HomeMy WebLinkAboutMINUTES - 02062001 - SD.3 (2) OH&S FIRST DRAFT
Recording requested by
and return to:
COUNTY OF CONTRA COSTA
c/o Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
Attn: Mary A. Collins
Exempt from Recording Fee Pursuant to
Government Code Section 6103
SECOND AMENDMENT TO FACILITY LEASE
by and between
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
and the
COUNTY OF CONTRA COSTA
Dated as of March 1, 2001
(Amending the Facility Lease (Various Capital Projects) .
dated as of February 1, 1999)
M)CSSF 1:504513.1
40511-119
TABLE OF CONTENTS
Page
ARTICLE XII ADDITIONS RELATING TO LEASE REVENUE BONDS
(VARIOUS CAPITAL PROJECTS), 2001 SERIES B..................:................ 1
SECTION 12.01. Effective Date ................................................................................... i
SECTION 12.02. Additional Definitions ...................................................................... 2
SECTION 12.03. Term of Additional Facilities............................................................ 3
SECTION 12.04. Use of Proceeds of 2001 Series B Bonds.......................................... 3
SECTION 12.05. Increase to Base Rental Payments .................................................... 3
SECTION 12:06. Possession of Additional Facilities................................................... 3
SECTION 12.07. Title Insurance .................................................................................. 3
SECTION 12.08. Continuing Disclosure ...................................................................... 3
SECTION 12.09. 2001 Series B Reserve Facility..................:...................................... 3
SECTION 12.10. Trust Agreement ............................................................................... 4
SECTION 12.11. Facility Lease in Full Force and Effect............................................. 4
SECTION 12.12. Execution in Counterparts................................................................. 4
EXHIBIT A—Addition to Demised Premises...............................................................A-1
EXHIBIT B —Additional Base Rental Payment............................................................B-1
DOCSSP 1:504513.1 _i-
40511-119
SECOND AMENDMENT TO FACILITY LEASE
This Second Amendment to Facility Lease, dated as of March 1, 2001, .between
the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of
powers authority, duly organized and existing under and by virtue of the laws of the State of
California (the "Authority"), as lessor, and the COUNTY OF CONTRA COSTA, a political
subdivision organized and validly existing under the Constitution and laws of the State of
California (the"County"), as lessee;
WITNESSETH:
WHEREAS, the County has leased certain real property and the improvements
thereon to the Authority pursuant to a lease, entitled "Master Site Lease" and dated as of
February 1, 1999 and recorded on March 4, 1999 in the office of the County Recorder of the
County, under Recorder's Instrument No. 9970059811; as amended by the First Amendment to
Master Site Lease and dated as of January 1, 2001 and recorded on January 25, 2001 in the office
of the County Recorder of the County, under Recorder's Instrument No. ;
WHEREAS, the County has further amended said. Master Site Lease to lease
certain additional property to the Authority; and
WHEREAS, this Second Amendment to Facility Lease is entered into to amend
and supplement in certain respects a lease between the Authority and the County entitled
"Facility Lease (Various Capital Projects)," dated as of February 1, 1999 and recorded on
March 4, 1999 in the office of the County Recorder of the County, State of California, under
Recorder's Instrument No. 99-0059812, as amended by the First Amendment to Facility Lease,
dated as of January 1, 2001 and recorded on January `, 2001 in the office of the County
Recorder of the County, State of California, under Recorder's Instrument No.
(together, the "Facility Lease") and to add to the property leased pursuant to the Facility Lease
certain additional real property consisting of a County clinical/public health laboratory located at
the Contra Costa County Medical Center Campus in Martinez, California as described in Exhibit
A (the"Medical Lab Property");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE XII
ADDITIONS RELATING TO LEASE REVENUE BONDS
(VARIOUS CAPITAL PROJECTS), 2001 SERIES B
SECTION 12.01. Effective Date. This Second Amendment to Facility Lease
shall become effective on the date of recordation of this instrument in the office of the County
Recorder of the County, State of California, or on March 1, 2001, whichever is earlier, and such
date of commencement shall be hereinafter referred to as the "effective date" and on the effective
date the additional.real property hereby added to the Facility Lease and set forth in Exhibit A
hereto shall be encumbered by the Facility Lease and references to Facilities and to Demised
Premises in the Facility Lease shall hereafter include the real property described in Exhibit A.
DOCSSF1:504513.1
40511-119
SECTION 12.02. Additional Definitions. From and after the effective date of
this instrument, the following new definitions shall be added to Section 1.01 of the Facility
Lease, in alphabetical order, to read as follows:
"Second Amendment to Facility Lease
The term `Second Amendment to Facility Lease' means
that Second Amendment to Facility Lease between the Authority
and the County, dated as of March 1, 2001, as originally executed
and recorded or as it may from time to time be supplemented,
modified or amended pursuant to the provisions hereof."
"Second Supplemental Trust Agreement
The term `Second Supplemental Trust Agreement' means
that Second Supplemental. Trust Agreement between the Authority
and the Trustee,dated as of March 1, 2001, as originally executed .
and recorded or as it may from time to time be supplemented,
modified oramended pursuant to the provisions of the Trust
Agreement."
"2001 Series B Bond Insurer
The term `2001 Series B Bond Insurer' means
or any successor thereto or
assignee thereof."
"2001 Series B Bonds
The term `2001 Series B Bonds' means the bonds issued by
the Authority under and pursuant to the Trust Agreement and the
Second Supplemental Trust Agreement, the proceeds of which will
be applied to the acquisition, construction and equipping of the
2001 Series B Project and to the payment of costs related thereto."
( 12001 Series B Financial Guaranty Agreement
The term 12001 Series B Financial Guaranty
Agreement' means the Financial.Guaranty Agreement, dated
the date of issuance of the 2001 Series B Bonds between the
Authority and.MBIA Insurance Corporation."]
"2001 Series B Project
The term `2001.Series B Project' means those items .
identified as such in the Second Supplemental Trust Agreement, as
the same may be changed from time to time by the filing of a
notice with the Trustee."
DOCSSF 1:504513.1
40511-119 2
SECTION 12.03. Term. of Additional Facilities. The term of this Lease for
the . shall end on June 1, 20_, unless such term is extended or sooner
terminated as provided in the Facility Lease.
SECTION 12.04. Use of Proceeds of 2001 Series B Bonds. The parties
hereto agree that the proceeds of the 2001 Series B Bonds will be used by the Authority to
finance the acquisition and construction of the 2001 Series B Project, to purchase a reserve fund
surety bond for [fund the portion of the Reserve Requirements necessary for the issuance of] the
2001 Series B Bonds and to pay costs related thereto as specified in the Second Supplemental
Trust Agreement.
SECTION 12.05. Increase to Base Rental Payments. From and after the
effective date of this instrument, the Base Rental Payments shall be increased by the amounts set
forth in Exhibit B attached hereto.
SECTION 12.06. Possession of Additional Facilities. The County hereby
represents and warrants that the County has taken possession of and will occupy the
throughout the term of this Lease for such facilities under the terns and
provisions of this Lease.
SECTION 12.07. Title Insurance. The County shall have obtained or shall
obtain upon the execution and delivery of this Second Amendment to Facility Lease policies of
title insurance or supplements to existing policies on the Demised Premises, in form and
substance satisfactory to the Bond Insurer, in an amount equal to the aggregate principal amount
of the 1999 Series A Bonds, the 2001 Series A Bonds and the 2001 Series B Bonds, issued by a
company or companies of recognized standing duly authorized to issue the same, subject only to
Permitted Encumbrances. Any proceeds of such insurance shall be delivered to the Trustee as a
prepayment of rent pursuant to Section _7.02 and shall be applied by the Trustee to the
redemption of Bonds pursuant to Section 4.01 and Section 22.01 of the Trust Agreement.
SECTION 12.08. Continuing Disclosure. The County hereby covenants and
agrees that it will comply with and carry out all of the provisions of the 2001 Series B
Continuing Disclosure Agreement. Notwithstanding any other provision of this Lease, failure of
the County to comply with the 2001 Series B Continuing Disclosure Agreement shall not be.
considered an event of default.hereurider; however, the Trustee may (and, at the request of any
Participating Underwriter (as defined in the 2001 Series B Continuing Disclosure Agreement) or
the Owners of at least 25% aggregate principal amount of Bonds Outstanding and provided
satisfactory indemnification is provided to the Trustee, shall) or any Bondholder may take such
actions as may be necessary and appropriate, including seeking mandate or specific performance
by court order, to compel the County to comply with its obligations under this Section 12.08.
SECTION 12.09. 2001 Series B Reserve Facility. . In order. to satisfy the
Reserve Fund Requirement upon the-issuance of the. 2001 Series B Bonds, the Authority is
purchasing the 2001 Series B Reserve Facility. Following a draw, if any, on the 2001 Series B
Reserve Facility, the County, through its administrative staff, will use its best efforts to do all
things lawfully within its power to include in its proposed budget and request that the Board of
Supervisors of the County include in the final budget all amounts.necessary to pay amounts
UOCSSF 1:503513.1
40511-119 3
owing by the Authority under the 2001 Series B Financial Guaranty Agreement with respect to
the 2001 Series B Reserve Facility, including seeking such an appropriation annually in the
budget submitted to the Board of Supervisors of the County for such purpose until all such
amounts are paid.
SECTION 12.10. Trust Agreement. The parties hereto acknowledge that the
County is a first-party beneficiary to the Trust Agreement, and the Authority hereby agrees that
during the term of the Facility Lease and provided the County is not in default hereunder, it will
not amend the Trust Agreement in any manner materially adverse to the interests of the County.
The County hereby consents to the execution and delivery of the Second Supplemental Trust
Agreement.
SECTION 12.11. Facility Lease in Full Force and Effect. Except as in this
Second Amendment to Facility Lease expressly provided,.the Facility Lease shall continue in full
force and effect in accordance with the terms and provisions thereof, as amended and
supplemented hereby.
SECTION 12.12. Execution in Counterparts. This Second Amendment to
Facility Lease may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all together shall constitute but one and the same Second Amendment to
Facility Lease. It is also agreed that separate counterparts of this Second Amendment to Facility
Lease may separately be executed by the Authority and the County, all with the same force and
effect as though the same counterpart had been executed by both the Authority and the County.
DOCSSF i:504513.1
40511-119 4
IN WITNESS WHEREOF, the Authority and the County have caused this
Second Amendment to Facility Lease to be executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
COUNTY OF CONTRA COSTA,
as Lessee
[SEAL]
By
Chair, Board of Supervisors
County of Contra Costa, State of California
Attest: Philip J. Batchelor
Clerk of the Board of Supervisors
and County Administrator
By
Chief Clerk
Approved as to form:
County Counsel
COUNTY OF CONTRA COSTA PUBLIC
FINANCING AUTHORITY,
Lessor
By
Chair
Attest: Philip J. Batchelor,
Executive Director and Secretary
By
Assistant Executive Director
DOCSSF I:504513.1
40511-119 5
EXHIBIT A
Addition to Demised Premises
All that certain real property situated in the County of Contra Costa, State of
California, described as follows:
Medical Lab Property
[Legal Property Description]
DOCSSF 1:504513.1
40511-119 A-1
EXHIBIT B
Additional Base Rental Payment
[to be provided by Underwriter]
DOCSSF 1:504513.1
40511-119 B-1
CONSENT OF TRUSTEE
The undersigned, as trustee under the Trust Agreement dated as of February 1,
1999, as amended, between the COUNTY OF CONTRA COSTA PUBLIC FINANCING
AUTHORITY (the "Authority") and the trustee, hereby acknowledges and consents to the
execution and delivery of the Second Amendment to FACILITY LEASE dated as of March 1,
2001, between the Authority and the COUNTY OF CONTRA COSTA (the "County") relating to
the Facility Lease (Various Capital Projects) dated as of February 1, 1999, between the Authority
and the County.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as Trustee
By
Authorized Officer
DOCSSF1:504513.1
10511-119
PRELIMINARY OFFICIAL STATEMENT DATED ,2001
NEW ISSUE-BOOK ENTRY ONLY RATINGS:
See"RATINGS"herein.
3 In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon existing laws, regulations, rulings and court
decisions, and assuming among other matters, compliance with certain covenants, interest on the 2001 Series B Bonds is excluded from gross
oincome for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exennpt from State of California personal
7 income taxes. In the fntrther opinion of Bond Counsel, interest on the 2001 Series B Bonds 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
a `o consequences related to the ownership or disposition of, or the accrual or receipt of the interest on, the 7001 Series B Bonds. See "TAX
Jo AIA I II:RS herein.
M
C w $
cr COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
o` LEASE REVENUE BONDS
c (MARTINEZ HEALTH CLINIC PROJECT),
ITE 2001 SERIES B
3 Dated: 1,2001 Due:June 1,as shown on inside cover
0
G The County of Contra Costa Public Financing Authority Lease Revenue Bonds(Martinez Health Clinic Project),2001 Series B(the
"2001 Series B Bonds")are being issued to finance the[constructiou][acquisition]of an ambulatory care clinic for the County of Contra Costa,
Califomia(the"County"),[to purchase a reserve fund surety bond]and to pay costs of issuance relating to the 2001 Series B Bonds. Sec"PLAN
d 01:FINANCE'and"ESTIMATED SOURCES AND USES OF FUNDS."
Interest on the 2001 Series B Bonds will be payable on June I and December 1 of each year,commencing December 1,2001. The
o 2001 Scries B Bonds will be initially delivered in book-entry form,registered in the name of Cede&Co.,as nominee of The Depository Trust
Com an New York,New York DTC:" Principal of,redemption premium,if an and interest on the 2001 Series B Bonds will be aid b
4 o Company, ("DTC"). P P P Y P' Y
3 State Street Bank and Trust Company of California,N.A.,as Trustee,to DTC. DTC is obligated to remit such principal and interest to its DTC
Participants for disbursement to the beneficial owners of the 2001 Series B Bonds. See"APPENDIX G-Book-Entry Only System." The 2001
Series B Bonds are subject to optional,extraordinary and mandatory redemption as described herein.
0
c
[Payment of the principal of and interest, when due, on the 2001 Series B Bonds will be insured by a bond insurance policy to be
' issued concurrently with the delivery of the 2001 Series B Bonds by
LOGO
The 2001 Series B Bonds are being issued pursuant to a Trust Agreement,dated as of February 1, 1999,as supplemented by the First
G v Supplemental frust Agreement, dated as of January 1, 2001, and the Second Supplemental Trust Agreement, dated as of 2001,
obetween the County of Contra Costa Public Financing Authority(the"Authority")and the Trustee..
F
The 2001 Series.B Bonds are limited obligations of the Authority payable solely from certain revenues of the Authority,consisting
o primarily of Base Rental Payments(as defined herein)to be made by the County to the Authority pursuant to a Facility Lease(Various Capital
o Projects),dated as of February 1, 1999, as amended by the First Amendment to Facility Lease, dated as of January I,2001, and the Second
.5 3 Amendment to Facility Lease,dated as of 2001 (the"Facility Lease"),between the Authority and the County. Pursuant to the
0— Facility Lease,the County will lease the Facilities(defined herein)from the Authority. 'llie County has covenanted in the Facility Lease to take
.o such action as may be necessary to include Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor.
o
The County has agreed in the Facility Lease to make all Base Rental Payments,subject to abatement in the event of damage to or destruction or
:o
condemnation of all or a portion of the Facilities which results in substantial interference with the County's use and occupancy of the Facilities,
y�. except as otherwise described herein.
c
THE 2001 SERIES B BONDS ARE LIMITED OBLIGATIONS OFTHE AUTHORITY AND ARE NOT SECURED BY A LEGAL
OR EQUITABLE PLEDGE OF,OR CHARGE OR LIEN UPON,ANY PROPERTY OF TIIE AUTHORITY OR THE COUNTY OR ANY OF
co
THEIR INCOME OR RECEIPTS, EXCEPT THE REVENUES (AS DESCRIBED HEREIN). NEITHER THE FULL FAITH NOR THE
CREDIT OF THE AUTHORITY OR THE COUNTY IS PLEDGED FOR THE PAYMENT OF THE INTERES'r ON OR PRINCIPAL OF TiIE
9 2001 SERIES B BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR INTERESTON THE 2001 SERIES B BONDS NOR
v� N
THE OBLIGATION TO MAKE BASE RENTAL PAYMENTS UNDER THE FACILITY LEASE CONSTITUTES A DEBT,LIABiLiT'Y OR
5 OBLIGATION OF TILE AUTHORITY OR THE COUNTY FOR WHiCH EITHER ENTITY IS OBLIGATED TO LEVY OR PLEDGE ANY
FORM OF TAXATION OR FOR WHICH EITHER ENTTrY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE
° o AUTilORITY HAS NO TAXING POWER.
b MATURITY SCHEDULE,CUSIP NUMBERS,PRINCIPAL AMOUNTS,INTEREST RATES AND PRICES/YIELDS
N
E (see inside cover)
o 17ie 2001 Series B Bonds are offered when,as and if issued,subject to approval of validity by Orrick,Berrington&Sutcliffe LLP,San
Francisco, California, Bond Counsel. Certain other legal matters will be passed upon for the County and the Authority by County Counsel,and
for the Underwriter by Brown& Wood LLP,San Francisco, California, Underwriter's Counsel. C.M. de Crinis&Co.,Inc. is Financial Advisor
to the County in connection with the issuance of the 2001 Series B Bonds. The 2001 Series B Bonds, in book-envy fortnn, will be available for
delivery through DTC on or about 1001.
v THiS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT INTENDED TO
BE A SUMMARY OF SECURITY OR TERMS OF THIS ISSUE. INVESTORS ARE ADVISED TO READ THE ENTIRE OFFICIAL
V,
d STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO TiiE MAKING OF AN INFORMED INVESTMENT DECISION.
0
b Dated: 2001
U U
V w �
o N *Preliminary,subject to change
G T
C� w
N � C
fes- ° SFLIBi/1095565/2/10420/00353/dybac/January 22,2001 -11:34 am
MATURITY SCHEDULE*
(Base CUSIP Number: )
$ Serial Bonds
Maturity Maturity
Date CUSIP Principal Interest Price/ Date CUSIP Principal Interest Price/
(June 1) Number Amount Rate Yield (June 1) Number Amount Rate Yield
2002 2015
2003 2016
2004 2017
2005 2018
2006 2019
2007 2020
2008 2021
2009 2022
2010 2023
2011 2024
2012 2025
2013 2026
2014
$ % Term Bonds June 1, -Price %
(Plus accrued interest)
* Preliminary,subject to change.
No dealer,broker, salesperson or other person has been authorized by the County or the Authority
to give any information or to make any representation other than those contained herein and, if given or
made, such other information or representation must not be relied upon as having been authorized by any
of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any
offer to buy nor shall there be any sale of the 2001 Series B Bonds by aperson in any jurisdiction in
which it is unlawful for such person to make such an offer,solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the 2001
Series B Bonds. Statements contained in this Official Statement which involve estimates, forecasts or
matters of opinion, whether or not expressly so described herein, are intended solely as such and are not
to be construed as representations of facts.
The information set forth herein has been obtained from the County or the Authority and from
other sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The
information and expressions of opinions herein are subject to change without notice and neither the
delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the County or the Authority since the date
hereof. This Official Statement is submitted in connection with the sale of the 2001 Series B Bonds
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless
authorized in writing by the County. All summaries of the documents and laws are made subject to the
provisions thereof and do not purport to be complete statements of any or all such provisions. All
capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Trust
Agreement and the Facility Lease. This Official Statement, including any supplement or amendment
hereto, is intended to be deposited with one or more nationally recognized municipal securities
information repositories.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
2001 SERIES B BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
SFLIBI/1095565/2/10420/00353/dybae/January 22,2001 -11:34 am
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
Donna Gerber Gayle B. Uilkema
Chair Vice-Chair
Philip J. Batchelor Kenneth J. Corcoran
Executive Director and Secretary Treasurer
COUNTY OF CONTRA COSTA,CALIFORNIA .
BOARD OF SUPERVISORS OF THE COUNTY
Donna Gerber
(District 3)
Chair
John Gioia Gayle B. Uilkeman
(District 1) (District 2)
Vice Chair
Mark DeSaulmer Federal Glover
(District 4) (District 5)
COUNTY OFFICIALS
Philip J. Batchelor
Clerk of the Board and County Administrator
Laura W. Lockwood
Director, Capital Facilities and Debt Management
Kenneth J. Corcoran William J. Pollacek
Auditor-Controller Treasurer-Tax Collector
Victor J. Westman Gus Kramer Stephen L. Weir
County Counsel Assessor County Clerk-Recorder
SPECIAL SERVICES
BOND COUNSEL FINANCIAL ADVISOR
Orrick, Herrington& Sutcliffe LLP C.M. de Crinis &Co., Inc.
San Francisco, California Sausalito, California
TRUSTEE
State Street Bank and Trust Company of California,N.A.
Los Angeles, California
SFL.IH1/1095565/2/10420/00353/dybac/January 22,2001 -11:34 am
TABLE OF CONTENTS
Page
INTRODUCTION........................................................................................................................................ 1
Authorityfor Issuance.....................................................................................................................2
PLANOF FINANCE................................................................................................................................... 3
ESTIMATED SOURCES AND USES OF FUNDS....................................................................................4
THELEASED FACILITIES........................................................................................................................4
THE2001 SERIES B BONDS..................................................................................................................... 5
GeneralProvisions .......................................................................................................................... 5
Redemption Provisions.................................................................................................................... 5
Noticeof Redemption..................................................................................................................... 6
Selection of 2001 Series B Bonds for Optional Redemption.......................................................... 7
Effectof Redemption ............:......................................................................................................... 7
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS............................................................ 7
General............................:........................................:...................................................................... 7
Pledgeof Revenues .................................................................. ............ 8
BaseRental Payments..................................................................................................................... 9
Pledgeof Courthouse Funds........................................:................................................................. 11
Reserve Fund......................................................:......... I......... 11
.......................................................
Substitution of Property .............................................................................................. 12
Insurance .........................................................................................:.............. .............................. 12
AdditionalBonds........................................................................................................................... 14
MUNICIPAL BOND INSURANCE POLICY........................................................................................... 14
[DEBT SERVICE RESERVE FUND SURETY BOND........................................................................... 16
CERTAINRISK FACTORS...................................................................................................................... 17
Limited Obligation.......................................................................I............. .. 17
.................................
BaseRental Payments ................................................................................................................... 17
Abatement..................................................................................................................................... 18
Defaultand Remedies................................................................................................................... 18
Limitationson Remedies............................................................................................................... 19.
Riskof Earthquake........................................................................................................................ 19
HazardousSubstances................................................................................................................... 19
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND
APPROPRIATIONS............................................................................................. ... 20
............................
Article XIII A of the California Constitution................................................................................ 20
Legislation Implementing Article XIII A...................................................................................... 20
Article XIII B of the California Constitution................................................................................ 20
ArticleXIII C and Article XIII D.................................................................................................. 21
Proposition62...........................................:.................................................................................... 22
Proposition187......................................................................................:....................................... 23
Future Initiatives and Changes of Law.......................................................................................... 24
Limitationson Remedies............................................................................................................... 24
THEAUTHORITY.................................................................................................................................... 24
THE COUNTY............................................................................ .................... 25
...........................................
RATINGS................................................................................................................................................... 25
LITIGATION.......................................................................................................... ............. 25
......................
TAXMATTERS........................................................................................................................................ 26
LEGALMATTERS ................................................................................................................................... 27
CONTINUINGDISCLOSURE ................................................................................................................. 27
UNDERWRITING..................................................................................................................................... 27
MISCELLANEOUSINFORMATION...................................................................................................... 28
SFLIF31/1095565/2/)0420100353ldybac/January 22,2001 -11:34 am
1
APPENDIX A —GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION........................A-1
APPENDIX B — COUNTY FINANCIAL INFORMATION..............................................................................................B-1
APPENDIX C — EXCERPTS FROM THE AUDI"TED FINANCIAL STATEMENTS OF THE COUNTY
FOR THE FISCAL YEAR ENDED JUNE 30,2000...........................................................................C-1
APPENDIX D — SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS........................D-1
APPENDIX E — PROPOSED FORM OF BOND COUNSEL OPINION............................................................................E-1
APPENDIX F — PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT..............................................F-1
APPENDIX G — BOOK-ENTRY ONLY SYSTEM............................................................................................................G-1
APPENDIX 1-1 — SPECIMEN MUNICIPAL BOND INSURANCE POLICY ..................................................................H-1
SFLIB1/1095565/2/10420/00353/dybac/January 22,2001 -11:34 am
11
OFFICIAL STATEMENT
COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
(MARTINEZ HEALTH CLINIC PROJECT),
2001 SERIES B
INTRODUCTION
This Official Statement (which includes the cover page and Appendices hereto) (the "Official
Statement") provides certain information concerning the issuance of County of Contra Costa Public
Financing Authority Lease Revenue Bonds (Martinez Health Clinic Project), 2001 Series B (the "2001
Series B Bonds"), in an aggregate principal amount of $ * by the County of Contra Costa
Public Financing Authority'(the "Authority"). The 2001 Series B Bonds are limited obligations of the
Authority payable solely from Revenues (as hereinafter defined), consisting primarily of certain base
rental payments (the "Base Rental Payments") to be made by the County of Contra Costa(the "County"),
as rent for the Facilities(as defined herein). The County will lease the Facilities to the Authority pursuant
to a Master Site Lease, dated as of February 1, 1999, as amended by the First Amendment to Master Site
Lease, dated as of January 1, 2001, and the Second Amendment to Master Site Lease, dated as of
, 2001 (collectively, the "Site Lease"). The Facilities will be leased-back by the County
pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended by the
First Amendment to Facility Lease, dated as of January 1, 2001 and the Second Amendment to Facility
Lease, dated as of , 2001 (collectively, the "Facility Lease"), between the County, as lessee,
and the Authority, as lessor. All real property leased by the County from the Authority under the Facility
Lease in connection with the Facilities is herein referred to as the"Demised Premises."
The 2001 Series B Bonds are being issued to finance the [construction][acquisition] of an
ambulatory care clinic for the County(the "2001 Series B Project"). In addition, the Authority will utilize
proceeds of the 2001 Series B Bonds [to purchase a reserve fund surety bond and to) pay certain costs
associated with the issuance of the 2001 Series B Bonds. See "PLAN OF FINANCE" and
"ESTIMATED SOURCES AND USES OF FUNDS."
The 2001 Series B Bonds will be issued pursuant to a "Trust Agreement, dated as'of February 1,
1999, as supplemented by the First Supplemental Trust Agreement, dated as of January 1, 2001, and the
Second Supplemental Trust Agreement, dated as of 2001 (collectively, the "Trust
Agreement"), between the Authority and State Street Bank and Trust Company of California, N.A., as
trustee (the "Trustee"). Pursuant to the Trust Agreement, the Authority will pledge to the Trustee, for the
benefit of the Bondholders (as hereinafter defined), all of the Revenues, consisting primarily of the Base
Rental Payments made by the County to the Authority under the Facility Lease.
The Authority has previously issued $74,685,000 County of Contra Costa Public Financing
Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999
Series A Bonds") and $ County of Contra Costa Public Financing Authority Lease Revenue
Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds") pursuant to the Trust
Agreement, which 1999 Series A Bonds and 2001 Series A Bonds will be payable on a parity with the
2001 Series B Bonds.
* Preliminary,subject to change.
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The Authority may in the future issue additional bonds under the Trust Agreement ("Additional
Bonds") secured on a parity with the 1999 Series A Bonds, the 2001 Series A Bonds and the 2001
Series B Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS - Additional
Bonds." The 1999 Series A Bonds, the 2001 Series A Bonds and the 2001 Series B Bonds, together with
any Additional Bonds issued pursuant to the Trust Agreement, are herein referred to as the "Bonds."
The term"Bondholders"as used throughout this Official Statement means the holders of the 1999
Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds and any Additional Bonds.
The County has covenanted under the Facility Lease that so long as the Facilities are available for
the County's use and occupancy, it will take such action as may be necessary to include all Base Rental
Payments and Additional Payments (as defined below) in its annual budgets and to make the necessary
annual appropriations therefor. The County has also covenanted, subject to applicable law, to
appropriate applicable amounts from its Courthouse Funds (as defined below) to pay Base Rental
attributable to the Courts Project (as defined below) or to replenish the portion of the Reserve Fund
allocable to the Courts Project, which pledge is not subject to the use and occupancy of the Facilities.
The County has timely made to date all Base Rental Payments and Additional Payments required under
the Facility Lease .for the 1999 Series A Bonds and the 2001 Series A Bonds. See "SECURITY AND
SOURCES OF PAYMENT.FOR"THE BONDS."
Base Rental Payments are subject to complete or partial abatement due to substantial interference
with the use and occupancy by the County of the Facilities (except for the portion of Base Rental
Payments attributable to the Courts Project for which Courthouse Funds are available for the payment
thereof) caused by damage to or destruction or condemnation of the Facilities. See "CERTAIN RISK
FACTORS" and "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS - Pledge of
Courthouse Funds." Abatement of Base Rental Payments under the Facility Lease could result in 2001
Series B Bondholders receiving less than the full amount of principal and interest on the 2001 Series B
Bonds, except to the extent proceeds of insurance or moneys in the Reserve Fund (as described herein)
are available to make payments of principal of or interest on the 2001 Series B Bonds (or the relevant
portion thereof) during periods of abatement of Base Rental.
[As additional security for the 2001 Series B Bonds, payment of the principal of and interest on
the 2001 Series,B Bonds when due will be insured by a municipal bond insurance policy to be issued by
(the "Insurer") simultaneously with the delivery of the 2001 Series B Bonds. See "THE
MUNICIPAL BOND INSURANCE POLICY."
Summaries of certain provisions of the principal legal documents relating to the 2001.Series B
Bonds are contained in Appendix D hereto. The summaries and descriptions in this Official Statement of
the Trust Agreement, the Facility Lease, the Site Lease, the Continuing Disclosure Agreement, and other
agreements relating to the 2001 Series B Bonds are qualified in their entirety by reference to such
documents, and the descriptions herein of the 2001 Series B Bonds are qualified in their entirety by the
form thereof and the information with respect thereto included in such documents. All capitalized terms
used herein, unless noted otherwise, shall have the meanings prescribed in the Trust Agreement and the
Facility Lease. See "APPENDIX D — SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL
LEGAL DOCUMENTS—Certain Definitions."
Authority for Issuance
The 2001 Series B Bonds are being issued pursuant to the Constitution and the laws of the State,
resolutions adopted by the Authority and the County on , 2001 and the Trust Agreement.
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2
PLAN OF FINANCE
A portion of the proceeds of the 2001 Series B Bonds will be used to finance the
[construction][acquisition] of an ambulatory care clinic for the County(the"2001 Series B Project").
The County presently anticipates that the capital project described below will constitute the 2001
Series B Project, although the County may change the 2001 Series B Project from time to time by filing a
notice of change with the Trustee. [The facilities presently anticipated to be improved as part of the 2001
Series B Project are not Facilities being leased pursuant to the Facility Lease.]
The County anticipates that it will apply approximately $ million of the proceeds of the
2001 Series B Bonds to [construct] [acquire] an ambulatory care clinic at the Contra Costa Regional
Medical.Center,the County's public hospital system in the City of Martinez, California.
[ADDITIONAL DESCRIPTION OF 2001 SERIES B PROJECT TO COME]
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3
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the estimated sources and uses of funds related to the issuance of
the 2001 Series B Bonds.
Sources
2001 Series B Bond Proceeds....................................................... $
Net Original Issue Premium(+)/Discount(-)...............................
Accrued Intered).........................................................................
TotalSources................................................................... $
Uses
Interest AccounP............ .................. $
...........................................
2001 Series B Project Fund..........................................................
Costs of Issuance Fund(`)..............................................................
TotalUses........................................................................ $
t Represents interest on the 2001 Series B Bonds from their dated date to their delivery date.
tzl Includes legal and professional fees,title search and title insurance fees, [municipal bond insurance policy and debt service reserve fund
surety bond premiums,]printing costs and other costs of issuance.
THE LEASED FACILITIES
The County will lease the Facilities to the Authority pursuant to the Site Lease, and the Authority
will lease-back the Facilities to the County pursuant to the Facility Lease. The County is committed to
the use of the Facilities as County property.
Pursuant to the Facility Lease, the County may substitute other properties for the Facilities or
portions thereof upon meeting certain conditions. See "SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS—Substitution of Property."
The Facilities consist of the West County Detention Facility, the Bray Courthouse, the East
County Social Services Building and the Summit Centre administration building [other facilities to be
added? ambulatory care clinic?l and the sites thereof, as further described below. The Facilities include
site development, landscaping, utilities, equipment, furnishings, improvements and appurtenant and
related facilities located on the Demised Premises.
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4
Approx.
Original Approx. Building
Completion Acreage Square Term of Value
Facility Address Date of Site Footage Site Lease (millions)
West County Detention 5555 Giant Highway 1991 47.4 243,300 2028 $63.00"'
Facility Richmond,California
Bray Courthouse 1020 Ward Street 19881`1 0.6 48,900 2016 10.35('1
Martinez,California
East County Social 4545 Delta Fair Blvd. 1988 4.9 52,700 2008 5.00([1
Services Building Antioch,California
Summit Centre 2530 Arnold Dr. 1988 20.8 113,000 2026 25.8(31
Martinez,California
]Add facilities to be
added]
TOTAL $104.1
(1) Based upon independent appraisals completed in December 1998.
(Z) A third story to the facility was completed in 1992.
(3) Based upon(i)an outside appraisal conducted in September 2000 that valued the property at$18.0 million,(ii)a purchase price of$2.3 million
for an adjacent 13.4 acres(which were purchased on February 18,2000),and(iii)the value of tenant improvements totaling$5.5 million that are
currently underway.
THE 2001 SERIES B BONDS
General Provisions
The 2001 Series B Bonds are limited obligations of the Authority payable solely from Revenues,
consisting primarily of Base Rental Payments to be made by the County under the Facility Lease.
The 2001 Series B Bonds will be prepared in the form of fully registered bonds and, when
delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust.Company,
New York, New York ("DTC"). DTC will act as securities depository of the 2001 Series B Bonds.
Ownership interests in the 2001 Series B Bonds may be purchased in book-entry form only,-in the .
denominations hereinafter set forth. See"APPENDIX G -Book-Entry Only System"hereto.
Ownership interests in 2001 Series B Bonds will be in $5,000 denominations or any integral
multiple thereof. Interest on the 2001 Series B Bonds will be calculated on the basis of a 360-day year
composed of twelve 30-day months and is payable on June 1 and December 1 (each an "Interest Payment
Date") of each year, commencing December 1, 2001. The 2001 Series B Bonds will be dated and bear
interest from , 2001. The 2001 Series B Bonds will mature on the dates (each a "Maturity
Date") and in the principal amounts, and the interest payable thereon will be computed at the rates, all as
set forth on the inside cover page of this Official Statement.
Redemption Provisions
Optional Redemption. The 2001 Series B Bonds maturing on or prior to June 1, are not
subject to optional redemption. The 2001 Series B Bonds maturing on or after June 1, are subject
to optional redemption prior to their respective stated maturities, at the written direction of the Authority,
from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such
maturities as are designated in writing by the Authority to the Trustee) on or after June 1, at the
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5
following redemption prices (expressed as a percentage of the principal amount of the 2001 Series B
Bonds called for redemption)plus accrued interest thereon to the date fixed for redemption, as follows:
Redemption Period
(dates inclusive) Redemption Price
June 1, through May 31, 101%
June 1, and thereafter 100
Mandigory Sinking Fund Redemption. The 2001 Series B Bonds maturing on June 1, are
subject to mandatory sinking fund redemption prior to their stated maturity, in part on June 1 of each year
on or after June 1, by lot, from and in the amount of the mandatory sinking account payment due and
payable on such dates, at a redemption price equal to the sum of the principal amount thereof plus accrued
interest thereon to the redemption date,without premium, in the amounts and on the dates set forth below.
2001 Series B Bonds Maturing on June 1,
Sinking Fund Payment Date Principal
(June 1) Amount
* Maturity
Extraordinary Redemption. The 2001 Series B Bonds are subject to redemption by the
Authority on any date prior to their respective stated maturities, upon notice as provided in the Trust
Agreement, as a whole or in part by lot within each stated maturity of the 2001 Series B Bonds in
Authorized Denominations, from prepayments of Base Rental Payments made by the County from the net
proceeds received by the County due to the taking of the Facilities or portions thereof under the power of
eminent domain, or from the net proceeds of title insurance or insurance received for damage to or
destruction of the Facilities or portions thereof, under the circumstances described in the Trust Agreement
and the Facility Lease. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS -
Insurance." The redemption price will be equal to the principal amount of the 2001 Series B Bonds to be
redeemed and accrued interest thereon to the date of redemption, without prcmium. Whenever less than
all of the Outstanding Bonds are to be redeemed on any one date, the Trustee will select, in accordance
with written instructions from the Authority, the Bonds to be redeemed so that the aggregate annual
amounts of principal of and interest on the Bonds which will be payable after such redemption date will
be as nearly proportional as practicable to the aggregate annual amounts of principal of and interest on the
Bonds outstanding prior to such redemption date.
Notice of Redemption
Notice of redemption is to be mailed, first class postage prepaid, to the respective Owners of any
2001 Series B Bonds designated for redemption at their addresses appearing on the registration books
required to be kept by the Trustee not less than 30 nor more than 60 days prior to the redemption date.
Each notice of redemption will state the date of such notice,the date of issue of the Bonds, the Series, the
redemption date, the redemption place, the redemption price, and the CUSIP number of the maturity or
maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers
of the 2001 Series B Bonds to be redeemed, and in the case of each 2001 Series B Bond called for
SFLIBI/1095565/2/10420/00353/dybac/January 22,2001 -11:34 am
6
redemption in part, state the amount which is to be redeemed. Each such notice will also state that from
and after the redemption date, interest on the 2001 Series B Bonds to be redeemed will cease to accrue.
Failure to receive such notice will not invalidate any of the proceedings taken in connection with such
redemption.
Selection of 2001 Series B Bonds for Optional Redemption
The Authority will designate which maturities of Bonds are to be redeemed. Whenever less than
all the Outstanding 2001 Series B Bonds maturing on any one date are to be redeemed, the Trustee will
select the 2001 Series B Bonds of such maturity date to be redeemed from the Outstanding 2001 Series B
Bonds payable on such maturity date by lot. For purposes of such selection, 2001 Series B Bonds will be
deemed to be composed of$5,000 portions, and any such portion may be separately redeemed. In the
event 2001 Series B Bonds subject to sinking fund redemption are designated for redemption, the
Authority may designate which sinking account payments are allocated to such redemption.
Effect of Redemption
If notice of redemption has been duly given as aforesaid and money for the payment of the
redemption.price of the 2001 Series B Bonds called for redemption is held by the Trustee, then on the
redemption date designated in such notice 2001 Series B Bonds so called for redemption will become due
and payable, and from and after the date so designated interest on such 2001 Series B Bonds will cease to
accrue, and the Owners of such 2001 Series B Bonds will have no rights in respect thereof except to
receive payment of the redemption price thereof.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds are secured by the Revenues, which consist primarily of Base Rental Payments to be
made by the County under the Facility Lease. Pursuant to the Facility Lease, the Authority leases the
Facilities to the County. As rental for the use and occupancy of the Facilities, the County covenants to
pay Base Rental Payments to the Trustee. The Base Rental Payments, which are subject to abatement
(except for that portion of Base Rental Payments attributable to the Courts Project for which Courthouse
Funds are available for the payment thereof, as described in "Pledge of Courthouse Funds" below), are
calculated to be sufficient to pay principal of and interest on the Bonds when due.
The County has covenanted in the Facility Lease to include all Base Rental Payments in its
annual budgets and to make the necessary annual appropriations therefor. The Authority will pledge the
Base Rental Payments to the Trustee for the benefit of the Owners of the Bonds. By the 15th day of the
month immediately preceding each Interest Payment Date, the County must pay to the Trustee Base
Rental Payments (to the extent required under the Facility Lease) which will be sufficient to pay, when
due, the scheduled principal of and interest on the Bonds. Base Rental Payments are not subject to
acceleration. The County has timely made to date all Base Rental Payments and Additional Payments
due under the Facility Lease for the 1999 Series A Bonds and the 2001 Series A Bonds.
Under the Facility Lease, the County agrees to pay Additional Payments for the payment of all
expenses and all costs of the Authority and the Trustee related to the Facilities, including expenses of the
Trustee payable by the Authority under the Trust Agreement, and fees of accountants, attorneys and
consultants. The County is responsible for repair and maintenance of the Facilities during the term of the
Facility Lease.
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7
The Base Rental Payments will be abated proportionately (except for the portion of Base Rental
Payments attributable to the Courts Project, which will not be abated to the extent Courthouse Funds are
available for the payment thereof, as described below in "Pledge of Courthouse Funds"), during any
period in which by reason of any damage to or destruction of the Facilities, there is substantial
interference with the use and occupancy of the Facilities by the County, in the proportion in which the
cost of that portion of the Facilities rendered unusable bears to the cost of the whole of the Facilities. See
"Pledge of Courthouse Funds." During any such period of abatement, except to the extent that amounts
held by the Trustee in the Revenue Fund or the Reserve Fund are otherwise available to pay the Bonds,
Revenues will not be available to pay the Bonds. Such abatement will continue for the period
commencing with such damage or destruction and ending with the substantial completion of the work of
repair or reconstruction. In the event of any such damage or destruction, the Facility Lease will continue
in full force and effect and the County waives any right to terminate the Facility Lease by virtue of any
such damage or destruction.
If the whole of the Facilities, including the Demised Premises, or so much therefor as to render
the remainder unusable, is taken under power of eminent domain, the term of the Facility Lease will cease
as of the day possession is so taken. If less than the whole of the Facilities is taken by eminent domain,
there will be a partial abatement of the rental due under the Facility Lease in an amount equivalent to the
amount by which the annual payments of principal.of and interest on the Bonds then Outstanding will be
reduced by the application of the award in eminent domain to the redemption of Outstanding Bonds.
Should the County default under the Facility Lease, the Authority may (i) terminate the Facility
Lease and take possession of the Facilities or (ii) retain the Facility Lease and may seek to hold the
County liable for all Base Rental Payments and Additional Payments thereunder (without acceleration) as
they become due on an annual basis. See "APPENDIX D - SUMMARY OF CERTAIN PROVISIONS
OF PRINCIPAL LEGAL DOCUMENTS — Facility Lease - Default and Remedies." Base Rental
Payments and Additional Payments may not be accelerated. See"CERTAIN RISK FACTORS."
[As additional security for the 2001 Series B Bonds, payment of the principal of and interest,
when due, on the 2001 Series B Bonds will be insured by a municipal bond insurance policy to be issued
by simultaneously with the delivery of the 2001 Series B Bonds. See "MUNICIPAL BOND
INSURANCE POLICY."]
Pledge of Revenues
The Revenues consist primarily of the Base Rental Payments made by the County to the
Authority. In accordance with the Trust Agreement, all Revenues are irrevocably pledged to and will be
used for the punctual payment of interest and premium, if any, on and principal of the Bonds and Reserve
Facility Costs, if any, and the sums due and payable by the Authority in connection with any Swaps, if
any, and will not be used for any other purpose while any of the Bonds remain Outstanding; provided,
however, that out of the Revenues may be applied such sums as are permitted under the Trust Agreement.
This pledge constitutes a first lien on the Revenues in accordance with the terms of the Trust Agreement.
The Authority has directed that all Base Rental Payments be paid directly to the Trustee to be
held in trust by the Trustee in the Revenue Fund for the benefit of the Bondholders. The County has
covenanted under the Facility Lease that as long as the Facilities are available for the County's use and
occupancy, it will take such action as may be necessary to include all Base Rental Payments and
Additional Payments due under the Facility Lease in its annual budgets and to make the necessary annual
appropriations therefor. The County has timely made to date all Base Rental Payments and Additional
Payments due under the Facility Lease for the 1999 Series A Bonds and the 2001 Series A.Bonds.
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Base Rental Payments
Base Rental Payments are calculated on an annual basis for twelve-month periods commencing
on June 1 and ending on May 31, and each annual Base Rental Payment will be divided into two interest
components, due on June 1 and December 1, and one principal component, due on June 1, except that the
first Base Rental Payment period commenced on the original date of recordation of the Facility Lease
(March 4, 1999) and ended on May 31, 1999. Each Base Rental Payment with respect to the 2001
Series B Bonds will be payable on the 15th day of the month immediately preceding its due date. Each
annual Base Rental Payment (to be payable in installments as aforesaid) will be for the use of the
Facilities for the twelve-month period commencing on June 1 of the period in which such installments are
payable (except the first Base Rental period which commenced on the date of recording of the Facility
Lease).
The Trust Agreement requires that Base .Rental Payments be deposited in the Revenue Fund
maintained by the Trustee. In accordance with the Trust Agreement, the Trustee will transfer such
amounts as are necessary to the Interest Account or the Principal Account, as the case may be, to pay
principal of and interest on the Bonds as the same become due and payable. On each Principal Payment
Date, following the payment-of principal of and interest on the Bonds, any excess amount in the Revenue
Fund will be transferred to the Reserve Fund, as necessary, and thereafter returned to the County. See
"APPENDIX D - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS -
Trust Agreement—Creation of Funds and Accounts."
THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS IS AN
OBLIGATION PAYABLE FROM AMOUNTS IN THE GENERAL FUND AND THE COURTHOUSE
FUNDS OF TIIE COUNTY, AND DOES NOT CONSTITUTE A DEBT OF THE COUNTY, THE
AUTHORITY OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION
THERE-OF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION OR AN OBLIGATION FOR WHICH THE COUNTY MUST LEVY
OR PLEDGE, OR IIAS LEVIED OR PLEDGED, ANY FORM OF TAXATION.
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The following table shows the debt service schedule relating to the 1999 Series A Bonds, the
2001 Series A Bonds and the 2001 Series B Bonds.
DEBT SERVICE SCHEDULE
Outstanding 2001 Series B Bonds
Payment Date Debt Service(') Principal Interest Total Fiscal Year Total
06/01/01
12/01/01
06/01/02
12/01/02
06/01/03
12/01/03
06/01/04
12/01/04
06/01/05
12/01/05
06/01/06
12/01/06
06/01/07
12/01/07
06/01/08
12/01/08
06/01/09
12/01/09
06/01/10
12/0110 .
06/01%11
12/01/11
06/01/12
12/01/12
06/01/13
12/01/13
06/01/14
12/01/14
06/01/15
12/01/15
06/01/16
12/01/16
06/01/17
12/01/17
06/01/18
12/01/18
06/01/19
12/01/19
06/01/20
12/01/20
06/01/21
12/01/21
06/01/22
12/01/22
06/01/23
12/01/23
06/01/24
12/01/24
06/01/25
12/01/25
06/01/26
12/01/26
06/01/27
12/01/27
06/01/28
TOTAL $ $ $ $
t�1 Reflects debt service on outstanding 1999 Series A Bonds and 2001 Series A Bonds issued pursuant to the Trust Agreement.
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Pledge of Courthouse Funds
The County has covenanted that, subject to applicable law, it will utilize moneys in the County's
Criminal Justice Facility Temporary Construction Fund and Courthouse Temporary Construction Fund
(collectively, the "Courthouse Funds") to pay the Authority in immediately available funds (from
amounts on hand from time to time in the Courthouse Funds) (i) the amount due as Base Rental
attributable to financing the Courts Project (as defined in the Trust Agreement) including amounts
attributable to the Family Law Center portion of the 1999 Series A Project and the 2001 Series A Project,
or (ii) the amount necessary to replenish the portion of the Reserve Fund allocable to the Courts Project.
Courthouse Funds are also pledged to pay the portion of Base Rental attributable to the refinancing of
improvements to the Bray Courthouse undertaken with the 1999 Series A Bonds.
The County's obligation to make amounts in the Courthouse Funds available for construction of
court facilities began in 1982 and 1983. The pledge of such funds to repay the Courts Project debt service
was approved by the Board of Supervisors on December 8, 1998 (in the case of the 1999 Series A Bonds)
and on October 17, 2000 (in the case of the 2001 Series A Bonds) and will continue until the Bonds
allocable to the Courts Project mature in 2026 or are redeemed or defeased. The County's obligation to
make payments from the Courthouse Funds is not subject to abatement. Notwithstanding the foregoing,
nothing will prevent the County from utilizing the Courthouse Funds for any other lawful purpose, the
only obligation under the Facility Lease being that the County must utilize any moneys therein available,
pursuant to applicable law, including the restricted purposes for which the respective funds may be
expended, to pay the Base Rental attributable to the Courts Project when the same is otherwise due and
payable or to replenish the Reserve Fund as specified below, but there is no obligation on the County to
set aside moneys in such fund in each fiscal year to pay such portion of the Base Rental. The average
annual amount of revenues received from the Courthouse Funds over the past ten years is approximately
$2.1 million and the amount of Base Rental allocable to the Courts Project is approximately
[$2.05] million annually.
Reserve Fund
The Trust Agreement requires the Reserve Fund (which secures all of the Bonds) to be funded in
an atnount equal to the Reserve Fund Requirement, which will initially be equal to $ *, upon
the delivery of the 2001 Series B Bonds, with cash, permitted investments, a surety bond, an insurance
policy, or a letter of credit, or any combination thereof, as further described in the Trust Agreement. [The
portion of the Reserve Fund Requirement allocable to the 2001 Series B Bonds will be satisfied through
the issuance of a surety bond issued by , which is also insuring the 2001 Series B Bonds]. See
"APPENDIX D - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS —
Trust Agreement—Creation of Funds and Accounts—Reserve Fund" and ["DEBT SERVICE RESERVE
FUND SURETY BOND."] Moneys in the Reserve Fund will be applied solely for the purpose of funding
the Interest Account or the Principal Account, in that order, in the event of any deficiency in either of
such accounts on an Interest Payment Date or a Principal Payment Date; provided that, so long as the
Authority is not in default under the Trust Agreement, certain excess amounts in the Reserve Fund will be
transferred to the Revenue Fund or, if so directed by the Authority, deposited into the 2001 Series B
Project Fund during construction of the 2001 Series B Project.
* Preliminary,subject to change.
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The Trust Agreement requires that, as a condition to the issuance of Additional Bonds,an amount
will be deposited in the Reserve Fund so that following such deposit there will be on deposit in the
Reserve Fund an amount at least equal to the Reserve Fund Requirement for all Outstanding Bonds.
For the definition of the term "Reserve Fund Requirement," see "APPENDIX D - SUMMARY
OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS —Certain Definitions."
Substitution of Property
The County and the Authority, with the written consent of the Insurer, may substitute other real
property as part of the Facilities for purposes,of the Facility Lease provided the County has filed with the
Authority and the Trustee, with copies to each rating agency then providing a rating for the Bonds, all of
the following:
(a) Executed copies of the Facility Lease or amendments thereto containing the amended
description of the Facilities, including the legal description of the Demised Premises as modified, if
necessary.
(b) A Certificate of the County with copies of the Facility Lease or the Site Lease as
applicable, or amendments thereto containing the amended description of the Facilities stating that such
documents have been duly recorded in the official records of the County Recorder of the County.
(c) A Certificate of the County, together with an appraisal performed by an independent
appraiser, evidencing that the annual fair rental value of the Facilities which will constitute the Facilities
after such substitution be at least equal to 100% of the maximum amount of Base Rental Payments
becoming due in the then current year ending May 31 or in any subsequent year ending May 31.
(d) A Certificate of the County stating that, based upon review of such instruments,
certificates or any other matters described in such Certificate of the County, the County has good
merchantable title to the Facilities which will constitute the Facilities after such substitution. The term
"good merchantable title" shall mean such title as is satisfactory and sufficient for the needs and
operations of the County.
(e) A Certificate of the County stating that such substitution does not adversely affect the
County's use and occupancy of the Facilities.
(f) An Opinion of Bond Counsel stating that such amendment or modification (i) is
authorized or permitted by the Constitution and laws of the State and by the Trust Agreement; (ii)
complies with the terms of the Constitution and laws of the State and of the Trust Agreement; (iii) will,
upon the execution and delivery thereof,be valid and binding upon the Authority and the County; and (iv)
will not cause the interest on the Bonds to be included in gross income for federal income tax purposes.
There is no requirement that any substitute Facilities be of the same or a similar nature or
function as the then existing Facilities. The Insurer may require additional conditions to the substitution
of Facilities.
Insurance
The Facility Lease requires the County to maintain or cause to be maintained,throughout the term
of the Facility Lease, insurance against loss or damage to any structures constituting any part of the
Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief
SPLIBI/1095565/2/10420/00353/dybae/January 22,2001 -11:34 am
12
insurance and sprinkler system leakage insurance, and earthquake insurance, if available on the open
market from reputable insurance companies at a reasonable cost as determined by the County. Such
extended coverage insurance will, as nearly as practicable, cover loss or damage by explosion, windstorm,
riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance.
Such insurance will be in an amount equal to the replacement cost(without deduction for depreciation) of
all structures constituting any part of the Facilities, excluding the cost of excavations, of grading and
filling, and of the land (except that such insurance may be subject to deductible clauses for any one loss of
not to exceed $250,000 or comparable amount adjusted for inflation or more in the case of earthquake
insurance), or in the alternative, will be in an amount and in a form sufficient(together with moneys held
under the Trust Agreement), in the event of total loss, to enable all Bonds then Outstanding to be
redeemed.
In the event of any damage to or destruction of any part of the Facilities caused by the perils
covered by such insurance, the Authority, except as hereinafter provided, will cause the proceeds of such
insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion
of the Facilities, to at least the same condition as they were in prior to the damage or destruction, insofar
as the same may be accomplished by the use of said proceeds. The Trustee will hold such proceeds in the
Insurance and Condemnation Fund and will permit withdrawals upon written request for such purposes.
Any balance of said proceeds not required for such repair, reconstruction or replacement will be treated
by the Trustee as Base Rental Payments and applied in the manner provided by the Trust Agreement.
Alternatively, if the proceeds of such insurance together with any other moneys then available for the
purpose are at least sufficient to redeem an aggregate principal amount of Outstanding Bonds equal to the
amount of Base Rental attributable to the portion of the Facilities so destroyed or damaged (determined
by reference to the proportion which the cost of such portion of the Facilities bears to the cost of the
Facilities), the Authority, with the written consent of the County, may elect not to repair, reconstruct or
replace the damaged or destroyed portion of the Facilities and thereupon will cause said proceeds to be
used for the redemption of Outstanding Bonds pursuant to the provisions of the Trust Agreement.
The Authority and the County covenant to promptly apply for federal or State disaster aid in the
event that the Facilities are damaged or destroyed as a result of an earthquake occurring at any time. Any
proceeds received as a result of such disaster aid will be used to repair, reconstruct, restore or replace the
damaged or destroyed portions of the Facilities, or, at the option of the County and the Authority, to
redeem Outstanding Bonds if such use of such disaster aid is permitted.
As an alternative to providing the fire and extended coverage insurance, or any portion thereof,
required by the Facility Lease, the.County may provide a self-insurance method or plan of protection if
and to the extent such self-insurance method or plan of protection will afford reasonable coverage for the
risks required to be insured against, in light of all circumstances, giving consideration to cost, availability
and similar plans or methods of protection adopted by public entities in the State other than the County.
So long as such method or plan is being provided to satisfy the requirements of the Facility Lease, there
will be filed with the Trustee a statement of an actuary, insurance consultant or other qualified person
(which may be the Risk Manager of the County), stating that, in the opinion of the signer, the substitute
method or plan of protection is in accordance with the requirements of the Facility Lease and, when
effective, would afford reasonable coverage for the risks required to be insured against. There will also
be filed a certificate of the County setting forth the details of such substitute method or plan. In the event
of loss covered by any such self-insurance method, the liability of the County under the Facility Lease
will be limited to the amounts in the self-insurance reserve fund or funds created under such method.
The Facility Lease requires the County to maintain or cause to be maintained, rental interruption
or use and occupancy insurance to cover loss, total or partial, of the rental income from or the use of the
Facilities as the result of any of the hazards covered by the fire and extended coverage insurance required
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13
by the Facility Lease described in the preceding paragraphs (provided with respect to earthquake
insurance, only if available on the open market from reputable insurance companies at a reasonable cost,
as determined by the County), in an amount sufficient to pay the part of the total rent attributable to the
portion of the Facilities rendered unusable (determined by reference to the proportion which the cost of
such portion bears to the cost of the Facilities) for a period of at least two years, except that such
insurance may be subject to a deductible clause of not to exceed $250,000 (or comparable amount
adjusted for inflation or more in the case of earthquake coverage). Any proceeds of such insurance will
be used by the Trustee to reimburse to the County any rental theretofore paid by the County under the
Facility Lease attributable to such structure for a period of time during which the payment of rental under
the Facility Lease is abated, and any proceeds of such insurance not so used will be applied to pay Base
Rental Payments and Additional Payments.
The County also agrees to deliver to the Authority title insurance on the Demised Premises,
subject only to Permitted Encumbrances, in an "amount equal to the aggregate principal amount of the
Bonds.
The County is required under the Facility Lease to purchase commercial insurance to cover
damage due to earthquake if it is available at a reasonable cost to the County. The County has purchased
an earthquake insurance policy for all of its property, including the Facilities, through the California State
Association of Counties Excess Insurance Authority, which insurance is purchased for two-year periods.
The County's current earthquake insurance policy expires on March 31, 2001 and the County expects to
renew the insurance through March 31, 2003. No assurance is given that the County will renew such
insurance or continue to maintain earthquake insurance. See "APPENDIX B - COUNTY FINANCIAL
iNFORMA,rION —Insurance."
The County is also required to obtain certain liability insurance coverage in protection of the
Authority and the Trustee. See "APPENDIX D — SUMMARY OF CERTAIN PROVISIONS OF
PRINCIPAL LEGAL DOCUMENTS—Facility Lease—Insurance and Self-Insurance Programs."
Additional Bonds
Additional Bonds may, with the consent of the Insurer (who also must consent as the Insurer of
the 1999 Series A Bonds and the 2001 Series A Bonds), be issued on a parity with the 1999 Series A
Bonds, the 2001 Series A Bonds and the 2001 Series B Bonds upon the terms and subject to the
conditions set forth in the Trust Agreement. See "APPENDIX D — SUMMARY OF CERTAIN
PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS —TRUST AGREEMENT—Additional Bonds."
MUNICIPAL BOND INSURANCE POLICY
The following information has been furnished by MBIA Insurance Corporation (the"Insurer") for
use in this Official Statement. Reference is made to Appendix H for a specimen of the Insurer's policy.
[The Insurer's policy unconditionally and irrevocably guarantees the full and complete payment
required to be made by or on behalf of the Authority to the Trustee or its successor of an amount equal to
(i) the principal of(either at the stated maturity or by an advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on, the 2001 Series B Bonds as such payments shall become due but
shall not be so paid (except that in the event of any acceleration of the due date of such principal by
reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than
any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by.
the Insurer's policy shall be made in such amounts and at such times as such payments of principal would
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14
have been due had there not been any such acceleration); and (ii)the reimbursement of any such payment
which is subsequently recovered from any owner of the 2001 Series B Bonds pursuant to a final judgment
by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner
within the meaning of any applicable bankruptcy law(a"Preference").
The Insurer's policy does not insure against loss of any prepayment premium which may at any
time be payable with respect to any 2001 Series B Bond. The Insurer's policy does not, under any
circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory
sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii)payments of the
purchase price of 2001 Series B Bonds upon tender by an owner thereof, or(iv) any Preference relating to
(i) through (iii) above. The Insurer's policy also does not insure against nonpayment of principal of or
interest on the 2001 Series B Bonds resulting from the insolvency, negligence or any other act or
omission of the Trustee or any other paying agent for the 2001 Series B Bonds.
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing
by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the
Insurer from the Trustee or any owner of a 2001 Series B Bond the payment of an insured amount for
which is then due, that such required payment has not been made, the Insurer on the due date of such
payment or within one business day after receipt of notice of such nonpayment, whichever is later, will
make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York,
New York, or its successor, sufficient for the payment of any such insured amounts which are then due.
Upon presentment and surrender of.such 2001 Series B Bonds or presentment of such other proof of
ownership of the 2001 Series B Bonds, together with any appropriate instruments of assignment to
evidence the assignment of the insured amounts due on the 2001 Series B Bonds as are paid by the
Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of
the 2001 Series B Bonds in any legal proceeding related to payment of insured amounts on the 2001
Series B Bonds, such instruments being in a form satisfactory to State Street Bank and Trust Company,
N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners or the Trustee payment
of the insured amounts due on such 2001 Series B Bonds, less any amount held by the Trustee for the
payment of such insured amounts and legally available therefor.
The Insurer is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange
listed company (the "Company"). The Company is not obligated to pay the debts of or claims against the
Insurer. The Insurer is domiciled in the State of New York and licensed to do business in and subject to
regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico,
the Conunonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. The Insurer has two European branches, one in the Republic of France and the other
in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes
and concentrations of investments and requiring the approval of policy rates and forms. State laws also
regulate the amount of both the aggregate and individual risks that may be insured, the payment of
dividends by the Insurer, changes in control and transactions among affiliates. Additionally, the Insurer is
required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of
time.
As of December 31, 1999, the Insurer had admitted assets of$7.0 billion(audited), total liabilities
of$4.6 billion (audited), and total capital and surplus of$2.4 billion (audited) determined in accordance
with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of
September 30, 2000, the I.nsurer had admitted assets of$7.5 billion (unaudited), total liabilities of$5.1
billion (unaudited), and total capital and surplus of$2.4 billion(unaudited)determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory authorities.
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15
Furthermore, copies of the Insurer's year-end financial statements prepared in accordance with
statutory accounting practices are available without charge from the Insurer. A copy of the Annual
Report on Form 10-K of the Company is available from the Insurer or the Securities and Exchange
Commission. "rhe address of the Insurer is 113 King Street, Armonk, New York 10504. The telephone
number of the Insurer is (914) 273-4545.
Moody's Investors Service, Inc. rates the financial strength of the Insurer"Aaa".
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., rates the
financial strength of the Insurer"AAA".
Fitch IBCA, Inc. rates the financial strength of the Insurer"AAA".
Each rating of the Insurer should be evaluated independently. The ratings reflect the
respective rating agency's current assessment of the creditworthiness of the Insurer and its ability
to pay claims on its policies of insurance. Any further explanation as to the significance of the
above ratings may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the 2001 Series B Bonds, and
such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward
revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the
2001 Series B Bonds. The Insurer does not guaranty the market price of the 2001 Series B Bonds nor
does it guaranty that the ratings on the 2001 Series B.Bonds will not be revised or withdrawn.
In the event the Insurer were to become insolvent, any claims arising under a policy of financial
guaranty insurance are excluded from coverage by the California Insurance Guaranty Association,
established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1
of the California Insurance Code.]
[DEBT SERVICE RESERVE FUND SURETY BOND
The Authority has received a commitment to issue a surety bond (the "Debt Service Reserve
Fund Surety Bond") from (the "Insurer"). The Debt Service Reserve Fund Surety Bond will .
provide that upon notice from the "Trustee to the Insurer to the effect that insufficient amounts are on
deposit in the Revenue Fund to pay the principal of (at maturity or pursuant to mandatory redemption
requirements) and interest on the 2001 Series B Bonds, the Insurer will promptly deposit with the Trustee
an amount sufficient to pay the principal of and interest on the 2001 Series B Bonds or the available
amount of the Debt Service Reserve Fund Surety Bond, whichever is less. Upon the later of. (i)three (3)
days after receipt by the Insurer of a Demand for Payment in the form attached to the Debt Service
Reserve Fund Surety Bond, duly executed by the Trustee; or (ii) the payment date of the 2001 Series B
Bonds as specified in the Demand for Payment presented by the Trustee to the Insurer, the Insurer will
make a deposit of funds in an account with State Street Bank and Trust Company, N.A., in New York,
New York, or its successor, sufficient for the payment to the Trustee, of amounts which are then due to
the Trustee(as specified in the Demand for Payment) subject to the Surety Bond Coverage.
The available amount of the Debt Service Reserve Fund Surety Bond is the initial face amount of
the Debt Service Reserve Fund Surety Bond less the amount of any previous deposits by the Insurer with
the Trustee which have not been reimbursed by the Authority. The Authority and the Insurer will enter
into a Financial Guaranty Agreement if and when the 2001 Series B Bonds are issued(the "Agreement").
Pursuant to the Agreement, the Authority is required to reimburse the Insurer, within one year of any
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deposit, the amount of such deposit made by the Insurer with the Trustee under the Debt Service Reserve
Fund Surety Bond. Such reimbursement shall be made only after all required deposits to the Principal .
Account and the Interest Account have been made.
Under the terms of the Agreement, the Trustee is required to reimburse the Insurer, with interest,
until the initial face amount of-the Debt Service Reserve Fund Surety Bond is reinstated. No optional
redemption of 2001 Series B Bonds may be made until the Insurer's Debt Service Reserve Fund Surety
Bond is reinstated. The Debt Service Reserve Fund Surety Bond will be held by the Trustee in the
Reserve Fund and is provided as an alternative to the County depositing funds to satisfy the Reserve Fund
Requirement for outstanding 2001 Series B Bonds. The Debt Service Reserve Fund Surety Bond will be
issued in the initial face amount equal to the portion of the Reserve Fund Requirement allocable to the
2001 Series B Bonds and the premium therefor will be fully paid by the County at the time of delivery of
the 2001 Series B Bonds.]
CERTAIN RISK FACTORS
The following factors, along with the other information in this Official Statement, should be
considered by potential investors in evaluating the purchase of 2001 Series B Bonds. However, the
following does not purport.to be an exhaustive listing of risks and other considerations which may be
relevant to investing in the 2001 Series B Bonds. In addition, the order in which the following
information is presented is not intended to reflect the relative importance of any such risks.
Limited Obligation
The 2001 Series B Bonds are not County debt and are limited obligations of the Authority.
Neither the full faith and credit of the Authority nor the County is pledged for the payment of the interest
on or principal of the 2001 Series B Bonds nor for the payment of Base Rental Payments. The Authority
has no taxing power. The obligation of the County to pay Base Rental Payments when due is an
obligation payable from amounts in the General Fund of the County. The obligation of the County to
snake Base Rental Payments under the Facility Lease does not constitute an obligation of the County for
which the County is obligated to levy or pledge any form of taxation or for which the County has levied
or pledged any form of taxation. Neither the Bonds nor the obligation of the County to make Base
Rental Payments under the Facility Lease constitute a debt or indebtedness of the Authority, the County,
the State or any of its political subdivisions, within the meaning of any constitutional or statutory debt
limitation or restrictions.
Base Rental Payments
General. The Base Rental Payments due under the Facility Lease (and insurance, payment of
costs of repair and maintenance of the Facilities, taxes and other governmental charges and assessments
levied against the Facilities) are not secured by any pledge of taxes or any other revenues of the County
but are payable from any funds lawfully available to the County. The County may incur other obligations
in the future payable from the same sources as the Base Rental Payments. In the event the County's
revenue sources are less than its total obligations, the County could choose to fund other municipal
services before making Base Rental Payments. The same result could occur if, because of State
constitutional limits on expenditures, the County is not permitted to appropriate and spend all of its
available revenues. The County's appropriations, however, have never exceeded the limitations on
appropriations under Article XIII B of the California Constitution. For information on the County's
current limitations on appropriations see"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON
"TAXES, REVENUES AND APPROPRIATIONS—Article XIII B of the California Constitution."
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Valid and Binding Covenant to Budget and Appropriate. . Pursuant to the Facility Lease, the
County covenants to take such action as may be necessary to include Base Rental Payments due in its
annual budgets and to make necessary appropriations for all such payments. Such covenants are deemed
to be duties imposed by law, and it is the duty of the public officials of the County to take such action and
do such things as are required by law in the performance of the official duty of such officials to enable the
County to carry out and perform such covenants. A court, however, in its discretion may decline to
enforce such covenants. Upon issuance of the 2001 Series B Bonds,Bond Counsel will render its opinion
(substantially in the form of "APPENDIX E — PROPOSED FORM OF BOND COUNSEL OPINION"
hereto) to the effect that, subject to the limitations and qualifications described therein, the Facility Lease
constitutes a valid and binding obligation of the County. As to the Authority's practical realization'of
remedies upon default by the County, see "Default and Remedies" and "Limitations on Remedies"below.
Abatement
In the event of loss or substantial interference in the use and occupancy of the Facilities by the
County caused by damage or destruction or condemnation of the Facilities,Base Rental Payments(except
for the portion of debt service attributable to the Courts Project, which will not be abated to the extent
Courthouse Funds are available for the payment thereof) will be subject to abatement. In the event that
the Facilities or any component thereof, if damaged or destroyed by an insured casualty, could not be
replaced during the period of time that proceeds of the County's rental interruption insurance will be
available in lieu of Base Rental Payments plus the period for which funds are available from the Reserve
Fund or the Revenue Fund, or in the event that casualty insurance proceeds or condemnation proceeds are
insufficient to provide for complete repair or replacement of the Facilities or such component of the
Facilities or redemption of the Bonds, there could be insufficient funds to make payments to Owners in
full. See "APPENDIX D —SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS —
Facility Lease Abatement."
The County's obligation to make payments from the Courthouse Funds for the Courts Project is
not subject to abatement. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS -
Pledge of Courthouse Funds."
Default and Remedies
The enforcement of remedies provided in the Facilities Lease and the Trust Agreement could be
both expensive and time consuming. The Trustee has no interest in the Authority's title to the Demised
Premises, and has no right to terminate the Facility Lease or reenter or relet the Facilities. Upon the
occurrence of one of the "events of default" described below, the County will be deemed to be in default
under the Facility Lease and the Authority may exercise any and all remedies available pursuant to law or
granted pursuant to the Facility Lease. Upon any such default, including a failure to pay Base Rental
Payments, the Authority may either (1) terminate the Facility Lease and seek to recover certain damages
or (2) without terminating the Facility Lease, (i) continue to collect rent from the County on an annual
basis by seeking a separate judgment each year for that year's defaulted Base Rental Payments and/or (ii)
reenter the Facilities and relet them. In the event of default, there is no right to accelerate the total Base
Rental Payments due over the term of the Facility Lease, and the Trustee has no possessory interest in the
Facilities and is not empowered to sell the Facilities.
Events of default under the Facility Lease include (i) the failure of the County to make rental
payments under the Facility Lease when the same become due and payable, (ii) the failure of the County
to keep, observe or perform any term, covenant or condition of the Facility Lease to be kept or performed
by the County for a period of 60 days after notice of the same has been given to the County, and (iii) the
bankruptcy or insolvency of the County.
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Upon a default, the Trustee may elect to proceed against the County to recover damages pursuant
to the Facility Lease. Any suit for money damages would be subject to statutory and judicial limitations
on lessors' remedies under real property leases, other terms of the Facility Lease and limitations on legal
remedies against public agencies in the State, including a limitation on enforcement of judgments against
funds needed to serve the public welfare and interest.
Limitations on Remedies
The rights and remedies provided in the Trust Agreement and the Facility Lease may be limited
by, and are subject to, the provisions of federal bankruptcy laws and to other laws or equitable principles
that may affect the enforcement of creditors rights. In addition,judicial action against public agencies in
California is subject to certain limitations.
Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the
bankruptcy proceedings for public agencies such as the County, there are no involuntary petitions in
bankruptcy. If the County were to file a petition under Chapter 9 of the Bankruptcy Code, the
Bondholders, the Trustee and the Authority could be prohibited from taking any steps to enforce their
rights under the Facility Lease, and from taking any steps to collect amounts due from the County under
the Facility Lease.
All legal opinions with respect to the enforcement of the Facility Lease and the Trust Agreement
will be expressly subject to a qualification that such agreements may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting creditors' rights generally and by
applicable principles of equity if equitable remedies are sought.
Risk of Earthquake
There are several earthquake faults in the greater San Francisco Bay Area that potentially could
result in damage to buildings, roads, bridges, and property within the County in the event of an
earthquake. Past experiences, including the 1989 Loma Prieta earthquake, have resulted in minimal
damage to the infrastructure and property in the County. Earthquake faults that could affect the County
include the San Andreas and Hayward Faults west of the County and the Calaveras Fault within portions
of the County.
The Facility Lease does not require the County to maintain insurance on the Facilities against
certain risks such as earthquakes unless such insurance is available from a reputable insurance company
at a reasonable cost to the County. The County has purchased an earthquake insurance policy that expires
on March 31, 2001 (and expects to renew the insurance through March 31, 2003) to cover all County
property, including the Facilities. See "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS—Insurance."
Hazardous Substances
Owners and operators of real property may be required by law to remedy conditions of the
property relating to releases or threatened releases of hazardous substances. The federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA"
or the "Superfund Act," is the most well known and widely applicable of these laws, but California laws
with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner
(or operator) is obligated to remedy a hazardous substance whether or not the owner (or operator) has or
had anything to do with creating or handling the hazardous substance. Further, such liabilities may arise
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19
not simply from the existence of a hazardous substance but from the method of handling it. All of these
possibilities could significantly and adversely affect the operations and finances of the County.
The County knows of no existing hazardous substances which require remedial action on or near
the Demised Premises. However, it is possible that such substances do currently or potentially exist and
that the County is not aware of them.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,
REVENUES AND APPROPRIATIONS
Article XIII A of the California Constitution .
In 1978, Califomia voters approved Proposition 13, adding Article XIII A to the California
Constitution. Article XIII A was subsequently amended in 1986, as discussed below, and on November
7, 2000 to reduce the percentage of voter approval required for the passage of school bonds. 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 percent 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 have 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, 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.
Legislation Implementing Article XIII A
Legislation has been enacted and amended a number of times since 1978 to implement Article
XII1 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 tares 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
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I
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
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. The
County is of the opinion that debt service on the Bonds and capital outlays for the 2001 Series B Project
are excluded from the limits imposed by Proposition 111.
For Fiscal Year 2000-2001, the County's Article XIII B limit is estimated to be $3,584,519,056
and budget appropriations subject to limitation are estimated to be $183,748,841. The County has never
exceeded its Article XIII B appropriations limit and does not anticipate having any difficulty in operating
within the appropriations limit.
The Base Rental Payments to be made by the County pursuant to the Facility Lease with respect
to the Bonds are not subject to an appropriations limit
Article X111 C and Article XIII D
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.
I
Article XIII 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
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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
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 2000-2001 it will collect no such fees and assessments. 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 pay Base Rental Payments under the Facility Lease could be adversely affected.
Proposition 62
On September 28, 1995, the California Supreme Court affirmed the lower court decision in Santa
Clara County Local Transportation Authority v. Guardino, 11 Cal. 4th 220 (1995) ("Guardino"). The
action held invalid a half-cent' sales tax to be levied by the Santa Clara County Local Transportation
Authority because it was approved by a majority but not two-thirds of the voters in Santa Clara County
voting on the tax. The California Supreme Court decided the tax was invalid under Proposition 62, a
statutory initiative adopted at the November 4, 1986 election that(a)requires that any new or higher taxes
for general governmental purposes imposed by local governmental entities be approved by a majority
vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special
tax (defined as taxes levied for other than general governmental purposes) imposed by a local
governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in
an election on the tax, (c)restricts the use of revenues from a special tax to the purposes or for the service
for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property
by local governmental entities except as permitted by Article XIII A of the California Constitution,
(e)prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local
governmental entities, (f) requires that any tax imposed by a local governmental entity on or after
August 1, 1985 be ratified by a majority vote of the voters voting in an election on the tax within two
years of November 5, 1986 or be terminated by November 15, 1988 and (g) requires a reduction of ad
valorem property taxes allocable to the jurisdiction imposing a tax not in compliance with its provisions
equal to one dollar for each dollar of revenue attributable to the invalid tax, for each year that the tax is
collected.
In deciding Guardino on Proposition 62 grounds, the Court disapproved the decision in City of
Woodlake v. Logan, 230 Cal. App. 3d 1058 (1991) ("Woodlake"), where the Court of Appeal had held
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22
portions of Proposition 62 unconstitutional as a referendum on taxes prohibited by the California
Constitution. The California Supreme Court determined that the voter approval requirement of
Proposition 62 is a condition precedent to the enactment of each tax statute to which it applies, while
referendum refers to a process invoked only after a statute has been enacted. Numerous taxes to which
Proposition 62 would apply were imposed or increased without any voter approval in reliance on
Woodlake. The Court noted as apparently distinguishable, but did not confirm, the decision in City of
Westminster v. County of Orange, 204 Cal. App. 3d 626 (1988), that held unconstitutional the section of
Proposition 62 requiring voter approval of taxes imposed during the "window period" of August 1, 1985
until November 5, 1986. Proposition 62 as an initiative statute does not have the same level of authority
as a constitutional initiative, but is akin to legislation adopted by the State Legislature.
The County has two taxes to which Proposition 62 could apply: a business license tax enacted in
1991, which generates approximately $950,000 per year, and a transient occupancy tax, an increase in
which was enacted in 1990, that generates.approximately $1,200,000 per year (approximately $180,000
per year of which is from the 1990 increase).
Proposition 187
At the November 8, 1994 General Election, California voters approved Proposition 187, an
initiative statute, which makes illegal aliens ineligible for public social services, public health care
services (unless pursuant to an emergency services request under federal law), and public school
education at elementary, secondary and post-secondary levels. Among other things, Proposition 187 also
requires state and local agencies to report persons who are suspected illegal aliens to the California
Attorney General and the United States Immigration and Naturalization Service (the"INS").
The Legislative Analyst estimated the most significant fiscal effects of Proposition 187 would fall
into the following three categories:
Program Savings. The State and local governments (primarily counties) would realize savings
from denying certain benefits and services to persons who cannot document their citizenship or legal
immigration status. The savings to State and local governments statewide could be in the range of
$200 million annually, based on the current estimated use of these services and benefits by illegal
immigrants.
Verification Costs. The State, local governments, and schools would incur significant costs to
verify citizenship or immigration status of students, parents, persons seeking health care or social
services, and persons who are arrested. Ongoing annual costs could be in the tens of millions of dollars,
with first-year costs considerably higher(potentially in excess of$100 million).
Potential Losses of Federal Funds. Proposition 187 places at risk up to $15 billion annually in
California alone in federal funding for education, health and welfare programs due to conflicts with
federal requirements.
A number of lawsuits filed in state and federal court challenging the validity of Proposition 187
under the California and U.S. Constitutions were consolidated for trial in a U.S. District Court. On
November 2, 1995, a United States District Court judge struck down the central provisions of Proposition
187 by ruling that parts of Proposition 187 conflict with federal power over immigration. The ruling
concluded that states may not enact their own schemes to "regulate immigration or devise immigration
regulations which run parallel or purport to supplement federal immigration law." On November 14,
1997, the District Court reaffirmed the 1995 decision, further stating that "California is powerless to enact
its own legislative scheme to regulate immigration." On March 18, 1998, the District Judge entered a
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final judgment in the case, holding key portions of the measure unconstitutional and permanently
enjoining the State from implementing those sections which would have required law enforcement,
teachers and social service and health care workers to verify a person's immigration status and
subsequently report illegal immigrants to authorities and deny them social service, health care and
education benefits. An appeal by then State Attorney General Dan Lungren was filed with the United
States Ninth Circuit Court of Appeals on March 25, 1998. In April 1999, the court agreed to the request
of Governor Davis to allow the United States Ninth Circuit Court of Appeals to serve as mediator on the
issue. Thereafter, the parties entered into a stipulation, approved by the court on September 13, 1999,
which dismissed the State's appeal of the cases. The period to challenge the court's approval expired on
October 13, 1999, without a challenge being filed. When the Stipulation becomes final, it is expected to
end the litigation among the parties and provisions of Proposition 187 affecting public education are
expected to be overturned. However, as of this date,the Court of Appeals is continuing to hear arguments
on whether the voluntary dismissal of the case was appropriate. It cannot be predicted what the outcome
of such appeal will be or the ultimate fiscal impact of Proposition 187 on the County.
Future Initiatives and Changes of Law
Article XIII A, Article XIII B, Article XIII C, Article XIII D,Proposition 62 and Proposition 187
were each 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. In
addition, the State legislature could amend or enact laws resulting in a reduction of moneys available to
the County. Similarly, the State legislature could enact legislation with the approval of the electorate
amending the State Constitution, which could result in a reduction of moneys available to the County.
Limitations on Remedies
The rights of the Bondholders are subject to the limitations on legal remedies against counties in
the State, including applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally, now or hereafter in effect, and to the application
of general principles of equity, including concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
THE AUTHORITY
The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers
Agreement, dated as of April 7, 1992 (the "JPA Agreement"), between the County and the Contra Costa
County Redevelopment Agency. The JPA Agreement was entered into pursuant to the California
Government Code, commencing with Section 6500. The Authority is a separate entity constituting a
public instrumentality of the State of California and was formed for the public put-pose of assisting in
financing and refinancing projects for the benefit of the County.
The Authority is governed by a five member Board of Directors. The Board of Supervisors of the
County constitutes the Board of Directors of the Authority. The Executive Director and Secretary of the
Authority is the County Administrator and Clerk of the Board of Supervisors, the Assistant Executive
Director of the Authority is. the County Community Development Director, the Deputy Executive
Directors of the Authority are the Director, Capital Facilities and Debt Management of the County and the
County Deputy Director-Redevelopment, the Treasurer of the Authority is the County's Auditor-
Controller and the Assistant Secretary of the Authority is the Director, Capital Facilities and Debt
Management of the County. The Authority's powers include, but are not limited to, the power to issue
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bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The
Authority is entitled to exercise the powers common to its members and necessary to accomplish the
purposes for which it was formed. These powers include the power to make and enter into contracts; to
employ agents and employees; to acquire, construct, manage, maintain and operate buildings, works or
improvements; to acquire, hold or dispose of property within the County; and to incur debts, liabilities or
obligations.
THE COUNTY
The County of Contra Costa lies northeast of San Francisco and is the ninth most populous
county in California. The County seat is in the City of Martinez. Major industries in the County include
petroleum refining and telecommunications. The Fiscal Year 2000 - 2001 General Fund Budget of the
County totals approximately$888.2 million.
For certain economic, demographic and financial information with respect to the County, see
"APPENDIX A - -GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION,"
"APPENDIX B - COUNTY FINANCIAL INFORMATION" and "APPENDIX C - EXCERPTS FROM
THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED
JUNE 30, 2000."
RATINGS
Moody's Investors Service ("Moody's") and Standard & Poor's, a division of the McGraw-Hill
Companies, Inc. ("S&P"), have assigned the 2001 Series B Bonds the ratings of" " and
respectively, [with the understanding that upon delivery of the 2001 Series B Bonds the Policy insuring
payment when due of the principal of and interest on the 2001 Series B Bonds will be issued by the
Insurer.]
Certain information was supplied by the Authority and the County to the rating agencies to be
considered in evaluating the 2001 Series B Bonds. Such ratings express only the views of the rating
agencies and are not a recommendation to buy, sell or hold the 2001 Series B Bonds.
There is no assurance that such ratings will continue for any given period of time or that they will
not be reduced or withdrawn entirely by the rating agencies, or either of them, if in their, or its,judgment
circumstances so warrant. The Authority, the County and the Trustee undertake no responsibility to
oppose any such revision or withdrawal. Any such downward revision or withdrawal may have an
adverse effect on the market price of the 2001 Series B Bonds.
LITIGATION
At the time of delivery of and payment for the 2001 Series B Bonds, the County and the
Authority will each certify that there is no action, suit, litigation, inquiry or investigation before or by any
court, governmental agency, public board or body served, or to the best knowledge of the County or the
Authority threatened, against the County or the Authority in any material respect affecting the existence
of the County or the Authority or the titles of their officers to their respective offices or seeking to
prohibit, restrain or enjoin the sale or delivery of the 2001 Series B Bonds, the Trust Agreement, the
Facility Lease, the Site Lease.or the payment of Base Rental Payments or challenging, directly or
indirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Authority.
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Various legal actions are pending against the County. The aggregate amount of the uninsured
liabilities of the County which may result from all legal claims currently pending against it will not, in the
opinion of the County, materially affect the County's finances or impair its ability to make Base Rental
Payments under the Facility Lease.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of
existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance
with certain covenants, interest on the 2001 Series B Bonds is excluded from gross income for federal
income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt
from State of California personal income taxes. Bond Counsel is of the opinion that interest on the 2001
Series B Bonds 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. A complete copy.of
the proposed form of opinion of Bond Counsel is set forth in Appendix E hereto.
2001 Series B Bonds purchased, whether at original issuance or otherwise, for an amount greater
than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium
Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the
amortizable bond premium for bonds, like Premium Bonds, 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 Bond, will be reduced by the amount of amortizable bond.premium
properly allocable to such purchaser. Owners of Premium Bonds should consult their own tax advisors
with respect to the proper treatment of amortizable bond premium in their particular circumstances.
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 2001 Series B Bonds.
The Authority and the County have covenanted to comply with certain restrictions designed to assure that
interest on the 2001 Series B Bonds will not be included in gross income for federal income tax purposes.
Failure to comply with these covenants may result in interest on the 2001 Series B Bonds being included
in federal gross income, possibly from the date of issuance of the 2001 Series B Bonds. The opinion of
Bond Counsel assumes 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 2001 Series B Bonds may adversely affect the value of the 2001 Series B
Bonds or the tax status of interest on the 2001 Series B Bonds. Further, no assurance can be given that
pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation
or amendments to the Code will not adversely affect the value of, or the tax status of interest on, the 2001
Series B Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to
proposals to restructure the federal income tax.
Certain agreements,requirements and procedures contained or referred to in the Trust Agreement,
the Facility Lease, the Tax Certificate and other relevant documents may be changed and certain actions
(including, without limitation, defeasance of the 2001 Series B Bonds) 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 2001 Series B Bond or the interest thereon if any such change occurs or
action is taken upon the advice or approval of counsel other than Bond Counsel.
Although Bond Counsel has rendered an opinion that interest on the 2001 Series B Bonds is
excluded from gross income for federal income tax purposes and is exempt from State of California
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personal income taxes, the ownership or disposition of the 2001 Series B Bonds, or the accrual or receipt
of interest on the 2001 Series B Bonds, may otherwise affect a Bondholder's federal or State tax liability.
The nature and extent of these other tax consequences will depend upon the Bondholder's particular tax
status and the Bondholder's other items of income or deduction. Bond Counsel expresses no opinion
regarding any such other tax consequences.
LEGAL MATTERS
Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, will render an
opinion with respect to the validity of the 2001 Series B Bonds. Copies of such approving opinion will be
available at the time of delivery of the 2001 Series B Bonds. The form of the legal opinion proposed to
be delivered by Bond Counsel is included as Appendix E to this Official Statement. Bond Counsel
undertakes no responsibility for the accuracy, completeness, or fairness of this Official Statement.
Certain legal matters will be passed upon for the County and the Authority by County Counsel, and for
the Underwriter by Brown & Wood LLP, San Francisco, California, Underwriter's Counsel.
Compensation paid to Bond Counsel and Underwriter's Counsel is contingent on the sale of the 2001
Series B Bonds.
CONTINUING DISCLOSURE
The County will undertake all responsibilities.for any continuing disclosure to Owners of the
2001 Series B Bonds as described below.
The County will enter into a Continuing Disclosure Agreement with the Trustee, to be dated the
date of delivery of the 2001 Series B Bonds (the "Continuing Disclosure Agreement"),which provides for
certain disclosure obligations on the part of the County. Under the Continuing Disclosure Agreement, the
County will covenant for the benefit of Owners and Beneficial Owners of the 2001 Series B Bonds to
provide certain financial information and operating data relating to the County by not later than nine
months after the end of its fiscal year(which fiscal year currently ends on June 30), commencing with the
report for the fiscal year ending June 30, 2000 (the "Annual Report"), and to provide notices of the
occurrence of certain enumerated events (the "Listed Events"), if material. The Annual Report is to be
filed with each Nationally Recognized Municipal Securities Information Repository and with any then-
existing State Repository for the State of California. Currently, there is no State Repository for the State
of California. The notices of material events are to be filed with the Municipal Securities Rulemaking
Board. These covenants will be made in order to assist the Underwriter in complying with Securities and
Exchange Commission Rule 15c2-12(b)(5) (the "Rule"). The County has not failed to comply with any
prior such undertaking under the Rule. For a form of the Continuing Disclosure Agreement, see
"APPENDIX F—PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT."
UNDERWRITING
The 2001 Series B Bonds will be purchased from the Authority by . the
"Underwriter"). The Underwriter has agreed to purchase the 2001 Series B Bonds at a price of
S (which is equal to the aggregate principal amount of the 2001 Series B Bonds less an
underwriting discount of$ plus accrued interest). The Underwriter will purchase all of the 2001
Series B Bonds if any are purchased. The 2001 Series B Bonds may be offered and sold to certain dealers
(including dealers depositing said 2001 Series B Bonds into investment trusts) and others at prices lower
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27
than the initial public offering price, and the public offering price may be changed from time to time by
the Underwriter.
MISCELLANEOUS INFORMATION
References are made herein to certain documents, reports and laws which are brief summaries
thereof which do not purport to be complete or definitive and reference is made to such documents,
reports and laws for full and complete statements of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not expressly
so stated, are intended as such and not as representations of fact. This Official Statement is not to be
construed as a contract or agreement between the Authority(or the County) and the purchasers or Owners .
of any of the 2001 Series B Bonds.
The execution and delivery of this Official Statement has been duly authorized by the Board of
Directors of the Authority and approved by the County Board of Supervisors.
COUNTY OF CONTRA COSTA
PUBLIC FINANCING AUTHORITY
By:
Philip J. Batchelor
Executive Director
COUNTY OF CONTRA COSTA
By:
Philip J. Batchelor
County Administrator
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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 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
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, Oakley in the northeast, and Concord in the middle.
A large part of the County is served by the Bay Area Rapid Transit District("BART"),which has
encouraged the expansion of both residential and commercial development. 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.
Population
The County is the ninth most populous county in California, with its population reaching
approximately 930,000 as of January 1, 2000. This represents an increase of approximately 16%
compared to the County's population in 1990. 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 1990s, population growth has been
strongest in unincorporated areas as well as in the eastern portion of the County, particularly in Antioch,
Brentwood and Clayton.
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A-1
The following is a summary of the County's population levels since 1960.
COUNTY OF CONTRA COSTA
POPULATION(1)
Special
Census
1960 1970 1975 1980 1990 2000
Antioch 17,305 28,060 33,215 42,683 62,195 84,500
Brentwood 2,186 2,649 3,662 4,434 7,563 23,100
Clayton -- 1,385 1,790 4,325 7,317 1.1,350
Concord 36,208 85,164 94,673 103,763 11.1,308 114,900
Danville* -- -- -- 26,143 31,306 40,500
EI Cerrito 25,437 25,190 22,950 22,731 22,869 23,850
Hercules 310 252 121 5,963 16,829 19,550
Lafayette -- 20,484 19,628 20,837 23,366 24,350
Martinez 9,604 16,506 18,702 22,582 31,810 37,050
Moraga -- 14,205 14,418 15,014 15,987 17,000
Orinda* -- -- -- 17,070 16,642 17,450
Pinole 6,064 15,850 15,337 14,253 17,460 18,650
Pittsburg 19,062 20,651 24,347 33,465 47,607 54,400
Pleasant Hill -- 24,610 25,398 25,547 31,583 33,150
Richmond 71,584 79,043 70,126 74,676 86,019 94,400
San Pablo 19,687 21,461 19,392 19,750 25,158 26,850
San Ramon* -- -- -- 20,511 35,303 45,700
Walnut Creek 9,903 39,844 46,034 54,033 60,569 64,700
Unincorporated 191,680 163,035 173,036 128,551 152,841 178,600
Total 409,030 558,389 582,829 656,331 803,732 930,000
California 15,717,204 18,136,045 21,185,000 23,668,145 29,758,213 34,336,000
' Totals may not equal sums due to independent rounding; official data not yet available for the City of Oakley which
incorporated in 1999.
* Dates of incorporation: Danville (7/1/82); Orinda (7/l/85); San Ramon (7/l/83); the 1990 Census Report created 1980
population levels for these cities prior to official incorporation.
Source: United States Census: 1960-1990;State Department of Finance:2000.
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. The combined impact of population growth and
immigration has resulted in significant job creation in the County, with the 1999 job base of 328,400
having grown about 15%since 1993.
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A-2
As shown below, the County's civilian labor force was 489,300 in 1999. With average 1999
unemployment rates of 3.0% and 5.2% for the County and the State, respectively, the County has
achieved a lower unemployment rate than the State in each of the past seven years.
COUNTY OF CONTRA COSTA
EMPLOYMENT AND UNEMPLOYMENT OF
RESIDENT LABOR FORCE
WAGE AND SALARY WORKERS BY INDUSTRY
ANNUAL AVERAGES(IN THOUSANDS)
1993 1994 1995 1996 1997 1998 1999
Civilian Labor Force(') 448.5 454.0 456.0 460.5 472.8 479.0 489.3
Employment 419.4 426.0 429.9 437.9 453.2 461.6 474.5
County Unemployment 29.1 28.0 26.1 22.6 19.6 17.3 14.8
Unemployment Rate:
County 6.5% 6.2% 5.7% 4.9% 4.1% 3.8% 3.0%'
State of California 9.4% 8.6% 7.8% 7.2% 6.3% 5.9% 5.2°%
Wage and Salary Employment(`) 1993 1994 1995 1996 1997 1998 1999
Agriculture 1.3 1.2 1.0 1.0 1.1 0.9 0.8
Mining and Construction 19.8 19.8 19.7 20.5 22.1 23.3 26.9
Manufacturing 28.8 27.2 26.6 26.0 26.0 25.6 23.9
Transportation and Public Utilities 18.8 20.2 20.3 19.8 20.4 20.1 20.1
Wholesale Trade 10.2 10.5 10.6 11.8 11.3 11.0 12.5
Retail Trade 56.5 56.2 56.1 56.2 57.4 59.2 59.7
Finance,Insurance,and Real Estate 29.0 28.4 26.7 26.0 27.9 28.1 28.9
Services 76.4 81.0 86.7 91.1 98.9 103.8 108.5
Government 44.0 44.8 45.1 45.3 45.6 45.5 47.1
Total"' 284.8 289.3 292.7 297.7 310.8 317.6 328.4
(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,Labor Market Information Division,March 1997 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 and San Pablo Bays leading to San Francisco Bay and the Pacific.Ocean.
Descriptions of major employers in selected industries follow.
Petroleum and Petroleum Products. The production of petroleum products formed the initial
basis of industrial development in the County. Currently, three companies manufacture products from
crude oil. The largest in terms of capacity is Chevron Corporation's Richmond Refinery, which began
operations in 1902 and is the company's oldest and third-largest refinery. The Richmond refinery,
located on 3,000 acres, has a capacity of 365,000 barrels per day. The refinery produces a complete line
of petroleum products and imports the bulk of the crude oil from Alaska. Shipping facilities include the
company's own wharf, which is capable of handling four tankers at a time, making it the largest in the
Bay Area in terms of tonnage. Chevron operates a fleet of 37 tankers, of which seven are for intrastate
business. Petroleum products are also shipped by truck and by two railroad carriers as well as distributed
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by pipeline. The company has completed construction of a $160 million natural-gas-fired cogeneration
plant to fulfill its requirements for electricity and steam.
A number of Chevron's divisions are located throughout the County. Chevron Products
Company is located in Richmond where approximately 1,500 employees work at an oil refinery and
management office. Chevron Research and Technology Company, located in Richmond, is the only non-
geological research arm of the company. This facility employs approximately 400 people and is used by
Chevron in its continuing program to improve the efficiency of conventional auto, aircraft and marine
fuels. Chevron Accounting Division is located in a 400,000 square-foot building in Concord where over
1,000 employees operate the accounting and credit card center for Chevron's entire domestic operations.
Chevron also operates a facility in San Ramon where approximately 2,100 employees are involved in
computer, marketing, consumer services and other administrative functions and in Walnut Creek where
approximately 250 employees work in various divisions.
Chevron is the fifth largest company in the San Francisco Bay Area (as measured by net income)
and is one of the largest employers in the County. The company has approximately 6,500 employees
located among its various facilities in the County and East Bay communities.
Shell Oil Company, which recently merged with Texaco to become Equilon Enterprises LLC
("Equilon"), began operating in Martinez in 1915. The Martinez Refining Company, located on 1,100
acres, is a combined oil refinery and industrial chemical production plant. It is one of three facilities on
the West Coast that supply all Shell-brand products to the western states. The complex currently has the .
capacity to process about 145,000 to 160,000 barrels of crude oil per day. Approximately 70%-80% of
this crude oil is transferred via the company's pipeline from California oil fields, while the remainder is
shipped from Alaska. Equilon's docking facilities can handle two tankers and two barges simultaneously.
Finished petroleum products are shipped via a company owned pipeline, Southern Pacific Railroad's
pipeline,rail car and truck.
Equilon employees in the County total approximately 900, of whom approximately 850 work at
the Martinez complex and approximately 50 work from their homes to provide marketing services to
Shell and Texaco gas stations.
Tosco Refining Company, a wholly owned subsidiary of Tosco Corporation ("Tosco"), operates
an oil refinery at Rodeo between the cities of Richmond and Martinez, and a distribution terminal for
Northern California at Richmond, which began operations in 1896, occupies 1,100 acres and processes up
to 100,000 barrels of raw materials per day. There are approximately 600 full-time employees at the
refinery and approximately 75 at the distribution terminal. Tosco also owns a carbon plant on Franklin
Canyon Road near Highway 4 in the County and until recently owned a refinery with a capacity of
150,000 barrels per day at Avon near Martinez. Total Tosco employment in the County is approximately
1,200. Tosco shut down the Avon refinery in March 1999 following an explosion that claimed the lives
of four employees. On April 27, 1999, the company announced that it would reopen the refinery as well
as adopt all 72 recommendations in a consulting firm's critical safety report on the plant. The refinery
reopened in June 1999. Prior to the Avon refining accident, Tosco had announced a major restructuring
of its San Francisco Area Refinery Complex, which includes the facilities in Richmond and Rodeo. This
restructuring will affect production capacity but is not. expected to have a major impact on employment.
Recently, Tosco sold the Avon refinery to Ultramar Diamond Shamrock Corporation for approximately
$800 million. The new owners have retained outside experts to study the condition of the plant and to
assure that safety measures recommended by consultants for the County have been implemented.
Ultramar Diamond Shamrock Corporation expects to increase production at the refinery.
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In order to comply with State and federal clean air laws, the County's major oil refineries have
built new facilities to produce cleaner gasoline and other products. The refinery projects are known as
"Clean Fuels Projects." The following are the locations and capital investment amounts undertaken for
each of the Clean Fuels Projects.
County of Contra Costa
Clean Fuels Projects
(as of December 2000)
(in millions)
CompanX City Investment
Chevron Corp. Richmond $ 500
Tosco Avon 400
Equilon Martinez 1,300
Tosco Rodeo 300
Total 20
Health Care. One of the Bay Area's largest private employers, Kaiser Permanente Medical
Group ("Kaiser"), has approximately 4,730 employees in the County and East Bay communities. Kaiser
provides medical coverage to about one in three Bay Area residents and operates hospital and clinic
facilities in Martinez, Antioch and Walnut Creek and opened a major facility in Richmond in 1999.
Telephone Services. SBC (formerly known as "Pacific Telesis"), a major provider of telephone
services, employs approximately 11,800 employees in the East Bay. Its headquarters in the East Bay is
located in the Bishop Ranch office complex in the County.
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The following table provides a listing of major employers headquartered or located in the East
Bay and their employment levels.
MAJOR EMPLOYERS IN THE EAST BAY
WITH EMPLOYEES IN THE COUNTY(')
Primary Location
Firm In County Product Or Service Employment
SBC San Ramon Telephone Services 11,800
U.S.Postal Service Countywide Postal Services 10,600
County of Contra Costa(`) Martinez County Government 8,090
Safeway Countywide Supermarkets 8,000
Bank of America Countywide Banking 7,081
Chevron Companies Countywide Energy,Oil&Gas 6,586
Pacific Gas&Electric Countywide Gas&Electric Service 5,200
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 3,341
Longs Drug Stores(`) Walnut Creek Retail Drug Stores 2,900
Western Contra Costa School District(2) Richmond K=12 Education 2,844
Mt.Diablo Unified School District(z) Concord K-12 Education 2,502
John Muir/Mt. Diablo Health System(`) Walnut Creek Health Care 2,170
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. Martinez Oil Refinery 930
(1) Source: The companies;East Bay Business Times,November 2000;San Francisco Business Times,November 1999. Data is
for the reported entity's latest fiscal year.
(2) Headquartered in the County.
Measures of Income
Due to the presence of relatively high-wage skilled jobs and relatively wealthy residents, the
County achieves high rankings among all California counties on a variety of income measurements. For
example, as reported in the 2000 Sales and Marketing Management Survey of Buying Power, the
County's median household effective buying income for the 1999 calendar year of$53,234 was in the top
four among all California counties. According to the U.S. Department of Commerce's Bureau of
Economic Analysis, the County's per capita personal income of $36,006 in 1998 was the fifth highest
among California counties. The medians for the State were $39,492 (1999 household income) and
$28,163 (1998 per capita income).
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Commercial Activity
Commercial activity comprises an important part of the County's economy, with taxable
transactions totaling approximately$11.1 billion in 1999.
COUNTY OF CONTRA COSTA
TAXABLE TRANSACTIONS
1994 TO]999
(IN THOUSANDS)
1994 1995 1996 1997 1998 1999
Apparel Stores $ 263,835 $ 246,879 $ 261,695 $ 277,962 $ 289,750 $304,915
General Merchandise Stores 1,166,204 1,223,187 1,213,152 1,283,994 1,379,504 1,467,490
Specialty Stores 754,092 817,531 890,623 957,508 1,070,135 1,259,681
Food Stores 428,585 433,694 458,877 478,924 486,580 509,062
Packaged Liquor Stores 38,242 39,972 42,925 44,700 48,261 54,563
Eating and Drinking Places 563,770 591,767 625,283 664,184 708,982 764,682
Home Furnishings and'Appliances 270,691 283,020 323,400 333,179 366,400 414,384
Building Materials and Farm Implements 492,850 493,436 543,324 591,710 643,052 749,681
Service Stations 507,073 551,686 538,840 780,857 922,502 669,467
Automotive and Vehicle Dealers,Parts
and Supplies 868,095 927,563 1,046,980 1,143,170 1,308,493 1,524,336
Total Retail Outlets $5,353,437 $5,608,735 $5,945,099 $6,556,188 $7,223,699 $7,718,261
Business and Personal Services $ 326,664 $ 330,063 $ 365,029 $ 407,816 $ 442,696 $ 467,124
All Other Outlets 2,138,064 2,400,957 2,265,576 2,313,414 2,869,991 2,929,091
Total All Outlets $7,818,165 $8,339,755 $8,575,704 $9,277,418 $10,093,690 $11,114,476
Source: State Board of Equalization
Much of the County's commercial activity is concentrated in central business districts of the cities
and unincorporated towns. In addition, four regional shopping centers and numerous smaller centers
serve County residents. The regional centers, located in the cities of Richmond, Concord, Walnut Creek
and Antioch are each anchored by at least three major department stores. The largest regional shopping
center in the County is Sun Valley Shopping Center, Concord, which features 130 stores, including
Macy's, Sears, J.C. Penney's and Mervyn's. In addition, Costco's large.warehouse stores are located in
Richmond, Antioch and Danville, and Sam's Club is located in Concord.
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 rose in 1999 to the highest level in a decade. The
overall increase was attributable to gains in both single and multi-family units.
Within incorporated cities in the County, Brentwood accounted for the greatest activity with
$179.5 million of construction in 1999.
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The following table provides a summary of building permit valuations and number of new
dwelling units authorized in the County since 1990.
COUNTY OF CONTRA COSTA
BUILDING PERMIT VALUATIONS 1990 TO 1999
Valuation($millions) Number of New Dwelling Units
Residential Single Multiple
Year (New) Family Family Total
1990 $ 560,193 3,132 1,1.49 4,281
1991 488,939 2,705 1,275 3,980
1992 638,714 3,279 614 3,893
1993 590,135 3,026 451 3,477
1994 699,395 3,682 230 3,912
1995 619,685 2,137 618 3,755
1996 584,108 . 3,094 450 3,580
1997 582,793 3,105 381 3,486
1998 738,939 3,144 999 4,142
1999 852,256 3,909 504 4,413
Note: Totals may not be precise due to independent rounding.
Source:Economic Sciences Corporation: 1990- 1999.
A number of major construction projects .have been completed in the County, including $2.5
billion that was spent by several major oil refiners to comply with federal clean fuels guidelines (see
"Major Employers-Petroleum and Petroleum Products"). In addition, $506 million was spent by BART
on its extension to the West Pittsburg/Baypoint region of the County, and $450 million of new
construction was completed by the Contra Costa Water District on the Los Vaqueros Reservoir in the
eastern portion of the County.
.Approximately $10.8 billion of construction projects are currently approved or underway in the
County, including a $2.2 billion development known as "Dougherty Valley" that will add approximately
11,000 new homes to the County's housing stock and construction projects totaling more than $1 billion
on three major bridges. Other major subdivisions have been approved that will add $4.6 billion in new
home construction,primarily in the eastern half of the County. Approximately$2.6 billion of projects are
pending approval, including a project known as "Cowell Ranch," which involves $1.0 billion of
construction spending on approximately 5,000 residential units.
Within the last year, the California .Energy Commission has licensed and approved the.
construction of two new natural gas energy plants within the County. Using state=of--the-art
environmental control technology, these new facilities will emit 90% less than the average gas-fired
utility power plant in the United States. The Calpine Corporation broke ground in February 2000 for the
construction of the $300 million Los Medanos Energy Center. Located in Pittsburg, this natural gas fired
facility will generate 500 megawatts of electricity upon completion in June 2001. In June 2000, the joint
partnership of Calpine Corporation and Bechtel Enterprises also broke ground on the Delta Energy
Center; this facility is estimated to cost$450 million and will generate 880 megawatts upon completion in
mid-2002.
Following months of hearings and the preparation of an environmental impact report, the Board
of Supervisors, on August 1, 2000, unanimously adopted an amendment to the Contra Costa County
General Plan, 1995-2010, which modifies the boundaries of the County's Urban Limit Line. This action
shrinks the growth limit line by 22 square miles, thus removing approximately 14,000 acres from future
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development. The two regions primarily affected by the Board's action are eastern Contra Costa County
and the Tassajara Valley in the south-central part of the County. Two cities within the County have filed
lawsuits challenging the environmental justifications for the boundary shift. The County anticipates that
other parties may also file lawsuits or take other actions challenging the boundary shift. Consequently,
the actual number of acres ultimately removed from future development may be less than 14,000 acres.
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, Sacramento and points north to Interstate 5, the major north-south highway from Mexico to
Canada. Interstate 680 connects the central County communities to the rest of the Bay Area via State
Routes 4 and 24, the County's major east-west arteries.
Caltrans has completed Northern California's largest freeway interchange reconstruction project
at the intersection of Interstate 680 and Highway 24 in Walnut Creek. The $315 million project added
traffic lanes, an elevated bypass, and redesigned access patterns. Caltrans is currently widening Interstate
80 in the western portion of the County at a cost of$200 million.
In addition to private automobiles, ground transportation is available to County residents from the
following service providers:
e Central Contra Costa Transit Authority provides local bus service to the central area of the
County including Walnut Creek,Pleasant Hill and Concord.
o BART connects the County to Alameda County, San Francisco and Daly City and Colma in
San Mateo 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 finished construction of a 14 mile
extension to the City of Pleasanton in nearby Alameda County at a cost of$517 million in May
1997. BART now has 39 stations and 95 miles of roadway in its system. BART is currently in
the process of building an extension to the San Francisco International Airport expected to be
completed by 2003.
o AC Transit, a daily commuter bus service based in .Oakland, provides local service and
connects Contra Costa communities to San Francisco and Oakland.
Other bus service is provided by Greyhound..
C Commuter rail service is provided by the Capital Corridor, with daily runs between the Bay
Area and Sacramento.
o 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 Riclnnond, owned and operated by the City of Richmond, covers 202 acres and handles
nearly 20 million metric tons annually. The majority of the shipments are bulk liquids with the remainder
consisting of scrap metal, autos, and gypsum rock.
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Major scheduled airline passenger and freight transportation for County residents is available at
either Oakland or San Francisco International Airports, located about 20 and 30 miles, respectively, from
the County. In addition there are two general aviation fields, one at Byron and the other at Concord.
Agriculture
The County is comprised of 470,400 acres, with over half(254,445) of these acres allocated to
farmlands and harvested cropland. In 1999, the total gross value of agricultural products and crops
reached $86,693,780, a decline of$71,470 compared to 1998. The value of agricultural production since
1995 is illustrated in the following table.
COUNTY OF CONTRA COSTA
AGRICULTURAL PRODUCTION,1995 TO 1999
1995 1996 1997 1.998 1999
Nursery products $21,782,000 $26,219,000 $31,287,800 $31,643,300 $28,202,200
Livestock&poultry 3,444,000 4,668,400 5,040,800 3,911,300 3,997,000
Field crops 10,616,900 12,281,800 12,696,000 9,291,000 9,525,000
Vegetable&seed crops 19,037,000 19,899,000 20,033,000 16,756,000 18,298,000
Fruit and nut crops 14,967,500 15,294,000 18,520,000 17,180,400 18,197,300
Livestock,apiary&poultry
products 5,970,430 7,260,490 7,597,420 8,083,250 8,474,280
Total $75,817,830 $85,622,690 $95,175,220 $86,765,250 $86,693,780
Source: Contra Costa County Department of Agriculture.
Environmental Control Services
Water. The East Bay Municipal Utilities District ("EBMUD") and the Contra Costa County
Water District ("CCCWD") supply water to the County. EBMUD, the second largest retail water
distributor west of the Mississippi, supplies water to the western part of the County. Ninety-five percent
of its supply is from the Mokelumne River stored at the 68 billion gallon capacity Pardee Dam. EBMUD
is entitled to 325 million gallons per day under a contract with the State Water Resources Control Board,
plus an additional 325 million gallons per day under a contract with the U.S. Water and Power Resources
Service (formerly the U.S. Bureau of Reclamation). EBMUD does not plan to draw on its federal
entitlement for the foreseeable future.
CCCWD obtains its water from the Sacramento-San.Joaquin Delta and serves 400,000 customers
in Concord, Pleasant Hill, Martinez, Clayton, Pittsburg and Antioch. It is entitled under a contract with
the U.S. Water and Power Resources Service to 195,000 acre-feet per year. Water sold has ranged
between 80,000 and 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 south of the City of Antioch at .
an estimated cost of$450 million.
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, have resulted in about 14 agencies upgrading, cxpanding and/or building new facilities.
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Flood Control. The Contra Costa County Flood Control District has been in operation since
1.951 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. Corps of Engineers and the State Department of Water Resources. The District
has recently completed construction of the West Antioch Capacity Improvement Project.
Education and Community 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 133 elementary schools,
35 middle, junior high and intermediate schools, 26 high schools, and a number of preschool, adult
school, and special education facilities. In addition, there are 123 private schools with six or more
students in the County. School enrollment in January of 1999 numbered approximately 154,019 students
in public schools and 15,373 students in regular graded private schools. The County's average SAT
scores exceed regional, State and national averages.
Higher education is available in the County through a combination of two-year community
colleges and four-year colleges. The Contra Costa County Community College District has campuses in
Richmond, Pleasant Hill and Pittsburg. California State University at Hayward 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 campus in Orinda, which is completing a move into expanded space in downtown
Concord. In addition, County residents are within easy commuting distance of the University of
California, Berkeley. Approximately 64% of County residents have attended college, and approximately
49%of County residents have completed four or more years of college.
There are nine privately operated hospitals and one public hospital in the County, with a
combined total of approximately 1,900 beds. Three 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 public hospital
is Contra Costa Regional Medical Center, a 156-bed facility that the County rebuilt and opened to the
public in 1998 on the existing campus in Martinez.
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APPENDIX B
COUNTY FINANCIAL INFORMATION
Changes in State Funding and County's Response
California counties administer numerous health and social service programs as the administrative
agent of the State pursuant to State law. Historically, many of these programs have been either wholly or
partially funded with State revenues that have been subject each year to the State budget and
appropriation process.
Over the last several years, State and federally mandated expenditures in justice, health and
welfare have grown at a greater rate than the County's discretionary general purpose revenues. 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.
While the composition of State revenues has shifted over recent years, the overall proportion of
the County's General Fund budget financed by State revenues has remained steady at approximately 35%.
The level of intergovernmental revenues that the County will receive from the State in Fiscal
Year 2000-01 and in subsequent fiscal years is likely to be affected by the financial condition of the State.
Presented below is a summary of recent State budget issues and financial performance.
1999-2000 Fiscal Year State Budget
Following a severe recession beginning in 1990, the State's financial condition improved
markedly during the fiscal years beginning with Fiscal Year 1995-96, due to a combination of better than
expected revenues, slowdown in growth of social welfare programs, and continued spending restraint
based on actions taken in earlier years. The State's cash position also improved, and no external deficit
borrowing occurred over the end of the last five fiscal years.
The economy grew strongly during the fiscal years beginning with Fiscal Year 1995-96, and as a
result, the General Fund took in substantially.greater tax revenues (around $2.2 billion in Fiscal Year
1995-96, $1.6 billion in Fiscal Year 1996-97, $2.4 billion in Fiscal Year 1997-98, $1.7 billion in Fiscal
Year 1998-99, and $8.2 billion in Fiscal Year 1999-2000) than were initially planned when the budgets
were enacted. These additional funds were largely directed to school spending as mandated by
Proposition 98, to make up shortfalls from reduced federal health and welfare aid in Fiscal Year 1995-96
and Fiscal Year 1996-97 and to fund new program initiatives, including education spending above
Proposition 98 minimums.
The principal features of the 1999 Budget Act included the following:
1. Proposition 98 funding for K-12 schools was increased by $1.6 billion in General Fund
moneys over revised Fiscal Year 1998-99 levels, $108.6 million higher than the minimum Proposition 98
guarantee. Of the Fiscal Year 1999-2000 funds, major new programs included money for reading
improvement, new textbooks, school safety, improving teacher quality, funding teacher bonuses,
providing greater accountability for school performance, increasing preschool and after school. care
programs and funding deferred maintenance of school facilities. The 1999 Budget Act also included
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$310 million as repayment of prior years' loans to schools, as part of the settlement of the CTA v. Gould
lawsuit.
2. Funding for higher education increased substantially above the actual Fiscal Year 1998-
99 level. General Fund support was increased by $184 million (7.3 percent) for the University of
California system and $126 million (5.9 percent) for the California State University system. In addition,
Community Colleges funding increased by $324.3 million (6.6 percent). As a result, undergraduate fees
at University of California and California State University systems were reduced for the second
consecutive year, and the per unit charge at Community Colleges was reduced by $1.
-3. Increased funding of nearly$600 million for health and human services.
4. About $800 million from the General Fund was directed toward infrastructure costs,
including $425 million in additional funding for the Infrastructure Bank, initial planning costs for a new
prison in the Central Valley, additional equipment for train and ferry service, and payment of deferred
maintenance for State parks.
5. The Legislature enacted a one-year additional reduction of 10 percent of the Vehicle
License Fee ("VLF") for calendar year 2000, at a General Fund cost of about $250 million in each of
Fiscal Year 1999-2000 and Fiscal Year 2000-01 to make up lost funding to local governments. Several
other targeted tax cuts, primarily for businesses, were also approved, at a cost of $54 million in Fiscal
Year 1999-2000.
6. A one-time appropriation of$150 million, split between cities and counties, was made to
offset property tax shifts during the early 1990s. Additionally, an ongoing $50 million was appropriated
as a subvention to cities for jail booking or processing fees charged by counties when an individual
arrested by city personnel is taken to a county detention facility.
The combination of resurging exports, a strong stock market, and a rapidly-growing economy in
1999 and early 2000 resulted in unprecedented growth in General Fund revenues during Fiscal Year
1999-2000. The latest estimates from the Department of Finance indicate revenues of about$71.2 billion,
an increase of over 20 percent over final Fiscal Year 1998-99 revenues and $8.2 billion higher than
projected for the. 1999 Budget Act. The latest estimates indicate expenditures of$67.2 billion in Fiscal
Year 1999-2000, a $3.5 billion increase over the 1999 Budget Act,but the result still left a record balance
in the Special Fund for Economic Uncertainties("SFEU")at June 30, 2000 of over$7.2 billion.
2000-01 Fiscal Year State Budget
Background. On January 10, 2000, Governor Davis released his proposed budget for Fiscal Year
2000-01, The 2000-01 Governor's Budget ("2000 Governor's Budget") generally reflected an estimate
that General Fund revenues for Fiscal Year 1999-2000 would be higher than projections made at the time
of the 1999 Budget Act. Even these positive estimates proved to be greatly understated as continuing
economic growth and stock market gains resulted in a surge of revenues. The Administration estimated
in the 2000 May Revision that General Fund revenues would total $70.9 billion in Fiscal Year 1999-2000,
and $73.8 billion in Fiscal Year 2000-01, a two-year increase of$12.3 billion above the 2000 Governor's
Budget revenue estimates. The latest estimates for Fiscal Year 1999-2000 are even higher, with revenues
now estimated at$71.2 billion.
2000 Budget Act. The 2000 Budget Act was signed by the Governor on June 30, 2000. The
spending plan assumes General Fund revenues and transfers of$73.9 billion, an increase of 3.8 percent
above the estimates for Fiscal Year 1999-2000. The 2000 Budget Act appropriates $78.8 billion from the
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General Fund, an increase of 17.3 percent over Fiscal Year 1999-2000, and reflects the use of$5.5 billion
from the SFEU. In order not to place undue pressure on future budget years, about $7.0 billion of the
increased spending in Fiscal Year 2000-01 will be for one-time expenditures and investments.
The Department of Finance estimates the SFEU will have a balance of$1.781 billion at June 30,
2001. In addition, the Governor held back $500 million as a set-aside for litigation costs. If this amount
is not fully expended during Fiscal Year 2000-01, the balance will increase the SFEU. The Governor
vetoed just over$1 billion in General Fund and Special Fund appropriations from the 2000 Budget Act, in
order to achieve the budget reserve.
The 2000 Budget Act also includes Special Fund expenditures of$15.6 billion, and Bond Fund
expenditures of$5.0 billion. Special Fund revenues are estimated at$16.5 billion.
Some of the major features of the 2000 Budget Act were the following:
1. Proposition 98 funding for K-12 schools was increased by $3.0 billion in General Fund
moneys over revised Fiscal Year 1999-2000 levels, $1.4 billion higher than the minimum Proposition 98
guarantee. Per pupil spending is estimated at $6,701 per ADA, an 11'percent increase from the 1999
Budget Act. Of the Fiscal Year 2000-01 funds, over$1.8 billion is allowed for discretionary spending by
school districts. Major new programs included money for high school scholarship to high-achieving
students, English language and literacy, improving teacher quality, funding teacher bonuses and salaries
for beginning teachers, increasing investments in technology and funding professional development
institutes. The 2000 Budget Act also includes an income tax credit to compensate credentialed teachers
for the purchase of classroom supplies and a $350 million repayment of prior years' loans to schools, as
part of the settlement of the CTA v. Gould lawsuit.
2. Funding for higher education increased substantially above the revised 1999-2000 level.
General Fund support was increased by $486 million (17.9 percent) for the University of California
system and $279 million (12.7 percent) for the California State University system. In addition,
Community Colleges funding increased by $497 million (9.0 percent). Undergraduate fees at University
of California and California State University systems and the per-unit charge at Community Colleges will
be unchanged. The 2000 Budget Act anticipates enrollment increases in all sectors, and an expansion of
financial aid.
3. Increased funding of$2.7 billion General Fund for health and human services.
4. Significant moneys were devoted for capital outlay. A total of $2.0 billion of General
Fund money was appropriated for transportation improvements, supplementing gasoline tax revenues
normally used for that purpose. This was part of a $6.9 billion Transportation Congestion Relief Program
to be implemented over six years. In addition, the Budget Act included $570 million from the General
Fund in new funding for housing programs.
5. A total of about $1.5 billion of tax relief was enacted as part of the budget process. The
VLF reduction, started in 1998, was accelerated to the final 67.5 percent level for calendar year 2001, two
years ahead of schedule. The acceleration will cost the General Fund about $887 million in Fiscal Year
2000-01 and $1.426 billion in Fiscal Year 2001-02. A one-time Senior Citizens Homeowner and Renters
Tax Assistance program will cost about$154 million. A personal income tax credit for teachers will cost
$218 million and a refundable credit for child care expenses will cost $195 million. Several other
targeted tax cuts, primarily for businesses, were also approved, at a cost of $89 million in Fiscal Year
2000-01.
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6. A one-time appropriation of $212 million, to be split between cities and counties, was
made to offset property tax shifts during the early 1990s of which the County received $3.0 million.
Additionally, $121 million was appropriated for support of local law enforcement, and $75 million in
one-time funding was provided for local law enforcement agencies to purchase high technology
equipment.
From Welfare to Work
In Fiscal Year 1994-95, 4,600 single adults and 14,977 families were on welfare (based upon the
Fiscal Year 1994-95 average monthly caseload) in the County. In Fiscal Year 1999-2000, that number
was only 693 single adults and.10,919 families (based upon the Fiscal Year 1999-2000 average monthly
caseload). This dramatic decline, 41% overall, is in part due to State and federal policies which set time
limits on cash assistance and created a new"welfare-to-work" system.
Driving Forces of Change. The federal government and the State have been the driving forces of
change in development of the current system. In 1996, Congress passed the Personal Responsibility and
Work Opportunity Reconciliation Act(the "Welfare Reform Act"), which placed a five-year lifetime limit
on cash welfare benefits and expanded the scope of the program to include supportive services for
achieving economic self sufficiency. In California, the Welfare Reform Act has been implemented under
the California Work Opportunity and Responsibility to Kids Act ("Ca1WORKs"), which sets the
parameters under which counties provide welfare services, including cash benefits and supportive
services: In California, welfare recipients are eligible for up to two years of welfare-to-work services,
specifically designed to help the transition from welfare to work. In 1998, Congress .also passed the
Workforce Investment Act, which reorganized federal funding for job training employment services,
broadened the program to include services for the welfare population and required consolidation of
employment services to one stop employment centers.
Emplt vment and Human Services.— the New Department. In 1998, the Board of Supervisors
created the Employment and Human Services Department (the "Department''), an amalgamation of the
County's Social Service Department and the Private Industry Council. The reorganization recognized the
convergence of the missions and mandates of the two former departments, driven by both the Welfare
Reform Act and the Workforce Investment Act. Both the organizational structure and budget structure of
the Department differ from its predecessors' departments. It is divided into five bureaus: Workforce
Services; the Workforce Investment Board; Children and Families Services; Aging and Adult Services;
and Administrative Support. The Department's budget units are aligned to ensure fiscal accountability.
In Fiscal Year 1994-95, the combined budgets of the two former 'departments. were
$222.9 million, with a net County cost of$27.5 million. In Fiscal Year 2000-01, the Department's budget
is $259.6 million, with a net County cost of$24.5 million. Overall, the Department's reliance on County
General Funds has been reduced from 12.7% to 9.4%, demonstrating the County's ability to effectively
leverage State, federal and other funds to finance its welfare related programs and services.
Department Budget and County Cost
Fiscal Year 1994-1995 Fiscal Year 2000-01
Total Department Budget $215,608,937 $259,632,763
County Cost 27,466,711 24,501,866
County Cost as%of Total 12.70,'0 9.4%
Focusin- on the lforkforce. Economic self-sufficiency and prosperity are core missions of the
Department. The Department is focused on "a job, better job, a career" for its welfare clients. The two
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bureaus with primary responsibility for fulfilling these missions are the Workforce Investment Board
("WEB")and the Workforce Services Bureau ("WSB").
The WIB is responsible for creating partnerships in the areas of education, training and career
development under the guidance of a countywide workforce development strategic plan. The purpose of
this plan is to identify the roles and responsibilities of each employment sector and to better link
educational and training service strategies with emerging employment needs for the businesses of the
County. In addition, the WEB is responsible for overseeing the One-Stop Career Centers, of which four
are currently operational. One-Stop Career Centers offer access to all job seekers and integrate numerous
employment and job training programs at one location.
The WSB is responsible for operating the Ca1WORKs program, including cash assistance and
supportive services, as well as the One-Stop Career Centers. The operational responsibility for the One-
Stop Career Centers is vested by the WEB to the Mandated One-Stop Operator Consortium of which the
WSB is lead agency.
Supportive Services — Partnerships in Practice. Many of the challenges faced by current and
former Ca1WORKs families cannot be addressed by the Department'alone. The Department has taken the
initiative to increase coordination, collaboration and partnerships among public agencies, the employer
community and community-based organizations as well as providing its own resources to increase
support of working Ca1WORKs participants as well as ex-CalWORKS families. Partnerships include:
• Child Welfare Services. Managing both a fanuly and work can be overwhelming for some
individuals. The Workforce Services Bureau works closely with Child Welfare Services to
support family stability.
® Mental Health. Mental health counseling services are available both to parents and their
children as part of a welfare to work plan.
o Substance Abuse. Similar to mental health, substance abuse treatment is available to both
parents and their children and is available on both an outpatient and inpatient basis.
C Child Care. The Department is working with the Local Child Care Planning Development
Council, schools and the County's Community Services Department to address child care
capacity issues. The County is recognized for its innovation in creating a full day, full year
child care program, Child Start, which combines the resources of the part day, part year
federally funded Head Start, and State funded Child Development programs. In Fiscal Year
1999-2000, 657 families in the County were transitioned to non-subsidized child care, while
2,381 children in the County received subsidized care.
• Transportation. Most low income families rely on public transit, which can be both time
consuming and expensive, particularly when a parent must drop off and pick up a child from
child care. The Department successfully competed for over $750,000 of grant funding for a
demonstration program for child care transportation and is collaborating with the public transit
industry to better meet transportation needs of low income families. For example, night time
bus service was instituted in North Richmond, a very low income area of the County, in
acknowledgment of the high number of night shift job opportunities.
Job Retention and Career Development. For many Ca1WORKs participants, their first job pays
minimum wage or a little more. To ensure that former CalWORKs participants do not return to welfare
dependency, the Department is also focusing on education, skill development and training for former
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Ca1WORKs recipients. This initiative is under the direction of the WIB through its education, training
and career development partnerships. Job retention services are critical to forming long term attachments
to the workforce by former Ca1WORKs clients, which will help mitigate the caseload impact of an
economic downturn.
Declining Welfare Caseloads. To date, the implementation of the Ca1WORKs program has
continued the trend of declining welfare caseloads. The Ca1WORKs caseload is projected to be 541,000
in Fiscal Year 2000-01, down from 579,000 cases in Fiscal Year 1999-2000 and down from a high of
921,000 cases in Fiscal Year 1994-95.
Although the Department has had substantial success in recent years, challenges still remain. The
decline of the Ca1WORKs caseload has left the Department with a remaining caseload increasingly
concentrated with individuals experiencing severe barriers to employment such as mental illness and
substance abuse. The Department is currently implementing a collaborative effort with the County's
Health Services Department to provide specialized services to these program participants that will assist
them in overcoming their barriers to employment.
In addition, while the Ca1WORKs caseload has declined substantially in recent years, many
Ca1WORKs participants have left cash assistance for low paying jobs at the margins of the workforce. A
continuing challenge for the Department is to assist former cash aid recipients in retaining their jobs and
advancing to better paying jobs. Effective job retention services will help stabilize the .long-term
attachment of CaIWORKs participants to the workforce and mitigate the caseload impact of the next
economic downturn.
The Department has benefited financially. from Ca1WORKs "incentive funds" that the
Department receives from the State for decreasing cash assistance and moving program participants into
employment. The Department is increasingly using these incentive funds, which totaled $24 million in
Fiscal Year 1999-2000, to ensure that program participants successfully transition from welfare to work.
Health.Care Funding
The County has the responsibility for providing health care to all persons, regardless of their
ability to pay or insurance status. In recent years, it has become more and more difficult to meet this .
obligation as an "open door provider" for the federal and state governments, due to declining and
inadequate federal and state health care financing coupled with rising service demands and service costs.
The County is not alone in its health care financing difficulties. A recent survey of California's
ten major counties found that all public hospitals are experiencing revenue losses similar to the County's.
A May 2000 study by the Association of American Medical Colleges reported that medical centers
providing indigent care must either close because of the cuts following the 1997 Balanced Budget Act or
must downsize to survive such cuts. The County has taken steps to eliminate the gap between revenue
and expenditures in its health care system.
Revenue Enhancement. Pursuant to the Master Settlement Agreement ("MSA") pertaining to
national tobacco litigation and the Memorandum of Understanding between the State and the counties and
four cities in California which are parties thereto, the County expects to receive annual revenues from the
tobacco industry as reimbursement for prior expenditures on health problems related to tobacco
consumption. The Board of Supervisors has dedicated 100% of its MSA revenues to the Health Services
Department. The County received approximately $3.7 million in discretionary revenue in Fiscal Year
1998-99 and approximately $9.5 million in Fiscal Year 1999-2000. The County anticipates that its share
of tobacco settlement revenues will be approximately$9.2 million in Fiscal Year 2000-01.
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A major new initiative is also expected to increase revenue through an increase in enrollment in
the County's health maintenance organization known as the Contra Costa Health Plan ("CCHP").
Currently, when CalWORKs clients transition from welfare to work, they lose eligibility to receive health
care from CCHP. Yet, depending upon income level, many are still eligible for Medi-Cal or for Healthy
Families (California's child health insurance program), both of which are eligible to receive health care
from CCHP. The Department has initiated a major outreach effort to increase CCHP enrollment by
working with school districts in the County to recruit eligible children. Health insurance assistance
centers have been set up in West County and Central County that target outreach through schools.
Additional centers are being set up in East County. Initial data show that school outreach has been very
effective in increasing enrollment. In addition, this strategy has the further benefit of reducing non-
reimbursed health care costs and increasing revenue associated with health care plan enrollment.
Departmental Reductions and Internal Operational Efficiencies. On June 27, 2000, the Board
of Supervisors approved the closure of the Home Health Agency.. This action recognized that the
program was no longer cost effective due to changes in Medicare reimbursement rates and reporting
requirements. The annual General Fund savings of the closure is estimated to be $740,000.
The Department is also reconfiguring services to be more cost effective. For example, an
estimated $720,000 per year. of expenses will be avoided by transferring psychiatric patients from .
institutes of mental disease, for which Medi-Cal does not pay the cost of care, to a new skilled nursing
facility, which is eligible for reimbursement.
Other reductions include .the non-renewal of nonessential contracts and re-negotiation of
contracts wherever possible. For example, the Department realized budget savings of $102,000 by
negotiating a contract for beds at the Alameda County Criminal Inpatient Unit.
The Health Services Department is also involved in a management consultant study to identify
management actions that could lead to additional budget savings.
Trial Court Funding
Assembly Bill 233 ("AB 233"), which was adopted by the State Legislature in 1997 and became
effective January 1, 1998, transferred responsibility from the counties to the'State for local trial court
funding commencing in Fiscal Year 1997-98. Under the legislation,the State assumed a greater degree of
responsibility for trial court operations costs starting in Fiscal Year 1997-98. The County's trial court
funding requirement declined from $22.8 million in Fiscal Year 1997-98 to $15.4 million in Fiscal Year
1999-2000 as a result of AB 233. The County's trial court funding requirement is expected to be
approximately$15.4 million in Fiscal Year 2000-2001.
The County will continue to be obligated to provide court facilities for all judicial officers and
support positions authorized prior to July 1, 1996. This includes those judicial officers and positions
which replace those officers and positions created prior to July 1, 1996. However, AB 233 does not
require that the County finance new capital facility expenditures related to judicial officers and support
staff required for any judgeships authorized during the period from January 1, 1998 to June 30, 2001.
The final decision as to who will finance new capital facility expenditures related to this period of time
and into the future is being evaluated by a State task force.
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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 on a permanent basis or for a limited
period, the date 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 presents the County's Proposed Budget to the Board of
Supervisors. Absent the adoption of a final. County budget by June 30, the current existing budget is
continued into the new fiscal year until a final budget is adopted.
Third, between January and the time the State adopts its own budget, legally due no later than
June 15,representatives of the County Administrator monitor,review and analyze the State budget and all
adjustments made by the State legislature. Upon adoption of the final State budget, the County
Administrator recommends revisions to the County's Proposed Budget to align County expenditures with
approved State revenue. 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.
The County adopted its Final Budget for 2000-01 on August 8, 2000, ahead of the legally
extended deadline of October 2, 2000.
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 provisions of services. See "CONSTITUTIONAL
AND STATUTORY .LIMITATIONS ON .TAXES, REVENUES AND APPROPRIATIONS" in the
forepart of this Official Statement.
Recent County General Fund Budgets
Set forth below is a description of the County's comparative budgetary and expenditure
experience for Fiscal Years 1996-97 through 2000-01. For a summary of the actual audited financial
results of the County for Fiscal Year 1998-99, see "EXCERPTS FROM THE AUDITED FINANCIAL
STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2000"in Appendix C
to this Official Statement.
Fiscal Year 1996-97. The County's Fiscal Year 1996-97 Final Budget reflected a 3.9% decline
from Fiscal Year 1995-96.. However, the County experienced a decline in general assistance and welfare
caseloads compared to the prior fiscal year,thereby resulting in greater discretionary County revenue than .
in the recent past. The County's 1996-97 Final Budget did not contain-any significant budget cuts.as a
result of improvement in both the State and local economies.
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Fiscal Year 1997-98. The County's Fiscal Year 1997-98 Final Budget was slightly smaller than
that of the prior fiscal year. Public assistance costs continued to drop significantly, paced by General
Assistance expenditures that fell to $3.5 million compared to over $6.3 million in Fiscal Year 1996-97.
Expenditure increases in the Public Protection and Health and Welfare categories were primarily due to
federal and State grant increases identified in the 1997-98 State Budget Act. The fund balance increased
13% to a level of$77 million compared to Fiscal Year 1996-97. As in Fiscal Year 1996-97, the County
budget did not contain any significant budget cuts, as the health of both the State and local economies
continued to improve.
Fiscal.Year 1998-99. The County's Fiscal Year 1998-99 Final Budget, as adjusted through April
1999, was 3.8% percent larger than that of the prior fiscal year due to increases in costs for general
government, health and sanitation, public assistance, and public ways and facilities. Health and sanitation
costs increased due to increased grant funding of public health programs, increases in SB 855/1255
Disproportionate Share healthcare funding, and expansion of mental health programs. Public assistance
rose by $20 million compared to the prior fiscal year due to increased funds for federally-funded.Head
Start programs and State-funded Ca1WORKs programs for childcare. The general fund balance reached
$85 million,representing an increase of 11% over Fiscal Year 1997-98.
In Fiscal Year 1998-99, the County began receiving payments pursuant to the MSA and the
Memorandum of Understanding relating to the MSA between the State and the counties and four cities in
California which are parties thereto. The County has been allocating these revenues to the Health
Services Department. See "Health Care Funding — Revenue Enhancement." The County received
approximately $3.7 million in Fiscal Year 1998-99 and approximately $9.5 million in Fiscal Year 1999-
2000. The County expects to receive approximately$9.2 million in Fiscal Year 2000-2001.
In addition, a levy of 50 cents on every pack of cigarettes sold is collected in California pursuant
to Proposition 10, effective January 1, 1999. Tobacco tax revenue generated in excess of$10 million in
Fiscal Year 1998-99 and in excess of $14 million in Fiscal Year 1999-2000 for health and children's
programs in the County.
Fiscal Year 1999-2000. The County's 1999-2000 Final Budget grew 13% over the prior year
budget. Public Assistance accounted for nearly half of the increase as State and federal government
revenues have enriched children and family services as well as employment training and referral services.
Public Works accounted for one quarter of the increase as federal, State and local revenues were allocated
primarily for State Highway 4 expansion. The remaining increase was attributable to staffing additions in
criminal justice and health services. The fund balance is expected to increase to$86.3 million.
Fiscal Year 2000-01. The.County's Fiscal Year 2000-01 Final Adopted Budget was 4% larger
than the prior fiscal year. Salary and benefit increases accounted for the largest share of the increased
costs. Capital projects and building maintenance costs represent a smaller portion of the increase.
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A comparison of the County's General Fund budgets for Fiscal Years 1999-2000 and 2000-01 is
shown below.
COUNTY OF CONTRA COSTA
GENERAL FUND BUDGET
FOR FISCAL YEARS 1999-2000 AND 2000-01
(IN THOUSANDS OF DOLLARS)
Final Adopted Final Adopted
Budget. Budget
1999-2000. 2000-01
REQUIREMENTS
General Government $ 99,309 $138,939
Public Protection 218,768 249,389
Health and Sanitation 168,717 184,432
Public Assistance 276,520 280,127
Education 161 172
Public Ways and Facilities 21,184 . 19,625
Recreation and Culture 1 1
Reserves and Debt Service 16,251 15,501
Total Requirements $800,911 $888,186
AVAILABLE FUNDS
Property Taxes $ 93,202 $101,497
Fund Balance Available 44,648 63,882
Other Taxes 10,230 14,663
Licenses,Permits and Franchises 6,717 6,814
Fines,Forfeitures and Penalties 13,656 13,404
Use of Money and Property 11,943 13,011
Intergovernmental 443,444 484,010
Charges for Current Services 128,035 149,046
Other Revenue 49,036 41,859
Total Available Funds $800,911 $888,186
Source: County Auditor-Controller.
Ad Valorem Property Taxes
Taxes are levied for each fiscal year on taxable real and personal property that is situated in the
County as of the preceding 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.
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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 10th and the
second on April 10th. If mailed within the months of November through June, the first installment
becomes delinquent on the last day of the month following the month of billing. The second installment
becomes delinquent on the last day of the fourth month following the date the first installment is
delinquent.
Property taxes on the unsecured roll are due as of the 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 4701-4717 of the California Revenue and Taxation Code. Pursuant to those sections, the
accounts of all political subdivisions that levy taxes on the County tax rolls are credited with 100% 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
countywide delinquent penalties are deposited.. The County has used this method since Fiscal Year 1950-
51.
Major property tax assessment appeals by business and the oil industry total $5.3 billion in
disputed value, with potential loss of revenue in the millions to various units of County local government.
The County has hired Baker and O'Brien, a firm with international experience in the oil refinery sector, to
do refining valuations, and the County Assessor will vigorously contest the appeals. A recent appeal of
$894 million by an oil refinery(Unocal)has been decided in favor of the County Assessor and may affect
future negotiations with companies whose appeals are pending. The oil refinery could appeal the recent
decision to the courts. Another oil refinery (Chevron) filed a number of tax appeals with the County and
an agreement Nvas reached to reduce a portion of its assessed valuation. On June 11, 1999, the Contra
Costa County Assessment Appeals Board approved the reduction in assessed values for certain Chevron
parcels. The approved reductions and other adjustments to the assessed value of the Chevron refinery and
Chevron Research Center reduced the overall assessed value by $599.9 million, or approximately 10.3%
from 1996/97 through 1998/99, resulting in a one-time County-wide refund in Fiscal Year 1999-2000 of
approximately $7.6 million, which includes the property tax refund plus interest. Four oil refineries
(Chevron, Tosco, Martinez Refining Co., and Unocal) are currently seeking property tax refunds totaling
$50 million for a number of tax years by attempting to reduce their assessments by as much as sixty (60)
percent. The total assessed values for the refineries over the years still under appeal amount to $6.9
billion. The refiners are seeking value reductions of $4.482 billion. Heavy industry accounts for 17
percent of the collected property taxes in the County.
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The County has incorporated $3.0 million of property tax revenue adjustments in its Fiscal Year
2000-2001 budget as a precaution against potential assessment appeal decisions.
A recent history of County tax levies, delinquencies and the Tax Losses Reserve Fund cash
balances as of June 30 is shown below.
COUNTY OF CONTRA COSTA
SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION
FOR FISCAL YEARS 1990-91 THROUGH 1999-2000
Balance in
Current Tax %Levy Tax Losses
Assessed Secured Property Delinquencies Delinquent Reserve Fund
Fiscal Year Valuation Tax Levies June 30' June 30 June 30
1990-91 $54,114,860,918 $669,071,124 $19,762,687 2.95 $24,093,615
1991-92 58,422,186,087 714,963,082 24,787,991 . 3.47 26,558,333
1992-93 61,393,320,088 760,559,294 24,239,204 3.19 29,042,152
1993-94 63,427,696,578 794,435,830 20,652,106 2.60 31,225,565
1994-95 65,294,364,749 823,495,651 20,646,379 2.51 24,709,211
1995-96 67,146,461,590 854,519,586 18,296,237 . 2.14 18,670,811
1996-97 69,242,099,630 869,580,974 18,057,023 2.08 17,154,539
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 76,811,775,675 981,579,866 15,904,158 1.62 23,054,893
2000-01 83,094,557,304
Source: County Auditor-Controller
During each fiscal year, the Tax Losses Reserve Fund is reviewed and when the amount of the
fund exceeds certain levels, the excess is credited to the County General Fund as provided by Sections
4703 and 4703.2 of the California Revenue and Taxation Code. Sections 4703 and 4703.2 allow any
county to draw down their tax losses reservefund 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. The reductions in the Tax Losses Reserve Fund balances from Fiscal Year 1994-95
through Fiscal Year 1996-97 reflected multiple reductions in minimum reserve requirements legislated
over that period. The impact of these reductions was to allow increased credits to the County General
Fund. No other material drawdowns have occurred.
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Largest Taxpayers
The ten largest taxpayers in the County, as shown on the Fiscal Year 1999-2000 secured tax roll,
and the approximate amounts-of their property tax payments are shown below. These ten taxpayers paid a
total of$97.8 million in taxes, or about 10.21%of the County's 1999-2000 secured tax collection.
COUNTY OF CONTRA COSTA
TEN LARGEST PROPERTY TAXPAYERS
Company Total Taxes Paid 1999-2000 %of Total County Tax Roll
Chevron USA $23,546,329.03 2.46%
Pacific Gas&Electric 17,841,995.08 1.86
Tosco Corporation 15,670,776.34 1.64
Equilon/Shell 13,630,256.40 1.42
Pacific Bell 12,147,840.16 1.27
USS Posco 4,500,127.10 0.47
Seeno&Associates 4,228,763.20 0.44
Bank of America 2,378,178.02 0.25 .
Taubman(Mall) 2,034,934.17 0.21
Cornerstone(Buildings) 1,847,830.37 0.19
TOTAL $97,827,029.87 10.21%
Source: County Treasurer-Tax Collector
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 permit 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. Currently, approximately 3.69% of
the County's total net assessed valuation constitutes unitary property subject to State assessment by the
SBE, for which approximately $32,820,000 of property taxes were collected in Fiscal Year 1998-99.
[UPDATE] The portion of these tax collections attributable to the County General Fund was $7,286,000.
Until recently, SBE assessment of investor-owned gas and electric companies, incumbent local
exchange companies, AT&T Corp., and AT&T Communications of California, Inc. was subject to a
Settlement Agreement, dated May 1, 1992, among those companies,the SBE and all California counties
(the "Agreement"), under which, for many fiscal years, the SBE set the assessed property value equal to
historical cost less depreciation less 25% of each utility's deferred tax reserve (all as defined in the
Agreement). The Agreement provided that this valuation method was not intended to be precedent for
calculating fair market value in years after the term of the Agreement. The Agreement was in response to
a February 1, 1991, Sacramento Superior Court decision in AT&T Communications of California, Inc. et
al v. State Board of Equalization, in which the court held that the SBE's valuation approaches had
overvalued AT&T's unitary property, and ordered AT&T's statewide assessed value to be reduced from
approximately $1.75 billion to approximately $1.1 billion. With the expiration of the Agreement, the
SBE has greater flexibility in determining the factors to be considered in establishing assessed property
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values. The SBE has provided significant relief to various large companies during Fiscal Year 1999-2000
and Fiscal Year 2000-01, and such relief will result in the loss by the County of more than $2.3 million of
property taxes during this period.
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 now assesses two power plants
located in the County.
For a discussion of two proposed power plants that are expected to increase assessed property
values in the County, see "GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC
INFORMATION—Construction Activity" in Appendix A to this Official Statement.
In addition, the California electric utility industry is currently undergoing significant changes in
its structure and in the way in which components of the industry are or are not regulated. Further sales of
electric generation assets to largely unregulated, nonutility companies may affect how those assets are
assessed in the future and which local agencies are to receive the property taxes. The County is unable to
predict the impact of these changes on its utility property tax revenues, or whether further legislation may
be proposed or enacted in response to industry restructuring, or whether any future litigation may affect
methods of assessing utility property and the allocation of assessed value to or among local taxing
agencies.
Redevelopment Agencies
The California Community Redevelopment Law authorizes city or county redevelopment
agencies to issue bonds payable from the allocation of tax revenues resulting from increases in full cash
values of properties within designated project areas. In effect, local taxing authorities other than the
redevelopment agency realize tax revenues only on the "frozen" tax base. The following table shows
redevelopment agency full cash value increments and tax allocations for agencies within the County.
COUNTY OF CONTRA COSTA
COMMUNITY REDEVELOPMENT AGENCY PROJECTS
FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS"'
FISCAL YEARS 1990-91 THROUGH 1999-2000
Fiscal Year Base Year Value Full Cash Value Increment(2) Total Tax Allocations(3)
1990-91 $1,696,768,706 $3,966,154,674 $42,171,285
1991-92 1,806,223,553 4,573,718,772 48,590,841
1992-93 1,864,029,147 5,009,792,773 53,485,897
1993-94 1,864,029,147 5,236,543,696 55,748,579
1994-95 2,71.5,784,139 5,320,724,209 56,677,717
1995-96 3,051,303,629 5,337,629,341 57,204,637
1996-97 3,195,085,095 5,493,724,548 58,807,082
1997-98 2,198,412,5241") 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
(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) Does not include unitary and operating non-unitary utility roll values which are detemuned by the State Board of Equalization
on a countywide basis.
(3) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies.
(4) The Base Year Value is reduced to exclude project areas with negative increment.
Source: County Auditor-Controller
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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
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,
independentaudits 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 C — EXCERPTS FROM
THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED
JUNE 30, 2000."
In addition to the above-mentioned audits, the County Grand Jury may also conduct management
audits of certain offices of the County.
Funds accounted for by the County are categorized as follows:
General County Funds. The general County funds consist of the General Fund and other
operating funds. The General Fund is used to account for the revenues and expenditures of the County
that are not accounted for by other funds. The other operating funds are used to account for the proceeds
from specific revenue sources (other than special assessments) or to account for the financing of specific
activities as required by law or administrative regulations.
Special District Funds Under Control of Board of Supervisors. These funds are used to account
for the transactions of fire protection districts, flood control and storm drainage districts, sanitation
districts and county service areas under the control of the Board of Supervisors.
Special District Funds Under Control of Local Boards and School District Funds. These funds
are used to account for cash received and disbursed and cash and investments held by the County for
districts controlled by local boards. These districts maintain their own accounting records supporting
their separate financial statements which are subject to separate audit under California law.
Trust and Agency Funds. Trust and Agency funds are used to account for money and other
assets received and held as trustee, custodian or agent for individuals and governmental agencies.
Presented on the following page is the County's Schedule of Revenues, Expenditures and
Changes.in Fund Balances as of June 30 for the five most recent fiscal years. More detailed information
from the County's audited financial report for the fiscal year ending June 30, 2000 appears in Appendix C
to this Official Statement.
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COUNTY OF CONTRA COSTA GENERAL FUND
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL-BUDGETARY BASIS
FISCAL YEARS 1995-96 THROUGH 1999-00
(IN THOUSANDS)
1995-96 1996-97 1997-98 1998-99 1999-00
REVENUES
Taxes $95,773 $99,974 $101,370 $110,242 $116,540
Licenses,permits&franchises 6,689 7,419 6,476 6,597 8,623
Fines, forfeitures&penalties 17,437 14,082 12,725 13,514 15,029
Use of money&property 13,406 12,062 13,459 14,937 14,858
Intergovernmental revenues 373,167 371,750 378,383 411,112 465,245
Charges for services 99,678 103,913 107,530 123,203 143,566
Other revenue 17,456 18,198 15,083 17,750 27,923
TOTAL REVENUES 623,606 627,398 635,026 697,355 791,784
EXPENDITURES
General government 82,256 77,199 83,847 105,967 100,734
Public protection 141,875 150,121 168,054 198,836 215,919
Health&sanitation 115,286 122,676 138,241 146,927 156,441
Public assistance 233,862 218,081 213,246 233,217 244,934
Education 130 133 145 144 145
Public ways and facilities 61933 9,266 6,965 11,096 20,140
Recreation and culture 0 0 0 0 0
Interest 4,273 4,204 4,302 5,296 3,878
Capital outlay(i) 1,371 2,615 2,947 3,173 3,301
TOTAL EXPENDITURES 585,986 584,295 617,747 704,656 745,492
Excess of Revenues over(under)Expenditures 37,620 43,103 17,279 (7,301) 46,292
OTHER FINANCING SOURCES(USES)
Operating transfers in 18,804 24,581 31,318 49,025 31,294
Operating transfers out (50,911) (55,844) (42,005) (34,834) (55,993)
Capital lease financing(') 1,371 2,615 2,955 3,173 5,500
TOTAL OTHER FINANCING SOURCES(USES) (30,736) (28,648) (7,732) 17,364 (19,199)
Excess(Deficiency)of Revenues and Other Financing 6,884 14,455 9,547 10,063 27,093
Sources over(under)Expenditures and Other
Financing Uses
FUND BALANCE AT BEGINNING OF YEAR, 51,570 56,524 68,185 79,960 85,430
as Previously Reported
Adjustment to beginning fund balance (418) 0 0 0 0
FUND BALANCE AT BEGINNING OF YEAR, 51,152 56,524 68,185 79,960 85,430
as Restated
Residual equity transfers in 0 0 0 0 199
Residual equity transfers out (1,512) (2,794) (772) (1,593) (1)
FUND BALANCE at End of Year S56,524 $68,185 $76,960 $85,430 $112,721
(1) These entries are required by NCGA Statement 5 to disclose the value of fixed assets acquired during the year under lease
purchase agreements. The County does not appropriate these amounts since they apply to future years.
Source: County Auditor-Controller
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County Employees
A summary of County employees follows:
COUNTY OF CONTRA COSTA
COUNTY EMPLOYEES(')
As of Number of Permanent
June 30 Employees
1990 6,635
1991 7,008
1992 7,080
1993 6,689
1994 6,658
1995 6,822
1996 6,856
1997 6,974
1998 7,106
1999 7,683
2000 8,090
1'1 . Excludes temporary or seasonal employees.
Source: County Auditor-Controller.
County employees are represented by 36 bargaining units of 13 labor organizations, the principal
ones being Local 1 of the County Employees Association and the Clerical Employees Union which,
combined, represent approximately 34% of all County employees in a variety of classifications.
The County has had a positive .employee relations program, and has enjoyed successful
negotiations of cost effective agreements over the years. The County completed its latest contract
negotiations with labor representatives in September 1999 with the agreement providing for, among other
things, a five percent salary increase through September 30, 2000, a three percent salary increase effective
October 1, 2000, and a 4.0% salary increase effective October 1, 2001. The agreement covers
approximately 75% of the County's employees and expires in September 2002.
Contract negotiations with the firefighters were concluded in August 2000, with a 7% salary
increase through June 2001. The term of the contract expires in April 2002.
Pension Plan
The Contra Costa County Employees' Retirement Association ("CCCERA") is a cost-sharing
multiple=employer defined pension benefit plan governed by the County Employees' Retirement Law of
1937. The plan covers substantially all of the employees of the County, its special districts, the Housing
Authority and thirteen 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 as provided by State statutes.
Except for the new Tier III described below, the CCCERA is divided into three separate benefit
sections of the 1937 Act. These sections are known as: General - Tier I, General - Tier II and Safety.
Tier I includes all General.members hired before August 1, 1980 and electing not to transfer to Tier H.
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The Tier II section includes all employees hired on or after August 1, 1980 and all General members
electing to transfer from Tier 1. The Safety section covers all employees in active law enforcement, active
fire suppression work or certain other "safety" classifications as designated by the CCCERA's Board of
Retirement.
Service retirement benefits are based on age, length of service and final average salary. For the
Tier I and Safety sections, the retirement benefit is based on the twelve highest pay months, in accordance
with Government Code Section 31462. For Tier 11, the benefit is based on a three-year average salary.
Effective October 1,' 1998, a Tier III retirement plan was established for permanent County
employees with over five years of service, allowing employees to transfer from Tier II to Tier III. Tier III
offers a better retirement plan using Tier I pay-out levels, except that the more stringent requirements for
disability retirement are retained from Tier II.
CCCERA Funding Status. The most recent actuarial report of the CCCERA reflects its financial
status as of December 31, 1999. The market value of the plan's assets was $2,987,089,000. The present
value of the plan's unfunded actuarial accrued liability ("UAAL") was estimated to be $372,039,000,
which includes the County's portion of the liability as well as that of the other entities comprising
CCCERA. The County-only portion of the UAAL is approximately 54%. The Board of Retirement
allocated $120,500,000 in 1999 from unrestricted excess earnings toward funding the UAAL. The GASB
Statement No. 25 liabilities calculated for 1999 showed that the funded ratio was approximately 85%.
As of December 31, 1999, CCCERA had reserves as summarized below:
Type of Reserves Amount
Unrestricted $229,244,501
Market Stabilization 349,1 16,763
Total $578,361,264
The CCCERA 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 C—EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE
COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2000."
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 Sheriff's 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 earnable" 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 filed by certain retired County employees. The
CCERA 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
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members' retirement benefits as a result of the Ventura.Decision. A settlement agreement has been
entered into with all parties and a petitioners' class has been certified consisting of all retired members of
the Association whose effective retirement date was on or before September 30, 1997 (i.e., the period
prior to the October 1, 1997 effective date of the Ventura Decision).
The.Board of Retirement has designated $90 million from unrestricted excess earnings to cover
the anticipated liability of the settlement.
Long Term Obligations
The County has never defaulted on the payment of principal or interest on any of its indebtedness.
Following is a brief summary of the County's general obligation debt, lease obligations and direct and
overlapping debt.
General Obligation Debt. The County has no direct general obligation bonded indebtedness, the
last issue having been redeemed in Fiscal Year 1977-78. The County has no authorized and unissued
debt.
Lease Obligations. The County has made use of various lease arrangements with private and
public financing entities, nonprofit corporations, and the 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. For a summary of the County's lease obligations as of
June 30, [1999,] see "APPENDIX C — EXCERPTS .FROM THE AUDITED FINANCIAL
STATEMENTS OF THE COUNTY FOR THE .FISCAL YEAR ENDED JUNE 30, 2000 - Notes to
General Purpose Financial Statements" attached hereto.
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Annual debt service for the County's outstanding lease obligations and the 1994 Pension
Obligation Bonds is shown in the next table.
COUNTY OF CONTRA COSTA
Outstanding Lease Obligations and
1994 Pension Obligation Bonds.
IUPDATEI
Fiscal Year Total Lease Total POB Total Net
Ending 6/30 Debt Service(') Debt Service Debt Service(2) Debt Service(3)
2001 $ 24,142,071 $ 33,527,413 $ 57,669,484 $ 49,500,969
2002 24,430,579 35,409,713 59,840,292 51,101,632
2003 24,190,734 37,382,933 61,573,667 53,215,706
2004 24,181,701 39,459,053 63,640,754 55,162,667
2005 24,180,678 41,641,953 65,822,631 57,221,970
2006 24,188,874 431935,590 68,124,464 59,387,941
2007 24,187,751 46,347,585 70,535,336 61,658,081
2008 24,204,110 48,879,460 73,083,570. 64,041,127
2009 22,827,036 51,543,575 74,370,611 65,156,732
2010 21,610,370 44,576,215 66,186,585 57,290,728
2011 21,608,654 17,892,033 39,500,687 31,930,819
2012 21,613,945 - 21,613,945 14,944,146
2013 21,613,244 - 21,613,244 14,950,157
2014 21,616,106 - 21,616,106 14,954,216
2015 21,634,558 - 21,634,558 14,977,479
2016 21,626,887 - 21,626,887 14,969,344
2017 19,207,779 - 19,207,779 12,560,478
2018 19,203,379 - 19,203,379 12,561,785
2019 19,229,680 - 19,229,680 9,324,070
2020 17,502,265 - 17,502,265 11,051,284
2021 17,500,458 17,500,458 8,306,584
2022 14,745,888 - 14,745,888 8,616,009
2023 14,740,601 - 14,740,601 2,539,421
2024 4,281,629 - 4,281,629 4,179,688
2025 4,283,179 - 4,283,179 2,439,719
2026 2,489,000 - 2,489,000 2,489,000
2027 2,491,500 - 2,491,500 2,491,500
2028 2,488,500 - 2,488,500 2,488,500
TOTAL: $509,021,156 $440,595,523 $946,616,679 $759,511,752
(1) Prior to the issuance of the 2001 Series B Bonds.
(2) Excludes estimated reimbursement from the State for County hospital debt service and excludes estimated earnings on various
debt service and debt service reserve funds.
(3) Includes estimated reimbursement from the State for County hospital debt service, earnings on various bond funds and the
reduction in debt service obligation when the debt service reserve funds are liquidated at the maturity of the applicable
obligations.
Source: The County.
Direct and Overlapping Debt. The County contains numerous municipalities, school districts
and special purpose districts, as well as the overlapping Bay Area Rapid Transit District and the East Bay
Municipal Utility District, which have issued general obligation bonded and lease indebtedness. Set forth
below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal
Statistics Inc. that summarizes such indebtedness as of December 1, 2000. The Debt Report is included
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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 asindicated) 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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CONTRA COSTA COUNTY
2000-01 Assessed Valuation: $84,593,430,240 (includes unitary utility valuation)
Redevelopment Incremental Valuation: 7,446,872,533
Adjusted Assessed Valuation: $77,146,557,707
OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 12/1/00
East Bay Municipal Water District and Special District No. 1 48.910&5.966% $ 6,142,705
Martinez Unified School District 100. 39,739,192
Pittsburg Unified School District and West Contra Costa Unified School District 100. 68,595,000
San Ramon Valley Unified School District 100. 70,000,000
San Ramon Valley Unified School District Lease Tax Obligations 100. 11,635,000
Acalanes and Liberty Union High School Districts 100. 106,539,911
Lafayette School District 100. 26,705,000
Other School Districts 0.442-100. 77,262,442
Cities 100. 6,495,000
East Bay Regional Park District 44.440 77,725,560
Other Special Districts 100. 2,360,000
Community Facilities Districts 100. 207,060,000
1915 Act Assessment Bonds(Estimate) 100. 405,078,554
TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT 51,105,338,364
Less: East Bay Municipal Utility District(100%self-supporting) 3,423.700
TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $1,101,914,664
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Contra Costa County General Fund Obligations 100. % $294,965,000 (1)
Contra Costa County Pension Obligations 100. 302,275,000
Contra Costa County Board of Education Certificates of Participation 100. 3,020,000
Contra Costa County Mosquito Abatement District Certificates of Participation 100. 1,495,000
Alameda-Contra Costa Transit District Certificates of Participation 10.575 2,503,631
Antioch Unified School District Certificates of Participation 100. 21,109,844
San Ramon Valley Unified School District Educational Facilities Corporation 100. 31,215,000
Other School District General Fund Obligations 0.112-100. 44,035,583
City of Antioch General Fund Obligations 100. 15,908,728
City of Concord General Fund and Judgment Obligations 100. 34,005,000
City of Richmond General Fund Obligations 100. 26,746,595
City of Richmond Pension Obligations 100. 36,280,000
City of San Ramon General Fund Obligations 100. 22,420,000
Other City General Fund Obligations 100. 31,850,000
Hospital Authorities 100. 4,870,000
Other Special District Certificates of Participation 100. 11,980,000
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND-OBLIGATION DEBT $884,679,381
Less: San Ramon Unified School District Certificates of Participation(self-supporting
from GIC from Bayerische Landesbank) 11,385,000
City of Concord lease bonds(100%self-supporting) 450,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $872,844,381
GROSS COMBINED TOTAL DEBT $1,990,017,745 (2)
NET COMBINED TOTAL DEBT $1,974,759,045
(1) Excludes lease revenue bonds to be sold.
(2) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease
obligations.
Ratios to 2000-01 Assessed Valuation:
Total Gross Overlapping Tax and Assessment Debt................................ 1.31%
Total Net Overlapping Tax and Assessment Debt................................... 1.30%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($597,240,000)...................................................0.77%
Gross Combined Total Debt......................................................................2.58%
Net Combined Total Debt.........................................................................2.56%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/00: $0
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Future Financings
The County is preparing to get authorization to issue variable rate taxable pension obligation
bonds in 2001 to finance the tender and/or defeasance of approximately $100 million of its outstanding
1994 Pension Obligation Bonds. No other major debt financings of new capital projects are currently
scheduled by the County, although the County may undertake the replacement of its main administration
building and/or the Richmond Health Center in the next few years. [Update]
Insurance and Self-Insurance Programs
The County self-insures its unemployment, dental, management long-term disability and medical
liability exposures. The County is self-insured to $750,000 per occurrence for workers' compensation,
and maintains $10 million of excess insurance. coverage per occurrence with commercial insurance
carriers. The County is self-insured to $1.0 million per occurrence on public and automobile liability
(excluding the airport, which is insured for catastrophic losses by a commercial insurance carrier up to
$75 million per occurrence) and maintains $10 million excess insurance coverage with commercial
insurance carriers. The County is self-insured to $500,000 per occurrence on medical malpractice and
maintains $11 million of excess insurance with commercial insurance carriers. All claims are adjusted in-
house by the County, except for dental which is adjusted by outside parties.
Excess coverage is provided by the California State Association of Counties' Excess Insurance
Authority (the "Insurance Authority"), a joint powers authority, the purpose of which is to develop and
fund programs of excess insurance and provide the joint purchase of coverage from independent third
parties for its member entities. The Insurance Authority is governed by a Board of Directors consisting of
representatives of its member entities.
In addition, the County maintains up to $550 million "All Risk" coverage (including flood
insurance) with a $50,000 deductible, and up to $350 million earthquake coverage on all locations with
commercial insurance carriers.
During the past three years there have been no instances of the amount of claim settlements
exceeding insurance coverage.
Internal Service Funds are used to.account for the County's self-insurance activities. It is the
County's policy to provide in each fiscal year, by charges to affected operating funds, amounts.sufficient
to cover the estimated expenditures for self-insured claims. Charges to operating funds are recorded as
expenditures/expenses of such funds and revenues of the Internal Service Funds. Accrual and payment of
claims are recorded in the Internal Service Funds.
The County has accrued a liability of$80.337 million at June 30, 2000 for all self-insured claims
in the Internal Service Funds, which includes an amount for incurred but not reported claims. The self-
insurance reserve is based on actuarially determined amounts for workers' compensation, public and
automobile liability, and medical liability and based on management's estimates for all other reserves. In
the opinion of the County, the amounts accrued are adequate to cover claims incurred but not reported in
addition to known claims.
For additional information on the County's insurance coverage, see "APPENDIX C —
EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE
FISCAL YEAR ENDED JUNE 30, 2000 - Notes to General Purpose Financial Statements" attached
hereto.
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APPENDIX C
EXCERPTS FROM THE AUDITED
FINANCIAL STATEMENTS OF THE COUNTY
FOR THE FISCAL YEAR ENDED,TUNE 30,2000
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF
PRINCIPAL LEGAL DOCUMENTS
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APPENDIX E
PROPOSED FORM OF BOND COUNSEL OPINION
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APPENDIX F
PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT
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APPENDIX G
BOOK-ENTRY ONLY SYSTEM
DTC will act as securities depository for the 2001 Series B Bonds. The 2001 Series B Bonds will
be executed and delivered as fully-registered 2001 Series B Bonds registered in the name of Cede & Co.
(DTC's partnership nominee). One fully-registered certificate will be executed and delivered for each
maturity date of the 2001 Series B Bonds, each in the aggregate principal amount due on such maturity
date, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking Law, a"banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing agency" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants' accounts, thereby.
eliminating the need for physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National.Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission.
Purchases of 2001 Series B Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the 2001 Series B Bonds on DTC's records. The ownership
interest of each actual purchaser of each 2001 Series B Bond ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their holdings, from
the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the 2001 Series B Bonds are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests, except in the event that use of the book-entry system
for the 2001 Series B Bonds is discontinued.
To facilitate subsequent transfers, all 2001 Series B Bonds deposited by Participants with DTC
are registered in the name of DTC's.partnership nominee, Cede & Co. The deposit of 2001 Series B
Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the 2001 Series B Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts such 2001 Series B Bonds
are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
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Neither DTC nor Cede & Co. will consent or vote with respect to the 2001 Series B Bonds.
Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of the securities as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the 2001 Series B Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments with respect to the 2001 Series B Bonds will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the responsibility of such Participant
and not of DTC, the Trustee, the Authority or the County, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Authority or the Trustee, fiscal agent or other.designated agent, 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.
DTC may discontinue providing its services as securities depository with respect to the 2001
Series B Bonds at any time by giving reasonable notice to the Trustee and the Authority. Under such
circumstances, in the event that a successor securities depository is not obtained, physical certificates are
required to be printed and delivered as described in the Trust Agreement.
In the event the Authority and the Trustee determine not to continue the DTC book-entry only
system or DTC determines to discontinue its services with respect to the 2001 Series B Bonds and the
Authority does not select another qualified securities depository, the Authority will deliver one or more
2001 Series B Bonds in such principal amount or amounts, in authorized denominations, and registered in
whatever name or names, as designated by DTC. In such event, transfers and exchanges of 2001 Series B
Bonds will be governed by the provisions of the Trust Agreement.
AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 2001 SERIES B
BONDS, THE TRUSTEE WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO
IIOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY PARTICIPANT, OR OF
ANY PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS
CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE
PROCEEDINGS RELATING TO THE REDEMPTION OF THE 2001 SERIES B BONDS CALLED
FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE..
THE COUNTY, THE TRUSTEE, THE AUTHORITY AND THE UNDERWRITER HAVE 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 2001 SERIES B BONDS.
THE COUNTY, THE TRUSTEE, THE AUTHORITY AND THE UNDERWRITER CANNOT
AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC
PARTICIPANTS OR THAT PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH
RESPECT TO THE 2001 SERIES B BONDS RECEIVED BY DTC OR ITS NOMINEES AS THE
HOLDER THEREOF OR ANY REDEMPTION NOTICES OR OTHER NOTICES TO THE
BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC
WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.
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The foregoing description of the procedures and record keeping with respect to beneficial
ownership interests in the 2001 Series B Bonds, payment of principal, redemption premium, if any, and
interest with respect to the 2001 Series B Bonds to DTC, its Participants or Beneficial Owners,
confirmation and transfers of beneficial ownership interests in the 2001 Series B Bonds and other related
transactions by and between DTC, its Participants and the Beneficial Owners is based solely on the
County's understanding of such procedures and record keeping from information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither DTC, its Participants
nor the.Beneficial Owners should rely on the foregoing information with respect to such matters, but
should instead confirm the same with DTC or its Participants, as the case may be. The County
understands that the current "Rules" applicable to DTC are on file with the Securities and Exchange
Commission and that the current "Procedures" of DTC to be followed in dealing with Participants are on
file with DTC.
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APPENDIX H
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
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