the form and substance set
forth in Exhibit A attached hereto and by reference incorporated herein, the blanks in said form
to be filled in with appropriate words and figures.
Section 9. Use of Depository, Registration, Exchange and Transfer.
(A) The Depository Trust Company, New York,New York, is hereby
appointed depository for the Notes. The Depository Trust Company shall act as depository
pursuant to the Blanket Issuer Letter of Representations on file with the Depository Trust
Company. The Notes shall be initially issued and registered in the name of"Cede & Co.," as
nominee of The Depository Trust Company, New York,New York and shall be evidenced by a
single Note. Registered ownership of each Note, or any portion thereof, may not thereafter be.
transferred except as set forth in Section 9(B).
(B) The Notes shall be initially issued and registered as provided in
Section (A) hereof. Registered ownership of the Notes, or any portions thereof, may not
thereafter be transferred except:
(i) to any successor of Cede & Co., as nominee of The Depository
Trust Company, or its nominee, or of any substitute depository designated pursuant to clause (ii)
of this subsection (B) ("Substitute Depository"); provided that any successor of Cede & Co., as
nominee of The Depository Trust Company or Substitute Depository, shall be qualified under
any applicable laws to provide the service proposed to be provided by it;
(ii) to any Substitute Depository not objected to by the Treasurer, upon
(1) the resignation of The Depository Trust Company or its successor (or any Substitute
Depository or its successor) from its functions as depository, or (2) determination by the
Treasurer to substitute another depository for The Depository Trust Company (or its successor)
because the Depository Trust Company (or its successor) is no longer able to carry out its
functions as depository; provided that any such Substitute Depository shall be qualified under
any applicable laws to provide the services proposed to be provided by it; or
(iii) to any person as provided below, upon (1) the resignation of The
Depository Trust Company or its successor(or any Substitute Depository or its successor) from
its functions as depository, or (2) a determination by the Treasurer to discontinue using The
Depository Trust Company or a depository.
(C) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection
(B) of this Section , upon receipt of all outstanding Notes of each series by the Paying Agent
(together, in the case of a successor paying agent appointed by the County pursuant to Section 12
hereof, with a written request of the Treasurer to such successor paying agent designating the
OHS Wesr.260088774.5 8
Substitute Depository), a single new Note for each series, which the County shall prepare or
cause to be prepared, shall be executed and delivered, registered in the name of any such
successor to Cede & Co. or such Substitute Depository, or their respective nominees, as the case
may be, all as specified by the Treasurer or, in the case of a successor paying agent appointed by
the County pursuant to Section 12 hereof, as specified in the written request of the Treasurer. In
the case of any transfer pursuant to clause (iii) of Subsection (B) of this Section 9 upon receipt of
all outstanding Notes by the Paying Agent (together, in the case of a successor paying agent
appointed by the County pursuant to Section 12 hereof, with a written request of the Treasurer to
such successor paying agent), new Notes, which the County shall prepare or cause to be
prepared, shall be executed and delivered in such denominations and registered in the names of
such persons as specified by the Treasurer or, in the case of a successor paying agent appointed
by the County pursuant to Section 12 hereof, as are requested in such written request of the
Treasurer, subject to the limitations of this Section 9, provided that the Paying Agent shall
deliver such new Notes as soon as practicable.
(D) The County and the Paying Agent shall be entitled to treat the person in
whose name any Note is registered as the owner thereof for all purposes of the Resolution and
for purposes of payment of principal of and interest on such Note, notwithstanding any notice to
the contrary received by the Paying Agent or the County; and the County and the Paying Agent
shall not have responsibility for transmitting payments to, communicating with, notifying, or
otherwise dealing with any beneficial owners of the Notes. Neither the County nor the Paying
Agent shall have any responsibility or obligation, legal or otherwise, to any such beneficial
owners or to any other party, including The Depository Trust Company or its successor (or
Substitute Depository or its successor), except to the owner of any Notes, and the Paying Agent
may rely conclusively on its records as to the identity of the owners of the Notes.
(E) Notwithstanding any other provision of this Resolution and so long as all
outstanding Notes are registered in the name of Cede & Co. or its registered assigns, the County
and the Paying Agent shall cooperate with Cede & Co. or its registered assigns, as sole registered
owner, in effecting payment of the principal of and interest on the Notes by arranging for
payment in such manner that funds for such payments are properly identified and are made
available on the date they are due all in accordance with the Blanket Issuer Letter of
Representations, the provisions of which the Paying Agent may rely upon to implement the
foregoing procedures notwithstanding any inconsistent provisions herein.
(F) In the.case of any transfer pursuant to clause (iii) of subsection (B) of this
Section, any Note may, in accordance with its terms, be transferred or exchanged for a like
aggregate principal amount in authorized denominations of the same series, upon the books
required to be kept by the Paying Agent pursuant to the provisions hereof, by the person in
whose name it is registered, in person or by his duly authorized attorney, upon surrender of such
Note for cancellation, and, in the case of a transfer, accompanied by delivery of a written
instrument of transfer, duly executed and in form approved by the Paying Agent.
Whenever any Note shall be surrendered for transfer or exchange, the County
shall execute and the Paying Agent shall authenticate, if required, and deliver a new Note or
Notes of the same series of authorized denominations, for a like aggregate principal amount.
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The Paying Agent shall require the owner requesting such transfer or exchange to pay any tax or
other governmental charge required to be paid with respect to such transfer or exchange.
(G) The Paying Agent will keep or cause to be kept sufficient books for the
registration and transfer of the Notes, which shall at all times be open to inspection by the
County. Upon presentation for such purpose, the Paying Agent shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
such books, Notes as hereinbefore provided.
(H) If any Note shall become mutilated, the County, at the expense of the
owner of such Note, shall execute, and the Paying Agent shall thereupon authenticate, if
required, and deliver a new Note of like series, tenor and number in exchange and substitution
for the Note so mutilated, but only upon surrender to the Paying Agent of the Note so mutilated.
Every mutilated Note so surrendered to the Paying Agent shall be cancelled by the Paying Agent
and delivered to, or upon the order of, the County. If any Note shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the County and the Paying Agent
and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given,
the County, at the expense of the owner, shall execute, and the Paying Agent shall thereupon
authenticate, if required, and deliver a new Note of like series, tenor and number in lieu of and in
substitution for the Note so lost, destroyed or stolen (or if any such Note shall have matured or
shall be about to mature, instead of issuing a substitute Note, the Paying Agent may pay the same
without surrender thereof). The Paying Agent may require payment by the registered owner of a
Note of a sum not exceeding the actual cost of preparing each new Note issued pursuant to this
paragraph and of the expenses which may be incurred by the County and the Paying Agent. Any
Note issued under these provisions in lieu of any Note alleged to be lost, destroyed or stolen shall
constitute an original additional contractual obligation on the part of the County whether or not
the Note so alleged to be lost, destroyed or stolen be, at any time, enforceable by anyone, and
shall be entitled to the benefits of this Resolution with all other Notes secured by this Resolution.
All Notes surrendered for payment or registration of transfer, if surrendered to
any person other than the Paying Agent, shall be delivered to the Paying Agent and shall be
promptly cancelled by the Paying Agent. The County may at any time deliver to the Paying
Agent for cancellation any Notes previously authenticated and delivered hereunder which the
County may have acquired in any manner whatsoever, and all Notes so delivered shall promptly
be cancelled by the Paying Agent. No Note shall be authenticated in lieu of or in exchange for
any Notes cancelled as providedherein, except as expressly permitted hereunder. All cancelled
Notes held by the Paying Agent shall be disposed of as directed by the County.
Section 10. General Covenants. It is hereby covenanted and warranted by the
Board that-all representations and recitals contained in this Resolution are true and correct and
that the Board and the County, and their appropriate officials, have duly taken all proceedings
necessary to be taken by them, and will take any additional proceedings necessary to be taken by
them, for the levy, collection and enforcement of the taxes, income, revenue, cash receipts and
other moneys pledged hereunder in accordance with law and for carrying out the provisions of
this Resolution and the Notes and shall cause to be paid in accordance with their terms the
principal of and interest on the Notes.
OHS West260088774.5 10
The County hereby covenants to deposit funds in the Repayment Fund at the
times and in the amounts specified herein to provide sufficient moneys to pay the principal of
and interest on the Notes on the day or days on which they mature.
Section 11. Tax Covenants; Rebate Fund.
(A) The County hereby covenants that it will not take any action, or fail to
take any action, if such action or failure to take such action would adversely affect the exclusion
from gross income of the interest payable on the Notes under Section 103 of the Code. Without
limiting the generality of the foregoing, the County hereby covenants that it will comply with the
requirements of the Tax Certificate of the County with respect to the Notes (the "Tax
Certificate"), to be entered into by the County as of the date of issuance of the Notes. The
provisions of this Section 11 shall survive payment in full or defeasance of the Notes.
(B) The County covenants that it shall make or cause to be made all
calculations in a reasonable and prudent fashion relating to any rebate of excess investment
earnings on the proceeds of the Notes due to the United States Treasury, shall segregate and set
aside from lawfully available sources the amount such calculations may indicate may be required
to be paid to the United States Treasury and shall otherwise at all times do and perform all acts
and things necessary and within its power and authority, including complying with each
applicable requirement of Section 103 and Sections 141 through 150 of the Code and complying
with the instructions of Bond Counsel referred to in Section 4 hereof, to assure that interest paid
on the Notes shall, for the purposes of federal income taxes and California personal income
taxation, be excludable from the gross income of the recipients thereof and exempt from such
taxation. As part of the performance of the covenant contained in the preceding sentence,
promptly after six months from the date of the issuance of each series of the Notes, the County
will reasonably and prudently calculate the amount of the Note proceeds of such series which
have been expended, with a view to determining whether or not the County has met the
requirements of Section 148(f)(4)(B) of the Code with respect to the Notes of such series, and if
it has not met such requirements, it will reasonably and prudently calculate or cause to be
calculated the amount, if any, of investment earnings which must be rebated to the United States
and will immediately set aside, from revenues attributable to the 2006-2007 Fiscal Year or, to the
extent not available from such revenues, from any other moneys lawfully available, the amount
of any such rebate in the Fund referred to in paragraph (C) of this Section 11.
(C) if funds are required to be deposited therein, the County Auditor-
Controller shall establish and maintain a fund separate from any other fund established and
maintained hereunder designated as the "2006-2007 Tax and Revenue Anticipation Note Rebate
Fund". There shall be deposited in the Rebate Fund such amounts as are required to be deposited
therein in accordance with the written instructions from Bond Counsel pursuant to Section 4
hereof.
(D) Notwithstanding any other provision of this Resolution to the contrary,
upon the County's failure to observe, or refusal to comply with, the covenants contained in this
Section, no one other than the owners or former owners of the Notes shall be entitled to exercise
any right or remedy under this Resolution on the basis of the County's failure to observe, or
refusal to comply with, such covenants.
OHS West:260088774.5 11
• a
(E) Notwithstanding any provision of this section, if the County shall provide
to the Paying Agent an opinion of Bond Counsel that any specified action required under this
section is no longer required or that some further or different action is required to maintain the
exclusion from gross income for federal income tax purposes of interest on the Notes, the Paying
Agent and the County may conclusively rely on such opinion in complying with the
requirements of this section, and the covenants hereunder shall be deemed to be modified to that
extent.
Section 12. Paying Agent, The Treasurer is hereby appointed as Paying Agent
for the Notes. The County hereby directs and authorizes the payment by the Paying Agent of the
interest on and principal of the Notes when such become due and payable, from the Repayment
Fund in the manner set forth herein. Payment of the Notes shall be in accordance with the terms
of the Notes and this Resolution.
This appointment shall not preclude the County from appointing a financial
institution to act as Paying Agent or one or more successors thereto, all without notice to or the
consent of the registered owners of the Notes. Any such successor paying agent shall be or shall
have co-paying agent relationships with one or more banks or trust companies with a minimum
of$500 million,in capital and with offices in New York, New York, Los Angeles, California, or
San Francisco, California.
The Paying,Agent, initially the Treasurer, is also appointed as registrar and upon
the request of any registered owner is authorized to record the transfer or exchange of Notes in
accordance with the provisions hereof.
Section 13. Official Statement for Notes. The proposed form of Official
Statement relating to the Notes (the "Official Statement'), on file with the Clerk of the Board of
Supervisors and incorporated into this Resolution by reference, is hereby approved with such
changes, additions, completion and corrections as the County Administrator may approve. The
County Administrator or his designee is hereby authorized and directed, for and in the name and
on behalf of the County, to execute and deliver an official statement in substantially said form,
with such changes therein as such officer executing the same may require or approve, such
approval to be conclusively evidenced by the execution and delivery thereof. Distribution by the
Financial Advisor of a preliminary Official Statement relating to the Notes is hereby approved
and the County Administrator or his designee is hereby authorized and directed, for and in the
name and on behalf of the County, to execute a certificate confirming that the Preliminary
Official Statement has been"deemed final"by the County for purposes of Securities and
Exchange Commission Rule 15c2-12,
Section 14. Continuing Disclosure. The Treasurer and the County
Administrator are hereby authorized to execute a Continuing Disclosure Certificate on behalf of
the County containing such covenants of the County as shall be necessary to comply with the
requirements of Securities and Exchange Commission Rule 15c2-12. The County hereby
covenants and agrees that it will comply with and carry out all of the provisions of such
Continuing Disclosure Certificate.
OHS West260088774.5 12
Section 15, Approval of Actions. All actions heretofore taken by the officers
and agents of the County or the Board with respect to the sale and issuance of the Notes are
hereby approved, confirmed and ratified, and the officers of the County and the Board are hereby
authorized and directed, for and in the name and on behalf of the County, to do any and all things
and take any and all actions and execute any and all certificates, agreements and other documents
which they, or any of them, may deem necessary or advisable in order to consummate the lawful
issuance and delivery of the Notes in accordance with this Resolution.
Section 16. Proceedings Constitute Contract. The provisions of the Notes and
of this Resolution shall constitute a contract between the County and the registered owners of the
Notes, and such provisions shall be enforceable by mandamus or any other appropriate suit,
action or proceeding at law or in equity in any court of competent jurisdiction, and, upon
issuance of the Notes, shall be irrepealable.
Section 17. Severability. If any one or more of the agreements, conditions,
covenants or terms contained herein required to be observed or performed by or on the part of
the Board shall be contrary to law, then such agreement or agreements, such condition or
conditions, such covenant or covenants or such term or terms shall be null and void and shall be
deemed severable from the remaining agreements, conditions, covenants and terms hereof and
shall in no way affect the validity hereof or of the Notes, and the owners of the Notes shall retain
all the benefit, protection and security afforded to them hereunder and under all provisions of
applicable law. The Board hereby declares that it would have adopted this Resolution and each
and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would
have authorized the issuance of the Notes pursuant hereto irrespective of the fact that any one or
more of the 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.
OHS West:260088774.5 13
PASSED AND ADOPTED BY "THE BOARD OF SUPERVISORS OF THE
COUNTY OF CONTRA COSTA this 17th day of October, 2006 by the following vote:
AYES: Uilkema,Piepho,DeSaulnier,Glover and Gioia
f NOES: None
ABSENT: None
ABSTAIN: None
COUNTY OF CONTRA COSTA
By:
- 6�--
Chair of the Board
of Supervisors
{Seal]
ATTEST: John$, Cullen, Clerk of the Board of
Supervisors and County Administrator
By(:-,-'
ty Clerk of the Board of Supervisors
OHS West260088774.5 14
EXHIBIT A
REGISTERED REGISTERED
No. R- $
COUNTY OF CONTRA COSTA, CALIFORNIA,
2006-2007 TAX AND REVENUE ANTICIPATION NOTE, SERIES [A/B]
Rate of Interest: Note Date: Maturity Date: CUSIP No.:
Registered Owner: CEDE & CO.
Principal Amount: DOLLARS
FOR VALUE RECEIVED, the County of Contra Costa (the "County"), State of
California, acknowledges itself indebted to and promises to pay to the Registered Owner
identified above, or registered assigns, the Principal Amount specified above, in lawful money of
the United States of America, on the Maturity Date specified above, together with interest
thereon payable [on and] at the maturity thereof, at the Rate of Interest per annum
set forth above (computed on the basis of a 360-day year composed of twelve 30-day months) in
like lawful money from the Note Date specified above until payment in full of said principal
sum. Interest on this Note, due on shall be paid to the person in whose name this
Note is registered as of the close of business on the 15th day of the calendar month immediately
preceding the interest payment date by check mailed to such registered owner. The principal of
and interest on this Note shall be payable only to the registered owner hereof upon surrender of
this Note at the office of the Treasurer-Tax Collector of the County, as paying agent(together
with any successor appointed by the County, the "Paying Agent") as the same shall fall due;
provided, however, that no interest shall be payable for any period'after maturity during which
the registered owner hereof fails to properly present this Note for payment.
It is hereby certified, recited and declared that this Note is one of a series of Notes
of the Series specified above issued in the aggregate principal amount of$ and is
part of an authorized issue of Notes entitled "County of Contra Costa, California, 2006-2007 Tax
and Revenue Anticipation Notes" (the "Notes"), authorized in the aggregate principal amount of
Dollars ($ ), all of like tenor, made, executed and given
pursuant to the authority of Article 7.6 (commencing with Section 53850) of Chapter 4, Part 1,
Division 2, Title 5 of the California Government Code and all laws amendatory thereof or
supplemental thereto, and under and pursuant to the provisions of a Resolution of the Board of
Supervisors of the County adopted on , 2006 (herein called the "Resolution"),
OHS West260088774,5 A-I
authorizing the issuance of the Notes, and that all acts, conditions and things required to exist,
happen and be performed precedent to and in the issuance of this Note have existed, happened
and been performed in regular and due time, form and manner as required by law, and that this
Note, together with all other indebtedness and obligations of the County, does not exceed any
limit prescribed by the Constitution or statutes of the State of California. The Notes of each
series shall be payable on a parity with each other.
The principal of and interest on the Notes shall be payable from taxes, income,
revenue, cash receipts and other moneys which are received by the County for the General Fund
of the County for the Fiscal Year 2006-2007 and which are lawfully available for the payment of
current expenses and other obligations of the County (the "Unrestricted Revenues"). As security
for the payment of the principal of and interest on the Notes, the County has pledged to deposit
in the Repayment Fund (as defined in the Resolution): (i) an amount equal to 50% of the
principal amount of the Notes from the first Unrestricted Revenues received by the County
during the accounting period commencing on December_, 2006 and ending January_, 2007,
inclusive (the "First Pledge Period"), and (ii) an amount equal to 50% of the principal amount of
Notes from the first Unrestricted Revenues received by the County during the accounting period
commencing on April _, 2007 and ending May_, 2007, inclusive (the "Second Pledge
Period"), together with an amount sufficient (net of anticipated earnings on moneys in the
Repayment Fund) (x) to satisfy and make up any deficiency in the Repayment Fund with respect
to the prior Pledge Period and (y) to pay the interest on the Notes due on and prior to maturity
(such pledged amounts being hereinafter called the "Pledged Revenues"). In the event that there
are insufficient Pledged Revenues received by the County by the third business day prior to the
end of any such Pledge Period to permit the deposit into the Repayment Fund of the full amount
of the aforesaid moneys to be deposited, then the amount of any deficiency in the Repayment
Fund shall be satisfied and made up from any other moneys of the County lawfully available for
the payment of the principal of and interest on the Notes (such other pledged moneys being
hereinafter called the "Other Pledged Moneys"), The principal of and interest on the Notes shall
constitute a first lien and charge on, and shall be payable from, moneys in the Repayment Fund,
This Note is transferable by the registered owner hereof in person or by such
owner's attorney duly authorized in writing at the office of the Paying Agent, but only in the
manner, subject to the limitations and upon payment of the charges provided in the Resolution,
and upon surrender and cancellation of this Note. Upon such transfer a new Note or Notes of
authorized denominations and for the same aggregate principal amount will be issued to the
transferees in exchange herefor.
The County and the Paying Agent may deem and treat the registered owner hereof
as the absolute owner hereof for the purpose of receiving payment of or on account of principal
hereof and interest due hereon and for all other purposes, and neither the County nor the Paying
Agent shall be affected by any notice to the contrary.
This Note shall not be valid or become obligatory for any purpose until the
Certificate of Registration hereon shall have been signed by the Paying Agent.
OHS West:260088774.5 A-2
IN WITNESS WHEREOF, the County of Contra Costa has caused this Note to be
executed by the manual or facsimile signature of its Treasurer-Tax Collector and countersigned
by the manual or facsimile signature of the Clerk of its Board of Supervisors and caused the
official seal of its Board of Supervisors to be impressed hereon, all as of the Note Date specified
above.
COUNTY OF CONTRA COSTA
By '
Treas e x Collector
(SEAL)
Countersigned:
County Administrator and
Clerk of the Board of Supervisors
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION]
This Note is one of the Notes described in the within-mentioned Resolution,
which Note has been authenticated and registered on the date set forth below.
Date of Authentication:
By
Treasi •ei ax Collector
of the CoVpnly of Contra Costa
Otis West 260088774.5 A-3
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
(insert Social Security Number or taxpayer identification
number) the within-mentioned registered Note and hereby irrevocably constitute(s) and
appoint(s) attorney, to transfer the same on the books of the
Trustee with full power of substitution in the premises.
Dated:
Signature
NOTE: The signature to the
assignment must correspond to the
name as written on the face of this
Note in every particular, without
any alteration or change
whatsoever.
Signature Guaranteed By:
NOTE: The signature to
the assignment must be
guaranteed by a member
firm of the New York Stock
Exchange or a commercial
bank or trust company.
[FORM OF DTC LEGEND]
Unless the certificate is presented by an authorized representative of The
Depository Trust Company to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since the registered owner
hereof, Cede & Co., has an interest herein.
OHS West:260088774.5 A-4
CLERK'S CERTIFICATE
The undersigned Chief Clerk of the Board of Supervisors of the County of Contra
Costa, hereby certifies 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 and legally held at
the regular meeting place thereof on e�lrl , 2006, of which meeting all of the members
of the Board of Supervisors of said County had due notice and at which a majority thereof were
present.
At said meeting said resolution was adopted by the follmui,ng vote:
AYES: Uilkema,Piepho,DeSaulnier,Glover and Gioia
NOES: None
ABSENT: None
ABSTAIN: None
I have carefully compared the same with the original minutes of said meeting on
file and of record in my office and the foregoing is a full, true and correct copy of the original
resolution adopted at said meeting and entered in said minutes.
I further certify that an agenda of said meeting was posted at least 72 hours prior
to the date of the meeting in a place in the City of Martinez, California, freely accessible to
members of the public and that a short description of said resolution appeared on said agenda.
Said resolution has not been amended, modified or rescinded since the date of its
adoption, an the same is now in full force and effect.
Dated•:
C ief Clerk of the Board o upervisors
County of Contra Costa
[Seal]
OHS West:260088774.5
L&J DRAFT
10/09/06
CONTINUING DISCLOSURE CERTIFICATE
COUNTY OF CONTRA COSTA,.CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
This Continuing Disclosure Certificate(the"Disclosure Certificate") is executed and delivered by
the County of Contra Costa, California (the "County") in connection with the issuance of$
aggregate principal amount of its County of Contra Costa, California 2006-2007 Tax and Revenue
Anticipation Notes, Series A (the "Notes") pursuant to Resolution authorizing the issuance of the Notes
adopted by the Board of Supervisors of the County on 2006 (the "Resolution"); and in
connection therewith the County covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. The Disclosure Certificate is being executed
and delivered by the County for the benefit of the Holders (defined below) of the Notes and in order to
assist the Underwriters of the Notes in complying with S.E.C. Rule 15c2-12.
SECTION 2. Definitions. In addition to the definitions set forth above and in the Resolution,
which apply to any capitalized term used in the Disclosure Certificate unless otherwise defined herein, the
following capitalized terms shall have the following meanings:
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal
Advisory Council of Texas or any successor thereto, or any other organization or method approved by the
staff or members of the Securities and Exchange Commission as an intermediary through which issuers
may, in compliance with the Rule, make filings required by this Continuing Disclosure Certificate
"Beneficial Owner" shall mean any person which has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Note or Notes, including persons holding
Notes through nominees or depositories.
"Holders" shall mean either the registered owners of the Notes, or, if the Notes are registered in
the name of The Depository Trust Company or another recognized depository, any Beneficial Owner or
applicable participant in its depository system.
"Listed Event" shall mean any of the events listed in Section 3(a)of the Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule..The National Repositories currently approved by the Securities and
Exchange Commission can be found at the following website:
http://www.sec.gov/info/municipal/nrmsir.htm.
"Repository"shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
` under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository"shall mean any public or private repository or entity designated by the State of
j California as a state repository for the purpose of the Rule and recognized as such by the Securities and
Exchange Commission. As of the date of the Disclosure Certificate, there is no State Repository.
200-06036\cdc-1
"Tax-exempt" shall mean that interest on the Notes is excluded from gross income for federal
income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise
includable directly or indirectly for purposes of calculating any other tax liability, including any
alternative minimum tax or environmental tax.
"Underwriters" shall mean and any other original underwriters of the Notes, if any,
required to comply with the Rule in connection with the offering of the Notes.
SECTION 3. Reporting of Listed Events.
(a) Pursuant to the provisions of this section, to the extent applicable, the County shall give
notice of the occurrence of any of the following events with respect to the Notes, if material:
(i) principal and interest payment delinquencies.
(ii) non-payment related defaults.
(iii) modifications to the rights of the Holders.
(iv) optional,contingent or unscheduled note calls.
(v) defeasances.
(vi) rating changes.
(vii) adverse tax opinions or events adversely affecting the tax-exempt status
of the Notes.
(viii) unscheduled draws on the debt service reserves reflecting financial
difficulties.
(ix) unscheduled draws on the credit enhancements reflecting financial
difficulties.
(x) substitution of the credit or liquidity providers or their failure to perform.
(xi) release, substitution or sale of property securing repayment of the Notes.
(b) Whenever the County obtains knowledge of the occurrence of a Listed Event,the County
shall as soon as possible determine if the occurrence of such event would be material.
(c) If the County determines that the occurrence of a Listed Event would be material, the
County shall promptly file a notice of such occurrence with each Repository.
(d) Notwithstanding any other provision of this Continuing Disclosure Certificate, the
County reserves the right to make any of the aforementioned filings through the Central Post Office.
i
SECTION 4. Termination of Reporting Obligation. The County's obligations under the
{ Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of
the Notes.
i
200-06036\cdc-1 2
I
SECTION 5. Additional Information. Nothing in the Disclosure Certificate shall be deemed to
prevent the County from disseminating any other information, using the means of dissemination set forth
in the Disclosure Certificate or any other means of communication, or including any other information in
any notice of occurrence of a Listed Event, in addition to that which is required by the Disclosure
Certificate. If the County chooses to include any information in any notice of occurrence of a Listed
Event in addition to that which is specifically required by the Disclosure Certificate, the County shall
have no obligation under the Disclosure Certificate to update such information or include it in any future
notice of occurrence of a Listed Event.
SECTION 6. Default. In the event of a failure of the County to comply with any provision of the
Disclosure Certificate, the Underwriters or any Holder may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the County to
comply with its obligations under the Disclosure Certificate; provided, that the sole remedy under the
Disclosure Certificate in the event of any failure of the County to comply with the Disclosure Certificate
shall be an action to compel performance hereunder.
SECTION 7. Beneficiaries. The Disclosure Certificate shall inure solely to the benefit of the
County, the Underwriters and the Holders, and shall create no rights in any other person or entity.
Dated: 12006.
COUNTY OF CONTRA COSTA
By:
John B. Cullen
County Administrator and Clerk of the
Board of Supervisors
1
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i
i
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9
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200-06036\cdc-1 3
U .
L&J DRAFT 95
10/10/06
-�j NEW ISSUE-BOOK ENTRY ONLY RATINGS: Moody's:
Standard&Poor's:
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the County, based upon an analysis of
existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain
representations and compliance with certain covenants, interest on the Notes is excluded from gross income for
federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of
California personal income taxes. In the further opinion of Bond Counsel, interest on the Notes is not a specific
preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond
Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative
minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the
ownership or disposition of, or the accrual or receipt of interest on, the Notes. See "TAX MATTERS."
$
COUNTY OF CONTRA COSTA, CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION_NOTES, SERIES A
` INTEREST RATE: %
CUSIP NO.: 212219
Dated: Date of Delivery Due:December 11,2007
The County of Contra Costa, California (the "County") 2006-2007 Tax and Revenue Anticipation Notes, Series A
(the "Notes") are being issued to finance the seasonal cash flow requirements of the County during the fiscal year
ending June 30, 2007. The Notes will be issued as fixed-rate notes in fully registered form. The Notes, when
issued, will be registered in the name of Cede&Co., as nominee for The Depository Trust Company("DTC"),New
York,New York, which will act as securities depository for the Notes. Purchases of the Notes will be made only
through DTC Participants under the book-entry system maintained by DTC in denominations of $5,000 or any
integral multiple thereof. Purchasers will not receive certificates representing their ownership interest in the Notes
purchased.
The Notes will be dated the date of delivery thereof and will not be subject to redemption prior to maturity. The
Notes will bear interest at a fixed rate per annum from their dated date, Principal of and interest on the Notes is
payable at maturity of the Notes.
In accordance with California law, the Notes are general obligations of the County, but are payable only out of the
taxes, income, revenue, cash receipts and other General Fund moneys of the County attributable to the Fiscal Year
2006-07 and legally available for payment thereof. The Notes are equally and ratably secured by a pledge of certain
unrestricted taxes, income,revenue, cash receipts and other moneys. The County is not authorized to levy or collect
any tax for the repayment of the Notes. See"THE NOTES—Security for the Notes."
This cover page contains certain information for quick reference only and is not a summary of the transaction.
Investors must read the entire Official Statement to obtain information essential to the making of an informed
investment decision.
The Notes are offered when, as and if issued by the County and accepted by the purchaser(s), subject to the
approval of validity by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. Certain
other legal matters will be passed upon for the County by County Counsel and by Lofton & Jennings,
San Francisco, California, Disclosure Counsel. It is expected that the Notes will be available through the facilities
of DTC in New York,New York for delivery on or about November 21, 2006.
BIDS TO BE RECEIVED ELECTRONICALLY EXCLUSIVELY THROUGH PARITY®NO LATER THAN
9:00 A.M.,CALIFORNIA TIME ON THURSDAY,NOVEMBER 9,2006. SEE"OFFICIAL NOTICE OF SALE."
Dated: ,2006
*Preliminary,subject to change.
200-06036\pos-5
No dealer, broker, salesperson or other person has been authorized by the County to give any information
or to make any representations, other than those contained herein, in connection with the offering of the Notes and,
if given or made, such information or representations must not be relied upon. This Official Statement does not
constitute an offer to sell or the solicitation of an offer to buy the Notes nor shall there be any sale of the Notes by
any person in any jurisdiction in which or to any person to whom it is unlawful to make such an offer, solicitation or
sale. This Official Statement.is not to be construed as a contract with the purchasers of the Notes. Estimates and
opinions are included and should not be interpreted as statements of fact. Summaries of documents do not purport
to be complete statements of their provisions. The information and expressions of opinion herein are subject to
change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the affairs of the County since the date
hereof.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COUNTY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Notes have not been registered with the Securities and Exchange Commission by reason of the
provisions of Section 3(a)(2) of the Securities Act of 1933, as amended. The registration or qualification of the
Notes in accordance with applicable provisions of Securities Laws of the states in which these Notes have been
registered or qualified, and the exemption from registration or qualification in other states, shall not be regarded as a
recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the securities
or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal
offense.
Certain statements in this Official Statement, which may be identified by the use of such terms as plan,
project, expect, estimate, budget or other similar words, constitute forward-looking statements. Such forward-
looking statements include, but are not limited to, statements contained in APPENDIX B—"COUNTY FINANCIAL
INFORMATION." Such forward-looking statements refer to the achievement of certain results or other expectations or
performance which involved known and unknown risks, uncertainties and other factors. These risks, uncertainties
and other factors may cause actual results, performance or achievements to be materially different from any
projected results, performance or achievements described or implied by such forward-looking statements. The
County does not plan to issue updates or revisions to such forward-looking statements if or when its expectations,or
events, conditions or circumstances on which such statements are based, occur, or if actual results, performance.or
achievements are materially different from any results, performance or achievements described or implied by such
forward-looking statements.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER(S) MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER(S)
MAY OFFER AND SELL THE NOTES TO CERTAIN DEALERS AND BANKS AT PRICES LOWER THAN
THE INITIAL PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC
OFFERING PRICE MAY BE CHANGED FROM.TIME TO TIME BY THE UNDERWRITER(S).
This Preliminary Official Statement is submitted in connection with the sale of the Notes referred to herein
and may not be reproduced or used, in whole or in part, for any other purpose. This Preliminary Official Statement
and the information contained herein are in a form deemed final by the County for purposes of Rule 15c2-12
promulgated under the Securities Exchange Act of 1934, as amended (except for omission of certain information
permitted under Rule 15c2-12(b)(1)). However, the information herein is subject to revision, completion or
amendment in a final Official Statement.
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A TABLE OF CONTENTS
Page Page
INTRODUCTION.................................................1 Article XIII C and Article XIII D of the
COUNTY OF CONTRA COSTA CASH California Constitution...................................19
MANAGEMENT PROGRAM .............................1 Proposition 62................................................20
CONTINUING DISCLOSURE............................2 Proposition IA...............................................20
THE NOTES.........................................................3 Future Initiatives............................................21
General.............................................................3 COUNTY INFORMATION................................21
Authority for Issuance......................................3 TAX MATTERS.................................................22
Purpose of Issue...............................................3 LEGAL MATTERS ............................................23
Security for the Notes ......................................3 LEGALITY FOR INVESTMENT IN
Lien in Bankruptcy ..........................................4 CALIFORNIA.....................................................24
Investment of the Repayment Fund.................5 FINANCIAL ADVISOR.....................................24
Available Sources of Payment.........................5 RATINGS............................................................24
Cash Flow Projections.....................................6 NO MATERIAL LITIGATION..........................24
CONTRA COSTA COUNTY TREASURER'S SALE OF THE NOTES.......................................25
INVESTMENT POOL........................................12 ADDITIONAL INFORMATION.......................25
SUMMARY OF CERTAIN PROVISIONS OF
THE RESOLUTION...........................................14 APPENDIX A— GENERAL COUNTY ECONOMIC
Resolution to Constitute Contract..................14 AND DEMOGRAPHIC
Representations and Covenants of the INFORMATION ........................A-1
County............................................................14 APPENDIX B— COUNTY FINANCIAL
Paying Agent and Note Registrar...................15 INFORMATION.........................B-1
Exchange and Transfer of the Notes..............15 APPENDIX C— SUMMARY OF THE COUNTY
Permitted Investments....................................15 INVESTMENT POLICY..............C-1
CERTAIN RISK FACTORS...............................16 APPENDIX D— PROPOSED FORM OF OPINION
County Financial Stress .................................16 OF BOND COUNSEL ................D-1
Pension Plan and Other Post Employment APPENDIX E— EXCERPTS FROM THE AUDITED
Benefits..........................................................17FINANCIAL STATEMENTS OF
State Financial Condition...............................17 THE COUNTY FOR THE FISCAL
CONSTITUTIONAL AND STATUTORY YEAR ENDED JUNE 30,2005...E-1
LIMITATIONS ON TAXES,REVENUES AND APPENDIX F— FORM OF CONTINUING
APPROPRIATIONS...........................................18 DISCLOSURE CERTIFICATE.....F-1
Article XIII A of the California .APPENDIX G— DTC AND THE BOOK-ENTRY
Constitution....................................................18 ONLY SYSTEM ........................G-1
Legislation Implementing Article XIII A......18 .
Article XIII B of the California
Constitution....................................................18
LIST OF TABLES
Page
TABLE 1 -ESTIMATED GENERAL FUND UNRESTRICTED REVENUES............................................................6
TABLE 2-GENERAL FUND MID-MONTH END CASH BALANCES AND INTRAFUND
BORROWINGCAPACITY................................................................................................................7
TABLE 3 -ACTUAL MONTHLY GENERAL FUND AND TEETER PLAN CASH FLOW ........................................8
TABLE 4-MONTHLY GENERAL FUND AND TEETER PLAN CASH FLOW......................................................10
TABLE 5 -INVESTMENTS HELD BY TYPE OF LOCAL AGENCY....................................................................12
TABLE 6-INVESTMENT BY TYPE................................................................................................................13
TABLE 7-MATURITY DISTRIBUTION..........................................................................................................13
TABLE 8 -FUNDS ON HAND.........................................................................................................................14
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COUNTY OF CONTRA COSTA,CALIFORNIA
BOARD OF SUPERVISORS OF THE COUNTY
John M. Gioia
(District 1)
Chair
Gayle B. Uilkema
(District 2) Mary N. Piepho
(District 3)
Vice Chair
Mark DeSaulnier
(District 4) Federal D. Glover
(District 5)
COUNTY OFFICIALS
John B. Cullen
Clerk of the Board and County Administrator
Stephen J. Ybarra William J. Pollacek
Auditor-Controller Treasurer-Tax Collector
Paying Agent
Silvano Marchesi Gus S.Kramer Stephen L. Weir
County Counsel Assessor County Clerk-Recorder
SPECIAL SERVICES
Orrick,Herrington& Sutcliffe LLP Tamalpais Advisors, Inc.
San Francisco, California Sausalito, California
Bond Counsel Financial Advisor
Lofton&Jennings
San Francisco, California
Disclosure Counsel
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COUNTY OF CONTRA COSTA, CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
INTRODUCTION
The purpose of this Official Statement, which includes the front cover through the attached
Appendices, is to provide certain information concerning the issuance, sale and delivery of
$ * in aggregate principal amount of 2006-2007 Tax and Revenue Anticipation Notes,
Series A (the "Notes") of the County of Contra Costa, California (the "County"). Issuance of the Notes
will provide moneys to help meet current (i.e. Fiscal Year 2006-07) County General Fund expenditures,
including current expenses, capital expenditures and the discharge of other obligations or indebtedness of
the County.
The Notes are authorized by and are being issued in accordance with Article 7.6, Chapter 4,
Part 1, Division 2, Title 5 (commencing with Section 53850) of the Government Code of the State of
California (the "Act"), and Resolution No. 2006-587 adopted by the Board of Supervisors of the County
(the"Board of Supervisors") on October 17, 2006 and referenced as "Resolution Authorizing the Issuance
and Sale of Not to Exceed$145,000,000 County of Contra Costa, California 2006-2007 Tax and Revenue .
Anticipation Notes" (the "Resolution"). If circumstances warrant, the County may issue in Fiscal Year
2006-07 an additional series of 2006-2007 Tax and Revenue Anticipation Notes (the"Series B Notes") in
an amount not to exceed the difference between $145,000,000 and the principal amount of the Series A
Notes. The Series B Notes, if issued, would be issued prior to January 1, 2007, would have a maturity
date not more than 13 months thereafter, and would be secured by the same security pledge as the Notes.
The Notes are issued subject to California Law and the terms and conditions of the Resolution.
Pursuant to California law, the Notes and the interest thereon are general obligations of the County
payable from and secured by a pledge of unrestricted taxes, income, revenue, cash receipts and other
General Fund moneys received by the County attributable to Fiscal Year 2006-07 and lawfully available
therefor. See"THE NOTES=Security for the Notes."
COUNTY OF CONTRA COSTA CASH MANAGEMENT PROGRAM
County General Fund expenditures tend to occur in level amounts throughout the fiscal year.
Conversely, receipts have followed an uneven pattern primarily as a result of secured property tax
installment delinquency dates in December and April and as a result of delays in payments from other
governmental agencies, the two largest sources of County revenues. As a result, the General Fund cash
balance prior to Fiscal Year 1979-80 had typically been negative for most of the year and had been
covered by interfund borrowings pursuant to Section 6 of Article XVI of the California Constitution and
intrafund borrowings. "Interfund borrowing" is borrowing from specific funds of other governmental
entities whose funds are held in the County Treasury. Such borrowing, pursuant to the California
Constitution, may not occur after the last Monday in April of each year and shall be repaid before any
other obligation of the County. The County does not intend to engage in interfund borrowing for the
General Fund nor has it done so since the implementation of the General Fund cash management program
in Fiscal Year 1979-80. "Intrafund borrowing" is borrowing for General Fund purposes against funds
held in trust by the County. Because such General Fund intrafund borrowings caused disruptions in the
General Fund's management of pooled investments, beginning in Fiscal Year 1979-80 the County has
*Preliminary,subject to change.
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generally,but not exclusively,regulated its cash flow by issuing tax and revenue anticipation notes for the
General Fund and by using intrafund and/or interfund borrowing, if necessary, only after note proceeds
have been exhausted. While the County has,utilized intrafund borrowing from time to time, it does not
anticipate using intrafund borrowing to cover General Fund cash needs in the remainder of Fiscal Year
2006-07 following delivery of the Notes.
On December 8, 2005, the County issued $100,000,000 principal amount of its 2005-06 Tax and
Revenue Anticipation Notes, Series A (the "2005-06 Notes"). With the exception of the 2005-06 Notes,
all notes previously issued in connection with the County's cash management program were repaid on
their respective maturity dates. Funds have been irrevocably deposited in a repayment fund held by the
County Treasurer-Tax Collector(the"Treasurer")to fully repay the 2005-06 Notes at maturity.
The Notes represent the twenty-eighth short-term financing program which the County has
undertaken to meet its cash flow requirements. The County has never defaulted on the payment of
principal of or interest on any of its short-term or long-term obligations.
Set forth below is a summary of the County's short-term financing programs since Fiscal Year
1997-98.
HISTORY OF COUNTY OF CONTRA COSTA
SHORT-TERM FINANCING PROGRAMS SINCE FISCAL YEAR 1997-98
Principal Amount
Date of Issuance Maturity Date
July 1, 1997 $130,000,000 July 1, 1998
July 1, 1998 107,315,000 October 1, 1999
July 1, 1999 88,000,000 September 29, 2000
July 3, 2000 55,000,000 October 1, 2001
August 1, 2001 70,000,000 October 4, 2002
October 17, 2002 55,000,000 November 14, 2003
December 8, 2005 100,000,000 December 7, 2006
CONTINUING DISCLOSURE
The County will agree to provide notices, during the time the Notes are outstanding, of the
occurrence of certain enumerated events, if material, in accordance with the continuing disclosure
certificate to enable the Underwriter to comply with Rule 15c2-12 of the Securities and Exchange
Commission (the"Rule"). The specific nature of the notices of material events and certain other terms of
the continuing disclosure obligation are described in APPENDIX F—"FORM OF CONTINUING DISCLOSURE
CERTIFICATE."
Copies of the annual disclosure reports and notices of the occurrence of certain enumerated
events, if material, of the County are available at the Digital Assurance Certification LLC website:
www.dacbond.com.
The County has never failed to comply in any material respect with any prior undertaking under
the Rule.
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THE NOTES
General
The Notes will be issued in fully registered form in the aggregate principal amount of
$ *. When issued, the Notes will be registered in the name of Cede & Co., as nominee for
The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository
for the Notes. Purchasers will not receive certificates representing their ownership interest in the Notes
purchased. See APPENDIX G—"DTC AND THE BOOK-ENTRY ONLY SYSTEM." Beneficial ownership
interests in the Notes may be transferred only in accordance with the rules and procedures of DTC.
The Notes will be dated the date of issuance thereof and will pay interest on November 20, 2007
and at maturity on December 11, 2007. The Notes are not subject to redemption prior to maturity.
The Notes will be issued in denominations of $5,000 each or any integral multiple thereof
("Authorized Denominations") and will bear interest at the rate per annum set forth on the cover page
hereof. Interest on the Notes will be computed on the basis of twelve 30-day months and a 360-day year.
Principal and interest payable at maturity will be payable in immediately available funds, upon
presentation and surrender of the Notes.at the office of the Treasurer in Martinez, California, as initial
paying agent(the"Paying Agent")with respect to the Notes.
Authority for Issuance
The Notes are issued under the authority of the Act and pursuant to the Resolution and are subject
to the terms and conditions of the Act and the Resolution.
Purpose of Issue
The Notes are being issued to finance the County's General Fund cash flow requirements during
Fiscal Year 2006-07 (July 1, 2006 through June 30, 2007). County General Fund expenditures tend to
occur in level amounts throughout the Fiscal Year. Conversely, receipts have followed an uneven pattern
primarily as a result of secured property tax installment delinquency dates in December and April and as a
result of delays in payments from other governmental agencies, the two largest sources of County
revenues. The proceeds received from the sale of the Notes will allow the County to cover periods of
deficits resulting from such uneven flow of revenues and are an alternative to borrowing from County-
held pooled income funds. The proceeds of the Notes will be invested in the Contra Costa County
Treasurer's Investment Pool (the "County Pool") until expended. See "CONTRA COSTA COUNTY
TREASURER'S INVESTMENT POOL."
Security for the Notes
The 2006-2007 Tax and Revenue Anticipation Notes issued under the Resolution (in the
aggregate principal amount of$ * for the Notes and up to an aggregate principal amount of
$. * for.the Series B Notes) are secured by a pledge of taxes, income, revenue, cash receipts
and other moneys which are received by the County for the General Fund for Fiscal Year 2006-07 and
which are lawfully available for the payment of current expenses and other obligations of the County (the
"Unrestricted Revenues"). As security for the payment of the principal of and interest on the Notes and
the Series B Notes, the County pledges to deposit in trust in a special County fund designated as the
"2006-2007 Tax and Revenue Anticipation Note Repayment Fund" (the "Repayment Fund") an amount
equal to fifty percent (50%) of the aggregate principal amount of the Notes and Series B Notes from the
I
*Preliminary,subject to change.
200-06036\pos-5 3
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first Unrestricted Revenues received by the County in the accounting period beginning
December 13,2006 and ending January 11, 2007, inclusive; and an amount equal to fifty percent (50%)
of the aggregate principal amount of the Notes and the Series B Notes plus an amount (net of anticipated
earnings on moneys in the Repayment Fund) sufficient to make up any deficiency in the Repayment Fund
with respect to the prior pledge period and to pay the interest on the Notes due on and prior to maturity
from the first Unrestricted Revenues received by the County in the accounting period beginning April 12,
2007 and ending May 11,2007, inclusive.
Accordingly, pursuant to Section 53856 of the Government Code of the State of California (the
"Government Code"),the principal of the Notes and the Series B Notes and the interest thereon are a first
lien and charge against, and are payable from, such pledged moneys. In addition to such pledged moneys,
pursuant to Section 53857 of the Government Code, the Notes are general obligations of the County, and,
to the extent not paid from Unrestricted Revenues of the County pledged for the payment thereof, shall be
paid with interest thereon only from any other moneys of the County lawfully available therefor. The
County is not authorized to levy or collect any tax for the repayment of the.Notes or the Series B Notes.
In accordance with the terms of the Resolution, if insufficient Unrestricted Revenues are.received
by the County by the third business day prior to the end of any pledge period to permit deposit into the
Repayment Fund of the full amount of the pledged revenues required to be deposited with respect to such
pledge period, then.the amount of any deficiency in the Repayment Fund is required to be satisfied and
made up from any other moneys of the County lawfully available for the payment of the principal of the
Notes and the interest thereon, as provided in Sections 53856 and 53857.of the Government Code, on
such date or thereafter on a daily basis, when and as such pledged revenues and other pledged moneys are
received by the County. The Resolution provides that such amounts may not be used for any other
purpose and may be invested only in Permitted Investments. See "—Investment of the Repayment Fund"
and"SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION—Permitted Investments."
If for any reason amounts in the Repayment Fund are insufficient to pay both the Notes and the
Series B Notes in full, such amounts shall be applied pro rata to the payment of the Notes and the
Series B Notes based on the total principal of and interest payable upon the Notes and the Series B Notes
at the respective maturities thereof, taking into account anticipated earnings to be received on amounts in
the Repayment Fund prior to the final maturity dates thereof.
As more particularly described under "COUNTY OF CONTRA COSTA CASH MANAGEMENT
PROGRAM," the County may, under certain circumstances, undertake interfund or intrafund borrowing to
fund shortages in the General Fund. While the County does not expect to utilize any such interfund or
intrafund borrowing during the remainder of Fiscal Year.2006-07, Section 6 of Article XVI of the
California Constitution requires that any such borrowing be repaid from revenues before any other
obligation of the County(including the Notes) is paid from such revenues.
Lien in Bankruptcy
On January 24, 1996, the United States Bankruptcy Court for the Central District of California
held in the case of County of Orange v. Merrill Lynch that a State statute providing for a priority of
distribution of property held in trust conflicted with, and was preempted by, federal bankruptcy law. In
that case, the court addressed the priority of the disposition of moneys held in a county investment pool
upon bankruptcy of the county, but did not directly address the State statute that provides for the lien in
favor of holders of tax and revenue anticipation notes. The County will, at all times from the collection of
such amounts until such amounts are paid,be in possession of the taxes and other revenues that will be set
aside in the Repayment Fund and pledged to repay the Notes. The Repayment Fund may be invested in
the County Pool. In the event of a petition for the adjustment of debts of the County under Chapter 9 of
the federal bankruptcy code, a court might hold that the owners of the Notes (the"Owners") do not have a .
valid and/or prior lien on Repayment Fund amounts deposited in the County Pool and may not provide
200-06036\pos-5 4
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the Owners with a priority interest in such amounts. . In that circumstance, unless the Owners could
"trace" the funds from the Repayment Fund that have been deposited in the County Pool, the Owners
would be unsecured (rather than secured) creditors of the County. There can be no assurance that the
Owners could successfully so"trace"the pledged taxes and other revenues.
Investment of the Repayment Fund
Moneys in the Repayment Fund will be invested in one or more instruments of the types included
in Permitted Investments. See "SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION-Permitted
Investments." The proceeds of any such investments shall be retained in the Repayment Fund until
payment of principal of and interest on the Notes and the Series B Notes (or provision therefor) has been
made, at which time any excess amount shall be deposited by the Treasurer in the General Fund of the
County.
Available Sources of Payment
The Notes, in accordance with California law, are general obligations of the County, but are
payable only out of the taxes, income, revenue, cash receipts and other moneys received for the General
Fund of the County attributable to Fiscal Year 2006-07 and legally available for payment thereof. Under
the Act, no obligations, including the Notes, may be issued thereunder if the principal thereof and interest
thereon exceeds 85% of the estimated amount of the then-uncollected taxes, income, revenue, cash
receipts and other moneys which will be available for payment of such principal and interest. The
principal amount of Notes and estimated interest thereon equals approximately $_ million which
represents approximately_%of the estimated sources available for payment of the Notes.
The County estimates that the total moneys available for payment of the Notes and.the Series B
Notes will be in excess of $ million as indicated in the table that follows. Except for pledged
amounts, these moneys will be expended during the remainder of the Fiscal Year 2006-07, and no
assurance can be given that any moneys, other than the pledged amounts, will be available to pay the
Notes, the Series B Notes and the interest thereon. For detailed information regarding estimated debt
service coverage at each respective pledge period, see Table 4—"County of Contra Costa Monthly General
Fund and Teeter Plan Cash Flow Fiscal Year 2006-07."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
200-06036\pos-5. 5
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Table i
COUNTY OF CONTRA COSTA
ESTIMATED GENERAL FUND UNRESTRICTED REVENUES
NOVEMBER 1,2006 THROUGH JUNE 30,20071"
Amount
Sources ($in 000's)
Estimated Unrestricted Available.Cash Balance at July 1,2006 $121,895
Property Taxes 278,080
Other Taxes 27,040
Licenses,Permits and Franchises 29,899
Fines,Forfeitures and Penalties 13,425
Use of Money and Property 4,509
Aid from Other Governmental Agencies 2,265
Charges for Current Services 207,121
Other Unrestricted Revenue 94,274
Total $778,604
Less amount pledged for payment of the Notes and Series B Notes(2)
Net Total in excess of pledged revenues $
(1) Reflects revenues set forth in the Fiscal Year 2006-07 Adopted Budget which was approved on May 2, 2006; such
revenues are presented in Table 4—"Accounting Period General Fund and Teeter Plan Cash Flow, Fiscal Year 2006-07,"
with the amounts in Table 1 reflecting revenues from November 1, 2006 through the accounting period ending June 30,
2007.
(2) Based on S aggregate principal amount of Notes and Series B Notes plus an amount equal to interest thereon
calculated at the rate of_%per annum,assuming delivery on November 21,2006.
Source: County Auditor-Controller.
Cash Flow Projections
The Auditor-Controller of the County (the "Auditor-Controller") has prepared the following
three-year summary of month-end cash balances in-the combined unrestricted and restricted portions.of
the General Fund. The County's historical and projected fiscal year end balances in funds with which it
may undertake intrafund borrowing ("Intrafund Borrowing Capacity") is also presented. On the
subsequent pages is a detailed presentation of the Fiscal Year 2005-06 General.Fund cash flow and of the
projected cash flow for Fiscal Year 2006-07 for the combined unrestricted and restricted.portions of the
General Fund. The cash flow projections are based on the Fiscal Year 2006-07 Adopted Budget. See
APPENDIX B—"COUNTY FINANCIAL INFORMATION—Recent County General Fund Budgets."
A maximum cumulative cash flow deficit of approximately $ million is anticipated to occur
in the unrestricted portion of the General Fund in December 2006. Taking into account: (a) any
unrestricted monies that are expected to be available from sources other than the General Fund to address
the projected deficit and (b) the likelihood that the projected cash flows are susceptible to forecast error,
the County has elected to issue the Notes in an amount that is equal to approximately_% of its projected
maximum cumulative cash flow deficit.
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The estimates of amounts and timing of receipts and disbursements in the cash flow tables are
based on certain assumptions and should not be construed as statements of fact. The assumptions are
based on present circumstances and currently available information and are believed to be reasonable.
The assumptions may be affected by numerous factors and there can be no assurance that such estimates
will be achieved.
Table 2
COUNTY OF CONTRA COSTA
GENERAL FUND
ACCOUNTING PERIOD END CASH BALANCES AND INTRAFUND BORROWING CAPACITY(1)
FISCAL YEARS 2003-04 THROUGH 2005-06
($in thousands)
Accounting Period(2) 2003-04 2004-05 2005-06
1 $1,484 $(49,599) $(54,146)
2 (24,932) (70,862) (79,924)
3 (47,112) (99,341) (87,327)
4 (53,240) (92,073) (96,090)
5 (68,798) (130,199) (20,226)
6 (14,853) (64,477) 1,936
7 (3,171) (14,447) 50,193
8 3,234 (26,254) 46,257
9 (4,209) (20,343) 48,879
10 44,406 28,962 39,767
11 55,016 57,217 43,085
12 88,859 95,686 121,895
INTRAFUND BORROWING CAPACITY 446,939 490,629 431,615
(1) Period-end balances in Fiscal Year 2005-06 include the effects of the deposit of$100,000,000 of proceeds from the 2005-06
Notes that mature December 7, 2006, and intrafund borrowing net of deposits to the repayment funds relating to the short-
term notes. See"COUNTY OF CONTRA COSTA CASH MANAGEMENT PROGRAM." The County did not issue notes in Fiscal Year
2003-04 or Fiscal Year 2004-05. "Intrafund Borrowing Capacity"reflects borrowable balances as of June 30th of each Fiscal
Year.
(2) The County utilizes a twelve-period accounting system,with the first period beginning on July 1 and ending in the middle of
August. The subsequent periods end in mid-September, mid-October and so forth until mid-June. The final accounting
period runs from mid-June to the end of the Fiscal Year at June 30.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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Table 3
COUNTY OF CONTRA COSTA
ACTUAL ACCOUNTING PERIOD GENERAL FUND AND TEETER PLAN CASH FLOW
FISCAL YEAR 2005-06
($in thousands)
Aug 11 Sep 13 Oct 12 Nov 12 Dec 13
ACCOUNTING PERIOD ENDING 2005 2005 2005 2005 2005
BEGINNING BALANCE
RECEIPTS:
Property Taxes
Teeter Plan Redemptions
Other Taxes
Licenses
Fines&Forfeitures
Use of Money
Intergovernmental
Charges Current Services
Other Revenue
Accrued Revenue
Notes Sold
Intra Fund Borrow
Other Available Funds
TOTAL RECEIPTS
DISBURSEMENTS:
General Government
Public Protection
Health& Sanitation
Public Assistance
Education
Public Ways
Accrued Expense
Interest Exp-Notes
Notes: Principal Repay
IF Borrow Repay
Teeter Plan Buy-Out/Advances
Other Disbursements
TOTAL DISBURSEMENTS
ENDING BALANCE
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Jan 12 Feb 11 Mar 11 Apr 12 May 11 Jun 13 Jun 29 Total
2006 2006 2006 2006 2006 2006 2006 2005-06
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Table 4
COUNTY OF CONTRA COSTA
ACCOUNTING PERIOD GENERAL FUND AND TEETER PLAN CASH FLOW
FISCAL YEAR 2006-07
($in thousands)
Actual Proj. Proj. Proj. Proj. Proj.
ACCOUNTING PERIOD ENDING Aug 10 Sep 12 Oct 11 Nov 13 Dec 11 Jan 11
2006 2006 2006 2006 2006 2007
BEGINNING BALANCE
RECEIPTS:
Property Taxes
Teeter Plan Redemptions
Other Taxes
Licenses
Fines&Forfeitures
Use of Money
Intergovernmental
Charges Current Services
Other Revenue
Accrued Revenue
Notes Sold
Intrafund Borrowing
Other Available Funds
TOTAL RECEIPTS
DISBURSEMENTS:
General Government
Public Protection
Health&Sanitation
Public Assistance
Education
Public Ways
Accrued Expense
Interest Exp-Notes
Notes: Principal Repay 11>(2)
IF Borrow Repay
Teeter Plan Buy-Out/Advances
Other Disbursements
TOTAL DISBURSEMENTS
ENDING BALANCE
TRANS REPAYMENT FUND
Beginning Balance
Receipts
Disbursements
Ending Balance
(1) Monthly General Fund ending balance covers the January segregation—times and the May segregation_times.
(2) Assuming estimated intrafund borrowing capacity of$ million, the monthly General Fund ending balance including
intrafund borrowing capacity covers the January segregation_times and the May segregation_times.
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Proj. Proj. Proj. Proj. Proj. Proj.
Feb 12 Mar 12 Apr 11 May 10 Jun 11 Jun 29 Total
2007 2007 2007 2006 2007 2007 2606-07
(3)
(1) Monthly General Fund ending balance covers the January segregation_times and the May segregation_times.
(2) Assuming estimated intrafund borrowing capacity of$ million, the monthly General Fund ending balance including
intrafund borrowing capacity covers the January segregation_times and the May segregation_times.
(3) To be disbursed on 2007,the maturity date of the Notes.
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CONTRA COSTA COUNTY TREASURER'S INVESTMENT POOL
State law requires that all moneys of the County, County school districts, and certain special
districts in the County be held in the County Treasury by the Treasurer, The Treasurer has authority to
implement and oversee the investment of such funds in the County Pool in accordance with
Section 53600 et seq. of the Government Code. The Treasurer accepts.funds only from agencies located
within the County. The moneys on deposit are predominantly derived from local government revenues
consisting of property taxes, State and federal funding and other fees and charges. As of June 30, 2006,
there were 40 participants in the County Pool, the largest being the County. The County, County
agencies,and school and community college districts (who are required by State law to be members of the
County Pool) represented an aggregate of approximately 89.6% of the County Pool's investments as of
June 30,.2006.
The Contra Costa County Investment Policy (the "Policy") governs the County's investments in
the County Pool, The Policy has historically been more restrictive than that mandated under the
Government Code. Although the Policy permits reverse repurchase agreements between the County and
primary dealers with the Federal Reserve Bank of New York, the County currently does not intend to
engage in such transactions. The County has an oversight committee (the "Treasury Oversight
Committee") that meets quarterly to monitor and report on all investment activities of the Treasurer's
Office. The current Policy was revised by the Treasury Oversight Committee, submitted by the Treasurer
and approved by the Board of Supervisors on June 6, 2006. All funds of the County and investment
activities are governed by the Policy, which sets forth the following primary objectives, in order of
priority:
1. Preservation of capital.
2. Liquidity i.e. funds shall be invested only until the date of anticipated need or for a lesser
period.
3. Yield i.e. generation of a favorable return on investment without compromise of the first
two objectives.
For a summary of the Policy, see APPENDIX C—"SUMMARY OF THE COUNTY INVESTMENT POLICY."
As of June 30, 2006, investments in the County Pool were held for the following local agencies in
the indicated amounts:
Table 5
CONTRA COSTA COUNTY INVESTMENT POOL
INVESTMENTS HELD BY TYPE OF LOCAL AGENCY
(As OF JUNE 30,2006)
Percent Number
Local A2ency Par Value of Total of Agencies
County of Contra Costa and Agencies $1,582,534,030.23 65.15% 1
School Districts 509,831,058.00 20.99 19
Community College District 82,807,208.00 3.41 1
Other Public Agenciest 253,727,540.00 10.45 19
TOTAL $2,428,899,836.23 100.00% 40
t Sanitation,Fire and Transportation Authorities,and two Joint Power Authorities are the only voluntary
participants in the Pool. All other participants are required by State law to be members of the County
Pool.
200-06036\pos-5 12
p
As of June 30, 2006, the Pool had approximately 31.2% of its assets invested in U.S. Treasury
and federal agency securities. Another approximately 59.3% of the Pool's assets were invested in cash
and highly liquid short-term money market instruments (repurchase agreements, certificates of deposit,
bankers' acceptances, and commercial paper). As of June 30, 2006, the detailed composition, cost, and
market value of the Pool were as follows;
Table 6
CONTRA COSTA COUNTY INVESTMENT POOL
INVESTMENT BY TYPE
As OF JUNE 30,2006
Type of Investment Cost Market Value % of Total
Cash $96,783,897 $96,783,897 3.99%
U.S. Treasuries 42,179,195 42,898,421 1.74
U.S. Agencies 713,911,229 .712,788,852 29.46
Money Market Instruments 1,340,580,510 1,341,286,260 55.33
Other 229,634,937 299,749,921 9.48
TOTAL $2,423,089,769 $2,423,507,351 100.00%
The Pool is highly liquid, with approximately 94.1% of the portfolio having a maturity of less
than one year and an average weighted days to maturity of 65.6 days. The maturity distribution of the
Pool's portfolio as of June 30, 2006 is presented in the following table.
Table 7
CONTRA COSTA COUNTY INVESTMENT POOL
MATURITY DISTRIBUTION
As OF JUNE 30,2006
Amount % of
Term to Maturity (Cost Basis) Total(')
Less than 1 year $2,280,333,964 94.11% .
1 to 2 years 82,338,380. 3.40
2+years to 3 years 46,300,374 1.91
3+years to 4 years 11,405,872 0.47
4+years to 5 years 2,555,027 0.11
Greater than 5 years(2) 156,152 0.01
TOTAL $2,423,089,769 100.00%
(1) Column does not total due to independent rounding.
(2) Represents bond proceeds of School Districts.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
200-06036\pos-5 13
The mix of investments is designed to ensure that sufficient liquid funds are available to meet
disbursement requirements. Funds on hand at the end of each of the past five fiscal years in excess of
disbursement requirements were as follows:
Table 8
CONTRA COSTA COUNTY INVESTMENT POOL
FUNDS ON HAND
Fiscal Year Available Funds
Ending June 30 ($in millions)
2002 $1;527
2003 1,860
2004 1,844
2005 2,037
2006 2,428
SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION
The following is a summary of certain provisions of the Resolution. This summary is not to be
considered a full statement of the terms of the Resolution and accordingly is qualified by reference thereto
and is subject to the full text thereof. Except as otherwise defined herein, capitalized terms used in this
Official Statement without definition have the respective meanings set forth in the Resolution.
Resolution to Constitute Contract
The provisions of the Notes and of the Resolution constitute a contract between the County and
the registered owners of the Notes and the Series B Notes and such provisions may be enforceable by
mandamus or any other appropriate suit, action or proceeding at law or in equity in any court of.
competent jurisdiction, and, upon issuance of the Notes, will be irrepealable. See "THE NOTES—Lien in
Bankruptcy."
Representations and Covenants of the County
The County has determined and represents in the Resolution that with respect to Fiscal Year
2006-07, the amount of $145,000,000 (the maximum authorized principal amount of the Notes), when
added to the interest estimated to be payable thereon, does not exceed 85%of the estimated amount of the
uncollected taxes, income, revenue, cash receipts, and other moneys of the County for the General Fund
of the County attributable to Fiscal Year 2006-07 and be available for the payment of the principal of and
the interest on the Notes and the Series B Notes.
In order to maintain the exclusion from gross income for federal income tax purposes of interest
on the Notes, the County covenants to comply with each applicable requirement of the Internal Revenue
Code of 1986, as amended, necessary to maintain the exclusion of interest on the Notes from gross
income for federal income tax purposes and the County agrees to comply with the requirements of the
Tax Certificate of the County as such Tax Certificate may be amended from time to time. The County
further covenants that it will make all calculations relating to any rebate of excess investment earnings on
the Note proceeds due to the United States Department of the Treasury in a reasonable and prudent
fashion and will segregate and set aside the amounts such calculations indicate may be required to be paid
to the United States Department of the Treasury from revenues attributable to the 2006-2007 Fiscal Year
or from any other lawfully available moneys. See"TAX MATTERS."
200-06036\pos-5 14
e
�r
Notwithstanding any other provision of the Resolution to the contrary, upon the County's failure
to observe, or refusal to comply with, the foregoing tax covenants,no one other than the owners or former
owners of the Notes and the Series B Notes will be entitled to exercise any right or remedy with respect to
such covenants under the Resolution.
Paying Agent and Note Registrar
The Treasurer will initially act as Paying Agent and as Note Registrar for the Notes. This
appointment does not preclude the.County from appointing a financial institution to act as Paying Agent.
Any such successor Paying Agent will be or have co-paying agent relationships with one or more banks
or trust companies with a minimum of$100 million in capital located in New York, New York or Los
Angeles, California or San Francisco,California.
Exchange and Transfer of the Notes
The registered owners of the Notes which are evidenced by registered certificates may transfer
such Notes upon the books maintained by the Note Registrar,but only in accordance with the Resolution.
The County and any Paying Agent may deem and treat the registered owner of any Note as the .
absolute owner of such Note, regardless of whether such Note is overdue, for the purpose of receiving
payment thereof and for all other purposes, and all such payments so made to any such registered owner
upon his or her order will satisfy and discharge the liability upon such Note to the extent of the sum or
sums so paid, and neither the County nor any Paying Agent will be affected by any notice to the contrary.
Cede& Co., as nominee of DTC, or such other nominee of DTC or any successor securities depository or
the nominee thereof, will be the registered owner of the Notes as long as the beneficial ownership of the
Notes is held in book-entry form in the records of such securities depository. See APPENDIX G—"DTC
AND THE BOOK-ENTRY ONLY SYSTEM."
Permitted Investments
Moneys on deposit in the Repayment Fund will be retained therein until applied to the payment of
the principal of and interest on the Notes. Such amounts may not be used for any other purposes,
although they may be invested in Permitted Investments, which will, as nearly as practicable, mature on
or before the dates on which such money is anticipated to be required to pay principal of or interest on the
Notes. The Resolution specifically designates the following investments as Permitted Investments,
subject to certain limitations more fully described in the Resolution:
(1) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for
which the full faith and credit of the United States are pledged for the payment of
principal and interest.
(2) 'Obligations of instrumentalities or agencies of the United States of America limited to the
following: (a) the Federal Home Loan Bank Board (FHLB); (b) the Federal Home Loan
Mortgage Corporation .(FHLMC); (c) the Federal National Mortgage Association
(FNMA); (d) Federal Farm Credit Bank (FFCB); (e) Government National Mortgage
Association (GNMA); (f) Student Loan Marketing Association (SLMA); (g) Federal
Agricultural Mortgage Association (FRM); and (h) guaranteed portions of Small
Business Administration(SBA) notes.
(3) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise
known as bankers' acceptances. Purchases of bankers' acceptances may not exceed a
maturity of 180 days..The financial institution must have a minimum short-term rating of
200-06036\pos-5 15
11P-1" and "A-1" by Moody's and S&P, respectively, and a long-term rating of no less
than"A."
(4) Commercial paper of"prime" quality of the highest ranking or of the highest letter and
numerical rating ("P-1" or "A-I") as provided for by Moody's or S&P, respectively.
Eligible paper is further limited to issuing corporations that are organized and operating
within the United States and having total assets in excess of five hundred million dollars
($500,000,000). Such commercial paper may not mature later than 270 days. after
purchase.
(5) Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state
or federal association(as defined by Section 5102 of the California Financial Code) or by
a state-licensed branch of a foreign bank in each case which has, or which is a subsidiary
of a parent company which has, the highest letter and numerical rating from Moody's
("P-1'.') and S&P ("A-1"),respectively.
(6) Investments in repurchase agreements of any securities listed in (1) through (4) above.
Investments.in repurchase agreements may be made with financial institutions, which are
rated in one of the two highest long-term rating categories by Moody's and S&P, when
the term of the repurchase agreement does not exceed 30 days and are fully secured at or
greater than 102% of the market value plus accrued interest by obligations of the United
States Government, its agencies and instrumentalities, in accordance with clause (2)
above.
(7) Deposits in the State of California Treasurer's Local Agency Investment Fund(LAIF).
(8) Shares of beneficial interest issued by the Investment Trust of California (CalTRUST)
pursuant to California Government Code Section 6509.7; and authorized for local agency
investment pursuant to California Government Code Section 53601(o).
(9) The Contra Costa County Treasurer's Investment Pool..
CERTAIN RISK FACTORS
Described below are certain factors, which could impact the ability of the County to pay debt
service on the Notes. See also APPENDIX A—"GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC
INFORMATION" and APPENDLv B—"COUNTY FINANCIAL INFORMATION" for certain financial and other
information concerning the County. The following information does not purport to be an exhaustive
listing of the risks and other considerations which may be relevant to an investment in the Notes.
County Financial Stress
A variety of circumstances affecting the County(and other counties in the State)have resulted in
significant financial stress on the County over the last few years. Certain of these circumstances are
described in Appendix B, and include (i) the financial condition of the State, which resulted in decreased
revenues from the State to the County; (ii) significant increases in labor costs of the County, including
amounts required to be paid by the County to fund current and future retirement benefits, resulting from
the resolution of litigation related thereto as well as renegotiation of labor agreements and enhancement
1 of retirement benefits and the resulting impact on the required annual General Fund contribution to its
employee pension plan; and(iii)significant increases in employee and retiree health care costs.
200-06036\pos-5 16
9
,r
cl'
On May 2, 2006, the Board of Supervisors adopted a budget for the Fiscal Year 2006-07 that
provides for approximately $18 million in spending decreases compared to the actual budget for Fiscal
Year 2005-06.
Pension Plan and Other Post Employment Benefits
Pension Plan. With the exception of calendar year 2004, the County has experienced significant
increases in the amount that it is required to contribute annually to the Contra Costa County Employees'
Retirement Association("CCCERA") since calendar year 2002. The required General Fund contributions
were approximately $108.7 million in calendar year 2002, approximately $118.2 million in calendar year
2003, approximately $90.6 million in calendar year 2004, and approximately $147.1 million in calendar
year 2005. The required contribution for Fiscal Year 2006-07 is estimated to be approximately
$_million. These increases are due to a variety of factors, including changes in existing law regarding
the definition of the term "compensation earnable," changes in actuarial assumptions, enhancements to
the retirement benefits of employees and market losses and earnings shortfalls in the CCCERA
investment portfolio. See also APPENDIX B—"COUNTY FINANCIAL INFORMATION—Information Plan."
In 1997, the Supreme Court of the State rendered a decision in Ventura County Deputy Sheriff's
Association et al. v. Board of Retirement of Ventura County Employees' Retirement Association, and
County of Ventura (Ventura) holding, among other things,that certain items such as vacation buy-back be
included in the calculations that determine the amount of retirement benefits a retiree is eligible to
receive. Two lawsuits on similar issues were filed against the County by certain retired County
employees. These lawsuits were consolidated into one case, Vernon D. Paulson, et al. v. Board of
Retirement of the Contra Costa County Employees'Retirement Association, et al. and that case has been
settled.
The level of future required contributions depends an a variety of factors, including future
CCCERA investment portfolio performance and additional changes in retirement benefits. There can be
no assurances that the required annual General Fund contribution to CCCERA will not continue to
significantly increase, and that such increases will not materially adversely affect the financial condition
of.the County. For additional information regarding CCCERA see APPENDIX B-"COUNTY FINANCIAL
INFORMATION—Pension Plan"and"—Impact of the Ventura Decision."
Post Employment Benefits. In addition to providing retirement benefits,retired employees of the
County are allowed to continue participation in medical and dental plans. The cost of retiree health care
is recognized when the County makes its contribution on a pay-as-you-go basis. For additional
information regarding post employment benefits see APPENDIX B—"COUNTY FINANCIAL INFORMATION—
Post Employment Benefits."
State Financial Condition
Approximately 28% of the County's Fiscal Year 2006-07 General Fund Budget consists of
payments from the State. Therefore, the finances of the County may be adversely impacted by the
financial condition of the State. For information regarding the State budget, see APPENDIX B-"COUNTY
FINANCIAL INFORMATION—State Budget Acts."
200-06036\pos-5 17
i
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,
REVENUES AND APPROPRIATIONS
Article XIII A of the California Constitution
In 1978, California voters approved Proposition 13, adding Article XIII.A to the California
Constitution. Article XIII A was subsequently amended on several occasions in various respects.. Article
XIII A limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof,
except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by
the voters prior to July 1, 1978 and on bonded indebtedness for the acquisition or improvement of real
property which has been approved on or after July 1, 1978 by two-thirds of the voters voting on such
indebtedness and or bonded indebtedness incurred by a school district, community college district or
county office of education for the construction, reconstruction, rehabilitation or replacement of school
facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real
property for school facilities approved by 55% of the voters voting on the proposition. Article XIII A
defines full cash value to mean"the county assessor's valuation of real property as shown on the 1975-76
tax bill under "full cash" or thereafter, the appraised value of real property when purchased, newly
constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may
be increased at a rate not to exceed 2%per year to account for inflation.
Article XIII A has been amended to permit reduction of the "full cash value"base in the event of
declining property values caused by damage, destruction or other factors, and to provide that there would
be no increase in the "full cash value" base in the event of reconstruction of property damaged or
destroyed in a disaster or in the event of certain transfers to children or spouses or of the elderly or
disabled to new residences.
Legislation Implementing Article XIII A
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIII A. Under current law, local agencies are no longer permitted to levy directly any property tax
(except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the County
and.distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1979.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in
the "taxing area" based upon their respective "situs." Any such allocation made to a local agency
continues as part of its allocation in future years.
Article XIII B of the California Constitution
On October 6, 1979, California voters approved Proposition 4, known as the Gann Initiative,
which added Article XIII B to the California Constitution. Propositions 98 and 111, approved by the
California voters in 1988 and 1990, respectively, substantially modified Article XIII B. The principal
effect of Article XIII B is to limit the annual appropriations of the State and any city, county, school
district, authority, or other political subdivision of the State to the level of appropriations for the prior
fiscal year, as adjusted for changes in the cost of living and population. The initial version of Article
XIII B provided that the"base year" for establishing an appropriations limit was the 1978-79 fiscal year,
which was then adjusted annually to reflect changes in population, consumer prices and certain increases
in the cost of services provided by these public agencies. Proposition 111 revised the method for making
annual adjustments to the appropriations limit by redefining changes in the cost of living and in
population. It also required that beginning in Fiscal Year 1990-91 each appropriations limit must be
200-06036\pos-5 1 g
recalculated using the actual 1986-87 appropriations limit and making the applicable annual adjustments
as if the provisions of Proposition 111 had been in effect.
Appropriations subject to limitations of a local government under Article XIII B include
generally any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity
and the proceeds of certain State subventions to that entity, exclusive of refunds of taxes. Proceeds of
taxes include, but are not limited to all tax revenues plus the proceeds to an entity of government from
(1)regulatory licenses, user charges and user fees (but only to the extent such proceeds exceed the cost of
providing the service or regulation), (2) the investment of tax revenues, and (3) certain subventions
received from the State. Article XIII B permits any government entity to change the appropriations limit
by a vote of the electors in conformity with statutory and constitutional voting effective for a maximum of
four years.
As amended by Proposition 111, Article XIII B provides for testing of appropriations limits over
consecutive two-year periods. If an entity's revenues in any two-year period exceed the amounts
permitted to be spent over such period,the excess has to be returned by revising tax rates or fee schedules
over the subsequent two years. As amended by Proposition 98, Article XIII B provides for the payment
of a portion of any excess revenues to a fund established to assist in financing certain school needs.
Appropriations for"qualified capital outlays"are excluded from the limits of Proposition 111.
For Fiscal Year 2006-07, the County's Article XIII B limit is estimated to be $ and
budgeted appropriations subject to limitation are estimated to be $ . The County has never
exceeded its Article XIII_B appropriations limit and does not anticipate having any difficulty in operating
within the appropriations limit.
Article XIII C and Article XIII D of the California Constitution
On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to
Vote on Taxes Act." Proposition 218 adds Articles XIII C and XIII D to the California Constitution and
contains a number of interrelated provisions affecting the ability of the County to levy and collect both
existing and future taxes, assessments, fees and charges. The interpretation and application of
Proposition 218 likely will be determined by the courts with respect to a number of the matters discussed
below, and it is not possible at this time to predict with certainty the outcome of such determination.
Article XHI C requires that all new local taxes be submitted to the electorate before they become
effective. Taxes for general governmental purposes of the County require a majority vote and taxes for
specific purposes, even if deposited in the County's General Fund, require a two-thirds vote. Further, any
general purpose tax which the County imposed, extended or increased without voter approval after
December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which
must be held within two years of November 5, 1996. The County believes that no existing County-
imposed taxes deposited into its General Fund will be affected by the voter approval requirements of
Proposition 218, although as indicated below certain tax levies may be affected by Proposition 62. The
voter approval requirements of Proposition 218 reduce the flexibility of the County to raise revenues for
the General Fund, and no assurance can be given that the County will be able to impose, extend or
increase such taxes in the future to meet increased expenditure needs.
Article XIII D also adds several provisions making it generally more difficult for local agencies
to levy and maintain fees, charges, and assessments for municipal services and programs. These
provisions include, among.other things, (i) a prohibition against assessments which exceed the reasonable
cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must
confer a "special benefit," as defined in Article XIII D, over and above any general benefits conferred,
(iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the
record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to
200-06036\pos-5 19
the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges
which are used for general governmental services, including police, fire or library services, where the
service is available to the public at large in substantially the same manner as it is to property owners..
[The County estimates that in Fiscal Year 2006-2007 it will collect no such fees and assessments.
Verify) Article XIII C also removes limitations on the initiative power in matters of reducing or repealing
local taxes, assessments, fees or charges. No assurance can be given that the voters of the County will
not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees
or charges currently comprising a substantial part of the County's General Fund. If such repeal or
reduction occurs, the County's ability to repay the Notes and the Series B Notes could be adversely
affected.
Proposition 62
On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local
Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the
court held that a countywide sales tax of one-half of one percent was a special tax that, under
Section 53722 of the Government Code, required a two-thirds voter approval. Because the tax received
an affirmative vote of only 54.1%, this special tax was found to be invalid. The decision did not address
the question of whether or not it should be applied retroactively.
Following the California Supreme Court's decision upholding Proposition 62, several actions
were filed challenging taxes imposed by public agencies since the adoption of Proposition 62, which was
passed in November 1986. On June 4, 2001, the California Supreme Court released its decision in one of
these cases,Howard Jarvis Taxpayers Association v. City of La Habra, et al. ("La Habra'). In this case,
the court held that public agency's continued imposition and collection of a tax is an ongoing violation,
upon which the statute of limitations period begins anew with each collection. The court also held that,
unless another statute or constitutional rule provided differently, the statute of limitations for challenges
to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to
Proposition 62 may only be made for those taxes received within three years of the date the action is
brought.
The County has no taxes to which Proposition 62 could apply.
Proposition IA
The California Constitution and existing statutes give the legislature authority over property
taxes, sales taxes and the VLF. The State legislature has authority to change tax rates, the items subject to
taxation and the distribution of tax revenues among local governments, schools, and community college
districts. The State has used this authority for many purposes, including increasing funding for local
services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular
local governments, and restructuring local finance.
The California Constitution generally requires the State to reimburse the local governments when
the State "mandates" a new local program or higher level of service. Due to the ongoing financial
difficulties of the State, it has not provided in recent years reimbursements for many mandated costs. In
other cases,the State has "suspended" mandates, eliminating both responsibility of the.local governments
for complying with the mandate and the need for State reimbursements.
On November 3, 2004, the voters of the State approved Proposition lA that amended .the
California Constitution to, among other things, reduce the State Legislature's authority over local
government revenue sources by placing restrictions on the State's access to local government's property,
sales and vehicle license fee revenues.
200-06036\pos-5 20
Proposition I generally prohibits the State from shifting to schools or community colleges any
share of property tax revenues allocated to a county for any fiscal year under the laws in effect as of
November 3, 2004. The measure also specifies that any change in how property tax revenues are shared
among local governments within a county must be approved by two-thirds of both houses of the
Legislature (instead of by majority vote). Finally, the measure prohibits the State from.reducing the
property tax revenues provided to a county as replacement for the local sales tax revenues redirected to
the State and pledged to pay debt service on State deficit-related bonds approved by voters in
March 2004.
If the State reduces the VLF rate below its current level of 0.65% of the vehicle .value,
Proposition IA requires the State to provide local governments with equal replacement revenues.
Proposition I provides two significant exceptions to the above restrictions regarding sales and property
taxes. First, beginning in Fiscal Year 2008-09,the State may shift to schools and community colleges up
to 8%of local government property tax revenues if. the Governor proclaims that the shift is needed due to
a severe State financial hardship, the legislature approves the shift with a two-thirds vote of both houses
and certain other conditions are met. The State must repay local governments for their property tax
losses, with interest, within three years. Second, Proposition IA allows the State to approve voluntary
exchanges of local sales tax and property tax revenues among local governments within a county.
Proposition IA amends the California Constitution to require the State to suspend certain State
laws creating mandates in any year that the State does not fully reimburse local governments for their
costs to comply with the mandates. Beginning in Fiscal Year 2005-06, if the State does not provide
funding for the activity that has been determined to be mandated, the requirement on cities, counties or
special districts to abide by the mandate would be suspended. In addition, Proposition 1A expands the
definition of what constitutes a mandate to encompass State action that transfers to cities, counties and
special districts financial responsibility for a required program for which the State previously had
complete or partial financial responsibility. This provision does not apply to mandates relating to schools
or community colleges, or to those mandates relating to employee rights.
Proposition IA restricts the State's authority to reallocate local tax revenues to address concerns
regarding funding for specific local governments or to restructure local government finance. For
example, the State could not enact measures that changed how local sales tax revenues are allocated to
cities and counties. In addition, measures that reallocated property taxes among local governments in a
county would require approval by two-thirds of the members of each house of the legislature (rather than
a majority vote). As a result, Proposition 1 could result in fewer changes to local government revenues
than otherwise would have been the case.
Future Initiatives
Article XIII A, Article XIII B, Article XIII C, Article XIII D, and Proposition 62 and 1A, were
adopted as measures that qualified for the ballot through California's initiative process. From time to
time other initiative measures could be adopted, further affecting the County's revenues.
COUNTY INFORMATION
For a discussion of the economic and demographic profiles of the County, see APPENDIX A—
"GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION." For information on the County's
finances, see APPENDIX B--"COUNTY FINANCIAL INFORMATION"and APPENDIX E "EXCERPTS FROM THE
AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2005."
200-06036\pos-5 21
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the County ("Bond.
Counsel"),based on an analysis.of existing laws, regulations, rulings, and court decisions, and assuming,
among other matters, the accuracy of certain representations and compliance with certain covenants,
interest on the Notes is excluded from gross income for federal income tax purposes under Section 103 of
the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California (the "State")
personal income taxes. Bond Counsel is of the further opinion that interest on the Notes is not a specific ,
preference item for purposes of the federal individual or corporate alternative minimum taxes, although
Bond Counsel observes that such interest is included in adjusted current earnings in calculating federal
corporate alternative minimum taxable income. A complete copy of the proposed form of the opinion of
Bond Counsel is set forth in Appendix D hereto.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from
gross income for federal income tax purposes of interest on obligations such as the Notes. The County
has made certain representations and has covenanted to comply with certain restrictions designed to
insure that interest on the Notes will not be included in federal gross income. Inaccuracy of these
representations or failure to comply with these covenants may result in interest on the Notes being
included in gross income for federal income tax purposes, possibly from the date of original issuance of
the Notes. The opinion of Bond Counsel assumes the accuracy,of these representations and compliance
with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether
any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the
Notes may adversely affect the value of,or the tax status of interest on,the Notes.
One of the covenants of the County referred to above requires the County to reasonably and
prudently calculate the amount, if any, of excess investment earnings on the proceeds of the Notes which
must be rebated to the United States,to set aside from lawfully available sources sufficient moneys to pay
such amounts and to otherwise do all things necessary and within its power and authority to assure that
interest on the Notes is excluded from gross income for federal income tax purposes. Under the Code, if
the County spends 100% of the proceeds of the Notes within six months after issuance, there is no
requirement that there be a rebate of investment profits in order for interest on the Notes to be excluded
from gross income for federal income tax purposes. The Code also provides that such proceeds are not
deemed spent until all other available moneys (less a reasonable working capital reserve) are spent. The
County expects to satisfy this expenditure test or,if it fails to do so,to make any required rebate payments
from moneys received or accrued during Fiscal Year 2006-07. To the extent that any rebate cannot be
paid from such moneys, the law of California is unclear as to whether such covenant would require the
County to pay any such rebate. This would be an issue only if it were determined that the County's
calculations of expenditures of Note proceeds or of rebatable arbitrage profits,if any,were incorrect.
Notes purchased, whether at original issuance or otherwise, for an amount greater than their
principal amount payable at maturity ("Premium Notes") will be treated as having amortizable bond
premium. No deduction is allowable for the amortizable bond premium for notes, like Premium Notes,
the interest on which is excluded from gross income for federal income tax purposes. However, the
amount of tax exempt interest received, and a purchaser's basis in a Premium Note,will be reduced by the
amount of amortizable bond premium properly allocable to such purchaser. Owners of Premium Notes .
should consult their own tax advisors with respect to the proper treatment of amortizable bond premium
in their particular circumstances.
Certain requirements. and procedures contained or referred to in the Resolution, the Tax
Certificate and other relevant documents may be changed and certain actions (including, without
limitation, defeasance of the Notes) may be taken or omitted, under the circumstances and subject to the
terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Note or
200-06036\pos-5 22
the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of
bond counsel other than Orrick,Herrington& Sutcliffe LLP.
Although Bond Counsel is of the opinion that interest on the Notes is excluded from gross income
.for federal income tax purposes and is exempt from State personal income taxes, the ownership or
disposition of, or the accrual or receipt of interest on, the Notes may otherwise affect a Beneficial
Owner's federal or state tax liability. The nature and extent of these other tax consequences will depend
upon the particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or
deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Future legislation, if enacted into law, or clarification of the Code, may cause interest on the
Notes to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial
owners from realizing the full current benefit of the tax status of such interest. The introduction or
enactment of any such future legislation or clarification of the Code may also affect the market price for,
or marketability of, the Notes. Prospective purchasers of the Notes should consult their own tax advisers
regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no
opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment
of the Notes for federal income tax purposes. It is not binding on the Internal.Revenue Service("IRS")or
the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the
future activities of the County, or about the effect of future changes in the Code, the applicable
regulations,the interpretation thereof or the enforcement thereof by the IRS. The County has covenanted,
however,to comply with the requirements of the Code.
Bond Counsel's engagement with respect to the Notes ends with the issuance of the Notes, and,
unless separately engaged, Bond Counsel is not obligated to defend the County or the Beneficial Owner
regarding the tax-exempt status of the Notes in the event of an audit examination by the IRS: Under
current procedures, parties other than the County and its appointed counsel, including the Beneficial
Owner, would have little, if any, right to participate in the audit examination process. Moreover, because
achieving judicial review in connection with an audit examination of tax-exempt Notes is difficult,
obtaining an independent review of IRS positions with which the County legitimately disagrees, may not
be practicable. Any action of the IRS, including but not limited to selection of the Notes for audit, or the
course or result of such audit, or an audit of Notes presenting similar tax issues may affect the market
price for, or the marketability of, the Notes, and may cause the County or the Beneficial Owner to incur
significant expense.
LEGAL MATTERS
Bond Counsel's engagement is limited to a review of the legal proceedings required for .the
authorization of the Notes and to rendering the opinion set forth in Appendix D hereto. Bond Counsel
takes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal
matters will be passed upon for the County by the County Counsel and for the County and the
purchaser(s)by Lofton&Jennings, San Francisco,California,Disclosure Counsel. Compensation paid to
Bond Counsel and Disclosure Counsel is contingent on the sale of the Notes.
200-06036\pos-5 23
LEGALITY FOR INVESTMENT IN CALIFORNIA
Under provisions of the California Financial Code, the Notes are legal investments for
commercial banks in the State to the extent that the Notes, in the informed opinion of the investor bank,
are prudent for the investment of funds of its depositors and, under provisions of the California
Government Code, are eligible to secure deposits of public moneys in the State.
FINANCIAL ADVISOR
The County has retained Tamalpais Advisors, Inc., Sausalito, California, as Financial Advisor for
the sale of the Notes. Tamalpais Advisors, Inca is an independent financial advisor and is.not engaged in
the business of underwriting, trading or distributing municipal or other financial securities. Tamalpais
Advisors,Inc. takes no responsibility for the accuracy, completeness or fairness bf this Official Statement.
Compensation paid to the Financial Advisor is contingent on the delivery of the Notes.
RATINGS
The County has received ratings of" " from Moody's Investors Service ("Moody's") and
" " from Standard & Poor's Ratings Services, a Division of the McGraw Hill Companies, Inc.
("S&P") on the Notes. Certain information was supplied by the County to the rating agencies to be
considered in evaluating the Notes. The ratings issued reflect only the views of the rating agency giving
such rating and is not a recommendation to buy sell or hold the Notes. Any explanation of the
significance of such ratings may be obtained from the rating agencies at their respective addresses, as
follows: Moody's Investors Service, 99 Church Street, New York, New York 10007; and Standard &
Poor's, 55 Water Street, New York, New York 10041. There is no assurance that any rating will be
retained for any given period of time or that the same will not be revised downward or withdrawn entirely
by the respective rating agency if in its judgment, circumstances so warrant. Other than as provided in the
Continuing Disclosure Certificate,the County undertakes no responsibility either to bring to the attention
of the owners of any Notes any downward revision or withdrawal of any rating obtained or to oppose any
such revision or withdrawal. Any such downward revision or withdrawal of the ratings obtained may
have an adverse effect on the market price of the Notes.
NO MATERIAL LITIGATION
No material litigation is pending or threatened against the County concerning the validity of the
Notes, and a certificate of the County Counsel to that effect will be furnished to the purchaser at the time
of the original delivery of the Notes. The County is not aware of any litigation pending or threatened
against the County questioning the political existence of the County or contesting the County's ability to
levy and collect ad valorem taxes or contesting the County's ability to issue and repay the Notes.
There are a number of lawsuits and claims pending against the County. The aggregate amount of.
the uninsured liabilities of the County and the timing of any anticipated payments of judgments which
may result from suits and claims will not, in the opinion of the County Counsel and the County Auditor-
Controller,materially affect the County's finances or impair its ability to repay the Notes.
200-06036\pos-5 24
SALE OF THE NOTES
The Notes were to be sold at competitive bid on November 9, 2006. The Notes were awarded to
. The Notes were purchased from the County at a purchase price of$
(representing.the principal amount of the Notes, plus a premium in the amount of$ ). The
Official Notice of Sale provides that the obligation to purchase the Notes is subject to certain terms and
conditions set forth in the Official Notice of Sale, including, among others the approval of certain legal
matters by Bond Counsel. The purchaser(s) of the Notes has represented to the County that the Notes
have been re-offered to the public at the initial offering yield shown on the cover page hereof. Based on
such representation, compensation paid to the purchaser with respect to the Notes is $
ADDITIONAL INFORMATION
The purpose.of this Official Statement is to supply information to prospective purchasers of the
Notes. Summaries and explanations of the Notes, the Resolution, and statutes and documents contained
herein do not purport to be complete, and reference is made to said documents and statutes for a full and
complete statement of their provisions. This Official Statement is not to be construed as a contract
between the County and any purchasers or owners of the Notes.
The County regularly prepares a variety of reports, including audits, budgets and related
documents, as well as certain monthly activity reports. Any owner of a Note may obtain a copy of any
such report, as available, from the County by writing to the Senior Deputy County Administrator/Debt
Manager, County Administrator's Office, 651 Pine Street, 10h Floor, Martinez, California 94553, or by
calling(925) 335-1021.
All data contained herein have been taken or constructed from County records and other sources.
Appropriate County officials, acting in their official capacity, have reviewed this Official Statement and
have determined that as of the date hereof the information contained herein is, to the best of their
knowledge and belief,true and correct in all material respects and does not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements made herein, in
the light of the circumstances under which they are made, not misleading. An appropriate County official
will execute a certificate to this effect upon delivery of the Notes. This Official Statement and its
distribution have been duly authorized and approved by the Board of Supervisors of the County.
COUNTY OF CONTRA COSTA
By:
John B. Cullen
County Administrator and Clerk
of the Board of Supervisors
200-060361pos-5 25
APPENDIX A
GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION
General
The County of Contra Costa, California (the "County") was incorporated in 1850 as one of the
original 27 counties of the State of California (the "State"), with the City of Martinez as the County seat.
It is one of the nine counties in the San Francisco-Oakland Bay Area. The County covers about 733
square miles and extends from the northeastern shore of the San Francisco Bay easterly about 50 miles to
San Joaquin County. The County is bordered on the south and west by Alameda County and on the north
by the Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized, while
the interior sections are suburban/residential, commercial and light industrial. The County contains 19
incorporated cities, including Richmond in the west,Antioch in the northeast, and Concord in the middle.
A large part of the County is served by the San Francisco Bay Area Rapid Transit District
("BART"), which has enabled the expansion of both residential and commercial development throughout
much of the County. In addition, economic development along the Interstate 680 corridor in the County
has been substantial and has accounted for significant job creation in the Cities of Concord, Walnut Creek
and San Ramon.
County Government
The County has a general law form of government. A five-member Board of Supervisors, each
member of which is elected to a four-year term, serves as the County's legislative body. Also elected are
the County Assessor, Auditor-Controller, Clerk-Recorder, District Attorney-Public Administrator,
Sheriff-Coroner and Treasurer-Tax Collector. A County Administrator appointed by the Board of
Supervisors runs the day-to-day business of the County. The current County. Administrator is
John Cullen.
Population
The County is the ninth most populous county in California, with its population reaching
approximately 1,029,377 as of January 1, 2006. This represents an increase of approximately 417%
compared to the County's population as of January 1, 2002. The availability of rapid transit, close
proximity to major employment hubs in San Francisco and Oakland, and relatively affordable existing
and new housing have combined to attract more residents to the County over the past decade.
While population grew in every city in the County during the last decade, population growth has
been strongest in unincorporated areas as well as in the eastern portion of the County, particularly in
Antioch,Brentwood and Clayton.
200-06036\pos-5 A-1
The following is a summary of the County's population levels since 2002. .
Table A-1
COUNTY OF CONTRA COSTA
POPULATION'
(AS OF JANUARY 1)
2002 2003 2004 2005 2006*
Antioch 96,878 99,422 101,097 100,913 100,945
Brentwood 29,685 33,094 37,246 42,050 45,892
Clayton 10,993 10,994 11,045 10,967 10,924
Concord 124,963 125,104 125,484 124,720 124,436
Danville 43,067 43,269 43,459 43,216 43,052
El Cerrito 23547 23,561 23,517 23,375 23,471 .
Hercules 20,169 20,515 21,814 23,330 23,834
Lafayette 24,447 24,433 24,421 24,284 24,191
Martinez 36,769 36,938 36,985 36,770 36,582
Moraga 16,529 16,531 16,516 16,417 16,338
Oakley 26,196 27,036 27,670 28,228 29,074
Orinda 17,860 17,854 17,849 17,771 17,693
Pinole 19,457 19,555 19,638 19,579 19,465
Pittsburg 60,000 61,146 61,791 62,521 62,979
Pleasant Hill 33,409 33,719 33,786 33,594 33,462
Richmond 101,212 101,502 102,162 102,877 103,468
San Pablo 30,689 30,842 31,187 31,302 31,216
San Ramon 46,887 47,120 48,855 50,958 53,137
Walnut Creek 65,980 66,080 66,466 . 66,415 66,111
SUBTOTAL 828,737 838,715 850,988 859,144 866,270
Balance of County 154,681 157,496 157,956 159,814 163,107
TOTAL 983,418 996,211 1,008,944 1,019,101 1,029,377
California 35,008,671 35,691,442 36,271,091 36,728,196 37,172,015
* Preliminary.
t Totals may not equal sums due to independent rounding.
Source: State Department of Finance for 2002-2006.
Industry and Employment
The 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. The County has experienced an immigration of white-collar jobs due to the relocation of
companies from costlier locations in the Bay Area.
200-06036\pos-5 A-2
As shown below, the County's civilian labor force was 511,900 in 2005. With average 2005
unemployment rates of 4.8% and 5.4% for the County and the State, respectively, the County has
achieved a lower unemployment rate than the State in each of the past five years.
Table A-2
COUNTY OF CONTRA COSTA
EMPLOYMENT AND UNEMPLOYMENT OF
RESIDENT LABOR FORCE
WAGE AND SALARY EMPLOYMENT BY INDUSTRY
ANNUAL AVERAGES(IN THOUSANDS)
2001 2002 2003 2004 2005
County Civilian Labor Force 508.4 512.9 512.0 511.0 511.9
Employment 487.9 483.7 480.8 483.3 487.3
Unemployment 20.5 29.2 31.2 27.7 24.6
Unemployment Rate:
County 4.0% 5.7% 6.1% 5.4% 4.8%
State of California 5.4% 6.7% 6.8% 6.2% 5.4%
Wage and Salary Employment(2) 2001 2002 2003 2004 2005
Agriculture 2.1 2.1 2.0 0.8 0.9
Mining and Construction 30.1 28.0 27.5 29.0 30.8
Manufacturing 22.8 21.9 20.6 20.6 19.8
Wholesale Trade 9.7 10.1 9.3 9.0 8.8
Retail Trade 43.2 43.4 42.2. 43.4 44.2
Transportation and Public Utilities 8.9 9.3 7.9 7.5 7.4
Information 16.8 16.0 13.8 14.0 13.3
Finance,Insurance, and Real Estate 28.6 30.8 32.4 32.6 34.3
Professional and Business Services 48.8 48.0 45.1 45.9 47.0
Education and Health Services 39.5 40.3 40.4 41.0 41.1
Leisure and Hospitality 26.6 29.1 29.8 30.3 31.5
Other Services 11.5 13.6 13.3 13.9 14.1
Government 49.6 50.5 50.2 49.3 50.8
ToTAL(3) 333.3 343.2 334.3 337.3 344.0
(1) Based on place of residence.
(2) Based on place of work.
(3) "Total"may not be precise due to independent rounding.
Source: State of California, Employment Development Department, and Labor Market Information Division, March 2004
benchmark.
Major Employers
Major industries in the County include petroleum refining, telecommunications, financial and
retail services, steel manufacturing,prefabricated metals, chemicals, electronic equipment,paper products
and food processing. Most of the County's heavy manufacturing is located along the County's northern
boundary fronting on the Suisun Bay and San Pablo Bay leading to San Francisco Bay and the Pacific
Ocean.
200-06036\pos-5 A-3
The County is located in the region east of the San Francisco Bay known as the "East Bay,"
which also includes the County of Alameda. The following Table A-3 provides a listing of major
employers headquartered or located in the County and their employment levels.
Table A-3
MAJOR EMPLOYERS IN THE EAST BAY
WITH EMPLOYEES IN THE COUNTY(t)
Primary Location
Firm in County Product or Service Employment
SBC Communications Inc. San Ramon Telecommunications 10,600
U.S.Postal Service Countywide Postal Services 10,000
Chevron/Texaco(2) Countywide Energy,Oil&Gas 8,730
County of Contra Costa(2) Martinez County Government 8,381
Safeway Countywide Supermarkets 7,922
Bank of America Countywide Banking 7,081
Bio-Rad Laboratories Inc. Hercules Biotech tests 5,200
John Muir/Mt.Diablo Health System Walnut Walnut Creek Health Care 4,900
Kaiser Permanente Medical Center(2) Walnut Creek,Martinez Health Care 4,730
Lucky Stores Countywide Supermarkets 4,631
Wells Fargo&Co. Countywide Banking 4,000
AT&T Countywide Telecommunications 4,000.
Mt.Diablo Unified School District(Z) Concord K-12 Education 3,600
West Contra Costa Unified School District(2) Richmond K-12 Education 3,360
Coopervision/Ocular Sciences Inc. Concord Contact lenses 3,144
Pacific Gas&Electric Countywide Gas&Electric Service 3,000
Longs Drug Stores(2) Walnut Creek Retail Drug Stores 2,900
San Ramon Valley Unified School District Danville K-12 Education 2,200
Contra Costa Newspapers(2) Walnut Creek Newspaper Publishing 1,417
Round Table Franchise Corp. Countywide Pizza Restaurants 1,230
Tosco Martinez Oil Refinery 1,200
Hill Physicians Med.Group Countywide Health Care 1,050
USS Posco Industries Pittsburg Steel Manufacturing 1,000
Shell Martinez Refining Co. (Equilon) Martinez Oil Refinery 930
(1) Sources: East Bay Business Times,Book of Lists,2005 and San Francisco Business Times,Book of Lists,2005. Data is for
the reported entity's latest fiscal year.
(2) Headquartered in the County.
Effective Buying Income
"Effective buying income" ("EBI") is a classification developed exclusively by Sales &
Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is
defined as "money income" less personal tax and nontax payments- a number often referred to as
"disposable" or "after-tax" income. Money income is the aggregate of wages and salaries, net farm and
nonfarm self-employment income, interest, dividends, net rental and royalty income, Social Security and
railroad retirement income, other retirement and disability income, public assistance income,
unemployment compensation, Veterans Administration payments, alimony and child support, military
family allotments, net winnings from gambling and other periodic income. Money income does not
include money received from the sale of property (unless the recipient is engaged in the business of
selling property); the value of"in-kind" income such as food stamps, public housing subsidies, medical
care, employer contributions for pensions, etc.; withdrawal of bank deposits; money borrowed; tax
refunds; exchange of money between relatives living in the same household; gifts and lump-sum
inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting
from money income all personal income taxes (federal, state and local), personal contributions to social
200-06036\pos-5 A-4
insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied
nonbusiness real estate.
The total effective buying income for the County in 2005, as reported by Sales & Marketing
Management in its Survey of Buying Power,was $27,273,658 and the median household effective buying
income was $56,165. This compares to 2005 median household effective buying incomes of$51,514 for
the City and County of San Francisco, $51,415 for Alameda County, $59,703 for San.Mateo County,
$62,614 for Santa Clara County and$39,414 for Los Angeles County.
Table A-4 below presents the latest available total effective buying income and median household
effective buying income for the County, the State and the nation for the, calendar years 2001
through 2005.
Table A-4
COUNTY OF CONTRA COSTA
EFFECTIVE BUYING INCOME
CALENDAR YEARS 2001-2005
Total Effective Median Household
Buying Income Effective
Year and Area ($in 000's) Buying Income
2005'
County $27,273,658 $56,165
State 705,108,410 43,915
United States 5,692,909,567 39,324
2004
County $25,962,828 $54,862
State 674,721,020 42,924
United States 5,466,880,008 38,201
2003
County $24,571,388 $54,448
State 647,879,427 42,484
United States 5,340,682,818 38,035
2002
County $23,902,953 $56,507
State 650,521,407 43,532
United States 5,303,481,498 38,365
2001
County $28,823,698 $60,189
State 652,190,282 44,464
United States 5,230,824,904 39,129
t Most recent data available.
Source: Sales&Marketing Management,Survey of Buying Power.
200-06036\pos-5 A-5
Commercial Activity
Commercial activity comprises an important part of the County's economy, with taxable
transactions totaling approximately $13.0 billion in 2004, the most recent year for which complete annual
data is available. Presented in Table A-5 below is a summary of taxable transactions in the County
since 2000.
Table A-5
COUNTY OF CONTRA COSTA
TAXABLE TRANSACTIONS
2000 TO 20041
($IN 000'S)
2000 2001 2002 2003 2004'
Apparel Stores $338,215 $346,190 $357,690 $377,571 $411,121
General Merchandise Stores 1,625,482 1,683,803 1,684,336 1,720,973 1,794,677
Specialty Stores 1,278,513 1,229,075 1,307,403 1,241,320 1,313,316
Food Stores 544,489 583,947 584,948 589,826 596,922
Packaged Liquor Stores 62,907 68,428 70,304 70,956 75,410
Eating and Drinking Places 832,962 878,955 903,540 928,874 994,733
Home Furnishings and Appliances 471,944 467,402 473,024 486,829 502,711
Building Materials and Farm Implements 840,546 850,622 876,203 925,708 1,080,813
Service Stations 820,701 792,340 747,291 763,870 921,731
Automotive and Vehicle Dealers,Parts
and Supplies 1,833,660 1,959,801 1,952,583 1,832,891 1,899,369
Total Retail Outlets $8,649,419 $8,942,822 $9,044,346 .$9,025,114 $9,697,365
Business and Personal Services 542,103 540,959 517,165 512,140 506,336
All Other Outlets 3,139,038 2,772,940 2,597,913 2,686,041 2,786,837
TOTAL ALL OUTLETS $12,330,560 $12,256,721 $12,159,424 $12,223,295 $12,990,538
Most recent annual data available.
Source: State Board of Equalization.
Much of the County's commercial activity is concentrated in central business districts of its cities
and unincorporated towns. Regional shopping centers, numerous smaller centers and several "big box"
warehouse stores serve County residents. The County is served by all major banks including Bank of
America and Wells Fargo Bank. In addition there are numerous local banks and branches of smaller
California and foreign banks. There are over 30 savings and loan.associations in the County, including
Washington Mutual,World Savings and California Federal.
Construction Activity
The value of residential building activity[increased]by_% in Fiscal Year 2005-06 from Fiscal
Year 2004-05 levels. The decrease was expected due to the unprecedented number of building permits
issued in the prior Fiscal Year for residential construction primarily in Antioch, Brentwood, Pittsburgh,
and Oakley compared to the actual rate of construction.
Within the County, Antioch, Brentwood, Oakley and Pittsburg accounted for approximately 46%
of all new homes constructed in the County during the first eight months of calendar year 2005.
200-06036\pos-5 A-6
The following Table A-6 provides a summary of residential building permit valuations and
number of new dwelling units authorized in the County since Calendar Year 2001-2005.
Table A-6
COUNTY OF CONTRA COSTA
RESIDENTIAL BUILDING PERMIT VALUATIONS CALENDAR YEARS 2001 THROUGH 2005
Valuation($in thousands) Number of New Dwelling Units
Calendar Residential Single Multiple
Year (New) Family Famil Total
2001 $917,085 4,152 984 5,13,6
2002 1,219,608 5,076 729 5,805
2003 1,263,360 4,965 1,930 6,895
2004 1,113,572 4,222 1,261 5,483
2005 1,525,515 5,452 860 6,312
Source:Construction Industry Research Board.
An approximately 5,979 acre development located east of the City of San Ramon will add 11,000
new homes in the County. The development known as "Dougherty Valley" is expected to be constructed
in nine phases with complete buildout in 2015. All phases of construction of Dougherty Valley have been
approved by the County and approximately 8,900 homes have been constructed.
On August 1, 2000 the Board of Supervisors unanimously adopted an amendment to the Contra
Costa County General Plan, 1995-2010, modifying the boundaries of the County's Urban Limit Line.
This action reduced the growth limit line by 22 square miles, by removing approximately 14,000 acres
from future development. The two regions primarily affected by this amendment were eastern Contra
Costa County and the Tassajara Valley in the south-central part of the County. Two cities within the
County lost lawsuits challenging the environmental justifications for the boundary shift.
On November 8, 2005 the voters of the City of Antioch and the City of Pittsburgh passed
Measure K and Measure P, respectively. These Measures established Urban Limit Lines for each City
and prohibit future urban development unless an amendment to the Urban Limit Line is approved by the
voters of the respective city. In Antioch,the approval of Measure K also reduces the aggregate number of
planned housing units, limits the annual number of housing units to be constructed to 600, and requires
additional developer contributions to roadway construction and school improvements. In the City of
Pittsburg, Measure P also "prezoned" certain land within the new urban limit line but outside of current
City limits to permit future annexation.
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 portion of the County to San
Francisco and the central portion of the County to Sacramento and points north via 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 and portions of the Central Valley of the State via State Routes 4 and 24, the
County's major east-west arteries.
200-06036\pos-5 A-7
Caltrans is currently widening Interstate 80 in the western portion of the County at a cost of
$200 million, has constructed a replacement span on the Carquinez Bridge on Interstate Highway 80 and
is constructing a replacement span on the Benicia—Martinez Bridge on Interstate Highway 680 at a cost
of$1.1 billion. The Benicia—Martinez Bridge project is expected to be completed and open for traffic in
spring 2007.
Ground transportation is available to County residents from the following service providers:
• Central Contra Costa Transit Authority provides local bus service to the central area of the
County including Walnut Creek,Pleasant Hill and Concord.
• BART connects the County to Alameda County, San Francisco and Daly City and Colma in
San Mateo County with two main lines, one from the San Francisco area to Richmond and
the other to the Concord/Walnut Creek/Pittsburg/Bay Point area. BART has 43 stations
and 104 miles of roadway in its system. BART completed an extension to the San
Francisco International Airport which opened in June 2003.
• AC Transit, provides local bus service and connects Contra Costa communities to San
Francisco and Oakland.
• Other bus service is provided by Greyhound.
• Commuter rail service is provided by the Capital Corridor, with daily runs between the Bay
Area and Sacramento that stop at the new intermodal facility in Martinez,the County seat.
• The Santa Fe and Union Pacific Railroads' main lines serve 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. The Port of Richmond on San Francisco Bay and several privately
owned industrial docks on both San Pablo and Suisun Bays serve the heavy industry located in the area.
The Port of Richmond, owned and operated by the City of Richmond, covers 202 acres and handles
nearly 20 million metric tons of cargo annually. The majority of the shipments are bulk liquids, primarily
crude oil, 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 located in Byron and the other in
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. With EBMUD supplies water to the western part
of the County, including Alamo, Crockett, Danville, Diablo, Hercules, Lafayette,Moraga, Orinda, Pinole,
portions of Pleasant Hill, Richmond, Rodeo, San Pablo, San Ramon Selby and portions of Walnut Creek.
Approximately 89% of its supply is from the Mokelumne River watershed stored at the 69.4 billion gallon
capacity Pardee Dam in Ione, California. EBMUD is entitled to 325 million gallons per day under a
contract with the State Water Resources Control Board, plus an additional 119 million gallons per day in
a single dry year under a contract with the U.S. Water and Power Resources Service (formerly the U.S.
Bureau of Reclamation).
200-06036\pos-5 A-8
CCCWD obtains its water from the Sacramento-San Joaquin Delta and serves approximately
500,000 customers in the central and eastern part of the County, including Antioch, Bay Point, Clayton,
Clyde, Concord, Martinez, Oakley, portions of Pleasant Hill, Pittsburg and portions of Walnut Creek. It
is entitled under a contract with the U.S. Water and Power Resources Service to purchase 195,000 acre-
feet per year. Water purchased by CCCWD has ranged between 80,000 and 110,000 acre-feet annually.
In addition, a number of industrial users and several municipalities draw water directly from the San
Joaquin River under their own riparian rights, so that actual water usage in the service area averages about
125,000 acre-feet annually. To provide expanded water storage capacity, CCCWD constructed the Los
Vaqueros Reservoir with a capacity of 100,000 acre-feet south of the City of Antioch. In spring 2004,the
voters within CCCWD approved the preparation of an economic analysis, a technical feasibility report
and environmental review to expand the reservoir. It is expected that a draft feasibility report and an
environmental impact statement/ environmental impact report will be completed in 2007.
Sewer. Sewer services for the County are provided by approximately 20 sanitation districts and
municipalities. Federal and State environmental requirements,plus grant money available from these two
sources,resulted in upgrading, expanding and/or building new facilities by approximately 14 agencies.
Flood Control. The Contra Costa County Flood Control District (the "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
that fall under the jurisdiction of the U.S. Army Corps of Engineers and the State Department of Water
Resources. The District is responsible for meeting requirements set forth by the Environmental
Protection Agency ("EPA") with respect to addressing potential pollutants in nonspecific groundwater
runoff. The County is not presently able to estimate the cost of compliance with EPA requirements,
although such costs may be significant.
Education and Health Services
Public school education in the County is available through nine elementary school districts, two
high school districts and seven unified school districts. These districts provide 145 elementary schools,
45 middle, charter,junior high and intermediate.schools, 29 high schools, and a number of preschools,
adult schools, and special education facilities. In addition, there are 110 private schools with six or more
students in the County. School enrollment as of November 2005 numbered approximately 166,000
students in public schools and 18,500 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 East Bay (formerly California State
University Hayward)operates a branch campus,called Contra Costa Center,in the City of Concord where
late afternoon and evening classes in business, education and liberal arts are offered. 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 is the John F.Kennedy University with campuses in Pleasant Hill and Pittsburg and the
UC Berkeley Extension Contra Costa Center in San Ramon. In addition,County residents are within easy
commuting distance of the University of California,Berkeley.
There are 12 privately operated hospitals and one public hospital in the County, with a combined
total of approximately 1,900 beds. Four of the private hospitals are run by Kaiser, the largest health
maintenance organization in the United States. Kaiser has opened a new hospital in Richmond with new
critical care beds, surgical suites and a full service emergency department. The Walnut Creek-based John
Muir/Mt. Diablo Health System operates hospitals at its Walnut Creek and Concord Campuses and
outpatient services at its Brentwood Campus and in Rossmoor.
200-06036\pos-5 A-9
In September 2006 the West Contra Costa Health Care District (the "Health Care District"),
which operates Doctors Medical Center, declared a financial emergency and authorized the filing of a
bankruptcy petition in an effort to keep the hospital open. On September 19, 2006 and September 26,
2006 the Board of Supervisors received updates from the Health Care District regarding possible closure
of the hospital. On October 1, 2006 the Health Care District filed for Chapter 9 bankruptcy protection.
The County is not obligated to and has not made any commitments to provide financial assistance to the
hospital. If the hospital is closed demand at the County public hospital is expected to increase. The
County cannot predict the eventual impact closure of this hospital will have on the financial condition of
the County.
The public hospital is Contra Costa Regional Medical Center("CCRMC"), a 164-bed facility that
the County rebuilt and re-opened to the public in 1998 on the existing campus in Martinez. Since
completion of the hospital in 1998, the County completed a public health/clinical laboratory in 2001 on
the CCRMC campus, converted the former Los Medanos Hospital into the Pittsburg Health Center,
completed construction of an ambulatory care clinic on the campus of CCRMC, expanded clinics in
Antioch, Concord and Brentwood and is in the planning stage of replacing a clinic in Richmond and
constructing expansions to the clinics at the CCRMC campus and at the Pittsburg Health Center.
200-06036\pos-5 A-10
i
APPENDIX B
COUNTY FINANCIAL INFORMATION.
Introduction
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. Currently, the County is required to provide health care to all indigents, administer welfare
programs, provide justice facilities (courts and jails) and administer the property tax system and real
estate recordings. 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. The result has been that the County has increased its..
contribution to maintain mandated services while optional local services have been reduced. The Board
of Supervisors has responded to this. trend .in part by instituting measures to improve management,
thereby reducing costs while increasing productivity and maintaining services with diminished funding.
The level of intergovernmental revenues that the County receives from the State in Fiscal Year
2006-07 and in subsequent fiscal years is likely to be affected by the financial condition of the State.
State Budgets
Currently, approximately 28% of the County's Fiscal Year 2006-07 General Fund Budget
consists of payments from the State. The financial condition of the State has an impact on the level of
these revenues. In past years the State reduced revenues to counties to help solve the State's budget
problems, although Proposition lA provides certain protections to counties. See"CONSTITUTIONAL AND
STATUTORY LIMITATIONS ON TAXES,REVENUES AND APPROPRIATIONS—Proposition 1A." The State has
also diverted other revenues such as cigarette taxes and trailer coach in lieu taxes from counties to the
State.
Property tax revenues received by local governments declined more than 50% following passage
of Proposition 13. Subsequently, the State Legislature enacted measures to provide for the redistribution
of the State's General Fund surplus to local agencies, the reallocation of certain State revenues to local
agencies and the assumption of certain governmental functions by the State to assist municipal issuers to
raise revenues. Total local assistance from the State General Fund was budgeted at approximately 75%of
General Fund expenditures in recent years, including the effect of implementing reductions in certain aid
programs.
To the extent the State should be constrained by its Article XIII B appropriations limit, or its
obligation to conform to Proposition 98, or other fiscal considerations, the absolute level, or the rate of
growth, of State assistance to local governments may be reduced. Any such reductions in State aid could
compound the serious fiscal constraints already experienced by many local governments, particularly
counties.
The following information concerning the State has been obtained from publicly available
information on the State Department of Finance, the State Treasurer and the California Legislative
Analysts Office websites. The estimates and projections provided below are based upon various
assumptions which may be affected by numerous factors, including future economic conditions in the
State and the nation, and there can be no assurance that the estimates will be achieved. For further
information and discussion of factors underlying the State's projections, see the aforementioned websites.
The County believes such information to be reliable however, the County takes no responsibility as to the
accuracy or completeness thereof and has not independently verified such information.
200-06036\pos-5 B-1
State Budget Acts
Fiscal Year 2005-06. The 2005-06 Budget Act (the "State 2005 Budget Act") was adopted by
the Legislature on July 7, 2005, along with a number of implementing measures, and signed by Governor
Schwarzenegger on July 11, 2005.
The State 2005 Budget Act reflected an improving State fiscal picture brought about by better-
than-expected growth in General Fund revenues. The State 2005 Budget Act funded the Proposition 42
transfer of general fund sales taxes to transportation special funds, and included significant increases in
both K-12 and higher education. The State 2005 Budget Act did not use any of the remaining $3.7 billion
in deficit-financing bonds authorized by Proposition 57. Pursuant to Proposition 1A, which, among other
things, amended the California Constitution to require the State to suspend certain State laws creating
mandates in any year that the State does not fully reimburse local governments for their costs to comply
with the mandates, the vehicle license fee ("VLF") was reduced from 2% to 0.65% of the value of the
vehicle. In order to protect local governments, the reduction in VLF revenue to cities and counties from
this rate change was to be replaced by an increase in the amount of property tax they receive. See
"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS—
Proposition IA."
Under Proposition IA, for Fiscal Years 2004-05 and 2005-06 only, the replacement property
taxes that cities and counties receive was reduced by $700 million. In future years, local governments
would receive the full value of the VLF revenue that they would have received under current law. Also
for these two Fiscal Years,Proposition I would require redevelopment agencies to shift $250 million in
property tax revenue they would otherwise receive to certain schools, and special districts would shift
$350 million to certain schools. The State prepaid the $1.2 billion VLF "gap" loan that was due to local
governments in Fiscal Year 2006-07 in August 2005. For a more detailed description of Proposition 1A,
see "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS—
Proposition 1A."
At the same time, State 2005 Budget Act included approximately$6 billion in savings and related
budget solutions in order to maintain budgetary balance, including, among other solutions, the Education
Revenue Augmentation Fund (the "ERAF") transfer from redevelopment agencies in the aggregate
amount of$250 million.
After taking into account the higher revenues and other offsetting factors (including higher
Proposition 98 funding requirements under current law) the resulting operating shortfall of the State for
Fiscal Year 2005-06 was estimated at$4.9 billion.
Fiscal. Year 2006-07. The 2006-07 Budget Act (the "State 2006 Budget Act") was adopted by
the Legislature on June 27, 2006 and signed by the Governor on June 30, 2006. The State 2006 Budget
Act assumes Fiscal Year 2006-07 revenues of$94.4 billion and expenditures of$101.3 billion, resulting
in an operating short-fall of$7 billion, which partly reflects the prepayment of$2.8 billion in budgetary
debt obligations, leaving the State General Fund with a year-end reserve of$2 billion, compared to the $9
billion year-end reserve in Fiscal Year 2005-06.
The State 2006 Budget Act, among other things, (i) allocates new revenues to K-12 and
community college education, increases funding for higher education, and prepays approximately $2.8
billion in budgetary debt, which is roughly consistent with the Governor's budget revision released on
May 13, 2006; (ii) makes partial repayments of debt; (ii) funds a budget stabilization account; (iv) makes
augmentations to health, resources, corrections and local governments (including increases in funding for
county block grants for California Work Opportunity and Responsibility Kids, Child Welfare Services,
and foster care; additional funding for local law enforcement and local flood control; and largely one-time
200-06036\pos-5 B-2
funding to hospitals to increase patient capacity to meet public health emergencies, such as an avian flu
pandemic); and(v) makes the first payment of a proposed settlement in the amount of$2.9 billion, which
will be paid over six years commencing in Fiscal Year 2007-08, related to a lawsuit involving school
funding.
The State 2006 Budget Act does not include any ERAF transfers from redevelopment agencies.
The County cannot predict whether the State Legislature will enact future legislation requiring
additional or increased future shifts of tax increment revenues to the Sate and/or to schools, whether
through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on the
distribution of future County revenues.
County Budget Process
The County is required by State law to adopt a balanced budget by August 30 of each year,
although the Board of Supervisors may, by resolution, extend the date on a permanent basis or for a
limited period,to October 2. The County's budget process involves a 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
assumptions and projections contained in the Governor's proposed budget and other projected revenue
trends.
Second, the County Administrator develops and presents a proposed budget (the "Proposed
Budget") to the Board of Supervisors. Absent the adoption of a Final Budget by June 30, the Proposed
Budget is passed into the new Fiscal Year as the spending authority until a Final Budget is adopted.
Third, the County Administrator prepares a Preliminary/Recommended Budget (the
"Recommended Budget") that is presented to the Board of Supervisors. Between January and the time
the State adopts its own budget, (which is 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 or, dependent on timing, the Recommended Budget to align County expenditures
with approved State revenue.
Fourth, after conducting public hearings and deliberating the details of the budget, the Board of
Supervisors adopts the County's Final Budget by August 30, or by October 2 if the Board of Supervisors
has adopted a resolution to extend the deadline.
In order to ensure that the budget remains in balance throughout the Fiscal Year, the County
Administrator monitors actual expenditures and revenue receipts each month. In the event of a projected
year-end deficit, steps are taken, in accordance with the State Constitution, to reduce expenditures. On a
quarterly basis, the County Administrator's staff prepares a report that details the activity within each
budget category and provides summary information on the status of the budget. Actions that 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. The
County's ability to increase its revenues is limited by State laws that prohibit the imposition of fees to
raise general revenue, except to recover the cost of regulation or provision of services. See
"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS" in the
forepart of this Official Statement.
200-06036\pos-5 B-3
The County Administrator expects to convene workshops with respect to the County's Fiscal
Year 2007-08 budget in April 2007 and anticipates that the County will adopt its Fiscal Year 2007-08
budget in early May 2007.
Recent County General Fund Budgets
Set forth below is a description of the County's comparative budgetary and expenditure
experience for Fiscal Years 2004-05 through 2006-07. For a summary of the actual audited financial
results of the County for Fiscal Year 2004-05, see "EXCERPTS FROM THE AUDITED FINANCIAL
STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2005" in Appendix E to this
Official Statement.
Fiscal Year 2004-05. The County's Fiscal Year 2004-05 Actual Budget was approximately 2.3%
higher than the actual budget for the prior Fiscal Year. General Fund expenditures decreased by $6.1
million or 0.6% compared to the Fiscal Year 2003-04 Adjusted Budget. The County closed a projected
$53 million budget deficit primarily through the implementation of additional 10% reductions in all
County department budgets,requiring departments to absorb increases in wage and benefit costs that were
not offset by revenues through staff reductions, and the use of one-time resources, specifically fund
balance in the amount of$19.3 million. Actual revenues in Fiscal Year 2004-05 were approximately 1.4%
higher and total actual expenditures were approximately 1.5% higher than the actual budgeted amounts .
for Fiscal Year 2003-04.
The County participated in a securitization of its portion of the VLF "backfill" revenues due from
the State as a participant in the California Statewide Communities Development Authority Revenue
Anticipation Notes (Vehicle License.Fee Program) financing. These notes were issued on March 17,
2005 and defeased on August 4,2005 as a result of the early repayment by the State of the VLF"backfill"
amounts required under Proposition IA. See "CONSTITUTIONAL AND STATUTORY LIMITATION ON
TAXES, REVENUES AND APPROPRIATIONS-Proposition lA" and "—State Budget Acts—Fiscal Year
2005-06."
Fiscal Year 2005-06. The County's Fiscal Year 2005-06 Adopted Budget, adopted on
June 28, 2005 was 8.33%higher than the Fiscal Year 2004-05 Actual Budget. General Fund expenditures
increased by $55 million or 4.7% compared to the Fiscal Year 2004-05 Adjusted Budget. The County
closed a projected $50-60 million General Fund budget gap by requiring that all County department
budgets absorb salary and benefit cost increases without increasing individual budget allocations and
through the use of$43 million in one-time resources (fund balance). The 2005-06 Adopted Budget did
not, however, budget $10.2 million of VLF "true-up" funds (representing the difference between the
actual and the estimated VLF adjustment amount for Fiscal Year 2004-05). The Fiscal Year 2005-06
Adopted Budget included a 5% cost of living increase for.probation safety employees effective October
15, 2005, however, no other cost of living salary increases were budgeted for such Fiscal Year. The
County also took steps to reduce its workers compensation costs through proactive review by the County
of the type, scope and provider of medical services to employees making workers' compensation claims.
200-06036\pos-5 B-4
Table B-1
COUNTY OF CONTRA COSTA
GENERAL FUND BUDGET
FOR FISCAL YEARS 2005-06 AND 2006-07t
($IN 000's)
Final Adopted
Budget Final Adopted
2005-06 Budget
2006-07
Requirements
General Government $144,578 $151,552
Public Protection 330,588 340,143
Health and Sanitation 266,558 240,788
Public Assistance 375,992 398,918
Education 332 330
Public Ways and Facilities 92,668 99,508
Recreation and Culture 375 0
Reserves and Debt Service 10,000 100
TOTAL REQUIREMENTS 22 1 1 231 3 9
Available Funds
Property Taxes $218,831 $259,670
Fund Balance Available 43,414 9,509
Other Taxes 25,594 27,230
Licenses,Permits and Franchises 13,928 14,005
Fines,Forfeitures and Penalties 15,490 13,840
Use of Money and Property 3,565 4,111
Intergovernmental 593,228 618,283
Charges for Current Services 196,657 206,034
Other Revenue 110.387 78,657
TOTAL AvAILABLE FUNDS 1221091 $1,231,339
This table presents budget information for the General Fund only.
Source: County Auditor-Controller.
Fiscal Year 2006-07. The County's Fiscal Year 2006-07 Adopted Budget, adopted on
May 2, 2006 is 5% lower than the Fiscal Year 2005-06 Actual Budget. General Fund expenditures
decreased by $69 million or 5% compared to the Fiscal Year 2005-06 Final Adjusted Budget. The
County adopted a budget which balances annual expenditures with annual revenue and closed a projected
$43 million General Fund budget gap. The gap was closed by requiring that all County department
budgets absorb salary and benefit cost increases without increasing individual budget allocations; cutting
a net of$30 million in on-going appropriations in the General Fund; and increasing revenue a net of$6
million. The County also cut a net of$5.7 million in on-going appropriations in the Hospital Enterprise
Fund and increased revenue a net of$800 thousand for a total Enterprise Fund impact of$6.5 million.
200-06036\pos-5 8-5
Additionally, the County Administrator has identified four major areas of focus for fiscal year
2006-07: improving the County's fiscal health; providing services more efficiently and effectively;
improving the County's credibility; and developing greater use of teams and partnerships to address
issues. Focusing on these areas for improvement will allow the County to better manage its resources,
lower its expense growth, improve its revenues, and build a reasonable reserve.
The County expects its revenues to grow at normal levels and continues taking steps to reduce
workers compensation costs and minimize employee compensation growth.
Ad Valorem Property Taxes
The County administers the property tax levy and collection system for the County and all local
governments in the County. Taxes are levied for each fiscal year on taxable real and personal property
that is situated in the County as of the preceding January 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 the"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 10%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's power of sale and may be subsequently sold by the Treasurer.
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 roll upon which the assessment is entered.
Billings are made on a monthly basis and are due on the date mailed. If mailed between the
months of July through October, the first installment becomes delinquent on December 10 and the second
on April 10. 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 fust installment is delinquent.
Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent,
if unpaid, on August 31. A 10% 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 certain property 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 Teeter Plan pursuant to provisions of
Sections 4701 through 4717 of the California Revenue and Taxation Code. See "—The Teeter Plan."
200-06036\pos-5 B-6
Pursuant to those sections,the accounts of all political subdivisions that levy taxes on the County tax rolls
are credited with 100% of their respective tax levies regardless of actual payments and delinquencies.
The County Treasury's cash position(from taxes) is protected by a special fund(the"Tax Losses Reserve
Fund") into which all County-wide delinquent penalties are deposited. The County has used this method
since Fiscal Year 1950-51. (See the"—The Teeter Plan—Tax Losses Reserve Fund.')
Major property tax assessment appeals by businesses and the oil industry total approximately
$4.9 billion in disputed value, with potential loss of revenue in the millions to various units of County
local government. Of the total amount, an aggregate of approximately $2.9 billion was attributable to
appeals by oil refineries. Heavy industry accounted for ^% of the collected property taxes in the
County in Fiscal Year 2005-06. [Update)
A recent history of County tax levies, delinquencies and the Tax Losses Reserve Fund cash
balances as of June 30th is shown in Table B-2 below.
Table B-2
COUNTY OF CONTRA COSTA
SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY
TAXATION FOR FISCAL YEARS 1997-98 THROUGH 2006-07
Balance in
Secured Current Tax %Levy Tax Losses
Fiscal Year Assessed Property Delinquencies Delinquent Reserve Fund
June 30 Valuation Tax Levies (June 30) (June 30) (June 30)
1997-98 $70,314,800,892 $892,581,453 $15,547,736 1.74% $19,508,732
1998-99 73,699,554,452 939,437,116 15,375,159 1.64 21,550,142
1999-00 78,346,533,416 981,579,866 15,904,158 1.62 23,054,893
2000-01 84,627,977,952 1,062,831,354 16,738,410 1.57 24,535,061
2001-02 93,490,199,701 1,187,173,140 20,551,776 1.73 27,032,058
2002-03 100,925,700,794 1,293,561,117 25,574,249 1.98 30,347,321
2003-04 109,072,548,285 1,402,895,299 27,325,421 1.95 20,167,593
2004-05 118,776,276,503 1,5841132,373 26,598,823 1.68 23,134,013
2005-06 131,125,213,168 1,720,977,608 35,699,290 2.07 26,334,817
2006-07 (est.) 146,523,464,934 1,904,000,000 N/A N/A N/A
Source: County Auditor-Controller.
The Teeter Plan
In 1949, the California Legislature enacted an alternative method for the distribution of secured
property taxes to local agencies. This method, known as the Teeter Plan, is set forth in
Sections 4701-4717 of Revenue and Taxation Code of the State of California (the"Law"). Generally, the
Teeter Plan provides for a tax distribution procedure by which secured roll taxes are distributed to taxing
agencies within the County included in the Teeter Plan on the basis of the tax levy,.rathei than on the
basis of actual tax collections. The County deposits in the Tax Losses Reserve Fund (defined below) all
future delinquent tax payments, penalties and interest, and a complex tax redemption distribution system
for all participating taxing agencies is avoided. While the County bears the risk of loss on delinquent
taxes that go unpaid, it benefits from the penalties associated with these delinquent taxes when they are
paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the
elimination of collection risk. The constitutionality of the Teeter Plan was upheld in Corrie v. County of
Contra Costa, 110 Cal. App. 2d 210 (1952). The Teeter Plan was named after Desmond Teeter, the then
Auditor-Controller of the County who originated this method of tax distribution. The County was the
first Teeter Plan county in the State.
200-06036\pos-5 B-7
Tax Losses Reserve Fund. Pursuant to the Law, the County is required to establish a tax losses
reserve fund(the"Tax Losses Reserve Fund")to cover losses that may occur in the amount of tax liens as
a result of special sales of tax-defaulted property (i.e., if the sale price of the property is less .than the
amount owed). During each fiscal year, the Tax Losses Reserve Fund is reviewed and when the amount
of the fund exceeds certain levels, the excess may be credited to the County General Fund as provided by
Sections 4703 and 4703.2 of the California Revenue and Taxation Code. State law allows any county to
drawdown their tax losses reserve fund to a balance equal to (i) one percent of the total of all taxes and
assessments levied on the secured roll for that year, or(ii) 25% of the current year delinquent secured tax
levy.
As of July 1, 2006, the balance in the Tax Losses Reserve Fund was $26.3 million.
Approximately $9.0 million of the reserve was transferred to the County's General Fund in Fiscal Year
2005-06. In addition, pursuant to the Law, the County has established a tax resources account to
compensate for losses that may occur as a result of uncollected current property taxes.
Largest Taxpayers
The ten largest taxpayers in the County, as shown on the Fiscal Year 2005-06 secured tax roll,
and the approximate amounts of their property tax payments are shown below. These ten taxpayers paid a
total of approximately $125 million in taxes, or approximately 8% of the County's Fiscal Year 2005-06
secured tax collection.
Table B-3
COUNTY OF CONTRA COSTA
TEN LARGEST PROPERTY TAXPAYERS
FISCAL YEAR 2005-06
%of Total
Taxpayer Total Taxes County Tax Rollt
Chevron $39,466,378.30 2.38%
Equilon Enterprise 20,400,059.00 1.23
PG&E 12,129,448.00 0.73
Tesoro Petroleum 11,265,374.00 0.68
Tosco Corporation 9,726,634.00 0.59
Windemere 8;224,297.00 0.50
Sunset Land Company 7,773,599.00 0.47
Pacific Bell 5,752,848.00 0.35
Walnut Creek Mutual 5,319,198.00 0.32
Delta Energy Company 5,123,645.00 0.31
TOTAL TEN LARGEST TAXPAYERS 125,161,480.30 7.56
Other Taxpayers 1,529,429,419.52 92.44
TOTAL $1,654,590,899.82 100.00%
t Column does not total due to rounding.
Source: County Treasurer-Tax Collector.
200-06036\pos-5 B-8
Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by regulated utilities
be assessed by the State Board of Equalization (the "SBE") and taxed locally. Property valued by the
SBE as an operating unit in a primary function of the utility taxpayer is known as "unitary property," a
concept designed to perinit assessment of the utility as a going concern rather than assessment of each
individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and
"operating nonunitary" property (which excludes nonunitary property of regulated railways) is allocated
to the counties based on the situs of the various components of the unitary property. Except for unitary
property of regulated railways and certain other excepted property, all unitary and operating nonunitary
property is taxed at special county-wide rates and distributed to taxing jurisdictions according to statutory
formulae generally based on the distribution of taxes in the prior year. In 1999, the SBE adopted a rule
that provides for local assessment of certain investor-owned electric utility facilities. As a result of this
rule, the County Assessor currently assesses three power plants located in the County. However,
assessment of certain power plants has been transferred to the SBE, so the portion of the County's total
net assessed valuation constituting unitary property subject to SBE assessment has increased (see further
discussion below). For Fiscal Year 2004-05, approximately 2.3% of the County's total net assessed
valuation constitutes property subject to State assessment by the SBE, for which.approximately $23.1
million of property taxes were collected in Fiscal Year 2004-05. The portion of Fiscal Year 2004-05 tax
collections through the SBE. assessment methodology attributable to the County General Fund was
approximately$4.7 million.
Pursuant to Assembly Bill 81 (California Legislature 2001-2002 Regular Session), commencing
with the January 1, 2003 property tax lien date, the SBE assesses certain electric generation facilities.
The legislation provides that the assessed value and revenues derived from such assessed property is
allocated to local jurisdictions in the same manner as locally assessed property based on the location of
the property and not under the unitary property formulae. The County estimates that, should cities annex
property underlying existing power plants, the resultant revenue allocation could annually decrease
County General Fund revenue by approximately$1.5 million based on the current fiscal year.
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200-06036\pos-5 B-9
Redevelopment Agencies
The California Community Redevelopment Law authorizes city or county redevelopment
agencies to issue bonds payable from the allocation of tax revenues resulting from increases in full cash
values of properties within designated project areas. In effect, local taxing authorities other than the
redevelopment agency realize tax revenues only on the "frozen" tax base. The following Table B-4
shows redevelopment agency full cash value increments and tax allocations for agencies within the
County.
Table B-4
COUNTY OF CONTRA COSTA
COMMUNITY REDEVELOPMENT AGENCY PROJECTS
FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS ttl
FISCAL YEARS 1996-97 THROUGH 2005-06
Full Cash Total Tax
Fiscal Year Base Year Value(2) Value Increment 131 Allocations(4)
1996-97 $3,195,085,095 $5,493,724,548 $58,807,082
1997-98 2,198,412,524 5,687,404,922 60,454,787
1998-99 2,343,330,103 6,080,461,083 64,427,525
1999-00 2,480,670,587 6,660,417,603 69,321,686
2000-01 2,704,690,573 7,446,872,533 76,886,217 .
2001-02 3,578,860,177 8,835,385,357 91,289,481
2002-03 3,433,942,598 10,070,678,634 103,955,708
2003-04 3,600,771,960 11,403,833,690 116,813,986
2004-05 2,881,589,675151 12,875,417,794 131,478,464
2005-06 2,577,582,263 15,510,491,418 148,064,971
(1) Full cash values for all redevelopment projects above the"frozen"base year valuations. These data represent growth in full
cash values generating tax revenues for use by the community redevelopment agencies.
(2) The Base Year Values for Fiscal Years 1997-98 through 2005-06 were reduced to. exclude project areas with negative
increment.
(3) Does not include unitary and operating non-unitary utility roll values which are determined by the State Board of Equalization
on a county-wide basis.
(4) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies.
(5) Decrease reflects the removal of an undevelopable parcel from a redevelopment project area.
Source: County Auditor-Controller,
Accounting Policies,Reports and Audits
Except as mentioned below, the County believes that its 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, whereby revenues are
recognized when they are earned and become measurable, while expenses are recognized when they are
incurred.
The 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
200-06036\pos-5 B-10
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. See APPENDIX E—"EXCERPTS FROM THE
AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2005."
In addition to the above-mentioned audits, the County Grand Jury may also conduct management
audits of certain offices of the County.
The County, like other State and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the County can be
divided into these categories as follows: (i) governmental funds; (ii) property funds; and (iii) fiduciary
funds.
Governmental Funds: used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-
wide financial statements, governmental fund financial statements focus on near-term inflows and
outflows of resources that are available for spending as well as on balances of resources that are available
for spending at the end of the Fiscal Year.
The County maintains 27 individual governmental funds (e.g. General Fund, special revenue
funds, debt service funds, capital projects funds and permanent fund) for reporting purposes. Information
is presented separately in the governmental fund balance sheet and in the governmental fund statement of
revenues, expenditures, and changes in fund balances for the General Fund,the Contra Costa County Fire
Protection District Special Revenue Fund, and the Land Development Special Revenue Fund.
Proprietary Funds: used to account for information of the same type as the government-wide
financial statements, only in more detail. There are of two different types: (i) Enterprise Funds (used to
report the same functions presented as business-type activities in the government-wide financial
statements) and (ii) Internal Service Funds (an accounting device used to accumulate and allocate costs
internally among the County's various functions).
Fiduciary Funds: used to account for resources held for the benefit of entities legally separate
from the County and individuals, which are not part of the reporting entity. Fiduciary Funds are not
reflected in the government-wide financial statements because the resources of those funds are not
available to support the County's own programs.
Presented in Table B-5 on the following page is the County's Schedule of Revenues,
Expenditures and Changes in Fund Balances for the County General Fund as of June 30th for the five
most recent fiscal years for which audited financial statements are available. More detailed information
from the County's audited financial report for the fiscal year ending June 30, 2005 appears in Appendix E
to this Official Statement.
200-06036\pos-5 B-11
Table B-5
COUNTY OF CONTRA COSTA GENERAL FUND
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES
FISCAL YEARS 2000-01 THROUGH 2004-05
($IN THOUSANDS)
2000-01 2001-02 2002-03 2003-04 2004-05
REvENUEs
Taxes $184,513 $200,571 $211,866 $210,032 $237,828
Licenses,permits&franchises 14,823 23,782 13,614 17,593 12,736
Fines,forfeitures&penalties 14,364 14,508 14,007 27,443 16,620
Use of money&property 19,029 10,527 7,312 5,412 5,454
Intergovernmental revenues . 452,351 506,352 505,878 508,679 530,155
Charges for services 160,130 155,713 173,062 186,508 183,774
Other revenue 18,078 74,613 75,776 88,489 76,892
TOTAiREvENuEs 863,288 986,066 1,001,515 1,044,156 1,063,459
EXPENDITURES
General government 106,250 128,375 133,565 131,387 127,686
Public protection 225,008 254,070 284,683 294,449 285,743
Health&sanitation 153,961 172,613 193,337 204,188 197,686
Public assistance 273,403 315,112 326,917 335,236 357,657
Education 151 205 257 306 290
Public ways and facilities 24,092 45,679 34,733 38,419 51,884
Interest 3,133 2,215 1,145 432 -
Capital outlay 1,269 7,415 2,620 1,973 6,388
TOTAL ExPENDnum 787,267 925,684 977,257 1,006,390 1,027,352
Excess(deficiency)of Revenues over(under)
Expenditures 76,021 60,382 24,258 37,766 36,107
OTHER FINANCING SOURCES(USES)
Operating transfers in 23,485 23,568 26,017 30,288 24,775
Operating transfers out (68,889) (76,347) (84,735) (87,978) (94,093)
Capital lease financing 1,269 7,415 3,627 1,973 6,388
TOTAL OTHER FINANCING SOURCES(USES) (44,135) (42,872) (55,091) (55,717) (62,930)
NET CHANGE IN FUND BALANCES 31,886 17,510 (30,833) (17,951) (26,823)
FUND BALANCE AT BEGINNING OF YEAR,
as Previously Reported 112,721 144,607 169,402 138,569 119,886
Adjustment to beginning fund balance 0 7,285 0 (732) 0
FUND BALANCE AT BEGINNING OF YEAR,
as Restated 112,721 151,892 169,402 137,837 93,063
Residual equity transfers in 0 0 0 0 0
Residual equity transfers out 0 0 0 0 0
FUND BALANCE AT END OF YEAR $144,607 $169,402 $138,569 $119,886 93,063
Source: County Auditor-Controller.
200-06036\pos-5 B-12
County Employees
A summary of County employees follows:
Table B-6
COUNTY OF CONTRA COSTA
COUNTY EMPLOYEES'
As of Number of
June 30 Employees
1997 6,974
1998 7,215
1999 7,749
2000 8,325
2001 8,640
2002 8,779
2003 8,785
2004 8,670
2005 8,381
2006 8,423
t Represents full-time equivalent employees. Excludes temporary or seasonal employees.
Source: County Auditor-Controller.
Contract Negotiations
County employees are represented in 31 bargaining units by 14 labor organizations, the principal
ones being Public Employees Union, Local One and Local 2700 of the American Federation of State
County and Municipal Employees ("AFSCME") which, combined, represent.approximately 50% of all
County employees in a variety of classifications. The Deputy District Attorneys' Association is a labor
organization that has been informally recognized by the Board of Supervisors. This labor organization is
expected to submit a request for and be granted formal recognition as a labor organization in late 2006.
The Memorandums of Understanding (the."MOUS") of the employee organizations that have
expired remain in full force and effect. Table B-7 summarizes the labor organizations at the County,
contract expiration dates and status of negotiations.
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200-06036\pos-5 B-13
Table B-7
COUNTY OF CONTRA COSTA
LABOR ORGANIZATION UNIT CONTRACT EXPIRATION DATES
Contract
Labor Organization Ex irate tion Date
AFSCME Local 512,Professional and Technical Employees 09/30/08
AFSCME Local 2700,United Clerical,Technical and Specialized Employees 09/30/08(1)
California Nurses Assn. 01/31/08(1)
Deputy Sheriff's Assn.,Management Unit 09/30/05(2)
Deputy Sheriff s Assn.,Rank and File Unit 09/30/05(2)
District Attorney Investigator's Assn. 09/30/052)
East County Firefighters Assn 09/30/04(2)
East Diablo Firefighters, IAFF,Local 1230 03/31/06(2)
Physicians and Dentists of Contra Costa(PDOCC) 09/30/0801
Public Employees Union,FACS Site Supervisor Unit,Local One 09/30/08(1)
Public Employees Union,Local One 09/30/08(1)
SEN Local 250,Health Care Workers Union 09/30/08(3)
SEN Local 535,Rank and File Unit and Service Line Supervisors Unit 09/30/08(11
United Chief Officers' Assn. 6/30/06(2)
United Professional Firefighters, IAFF Local 1230 3/31/06(2)
Western Council of Engineers 09/30/08(')
(1) Contract has been negotiated and is awaiting approval by the Board of Supervisors.
(2) Negotiations are in process and the employees continue to work for the County pursuant to the terms of the existing MOUS.
(3) Represents State employees whose compensation is established by the County and for which the County is responsible for
payment of a portion of such compensation.
Source: Contra Costa County Human Resources Department.
Pension Plan
Description. The Contra Costa County Employees' Retirement Association (the "Association")
is a cost-sharing multiple-employer defined pension benefit plan governed by the County Employees'
Retirement Law of 1937, as amended(the "County's Employees' Retirement Law"). The plan was
established on July 1, 1947 and covers substantially all of the employees of the County, its special
districts,the Housing Authority of the County and 16 other member agencies.
The plan provides for retirement, disability, and death and survivor benefits, in accordance with
the County Employees' Retirement Law. Annual cost-of-living adjustments to retirement benefits can be
granted by the Board of Retirement of the Association (the "Board of Retirement") as provided by State
statutes.
The Board of Retirement is responsible for the general management of the Association and is
comprised of 12 members, one of whom is a safety alternate, one of whom is a retiree alternate and one of
whom is the alternate appointee of the Board of Supervisors. Five members are appointed by the Board
of Supervisors, including the alternate appointee; four members, including the safety alternate, are elected
by the active membership of the Association; and two members, including the retiree alternate are elected
by retirees. The County Treasurer serves as an ex-officio member of the Board of Retirement. Members
of the Board of Retirement, with the exception of the County Treasurer, serve three-year terms of office,
with no term limits.
200-06036\pos-5 B-14
The Board of Retirement has exclusive control of all retirement system investments and is
responsible for establishing investment objectives, strategies and policies. The State.Constitution and the
Act authorize the Board of Retirement to invest in any investment deemed prudent in the opinion of the
Board of Retirement. See"—Investment Policy of the Association."
The Association is divided into seven separate benefit sections in accordance with the Act. These
sections are known as: General Tier I-Enhanced; General Tier I-Non-Enhanced; General Tier II; General
Tier III-Enhanced; General Tier III-Non-Enhanced; Safety-Enhanced and Safety-Non-Enhanced.
On October 1, 2002, the Board of Supervisors adopted Resolution No. 2002/608, providing
enhanced benefit changes equal to 3% of eligible salary per year of service to safety employees retiring at
age 50 (commonly known as 3% at 50) and 2% of eligible salary per year of service to general employees
retiring at age 55 (commonly known as 2% at 55), effective July 1, 2002 and January 1, 2003,
respectively. The enhanced benefits did not apply to bargaining units represented by the California
Nurses Association or to the nonrepresented employees within similar classifications as employees in
bargaining units represented by.the California Nurses Association, or to the supervisors and managers of
.those employees until January 1, 2005. In addition, each special district that is a participant of the
Association and whose staff are not County employees covered by Resolution No. 2002/608, could elect
to participate in the enhanced benefits.
Legislation was signed by the Governor in 2002 which allowed the County, effective
October 1,2002; to provide Tier III to all new employees, to move those previously in Tier II to Tier III
as of that date, and to apply all future service as Tier III. Tier III was originally created October 1, 1998
and made available to all members with five or more years of Tier II service who elected to transfer to
Tier III coverage.
As of December 31, 2003, Tier II includes only the employees described above for whom the
County did not adopt the enhanced benefits and employees of one special district agency. County
employees who were moved to Tier III effective October 1, 2002, continue to have Tier II benefits for
service prior to that date unless the service is converted to Tier III. The Safety section covers all
employees in active law enforcement, active fire suppression work or certain other"safety" classifications
as designated by the Board of Retirement.
Effective November 1, 2002, an additional flat monthly retiree benefit of$200 is provided for all
former members who retired prior to January 1, 1983, and are currently receiving pension benefits
(including spousal continuance benefits). The cost of this benefit improvement, as determined by the
actuary of the Association was $22,955,000 and has been funded by the Association.
Service retirement benefits are based on age, length of service and final average salary. For the
Tier I, Tier III and Safety sections, the retirement benefit is based on the 12 highest consecutive pay
months, in accordance with Government Code Section 31462. For Tier II,the benefit is based on a three-
year average salary.
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200-06036\pos-5 B-15
TABLE B-8
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
SCHEDULE OF FUNDING PROGRESS
($in 000's)
Actuarial
Accrued UAAL as a
Actuarial Liability Unfunded Percentage
Actuarial Value of (AAL) AAL Funded Covered of Covered
Valuation Assets(l) Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b_a) of /b) (c) (b-a/c)
12/31/011 $2,613,220 $2,983,551 $370,331 87.6% $523,621 70.7%
12/31/02131 3,296,736 3,677,624 380,888 89.6 580,415 65.6
12/31/03(4) 3,538,722 4,141,390 602,668 85.5 600,274 100.4
12/31/04 3,673,858 4,481,243 807,385 82.0 619,132 130.4
12/31/051'1 4,062,057 4,792,428 730,371 84.8 627,546 116.4
(1) Restated to exclude non-valuation reserves.
(2) Adjusted to reflect the action by the Board of Retirement to revise the annual investment return assumption to 8.35%
(3) Adjusted to reflect the action by the Board of Retirement to revise the annual investment return assumption to 8%, and
receipt of$319.1 million from Pension Obligation Bonds issued by the County on May 1,2003.
(4) Adjusted to reflect the action by the Board of Retirement to change the annual investment return assumption to 7.9%.
(5) Reflects the action by the Board of Retirement to revise the inflation rate assumption to 3.75%.
Source: Association Comprehensive Annual Financial Report.for the Year Ended.December 31, 2005 and the Association
Actuarial Valuation and Review as of December 31,2005.
During calendar year 2005, 7,726 County employees were active members of the Association,
representing approximately 83.9% of the Association's active membership. Listed in Table B-9 is a
summary of member population in the Association and in Table B-10 are the payments made by the
County to the Association for normal retirement costs as well, as in certain years, UAAL amortized
payments.
.Table B-9
COUNTY OF CONTRA COSTA RETIREMENT ASSOCIATION
MEMBER POPULATION
Total Association Vested and
Year Ended IActive Terminated Retired Members Ratio of Non-
December 31 Members Memberst and Beneficiaries Actives to Actives
2001 9,229 955 5,487 0.70%
2002 9,611 1,067 5,619 0.70
2003 9,476 1;248 5,936 0.76
2004 9,358 1,517 6,118 0.82
2005 9,205 1,731 6,437 0.89
t Includes terminated members due a refund of member contributions.
Source: Association Actuarial Valuation and Review as of December 31,2005.
200-06036\pos-5 B-16
TABLE B-10
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
Year Annual Annual
Ended Required Percentage
December 31 Contribution Contributed
2001 $58,642,40 94.1%
2001 58,319,678((1 98.6
2003 108,728,047(2) 100.0
2004 118,245,418 100.0
2005 147,165,108(31 100.0
(1) The contribution percentage is less than 100% due to action taken by the Retirement Board to phase-in, over three years,
increased contribution requirements associated with the significant actuarial assumption changes and the expansion of
earnable compensation required by the"Ventura Decision." See"—Impacts of the Ventura Decision."
(2) Excludes Contra Costa County pension obligation bond proceeds of$319,094,719.
(3) Excludes the Contra Costa Consolidated Fire District and Moraga-Orinda Fire District pension obligation bond proceeds in
the amounts of$124,917,000 and$28,317,911,respectively.
Source: Association Comprehensive Annual Financial Report for the Year Ended December 31, 2005 and the Association
Actuarial Valuation and Review as of December 31,2005.
CCCERA Funding Status. The actuarial report.prepared by the Association's independent
actuary, The Segal Company, reflects the financial status of the Association as of December 31, 2005.
The market value of the plan's assets as of such date was $4,221,722,252 and the return on assets was
10.8%.
The value of the plan's unfunded actuarial accrued liability ("UAAL") as of December 31, 2005
is estimated by the actuary to be $730,370,881 using a 7.9% actuarial rate of return. This includes the
County's portion of the liability in the amount of $575,291,881 as well as that of the other entities
comprising the Association. The GASB Statement No. 25 liabilities calculated for 2005, as shown in the
Actuarial Valuation and Review as of December 31, 2005, showed that the funded ratio .was
approximately 84.8%.
The Act authorizes the Board of Retirement to grant annual automatic and ad hoc cost-of-living
adjustment (a "COLA") increases to all eligible retired members. The Act requires the Board of
Retirement to grant an annual automatic COLA, effective April 1 of each year. This benefit is based on
the San Francisco-Oakland-San Jose area Consumer Price Index and is limited to 3% for Tier I, Tier III
and Safety members, and 4% for Tier 11 members. The Government Code allows the granting of a
supplemental cost-of-living benefit, on a prefunded basis to eligible retirees whose unused Consumer
Price Index increase accumulations equal or exceed 20%. This supplemental is a permanent part of the
retirees' monthly benefit and is known as"New Dollar Power."
In 2000, then Governor Davis signed legislation that permits 1937 Retirement Act counties to
provide increased retirement benefits equal to (a) 3% of eligible salary per year of service to safety
employees retiring at age 50, and (b) 2% of eligible salary per year of service to regular employees
retiring at age 55. If approved by the County Board of Supervisors, the cost of such benefits would have
to be paid by the employers, employees or CCCERA or some combination of all three. The Board of
Retirement requested an actuarial study which refined projections regarding cost of such benefits. The
actuary completed the study and found that the UAAL would increase by $199,000,000 if the new
benefits were approved. The annual cost to pay for the new benefit and to amortize the UAAL would be
$29,192,072. Representatives of the employer and the employees have been in negotiations discussing
the approval of the new benefit and what resources will be used to pay for it. A Memorandum of
Understanding •("MOU") addressing the source of payment for these additional benefits for safety.
200-06036\pos-5 B-17
employees and for general and miscellaneous employees was recently drafted. Pursuant to the MOU,
$100,000,000 of the cost of the benefit would be funded from CCCERA's unrestricted reserves and safety
employees would pay the remaining $99.0 million from a portion of the cost of living adjustment
("COLA") increases included in their compensation. The MOU sets forth a four year agreement
beginning on July 1, 2002 under which safety employees will receive 5% to 6% COLAs out of which
2.25% is applied toward the new benefit in year 1, with additional 2.25% increments applied in years 2
through 4. The MOU provides a three year agreement beginning on October 1, 2002 for general and
miscellaneous members under which they will receive a 5% COLA in year 1 and 3% COLAs in years 2
and 3.
The actuarial valuation and review of December 31, 2005 updated the amount of unrecognized
net investment gains and losses to be booked by the Association over the next 4.5 years. The total
unrecognized investment gain as of December 31, 2005 was approximately $147,229,420. See Table B-
11—"Market Stabilization Account (Deferred Return)." A portion of these amounts will be added or
subtracted to the UAAL of the County over the five year market stabilization period.
The Association has established and maintains various reserves and designations from member
and County contributions and the accumulations of investment income thereof, after satisfying investment
and administrative expenses, including a Market Stabilization Account.
The Market Stabilization Account represents the deferred return developed by the smoothing of
realized and unrealized gains and losses based on five-year smoothing. This method smoothes only the
semi-annual deviation of total market return (net of expenses) from the applicable return target per
annum. An 8.35% assumed rate was used in determining contribution rates for the period
January 1, 2003,through June 30,2004. As of December 31, 2003,the Market Stabilization Account was
in a negative position due to market losses over three of the four prior years. As of December 31, 2005,
the net balance in the Market Stabilization. Account was $147,229,420. See Table B-11—"Market
Stabilization Account (Deferred Return)." The assumed rate of return from July 1, 2004 through
June 30,2005 was 8.00%and is 7.9%for the Fiscal Years thereafter.
Table B-11 sets forth the balances as of December 31,2005,in reserves and designated net assets:
Table B-11
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
RESERVES AND DESIGNATED NET ASSETS
ASSUMING A 7.9%ACTUARIAL RATE OF RETURN
(AS OF DECEMBER 31,2005)
Category Amount
Valuation Reserves $4,062,057,143
Post Retirement Death Benefit 12,435,689
Statutory Contingency Reserve(one percent) 0
Market Stabilization Account 147,229,420
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $4,221,722,252
Source: Association Comprehensive Annual Financial Report for the Year Ended December 31,2005.
Table B-12 sets forth the schedule for recognizing estimated deferred gains and losses. The
actual amounts recognized in future years may vary depending on whether the rate of return on the
Association's assets is equal to the assumed 7.9%rate of return.
200-06036\pos-5 B-18
Table B-12
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
MARKET STABILIZATION ACCOUNT(DEFERRED RETURN)
(As OF JUNE 30;2006)
Amount Applied to:
Remaining
Ending Period Amount 2006 2007 2008 2009 2010
June 2002 $(23,238,391) $(23,238,391) — — — —
December 2002 (53,812,530) (26,906,265) $(26,906,264) — — —
June 2003 38,161,393 12,720,464 25,440,929 — — —
December 2003 97,432,557 24,358,139 48,716,279 $24,358,139 — —
June 2004 (28,588,544) (5,717,709) (11,435,417) (11,435,418) — " —
December 2004 114,017,158 19,002,860 38,005,719 38,005,719 $19,002,859 —
June 2005 (37,303,452) (5,329,065) (10,658,129) (10,658,129) (10,658,129) —
December 2005 57,242,793 7,155,349 14,310,698 14,310,698 14,310,698 $7,155,349
June 2006 (582,588) (64,732) (129,46 (129,464) (129,464) (129,464)
TOTAL $163,328,396 $1,980,651 $77,344,349 $54,451,546 $22,525,965 $7,025,885
Source: Association records.
The revenues of the Association by source, net assets at the end of the year and the total return on
market value for the five years ending December 31,2005 are set forth in Table B-13.
Table B-13
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
SCHEDULE OF REVENUES,NET ASSETS AT MARKET VALUE
AND RETURN ON MARKET VALUE
2001 THROUGH 2005
Source of Revenues
Net Assets at Total
Investment Market Value Return
Year Employee Employer Income/ End of on Market
(December 31) Contributions Contributionsoss (I) Year(2) Value(3)
2001 $18,681,239 $55,182,505 $(114,531,847) $2,704,728,752 (2.4)
2002 26,605,875 57,474,043 (267,980,549) 2,365,537,423 (9.5)
2003 51,602,939 427,822,766141 608,5741*613 3,313,494,947 23.5
2004 65,297,397 118,245,418 416,012,994 3,718,615,896 13.4
2005 73,474,816 300,300,019151 342,383,194 4,221,722,252 10.8
(1) Net of investment expenses.
(2) Net of benefits paid, administrative costs, refund of contributions and other deductions. See also APPENDIX B—
"
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ASSOCIATION FOR THE FISCAL YEAR ENDED DECEMBER 31,2005."
(3) Before deduction of administrative fees and investments costs.
(4) Includes proceeds in the amount of$319,094,719 of pension obligation bonds issued by the County in 2003.
(5) Includes proceeds in the amount of $153,134,911 of pension obligation bonds issued by the Moraga-Orinda Fire
Protection District and the Contra Costa Fire Protection District in 2005.
Sources: Association Comprehensive Annual Financial Reports for the years Ended December 31, 2001 through 2005 and
Actuarial Valuation Reports as of December 31,2000 through 2005.
200-060361pos-5' B-19
Investment Policy of the Association. The Board of Retirement adopted its investment
guidelines in 1985 and has amended those guidelines,the most recent amendment having been adopted on
December 14, 2005 (the "Investment Policy") The Investment Policy prescribes, among other things,
asset class targets for investment of Association funds. The asset allocation targets and their associated
ranges, which are a function of the returns and risks from various asset class and the nature of the
Association's liabilities, currently are set forth in Table B-14.
Table B-14
CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION
INVESTMENT POLICY ASSET ALLOCATION TARGETS
(As OF APRIL 2005)
Current Investment
Asset TVne Allocation Allocation Range
Domestic Equity 43% 35%to 55%
International Equity 11.5 7 to 13
Domestic Fixed Income 23 19.to 35
High Yield Fixed Income . 2 1 to 4
International Fixed Income 4 3 to 7
Commodities 2 0 to 3
Real Estate 9 5 to 12
Alternative Investmentst 5 0 to 7
Cash 0.5 0 to 2
TOTAL 100%
t CCERA does not have any hedge fund investments.
Source: Association.
The Association contracts with 35 investment managers who are responsible for investment of
their respective portion of the portfolio. The Investment Policy prescribes investment guidelines to be
followed by the investment managers as well as monitoring procedures regarding their performance.
In April 2005 the Association adopted new asset allocation targets, increasing the target for the
domestic equity to 43%, and decreasing the international equity target to 11.5%, the domestic fixed
income target to 23%, the real estate target to 9% and the cash equivalent target to 0.5%. A 2% target
allocation was also established for commodities and high yield fixed income. The new target allocations
are reflected in a revision to the Investment Policy adopted in December 2005.
The Association issues a stand-alone financial report, which is available at its office located at
1355 Willow Way, Suite 221, Concord, California 94520. For additional information on the County's
pension plan, see APPENDIX E—`'EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE
COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2005."
Impact of the Ventura Decision. On August 14, 1997, the Supreme Court of the State of
California rendered a decision in the matter of Ventura County Deputy Sheriffs Association v. Board of
Retirement of Ventura County Employees'Retirement Association which held that compensation not paid
in cash, even if not earned by all employees in the same grade or class, must be included in
"compensation eamable" and "final compensation" on which an employee's pension is based. This
California Supreme Court decision became final on October 1, 1997, requiring, among other things,
certain items such as vacation buy-back to be included in the calculations that determine the retirement
benefits that a retiree is eligible to receive. The court decision pertains to defined pension plans governed
by the County Employees' Retirement Law of 1937, such as the pension plans of many counties in the
State, including the County. In addition, two lawsuits against the County on similar issues have been
200-060361pos-5 B-20
filed by certain retired County employees. The CCCERA has settled its litigation of these two cases that
were consolidated into one case, entitled Vernon D. Paulson, et al. v. Board of Retirement of the Contra
Costa Employees'Retirement Association, et al.
The consolidated lawsuit was brought.on behalf of a class of retired members of the Association
regarding the inclusions and the exclusions from "final" compensation that are used in calculating
members' retirement benefits as a result of the Ventura decision. A settlement agreement was entered
into with all parties and each employer was invoiced for their share of the $34.2 million additional
liability plus interest up to the date of the payment.
On May 20, 2003, the actuary for CCCERA completed the final true-up for. the Paulson
settlement. The total settlement cost was $149,346,218. After making certain transfers, the net Paulson
liability was $34,230,204, of which $24,821,154 was the responsibility of the County. The County
elected to amortize this payment over 19.5 years commencing August 1, 2004.
Post Employment Benefits
The County provides post-employment medical and dental benefits to employees based upon the
bargaining unit contracts. To be eligible, the retiring employee is required to have been a member in a
participating health plan on the date of retirement. The cost of the premiums associated with these
benefits is recognized on a pay-as-you-go basis when the County makes the payment. The number of
retirees and PERS survivors (for which the County makes a payment) employees participating in this
benefit program and the contributions made by the County are set forth in Table B-15.
Table B-15
CONTRA COSTA COUNTY
POST EMPLOYMENT BENEFIT SUMMARY
Fiscal Year Number of County Contribution
(As of June 30) Participating Retireest ($in 000's)
2002 4,040 $16,335
2003 4,386 20,644
2004 4,633 25,216
2005 4,890 26,543
2006 5,049 29,389
t Includes retirees and dependents receiving benefits,
Source:
In June 2004,the Governmental Accounting Standards Board ("GASB") issued Statement No. 45
("GASB 45"), which addresses how state and local governments should account for and report their costs
and obligations related to post-employment health care and other non-pension benefits ("OPER").
GASB 45 generally requires that employers account for and report the annual cost of OPEB and the
outstanding obligations and commitments related to OPEB in essentially the same manner as they
currently do for pensions. Annual OPEB costs for most employers will be based on actuarially
determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay
benefits as they come due. The provisions of GASB 45 may be applied prospectively and do not require
governments to fund their OPEB plans. An employer may establish its OPEB liability at zero as of the
beginning of the initial year of implementation. However, the unfunded actuarial liability is required to
be amortized over future periods on the income statement. GASB 45 also established disclosure
requirements for information about the plans in which an employer participates, the funding policy
followed, the actuarial valuation process and assumptions, and for certain employers, the extent to which
200-06036\pos-5 B-21
the plan has been funded over time. These disclosure requirements will be effective for the County's
Fiscal Year ending June 30,2008,
GASB 45 is likely to result in a substantial increase in the annual expense recognized by the
County for post-retirement health care benefits. If those expenses are not funded as determined by the
actuary (the "Actuary"), a substantial liability will accumulate over time and will be reported on the
statement of net assets.
On February 28,2006, the County retained the services of Buck Consultants LLP,an independent
actuary, to determine the extent of the County's OPEB liability. In an actuarial analysis delivered to the
County on April 25, 2006,the Actuary estimated the accumulated postemployment benefit obligation(the
"APBO") as of January 1,2006 for all participants (i.e. active employees, retirees and surviving spouses)
of County entities under the current contribution schedule. The APBO is defined as the actuarial present
value of benefits attributed to employee service rendered to a particular date.
Table B-16 shows the normal cost ("NC"), which is equal to the amount of benefit to be earned
by the active employees for service in calendar year 2006, calculated (i) at a discount rate of 4.5%
(reflecting the current pay-as-you-go ("PAYGO") funding method), and (ii) at a discount rate of 7.9%
(reflecting a fully funded postretirement medical plan).
Table B-16
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
APBO AND NORMAL COST AS OF JANUARY 1,20061
APBO @ 4.5% APBO @ 7.9% NC @ 4.5% NC @ 7.9%
PA( YGO) (Fully Funded) PAYGO (Fully Funded)
Active Employees $1,605,649,000 $779,265,000 $130,604,000 $55,182,000
Retirees. 919,840,000 614,568,000 . 0 0
Survivors 46,161,000 31,754,000 0 0
TOTAL $2,571,650,000 $1,425,587,000 $130,604,000 $55,182,000
t Information presented in this Table B-16 includes all County entities included in the County's audited financial statements
and utilizing County sponsored health benefit programs.
Source: Buck Consultants LLP.
GASB 45 also requires the calculation of an Annual Required Contribution (the "ARC") which
consists of the normal cost and a not greater than 30 year amortization of the unfunded actuarial accrued
liability (the "UAAL") for the post-retirement medical and dental benefit. However, there is no
requirement under GASB 45 that the ARC actually be funded. This UAAL is calculated as the APBO
less any assets held for the plan.
For fiscal years beginning after December 15, 2006, GASB 45 requires that these post-retirement
medical plan liabilities be recognized on an accounting basis, if there are no dedicated assets or funding
arrangements.
200-06036\pos-5 B-22
Table B-17 shows the ARC for all County entities for Fiscal Year 2006-07 under the current .
health benefit plan using the two discount rate assumptions described above.
Table B-17
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
ANNUAL REQUIRED CONTRIBUTION FOR FISCAL YEAR 20061
4.5%Discount Rate 7.9% Discount Rate
(PAYGO) (Fully Funded)
Total APBO $2,571,650,000 $1,425,587,000
Assets 0 0
UAAL $2,571,650,000 $1,425,587,000
Annual Required Contribution Normal Cost $130,604,000 $55,182,000
30 Year Amortization of UAAL 85,721,000 47,519,000
ARC $216,325,000 $102,701,000
f Information presented in this Table B-16 includes all County entities included in the County's audited financial statements
and utilizing County sponsored health benefit programs.
Source: Buck Consultants LLP.
Table B-18 shows the APBO, Normal Cost and ARC for County employees only, calculated at a
4.5% and 7.9%discount rates.
Table B-18
CONTRA COSTA COUNTY
POST EMPLOYMENT HEALTH BENEFITS PLAN
APBO,NORMAL COST,AND ARC AS OF JANUARY 1,2006
4.5%Discount Rate 7.9%Discount Rate
(PAYGO) (Fully Funded)
APBO $2,377,514,000 $1,318,565,000
Normal Cost $124,135,000 $52,736,000
ARC $203,385,000 $96,688,000
Source: Buck Consultants LLP.
The amounts above include the liability associated with the subsidization of retiree premiums by
active employees. This occurs because the under age 65 retiree medical costs are much higher than active
employee costs but the retiree rates are the same as the active rates due to the pooling of the costs in the
underwriting process. Approximately $424,583,000 of the liability is caused by this rate subsidy, or
16.0% of the total liability under the 4.5%discount rate assumption.
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.
No 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
general obligation debt.
200-060361pos-5 B-23
Lease Obligations. The County has made use of various lease arrangements with private and
public financing entities, nonprofit corporations, the County of Contra Costa Public Financing Authority
and the Contra Costa County Employees' Retirement Association for the use and acquisition of capital
assets. These capital lease obligations have terms ranging from five to 30 years. The longest capital lease
ends in 2028. Certain of the lease obligations of the County reflect annual payments made for debt
service on lease revenue bonds and certificates of participation issued to finance capital projects. For a
summary of the County's lease obligations as of June 30, 2005, see APPENDIX E—"EXCERPTS FROM THE
AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2005—Notes
to General Purpose Financial Statements."
Pension Obligation Bonds. The County issued pension obligation bonds in 1994, a portion of
which were restructured in 2001 and 2003 to refund debentures issued to evidence its statutory obligation
to make pension payments with respect to its UAAL to CCCERA. See also"—Pension Plan."
Fiscal year debt service for the County's lease obligations and pension obligation bonds
outstanding as of October 1, 2006 is shown in Table B-19 below.
Table B-19
COUNTY OF CONTRA COSTA
OUTSTANDING LEASE OBLIGATIONS AND
PENSION OBLIGATION BONDS
Fiscal Year
Ending Total Lease Total POB Total
6/30 Debt Service Debt Service Debt Service(l)
2007 $32,540,864 $52,060,999 $84,601,863
2008 32,591,520 52,064,234 84,655,754
2009 30,748,109 55,312,572 86,060,680
2010 28,317,219 56,135,041 84,452,260
2011 28,343,640 59,549,809 87,893,449
2012 28,344,386 63,262,284 91,606,670
2013 28,362,805 67,939,535 96,302,340
2014 28,007,805 68,401,566 96,400,371
2015 28,248,526 35,409,894 63,458,419
2016 28,040,370 36,914;525 64,954,895
2017 25,647,577 38,484,360 64,131,937
2018 25,132,588 40,114,901 65,247,489
2019 25,072,861 41,821,636 66,894,497
2020 21,826,243 43,600,400 65,426,642
2021 21,813,197 45,452,243 67,265,440
2022 19,060,666 47,382,397 66,443,063
2023 19,082,916 — 19,082,916
2024 9,132,437 — 9,132,437
2025 8,609,394 — 8,609,394.
2026 6,810,795 — 6,810,795
2027 5,584,538 — 5,584,538
2028 3,081,750 — 3,081,750
TOTAL(') $484.200.201 803.906.396 1.288:106.597
(1) Excludes deductions based upon estimated reimbursement from the State for County hospital and pension obligation bond debt
service and estimated earnings on various debt service and debt service reserve funds.
(2) Totals do not add due to independent rounding.
Source: County Administrator's Office.
200-06036\pos-5 B-24
Direct and Overlapping.Debt. The County contains numerous municipalities, school districts
and special purpose districts, as well as the overlapping East Bay Municipal Utility District, which has
issued general obligation bonded and lease indebtedness. Set forth in Table B-20 below is a direct and
overlapping debt report (the "Debt Report") prepared by California Municipal Statistics Inc. that
summarizes such indebtedness as of November 1, 2006. The Debt Report is included for general
information purposes only and the County does not guaranty the completeness or accuracy of the
information contained in the Debt Report.
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 public
agency are payable only from the general fund or other revenues of such public agency.
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200-06036\pos-5 B-25
Table B-20
CONTRA COSTA COUNTY
DEBT STATEMENT
2006-07 Assessed Valuation: $146,407,238,208(includes unitary utility valuation)
Redevelopment Incremental Valuation: 17.084,076,955
Adjusted Assessed.Valuation: $129,323,161,253
OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable(1) Debt 11/1/06
Bay Area Rapid Transit District 36.661% $ 27,603,643
East Bay Municipal Water District and Special District No. 1 50.244&6.265 . 3,342,162
Contra Costa Community College District 100. 112,900,000
Martinez Unified School District 100. 29,962,135
Mt.Diablo Unified School District 100. 222,500,000
Pittsburg Unified School District 100. 54,935,000
San Ramon Valley Unified School District 100, 298,610,607
West Contra Costa Unified School District 100. 537,593,520
Acalanes and Liberty Union High School Districts 100, 177,981,053
Brentwood Union School District 100. 48,624,410
Lafayette School District 100. 24,610,000
Oakley Union School District 100. 25,050,000
Walnut Creek School District 100. 29,245,000
Other School Districts Various 47,269,330
Cities and City Special Tax Districts 100. 19,054,977
East Bay Regional Park District 46.314 77,450,902
West Contra Costa Healthcare District Parcel Tax Obligations 100. 25,315,000
Community Facilities Districts 100. 290,237,984
1915 Act Assessment Bonds(Estimate) 100. 447.154,535
TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $2,499,440,258
Less: East Bay Municipal Utility District(100%self-supporting) 1.055.124
TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $2,498,385,134
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Contra Costa County General Fund Obligations. 100. % $ 296,760,000
Contra Costa County Pension Obligations 100. 537,005,000
Contra Costa County Office of Education Certificates of Participation 100. 900,000
Alameda-Contra Costa Transit District Certificates of Participation 11.439 2,162,543
Antioch Unified School District Certificates of Participation 100. 14,171,325
West Contra Costa Unified School District General Fund Obligations 100. 26,335,000
Other School District General Fund Obligations Various 27,420,158
City of Antioch General Fund Obligations 100. 30,032,560
City of Concord General Fund and Judgment Obligations 100. 34,765,000
City of Pittsburg Pension Obligations 100. 39,566,056
City of Richmond General Fund Obligations 100. 41,742,791
City of Richmond Pension Obligations 100. 22,825,000
City of San Ramon General Fund Obligations 100. 19,415,000
Other City General Fund Obligations 100. 63,122,990
Contra Costa County Fire Protection District Pension Obligations 100. 128,280,000
San Ramon Valley Fire Protection District Certificates of Participation 100. 17,080,000
Other Special District Certificates of Participation 100. 2,725.000
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $1,304,308,423
GROSS COMBINED TOTAL DEBT $3,803,748,681
(2)
NET COMBINED TOTAL DEBT $3,802,693,557
(1) Based on 2005-06 ratios.
(2) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded capital
lease obligations.
Ratios to 2006-07 Assessed Valuation:
Total Gross Overlapping Tax and Assessment Debt...............................1.71%
Total Net Overlapping Tax and Assessment Debt..................................1.71%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($833,765,000)................................................0.64%
Gross Combined Total Debt...................................................................2.94%
Net Combined Total Debt.......................................................................2.94%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06: $0
Source: California Municipal Statistics,Inc.
200-06036\pos-5 B-26
Future Financings
The County may undertake an approximately $42 million financing to acquire, construct and
improve various capital projects within the County and an approximately $100 million refunding of
outstanding lease obligations in the.next six months and may undertake other financings for various
capital improvements over the next few years.
Insurance and Self-Insurance Programs
The County self-insures its unemployment, dental, management long-term disability and
employee medical insurance plans.
The County self-insures its workers' compensation exposure to $750,000 per occurrence and
purchases commercial insurance to provide protection for up to an additional $150 million per
occurrence.
For its .public and automobile liability exposures, the County purchases $25 million of
commercial insurance, excess of a$1 million per occurrence self-insured retention.
The County's airports are protected by a commercial liability insurance policy that provides up to
$100 million in coverage that is subject to neither a deductible nor a self-insured retention.
With respect to the medical malpractice liability exposure, the County purchased coverage in the
amount of$1.5 million through the California State Association of Counties Excess Insurance Authority
Pooling Fund (self-insured retention) and $10 million in commercial coverage on a claims made basis.
The County has a$500,000 self-insured retention.
The County's buildings, equipment and other property are commercially insured for losses up to
$600 million per occurrence for "All Risk" coverage. There is a $50,000 deductible for "All Risk"
coverage. Flood coverage is insured for.$550 million on a,shared aggregate with a $100,000 minimum
deductible. There is a $500,000 maximum deductible for property located within a 100-year flood plain.
The County is insured for earthquake in the amount of$225 million with a 5% deductible per location.
The County has $100 million Boiler and Machinery coverage.
The County also maintains a separate insurance policy to cover the Sheriff-Coroner's two
helicopters up to $50 million.
All claims,with the exception of dental claims, are handled by County staff.
During the last three years, one fire loss, two medical malpractice liability, and one general
liability claim have been incurred by the County that will involve payment by a commercial insurance
company.
Except for the County's airports and a portion of the excess workers' compensation insurance, the
commercial insurance has been purchased through the California State Association of Counties' Excess
Insurance Authority, a joint powers authority, whose purpose is to obtain"group" commercial insurance
for its membership,which includes the County.
Internal Service Funds are used to account for all self-insurance activities. It is the County policy
to periodically infuse capital into each Fund to sufficiently cover the payment of claims, including those
that either will or may require payment sometime in the future. As of June 30, 2006, the Internal Service
Funds had approximately $93 million in assets and $121 million in actuarial liabilities as determined by
an independent actuary based upon past experience by the County.
200-06036\pos-5 B-27
Current and future liabilities for the workers' compensation, public liability, automobile liability,
and medical malpractice liability funds are determined annually by an outside actuarial firm, while the
others are determined by county management personnel: In the County's opinion the Internal Service
Funds are sufficiently funded, with an allowance for future investment income,to pay both known claims
and those that may have been incurred but are not presently known.
For additional information on the County's insurance coverage, see APPENDIX E—"EXCERPTS
FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,
2005—NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
200-06036\pos-5 B-28
APPENDIX C
SUMMARY OF THE COUNTY INVESTMENT POLICY
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE 2006
OBJECTIVES AND STANDARDS
Standard for Governing Bodies or Persons Authorized to Make Investment Decisions for Local
Agencies
Governing bodies of local agencies or persons authorized to make investment decisions on behalf
of those local agencies investing public funds pursuant to this chapter are trustees and therefore
fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring,
exchanging, selling and managing public funds, a trustee shall act with care, skill,prudence and diligence
under the circumstances then prevailing, that a prudent person acting in a like capacity and familiarity
with those matters would use in the conduct of funds of a like character and with like aims, to safeguard
the principal and maintain the liquidity needs of the agency. Within the limitations of this section and
considering individual investments as part to an overall strategy, investments as authorized by law.
Trustee's Objectives Regarding Funds
When investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public
funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control.
The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be
to achieve a return on the funds under its controls.
INSTRUMENTS AUTHORIZED FOR INVESTMENT
Instruments Authorized for Investment
(a) Bonds issued by the local agencies, including bonds payable solely out of the revenues
from a revenue-producing property, owned, controlled, or operated by the local agency or by a
department,board, agency or authority of the local agency.
(b) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for
which the faith and credit of the United States are pledged for the payment of principal and interest.
(c) Registered state warrants or treasury notes or bonds of this state, including bonds payable
solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state
or by a department,board, agency or authority of the state.
(d) Bonds, notes, warrants or other evidences of indebtedness of any local agency within this
state, including bonds payable solely out of the revenues from a revenue-producing property owned,
controlled or operated by the local agency, or by a department, board, agency or authority of the local
agency.
(e) Federal agency or United States government-sponsored enterprise obligations,
participations, or other instruments, including those issued by or fully guaranteed as to principal and
interest by federal agencies or United States government-sponsored enterprises.
200-06036\pos-5 C-1
(f) Bankers acceptances otherwise known as bills of exchange or time drafts drawn on and
accepted by a commercial bank. Purchases of banker's acceptances may not exceed 180 days maturity or
40 percent of the agency's money that may be invested pursuant to this section. However, no more than
30 percent of the agency's money may be invested in the banker's acceptances of any one commercial
bank pursuant to this section. This subdivision does not preclude a municipal utility district from
investing any money in its treasury in any manner authorized by the Municipal Utility District Act
(Division 6, commencing with Section 11501, of the California Public Utilities Code).
(g) Commercial paper of"prime" quality of the highest ranking or of the highest letter and
numerical rating as provided for by a nationally recognized statistical-rating organization(NRSRO). The
entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1)
or paragraph(2):
(1) The entity meets all of the following criteria:
(A) Is organized and operating within the United States as a general corporation.
(B) Has total assets in excess of five hundred million dollars($500,000,000).
(C) Has debt other than commercial paper, if any, that is rate "A" or higher by a
NRSRO.
(2) The entity meets the following criteria:
(A) is organized within the United States as a special purpose corporation, trust or
limited liability company.
(B) Has programwide credit enhancements including, but not limited to,
overcollateralization, letters of credit or surety bond.
(C) Has commercial paper that is rated "A-1" or higher or the equivalent by an
NRSRO.
Eligible commercial paper shall have a maximum maturity of 270 days or less. Local agencies,
other than counties or a city and county, may invest no more than 25 percent of their money in eligible
commercial paper. Local agencies, other than counties or a city and county;may purchase no more than
10 percent of the outstanding commercial paper of any single issuer. Counties or a city and county may
invest in commercial paper pursuant to the concentration limits in subdivision(a) of Section 53635 of the
Government Code. Following are the concentration limits (Government Code Section 53635, subdivision
(a)):
1. Not more than 40 percent of the local agency's money may be invested in eligible
commercial paper.
2. Not more than 10 percent of the local agency's money may be invested pursuant to this
section may be invested in the outstanding commercial paper of any single issuer.
3. No more than 10 percent of the outstanding commercial paper of any single corporate
issuer may be purchased by the local agency.
(h) Negotiable certificates of deposit issued by a nationally- or state-chartered bank or a
savings association or federal association (as defined by Section 5102 of the Financial Code), a state or
federal credit union, or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates
of deposit may not exceed 30 percent of the agency's money that may be invested pursuant to this section.
For purposes of this section, negotiable certificates of deposits do not come within Article 2 (commencing
with Government Code Section 53630), except that the amount so invested shall be subject to the
limitations of California Government Code Section 53638. The legislative body of a local agency and the
treasurer or other official of the local agency having legal custody of the money are prohibited from
investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of
200-06036\pos-5 C-2.
deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or
any person with investment decision making authority in the administrative office manager's office,
budget office, auditor-controller's office,or treasurer's office of the local agency also serves on the board
of directors, or any committee appointed by the board of directors, or the credit committee or the
supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit.
Investments in repurchase agreements or reverse repurchase agreements of any securities
authorized by this section, as long as the agreements are subject to this subdivision, including the delivery
requirements specified in this section.
1. "Repurchase agreement" means a purchase of securities by the local agency pursuant to
an agreement by which the counterparty seller will repurchase the securities on or before a specified date
and for a specified amount and the counterparty will deliver the underlying securities to the local agency
by book entry, physical delivery, or by third-party custodial agreement. The transfer of underlying
securities to the counterparty bank's customer book-entry account may be used for book-entry delivery.
(A) "Securities," for purpose of repurchase under this subdivision, means securities
of the same issuer, description, issue date and maturity.
(B) Investments in repurchase agreements may be made on any investment
authorized in this section when the term of the agreement does not exceed one year. The market value of
securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds
borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market
value of the underlying securities is subject to daily market fluctuations, the investments in repurchase
agreements shall be in compliance if the value of the underlying securities is brought back up to 102
percent no later than the next business day.
2. "Reverse repurchase agreement" means a sale of securities by the local agency pursuant
to an agreement by which the local agency will repurchase the securities on or before a specified date and
includes other comparable agreements.
3. Reverse repurchase agreements may be utilized only when all of the following conditions
are met:
The security to be sold on reverse repurchase agreement has been owned and fully paid for by the
local agency for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements on,
investments owned by the local agency does not exceed 20 percent of the base value of the portfolio; the
agreement does not exceed a term of 92 days, unless the agreement includes a written codicil
guaranteeing a minimum earning or spread for the entire period between the sale of a security using a
reverse repurchase agreement and the final maturity date of the same security.
4. Investments in reverse repurchase agreements shall only be made with primary dealers of
the Federal Reserve Bank of New York, or with a nationally-or state-chartered bank that has or has had a
significant banking relationship with a local agency..."Significant banking relationship" means any of the
following activities of a bank:
(A) Involvement in the creation, sale, purchase, or retirement of a local agency's
bonds, notes,or other evidence of indebtedness.
(B) Financing of a local agency's activities.
(C) Acceptance of a local agency's securities or funds as deposits.
200-06036\pos-5 C-3
(i) Medium-term notes of a maximum of five-years maturity issued by corporations
organized and operating within the United States or by depository institutions licensed by the United
States or any state and operating within the United States. Notes eligible for investment under this
subdivision shall be rated in a rating category of"A"or its equivalent or better by a nationally-recognized
rating service. Purchases of medium-term notes may not exceed 30 percent of the agency's surplus
money that may be invested pursuant to this section.
(j) Shares of beneficial interest issued by diversified management companies that invest in .
the securities and obligations as authorized by subdivisions (a)to 0), inclusive, or subdivision (m) or (n)
and that comply with the investment restrictions of this article and Article 2.
(k) Shares of beneficial interest issued by diversified management companies that are money
market funds registered with the Securities and Exchange Commission under the Investment Company
Act of 1940 (15 U.S.C. Sec.80a-1 et seq.).
If investment is in shares issued pursuant to paragraph (2), the company shall have met the
following criteria:
(A) Attained the highest ranking or the highest letter and numerical rating provided
by not less than two nationally recognized statistical rating organizations.
(B) Retained an investment adviser registered or exempt from registration with the
Securities and Exchange Commission with not less than five years' experience managing money market
mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).
The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not
include any commission that the companies may charge and shall not exceed 20%of the agency's surplus
money that may be invested pursuant to this section. However,no more than 10%of the agency's surplus
funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph(1).
(1) Moneys held by a trustee or fiscal agent and pledged to the payment of security of bonds
or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency,
or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements,
may be invested in accordance with the statutory provisions governing the issuance of those bonds,
indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if
there are not specific statutory provision, in accordance with the ordinance, resolution, indenture, or
agreement of the local agency providing for the issuance.
(m) Notes, bonds, or other obligations that are at all times secured by a valid first-priority
security interest in securities of the types listed by California Government Code Section 53651 as eligible
securities for the purpose of securing local agency deposits having a market value at least equal to that
required by California Government Code Section 53652 for the purpose of securing local agency
deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of
a trust company or the trust department of a bank which is not affiliated with the issuer of the secured
obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform
Commercial Code or federal regulations applicable to the types of securities in which the security interest
is granted.
(n) Any mortgage pass-through security, collateralized mortgage obligation, mortgage-
backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through
certificate,or consumer receivable-backed bond of a maximum of five years' maturity. Securities eligible
for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the
issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA"
200-06036\pos-5 C-4
or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by
this subdivision may not exceed 20%of the agency's surplus money that may be invested pursuant to this
section.
(o) Shares of beneficial interest issued by a joint powers authority organized pursuant to
Section 6509.7 of the Government Code that invests in the securities and obligations authorized in
subdivisions (a) to (n), inclusive. Each share shall represent an equal proportional interest in the
underlying pool of securities owned by the joint powers authority. To be eligible under this section, the
joint powers authority issuing shares shall have retained an investment adviser that meets all of the
following criteria: (i) the adviser is registered or exempt from registration with the Securities and
Exchange Commission; (ii) the adviser has not less than five years of experience investing in the
securities and obligations authorized in subdivisions (a) to (n) inclusive; (iii)the adviser has assets under
management in excess of five hundred million dollars($500,000,000).
(p) Local Agency Investements -LAW
1. All money in the Local Agency Investment Fund shall be held in trust in the custody of
the Treasurer.
2. All money in the Local Agency Investment Fund is nonstate money. That money shall be
held in a trust account or accounts. The Controller shall be responsible for maintaining those accounts to
record the Treasurer's accountability, and shall maintain a separate account for each trust deposit in the
Local Agency Investment Fund.
3. That money shall be subject to audit by the Department of Finance and to cash count as
provided for Sections 13297, 13298, and 13299. It may be withdrawn only upon the order of the
depositing entity or its disbursing officers. The system that the Director of Finance has established for the
handling, receiving, holding and disbursing of state agency money shall be used for the money in the
Local Agency Investment Fund.
4. All money in the Local Agency Investment Fund shall be deposited, invested and
reinvested in the same manner and to the same extent as if it were state money in the State Treasury.
(q) Investment Trust of California - CalTRUST. Pursuant to Government Codes 6500,
6502, 53601, 53630 and 53635, CalTRUST was established on January 9, 2003. The purpose of the trust
is to serve as a vehicle for public agencies to jointly exercise their common power to invest funds,
including tax-exempt bond proceeds. All investment activities will be in accordance with applicable
California laws governing the investment of funds by public agencies.
Government code 53610 (o) includes as permissible investment shares of beneficial interest
issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and
obligations authorized in subdivisions (a) to (n), inclusive. Each share shall represent an equal
proportional interest in the underlying pool of securities owned by the joint powers authority. To be
eligible under this section,the joint powers authority issuing the shares shall have retained an investment
advisor that meets all of the following criteria: (i) the advisor is registered or exempt from registration
with the Securities and Exchange Commission; (ii) the advisor has not less than five years of experience
investing in the securities and obligations authorized in subdivisions (a) to (n),inclusive; (iii) the advisor
has assets under management in excess of five hundred million dollars ($500,000,000).
200-06036\pos-5 C-5
Existence and Appropriation of Fund; Investment and Distribution of Deposits
There is in the State Treasury the Local Agency Investment Fund, which fund is hereby created.
Notwithstanding California Government Code Section .13340, all money in the fund is hereby
appropriated without regard to fiscal years to carry out the purpose of this section. The Controller shall
maintain a separate account for each governmental unit having deposits in this fund.
Notwithstanding any other provisions of law, a local governmental official, with the consent of
the governing body of that agency, having money in its treasury not required for immediate needs, may
remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of
investment.
Notwithstanding any other provisions of law, an officer of any nonprofit corporation whose
membership is confined to public agencies or public officials, or an officer of a qualified quasi-
governmental agency, with the consent of the governing body of that agency, having money in its treasury
not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency
Investment Fund for the purpose of investment.
Notwithstanding any other provision of law or of this section, a local agency, with the approval of
its governing body, may deposit in the Local.Agency Investment Fund proceeds of the issuance of bonds,
notes, certificates of participation, or other evidences of indebtedness of the agency pending expenditure
of the proceeds for the authorized purpose of their issuance. In connection with these deposits of
proceeds, the Local Agency Investment Fund is authorized to receive and disburse moneys, and to
provide information, directly with or to an authorized officer of a trustee or fiscal agency engaged by the
local agency, the Local Agency Investment Fund is authorized to hold investments in the name and for
the account'of that trustee or fiscal agent, and the Controller shall maintain a separate account for each
deposit of proceeds.
The local governmental unit,the nonprofit corporation, or the quasi-governmental agency has the
exclusive determination of the length of time its money will be on deposit with the Treasurer.
The trustee or fiscal agent of the local governmental unit has the exclusive determination of the
length of time proceeds from the issuance of bonds will be on deposit with the Treasurer.
The Local Investment Advisory Board shall determine those quasi-governmental agencies which
qualify to participate in the Local Agency Investment Fund.
The Treasurer may refuse to accept deposits into the fund if, in the judgement of the Treasurer,
the deposit would adversely affect the state's portfolio.
The Treasurer may invest the money of the fund in securities prescribed in California
Government Code Section 16430. The Treasurer may elect to have the money of the fund invested
through the Surplus Money Investment Fund as provided in Article 4 (commencing with California
Government Code Section 16470)of Chapter 3 of Part 2 of Division 4 of Title 2.
Money in the fund shall be invested to achieve the objective of the fund, that is to realize the
maximum return consistent with safe and prudent treasury management.
All instruments of title of all investments of the fund shall remain in the Treasurer's vault or be
held in safekeeping under control of the Treasurer in any federal reserve bank, or any branch thereof, or
the Federal Home Loan Bank of San Francisco, with any trust company, or the trust department of any
state or national bank.
200-06036\pos-5 C-6
Immediately at the conclusion of each calendar quarter, all interest earned and other increment
derived from investments shall be distributed by the Controller to the contributing governmental units or
trustees or fiscal agents, nonprofit corporations; and.quasi-governmental agencies in amounts directly
proportionate to the respective amounts deposited in the Local Agency Investment fund and the length of
time the amounts remained therein. An amount equal to the reasonable costs incurred in carrying out the
provisions of this section, not to exceed a maximum of one-half of one percent of the earnings of this
fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be
credited as reimbursements to the state agencies having incurred costs in carrying out the provisions of
this section. The Treasurer shall prepare for distribution a monthly report of investments made during the
preceding month.
FURTHER RESTRICTIONS/LIMITATIONS BY GOVERNMENT CODE AND COUNTY
TREASURER
Further Restrictions Set By Treasurer
Reverse repurchase agreements will be used strictly for the purpose of supplementing income
with a limit of 10 percent of the total portfolio without prior approval of the Treasurer.
Swaps and Trades will each be approved on a per-trade basis by Treasurer or Assistant Treasurer.
SBA loans require prior approval of the Treasurer in every transaction.
Repurchase Agreements will generally be limited to Wells Fargo Bank,Bank of America or other
institutions with whom the County treasury has executed tri-party agreements. Collateral will be held by
a third party to the transaction that may include the trust department of particular banks. Collateral will
be only securities that comply with California Government Code Section 53601.
Securities purchased through brokers will be held in safekeeping at the Bank of New York or as
designated by the specific contract(s) for government securities and tri-party repurchase agreements.
Bank C.D.s or non-negotiable C.D.s will be collateralized at 105 percent by government
securities or 150 percent by current mortgages. There will be no waiver of the first $100,000 collateral
except by special arrangement with the Treasurer.
All investments purchased by the Treasurer's Office shall be of investment grade. The minimum
credit rating of purchased investments shall be as defined by California Government Code Section 53600
et. seq.
All legal securities issued by a tobacco-related company are prohibited. A tobacco-related
company is defined as an entity that makes smoking products from tobacco used in cigarettes, cigars or
snuff or for smoking in pipes or a company that has total revenues of 15 percent or more from the sale of
such products. The tobacco-related issuers restricted from any investment are.British American Tobacco,
Gallaher Group PLC, Imasco Ltd., Lowes Companies, Phillip Morris, Inc., RT Reynolds Tobacco
Holdings, Inc., Brooke Groupe LTD., UST, Inc. and Universal Corp. However, tobacco-related
companies will not be limited to the foregoing list. Additional companies will be prohibited as long as
said entities fall within the definition of tobacco-related companies.
Financial futures or financial option contracts will each be approved on a per trade basis by the
County Treasurer.
200-06036\pos-5 C-7
Prohibited Investments by Government Code
A local agency shall not invest any, funds pursuant to this Article or pursuant to Article 2
(commencing with California Government Code Section 53630) in inverse floaters, range notes or
interest-only strips that are derived from a pool of mortgages.
A local agency shall not invest any funds pursuant to this article or pursuant to Article 2
(commencing with California Government Code Section 53630) in any security that could result in zero
interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their
maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of
beneficial interest issued by diversified management companies registered under the Investment
Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.) that are authorized for investment pursuant to
subdivision(k) of California Government Code Section 53601.
Instruments Authorized for Investments: Maturity
Where this section does not specify a limitation on the term or remaining maturity at the time of
the investment, no investment shall be made in any security, other than a security underlying a repurchase
or reverse repurchase agreement authorized by this section, that at the time of the investment has a term
remaining to maturity in excess of five years, unless the legislative body has granted express authority to
make that investment either specifically or as a part of an investment program approved by the legislative
body no less than three months prior to the investment.
Quality of Investment Instruments,Issuers and Sources
Regular financial review and analysis of issuers and sources of securities such as banks and
brokerage firms shall be performed. These will be based on credit-rating services' evaluations, financial
documents such as audits, Form 10-Q filings to the Securities and Exchange Commission and other
reliable financial information..
GLOSSARY
Agencies A colloquial term for securities issued by the federal agencies.
Bankers Acceptances A time bill of exchange drawn on and accepted by a commercial bank to
finance the exchange of goods. When a bank "accepts" such a bill, the time draft becomes, in effect, a
predated, certified check payable to the bearer at some future specified date. Little risk is involved for the
investor because the commercial bank assumes primary liability once the draft is accepted.
Basis Point One basis point is equal to 1/100 of one percent. For example, if interest rates
increase from 8.25%to 8.50%, the difference is referred to as a 25-basis-point increase.
Blue Sky Laws Common term for state securities law, which vary from state to state. Generally
refers to provision related to prohibitions against fraud, dealer and broker regulations and securities
registration.
Book Value Refers to value of a held security as carried in the records of an investor. May
differ from current market value of the security.
Certificates of Deposit(C/Ds) Certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified rate of return. They are issued in two forms,
negotiable and non-negotiable.
200-06036\pos-5 C-8
0 Negotiable Certificates of Deposit May be sold by one holder to another prior to maturity.
This is possible because the issuing bank agrees to pay the amount of the deposit plus interest earned to
the bearer of the certificate at maturity.
• Non-Negotiable Certificates of Deposit These certificates are collateralized and are not money
market instruments since they cannot be traded in the secondary market. They are issued on a fixed-
maturity basis and often pay higher interest rates than are permissible on other savings or time-deposit
accounts.
Commercial Paper Short-term,unsecured promissory notes issued in either registered or bearer
form and usually backed by a line of credit with a bank. Maturities do not exceed 270 days and generally
average 30-45 days.
Coupon Rate The annual rate of interest payable on a security expressed as a percentage of the
principal amount.
CUSIP Numbers CUSIP is an acronym for Committee on Uniform Security Identification
Procedures. CUSIP numbers are identification numbers assigned each maturity of a security issue and
usually printed on the face of each individual security in the issue. The CUSIP numbers are intended to
facilitate identification and clearance of securities.
Inverse Floaters An adjustable interest rate note keyed to various indices such as LIBOR,
commercial paper, federal funds, treasuries and derivative structures. The defined interest rate formula is
the opposite or inverse of these indices. Interest rates and pay-dates may reset daily, weekly, monthly,
quarterly, semi-annually or annually.
Liquidity Usually refers to the ability to convert assets (such as investments) into cash.
Mark to Market Valuing the inventory of held securities at its current market value.
Market Value Price at which a security can be traded in the current market.
Maturity The date upon which the principal of a security becomes due and payable to the
holder.
Medium-Term Notes (MTNs) Corporate debt obligations continuously offered in a broad
range of maturities. MTNs were created to bridge the gap between commercial paper and corporate
bonds. The key characteristic of MTNs is that they are issued on a continuous basis.
Money Market Instruments Private and government obligations of one year or less.
Offer The price of a security at which a person is willing to sell.
Par Value The stated or face value of a security expressed as a specific dollar amount marked
on the face of the security; the amount of money due at maturity. Par value should not be confused with
market value.
Premium The amount by which the price paid for a security exceeds par value, generally
representing the difference between the nominal interest rate and the actual or effective return to the
investor.
200-06036\pos-5 C-9
Range Notes A security whose rate of return is pegged to an index. The note defines the
interest rate minimum or floor and the interest rate maximum or cap. An example of an index may be
federal funds. The adjustable rate of interest is determined within the defined range of the funds.
Repurchase Agreement or RP or REPO An agreement consisting of two simultaneous
transactions whereby the investor purchases securities from a bank or dealer and the bank or dealer agrees
to repurchase the securities at the same price on a certain future date. The interest rate on a RP is that
which the dealer pays the investor for the use of his funds. Reverse repurchase agreements are the mirror
image of the RPs when the bank or dealer purchases securities from the investor under an agreement to
sell them back to the investor,
Settlement Date The date used in price and interest computations, usually the date of delivery.
SLUGS An acronym for State and Local Government Series. SLUGS are special United States
Government securities sold by the Secretary of the Treasury to states, municipalities and other local
government bodies through individual subscription agreements. The interest rates and maturities of
SLUGS are arranged to comply with arbitrage restrictions imposed under Section 103 of the Internal
Revenue Code. SLUGS are most commonly used for deposit in escrow in connection with the issuance
of refunding bonds.
STRIPS US Treasury acronym for "separate trading of registered interest and principal of
securities." Certain registered Treasury securities can be divided into separate interest and principal
components, which may then be traded as separate entities.
SWAP Generally refers to an exchange of securities, with essentially the same par value, but
may vary in coupon rate, type of instrument, name of issuer and number of days to maturity. The purpose
of the SWAP may be to enhance yield, to shorten the maturity or any benefit deemed by the contracting
parties.
Treasury Securities Debt obligations of the United States Government sold by the Treasury
Department in the form of bills,notes and bonds: .
• Bills Short-term obligations that mature in one year or less and are sold at a discount in lieu of
paying periodic interest.
• Notes Interest-bearing obligations that mature between one year and 10 years.
a Bonds Interest-bearing long-term obligations that generally mature in 10 years or,more.
Zero-Coupon Security A security that makes no periodic interest payments but instead is sold
at a deep discount from its face value.
200-060361pos-5 C-10
APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
Upon delivery of the Notes in definitive form, Orrick, Herrington & Sutcliffe LLP, San Francisco,
California, Bond Counsel to the County of Contra Costa, proposes to render its final approving opinion
with respect to such Notes in substantially the following form:
[Date]
Board of Supervisors
County of Contra Costa
Martinez,California
Re: County of Contra Costa, California
2006-2007 Tax and Revenue Anticipation Notes, Series A
(Final Opinion)
200-06036\pos-5 D-1
APPENDIX E
EXCERPTS FROM THE AUDITED
FINANCIAL STATEMENTS OF THE COUNTY
FOR THE FISCAL YEAR ENDED JUNE 30,2005
200-06036\pos-5 E-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
COUNTY OF CONTRA COSTA, CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
This Continuing Disclosure Certificate(the"Disclosure Certificate") is executed and delivered by
the County of Contra Costa, California (the "County") in connection with the issuance of$
aggregate principal amount of its County of Contra Costa, California 2006-2007 Tax and Revenue
Anticipation Notes, Series A (the "Notes") pursuant to Resolution authorizing the issuance of the Notes
adopted by the Board of Supervisors of the County on , 2006 (the "Resolution"); and in
connection therewith the County covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. The Disclosure Certificate is being executed
and delivered by the County for the benefit of the Holders (defined below) of the Notes and in order to
assist the Underwriters of the Notes in complying with S.E.C.Rule 15c2-12.
SECTION 2. Definitions. In addition to the definitions set forth above and in the Resolution,
which apply to any capitalized term used in the Disclosure Certificate unless otherwise defined herein,the
following capitalized terms shall have the following meanings:
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal
Advisory Council of Texas or any successor thereto, or any other organization or method approved by the
staff or members of the Securities and Exchange Commission as an intermediary through which issuers
may, in compliance with the Rule,make filings required by this Continuing Disclosure Certificate
"Beneficial Owner" shall mean any person which has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Note or Notes, including persons holding
Notes through nominees or depositories.
"Holders" shall mean either the registered owners of the Notes, or, if the Notes are registered in
the name of The Depository Trust Company or another recognized depository, any Beneficial Owner or
applicable participant in its depository system.
"Listed Event" shall mean any of the events listed in Section 3(a) of the Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The National Repositories currently approved by the Securities and
Exchange Commission can be found at the following website:
http://www.see.gov/info/municipaVnrrnsir.htm.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository" shall mean any public or private repository or entity designated by the State of
California as a state repository for the purpose of the Rule and recognized as such by the Securities and
Exchange Commission. As of the date of the Disclosure Certificate,there is no State Repository.
200-060361pos-5 F-I
"Tax-exempt" shall mean that interest on the Notes is excluded from gross income for federal
income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise
includable directly or indirectly for purposes of calculating any other, tax liability, including any
alternative minimum tax or environmental tax.
"Underwriters" shall mean and any other original underwriters of the Notes, if any,
required to comply with the Rule in connection with the offering of the Notes.
SECTION 3. Reporting ofListed Events.
(a) Pursuant to the provisions of this section, to the extent applicable, the County shall give
notice of the occurrence of any of the following events with respect to the Notes, if material:
(i} principal and interest payment delinquencies.
(ii) non-payment related defaults.
(iii) modifications to the rights of the Holders.
(iv) optional, contingent or unscheduled note calls.
(v) defeasances.
(vi) rating changes.
(vii) adverse tax opinions or events adversely affecting the tax-exempt status .
of the Notes.
(viii) unscheduled draws on the debt service reserves reflecting financial
difficulties.
(ix) unscheduled draws on the credit enhancements reflecting financial
difficulties.
(x) substitution of the credit or liquidity providers or their failure to perform.
(xi) release, substitution or sale of property securing repayment of the Notes.
(b) Whenever the County obtains knowledge of the occurrence of a Listed Event,the County
shall as soon as possible determine if the occurrence of such event would be material.
(c) If the County determines that the occurrence of a Listed Event would be material, the
County shall promptly file a notice of such occurrence with each Repository.
(d) Notwithstanding any other provision of this Continuing Disclosure Certificate, the
County reserves the right to make any of the aforementioned filings through the Central Post Office.
SECTION 4. Termination of Reporting Obligation. The County's obligations under the
Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of
the Notes.
200-06036\pos-5 F-2
SECTION 5. Additional Information. Nothing in the Disclosure Certificate shall be deemed to
prevent the County from disseminating any other information, using the means of dissemination set forth
in the Disclosure Certificate or any other means of communication, or including any other information in
any notice of occurrence of a Listed Event, in addition to that which is required by the Disclosure
Certificate. If the County chooses to include any information in any notice of occurrence of a Listed
Event in addition to that which is specifically required by the Disclosure Certificate, the County shall
have no obligation under the Disclosure Certificate to update such information or include it in any future
notice of occurrence of a Listed Event.
SECTION 6. Default. In the event of a failure of the County to comply with any provision of the
Disclosure Certificate, the Underwriters or any Holder may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the County to
comply with its obligations under the Disclosure Certificate; provided, that the sole remedy under the
Disclosure Certificate in the event of any failure of the County to comply with the Disclosure Certificate
shall be an action to compel performance hereunder.
SECTION 7. Beneficiaries. The Disclosure Certificate shall inure solely to the benefit of the
County,the Underwriters and the Holders,and shall create no rights in any other person or entity.
Dated: 12006.
COUNTY OF CONTRA COSTA
By:
John B. Cullen
County Administrator and Clerk of the
Board of Supervisors
200-06036\pos-5 F-3
APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix G concerning The Depository Trust Company, New York, New
York(`DTC") and DTC's book-entry system has been obtained from DTC and the. County takes no
responsibility for the completeness or accuracy thereof. The County cannot and does not give any
assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners
(a) payments of interest principal or premium, if any, with respect to the Notes, (b) certificates
representing ownership interest in or other confirmation or ownership interest in the Notes, or (c)
redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the
Notes,. or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect
Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC
are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be
followed in dealing with DTC Participants are on file with DTC.
The Depository Trust Company("DTC"),New York,NY,will act as securities depository for the
Notes. The Notes will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully-registered security certificate will be issued for each maturity of the Notes, each in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest depository, 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 and provides asset servicing for over 2.2 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market
instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC.
DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry transfers and pledges
between Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of
The Depository Trust& Clearing Corporation("DTCC"). DTCC, in turn,is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Government
Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and"EMCC", also subsidiaries of DTCC), as
well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC
can be found at www.dtce.com and www.dtc.org.
Purchases of the Notes under.the DTC system must be made by or through Direct Participants,
which will receive a credit for the Notes on DTC's records. The ownership interest of each actual
purchaser of each Note (`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. Beneficial Owners are,however, expected to receive written confirmations providing details of
the transaction, as.well as periodic statements of their holdings, from the Direct or Indirect Participant
200-060361pos-5 G-1
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by.Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of the Notes with DTC and their
registration in the name of Cede&Co. or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect
only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial.Owners. The Direct and Indirect 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. Beneficial Owners of the Notes may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the
Notes, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example,
Beneficial Owners of the Notes may wish to ascertain that the nominee holding the Notes for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Notes unless authorized by a Direct Participant in accordance with DTC's Procedures.Under its usual
procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date.. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date(identified in a listing attached to the Omnibus Proxy).
Payments of principal of, premium, if any, and interest evidenced by the Notes will be made to
Cede & Co., or such other nominee as maybe requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail
information from the County, on payable date in accordance with their respective holdings shown on
DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices,as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its
nominee),the County, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal of, premium, if any, and interest evidenced by the Notes to Cede & Co. (or
such other nominee as may be requested by an authorized representative of DTC) is the responsibility of
the County, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE NOTES, THE
COUNTY WILL SEND NOTICES TO HOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO
ADVISE ANY PARTICIPANT, OR OF ANY PARTICIPANT TO NOTIFY ANY BENEFICIAL
OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE
VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO ANY OTHER ACTION
PREMISED ON SUCH NOTICE.
200-06036\pos-5 G-2
a
THE COUNTY HAS NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE
RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL
OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS
RELATING TO BENEFICIAL OWNERSHIP OF INTERESTS IN THE NOTES.
THE COUNTY CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC WILL
DISTRIBUTE PAYMENTS WITH RESPECT TO THE NOTES RECEIVED BY DTC TO DTC
PARTICIPANTS OR THAT THE PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS
WITH RESPECT TO THE NOTES RECEIVED TO THE BENEFICIAL OWNERS, OR THAT THEY
WILL DO SO ON A TIMELY BASIS OR WILL SERVE AND ACT IN THE MANNER DESCRIBED
IN THIS OFFICIAL STATEMENT. THE COUNTY IS NOT RESPONSIBLE OR LIABLE FOR THE
FAILURE OF'DTC OR ANY PARTICIPANT TO MAKE ANY PAYMENT WITH RESPECT TO THE
NOTES OR AN ERROR OR DELAY RELATING THERETO.
200-06036\pos-5 G-3
NOTICE OF INTENTION TO SELL NOTES
NOT TO EXCEED
$145,000,000
COUNTY OF CONTRA COSTA, CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
NOTICE IS HEREBY GIVEN that the County of Contra Costa, California (the
"County"), intends to receive electronic bids through the PARITY electronic bid submission
system for the sale of the above Notes on Thursday, November 9, 2006, at the hour of 9:00 a.m.,
Pacific time (or on such other date and time as may be determined by the County as provided
below).
NOTICE IS HEREBY FURTHER GIVEN that the Notes will be offered for
public sale subject to all the terms and conditions of the Official Notice of Sale for the Notes, as
set forth in the Preliminary Official Statement relating to the Notes. When available, an
electronic copy of the Preliminary Official Statement can be obtained at or upon
request to Tamalpais Advisors, Inc., 3030 Bridgeway, Suite 340, Sausalito, California 94965,
Financial Advisor to the County (telephone (415) 331-4473, fax (415) 331-4479), and email:
jbuckley@tamadvisors.com.
Any sale date, time and terms of the Notes may be changed by the County by
notice thereof through The Bond Buyer Wire, no later than 1:00 p.m., Pacific time, on the
business day prior to the then-scheduled date for receipt of bids or on such date if no legal bid or
bids are received. Legal Opinion: Orrick, Herrington & Sutcliffe LLP, San Francisco,
California.
Dated: 12006.
/s/John B. Cullen
County Administrator and
Clerk of the Board of Supervisors,
County of Contra Costa, State of California
OHS WEST:260088760.4
y
OFFICIAL NOTICE OF SALE
COUNTY OF CONTRA COSTA
STATE OF CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A
DATE OF SALE
THURSDAY, NOVEMBER 9, 2006
9:00 A.M., LOCAL TIME
BIDS TO BE RECEIVED EXCLUSIVELY VIA PARITY
* Preliminary, subject to change.
OHS WEST:260088704.4
'7l
OFFICIAL NOTICE OF SALE '
COUNTY OF CONTRA COSTA, CALIFORNIA
2006-2007 TAX AND REVENUE ANTICIPATION NOTES, SERIES A '
NOTICE IS HEREBY GIVEN that electronic unconditional proposals will be
received by the County of Contra Costa (the "County") up to the time specified below for the "
purchase of $145,000,000 principal amount of County of Contra Costa 2006-2007 Tax and
Revenue Anticipation Notes, Series A (the "Notes"). Proposals may only be submitted
electronically through the PARITY electronic bid submission.system. No other method of bid
submission will be accepted.
DATE AND
TIME OF s.
SALE: 9:00 a.m. Pacific time on Thursday, November 9, 2006, or at such later date
and/or other time as shall be established by the County Administrator of the
County or his designee (the "County Administrator") and announced through The
Bond Buyer Wire no later than 1:00 p.m., Pacific time, on the business day prior
to the day proposals are to be received. If no legal proposals are received for the `.
Notes on November 9, 2006 (or such other date as is communicated by The Bond
Buyer Wire) at the time specified, proposals will be received at such time
specified on such other date as shall be designated by The Bond Buyer Wire.
As an accommodation to Proposers, telephonic notice of the postponement of the
sale time and/or date will be given to any Proposer requesting such notice by
request directed to the County's Financial Advisor, Tamalpais Advisors, Inc.,
3030 Bridgeway, Suite 340, Sausalito, California 94965; Attn. Jean Buckley
(Phone (415) 331-4473). Failure of any Proposer to receive such telephonic
notice shall not affect the legality of the sale.
CHANGES !
IN TERMS 1511.
OF NOTES: The County reserves the right to change the terms of the Notes set forth in this
te
Notice so long as Proposers are alerted to any changes by announcement through
The Bond Buyer Wire no later than 1:00 p.m., Pacific time, on the business day
prior to the day proposals are to be received.
The Notes will be issued pursuant to a Resolution (the "Resolution") adopted by h`
the County on October 17, 2006. A copy of the Resolution will be furnished.to any interested
Proposer upon request to the Senior Deputy County Administrator/Debt Manager, County of
Contra Costa, 651 Pine Street, 10th Floor, Martinez, CA 94553-0063, (925) 335-1023, Attn:
Lisa Driscoll.
E
Preliminary, subject to change.
F
OHS WEST:260088704.4
F
f
BOOK-ENTRY ONLY: The Notes shall be issued in registered form by means
of a book-entry system with no distribution of note certificates made to the public. One or more
Note certificates representing the Note issue will be issued to The Depository Trust Company,
New York, New York ("DTC"), registered in the name of Cede & Co., its nominee. The book-
entry system will evidence ownership interests in the Notes in the denominations of $5,000 or
any integral multiple thereof, with transfers of ownership effected on the records of DTC.
PAYMENT OF DTC FEES: The bidders for the Notes whose proposals are
accepted by the County (the "Accepted Proposer(s)"), will be responsible for submitting all
requisite documents to DTC for DTC-eligibility purposes. In addition, the Accepted Proposer(s)
of the Notes will be responsible for payment of all fees charged by DTC.
NOTE TERMS: The Notes will be dated the date of issuance thereof(expected
to be November 21, 2006), will pay interest on 2007 and at the maturity thereof
and will mature on 2007.
PREPAYMENT: The Notes are not subject to prepayment prior to maturity.
PURPOSE: The proceeds of the, sale of the Notes will provide moneys to help
meet current (Fiscal Year 2006-2007) County expenditures, including current expenses, capital
expenditures and the discharge of other obligations or indebtedness of the County.
ADDITIONAL NOTES: The County has authorized the issuance of additional
notes (the "Series B Notes") payable on a parity with the Series A Notes and which in aggregate
with the principal amount of the Series A Notes are not to exceed $145,000,000.
SECURITY: The principal amount of the Notes and Series B Notes, together
with interest thereon, shall be payable from taxes, income, revenue, cash receipts and other
moneys which are received by the County for the General Fund of the County attributable to
Fiscal Year 2006-2007 and which are lawfully available for the payment of current expenses and
other obligations of the County (the "Unrestricted Revenues"). The Notes and Series B Notes
are secured by the County's pledge to deposit in trust in a special fund designated as the "2006-
2007 Tax and Revenue Anticipation Note Repayment Fund" (the "Repayment Fund") specific
amounts on specific dates, which dates are subject to change at the discretion of the County.
Proposers are referred to the Resolution and the Preliminary Official Statement for further
information.
CONTINUING DISCLOSURE: The County. will deliver to the Accepted
Proposer(s) a Continuing Disclosure Certificate in connection with the issuance of the Notes in
which, among other things, the County covenants to provide notice of certain material events to
nationally recognized municipal securities information depositories. The County has never
failed in any material respect to comply with its obligations regarding continuing disclosure. All
of the County's currently required continuing disclosure filings can be obtained on the website of
Digital Assurance Certification: www.dacbond.com.
LEGAL OPINION -- DISCLOSURE COUNSEL: The Accepted Proposer(s)
will receive a disclosure opinion from Lofton & Jennings, San Francisco, California regarding
the Official Statement.
OHS WEST:260088704.4 2
y
LEGAL OPINION -- TAX EXEMPT STATUS: The Notes will be issued
subject to the approving legal opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco,
California ("Bond Counsel"), approving the validity of the Notes and stating that, in the opinion
of Bond Counsel, based on an analysis of existing laws, regulations, rulings, and court decisions, T
and assuming, among other matters, the accuracy of certain representations and compliance with
certain covenants, interest on the Notes is excluded from gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of
California personal income taxes. The amount treated as interest on the Notes and excluded
from gross income may depend upon the taxpayer's election under Internal Revenue Service
Notice 94-84. A copy of the proposed opinion of Bond Counsel is set forth in Appendix D of.the
Preliminary Official Statement.
FORM OF PROPOSAL -- NO DISCOUNT: The proposals may be for all or
part (in increments of $5,000;000) of the Notes hereby offered for sale. Proposals for less than
all of the issue are required to be made in increments of $5,000,000, and no proposal for less
than $5,000,000 principal amount of Notes will be entertained. Awards will be made in
increments of $5,000,000 up to $ * with the 'remainder to be then awarded as a
separate increment. Each proposal shall state the purchase price, which shall. not be less than
par, and the interest rate, which shall not exceed 12% per annum, and must be delivered by
electronic transmission, as described below, and received by the time specified above. Each
proposal must be in accordance with the terms and conditions,set forth in this Official Notice of
Sale.
FORM OF BID: A prescribed bid form ("Bid Form") for the Notes will be
provided electronically by PARITY. Each bid for the Notes must be submitted electronically via
PARITY pursuant to the prescribed version of the Bid Form posted thereon. For purposes of
submitting all bids, the time as maintained on PARITY shall constitute the official time.
WARNINGS REGARDING ELECTRONIC BIDS: NEITHER THE COUNTY NOR THE
FINANCIAL ADVISOR NOR BOND COUNSEL SHALL BE RESPONSIBLE FOR, AND
THE' PROPOSER EXPRESSLY ASSUMES THE RISK FOR, ANY INCOMPLETE,
INACCURATE OR UNTIMELY BID SUBMITTED VIA PARITY BY SUCH PROPOSER,
INCLUDING, WITHOUT LIMITATION, BY REASON OF GARBLED TRANSMISSION,
MECHANICAL FAILURE, ENGAGED TELEPHONE OR TELECOMMUNICATIONS
LINES, OR ANY OTHER CAUSE ARISING FROM DELIVERY VIA PARITY.
All bids which are submitted electronically via PARITY pursuant to the
procedures described below shall be deemed to constitute a bid for purchase of the Notes (each a
"Bid") and shall be deemed to incorporate by reference all of the terms and conditions of this
Official Notice of Sale. The submission of a Bid electronically via PARITY shall constitute and
be deemed the Proposer's signature on the Bid Form.
PROCEDURES REGARDING ELECTRONIC BIDDING: Bids may be submitted
electronically via PARITY in accordance with this Official Notice of Sale, until 9:00 a.m.,
Pacific Time, 2006, but no Bid will be received after the time for receiving bids
Preliminary, subject to change. .'
tt m
y
OHS WEse:260088704.4 3
specified above. To the extent any instructions or directions set forth on PARITY conflict with
this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further
information about PARITY, potential bidders may contact PARITY at (212) 806-8304 or the
County's Financial Advisor. In the event that a Bid for the Notes is submitted via PARITY, the
Proposer further agrees that:
1. If a Bid submitted electronically by PARITY is accepted by the County, the terms
of the Bid Form and this Official Notice of Sale and the information that is electronically
transmitted through PARITY shall form a contract and the Accepted Proposer(s) shall be bound
by the terms of such contract.
2. PARITY is not an agent of the County, and the County shall have no liability
whatsoever based on any Proposer's use of PARITY, including but not limited to any failure by
PARITY to correctly or timely transmit information provided by the County or information
provided by the Proposer.
3. The County may choose to discontinue use of electronic bidding via PARITY by
issuing a notification to such effect via PARITY's internet site (wwv.tm3.com) no later than
1:00 p.m. (Pacific Time) on the last business day prior to the date of sale.
4. Once the Bids are communicated electronically via PARITY to the County as
described above, each Bid shall be deemed to be an irrevocable offer to purchase the Notes on
the terms provided in this Official Notice of Sale.
5. Each Proposer choosing to submit a Bid shall be solely responsible to make
necessary arrangements to access PARITY for purposes of submitting its Bid in a timely manner
and in compliance with this Official Notice of Sale. Neither the County nor Dalcomp shall have
any duty or obligation to undertake such registration to bid for any prospective Proposer or to
provide or assure such access to any qualified prospective Proposer, and neither the County nor
Dalcomp shall be responsible for a bidder's failure to register to bid or for proper operation of, or
have any liability for any delays or interruptions of, or any damages caused by, PARITY. The
County is using PARITY as a communication mechanism, and not as the County's agent, to
conduct the electronic bidding for the Notes. By using PARITY, each Proposer agrees to hold
the County harmless for any harm or damages caused to such bidder in connection with its use of
PARITY for bidding on the Notes.
No Bid received after the deadline shall be considered. In any case, each Bid must be in
accordance with the terms and conditions set forth in this Official Notice of Sale.
INTEREST RATE: Interest with respect to the Notes is computed on the basis
of a 360-day year and a 30-day month and accrues from the date of issuance of the Notes.
Interest on the Notes is payable on ; 2007 and at the maturity of the Notes. In
connection with the proposal submitted for the Notes, (1) each Proposer must propose an interest
rate in multiples of 1/20 or 1/8 percent, which rate shall not exceed 12% per annum; (2) interest
with respect to a Note shall be computed from the date of issuance thereof (expected to be
November 21, 2006) to 2007 the stated maturity date at the interest rate specified
in the'proposal; (3) the same interest rate shall apply to all Notes (with respect to the $5,000,000
OHS WEST:260088704.4 4
increments specified in the proposal); and (4) any premium must be paid as part of the purchase
price, and no proposal will be accepted which contemplates the waiver of any interest or other
concession by the Proposer as a substitute for payment in full of the purchase price.
BEST PROPOSAL: Unless all Bids are rejected, the Notes will be awarded to
the best responsible Proposer(s), considering the rate specified and the premium offered, if any,
in increments of $5,000,000 up to $ and the remainder out of the next best
$5,000,000 until all $ of Notes have been awarded. Therefore, a Proposer may
be awarded Notes in an amount which is less than that requested by such Proposer. The Notes
will be awarded to the Proposers whose proposals represent the lowest true interest cost to the
County, considering the interest rate specified and the premium offered, if any. The true interest
cost will be that nominal annual discount rate which, when compounded semiannually and when
used to discount all payments of principal and interest payable on the Notes at the rate specified
in the proposal to the delivery date of the Notes, results in the amount equal to the purchase
price, which is the principal amount of the Notes plus the amount of any premium offered. In the
event that two or more Proposers offer proposals for the Notes at the same lowest true interest
cost, the first Bid submitted, as determined by reference to the time displayed on PARITY, shall
be awarded such Notes.
PRINCIPAL AMOUNT: The County reserves the right following receipt of
proposals and determination of the winning proposals to decrease the principal amount of the
Notes by not more than' 10%. In such event, the County will award such lesser amount of Notes
and the purchase price of the Accepted Proposer(s) will be proportionally reduced or the
proposals less advantageous to the County will not be accepted or will be accepted in a lesser
amount.
RIGHT OF REJECTION: The County reserves the right, in its sole discretion,
to reject any and all proposals and to waive any irregularity or informality in any proposal.
`s PROMPT AWARD: The County Administrator or his designee will take action
awarding the Notes or rejecting all proposals not later than thirty (30) hours after the expiration
of the time herein prescribed for the receipt of proposals, unless such period for award is waived
by the Accepted Proposer(s). Notice of the award will be given promptly to the successful
Proposer(s). Each electronically submitted successful Proposal and its corresponding written
award by the County Administrator or his designee shall constitute an executed contract for
purchase of the Notes between each Accepted Proposer and the County.
DELIVERY AND PAYMENT: Delivery of the Notes through DTC is expected
to be made to the Accepted Proposer(s) on or about November 21, 2006. Payment for the Notes
must be made in Federal Reserve Bank funds or other immediately available funds. Any
expense in providing immediately available funds, whether by transfer of Federal Reserve Bank
funds or otherwise, shall be borne by the Accepted Proposer(s).
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the
Notes, but neither failure to print such numbers on any Note nor any error with respect thereto
Preliminary, subject to change.
OHS WEST:260088704.4 5
shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and
pay for the Notes in accordance with the terms of this Official Notice of Sale. All expenses in
relation to the printing of CUSIP numbers on the Notes shall be paid for by the County;
provided, however, that the CUSIP Service Bureau charge for the assignment of said
numbers shall be the responsibility of and shall be paid for by the Accepted Proposer(s).
CERTIFICATE REGARDING REOFFERING PRICE: No later than two
hours after award of the Notes and upon the delivery date of the Notes, the Accepted Proposer(s)
must submit to the County a certificate or certificates regarding the reoffering price of the Notes
in the form attached hereto as Exhibit A.
RIGHT OF CANCELLATION: The Accepted Proposer(s) shall have the right,
at its/their option, to cancel the contract of purchase if the County shall fail to execute the Notes
and tender the same on or before sixty (60) days after the award thereof.
NO GOOD FAITH DEPOSIT NEEDED: No Good Faith Deposit will be
required.
STATEMENT OF TRUE INTEREST COST: Each Proposer is requested, but
is not required, to state in its proposal the true interest cost in dollars, which shall be considered
as informative only and not binding.
OFFICIAL STATEMENT: The County will approve a Preliminary Official
Statement relating to the Notes, which the County will certify to be "deemed final" as of its date
for purposes of SEC Rule 15c2-12, except for the omission of certain pricing and related
information, and has authorized the use of the final Official Statement in connection with the sale
of the Notes. Up to fifty (50) copies of the final Official Statement per $50 million of Notes
purchased will be supplied within seven (7) business days from the date of sale of the Notes to
the purchaser(s) of the Notes for this purpose at the expense of the County.
RESALE IN OTHER STATES: The Accepted Proposer(s) will assume
responsibility for taking any action, necessary to qualify the Notes for offer and sale in
jurisdictions other than California, and for complying with the laws of all jurisdictions on resale
of the Notes, and shall indemnify and hold harmless the County and its officials and supervisors
from any loss or damage resulting from any failure to comply with any such law.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION:
Each Accepted Proposer will be required, pursuant to State law (California Government Code
Section 8856), to pay any fees of the California Debt and Investment Advisory Commission
("CDIAC"). CDIAC will invoice each Accepted Proposer(s) directly for any such fees.
RATINGS IN EFFECT: Each proposal will be understood to be conditioned
upon their being in place at the date of delivery of the Notes a rating or ratings at least as high as
the rating or ratings, if any, as were in place with respect to the Notes at the time fixed for
receiving proposals.
CHANGE IN TAX-EXEMPT STATUS: At any time before the Notes are
tendered for delivery, the Accepted Proposer(s) may disaffirm and withdraw its proposal if the
OHS WEsT:260088704.4 6
b
interest received by private holders of obligations-of the same type and character as the Notes•(as
determined by Bond Counsel) shall be declared to be includable in gross income under present
federal income tax laws, either by a federal court, or by legislation enacted subsequent to the date
of this Official Notice of Sale.
CLOSING DOCUMENTS: Each proposal will be understood to be conditioned
upon the County's furnishing to the Accepted Proposer(s), without charge, concurrently with
payment and delivery of the Notes, the following closing papers, each dated the date of such
delivery:
(a) Legal Opinion: The legal opinion of Orrick, Herrington & Sutcliffe LLP,
Bond Counsel, described in this Official Notice of Sale under the heading "Legal Opinion -- Tax
Exempt Status."
(b) No Litigation Certificate: A certificate of the County that there is no {;
litigation pending concerning the validity of the Notes, the existence of the County or the
entitlement of the County Officers thereof to their respective offices except as set forth in the
Official Statement.
(c) Certificate Regarding Official Statement: A certificate of an official of the
County stating that as of the date thereof, to the best of the knowledge and belief of said official,
l the Official Statement (excluding information on DTC) does not contain an untrue statement of a
k material fact or omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading.
(d) Receipt of the County: A receipt of the County showing that the purchase
price of the Notes has been received by the County.
;4
:g (e) Disclosure Opinion: The legal opinion of Lofton & Jennings, Disclosure
Counsel, described in this Official Notice of Sale under the heading "Legal Opinion - Disclosure
Counsel."
(f) Continuing Disclosure Certificate: The: Certificate described in this
Official Notice of Sale under the heading "Continuing Disclosure."
i
r
OHS WEST:260088704.4 7
tl
r
ADDITIONAL INFORMATION: An electronic copy of the Preliminary
Official Statement and any other information concerning the proposed financing will be
furnished upon request to either the financial advisor, Tamalpais Advisors, Inc., 3030
Bridgeway, Suite 340, Sausalito, California 94965, (415) 331-4473, or to the Senior Deputy
County Administrator/Debt Manager of the County, (925) 335-1023,
Dated: 12006.
COUNTY OF CONTRA COSTA
By
John B. Cullen
County Administrator and
Clerk of the Board of Supervisors
OHS WESr:260088704.4 8
is
EXHIBIT A
CERTIFICATE OF PURCHASER
AS TO INITIAL REOFFERING PRICE AND OTHER MATTERS
[PURCHASER] has acted as the underwriter of$ principal amount
of County of Contra Costa, California 2006-2007 Tax and Revenue Anticipation Notes, Series A
(the "Notes"), and hereby certifies and represents the following:
1. As of November 9, 2006 (the "Sale Date"), we had offered or reasonably
expected to offer the Notes that we are underwriting to the general public (excluding bond
houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a
bona fide public offering at % of the principal amount thereof to yield %.
2. The issue price of the Notes listed in paragraph 1 above does not exceed
the fair market price and the issue yield is not lower than the market yield as of the Sale Date.
F
3. As of the date hereof, all of the Notes that we are underwriting have
actually been offered to the general public at % of the principal amount thereof and at
least 10% of the Notes actually have been sold to the general public at such price.
4. None of the Notes (a) were initially offered at one price to the general
public and at a discount from that price to institutions or other investors, (b) have actually been
sold, as of the date hereof, at a discount to institutional or other investors, or (c) were initially
only offered and sold to persons other than members of the general public (but excluding
,K
intermediaries).
Dated: 2006.
¢S
[PURCHASER]
.3
By
Authorized Representative
a
]
a
}
1
OHS WEsT:260088704.4