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HomeMy WebLinkAboutMINUTES - 03262002 - SD3 BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA RESOLUTION NO. 2002/166 RESOLUTION APPROVING THE ISSUANCE BY THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY OF ADDITIONAL LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002 SERIES A IN AN AMOUNT NOT TO EXCEED $35,000,000 AGGREGATE>> PRINCIPAL AMOUNT FOR THE ''REFUNDING AND DEFEASANCE OF THE COUNTY'S 1992 CERTIFICATES OF PARTICIPATION AND THE` FINANCING OF VARIOUS CAPITAL PROJECTS, AUTHORIZING THE FORMS OF AND DIRECTING THE EXECUTION AND DELIVERY OF A THIRD 'SUPPLEMENTAL TRUST AGREEMENT, A THIRD AMENDMENT TO FACILITY LEASE, A THIRD AMENDMENT TO MASTER SITE LEASE, A LETTER OF INSTRUCTIONS AND A CONTINUING DISCLOSURE AGREEMENT; APPROVING FORM'OF AND DISTRIBUTION OF AN: OFFICIAL NOTICE OF SALE AND THE OFFICIAL STATEMENT FOR SAID BONDS'; AND AUTHORIZING'TAKING OF NECESSARY ACTIONS' AND EXECUTION' OF NECESSARY DOCUMENTS IN CONNECTION THEREWITH WHEREAS, the County of Contra Costa (the "County") and the Contra Costa County Redevelopment Agency (the "Agency") have heretofore entered into a Joint Exercise of Powers Agreement, dated as of April 7, 1992 (the"Joint Powers Agreement"),which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority (the "Authority"); WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Cade of the State of California (the "Act") and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; WHEREAS, pursuant to a Trust Agreement dated as of June 1, 1992 (the "1992 Trust Agreement"), among U.S. Bank Trust Company of California, N.A. (succeeded by BNY Western Trust Company), as trustee(the"1992 Trustee"),the Contra Costa County Public Facilities Corporation(the "Corporation") and the County, the County has heretofore caused to be executed and delivered its 1992 Refunding Certificates of Participation (Consolidated::Capital Facilities Project)(the"1992 Certificates"),in the aggregate principal amount of$37,300,000, for the purpose' of defeasing three prior series of certificates of participation which financed the costs of acquisition and improvement of the following County facilities: (i) County's Public Works Department Administration Building located at 255 Glacier Drive in Martinez, California; DOCS01:596941 40511-121 MAC (ii) Data processing building,30 Douglas Drive in Martinez, California; and Public Works Administration Building, Material Testing Laboratory,Road Maintenance Facility and Warehouse Building at Central Contra Costa County Public Works Yard, Waterbiird Way and Blum Road in Martinez, and (iii) Health Services Building,595 Center Street and Muir Road in the City of Martinez and the Forensic Science Center, 1964 Muir Road in the City of Martinez (collectively,the"1932 Facilities"). WHEREAS, the Corporation acquired the 1992 Facilities and pursuant to a lease agreement, dated as of June 1, 1992, by and between the Corporation and the County (the "1992` Facility Lease"'),the Corporation has leased the 1992 Facilities to the County; WHEREAS, the Authority has heretofore issued $74,685;000 of the Authority's Lease Revenue Bonds(Refunding and Various Capital Projects), 1999 Series A(the"1999 Series A Bonds")in order to finance and refinance capital projects for the County; WHEREAS, the Authority has:heretofore issued $18,030,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A'Bonds") to finance additional capital projects for the County; WHEREAS, this Authority has heretofore issued '$23,775,00 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B 'Bonds") to finance the acquisition, construction and equipping of the Martinez Health Center and a county animal shelter(the "2001 Series B'Project"), WHEREAS, in accordance with the requirements of Section 6586.5 of the Act, a` public hearing 'regarding the financing proposed herein was 'conducted by the 'County on March 26 2002; WHEREAS,.notice of such hearing was published at least five days prior to such hearing in a newspaper of general circulation in the County; WHEREAS, this Board of Supervisors hereby determines that it is in the best interest of the County for the Authority to issue additional' lease revenue bonds to refund and defease the 1992 Certificates and finance various additional capital projects, including, but not limited to, the acquisition and installation of photovoltaic equipment (Power Light solar electric panels) to be placed on the roofs of the Martinez Detention Facility and 50 Douglas Drive in Martinez (the"Solar Electric Panels"), and the acquisition of a County office building located at 1650 Cavallo Read in Antioch(collectively,the"2002 Series A Project"); WHEREAS, it is further proposed that the Authority and State Street Bank and Trust Company' of California, N.A., as trustee (the "Trustee"), enter into a supplemental trust agreement (the'"Third Supplemental Trust Agreement") acknowledged' by the County, which' will further supplement and amend'the Trust Agreement dated as of February 1, 1999 (the"Trust Agreement") and, pursuant to the Trust Agreement and the Third Supplemental 'Trust Agreement, the Authority will issue up`to an additional not to exceed' $35,000,000 aggregate principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds DOCSSF1:5 36941.3 40511-121 MAS 2 (Refunding and Various Capital Projects), 2002 Series A(the"Bonds") on a parity with the 1999 Series A Bonds, the 2001 Series Bonds and the 2001 Series B Bands, and will use the proceeds to refund and defease the outstanding 1992 Certificates and to finance the 2002 Series A Project, fund a reserve fund and pay costs of issuance associatedwith such bonds; WHEREAS, it is proposed that the County enter' into a Third Amendment to Master Site Lease (the "Third Amendment to Site Lease")`pursuant to which it will lease the 1992 Facilities and the County office building located at 1650 Cavallo Road in Antioch and sell the Solar Electric Panels (collectively, the "2002 Series A Facilities") to the Authority'such leased facilities to be in addition to the 'facilities currently"leased'under'the Master Site Lease, dated as of February 1' 1999, as amended,between the County and the Authority; WHEREAS, it is proposed that the County enter into a Third Amendment to Facility Lease (the "Third Amendment to Facility Lease") pursuant to which it will lease back the 1992 Facilities and the 2002 Series A',Facilities from the Authority in addition to the facilities currently leased pursuant to the Facility Lease (Various Capital Projects),dated as of February 1, 1999, as amended,between the Authority and the County; WHEREAS, under the Third Amendment to Facility Lease, the County would be obligated to make additional base rental payments to the Authority which the Authority will use to pay debt service'on the Bonds; WHEREAS, Sperry Capital Inc., is acting as financial advisor (the' "Financial Advisor") to the County and the Authority and'Orrick, Herrington & Sutcliffe LLP is serving as bond counsel C'Bond' Counsel") to the County and the Authority and Lofton& Jennings is serving as Disclosure Counsel to the County and the Authority in connection with the financing; WHEREAS, the Financial Advisor has assisted the County and the Authority in the preparation of an Official Statement describing the Bonds and an Official Notice of Sale describing the terms of sale of the Bonds, which will be distributed to potential purchasers of the Bonds; WHEREAS, ;,this Board has been presented with the form of each document referred to herein relating' to the Bonds, and the Board has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; WHEREAS, the County' has full legal right, power and authority under the Constitution and the 'laws of the 'State of California to enter into the transactions hereinafter authorized; and WHEREAS, the County expects to finance the refunding and defeasance of the 1992 Certificates and the 2002 Series A Project on a tax-exempt basis; NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Contra Costa, as follows: DOCSSF 1:586941.3 40,511-121 MAC Section 1. The foregoing recitals are true and correct and this Board so finds and determines. Section 2. The County hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the County and that the statements, findings and determinations of the County set forth above are true and correct and that the issuance of the Bonds by the Authority and refunding of the 1992 Certificates and the financingof the 2002 Series A Project will result in demonstrable savings in effective`interest rate,bond preparation,bond underwriting or bond issuance casts producing significant public benefits. Section 3. The Board of Supervisors hereby requests and approves the issuance of the Bonds by the Authority,in an aggregate principal amount of not to exceed$35,000,000 for the refunding and defeasance of the 1992 Certificates and for the financing of the 2002 Series A Project;provided that the refunding of the 1992 Certificates,which may be effected for the June 1,' 20022 or December 1,2002 redemption dates of the 1992 Certificates,'produces net present value savings equal to at least 2.75%a of the principal amount of the 1992 Certificates being refunded. Section 4. The form of Third Amendment to Site Lease,on file with the Clerk of the Board of Supervisors,is hereby approved, and the Chair of the Board of Supervisors or the Vice Chair of the Board of Supervisors or the County Administrator of the County and the Clerk of the Board of Supervisors(the"Clerk")or any Deputy Clerk of the Board of Supervisors or any designee of such officials(the"Authorized Signatories")are hereby authorized and directed to execute and deliver the Third Amendment to Site Lease in substantially said form,with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided,however,that the term thereof with respect to the 2002 Series A Facilities shall not exceed June 15, 2039. Section 5. The form of Third Amendment to Facility Lease, on file with the Clerk, is hereby approved, and any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Third Amendment to Facility Lease in substantially said form, with such changes therein as such officers may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof;provided,however,that the maximum additional annual base rental payments payable under the Third Amendment to Facility Lease shall not exceed$3,500,000 and the term of the Third Amendment to Facility Lease(including any extensions)with respect to the 2002 Series A Facilities shall not exceed June 1, 2039. Among the changes authorized to be made to the Third Amendment to Facility Lease are such changes as are necessary in the event the County Administrator or his designee, upon consultation with the Financial Advisor,determines it is desirable to obtain municipal bond insurance. Section 6. The form of Third Supplemental'Trust Agreement by and between' the Trustee and the Authority and acknowledged by the County,on file with the Clerk, is hereby approved. Anyone of the Authorized Signatories is hereby authorized and directed to execute and deliver the Third Supplemental Trust,Agreement in substantially said form,'with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made:to DOCSSF1:5136941.3 40511-121 MAC 4 the'Third;Supplemental Trust Agreementare such changes as are necessary in the event the County Administrator'or his designee,upon consultation with the Financial Advisor,determines it is desirable to obtain municipal band insurance or a reserve facility for the Bands or for the Authority to enter into an interest rate swap or other hedging,product in connection with the Bonds. Section 7. The form of Preliminary Official Statement describing the Bonds, on file with the Clerk,is hereby approved and the County Administrator or his designee, is hereby authorized and directed to execute and deliver a final Official Statement in substantially said, form with such additions,corrections and revisions as may be determined to be necessary or desirable by the Financial Advisor,'Bond'Counsel,Disclosure Counsel or the County Counsel's Office. The Underwriter is hereby'authorized and directed to cause to be supplied to prospective purchasers of the Bonds copies of preliminary'official statement in such form, and to supply the purchaser of the Bonds with copies of a final official statement, completed to include, among' other things the interest rate or rates, and final sale information for the Bonds. The County Administrator, or his designee, is hereby authorized and directed to execute a certificate confirming that the Preliminary Official Statement has been"deemed final"by the County for purposes of Securities'and Exchange Commission Rule 15c2-12. Section 88. The form of proposed Official Notice of Sale inviting bids for the Bands on file with the Clerk is hereby approved'and adopted as the Official Notice of Sale for the Bonds,with such additions, changes and corrections thereto as the County Administrator or his designee shall require or approve, such approval to be conclusively evidenced by the execution thereof. Section 9. The proposed form of Letter of instructions,by and between the County,the Authority and the 1992 Trustee, on file with the Clerk,;is hereby approved. Any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Letter of Instructions in substantially said form,`.:with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 10. The proposed form of Continuing Disclosure Agreement,to be dated the date of issuance of the Bonds, by and among the County and the Trustee,on file with the Clerk, is hereby'approved. Any of the Authorized Signatories are hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 11. The Board hereby authorizes the County Administrator or his designee on behalf of the County to enter into or approve the Authority's'execution and delivery of one or more investment agreements or the extension or amendment of the existing investment agreement held with respect to the 1992 Certificates providing for the investment of moneys in the funds and accounts created under the Trust Agreement, as the County Administrator or his designee deems'appropriate(collectively,the"investment Agreement"). The Board hereby finds`. and determines pursuant to Government Code section 5922,that the Investment Agreement will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to I)OCSSF4:586341.3 40511-121 MAC 5 such agreement. The County Administrator or his designee is hereby authorized and directed to execute and deliver or approve the execution and delivery of the Investment Agreement and any other related agreement or agreements on behalf of the County as may be,approved by the County Administrator'or his designee, such approval to be conclusively evidence by the execution and delivery of such agreement or agreements. Any termination amounts required to be paid by the County with respect to the Investment Agreement shall be paid from amounts invested pursuant thereto or otherwise made available therefor. Section 12. The officers of the County are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution,including,but not limited to, executing and delivering documents evidencing the termination of the 1992 Facility Lease and the vesting of title to the 1992 Facilities in the County and other documents related to the defeasance of the 1992 Certificates,acquisition and sale or assignment agreements relating to the Solar Electric Panels, signature certificates,no-litigation certificates,tax and rebate certificates and certificates concerning the contents of the Official Statement distributed in connection with the sale of the. Bonds. The Authorized Signatories,the Director, Capital Facilities and Debt Management of the County and other appropriate officers of the County are hereby authorized and directed to execute and deliver any and all certificates, instructions as to investments,written requests and other certificates necessary or desirable to administer the Bonds or leases,pay costs of issuance or to accomplish the transactions contemplated herein. Section 13. All actions heretofore taken by the officers and agents of the County with respect to the issuance and sale of the Bonds are hereby'approved and confirmed.' DOCSSFI:586941.3 40511-121 MA( CLERK'S CERTIFICATE The undersigned,Deputy Clerk of the Board of Directors of theCountyof Contra Costa Public Financing Authority,hereby certifies as follows: The foregoing is a 'full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Directors of said Authority duly and regularly held at the regular meeting place thereof on the 26th day of March, 2002, of which meeting all of the members of said Board of Directors had Clue notice and at which a majority thereof were present, and at said meeting said resolution was adopted by the following vote: AYES: SUPERVISORS UILKEMA, GERBER, GLOVER AND GIOIA NOES: NONE ABSENT: SUPERVISOR DESAULIVIER ABSTAIN: NONE An agenda of said meeting was posted at least 96 hours before said meeting at the County Administration Building, 651. Pine Street, Martinez, California, a location freely accessible to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes;',and said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand this 26th day of March, 2002, c [Seal] Deputy Clerk DOCS5C'1:5 39699.3 40511-121 MAS Section 14. This Resolution shall takeeffect'from and after its date of adoption. PASSED AND ADOPTED this 26th day of March, 2002. taof the Board of Supervisors tyof Contra Costa, California' [Seal], ATTEST: John R. Sweeten, Clerk of the Board of Supervisors and County Administrator March 26, 2002 By Deputy Clerk of the Board of Supervisors of the County of Contra Costa, State of California [)(:)CSSF 1c 586941.3 40511-121 MAC BOARD OF DIRECTORS OF THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY RESOLUTION NO 2002/167 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ADDITIONAL LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002 SERIES A IN AN AMOUNT NOT TO EXCEED $35,000,000 AGGREGATE PRINCIPAL AMOUNT FOR THE REFUNDING AND DEFEASANCE OF THE COUNTY'S 1992 CERTIFICATES OF PARTICIPATION AND THE FINANCING OF VARIOUS CAPITAL PROJECTS, AUTHORIZING THE FORMS OF AND DIRECTING THE EXECUTION AND DELIVERY OF A THIRD SUPPLEMENTAL TRUST AGREEMENT, A THIRD AMENDMENT TO FACILITY LEASE, A THIRD AMENDMENT TO MASTER SITE LEASE AND A CONTINUING DISCLOSURE AGREEMENT; APPROVING FORM OF AND DISTRIBUTION OF AN OFFICIAL NOTICE OF SALE AND THE OFFICIAL STATEMENT FOR SAID BONDS; AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OF NECESSARY DOCUMENTS IN CONNECTION THEREWITH WHEREAS, the County of Contra Costa (the "County") and the Contra Costa County' Redevelopment Agency'(the "Agency") have heretofore entered into a Joint Exercise of Powers Agreement, dated as of April 7, 1992(the "Joint Powers Agreement''), which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority (the "Authority"); WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act") and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; WHEREAS, pursuant to a Trust Agreement dated as of June 1, 1992 (the "1992 Trust Agreement"), among U.S. Bank Trust Company of California, N.A. (succeeded by BNY Western`Trust'Company), as trustee(the"1992 Trustee"),the Contra Costa County Public Facilities Corporation (the "Corporation") and the County, the County has heretofore caused to be executed and delivered its 1992 Refunding Certificates of Participation (Consolidated Capital Facilities Project)(the"1992 Certificates"),in the aggregate principal amount of$37,300,000,f Or the purpose of defeasing three prior series of certificates of participation which financed the costsf acquisition and improvement of the following County facilities: (i) County's Public Works Department Administration Building located at 255 Glacier Drive in Martinez,California, J. (ii) Data processing building, 30 Douglas Drive in Martinez, California; and Public Works Administration Building,Material Testing Laboratory,Road Maintenance D005sF1:589699.3 4051 1-1 21 MAC 1 Facility and Warehouse Building at Central Contra Costa County Public Warks Yard, Waterbird Way and Blum Road in Martinez;and (iii) Health Services Building, 595 Center Street and Muir Road in the City of Martinez and the Forensic Science Center, 1960 Muir Road in the City of Martinez (collectively,the"1992 Facilities"). WHEREAS, the Corporation acquired the 1992 Facilities and pursuant to a lease agreement, dated as of June 1, 1992, by and between the Corporation and the County (the "1992 Facility Lease"),the Corporation has leased.the 1992 Facilities to the County, WHEREAS, 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") in order to finance and refinance capital projects for the County; WHEREAS, the Authority has previously issued $18,030,000County of Contra Costa Public Financing Authority Lease Revenue Bonds ('Various Capital Projects), 2001 Series A(the"2001 Series A Bonds")to finance additional capital projects for the County; WHEREAS, this Authority has heretofore issued $23,775,00 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds") to finance the acquisition, construction and equipping of the Martinez Health Center and a county animal shelter(the"2001 Series B Project") WHEREAS, in accordance with the requirements of Section 6586.5 of the Act, a public hearing regarding the financing proposed herein was conducted by the County on March''26, 2002; WHEREAS, notice of such hearing was published at least five days prior to such hearing in a newspaper of general circulation in the County; WHEREAS, the Board of Supervisors, following such public hearing, determined that it is in the best interest of the County for the Authority to issue additional lease revenue bonds to refund and defense the 1992 Certificates and finance various additional capital projects, including, but;not limited to, the acquisition and installation of photovoltaic equipment (Power Light solar electric panels) to be placed on the roofs of the Martinez Detention Facility and 50 Douglas Drive in Martinez (the "Solar Electric Panels"), and the acquisition of a County office building at 1650 Cavallo Road in Antioch(collectively,the"2002 Series A Project"); WHEREAS, it is further proposed that the Authority and State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), enter into a supplemental trust agreement (the "Third Supplemental Trust Agreement") acknowledged by the County, which will supplement and amend the Trust Agreement' dated as of February 1, 1999 (the "Trust Agreement") and, pursuant to the Trust Agreement and Third Supplemental: Trust Agreement, the Authority will issue up to an additional not to exceed $35,000,000 aggregate principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds(Refunding and Various Capital Projects), 2002 Series A: (the `Bonds"), on a parity with the 1999 Series A DOCSSPI:589099. 40511-121 MAC 2 Bonds, the 2001 Series A Bonds and the 2001 Series B Bonds, and will use the proceeds to finance the 2002 Series A Project, fund a reserve fund and pay costs of issuance associated with such bonds; WHEREAS, it is proposed that the Authority enter into a Third Amendment to Master Site Lease (the "Third Amendment to Site Lease") pursuant to which the County will lease the 1992Facilities and the County office'building located at 1650 Cavallo Road in Antioch and sell the Solar Electric Panels (collectively "2002 Series A Facilities") to the Authority such leased facilities to be in addition to the facilities currently leased pursuant to the Master Site Lease dated as of February 1, 1999, as amended, between the County and the Authority; WHEREAS, it is proposed that the Authority enter into a Third Amendment to Facility Lease (the "Third Amendment to Facility Lease") pursuant to which it will lease back the 1992 Facilities and the 2002 Series A Facilities to the County as additional leased facilities under the Facility Lease (Various Capital Projects)'dated as of February 1, 1999, as amended, entered'into by the Authority and the County, WHEREAS, under the Third Amendment to Facility Lease, the County would be obligated to make additional base rental payments to the Authority which the Authority will use to pay debt service on the Bonds, WHEREAS, Sperry Capital Inc,, is acting as financial advisor (the "Financial Advisor") to the County and the Authority and Orrick, Herrington & Sutcliffe LLP is serving as band counsel ("Bond Counsel") to the County and the Authority and Lefton&' Jennings is serving as disclosure counsel ("Disclosure Counsel") to the County and the Authority in connection with the financing; WHEREAS, the Financial Advisor has assisted the County and the Authority in the preparation of an Official Statement describing the Bonds which will be distributed to potential purchasers of the Bonds, WHEREAS, a proposed form of Official Notice of Sale has been presented to this Board; WHEREAS, this Board has been presented with the form of each document referred: to herein relating to the Bonds, and the Board has examined and approved each document and desires to authorize' and direct the execution of such documents and the consummation of such financing; WHEREAS, the Authority has full legal right, power and authority under the laws of the State of California to enter into the transactions hereinafter authorized, and WHEREAS, the Authority expects to finance the refunding and defeasance of the 1992 Certificates and the 2002 Series A Project on a tax-exempt basis; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the County of Centra Costa Public Financing Authority, as follows: L>c)csSF1:s89c1)9. 40511-121 MAC 3 Section 1. The foregoing recitals are true and correct and this Board so finds and determines. Section 2. The issuance and sale of the Bonds by the Authority, in an aggregate principal amount of not to exceed$35,000,040 for the refunding and defeasance of the 1392 Certificates,which may be effected for the June 1, 2042 or December 1,2002 redemption dates of the 1932 Certificates, and for the financing of the 2002 Series A Project is hereby authorized and approved. Section 3. The form of Third Amendment to Site Lease,on file with the Secretary of the Board of Directors, is hereby approved,and the Chair of the Board of Directors or the Vice Chair of the Board of Directors or the Executive Director of the Authority or the Assistant Executive Director of the Authority and the Secretary of the Board of Directors(the "Secretary")or any Assistant Secretary of the Board of Directors or any designee of such officials(the"Authorized Signatories")are hereby authorized and directed to execute and deliver the Amendment to Site Lease in substantially said form,with such changes therein as such officers may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof; rop vided,however,that the term thereof with respect to the 2002 Series A Facilities shall not exceed June 15,2039;provided further that such officials may execute a separate acquisition agreement with respect to the Solar Electric Panels in lieu of including such acquisition in the Third Amendment to Site Lease. Section 4. The form of Third Amendment to Facility Lease, on file with the Secretary, is hereby approved, and any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Amendment to Facility Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made;to such Amendment to Facility Lease are such changes as are necessary in the event the Executive Director or the Assistant Executive Director,upon consultation with the Financial Advisor,determines it is desirable to obtain municipal bond insurance. Section 5. The form of Third Supplemental Trust Agreement by and between the Trustee and the Authority and acknowledged by the County, on file with the Secretary, is hereby approved. Any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Third Supplemental Trust Agreement in substantially said form,with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made to such Third Supplemental Trust Agreement are such changes as are necessary in the event the Executive Director or the Assistant ExecutiveDirector,upon consultation with the Financial Advisor, determines it is desirable to obtain municipal bond insurance or a reserve facility for the Bonds or to execute an interest rate swap or other hedging product(the "Swap"), in connection with the Bonds. Section 6. The form of Preliminary Official Statement describing the Bonds, on file with the Secretary, is hereby approved and the Executive Director or his designee, is hereby authorized and directed to execute and deliver a final Official Statement in substantially said form with such additions, corrections and revisions as may be determined to be necessary or DOCSSFI:589699.3 40511-121 MAC 4 desirable by the Financial Advisor,Bond Counsel, Disclosure Counsel or the County Counsel's Office. The Underwriter is hereby authorized and directed to cause to be supplied to prospective purchasers of the Bonds copies of a preliminary official statement in such form, and to supply the purchasers of the Bonds with copies of a final official statement,completed to include, among other things the interest rate or rates, and final sale information for the Bonds. The Executive Director or his designee, is hereby authorized and directed to execute a certificate confirming that the Preliminary Official Statement has been"deemed final"by the Authority for purposes of Securities and Exchange Commission Rule 15c2-12. Section 7. The form of proposed Official Notice of Sale inviting bids for the Bonds on file with the Secretary is hereby approved and adopted as the Official Notice of Sale for the Bonds,with such additions,changes and corrections thereto as the Executive Director or his designee shall require or approve, such approval to be conclusively evidenced by the execution thereof. The Secretary is hereby authorized to cause to be published a notice of the proposed sale of the Bonds as required by law. The Executive Director or his designee shall award the sale of the Bonds pursuant to the Official Notice of Sale; provided that the refunding of the 1992 Certificates produces net present value savings equivalent to at least 2.75%of the principal amount of 1992 Certificates being refunded, as determined by such official at the time of such award. Section 8. The proposed form of Continuing Disclosure Agreement,to be dated the date of issuance of the Bonds,by and among the County and the Trustee, on file with the Secretary, is hereby approved. Section 9. The Board hereby authorizes the Executive Director or his designee to enter into one or more investment agreements(the"Investment Agreement")providing for the investment of moneys in the funds and accounts created under the Trust Agreement and/or one or more Swaps, as the Executive Director or his designee deems appropriate. The Board hereby finds and determines pursuant to Government'Code section 5922,that the Investment Agreement will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Investment Agreement and that the Swap is designed to reduce the amount or duration of payment,rate, spread or similar risk or result in a lower cost of borrowing when used in combination with the Bonds or enhance the relationship between risk and return with respect to investments. The Executive Director or his designee is hereby authorized and directed to execute and deliver the Investment Agreement, Swap and any other related agreement or agreements on behalf of the Authority as may be approved by the Executive Director or his designee, such approval to be conclusively evidence by the execution and delivery of such agreement or agreements. Section 10. The officers of the Authority are hereby authorized and'directed, jointly and severally,to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to cant'out, give effect to and comply with the terms and intent of this Resolution,including,but not limited to executing and delivering documents related to the defeasance of the 1992 Certificates, acquisition and sale or assignment agreements relating to the Solar Electric Panels, signature certificates,no litigation certificates,tax and rebate certificates and certificates concerning the contents of the Official'Statement distributed in connection with the sale of the Bonds. The Authorized DOCSSF1:5896993 40511-121 MAC Signatories and.the Director, Capital Facilitiesand Debt Management of the County on behalf of the Authority are hereby authorized and directed to execute and deliver any and all certificates,' instructions as to investments,written requests and other certificates necessary and desirable to administer the Bonds and the Trust Agreement or other documents authorized hereunder including executing Written Requests of the Authority authorizing disbursements from the Costs of Issuance Fund for payment of cost of issuance such as legal and financial advisor fees, trustee's fees,title insurance and bond insurance premiums, publication and printing costs,rating agency fees and similar expenses of the bond financing. Section 11. All actions heretofore taken by the officers and agents of the Authority with respect to the issuance and sale of the Bonds are hereby approved and confirmed. Section 12. This Resolution shall'take effect from and after its date of adoption. PASSED AND ADOPTED this 26th day of March,2002. Chai o he Board of Directors Co of Contra Costa Public Financing Authority [Seal] ATTEST: March 26 2002 Deputy Clerk DOCSSFI:5896I9.3 40511-121 MAC 6 CLERK'S CERTIFICATE The undersigned, Deputy Clerk of the Board of Directors of the County of Contra Costa Public Financing Authority,hereby certifies as follows: The foregoing is a full, true and correct copy of a resolution duty adopted at a regular meeting of the Board of Directors of said Authority duly and regularly held at the regular meeting place thereof on the 26th day of March, 2002, of which meeting all of the members of said Board of Directors had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following voter AYES: SUPERVISORS UILKEMA, GERBER,GLOVER AND GIOIA NOES: NONE ABSENT: SUPERVISOR.DESA.ULNIER ABSTAIN: NONE An agenda of said meeting was posted at least 96 hours before said meeting at the County Administration Building, 651 Pine Street, Martinez, California, a location freely accessible to members of the public, and a brief general description: of said resolutionappeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. "WITNESS my hand this 26th day of March, 2002, t [Seal] Deputy Clerk OCSSF1:589639.3 40511-121 MAC Recording requested',by and return to: COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY 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 GovernmentCode Section 6103 THIRD AMENDMENT TO MASTER SITE LEASE between the COUNTY OF CONTRA COSTA and the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY Dated as of April 1, 2002 (Amending the 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 as amended by the Second Amendment to Master Site Lease dated as of May 1,2001) 1 OCSSF 1587242. 40511.121 MA THIRD AMENDMENT TO MASTER SITE LEASE This Third Amendment to Master Site Lease, dated as of April 1, 2002 between the COUNTY OF CONTRA COSTA, a political subdivision organized and existing under and by virtue of the laws of the State of California. (the "County"), as lessor, and the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority"), as lessee, a joint exercise of power authority, duly organized and existing pursuant to an Agreement, dated April 7,, 1992; entitled "County of Contra Costa public Financing Authority Joint Exercise of Powers Agreement, by and between the County of Contra Costa and the Contra Costa County Redevelopment Agency; WITNESSETH WHEREAS, this Third Amendment to Master Site Lease is entered into in order to amend in certain respects a lease between the County and the Authority entitled "Master Site Lease , , 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. 99-0059811, as amended by the First Amendment to Master Site Lease, 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. 2001- 00 17620, 001-0017620, and as amendedby the Second Amendment to Master Site Lease, dated as of May 1, 2001 and recorded on May 10,2001, in the office of the County Recorder of the County, under Recorder's Instrument No. 2001-01-123402(together, the "Master Site Lease"),and to add to the property leased pursuant to the Master Site Lease certain additional real property consisting of the following building and facilities located in the County, the real property descriptions of tx1:58 242 which are contained in Exhibit A(capitalized terms used herein and not otherwise defined herein have the meanings assigned thereto by the Master Site Lease): County's Public Works Department Administration °Building located at 255 Glacier Drive in the City of Martinez; Data processing building located at 30 Douglas Drive in the City of Martinez; Public Works Administration Building, Building A, 2475 Waterbird Way in the City of Martinez; Public Works Material Testing Laboratory, Building D, 4785 Blunt Road in the City of Martinez; Public Works Road Maintenance Building, Building B; 2479 Waterbird Way in the City of Martinez; Public Works Warehouse Building, Building C, 2483 Waterbird Way in the City of Martinez; Health Services Building located at 595 Center Street and Muir Road in the City of Martinez; Forensic Science Center located at 1960 Muir Road in the City of Martinez; County Office Building located at 1650 Cavallo Road in the City of Antioch. and to sell to the Authority certain photovoltaic equipment (Power Light solar electric panels)' (the "Solar Electric Panels") to be placed on the roofs of the Martinez Detention Facility and on the County Building located at 50 Douglas Drive in Martinez (collectively with the,above leased facilities,the"2002 Series A Facilities"). NOW, THEREFORE,the parties hereto agree as follows: Section 1. This Third Amendment to Master Site Lease shall become effective on the date of recordation of this instrument in the office of the CountyRecorder of the County, State of California, or on June 1, 2002, whichever is earlier, and such date of commencement shall be'hereinafter referred'to as the "effective date." 2 Section 2 From and after the effective date of this instrument, the County, for good and valuable'consideration the sufficiency of which is hereby acknowledged, hereby leases to the Authority and the Authority hereby leases from the County, the real property described in Exhibit A hereto, which real property is hereby added to the Facilities leased pursuant to the Master Site Lease and all references to the Facilities in the Master Site Lease shall include said real property. The County, for good and valuable consideration, hereby sells all right, title and interest it has in the Solar Electric Panels to the Authority. The Authority agrees to lease said real property and the Solar Electric Panels back to the County pursuant to the Facility Lease. Section 3. The term of the Master Site Lease as to the 2002 Series A Facilities is unless such term is extended or sooner terminated as provided in the Master Site Lease. Section 4. The County covenants that it is owner in fee of the 2002 Series A Facilities: Section 5. Except as in this Third Amendment to Master'Site Lease expressly provided, the Master Site Lease shall continue in full force and effect in accordance with the terms and provisions thereof, as amended hereby. Section 6. If one or more of the terms, provisions, covenants or conditions of this Third Amendment to Master Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the retraining terms, provisions, covenants and conditions of this Third Amendment to Master Site Lease shall be affected thereby, and each D(WS�1 t:--)87242- 4 6 11-12 1 ' provision of this Third Amendment to Master Site Lease shall be valid and;enforceable to the fullest extent permitted by-law: Section 77. This ThirdAmendment to Master Site Lease may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. IN)( S' 1:581242 4051 I-I'_I NI V" 4 IN WITNESS WHEREOF, the County and the Authority have caused this Third Amendment to Master Site 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 Lesson [SEAL]' By Chair of the Board of Supervisors Attest: John R. Sweeten Clerk of the Board of Supervisors and County Administrator By Chief Clerk COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, as Lessee By Chair Attest: John R. Sweeten, Executive Director and Secretary I3y Assistant Executive Director IN X,'r�t :n5;7_4 . grs19 121 \1.tt' EXHIBIT A Additions to Facilities All that certain real property situated in the County of Centra Costa, State of California, described as follows: [Legal property descriptions for 2402 Series A Facilities to be inserted here.] 1)c x ,tif 1:5 242' 11611 1-11 MAC 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 Third Amendment to Master Site Lease dated as of April 1, 2002, between the County of Contra Costa (the "County") and the Authority, relating to the 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 by the Second Amendment to Master site Lease, dated as of May 1, 2001, between the County and the Authority. STATE STREET BANK AND TRUST COMPANY'OF CALIFORNIA,N.A.,as Trustee By: Authorized Officer' D( t 7S-;24 CONSENT OF BOND INSURER The>undersigned, as Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding_ and Various Capital Projects), 1999 Series A, issued pursuant to the Trust Agreement dated as of February 1, 1999, between the County of Contra Costa Public Financing Authority (the "Authority") and the trustee ;and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects),2001 Series A issued pursuant to the First Supplemental Trust Agreement dated as of January 1, 2001, and as Insurer of the Authority's ''Lease Revenue Bonds (Various Capital Projects), 2001 Series B issued pursuant to the Second Supplemental Trust Agreement dated as of May 1, 2001, hereby consents to the execution and delivery of the Third Amendment to Master Site Lease dated as of April 1,, 2002, between the County of Contra Costa (the "County") and the Authority, relating to the Master Site Lease, dated as of February 1, 1999, between the County and the Authority, as amended by the First Amendment to the Master Site Lease, dated as of January 1, 2001, and as amended by the Second Amendment to the Master Site Lease, dated as of May 1, 2001. MBIA INSURANCE CORPORATION By Authorized Officer TRANSCRIPT FOR PUBLIC HEARING ON PROPOSED ISSUANCE OF BUNDS To comply with the lawgoverning the issuance of joint powers authority bonds, a public hearing is being held by this Board of Supervisors of the County of Contra Costa,California,in connection with plans by the County of Contra Costa Public Financing Authority to issue up to $35,000,000 of its Lease Revenue Bonds(Refunding and'Various Capital Projects),2002 Series A(the"Bonds"). Notice of the time and place of this public hearing on the issuance of the Bonds was published in the local newspaper at least five days prior to the hearing date. The Bonds will be issued to refund the County's outstanding '1992 Certificates of Participation and in part to finance various capital improvements and projects for the County located within the County, such as: Acquisition and installation of photovoltaic equipment (Power Light solar electric panels) to be placed on the roofs''of the Martinez Detention Facility and 50 Douglas Drive in Martinez Acquisition of a County office building at 1650 Cavallo Road in Antioch. Members of the public are invited to express their views on the plan of financing,and on the nature and location of facilities proposed to be financed, [Public comments heard] This:Board of Supervisors will consider the comments made with respect to the financing in their determination of whether to approve the financing and find a significant public benefit to the financing. There being no further'comments this hearing is now closed. COUNTY OF CONTRA COSTA, CALIFORNIA D0 SSFt.594?;3fi: 40511-121 MAC: 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 GovernmentCode Section 6103 THIRD AMENDMENT TO FACILITY LEASE by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and the COUNTY OF CONTRA COSTA Dated as of April 1,2002 (Amending the 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 May 1, 2001) DOC; ;1 1:587105. 40511-121 Aia(: TABLE OF CONTENTS Page ARTICLE XIII ADDITIONS RELATING TO LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS),2002 SERIESA.......................................................... .............................. .....2 SECTION 13.01. Effective Date........................ ....................... ...............................2 SECTION 13.02. Additional Definitions .................................................... ...........2 SECTION 13.03. Term of Additional Facilities.........................................................3 SECTION 13.04. Use of Proceeds of 2002 Series A Bonds......................................4 SECTION 13.05. Increase to Base Rental Payments .................... . .......... .. ...........4 SECTION 13.06. Possession of Additional Facilities................................................4 SECTION 13.07. Title Insurance ...............................................................................4 SECTION 13.08, Continuing Disclosure...................................................................4 SECTION 13.09. 2002 Series A Reserve Facility................. ..........4 SECTION 13.10. Trust Agreement............................................................................5 SECTION 13.11. Facility Lease in Full Force and Effect........................... ..............5 SECTION 13.12. Execution in Counterparts.............................................................. 5 EXHIBIT A—Additions to Demised Premises...................................... .. ..........A-1 EXHIBIT B —Additional Base Rental Payment............. ......... ......... .................. B-1 40511-I 1-1 .NI THIRD AMENDMENT TO FACILITY LEASE This Third Amendment to Facility Lease, dated as of April 1, 2002, 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 (tire "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, 1999and recorded on March 4, 1999 in the office of the County Recorder of the County, under Recorder's Instrument No. 99-0059811; as amended by the First Amendment to Master Site Lease 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. 01-17620, and as amended by the Second Amendment to Master Site Lease dated as of May 1, 2001 and recorded on May 10, 2001 in the office of the County Recorder of the County, under Recorder's Instrument No. 01-123402. WHEREAS, the County has further amended said Master Site Lease pursuant to the Third Amendment to Master Site Lease dated as of April 1, 2002;to lease certain additional real property to the Authority consisting of the following buildings and facilities: County's Public Works Department Administration Building located at 255 Glacier Drive in the City of Martinez; Data processing building located at 30 Douglas Drive in the City of Martinez; Public Works Administration Building, Building A, 2475 Waterbird Way in the City of Martinez Public Works Material Testing Laboratory, Building D, 4785"Blum Road in the City of Martinez; Public Works Road Maintenance Building, Building B, 2479 Waterbird Way in the City of Martinez; Public Works Warehouse Building, Building C,2483 Waterbird Way in the City of Martinez; Health Services Building located at 595 Center Street and Muir Road in the City of Martinez; Forensic Science Center located at 1960 Muir Road in the City of Martinez; County Office Building'located at 1650 Cavallo Road in the City of Antioch; WHEREAS; this Third Amendment to Facility Lease is entered into to amend and supplement in certain respects a'lease between the Authority and the County entitled "Facility 40511-12I MAC 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 25; 2001 in the office of the County Recorder of the County, State of California, under Recorder's Instrument No. 01-1'7621, and as amended by the Second Amendment to Facility Lease,dated as of May 1, 2001 and recorded on May 10, 2001 in the office of the County Recorder of the County, State of California; under Recorder's Instrument No. 0 1-123403 (together and as amended from time to time,the"FacilityLease")and to add to the property leased pursuant to the Facility Lease certain additional real property and equipment consisting of the buildings and facilities leased by the County pursuant to the Third Amendment to Master Site Lease and Photovoltaic equipment(Power Light solar electric panels) to be placed on the roofs of the Martinez Detention Facility and the County building located at 50 Douglas Drive, in Martinez (the "Solar Electric Panels"). The real property descriptions of the facilities Ieased hereunder are contained in Exhibit A (together, with the Solar Electric Panels,the "2002 Series A Facilities"); NOW, THEREFORE,the parties hereto agree as follows: ARTICLE XIII ADDITIONS RELATING TO LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002 SERIES A SECTION 13.01. Effective Date. This Third 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 June 1, 2002, 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 and equipment consisting of the 2002 Series A Facilities is hereby added to the Facility Lease as set forth in Exhibit A hereto and shall be encumbered by the Facility Lease and references to Facilities in the Facility Lease shall hereafter include such real property and equipment and reference to Demised .Premises in the Facility Lease shall hereafter include the real property described in Exhibit A. SECTION 13.02. 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: "Third Amendment to Facility Lease The term `Third Amendment to Facility Lease' means that Third Amendment to Facility Lease between the Authority and the County, dated as of April 1, 2002, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof." Di lau-tx : 11611-121 M V "Third Supplemental Trust A reement The term `Third'Supplemental Trust Agreement' means that Third Supplemental Trust Agreement between the Authority and the Trustee,dated'as of April 1,2002,as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions of the Trust Agreement." "2002 Series A Bond Insurer The term `2002 Series A Bond Insurer' means MBIA Insurance Corporation, or any successor thereto or assignee thereof." "2002 Series A Bonds The term`2002 Series A Bonds' means the bonds issued by the Authority under and pursuant to the Trust Agreement and the Third Supplemental Trust Agreement, the proceeds of which will be applied to the acquisition, construction and equipping of the 2002 Series A Project and to the payment of costs related thereto." "2002 Series A Facilities The term `2002 Series A Facilities' has the meaning set forth in the third WHEREAS clause of this Third Amendment to Facility Lease." "2002 Series A Financial Guaranty Agreement The term `2002 Series A Financial Guaranty Agreement' means the Financial Guaranty Agreement, dated the date of issuance of the 2002 Series A Bonds between the Authority and MBIA Insurance Corporation." "2002 Series A PMig]gt The term `2002 Series A Project' means those items identified as such in the Third Supplemental Trust Agreement, as the same may be changed from time to time by the filing of a notice with the Trustee." SECTION 13.03. Term of Additional facilities. The term of this Lease for the 2002 Series A Facilities shall end on June 1, _ , unless such terra is extended or sooner terminated as provided in the Facility Lease. IN)t �SFT:5A7H15. 4u511-121 M V 3 SECTION 13.04. Use of Proceeds of 2002 Series A Bonds. The parties hereto agree that the proceeds of the 2002 Series A Bonds will be used by the Authority to refund and defensethe 1992 Certificates and refinance and mance the acquisition and construction of the 2002 Series A Project, including the payment of capitalized interest related to a portion;of the 2002 Series A Project[, to purchase a reserve fund surety bond] to fund' the portion of the Reserve Fund Requirement necessary for the issuance of the 2002 Series A Bonds and to pay costs related thereto as specified in the Third Supplemental Trust Agreement: SECTION 13.05. 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 13.06. Possession of Additional Facilities. The County hereby represents and warrants that the County has taken possession of and will occupy the 2002 Series A Facilities throughout the term of this Lease for such facilities under the terms and provisions of this Lease; the 2002 Series A Facilities are of comparable worth and economic life to the 2002 Series A Project and the 2002 Series A Facilities are ready for immediate use and occupancy by the County or to the extent such equipment or facilities are under construction, sufficient capitalized interest is available under the Trust Agreement to provide for the payment of related debt service until the completion of such facilities. SECTION 13.07. Title 111surance. The County shall have obtained or shall obtain upon the execution and delivery of this Third 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, the 2001 Series B Bonds and the 2002 Series A 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, Section 16.01, Section 22.01 and Section 28.01 of the Trust Agreement. SECTION 13.08. Continuina Disclosure. The County hereby covenants and agrees that itwill comply with and carry out all of the provisions of the 2002 Series'A Continuing Disclosure Agreement. Notwithstanding any other provision of this Lease, failure of the County to comply with the 2002 Series A Continuing Disclosure Agreement shall not be considered an event of default hereunder, however, the Trustee may (and, at the request of any Participating Underwriter (as defined in the 2002 Series A Continuing Disclosure Agreement) or the Owners of at least 25% aggregate principal amount of Bands 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 13.08. SECTION 13.09. [?002 Series A Reserve Facility. In order to satisfy the Reserve Fund Requirement upon the issuance of the 2002 Series A Bonds, the Authority is purchasing the 2002'Series A Reserve Facility. Following a draw, if any, on the 2002 Series>A .Reserve Facility, the County, through its administrative staff, will use its best efforts to do all t�cx :�I I:,ti7iu , 41.)511-i_I ,1i.Fr 4 things lawfully within its power to include in its proposed budget and request that the Beard of Supervisors of the County include in the final budget all amounts necessary to pay amounts owing by the Authority under the 2002 Series A Financial Guaranty Agreement with respect to the 2002 Series A 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 13.10. 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 Third Supplemental Trust Agreement. SECTION 13.11. facility Lease in Full Force and Effect. Except as in this Third 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 13.12. Execution in Counterparts. This Third Amendment to Facility Lease may be executed in any number of counterparts, each of which shall be deemed to bean original, but all together shall constitute but one and the same Third Amendment to Facility Lease. It is also agreed that separate counterparts of this Third 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. uut. i 1:51s7[��3, 4031 1-1221 \1 V' 5 IN WITNESS WHEREOF, the Authority,and the County have caused this Third 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: John R. Sweeten Clerk of the Board of Supervisors and County Administrator By Chief Clerk COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, Lessor By Chair Attest; John R. Sweeten, Executive Director and Secretary By Assistant Executive Director 1>t rc;ti::f1:5hi t15. 40511-1'_f \1 V" EXHIBIT A Addition to Demised premises All that certain real property ,situated in the County of Contra Costa, State of California,described as follows. IN) SSI 1:59710.5. 40511,121 V V A-1 EXHIBIT$ [TO BE REVISED] Additional Base Rental Payment Schedule f and other Facilities) Date Principal interest Total Fiscal Year Total [June 1, 20021 $ $ $ December 1, 2002` June 1, 2003 December 1, 2003 June.1,2004 December 1, 2004 June 1, 200 December 1, 2005 June 1, 2006 December 1, 2006 June 1, 2007 December 1, 2007 June 1, 2008 December 1, 2008 June 1, 2009 December 1, 2009 June 1,2010 December 1, 2010 June 1, 2011 December 1, 2011 .tune 1, 2012 December>1, 2012 June 1, 2013 December 1, 2013 June 1, 201'4 December 1, 2014 June 1, 2015 December 1, 2015 June 1, 2016 December 1, 2016 June 1, 2017 December 1, 2017 June 1, 2018 December 1,2018 June 1, 2019 December 1, 2019 June 1, 2020 December'1,2020 f);11-121 %IAC B- June 1, 2021 December 1,2021 June 1, 2022 December 1, 2022 June 1,2023 December 1, 2023 June 1,:2024 December 1,'2024 June 1,2025 December 1,2025 June 1, 2026 December 1, 2026 June 1, 2027 TOTAL 40511-fat \i:(' 2 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 consentsto the execution and delivery of the THIRD AMENDMENT TO FACILITY LEASE dated as of April I, 2002, 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, as amended by the First Amendment to Facility Lease dated as of January 1, 2001, and by the Second Amendment to Facility Lease dated as of May 1, 2001, between the Authority and the County. STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A.,'as Trustee By Authorized Officer' 40>11-121 %11 CONSENT OF INSURER The undersigned, as Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 SeriesA, issued pursuant to the Trust Agreement dated as of February 1, 1999, between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority") and the trustee, and as Insurer of the Authority's Lease Revenue Bands (Various Capital Projects), 2441 Series A, issued pursuant to the First Supplemental Trust Agreement,and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2041 Series B, issued pursuant to the Second Supplemental Trust Agreement, hereby consents to the execution and delivery of the THIRD AMENDMENT' TO FACILITY LEASE dated as of April 1, 2002, 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, as amended by the First Amendment to Facility Lease, dated as of January 1, 2001, and as amended by the Second Amendment to Facility Lease, dated as of May 1, 2001, between the Authority and the County. MBIA INSURANCE CORPORATION By Authorized Officer t?t lt_ jl I:5K7116 40511-1'_1 \1 iC THIRD SUPPLEMENTAL TRUST AGREEMENT by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A. Dated as of April 1, 2002 RELATING TO THE $[Amount] COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002 SERIES A (Supplementing the Trust Agreement dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001 and the SecondSupplemental Trust Agreement dated as of May 1, 2001) DO SSI-'4:586907, 40511-121 MAC TABLE OF CONTENTS Page ARTICLE XXV DEFINITIONS;EQUAL SECURITY........ ..................... ............... .......4 SECTION 25.01. Additional Definitions .................. ....... .. ... ........... .........................4 ARTICLEXXVI THE BONDS .............................................,.... ............... .......... ..... ..... 7 SECTION 26.01. Authorization of 2002 Series A Bonds...................... ......... ..............7 SECTION 26.02. Terms of the 2002 Series A Bonds......................................................8 SECTION 26.03. Form of 2002 Series A Bonds.......................... ............ ......................9 SECTION 26.04. Execution of 2002 Series A Bonds........ .............................................9 SECTION 26.05. Transfer,Exchange and Payment of 2002 Series A Bonds'.. ..............9 SECTION 26.06. Special Covenants as to Book-Entry Only System for 2002 Series A Bonds............... .. ......... .......... ......... ......... ......... ............. 10 SECTION 26.07. Compliance with 2002 Series A Continuing Disclosure Agreement......................... ......... ......... ..:...... ......... ......... ............. I 1 ARTICLE XXVII ISSUANCE OF BONDS ................................................. ....................... 12 SECTION 27.01. Procedure for the Issuance of 2002 Series A Bonds............ ............. 12 SECTION 27.02. 2002 Series A Project Fund............................................................... 13 SECTION 27.03. Creation of Sinking Accounts for the 2002 Series A Term Bonds........... .................... .. ............. ......... ................... ............. 13 SECTION 27.04. Tax Covenants ....... ................... ................... .. ............... ............. 14 ARTICLE XXVIII REDEMPTION OF BONDS..................................... ............................. 14 SECTION 28.01. Extraordinary Redemption. .............................................................. 14 SECTION 28.02. Optional Redemption........ ......... ................... ................... ............. 14 SECTION 28.03. Mandatory Sinking Fund Redemption............................................... 15 SECTION 28.04. Effect of Redemption............................ ............................................ 15 ARTICLE XXIX MUNICIPAL BOND INSURANCE[; 2002 SERIES A RESERVE FACILITY].................. ......... ................................................................ 15 SECTION 29.01. Concerning the 2002 Series Bond Insurer....... ..... ....................... 15 SECTION 29.02, Payments Under the 2002 Series A Bond Insurance Policy.............. 17 SECTION 29.03. 2002 Series A Bond Insurer Default.. . ..... ... ....... .... ....... 18 SECTION 29.04. Provisions Relating to the 2002 Series A Reserve Facility... ........... 18` ARTICLE XXX MISCELLANEOUS PROVISIONS................................................I....... 19 SECTION 30.01. 2002 Series A Bond Insurer .......... ......................... 19 SECTION 30.02. Validity of Supplement.... ..................... .............................. 19 th a ti;a�IrShGR�t;. ..i_ 10511-I"_1 11!{, TABLE OF CONTENTS (continued) Page SECTION 30.03. Terms of 2002 Series A Bonds Subject to the Trust Agreement....... 19 SECTION 30.04. Assignment Acknowledged......... ......... ... ............. .... .............. ..... 19 SECTION 30.05. Effective Date of Third Supplemental Trust Agreement....... . ......... 19 SECTION 30.06. Execution in Counterparts......... ... ......... ................ ........... ..........20 EXHIBIT A [FORM OF 2002 SERIES A BOND].... ......... ......... ......... ................. ....... ....A.-1 EXHIBIT B DESCRIPTION OF 2002 AERIE'S A PROJECT.................................................B-1 EXHIBIT C [FORM OF REQUISITION—COSTS OF ISSUANCE] ....................................C-1 EXHIBIT D [FORM OF REQUISITION—PROJECT FUND] .... ................... .. ..................D-1 D(x SSI 1:58 8,17, FSI 41-1'1"ti1 V* THIS THIRD SUPPLEMENTAL TRUST AGREEMENT dated as of April 1, 2002, by and between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY(the"Authority"), a joint exercise of powers authority, duly organized and validly existing pursuant to an Agreement entitled "County of Centra Costa Public Financing Authority Joint Exercise of Powers Agreement"by and between the County of Centra Costa and the Contra Costa County Redevelopment Agency, and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a national banking association>organized and existing under and by virtue of the laws ,of the United States of America, as successor trustee (together with any successor thereto, the "Trustee"), beingsupplemental to the trust: agreement dated as of February 1, 1999, by and between U.S. Bank Trust National Association, as predecessor trustee and the Authority; WITNESSETH: WHEREAS, the County of Contra Costa (the "County") has leased certain real property (as further defined herein, the "Facilities") to the Authority pursuant to a Master Site Lease,dated as of February 1, 1999 (together with amendments from time to time thereto, called the"Site Lease"), WHEREAS, the County and the Authority have entered into a Third Amendment to Master Site Lease, dated as of April 1, 2002 (herein called the "Third Amendment toMaster Site Lease"), to amend the Site Lease in certain respects and to lease to the Authority certain additional real property; WHEREAS, the Authority is leasing certain Facilities to the County pursuant to;a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, including as amended by the Third Amendment to Facility Lease, dated as of April 1, 2002 (herein, together with other amendments thereto, collectively called the"Facility Lease") WHEREAS, the U.S. Bank Trust National Association, as original and predecessor to the Trustee, and the Authority have heretofore executed the Trust Agreement, dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001, as supplemented by the Second Supplemental Trust Agreement dated as of May 1, 2001 and as supplemented by this Third Supplemental Trust Agreement dated as of April 1, 2002 (herein, together with other supplements thereto, collectively called the "Trust Agreement"), WHEREAS,the Authority has heretofore issued pursuant to the Trust Agreement $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") $18,030,000'County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds"), and $23,775,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds(Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"), to acquire the leasehold in the Facilities and to assist the County in financing and refinancing various capital projects (as further' defined herein, the "Project"); D(V SSFI:56,81x7. 1,611-121 \I\f' WHEREAS, U.S. Trust Company of California, N.A. (now succeeded by BNY Western Trust Company),as trustee (the "1992 Trustee") executed and delivered<$37,300,000 aggregate principal amount of the County's 1992 Certificates of Participation (Consolidated Capital'Facilities Project) (the "1992 Certificates") pursuant to a Trust Agreement, dated as of June 1, 1992, by and among the County, the Contra Costa County Public FacilitiesCorporation (the "Corporation") and the 1992 Trustee for the purpose of defeasing three prior series of certificates of participation, which financed the costs of the acquisition and improvement of the following County projects: County's Public Works Department Administration Building located at 255 Glacier Drive in the City of Martinez; Data processing building located at 30 Douglas Drive in the City of Martinez, Public Works Administration Building, Building A, 2475 Waterbird Way in the City of Martinez; Public Works Material Testing Laboratory, Building D, 4785 Blunt Road in the City of Martinez; Public Works Road Maintenance Building, Building B, 2479 Waterbird Way in. the City of Martinez; Public Works Warehouse Building,'Building C, 2483 Waterbird Way in the City of Martinez; Health Services Building located at 595 Center Street and Muir Road in the City of Martinez; Forensic Science Center located at 1960 Muir Road in the City of Martinez (collectively, the"1992 Facilities"); WHEREAS pursuant to an acquisition agreement, dated as ofJune1 1992, between the County and the Corporation, the Corporation acquired' the 1992 Facilities and pursuant to a lease agreement, dated as of June 1, 1992 (the "1992 Facility Lease"), between the Corporation and the County, which lease or memorandum thereof was recorded in the office of the County Recorder of the County of Contra Costa on June 22, 1992 under Recorder's Serial Number 92-157266, the Corporation leased the 1992 Facilities to the County; WHEREAS, pursuant to an assignment agreement, dated as of June 1, 1992, between the Corporation and the 1992 Trustee, the lease payments made by the County under the 1992 Facility Lease ("1992 Base Rental") were assigned to the 1992 Trustee and the principal and interest components thereof are represented by the 1992 Certificates; WHEREAS, the County has determined that it is in the best interest of the County to refund and defease the'outstanding 1992 Certificates; WHEREAS, the Authority may at any time, with the consent of the Bond Insurer, issue Additional Bonds payable from,and secured by a pledge of and lien upon, the Revenues, as provided in Section 3.03 of the Trust Agreement, provided that the proceeds of such Additional Bonds be applied to, among other things, the acquisition (by purchase or tease) of facilities to be added to the Facilities or the refunding of any Bonds;,then Outstanding; WHEREAS, in order to provide funds for the defeasance of the 1992 Certificates and the financing of the 2002 Series A Project (hereinafter defined), the County has requested that the Authority issue the 2002 Series A Bonds (hereinafter defined) and acquire a leasehold. interest in the 1992 Facilities and the 2002 Series A Project and lease the same back to the County, WHEREAS, pursuant to the Letter of Instructions to the 1992 Trustee, dated as of April 1 ,2042, certain proceeds of the 2002 Series A'Bonds will be deposited into an escrow fund (the "Escrow Fund") and irrevocably pledged to repay the 1992 Base Rental and 1992 Certificates on June 1, 2002, thereby defeasing the 1992 Certificates; WHEREAS, upon such defeasance the 1992 Facilities will vest in the County; WHEREAS,the County will lease to the Authority the 1992 Facilities and certain capital assets of the County (as further defined herein, the "2002'Series A Facilities") pursuant to the Third Amendment to Master Site Lease ; WHEREAS, the County will lease back the 2002 Series A Facilities from the Authority pursuant to the terms of the Facility Lease; WHEREAS, under the Facility Lease, the County is obligated to make base rental payments to the Authority for the lease of the Facilities; WHEREAS, all rights to receive such base rental payments have been pledged without recourse by the Authority to the Trustee pursuant to the Trust Agreement; WHEREAS, under the Third Amendment to Facility Lease, the County is obligated to pay increased base rental payments to the Authority; WHEREAS, in consideration of such increased base rental payments and other adequate consideration,the Authority has agreed to issue bands entitled "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding, and Various Capital Projects),, 2002 Series A (the "2002 Series A Bonds"), in the aggregate principal`amount of$[Amount],to provide funds for the defeasance of the 1992 Certificates, to provide additional funds'for the Project and to acquire a leasehold interest in such additional facilities, and in connection therewith the Authority and the County have provided for the amendment of the Site Lease and the Facility Lease, WHEREAS, the 2002 Series A Bonds are payable from Revenues on a parity" basis with the 1999=.Series A Bonds, the 2001' Series A Bonds, the 2001 Series B Bands and any Additional Bands hereafter issued by the Authority under the Trust Agreement; and WHEREAS, all acts and proceedings required by law necessary to snake the 2442 Series A Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Authority payable in accordance with their terms, and to constitute the Trust Agreement a valid:and binding agreement of the parties hereto for the uses and purposes herein set forth in accordancewith its terms, have been done and taken, and the execution and delivery of this Third Supplemental Trust Agreement have been in all respectsdulyauthorized, NOW, THEREFORE, THIS THIRD SUPPLEMENTAL TRUST AGREEMENT WITNESSETH,that in order to secure the full and timely payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under the Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions'therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bands are to be issued and received, and in consideration of the premises and of the mutual:covenants herein contained and of the purchase and acceptance of the: Bonds by the holders thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective folders from time to time of the Bonds, as follows: ARTICLE XXV DEFINITIONS; EQUAL SECURITY SECTION 25.01. Additional Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of the Trust Agreement and of any amendment hereof or supplement hereto and of any certificate,;opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein and to the extent the definitions in this Section differ from the definitions of such terms contained in Section 1.01 of the Trust Agreement, the definitions in this Section shall control and the definitions in Section 1.01 shall be amended accordingly. Capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Facility Lease. Facility Lease The term "Facility Lease" means that certain lease, entitled "Facility Lease (Various Capital Projects)," by and between the Authority" and the County, dated:, as of February 1; 1999, which lease or a memorandum thereof was recorded in the office of the County Recorder of the County on March 4, 1999 under Recorder's Serial No. 99-0059812, as originally executed and recorded or as it may from time to time be supplemented, modified'or amended pursuant to the provisions hereof and thereof, including the Third Amendment to Facility Lease. 1992 Certificates The term "1992 Certificates" means the County's $37,300,040 1992 Refunding Certificates of Participation (Consolidated Capital Facilities 'Project), dated June 1, 1992, evidencing proportionate ownership interest of the owner thereof in payments to be made by the County as rental for certain land and facilities pursuant to a lease agreement,;'dated as of June 1, 1992, by and between the County and the Contra Costa County Public Facilities Corporation. 1992 Escrow Age The term "1992 Escrow Agent" means U.S. Trust Company of California, N.A., as the 1992 Trustee,or its successor thereto. 1992 Escrow Fund The term "1992 Escrow Fund" means the fund of the same name defined in the 1992 Letter of Instructions. 1992 Letter of Instructions The term "1992 Letter of Instructions" means that certain 1992 Letter of Instructions by and between the Escrow Agent and the County, dated as of April 1, 2002, providing for the defeasance and prepayment of the 1992 Certificates. 1992 Trust Agreement The term "1992 Trust Agreement"means that certain trust agreement dated as of June 1, 1992,'among the Contra Costa County Public Facilities Corporation,the County and the 1992 Trustee authorizing the execution and delivery of the 1992 Certificates. 1992 Trustee The term "1992 Trustee" means U.S. Trust Company of California, N.A., as trustee for the 1992 Certificates: Third Amendment to Facility Lease The terra "Third Amendment to Facility Lease" means that certain lease and instrument, entitled"Third Amendment to Facility Lease,"by and between the Authority and the County,dated'as of April 1, 2002, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County on _, 2002 under Recorder's Serial No. 02 as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof, Third Amendment to Master Site Lease The term "Third Amendment to Master Site Lease" means that certain lease and instrument, entitled "Third Amendment to Master Site Lease," by and between the County and the Authority, dated as of April 1, 2002, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County on —, 2001' under Recorder's Serial Number 02 ,as originally executed and recorded or it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof. D()t.SSI 1:3868i I7. 0511-E'S 1f,\t. Third Supplemental Trust Agreement The term "Third Supplemental Trust Agreement"means this Third Supplemental Trust Agreement, dated as of April 1, 2002, by and between the Trustee and the Authority, executed and delivered in accordance with the Trust Agreement and which is supplementalto the Trust Agreement. Site Lease The-term "Site Lease" means that certain lease, entitled "Master Site Lease," by and between the County and the Authority, dated' as of February 1, 1999, which lease or a memorandum thereof was recorded in the 'office of the County Recorder of the County on March 4, 1999 under Recorder's Serial Number 99-0059811, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof including the Third Amendment to Master Site Lease. 2002 Series A Bond Insurance Policy The term ""2002 Series A Bond Insurance Policy" means the insurance policy issued by the 2002 Series A Bond Insurer guaranteeing the scheduled payment of principal of and interest on the 2002 Series A Bonds when due. 2002 Series A Bond Insurer The term"2002 Series A Bond Insurer" means [MBIA Insurance Corporation], or any successor thereto or assignee thereof. 2002 Series A Bonds The term "2002 Series A Bonds" means the bonds issued by the Authority under and pursuant to the Trust Agreement and this Third Supplemental Trust Agreement, the proceeds of which will be applied to the acquisition, construction and equipping of the Project, including the 2002 Series A Project and to the payment of costs related thereto. 2002 Series A Continuing Disclosure Agreement _ The term "2002 Series A Continuing Disclosure Agreement"means that certain Continuing Disclosure Agreement among the County and the Trustee dated the date of issuance of the 2002 Series A Bonds, as originally executed and as it may be amended from time to time n accordance`with the terms thereof. 2002 Series A Costs of Issuance Fund The term "2002 Series A Costs of Issuance Fund" means the fund by that name established pursuant to Section 27.01 of this Third Supplemental'Trust Agreement. D(Wu yf 4w.) 1(\C 6 2002 Series A Facilities The term "2042 Series A Facilities" means additional Facilities consisting of the following: County's Public Works Department Administration Building located at 255 Glacier Drive in the City of Martinez; Data processing building located at 30 Douglas Drive in the City of Martinez; Public Works Administration Building, Building A, 2475 Waterbird Wayin the City of Martinez; Public Works Material Testing Laboratory, Building D, 4785 Blum Road in the City of Martinez'; Public Works road Maintenance Building, Building B, 2479 Waterbird Way in the City of Martinez; Public Works Warehouse Building;Building C, 2483 Waterbird Way in the City of Martinez; Health Services Building located at 595 Center Street and Muir Road in the City of Martinez; Forensic Science Center located at 1960 Muir Road in the City of Martinez; County Office Building located at 1650 Cavallo Load in the City of Antioch;. Certain photovoltaic equipment (Power Light solar electric panels) (the "Solar Electric Panels")to be placed on the roofs of the Martinez Detention.Facility and on the County Building located at 50 Douglas Drive in Martinez. 2042 Series A Financial Guaranty Agreement The terin "2002 Series A Financial Guaranty Agreement" means the Financial` Guaranty Agreement, dated the date of issuance of the 2002; Series A Bonds, between the Authority and the 2002 Series A Reserve Facility Provider. 2002 Series A Project The term "2042 Series A Project" means the Subsequent Phase of the Project financed with the proceeds of the 2002 Series A Bonds and includes the capital improvements listed on Exhibit B hereto, as the same may be changed by notice to the Trustee. 2002 Series A Project Fund The term "2042 Series A Project Fund"'means the fund of that name created pursuant to Section 27.02. »X>4 '+1:586,"n. f2002 Series A Reserve Facility The term "2002 Series A Reserve Facility" means the surety bond, effective as of the date of issuance of the 2002 Series A Reserve Facility Provider.] [2002 Series A Reserve Facility Provider The term "2002 Series A Reserve Facility Provider" means (MBIA Insurance Corporation],as issuer of the 2002 Series A Reserve Facility.] ARTICLE'XXVI THE BONDS; SECTION 26.01 Authorization of 2002 Series A Bonds. (a) A fourth-Series of Bonds is hereby created and designated" "County of Contra Costa Public;Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series A." The aggregate principal amount of 2002 Series A Bonds which may be issued and Outstanding under this Third Supplemental Trust Agreement shall not exceed $'[Amount]. The 2002 Series ABonds shall be payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues equal to the pledge,'charge and lien securing the Outstanding Bonds. The 2002 Series A>Bonds are issued in accordance with Article III'. (b) The Authority has reviewed all proceedings heretofore taken relative to the authorization of the 2002 Series A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the 2002 Series Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and;every' requirement of the Act, to issue the 2002 Series A Bonds in the form and manner provided Therein for the purpose of providing funds to finance and refinance the Project,`including the 2002 Series A Project and the refunding and defeasance of the 1992 Certificates, and that the 2002 Series A Bonds shall be entitled to the benefit,protection and security of the provisions hereof. (c) The validity of the issuance of the 2002 Series A Bonds shall not be dependent on or affected in any way by the proceedings taken by the Authority for the finance and refinancing of the Project or by any contracts made by the Authority or its agents in connection therewith, and shall not be dependent upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The 2002 Series"A Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive 2002 Series A Bonds (or any temporary 2002 Series A Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. SECTION 26.02. Terms of the 2002 Series A Bonds. (a) The 2002 Series A Bonds shall be issued in the aggregate principal amount' of$[Amount]. The 2002 Series A Bonds 'shall be dated as of April 1, 2002, shall be i (W s"!,1!5s. 1,'01 +611,121 MAC 8 issued only in fully registered form in Authorized Denominations (not exceeding the principal' amount of 2002 Series A Bonds maturing at any one time), and shall mature in the years and in the principal amounts and bear interest at the rates as set forth in the following schedule, subject to prior redemption as described in Article XXVIII hereof. County of Contra Costa Public Financing Authority Lease Revenue Bonds(Various Capital Projects), 2002 Series A Maturity Date June 1 Principal AmountInterest Rate *Term Bond The 2002' Series A Bonds shall bear interest at the rates set forth above, payable commencing;December l; 2002,and semiannually thereafter on June 1 and December l in each year. The 2002 Series A Bonds shall bear interest from the Interest Payment Date next preceding the date of,authentication thereof, unless such date of authentication is an Interest Payment Date, in which event they shall bear interest from such date, or unless such date of authentication is prior to the Record Date for the first Interest Payment Date, in which event they shall bear interest from their dated date. The amount of interest so payable on any Interest Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. (b) Payment of interest on the 2002 Series A Bonds due on or before the maturity or prior redemption thereof shall be paid by check mailed by first class mail on each Interest Payment Date to the person in whose name the Bond is registered as of the applicable Record Date for such Interest Payment Date at the address shown on the registration books maintained by the Trustee pursuant to Section 2.07, provided, however,that interest on the 2002' Series A Bonds shall be paid by wire transfer or other means to provide immediately available funds to any`Owner of at least $1,000,000 in aggregate principal amount'of such Series of Bands, at its option, to an account within the United States of America according to wire instructions given to the Trustee in writing for such purpose and on:file as of the applicable Record Date preceding the Interest Payment Date in accordance:with Section 2.02,of the Trust Agreement. SECTION 26.03. Form of 2002`Series A Bonds. The 2002 Series A Bonds; and the authentication and registration endorsement and assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto attached and by this reference herein incorporated: SECTION 26.04. Execution of 2002 Series A Bonds. The 'Chair or the Executive Director of the Authority is hereby authorized and directed to execute each of the 2002 Series A Bonds on behalf of the Authority and the Secretary or Assistant Secretary of the Authority is hereby authorized and directed to countersign each of the 2002 Series:A Bonds on behalf of the ,Authority. The signatures of such officers may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the 2002 Series A Bonds shall cease to be such officer before the delivery of the 2002 Series A Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the 2002 Series A:'Bonds. Only those 2002 Series A Bonds bearing thereon a certificate of authentication in the form set forth in Exhibit A hereto, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the 2002 Series A Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof. SECTION 26.05. Transfer. Exchange and Payment of 2002 Series A Bonds. Any 2002 Series A Bond may, in accordance with its terms, be transferred,paid or exchanged as provided in Section 2.05 through Section 2.08, inclusive. SECTION 26.06. Special Covenants as to Book-Entry Only System for 2002 Series A Bonds. (a) Except as otherwise provided in subsections (b) and ' (c) of this Section 26.06, all of the 2002 Series A Bonds initially issued shall be registered in the name of Cede & Co., as nominee for DTC, or such other nominee as DTC shall request pursuant to the Representation. Letter. Payment of the interest on any 2002 Series A Bond registered in the name of Cede & Co.shall be made on each Interest'Payment Date for such 2002 Series A Bonds to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. (b) The 2002 Series A Bonds initially shall be issued in the form of a,single authenticated fully registered bond for each stated maturity of such 2002 Series A Bonds, representing the aggregate principal amount of the 2002 Series A Bonds of such maturity. Upon> initial issuance, the ownership of all such 2002 Series A Bonds shall be registered in the; registration records maintained by the Trustee pursuant to Section 2.07 in the name of Cede& Co., as nominee of DTC, or such other nominee as DTC `shall request pursuant to the Representation Letter. The Trustee, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the 2002 Series A Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such 2002' Series A Bonds, selecting the 2002 Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders hereunder,registering the transfer of 2002 Series A Bonds, obtaining any consent or other action to be taken by Bondholders of the 2002 Series A Bonds and for all other purposes whatsoever; and neither the Trustee nor the Authority or any paying agentshall be affected by any notice to the contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility or obligation to any "Participant" (which shall mean, for purposes of this Section 26.06, securities brokers and: dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly awn DTC), any person claiming a beneficial ownership interest in the 2002 Series A Bonds under or through DTC or any Participant, or any other person which is not shown on the registration records as being a 'Bondholder, with respect to (i)the accuracy of any records maintained by DTC or any Participant, (ii)the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the 2002 Series A Bonds, (iii)any notice which is permitted or required to be given to Bondholders of 2002 Series A Bonds hereunder, (iv)the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the 2002 Series A Bonds, or(v) any consent given or other action taken by DTC as Bondholder of 2002 Series A Bonds. Notwithstanding anything to the contrary contained in this Trust Agreement,The Trustee shall pay all principal of and premium, if any, and interest on the 2002 Series A Bonds only at the times,to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the Authority's obligations with respect to the payment of the principal of and premium, if any, and interest on the 2002 Series A Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the 2002 Series'A Bonds will be transferable to such new nominee in accordance with subsection(e)of this Section 26.06. (c) In the event that the Authority determines that the 2002 Series A Bonds should not be maintained in book-entry form, the Trustee shall, upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of bond certificates. In such event, the 2002 Series A Bonds will be transferable in accordance with subsection (e) of this Section 26.06. DTC may determine to discontinue providing its services with respect to the 2002 Series A Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the Authority>or the Trustee and discharging; its responsibilities with respect thereto under applicable law. In such event, the 2002 Series A t)(jt.'��,6�I:596yi i7. 40il1-121't;\t'. l' Bonds will be transferable in accordance with subsection(e)of this Section 26.06. If at any time DTC shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then this Section 26.06 shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the 2002 Series A Bonds as provided below. Whenever DTC requests the Authority and the Trustee to do so, the Trustee and the Authority will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of all certificates evidencing the 2002Series A Bonds then Outstanding. In such event, the 2002 Series A Bonds will be transferable to such securities depository in accordance with subsection (e) of this Section'26.06, and thereafter, all references in this Third Supplemental Trust Agreement to DTC or its nominee shall,be deemed to refer to such successor securities depository and its nominee, as appropriate. (d) Notwithstanding any other provision of this Third Supplemental Trust: Agreement to the contrary, so long as all 2002 Series A Bands Outstanding are registered;in the name of any nominee of DTC,all payments with respect to the principal of and premium, if any, and interest on each such 2002 Series A Bond and all notices with respect;to each such: 2002 Series A Bond shall be made and given, respectively, to DTC as provided in or pursuant to the Representation Letter. (e) In the`event that any transfer or exchange of 2002 Series A Bonds is authorized under subsection (b) or (c) of this Section 26.06, such transfer or exchange shall be accomplished'upon receipt by the Trustee from the registered owner thereof of the 2002 Series A Bonds to be transferred or exchanged`and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.05 and 2.06. In the event 2042 Series A Bond certificates are issued to Bondholders other than Cede & Co., its successor as nominee for DTC as holder of all the 2002 Series A Bonds, another securities depository as holder of all the 2402 Series A Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.05 and 2.06' shall also apply to, among other things, the registration, exchange and transfer of the 2002 Series A'Bonds and the method of payment of principal of, premium, if any, and interest on the 2002 Series A Bonds'. SECTION 26.07. Compliance with 2402 Series A Continuing Disclosure Agreement. Pursuant to Section 8.48 of the Facility Lease, the County has undertaken all responsibility for compliance with continuing disclosure requirements, and the Authority shall have no liability to the Owners of the Bonds or any other person with respect to S.E.C. Rule 1>5c2-12. The County has agreed that so long as it shall act as the Dissemination Agent under the 2402 Series A Continuing Disclosure Agreement, it will perforin all of the provisions thereof to be performed, by the Dissemination Agent. Notwithstanding any other provision of this Trust .Agreement, failure of the County to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however,any Bondholder or Beneficial Owner:may take such actions as may be necessary and appropriate, including seeking mandate or specific"performance by court order, to cause the County to comply with its obligations under Section 8.08 of the Facility, Lease or under this Section 26.07. For purposes of this Section, ``Beneficial Owner" :means any person which has or shares the power, directly or indirectly, to make investment lk,,t s 1'21 \1A( 12 decisions concerning ownership of any Bands (including persons holding Bands through nominees, depositories or other intermediaries)." ARTICLE XXUII ISSUANCE OF BOLDS SECTION 27.01. Procedure for the Issuance of 2002 Series A Bands. At any time after the sale of the 2002 Series'A Bunds in accordance with the Act, the Authority shall execute the 2002 Series A Bonds for issuance hereunder and shall deliver thein to the Trustee, and thereupon the 2002 Series A Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request of the Authority and upon receipt;' of payment therefor from the purchaser thereof. Upon receipt of payment for the 2002 Series A Bonds from the purchaser thereof (other than the portion of such purchase 'price to be paid directly to the 2002 Series A Bond Insurer as the premium for the Band InsurancePolicy ($ �} [and 2002 Series A Reserve Facility ($ }]) the Trustee shall, unless otherwise instructed by the Authority, transfer or deposit the proceeds received from such sale (including the good faith deposit received from the County,) to the following respective parties or to the following respective accounts or funds, in the following order of priority: (i) deposit in the Interest Account created pursuant to Section 5.03 the amount of$ which is equal to interest accrued on the 20102 Series A Bonds from their dated' date to the date of issuance thereof [and the amount of $ which is equal,to capitalized'interest on a portion of the 2002 Series A Project]; (ii) deposit the amount of $ in the 2002 Series A Costs of Issuance Fund, which fund ishereby created and which fund the Trustee hereby covenants and agrees to maintain. All money in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the 2002 Series A'Bonds upon receipt of a Written Request of the Authority in the form attached hereto as Exhibit C, filed with the Trustee,each of which shall be sequentially numbered and shall state the person(s) to whom payment is to be made, the amount(s) to be paid, the purpose(s) for which the;,obligation(s) was incurred and that such payment is a proper charge against said fund. On October 1, 2002, or upon the earlier Written Request of the Authority, any remaining balance in the 2002 Series A Costs of Issuance Fund shall be transferred to the 2002 Series A Project Fund and the 2002 Series A Costs of Issuance Fund shall be closed; (iii) transfer the amount of$ to the '1992 Escrow Agent for deposit in the 1992 Escrow Fund; [(iv) deposit the amount of $' to the Reserve Fund which amount when combined with the amount of $ transferred to the Trustee by the 1992 Trustee from the reserve for the 1992 Certificates and deposited in the Reserve Fund will cause the Reserve Fund to contain the Reserve Fund Requirement; and 1031!-t^S 1 Ft. 13 (v) deposit the balance of such proceeds (namely the amount of $ ) in the 2002 Series A Project fund Following issuance of the 2002 Series A Bonds, the Reserve Fund Requirement for the Outstanding Bonds will equal $ , an amount equal to 125%of average Annual Debt Service' on the Outstanding Bonds. Such amount will be satisfied by [the deposits described in (iv) of the preceding paragraph] [the 2002 Series A Reserve Facility issued in the amount of$ 1. The Trustee'is hereby directed to accept and acknowledge receipt of [the amount of$ from the 1992 Trustee for deposit to the Reserve Fund] [the 2002 Series A Reserve Facility], prior to the delivery of the 2402 Series A Bonds to the purchaser thereof. SECTION 27.02. 2002 Series A Project Fund. The Trustee hereby agrees to establish and maintain so long as any 2002 Series A Bonds are Outstanding the 2002 Series A Project Fund (the "2402 Series A Project Fund") (the initial payment into which is provided for in Section 27.01). The moneys in the 2002 Series A Project Fund shall be disbursed by the Trustee upon the Written Request of the County in the form attached hereto as Exhibit D, for the payment of casts relating to the financing of the 2042 Series A Project, including interest on the 2002 Series A Bonds. All 'interest earnings or profits received from investments of amounts in the 2002 Series A Project Fund' shall be deposited in the 2002 Series A Project Fund until completion of the 2002 Series A Project and thereafter any remaining amounts in the 2002'' Series A Project Fund will be deposited first in the Reserve Fund, to the extent necessary to make amounts on deposit in the Reserve Fund equal to the Reserve Fund Requirement, and then in the Revenue Fund and the 2002 Series A Project Fund shall be closed. SECTION 27.03.' Creation' of Sinking Accounts for:the 2002 Series A Term Bonds. The Trustee shall establish and maintain within the Principal Account separate Sinking Accounts for the 2402 Series A Term Bonds maturing on June 1,,20 and June 1, 20 Subject to the terms and conditions set forth in this Section and Section 28.03,,the 2002 Series—A Term Bonds maturing on June 1, 20 and June 1, '20_ shall be redeemed (or paid at maturity, as the case may be) by application of mandatory sinking'account payments in the amounts and upon the dates as follows: 2002 Series A Term Bond Sinking Account for 20 Maturity Mandatory Sinking Account Mandatory Sinking Payment Date`fJun Account Payments 2002 Series A Term Bond Sinking Account for 20 Maturity Mandatory Sinking Account Mandatory Sinking Payment Date.(June:l) Account Payments I X)C�;,1'1:38681 j7. 4o5II-121 tit\e. 14 As provided in Section 4.04,upon the optional redemption of 2002 Series A Term Bands,the Authority may designate which sinking account payments shall be allocated to such redemption. SECTION 27.04. Tax Covenants The provisions of Section 6.03 are applicable to the 2002 Series A Bonds, the interest on which is intended by the Authority to be excluded from gross income of the Owner thereof for federal income tax purposes. ARTICLE XXVIIi REDEMPTION Of BONDS SECTION 28.01. Extraordinary Redemption. The 2002 Series A Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities; upon notice as hereinafterprovided, as a whale or in part by lot within each stated maturity in integral multiples of Authorized Denominations,' from prepayments made by the County pursuant to Section.7.02 of the Facility Lease, at a redemption price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the Redemption' Date. Whenever less than all of the Outstanding Bands are to be redeemed on any one date, the Trustee shall select, in accordance with written directions from the Authority, the 'Bonds to be redeemed in part from the Outstanding Bonds so that the aggregate annual principal amount of and interest on Bonds which shall be payable after such:Redemption Date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on Bonds' Outstanding prior to such Redemption bate, SECTION 28.02_ Optional Redemption. The 2002'Series A Bonds maturing on or prior to-.June 1, 2010, are not subject to optional redemption. [Subject to Section 29.04(e),]` the 2002 Series A Bonds maturing on or after June 1, 2011, are subject to redemption prier 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, 2010, at the following redemption prices (expressed as percentages of the principal amount of 2002 Series A Bonds called for redemption),together with accrued interest to the date fixed for redemption. Redemption Period (dates inclusive) Redemption Price June 1, 2010 through May 31, 2011 101% June 1,2011'through May 31, 2012 1001/2 June 1 2012 and thereafter 100 SECTION 28.03. Mandatory Sinking fund Rederni2tion. .The 2002 Series A Bonds maturing on June 1, 20 and June 1, 20_, upon notice as hereinafter provided, shall also be subject to mandatary sinking fund redemption prior to maturity, in part on June 1 of each year on and after June 1, 20 and June 1, 20_, respectively, by lot, from. and in the amount of the mandatory sinking account payments set forth in Section 27.03 at a redemption priceequal to the sum of the principal amount thereof plus accrued interest thereon to the redemption date, without premium. SECTION 28.04. Effect of Redemption. All 2002 Series A Bonds redeemed pursuant to the provisions of this Article and Article IV shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued, ARTICLE XXIX MUNICIPAL BOND INSURANCE[. 2002' SERIES A RESERVE FACILITY] SECTION 29.01. Concerning the 2002 Series A Bond Insurer. Notwithstanding any other provision hereof, so long as the 2002 Series A Bond Insurance Policy shall be in full force'and effect, the Authority and the Trustee hereby'agree to comply with the following provisions: (a) The 2002 Series A Bond insurer shall be deemed to be;the sole Owner of the 2002 Series A Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owers of the 2002 Series A Bonds are entitled to take pursuant to Article VII and Article VIII hereof. The 2002 Series A Bond Insurer shall have the exclusive right to initiate or direct proceedings upon an Event of Default and shall be entitled to request the Trustee to intervene in judicial proceedings that affect the 2002 Series A Bonds or the security therefor; provided that the Trustee shall have the right in its sole discretion to commence an action to enforce the payment of its fees and expenses hereunder. Bondholder's'direction or institution of remedies upon an Event of Default shall be subject to the prior written consent of the 2002 Series A Bond Insurer, (b) Copies of any modification or amendment to the Trust Agreement or the Facility Lease, shall be sent by the Authority to the 2002 Series A Bond, Insurer, S&P and Moody's prior to the effective date thereof or as soon as practical'thereafter. (c) The2002Series A Bond insurer shall, to the extent it makes',any payment of principal of or interest on the Insured 2002 Series A Bands, become subrogated to the rights of the recipients of such,payments in accordance with the terms of the 2002 Series A Bond Insurance Policy. (d) The 2002 Series A Bond Insurer shall have the right to advance any payment required to be made by the County or the Authority in order to prevent an Event of Default under the Trost Agreement and the Trustee shall be required to accept such advance. The Authority shall be required to.reimburse the 2002'Series A Bond Insurer for any such advance. (e) Th—z rights granted under the Trust Agrees lent and the Facility Lease to the 2002 Series A Bond Insurer to request, consent to or direct any action are rights granted to the 2002 Series A Bond Insurer in consideration of its issuance of the 2002 Series A Bond Insurance ;1)511 121 \1\C 16 Policy. Any exercise by the 2002 Series A Band Insurer of such rights is merely an exercise of the 2002 Series A Bond Insurer's contractual rights and shall not be construed or deemedto be taken for the benefit or on behalf of the 2002 Series A Bondowners, nor`does such action evidence any position of the 2002 Series A Bond Insurer, positive or negative, as to whether 2002 Series A'Bondowners' consent is required in addition to consent of the 2042 Series A'Bond Insurer.' (f) Amounts paid by the 2002 Series A Bond Insurer under the 2002 Series A Bond Insurance Policy shall not be deemed paid for purposes of the Trust Agreement and the 2002 Series A Bonds relating to such amounts shall remain Outstanding and continue to be due and owing until paid in accordance with the Trust Agreement. The Trust Agreement shall not be discharged unless all amounts due or to become dee to the 2002 Series A Bond Insurer have been paid in full. (g) The 2002 Series A Bond Insurer shall be provided by the Authority or the Trustee (with respect to items (i) through (iv) and item (vii) only) with the following information: (i) Notice of any draw upon, or deficiency due to market fluctuation in the amount on deposit in, the Reserve Fund within two Business Days after knowledge thereof other than (i)withdrawals of amounts in excess of the Reserve Fund 'Requirement and (ii)withdrawals in connection with a refunding of 2002 Series A Bonds; (ii) Notice of any failure of the Authority to make any required deposit into the Revenue Fund within two Business Days of knowledge thereof; notice of any other' Event of Default known to the Trustee within five Business Days after knowledge thereof; (iii) Prior notice of the advance refunding or redemption of any of the 2002'Series A Bonds, including the principal,amount, maturities and CUSIP numbers thereof; (iv) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto; (v) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Trust Agreement; (vi) All reports, notices and correspondence to be delivered under the terms of the Third Supplemental Trust Agreement and, on an annual basis, copies of the audited financial statements and annual budget of the Authority; and (vii) If the Trustee has notice that any Bondholder has been required to disgorge payments of principal,or interest on the 2002 Series A Bonds to a trustee in bankruptcy or creditors or others pursuant to a ficial judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the 2002 Series A Bond Insurer or its designee of such fact by telephone or telegraphic'notice, confirmed in writing, by registered or certified mail. S r>11-1221 S1 tit' 17 (viii) Such additional''information as the 2002 Series A Bond Insurer from time to time may reasonably request. (h) The 2002 Series A Bond Insurer shall have the right to give notice of an Event' of Default. SECTION 29.02. Payments Under the 2002 Series A Bond Insurance Policy. Notwithstanding any other provision hereof, so long as the 2002 Series A Bond Insurance Policy shall be in full force and effect, the Authority and the Trustee hereby agree to comply with the following provisions: (a) If, on the second Business Day, and again on the Business Day, prior to the interest payment date or principal payment date or the date to which Bond.maturity has been accelerated ("Payment Date") there is not on deposit with the Trustee,after making:all transfers' and deposits required under the Trust Agreement, moneys sufficient and available to pay the principal of and interest on the 2002 Series A Bonds due on such Payment Date,the Trustee shall give notice to the 2402 Series A' Bond Insurer and to the Insurance Paying Agent (hereinafter defined) by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of such deficiency on such Business Day. If such deficiency is made up in whole or in part prior to or on the Payment Date, the Trustee shall so notify the 2002 Series A Bond Insurer and the Insurance Paying Agent.' If,on the Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the 2002 Series A Bonds due on such Payment Date, the Trustee shall make a claim under the 2002 Series A Bond Insurance Policy and give notice to the 2002 Series A Bond Insurer and the Insurance Paying Agent (if any) by: telephone of the 'amount of such deficiency, and the allocation of such deficiency. (b) The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Bondholders as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest on the 2002 Series A Bonds, the Trustee shall (a)execute and deliver to State'Street Bank and Trust Company, N.A., or its successors under the 2042 Series A Bond Insurance Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the 2002 Series A Bond Insurer as agent for such Bondholders in any legal proceeding related to the payment of such interest and an assignee to the 2002 Series A Bond Insurer of the claims for interest to which such deficiency relates and which are paid by the 2002 Series A Bond Insurer, (b)'receive as designee of the respective Bondholders(and not as Trustee) in accordance with the tenor of the 2002 Series A Bond Insurance Policy' payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c)disburse the same to such respective Bondholders, and (ii) If and to the extent of a deficiency in amounts required to pay principal of the 2402 Series A Bonds, the Trustee shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the 2002 Series A Bond Insurer as agent for such Bondholders in any legal proceeding relating to the payment of such principal and an assignment to the Bond Insurer of any of the 2002 Series A 101 11 i"I MA( 18_ Bonds surrendered to the Insurance Paying Agent or so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and'available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Bondholders (and not as Trustee) in accordance with the tenor of the 2002 Series A Bond Insurance Policy payment therefor from the Insurance Paying Agent, and(c)disburse the same to such Bondholders'. (c) The Trustee shall keep a complete and accurate record of all funds deposited` by the 2002 Series'A Bond Insurer and Insurance Paying Agent and the allocation of such funds to payment of interest and principal in respect of any 2002 Series A Bonds. The 2002 Series A Bond Insurer shall have the right to inspect such records at reasonable times upon one Business' Day's prior notice to the Trustee. SECTION 29.03. 2002 Series A Bond: Insurer Default. Rights of the 2002 Series A Bond Insurer to direct or consent to actions under the Trust Agreement or the Facility Lease shall be suspended during any period in which the 2002 Series A Bond Insurer is in default in its payment obligations under the 2002 Series A Bond Insurance Policy (except to the extent of amounts previously paid by the 2002 Series A Bond Insurer and due and owing to the 2002 Series A Bond Insurer) and shall' be of no force or effect in the event the 2002 Series A Bond Insurance Policy is no longer in effect or the 2002'Series A Bond Insurer asserts that the 2002 Series A Bond Insurance Policy is not in effect. SECTION 29.04. Provisions Relatinu to the 2002 Series A Reserve Facility. (a) In the event it is necessary to.draw on the 2002 'Series:A Reserve Facility to pay the principal of or interest on the 2002 Series A Bonds, the Trustee shall deliver a Demand for Payment (in the form attached to the 2002 Series A Reserve Facility) at least three days prior to the date on which funds will be required to make such payment. (b) The Trustee shall pay to the 2002 Series A Reserve Facility Provider the amount necessary to pay all accrued and unpaid interest on amounts drawn under the 2002 Series A Reserve Facility from Revenues. (c) Before the Trust Agreement can be discharged and terminated under Section 10.0 1, the 2002 Series A Reserve Facility Provider must be paid all amounts owed to it under the terms of the 2002 Series A Financial Guaranty Agreement. (d) The Trustee shall be responsible for maintaining adequate records, verified with the 2002 Series A Reserve Facility Provider, as to the amount available.to be drawn at any given time under the 2002 Series A Reserve Facility and as to the amounts paid and owing to the 2002 Series A Reserve Facility Provider under the terms of the 2002 Series`A Financial Guaranty Agreement. (e) The 2002 Series A Bonds may not be redeemed pursuant to Section 28.02 unless all amounts owed to the 2002 Series A Reserve Facility Provider under the:terms of the 2002 Series A Financial Guaranty Agreemcnt have becrt paid in full. }itii l I-I :M l( 19 ARTICLE XXL MISCELLANEOUS PROVISIONS SECTION 30.01. 2002 Series A: Bond; Insurer. The 2402 Series A Bond' Insurer shall have the benefit of all provisions relating to the 1999 Series B Bond Insurer included in the Facility Lease, the Site Lease and the Trust Agreement and any references;to the. "Bond Insurer" shall include the 2002 Series A Bond Insurer, and the 2002 Series A; Bond Insurer is hereby included as a third party beneficiary to the Trust Agreement. SECTION 30.02. Validity of Supplement. The County,the Authority and the Trustee hereby determine that the amendments set forth herein do not adversely affect the interest of the Owners, shall become binding without the written consents of any Owners, and are in compliance with the provisions of Section 9.01(b) of the Trust Agreement. The Trustee is makingsuch determination based solely in reliance upon an Opinion of Counsel and the determination of the County and the Authority and the consent of the Band Insurer. SECTION 30.03. Terns of 2002 Series A Bonds Subject to the Trust Agreement. Except as in this Third Supplemental Trust=.Agreement expressly provided,,every term and condition contained in the Trust Agreement shall apply to this Third Supplemental Trust Agreement and to the 2002 Series A Bonds with the same force and effect as if the same were herein set forth at length, with such omissions,variations and modifications thereof as may be appropriate to make the same conform to this Third Supplemental Trust Agreement. This Third Supplemental Trust Agreement and all the terms and provisions herein contained shall form part of the Trust Agreement as fully and with the same effect as if all such terms and provisions had been set forth in the Trust Agreement. The Trust Agreement is hereby ratified and confirmed and shall continue in ,full force and effect in accordance with the terms and provisions thereof, as supplemented and amended hereby. SECTION 30.04. Assiannzent Acknowledged. Pursuant to the Trust Agreement, the Base Rental Payments have been assigned to the Trustee and such assignment extends to and includes the Base Rental Payments increased pursuant to the Third Amendment to Facility Lease. The assignment of the Base'Rental Payments increased pursuant to the Third Amendment to Facility Lease to the Trustee is hereby approved, consented to,acknowledged and confirmed. SECTION 30.05. Effective Date of Third Supplemental Trust: Agreement. This Third Supplemental Trust Agreement shall take effect upon its execution and delivery. SECTION 30.06. Execution in Counterparts. This Third Supplemental Trust Agreement may be executed in'several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 405111-1_1 MAC 20 IN WITNESS WHEREOF, the parties hereto have executed'. this Third' Supplemental Trust Agreement by their officers thereunto;duly authorized as of the day and year first written above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Chair Attest: John R. Sweeten Executive Director and Secretary By: Assistant Executive Director STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A.,as Trustee By; Authorized Officer Acknowledged and Approved: COUNTY OF CONTRA COSTA By: Title: Director, Capital Facilities and Debt Management, County of Contra Costa D( I 5N6807, 4'r 11-1'_i M V 21 CONSENT 4F BOND INSURER The undersigned, as Bond Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding ,and 'Various Capital Projects), 1999 Series A, the County of Contra Costa Public 'Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001Series A, and the County of 'Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series B, hereby consents to the execution and delivery of the Third Supplemental Trust Agreement dated as of April l 2002 between the County of Contra Costa Public Financing Authority and State Street Bank and Trust Company of California, N.A., as trustee, and to the issuance of the 2002 Series A .Bonds for the purposes set forth therein: MBIA INSURANCE CORPORATION By: Authorized Officer ix x 'S"M>:i868 -, 6l 1-1^_1 MAC EXHIBIT A [FORM OF 2002 SERIES A BOND] No. $ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL PROJECTS), 2002"SERIES A NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY NOR THE COUNTY OF CONTRA COSTA IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE BONDS AND NO TAX OR OTHER SOURCE OF FUNDS OTHER THAN THE REVENUES HEREINAFTER,,REFERRED TO IS PLEDGED TO PAY THE INTEREST ON OR PRINCIPAL OF THE BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR. INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY OF CONTRA COSTA OR THE CONTRA COSTA'` COUNTY' REDEVELOPMENT AGENCY, THE PARTIES TO THE AGREEMENT CREATING THE;AUTHORITY. Interest Maturity Dated Rate Date Date CUSIP' ofd April 1,2002 REGISTERED OWNER: CEDE& CO. PRINCIPAL SUM: DOLLAR The COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a Joint exercise of powers authority, duly organized and validly existing under and pursuant to the laws of the State of California(the "Authority"), for value received, hereby promises to pay (but only out of the Revenues hereinafter' referred to)''to the registered owner;identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sutra specified above, together with interest on such principal surer from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is registered as of an interest payment date or during the period from the 4o.511 12 \l\C A-} fifteenth calendar day of the month preceding an interest payment date to such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated prior to , 2002, in which event it shall bear interest from the Dated Date specifiedabove) until the principal hereof shall have been paid at the interest rate per annum specified above, payable'on December 1, 2002, and semiannually thereafter on each June 1 and December 1. Interest due on or before the maturity or prior redemption of this Bond shall be payable only by; check mailed by :first-class mail to the registered owner hereof; provided that upon the written request of a Bondholder of $1,000,000 or more in aggregate principal amount of Bonds of the Series of which this Bond is a part ''received by the Trustee (defined hereinafter)prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds to an account within the United States of America. The principal hereof is payable in lawful money of the United States of America upon presentation of this Band at the principal office of the Trustee. This Bond is one of a duly authorized issue of bonds of the Authority designated as its "County of Contra Costa Public Financing Authority Lease Revenue Bonds"(the "Bonds") unlimited as to principal amount and is one of a duly authorized series of such Bonds known as "(Refunding and Various Capital Projects), 2402 Series A" (the "2002 Series A Bonds") issued in an aggregate principal amount of $[Amount], all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of the Joint Exercise of Powers Act (being, Chapter'5 of Division 7 of Title l of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions of a Trust Agreement, dated as of February 1, 1999, a First Supplemental Trust;Agreement, dated as of January 1, 2001 a Second Supplemental Trust Agreement dated as of May 1, 2001, and a Third Supplemental Trust Agreement, dated as of April 1, 2002 (collectively, as amended ` from time to time, the "Trust Agreement"), between the Authority and State Street Bank. and Trust Company of California, N.A., as trustee,(together with any successor as trustee under the Trust Agreement,the "Trustee") (copies of the Trust Agreement are on file at the principal office oftheTrustee in Los Angeles, California). The Bonds are issued to provide funds to finance`and refinance the ;acquisition, construction, improvement, equipping, remodeling and refinancing of certain public buildings and related facilities, Iocated in the County of Contra Costa (as more fully defined in the Trust Agreement, the "Project"). The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from certain proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and the revenues (as more fully' defined in the 'frust Agreement, the "Revenues") derived from Base Rental Payments and other payments made by the County of Contra Costa (the "County"), and all interest or other. investment income thereon,pursuant to the Facility Lease (Various Capital Projects), dated as of February 1, 1999 (as' amended from time to time, including the"Third Amendment to Facility Lease, dated as of April 1, 2002, the " Facility Lease"), by and between the Authority and the County, and the Authority is not obligated to pay the interest or premium, if any, on and principal' of the Bonds except from the Revenues. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Trust Agreement by a pledge and assignment of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest or premium, if any, on and principal of the Bonds as provided in the ui7t t 'tf�K: A-2 Trust Agreement. The full faith and credit of the Authority, the Centra Costa County: Redevelopment Agency (the "Agency") and the County are not pledged for the payment of the interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the: interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Authority or any of its income or receipts except the Revenues, and neither the payment of the interest on nor principal (or premium, if any) of the Bands is a debt, liability or general obligation of the Authority,the County or any member of the Authority for which such entity is obligated to levy or pledge any form of taxation. Additional bonds payable from the Revenues may be issued which will rank equally as to security with the Bonds, but only subject to the conditions and upon compliance with the procedures set forth in the Trust Agreement. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms on which the Bonds are issued, the provisions'with regard to the nature and extent of the Revenues, the rights of the registered owners of the Bands, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds); and all the terms of the Trust Agreement' are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Boned,to all the provisions of which the registered owner of this Bond, by acceptance hereof,_ agrees and consents. The Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as 'hereinafter provided, as a whole or in part by lot within each stated' maturity in integral multiples of Authorized Denominations so that the aggregate annual principal amount of and intereston the Bonds which shall be payable after such redemption date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on the Bonds Outstanding prior to such redemption date, from, prepayments of Base Rental Payments made by the County from the proceeds received by the County clue to a taking of the Facilities or portions thereof under the power of eminent domain and from the net proceeds of title insurance or 'insurance received' for material damage or destruction to the Facilities or portions thereof received by the Authority from.the County; all as provided in and under thecircumstancesand terms prescribed in the Facility Lease and the Trust Agreement, at the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium. The 2002 Series A Bonds maturing on June 1, 20' and June 1,20_, upon notice as provided in the Trust Agreement, shall also be subject to mandatory sinking fund redemption prior to maturity, in part' on June I of each year on and after June 1 20 and June 1, 20-, respectively,,by lot, from and in the amount of the mandatory sinking account payments set forth in the 'Third' Supplemental Trust Agreement at a redemption price equal to the sum;of the principal amount thereof plus accrued interest thereon to the redemption date,without premium. The 2002 Series A Bonds maturing on or prior to June 1, 2010, are not subject to optional redemption. The 2002 Series A Bands maturing on or after June 1, 2011, are subject to 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, 2010, at the following redemption prices (expressed as percentages of the principal amount of 40i11-1221 M tt A-3 2002 Series A Bonds called for redemption), together with accrued interest to the date fixed for redemption: Redemption Period' (dates inclusive) Redemption Price June 1, 2010 through May 31, 2011 101% June 1,'2011 through May 31, 2012 100'/z June 1,2012 and thereafter 100 Notice of redemption of this Bond shall be given by first-class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner' of any Fond selected for redemption, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly given as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Band shall, on the redemption date designated in such notice, become' due and payable at the above-described redemption price; and from and after the date so designated, interest on this Bond shall cease to 'accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof.' If an Event of Default (as defined in the Trust Agreement) shall occur, the principal of all Bonds maybe declared due and payable upon the conditions, in the manner and with the effect provided in the Trust Agreement. The Trust Agreement provides that in certain' events such declaration and its consequences may be rescinded by the holders'of not less than a.. majority in aggregate';,principal amount of the Bonds then outstanding or by the Trustee. This Bond is transferable only on a register to be kept,for that purpose at the above-mentioned corporate trust office of the'Trustee by the registered owner hereof in person or by the duly authorized attorney of`such owner upon payment of the charges provided in the Trust Agreement and upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or the duly authorized attorney of such owner, and 'thereupon a new fully registered Bond or 'Bonds' in the same aggregate principal' amount in:authorized denominations will be issued to the transferee in exchange therefor. The Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the Authority nor the Trustee shall be affected by any ,notice or knowledge to the contrary; and payment'of the interest on and principal of this Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the Trust Agreement or become valid or obligatoryfor any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee. ut a<.•:;E �:Ss�;��,is 0-)1 121 MAC A4 It is hereby certified and recited that all acts, conditions and things,required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Act, and by the Constitution and laws of the State of California, that the amount of this Bond, together with all other indebtedness of the>Authority, does not exceed any limit' prescribed by the Constitution or laws of the State of California and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. IN WITNESS WHEREOF, the County .of Contra Costa Public Financing Authority has caused this Bond to be 'executed in its name and on its behalf by the manual or facsimile signature of the'Chair of the:Authority and countersigned by the manual'or facsimile signature of the Secretary of said Authority, and has caused this Bond to be dated as of the Dated Date specified above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Chair Countersigned' Secretary M A-5 [FORM OF CERTIFICATE OF AUTHENTICATION TO APPEAR ON 2002 SERIES A BONDS] This is one of the Bonds described in the within-mentioned' Trust Agreement which has been registered and authenticated on 12001. STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A.,as Trustee By Authorized Signatory` D(W'<:,l"1':5868173: [INSERT STATEMENT OF INSURANCE] I )(:, I 1:586 S,17, 40-511-121 %[,\f A-7 [FORM OF ASSIGNMENT TO APPEAR ON 2002 SERIES A'BONDS] For value received the undersigned hereby sells, assigns and transfersunto {Taxpayer Identification Number. the within Band and all rights `.thereunder, and hereby irrevocably constitutes and appoints attorney to transfer:the within bond on the books kept for registration thereof,with full power of substitution;in the premises. NOTE: The signature to this Assignment must correspond with the name as written on the face of the Bond in every particular, without alteration or enlargement or any change'whatever, Dated: PLEASE INSERT SOCIAL SECURITY NUMBER,'TAXPAYER IDENTIFICATION NUMBER OR OTHER IDENTIFYING'NUMBER OF ASSIGNEE: Signature Guaranteed: NOTE: Signature must be guaranteed by an eligible guarantor institution. +611-I'I MAC A-8 EXHIBIT B DESCRIPTION OF 2002 SERIES A PROJECT Acquisition and installation of photovoltaic equipment(Power Light solar electric panels)to be placed on the roofs of the Martinez Detention Facility and the County building located at 50 Douglas Drive in Martinez Acquisition of a County office building at 1650 Cavallo Road, Antioch Acquisition, construction and improvement or other equipment and facilities for the County as set forth in requisitions to the Trustee By refunding and defeasing the 1992 Certificates the following projects are being refinanced: County's Public Works Department Administration Building located at 255 Glacier Drive in the City of Martinez Data processing building located at 30 Douglas Drive in the City of Martinez Public WorksAdministration Building,'Building A,,2475 Waterbird Way in the City of Martinez Public Works Material Testing Laboratory, Building D, 4785 Blum Road in the City of Martinez' Public "Works Road Maintenance Building, Building B, 2479 'Waterbird Way in the City of Martinez' Public Works Warehouse Building, Building C, 2483 Waterbird Way in the City of Martinez Health'Services Building located at 595 Center Street and Muir Road in the City of Martinez Forensic Science Center located at 1960 Muir Road`;in the City of Martinez D(h x+1:5x681)-; 11611-12= MA B-1 EXHIBIT C [FORM OF REQUISITIO) 4—COSTS OF ISSUANCE] Date: No. State Street Bank and Trust Company of California,N.A. Corporate Trust Department 633 W. 5th Street, 12th Floor Los Angeles, CA 90071 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds(Various Capital Projects)_ 2002 Series A (Written Request of the Authority-2002 Series A Costs of Issuance Fund) Ladies and Gentlemen: This letter is our authorization to you to disburse from the 2002 Series A Costs of Issuance Fund'provided for in Section 27.01 of the Trust Agreement dated as of February 1 1999, as amended, including as amended by the Third Supplemental Trust Agreement,dated as of April 1, 2002 (the"Trust Agreement") between the County of Contra Costa Public Financing Authority (the "Authority")and State Street Bank and Trust Company of California,N.A., as trustee,the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and corporations for expenses incident to the issuance of the above-referenced Bonds'= pursuant to the Trust,Agreement. The obligations in the stated amounts have been incurred by the Authority and each item thereof is a proper charge against the 2002 Series A Costs of Issuance Fund. U If checked here you are hereby authorized to close the 2002 Series A Costs of Issuance Fund;and transfer any remaining balance(after payment of any amounts indicated in Schedule A)to the 2002 Series A Project Fund. 4u:_517 1'_1 M l<' C'1 Very truly yours, COUNTY OF CONTRA COSTAPUBLIC FINANCING AUTHORITY By Assistant Executive Director and Assistant Secretary -P 1311 121 MA(. C-2 SCHEDULE Item Payee y Amount purpose A HM I SMM A, to No! MV, C-3 EXHIBIT D [FORM OF REQUISITION-PROJECT FUND] Date; No. State Street Bank and Trust Company of California,N.A. Corporate Trust Department 633 W. 5th Street, 12th Floor Los Angeles, CA 90071 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A (Written Request of the Authority—2002 Series A Project Fund) Ladies and Gentlemen: This letter is our authorization to you to disburse from the 2001 Series'>B Project Fund provided for in Section 21.02 of the Trust Agreement dated as of February 1, 1999, as amended, including as amended by the Third Supplemental Trust Agreement, dated as of April 1, 2002(collectively the"Trust Agreement") between the County of Contra Costa Public Financing Authority(the"Authority")and State Street Bank'and Trust Company of California, N.A., as trustee, the amounts indicated on Schedule A attached hereto to the therein-reamed individuals, firms and corporations for costs related to completion of the Project. I)()( 'SF I:586A;n7. The obligations in the stated amounts have been incurred by the County of Contra Costa and each item thereof is a proper charge against the 2002 Series A Project Fund. Very truly yours, COUNTY OF CONTRA COSTA By Director, Capital Facilities'& Debt Management County of Contra Costa I)()( SSI 1:i f,5s 17. 401 _,21 VAC D-2 SCHEDULE A Item No. Payee Amount Purpose -1511-121 ��.� : D-3 NOT TO EXCEED`35,000,000' COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS),2002 SERIES A OFFICIAL NOTICE OF SALE NOTICE IS HEREBY GIVEN that facsimile proposals and electronically submitted proposalswill be received by the County of Contra Costa Public Financing Authority (Herein called the `{Authority") at the offices of Sperry Capital Inc., 475 Gate Five'Road, Suite 310, Sausalito,CA 94965,facsimile number(4'15) 339-9203 on [Wednesday,April 17, 2002] t the hour of 10.00 a.m., California time, for the purchase of not to exceed $35,000,000 aggregate principal amount of lease revenue Bonds designated "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series A'"(herein called the"2002 Series A Bands"),to be issued pursuant to a Trust Agreement, dated as of February 1, 1999, as amended, and as further amended by the Third Supplemental Trust Agreement, to be dated as of April 1, 2002 (herein called the "Trust Agreement"), by and between State Street Bank and Trust Company of California, N.A., as trustee (herein called the "Trustee") and the Authority. The Authority reserves the right to postpone to a later date and/or different time said public sale by announcing such postponement through The Bond Buyer Wire' on Thompson Municipal Market Monitor (vwvw.TM3.com) and Bloomberg .Business News (collectively, the "News Services") not less than '20 hours prior to the time bids are to be received. If no legal bid or bids are received for the 2002 Series A Bonds on said date (or such later date as is established as provided herein) at the time specified, bids will be received for the 2002 Series A Bands on such other date and at such other time as shall be designated through the News Services. Potential bidders will be notified via the News Services not tater than 2:00 p.m. (California time) on the day prier to the date prescribed for the receipt of bids of any change to the principal ,,payment schedule for the 2002 Series A Bonds to be utilized for the bidding process. As an accommodation to bidders, telephonic or telecopied notice of the postponement of the sale date or dates or of a change in the principal payment schedule will be given to any bidden requesting such notice to the Authority's Financial Advisor, Sperry Capital Inc., Attention. Jean Buckley, (415) 339-9204 (email; jbuckley ,sperrycapital.co ). Failure of any bidder to receive such telephonic or telecopied notice shall not affect the legality of the sale. Bidders are referred to the Preliminary Official Stateent"for additional information regarding the Authority, the County of Contra Costa, California(the "County"), the 2002 Series A Bands and the security therefor, and other matters. See "OFFICIAL STATEMENT"below. DOCS.S1 1:587429. 40511-121 MAC TERMSRELATING TO THE 2042 SERIES A BONDS SERIES. Not to exceed $35,000,000 aggregate principal amount of 2002 Series A' Bonds, which are being issued as fully registered 2002 Series A Bands in denominations of $5,000 or multiples thereof, provided that no 2402 Series A Bond shall' represent principal maturing in more than one year,all dated April 1, 2402 and comprising all of the 2002'Series A Bonds of said authorized issue. The 2442 Series A Bonds are the fourth series issued under the Trust Agreement and additional series of bonds may be issued on a parity with the Bonds on the terms and subject to the conditions set forth'in the Trust Agreement. The County has made timely payment to date of all payments required to pay debt service on Bonds issued under the Trust Agreement, INTEREST RATE: Interest is payable on December 1, 2002 and semiannually thereafter on June l and December 1 of each year. Bidders must specify the rate or rates of interest that the 2002 Series A Bonds hereby offered for sale shall bear. Bidders will be permitted to bid different rates'of interest; but (i)the maximum interest rate shall not exceed eight percent (8%) and the maximum differential between the highest and lowest rates specified in any bid shall not exceed four percent (4%) per annum; (ii)each interest rate specified in any bid must be it a multiple of one-eighth or one-twentieth of one percent per annum and a zero rate of interest cannot be specified; (iii)no 2002 Series A Bond shall bear more than one rate of interest, (iv) each 2402 Series A Bond shall bear interest from its dated date to its stated payment date at the interest rate specified in the bid; (v)all 2002 Series A Bonds payable at any one time shall bear the same rate of interest; (vi)any premium bid' must be paid as part of the purchase price, and no bid will be accepted which contemplates the waiver of any interest or other concession by the bidder as a substitute for payment in full of the purchase price; (vii)any underwriting discount shall be stated as a specific sum not exceeding one percent (1.0%) of the aggregate principal amount of the 2002 Series A 'Bonds; (viii)no original issue discount is permitted in any maturity; and (ix)the interest rate for the 2002 Series A Bonds payable in each year must either be the same as or higher than the interest rate on the 2402 Series A Bonds payable in the preceding years. The Authority reserves the right to modify or amend the terms of the sale,prior to the time bids are received. BOOK-ENTRY ONLY: The 2402 Series A Bonds shall be issued in registered farm by means of a book-entry system with no distribution of 2002 Series A Bonds made to the public. One;2002'Series A Bond representing each Bond maturity date will be issued,to The Depository 'frust Company, New York, New York ("DTC"), registered in the name of Cede& Co., its nominee. The book-entry system will evidence ownership of the 2002 Series A Bonds in the principal amount of $5,000 or any integral multiple thereof, with transfers of ownership effected on the records of DTC. PAYMENT OF DTC FEES: The Authority will submit all requisite documents to DTC for DTC-eligibility purposes. However, the purchaser of the 2042 Series A Bonds will be responsible for payment of all fees charged by DTC. L7cxssU 1.587422, 40511-121 MAC 2 MATURITY*. The 2002 Series A Bonds shall mature on June 1 in each of the years, and in the amounts,as follows; Year Year June l Amount* June 1; Amount* $[Amount] ADJUSTMENT OF PRINCIPAL PAYMENTS: The principal amounts set forth in this Official Notice of Sale reflect certain estimates of the Authority with respect to the likely interest rates of the winning bid and the premium and underwriting discount contained in the winning bid. Potential bidders will be notified via the News Services not later than 2:00 p.m. (California time) on the business day prior to the date prescribed for the receipt of bids, of any change to the principal payment schedule for the 2002 Series A Bonds to be utilized for the bidding process. The final maturity schedule will be designed so that the financing objectives of the County will be met. The Authority reserves the right to increase or decrease the aggregate principal amount of any maturity of the 2002 Series A Bands by an amountnot to exceed ten percent (10%) following the submission of the bids, provided, however, that the aggregate principal amount of the 2002 Series A Bonds shall not exceed $35,000,000. Each principal payment is subject to increase or decrease` in $5,000 increments. The Purchaser may not withdraw its bid or change its interest rates bid as a result of any changes made to the principal amounts. The dollar amount of the price bid will be changed so that the net compensation to the successful bidder(expressed as a percentage of the aggregate principal amount of 2002 Series A Bands) does not increase or decrease from what it would have been if no adjustment had been made to the principal amounts. SERIAL BONDS'AND/OR TERM BONDS: Bidders may provide that all the 2002 Series A Bonds be executed and delivered as Serial Bonds or may previdaAat any one or more consecutive annual principal amounts be combined into one or more Term Bonds. REOFFERING PRICE CERTIFICATE: The successful bidder for the 2002 Series A;-Bonds must deliver a certificate setting forth the expected finial reoffering price of such 2002 Series A Bonds to the public (the "Reoffering Price Certificate's) to Orrick, Herrington& Prelitninaty,subject to change. D005.SF1:587429 40511-121 MAC 3 Sutcliffe LLP, Old Federal Reserve Bank wilding, 400 Sansome Street, San Francisco, California 94111, Attention: Mary A."Collins, by the close of business not more than one business;day after the award of the 2002 Series A Bonds. The winning bidder will cooperate with the Authority in promptly providing reoffering price information to facilitate the final sizing of the issue. The Reoffering Price Certificate shall set forth the maximum initial bona fide offering prices and concessions to the public (excluding bond houses,brokers,or similar persons or organizations acting in the capacity of underwriters or wholesalers) of each maturity of the 2002 Series A-.Bonds at which a substantial amount (at least 10%) of such maturity was sold. The form of the Reoffering Price Certificate appears as Appendix A to the Official Bid Form. For purposes of this paragraph, sales of 2002 Series A Bonds to other securities brokers or dealers will not be considered sales to the general public. REDEMPTION: The Authority shall have the ,right, under the circumstances described in the Preliminary Official Statement, to redeem 2002 Series A Bonds, upon the terms and conditions, and at the prices,set forth in the Preliminary Official Statement. PURPOSE: The 2002 Series A Bonds are to be issued to (i)refund and defease the County's 1992 Refunding Certificates of Participation (Consolidated Capital Facilities Project),(ii)finance various capital projects for the County, (iii)fund a reserve fund and(iv)pay costs of issuance. SECURITY: The 2002 Series A Bonds are payable from, and are secured by a pledge of, Base Rental payments payable to the Authority by the County pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, and as further amended by a Third Amendment to Facility Lease, to be dated as of April 1, 2002 (the "Facility Lease"). The County has covenanted under the Facility Lease that as long as the Facilities (as defined therein) are available for the County's use, it will take such action as may be necessary to include the Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. The Authority will pledge to the Trustee for the benefit of the owners of the 2002 Series A Bands the Authority's right to receive rental payments, and its right to receive and collect any proceeds of any insurance maintained under the Facility Lease. To further secure the 2002 Series A Bonds, a reserve fund will be funded as described in the Preliminary Oficial Statement. [BOND INSURANCE POLICY: The Authority will purchase a financial guaranty insurance policy from MBIA Insurance Corporation to 'guarantee the scheduled payment of principal of and interest on the 2002 Series A Bonds when due. See "THE MBIA .INSURANCE CORPORATION INSURANCE POLICY' in the Preliminary ary Official Statement. TAX-EXEMPT STATUS: In the opinion of Orrick, Herrington& Sutcliffe LLP, San Francisco, California, interest on the 2002 Series A Bonds, assuming compliance with certain covenants contained in the Facility Lease,the Trust Agreement and the Tax Certificate, is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. See "TAX MATTERS" in the Preliminary Official Statement. In the event that prior to the issuance of the 2002 Series A Bonds (a)the income received by private owners of bonds of the DOCS C'1:587429. 40511-121 MAC 4 same type and'character as the 2002 Series A Bonds shall be declared to be includable in gross income (either at the time of such declaration or at any future date) for purposes of federal income tax laws,either by the terms of such laws or by ruling of a federal income tax authority or'official which is followed by the Internal Revenue Service,or by decision of any federal court, or (b)any federal income tax law is adopted that will have a substantial adverse tax effect upon owners of the 2002 Series A Bonds as such,the successful bidder may, at its option., prior to the tender of said 2002 Series A Bonds, be relieved of its obligation under the contract to purchase the 2002Series.A Bands, and in such case the deposit accompanying its bid will be returned. LEGAL OPINION: The legal opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco,California, approving the validity of the 2002 Series A Bunds will be furnished to the successful bidder without cost, DISCLOSURE COUNSEL OPINION: The successful bidder or bidders will: receive a disclosure opinion addressed to thetas regarding the Official Statement from Lofton Jennings, San Francisco, California to the effect that the Official Statement as of its date and as of the closing date did not contain a misstatement of material fact or remit to state any material fact necessary in order that the statements made therein in light of the circumstances under which they are made are not misleading and that the Continuing Disclosure Agreement provides a suitable basis for the successful` bidder in connection with the offering of the 2002 Series A Bands to satisfy the requirements of Rule 15c2-12 promulgated by the Securities and Exchange` Commission: TERMS OF SALE BEST BID: The 2002 Series A Bonds will be awarded to the bidder offering to purchase the 2002 Series A Bonds at the lowest true interest cost to the Authority. The true interest cost for each bid will be determined on the basis of the aggregate present value of each semiannual payment. The present value will be calculated to the dated date of the 20012 Series A Bonds and will be based on the bid amount (par value plus any premium or less any discount), excluding the accrued interest from the date of the 2002 Series A Bonds to the date of the delivery of the 2002 'Series A Bonds. Irl the event two or more bids specify the same lowest true interest cost, then the selection for award of the 2002 Series A Bands will be made'among such bidders by Sperry Capital Inc. by lot. The purchaser must pay accrued interest from the date of the 2001 Series B Bands to the date of delivery. All interest will be computed on a 360-day year 30-day month basis from the date of the 2002 Series A Bonds. The coast of preparing the 2002' Series A Bonds will be borne by the Authority. RIGHT OF REJECTION: The Authority reserves the right,in its discretion,to reject any and all proposals and to waive any irregularity or informality in ani'prsals. PROMPT AWARD: The Authority will take action awarding the 20012 Series A Bonds or rejecting all bids not later than thirty (30) hours after the expiration of the time herein prescribed for the receipt of proposals unless such time of award is waived by the successful bidder. Notice of the award will be given promptly to the successful bidder. QUALIFICATION FOR SALE; BLUE SKY: Compliance with Blue Sky laws shall be the sole responsibility of the successful bidder (the "Purchaser"). The Authority will D0055F1.587429; 40511-121 MAC. 5 furnish such information and take such action not inconsistent with law as the Purchaser may request and the Authority shall deem necessary or appropriate;to qualify the 2002 Series A Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as may be designated by the Purchaser,provided, however, that the Authority shall not execute a general or special consent to service of process or qualify to do business in connection with such qualification or determination in any jurisdiction. The Purchaser will not offer to sell or solicit any offer to buy, the 2002 SeriesA Bonds in any jurisdiction where it is unlawful for such Purchaser to make such offer,solicitation or sale, and the Purchaser shall comply with the Blue Sky and other securities laws and regulations of the states and jurisdictions in which the Purchaser' sells the 2002 Series A Bonds: DELIVERY AND PAYMENT: Delivery of the 2002 Series A Bonds will be made to the successful bidder through DTC and is expected to occur on [May 1,2002]. Payment for the 2002 Series A Bonds must be made in immediately available funds. Any expense of providing immediately available funds, whether by transfer of Federal Reserve Bank funds or otherwise,shad be borne by the purchaser. RIGHT OF CANCELLATION: The successful bidder shall have the right, at his option,to cancel the contract of purchase if the Authority shall fail to issue the 2002 Series A Bonds and tender the same for delivery within 60 days from the date of sale thereof, and in such event the successful bidder shall'be entitled to the return of the deposit accompanying his bid. FORM OF BID: All bids must be for not less than all of the 2002 Series A Bonds hereby°offered for sale and accrued interest to date of delivery, plus such premium or less such discount as is specified in the bid. Each bid must be delivered by facsimile or electronic transmission as described below and be received by 10:00 a.m., California time, on April 17 2002. A facsimile transmittal sent to (415) 339-9203, Attention: Jean M. Buckley, prior to the above referenced deadline will be acceptable (subject to the limitations set forth in"WARNINGS' REGARDING FAX BIDS" and "'WARNINGS REGARDING ELECTRONIC BIDS" immediately below). Each bid roust be in accordance with the terms and conditions set forthh in this Official Notice of Sale, and may be submitted on the attached Bid Form. Each bid must be accompanied by a Deposit (see "GOOD FAITH DEPOSIT" below). All bids shall be deemed to incorporate all of the terms of this Official'Notice of Sale. ELECTRONIC BIDS: Solely as an accommodation to bidders, the Authority will receive bids delivered electronically through the following service(the"Bid. Service"). Dalcomp,a division of Thomson Financial Municipals Group, Inc. BIDCOMP Competitive Bidding System and Parity Electronic - Submission.System 395 Hudson Street New York,NY 10014 Phone: (212) 806-8304 Fax: (212)989-928I Internet address: http://www.tm3.com DOCS01i587429. 40511-121 MAC 6 c if any provision of this Official Notice of Sale conflicts with information Provided by the Bid Service, this Official Notice of Sale shall control,. Each bidder submitting an electronic bid agrees by doing so that it is solely responsible for all arrangements with (including any charges by) the Bid Service, that the Authority does not endorse or encourage the use of the Bid Service, and that the Bid Service is not acting as an agent of the Authority. Instructions for submitting electronic bids must be obtained from the Bid Service, and the Authority docs not assume any responsibility for ensuring or verifying bidder compliance with the Bid Service's Procedures. The Authority shall be entitled to assume that any bid received via the Bid Services has been made by a duly authorized agent of the bidder. WARNINGS REGARDING ELECTRONIC BIDS: THE AUTHORITY WILL ACCEPT BITS IN ELECTRONIC FORM 'SOLELY THROUGH PARITY ON THE OFFICIAL BID FORM CREATED FOR SUCH PURPOSE. EACH BIDDER SUBMITTING AN ELECTRONIC'BID UNDERSTANDS AND AGREES BY DOING ,SO THAT IT IS SOLELY RESPONSIBLE FOR ALL ARRANGEMENTS WITH 'PARITY, THAT THE AUTHORITY NEITHER ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY, AND THAT PARITY IS NOT ACTING AS AN AGENT OF THE AUTHORITY. INSTRUCTIONS AND FORMS FOR. SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM PARITY, ,AND THE AUTHORITY ASSUMES NO RESPONSIBILITY' FOR ENSURING OR VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF PARITY. THE AUTHORITY SHALL ASSUME THAT ANY BID DECEIVED THROUGH , PARITY HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.. THE AUTHORITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE ELECTRONIC BIDS; HOWEVER, THE AUTHORITY, THE FINANCIAL ADVISOR AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY BID SUBMITTED 'ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS''WILL, BE DETERMINED BY THE AUTHORITY AT THE PLACE OF BID OPENING AND THE AUTHORITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY PARITY AS;THE OFFICIAL TIME THE AUTHORITY ASSUMES NO RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR TO THE DEADLINE FOR RECEIVING BIDS THAT ITS BIS IS INCOMPLETE OR NOT RECEIVED. IN THE EVENT OF A MALFUNCTION IN THE ELECTRONIC BIDDING PROCESS, BIDDERS SHOULD SUBMIT THEIR BIDS ON THE OFFICIAL BID FORM ATTACHED HERETO BY FAX TO (415)'339-9203. WARNINGS REGARDING FAX BIDS: BIDS SUBMITTED BY FACSIMILE TRANSMISSION ARE DEEMED LATE AND WILL NOT BE ACCEPTED OR EVALUATED UNLESS, AT PRECISELY THE TIME INDICATED dABOVE FOR SUBMISSION OF BIDS, THE ENTIRE BID FORM HAS BEEN FULLY EJECTED FROM THE RECEIVING FACSIMILE MACHINE AT THE PLACE OF THE BID RECEIPT, AND THE INTEREST RATES, TOTAL PURCHASE PRICE, AND NAME AND SIGNATURE OF THE BIDDER ARE CLEARLY READABLE' BY THAT TIME. NEITHER THE AUTHORITY, THE AUTHORITY'S FINANCIAL ADVISOR NOR BOND COUNSEL WILL, ACCEPT RESPONSIBILITY FOR, AND THE BIDDER EXPRESSLY ASSUMES ALL RISK. OF, ANY INCOMPLETE, ILLEGIBLE OR UNTIMELY BID SUBMITTED BY SUCH DOCSSP1587429 *1511-121 MAC BIDDER BY FACSIMILE TRANSMISSION, INCLUDING BY REASON OF GARBLED TRANSMISSIONS, MECHANICAL FAILURE, ENGAGED TELEPHONE OR TELECOMMUNICATION LINES AT THE PLACE OF BID RECEIPT, OR ANY OTHER CAUSE FOR REJECTION ARISING OUT OF ANY BIDDER'S ELECTION TO DELIVER ITS BID BY SUCH MEANS. NO ATTEMPT WILL BE MADE PRIOR TO THE DEADLINE FOR RECEIPT OF BIDS TO INFORM ANY BIDDER THAT ITS BID WAS INCOMPLETE, ILLEGIBLE OR NOT RECEIVED. IN THE EVENT ANY BIDDER. SUBMITS MORE THAN ONE BID (WHETHER BY FACSIMILE OR OTHERWISE),THE BID MOST RECENTLY RECEIVED IN ITS ENTIRETY PRIOR.TO THE DEADLINE NOTED ABOVE WILL BE CONSIDERED THE OPERATIVE BID FOR SUCH BIDDER AND ALL PREVIOUS BIDS OF SUCH BIDDER WILL BE DISREGARDED. GOOD FAITH DEPOSIT: A Good Faith Deposit C Deposit") in the form of a certified or cashier's'check or a bid bond ("Financial Surety Bond") in the amount of$350,000,' payable' to the order of the Authority, must accompany each proposal as a guaranty that the bidder, if successful, will accept and pay for the 2002 Series A Bonds in accordance with the terms of the bid. If a check is used., it must accompany the bid(or be delivered no later than the submission of an electronic or facsimile bid)and be'drawn on a bank or trust company having an office in San Francisco or Los Angeles, California. If a Financial Surety Bond is used, it must b from a pre-qualified insurance company whose claims paying ability is rated in the highest rating category by Moody's Investors Service or Standard & Poor's,`and is licensed to 'issue such a bond in the State of California. The form of such Financial Surety;Bond is subject to prior' approval by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, bond counsel, and such form must be submitted to Sperry Capital, the Authority's financial advisor, a,minium of 24 hours prior to the time bids are to be received. Such Financial Surety Bond must provide that the surety shall make payment of the full amount of the Deposit by wire transfer to the Authority within 24 hours of the receipt of written notice from either the Authority or the Financial Advisor that the bidder has failed to submit the:Deposit as required by this Official Notice of Sale. The Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If the 2002 Series A Bonds are awarded to a bidder utilizing' a Financial Surety Bond, then the purchaser ("Purchaser") is required to submit its Deposit to the Authority in the farm of a certified or cashier's cheep or wire transfer not later than 3:30 p.m.,California time,on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Band may be drawn by the:Authority to satisfy the Deposit requirement. The Deposit will be applied to the purchase price of the 2002 Series A Bonds. If after the award of the 2002 Series A Bonds the successful bidder fails to complete its purchase on the terms stated in its proposal, the Deposit ,All be retained by the Authority. The certified or cashier's check accompanying an unaccepted proposal will be returned promptly. No irftrestwon the Deposit will accrue to any bidder. STATEMENT OF TRUE INTEREST COST; REOFFERING YIELDS: Each bidder is requested, but not required, to state in his bid the percentage'true interest cost to the Authority, which shall'be considered as informative only and not binding on either the bidder or the Authority. The accepted' bidder shall submit a Reoffering Price Certificate in the form DOC.SSF1:5$7429: 40511-121 MAC 8 attached as Appendix A to the Official Bid Form, all as described under "REOFFERING'' PRICE CERTIFICATE"herein. NO LITIGATION: There is no litigation pending concerning the validity of the 2002 Series A Bonds, the existence of the Authority or the County or the entitlement of the officers thereof to their respective offices,and the Authority and the County will each furnish to the successful bidder a no-litigation certificate certifying to the foregoing as of and at the time of the delivery of the 2002 Series A Bonds. RESALE IN OTHER STATES: The purchaser will assume responsibility for taking any action necessary to qualify the 2002 Series A Bands for offer and sale in jurisdictions other than California, and for complying with the laws of all jurisdictions on resale of the 2002 Series ABonds,and shall indemnify and hold harmless the Authority,the County and its officers and officials from any loss or damage resulting from any failure to comply with any such law. CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the 2002 Series A Bonds, but neither failure to print such numbers on any 2002 Series A Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the 2002 Series A Bonds in accordance with the terms of this Official Notice of Sale. All expenses in relation to the printing of CUSIP numbers on the 2002 Series A Bonds shallbe paid for by the Authority; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of and shall be paid for by the Purchaser. CALIFORNIA DEBT AND INVESTMENT' ADVISORY COMMISSION FEE: Attention of bidders is directed to California Government Code Section '8856,=which provides that the lead underwriter or the purchaser of the 2002 'Series A Bonds will be charged the California Debt and Investment Advisory Commission fee. OFFICIAL STATEMENT: A Preliminary Official Statement has been prepared, copies of which may be obtained upon request made to the Authority or to the Authority's Financial Adviser, Sperry,Capital Inc., 475 Crate Five Road, Suite 310, Sausalito, California 94965, (415)339-9204. The Preliminary Official Statement shall'be "deemed final" by the Authority prior to or on the sale date for purposes of Securities Exchange Commission Rule 15c2-12(b)(1), but is subject to revision, amendment and completion in a final Official Statement. A copy:of the certificate executed by the Authority indicating that the Preliminary Official'Statement has been deemed final as of its date will be provided;to potential bidders upon request to the Financial Adviser, Sperry Capital Inc., Attention; ,lean Buckley (415)339-9204. The Executive Director of the Authority or his designee has reviewed and will further review the Official;Statement and will certify that as of the date of the final Official St4emqW,to the best of such officer's knowledge and belief, the Official Statement does not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements' made, in the "light of the circumstances under which they were made, not misleading. The Authority will deliver to the purchaser of the,2002 Series A Bends a certificate of the .Authority as to the above,dated the date of delivery of the 2002 Series A Bonds, and further certifying that the signatory knows of no material adverse change in the condition or affairs of the Authority that would make it unreasonable for the purchaser of the 2002 Series'A Bonds to rely upon the DOUSSF1:587429: 40511-121'MAC' 9 Official Statement in connection with the resale of the 2002 Series A Bonds, and authorizing the purchaser of the 2002'SeriesA Bonds to distribute copies of the Official Statement in connection with the resale of the 2002 Series A Bonds.' The Authority will furnish to the successful purchaser, at no expense to the successful purchaser,'up to 150 copies of the Official Statement within seven(7) business days of the award date. Additional copies will be made available upon request, submitted to the Financial Advisor no later than twenty-four 'hours after the time of receipt of bids, at the purchaser's expense, for use in connection with any resale of the'2002 Series A Bonds. By malting a bid for the 2002 Series A Bonds, the successful bidder agrees (i)to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any supplements prepared by the Authority, (ii)to 'promptly file a copy of the final Official Statement, including any supplements prepared by the Authority, with the Nationally Recognized Municipal Securities Information Repositories, and (iii)to take any and all ether actions necessary to comply with applicable'Securities and Exchange''Commission and Municipal Securities Rulemaking Board' rules governing the offering, sale and delivery of the 2002 Series A Bonds to the ultimate purchasers. CONTINUING DISCLOSURE: In order to assist bidders in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the "Rule"), the "County will undertake, pursuant to a Continuing Disclosure Agreement, to provide certain annual financial information relating to the County and notices'of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. The County has never failed to comply;with the Rule in all material respects. See"CONTINUING DISCLOSURE"in the Preliminary Official Statement. DOC'SSP1:587429. 4051 1-1 21 MAC 10 RIGHT TO MODIFY OR AMEND: The Authority reserves the right to modify or amend this Official Notice of Sale in any respect; provided, however, that any such modification or amendment'shall be made not tater than twenty(20) hours prior to the time the bids are to be received and shall be communicated to potential bidders through the News Services. Failure of any bidder to receive notice"of any modification shall not affect the sufficiency of any such notice. Dated:"March 27, 2002 /s/John R. Sweeten Executive Director, County of Contra Costa Public Financing Authority DO SSF1:587429: 4051'1=121 MAC C OFFICIAL BID FORM Not to Exceed$35,000,000 County of Contra Costa,Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series A TO; COUNTY OF CONTRA COSTA DATE; 32002 PUBLICFINANCING'AUTHORITY Ladies and Gentlemen: We offer to purchase all,but not less than all,of the$35,000,000 principal amount of the above described bonds, more particularly described in your Official Notice of Sale, dated , 2002, all of the terms and conditions of which are made;part hereof as though set forth in full in this proposal, at the aggregates principal amount thereof(together with a premium of$ ), less an underwriter's discount of$ (not to exceed 1%) plus accrued interest to the date of delivery, said interest to be payable at the rates more particularly set forth in the Schedule below: Schedule of Maturity Dates,Principal Amounts",and Interest Rates (Check fine) Maturity Mandatory* ,Date Principal" Serial" Sinking Fund Interest rune 1 Component Maturi Preps ent Rate v,. $[Amount] Place a check in the appropriate column indicating whether the principal component is a serial maturity or mandatory sinking fund prepayment. Subject to adjustment as described„under"ADJUSTMENT OF PRINCIPAL PAYMENTS." DOCSSF1:587429. 40511-121 MAC NOTE: The interest rate bid for the Bonds payable in each year must either be the same as or higher than the interest rate bid on the Bonds payable in the preceding year. No original issue discount is permitted. Our calculation of the true interest cost,which is considered to be informative only and not a part of the proposal, is as follows: The totalamount of interest payable on the Bonds during the life'of the issue under the attached bid is$ The amount of premium is The amount of underwriter's discount(not to exceed I%)is$ The true interest cost(determined as J,described in the section of the Official Notice of Sale entitled"Best Bid")is Check One: There is enclosed herewith a(certified)(cashier's)check for$350,000 payable to the order of the County of Contra Costa Public Financing Authority. We have provided the Authority with a pre-approved Financial Surety Bond as provided in the Official'Notice of Sale. We agree that if we are the successful bidder for the Bonds we will provide the Authority with a Final Reoffering'Price Certificate in the form attached as Exhibit A hereto. We hereby represent that as of the date of award and as of the date of delivery of the Bonds, all members of our-.account either participate in DTC or clear through or maintain a custodial'relationship with an entity that participates in said depository. Following is a list of the members of our Respectfully submitted, account on whose behalf this bid is made. List of Members of Account: Firm: Account Manager` By: Printed Name: Title: Address: .� Telephone No.: Fax No. DOCSSFI-.587429. 40511-121 MAC APPENDIX A TO OFFICIAL BID FORM FORM OF REOFFERING PRICE CERTIFICATE" This certificate is being delivered by on behalf of the purchasers (the "Purchasers") of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A (the "2002 Series A Bands"). Based upon its records and information available to it, which it believes to be correct, the undersigned hereby certifies that: 1. As of April 1`7, 2002 (the"Sale Date") the Purchasers have offered or reasonably expected to offer all of each maturity of the 2002 Series A Bands listed below to the general public (excluding bond houses, brokers, or similarpersons acting in the capacity of underwriters or wholesalers)in a bona fide public',offering at the prices shown for each maturity. 2. The issue prices of the various maturities of the 2402 Series A Bonds as shown do not exceed the fair.market prices and the yields of the various maturities are not less than the fair market yields as of the Sale Date. 3. As of the date of this certificate, all of the 2002 Series A Bonds 'listed.have actually been offered to the general public at such prices. 4 At least 10% of each maturity of the"2002 Series_A Bonds has been sold at the prices shown herein. Maturity Date June 1 Price Dated: , 2002 [Name of Purchaser] By Title': DOC';SF1:587429. 4051'1-121 MAC * To be delivered by the successful bidder as described under"REOFFERING PRICE' CERTIFICATE" in the Official Notice of Sale. DOCSSr1:587429. 40511'=121 MAS NOTICE OF INTENTION TO SELL NOT TO EXCEED $35,000,000 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY STATE OF CALIFORNIA LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002 SERIES A NOTICE IS HEREBY GIVEN that the County of Contra Costa Public Financing Authority(the"Authority"),intends to offer the above Bunds for public sale on Wednesday, April 17 2002, at the hour of 10:00 a.m., local time(or on such other date and time as determined by the Authority as provided below), at the offices of its financial advisor, Sperry Capital Inc.,475 Gate Five Road, Suite 310, Sausalito, California 94965, by the receipt of faxed or electronic mail bids, and in the case of electronic bids, received solely through PARITYTM ("Parity"), subject to the terms and conditions of the Official Notice of Sale for the Bonds dated Murch 27, 2002, copies of which and the Preliminary Official Statement relating to the Bonds will be furnished upon request to Sperry Capital Inc.,at the above address. Legal Opinion: Orrick, Herrington&Sutcliffe LLP, San Francisco, California. The Authority reserves the right to postpone to a later date and/or other time said public sale by announcing such postponement or change on The Bond Buyer Wire on Thompson Municipal Market Monitor(www.TM3.com)and Bloomberg Business News no later than 24 hours prior to the then scheduled sale date. As an accommodation to bidders,telephonic or fax notice of the postponement of the sale time and/or date will be given to any bidder requesting such notice from Sperry Capital Inc.,Attn. Jean Buckley (415) 339-9204(email: jbuckley�7a sperrycapital.com). Failure of any bidder to receive such notice shall not affect the legality of the sale. Dated: April 2002. /s/ John Sweeten Executive Director County of Contra Costa Public Financing Authority 1: 87411). LETTER OF INSTRUCTIONS To: BNY WESTERN TRUST COMPANY, as trustee under a Trust Agreement, dated as of June 1, 1992, by and among U.S. Bank Trust National Association, as predecessor to BNY Western Trust Company, the Contra Costa County Public FacilitiesCorporation and the County of Contra Costa(the"Prior Trust Agreement") Re: Defeasance of County of Contra Costa 1992 Refunding Certificates of Participation Consolidated Capital Facilities Project Ladies and Gentlemen: This Letter of Instructions, dated as of April.1, 2002, is from the COUNTY OF CONTRA COSTA, a political subdivision of the State of California (the "County"), to BNY WESTERN TRUST COMPANY, a state banking corporation organized and existing under the laws of the State of California (the "Prior Trustee") and delivered pursuant to the Prior Trust Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Prior Trust Agreement. RECITALS You are advised that the County of Contra Costa Public Financing Authority (the "Authority") duly issued $ of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002'Series A (the "Refunding Bonds"), under and pursuant to the Trust Agreement, dated as of April 1, 2002, by and between State Street Bank and Trust Company of California,N.A., as successor trustee (together with any successor thereto, "the Trustee") and the Authority (the "Trust Agreement") for the purpose, among others, of providing funds to you for the defeasance of the Outstanding County of Contra Costa 1992 Refunding Certificates of Participation (Consolidated Capital Facilities Project), delivered in the original aggregate principal amount of$37,300,000 (the "Prior Certificates"). This Letter of Instructions provides for the creation of a fund'to be known as the Escrow Fund (the "Escrow Fund") to be established and maintained by the Prior Trustee, and provides for the deposit'in the Escrow Fund of certain of the proceeds of the Refunding,Bonds and other moneys. The County has taken action to cause to be issued to the Prior Trustee for deposit in or credit to the Escrow Fund certain cash, securities and investments consisting of certain direct and general obligations of the United States of America, or obligations that are unconditionally guaranteed as to principal and interest by the United States of America, that are not subject to redemption prior to their respective stated maturities (the "Escrow Securities"). The initial Escrow Securities are listed on Schedule I attached hereto and made a part hereof, and are in an amount which, together with the income or increment to accrue on such "Escrow Securities, will be sufficient, as certified in the verification report by , certified DO SSP1:59438). 4051 1-1 21 MAC public accountants, to pay the amounts required pursuant to Section 3. Escrow Securities shall not include unit investment trusts or mutual funds. INSTRUCTIONS Section 1. Establishment and Maintenance of Escrow Fund. The Prior Trustee shall establish and maintain pursuant to these irrevocable instructions the Escrow Fund until all amounts due as represented by the Prior Certificates have been paid. The Prior Trusteeshall hold the securities, investments and moneys in the Escrow Fund at all times as a special fund and separate trust account. All ''securities, investments and moneys in the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2' and Section 7 hereof, to secure the payment of the Prior Certificates. Section 2. Investment of Escrow Fund: (a) The County shall take all remaining necessary action to enable the Prior Trustee to register in the name of the Prior Trustee, for the account of the Escrow Fund, the Escrow Securities. The Prior Trustee shall use proceeds of the Refunding'Bonds in the amount of $ and moneys held pursuant to the Prior Trust Agreement in the amount of $ and certain available moneys of the County in the amount of$ and deposited into the Escrow Fund to purchase the Escrow Securities and establish the initial cash balance in the Escrow Fund as set forth in Schedule I hereto. (b) The Prior Trustee shall reinvest at the written direction of the County any cash portion of the Escrow Fund in Escrow Securities. Any such reinvestment shall be made in securities the principal of and interest on which is payable at such times and in such amounts as will be sufficient (together with the other securities, investments and moneys in;the Escrow Fund) to pay the Prior Certificates in accordance with Section 3 and consistent with the then currently applicable report of the nationally recognized firm of independent certified public accountants delivered'with'respect to the Escrow Fund. The Prior Trustee shall not be liable or responsible for any loss resulting from any investment made pursuant to this, Letter of Instructions and in full compliance with the provisions hereof.` Section 3. Payment and Prepayment of Prior Certificates. The Prior Trustee agrees to deposit, to the extent such funds are received in the Escrow Fund, the principal,of and interest on all Escrow Securities held for the account of the Escrow Fund promptly as such principal and interest become due, and to apply such principal and interest, together with other moneys and the principal of and interest on other securities deposited in the Escrow Fund, to the payment of the principal and interest represented by the Prior Certificates when due to and including June 1, 2002 and to the prepayment in full of the principal and prepayment premium represented by the Prior Certificates on June 1, 2002. Upon payment of all Prior Certificates, the Prior Trustee shall transfer any moneys or securities remaining in the Escrow Fund, to the extent not required for any fees or expenses of the Prior Trustee, to the County. Section 4. Notice of Prepayment. The County hereby irrevocably directs the Prior Trustee, and the Prior Trustee agrees, to give timely notice of the prepayment of the Prior DOCSsrl:594389: 40511-121 MAC 2 Certificates on June 1, 2002 in the time, form and manner as specified by the PriorTrust Agreement. Section 5. Possible Deficiencies. If at any time the Prior Trustee shall know that the moneys in the Escrow Fund, including the anticipated proceeds of the Escrow Securities, will ' not be sufficient to make all payments required by Section 3 hereof, the Prior Trustee shall notify the County in writing as soon as reasonably practicable of such fact and the amount of such deficiency; provided, however, the Prior Trustee shall have no liability whatsoever hereunder if it shall fail to give such notice as contemplated above. Thereupon the County shall use its best efforts to obtain and deposit with the Prior Trustee for deposit in the Escrow Fund, from any legally available moneys, such additional moneys as may be required to meet fully the aggregate amounts to become due and payable on the Prior Certificates as the same become due. The Prior Trustee shall in no manner be responsible for the County's failure to make any such deposit. Section 6. Unclaimed Moneys. Any moneys held by the Prior Trustee in trust for the payment and discharge of any of the Prior Certificates which remain unclaimed for two (2) years after the date when such Prior Certificates are to have been retired or prepaid in accordance with Section 3 shall be repaid by the Prior Trustee to the County as its absolute property free from trust, and the Prior Trustee shall thereupon without further action on the part of the County be released and discharged with respect thereto and the owners of the Prior Certificates shall look only to the County for the payment of such certificates; provided, however, that before being required to make any such payment to the County,the Prior Trustee may, at the expense of the County, (1) cause to be published once a week for two (2) successive weeks in a financial newspaper a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to the County, and (2) cause to be mailed, for and on behalf of the County, a copy of such notice, postage prepaid, not less than thirty (30) nor more than sixty(60) days prior to said date named in said notice, to the respective registered owners of any of said Prior Certificates. The instructions herein shall constitute the Written Request of the County for purposes of Section 10.02 of the Prior Trust Agreement. Section 7. Substitution'of Securities. Upon the written request of the County, subject to the conditions and limitations hereinafter set forth and applicable;,government rules and regulations, the Prior Trustee shall sell, redeem or otherwise dispose of the securities in the Escrow Fund, if there are substituted therefor, from the proceeds of such securities, other Escrow Securities as hereinafter provided. The County will not exercise any powers which would have the effect of causing any of the Refunding Bonds to be "arbitrage bonds" as defined in Section 148 of the Internal Revenue Code of 1986 and the regulations of the United States Department of the Treasury issued thereunder. The Prior Trustee shall dispose of the securities in the Escrow Fund and purchase substitute Escrow Securities only upon receipt of-- (a) a written report of a nationally recognized firm of independent certified public accountants acceptable to the Prior Trustee to the effect that the :substitute Escrow Securities will mature in such principal amounts and earn interest in such amounts and at such times so that sufficient moneys will be available to pay, as the same become due, all principal, premium, if any, and interest represented''by the Prior'Certificates; and I OC";S111.5')4383: 4051'1-121 MAC 3 (b) a legal opinion of nationally recognized bond counsel to the effect that such disposition of the securities in the Escrow Fund and purchase of substitute Escrow Securities will not cause the Refunding Bonds or the Prior Certificates to be"arbitrage bonds" as defined in Section 148(f) of the Internal Revenue Code of 1986 and the regulations of the United States Department of the Treasury issued thereunder. Section 8. 'Fees and Expenses of Prior Trustee. The County by this Letter of Instructions, agrees to pay the reasonable fees and expenses of the Prior Trustee incurred as a result of this Letter of Instructions and the acceptance thereof by the Prior Trustee; provided, however, that:in no event shall such fees or expenses incurred by the Prior Trustee be deducted from, or constitute a lien against,the Escrow Fund. Section 9. Liabilities and Obligations of Prior Trustee. The Prior Trustee shall have no 'obligation to make any payments or disbursement of any type or incur any financial liability in the performance of its duties under this Letter of Instructions unless the County shall have deposited:sufficient funds therefor with the Prior Trustee. The Prior Trustee may rely and shall be protected in acting upon the written instructions of the County or its agents relating to any matter or action as Prior Trustee under this Letter of Instructions. The obligations hereunder shall not create any obligation upon the Prior Trustee in excess of that provided under the Trust Agreement. The County, to the extent permitted by law, covenants to indemnify and hold harmless the Prior Trustee against any loss, liability or expense, 'including legal fees, incurred in connection with the performance of any of its duties hereunder, except the Prior Trustee shall not be indemnified against any loss, liability or expense resulting from its negligence or willful misconduct. The Prior Trustee may consult'with counsel of its own choice (which may be counsel to the County) and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action in accordance with such opinion of counsel. The Prior Trustee shall not be responsible for any of the recitals or representations contained herein. The Prior Trustee shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys or Escrow Securities deposited with it to pay the principal, interest or premiums,if any, represented by the Prior Certificates. The Prior Trustee shall not be liable for any action or omission of the County under this Letter of Instructions or the Prior Trust Agreement. Whenever in the administration of this Letter of Instructions the Prior Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect;thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Prior' Trustee, be deemed to be conclusively proved and established by,a certificate of an authorized representative of the County, and such certificate shall, in the absence of negligence or willful misconduct on the part of the Prior Trustee, be full warrant to the Prior Trustee for any Doc_sSFI:594389. 40511-121 MAC 4 action taken or suffered by it under the provisions of this Letter of Instructions upon the faith thereof' The Prior Trustee may conclusively rely, as to;,the truth or accuracy of the statements and:correctness of the opinions and calculations provided, and shall be protected and indemnified, in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Prior Trustee signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. Section 10. Miscellaneous. This Letter of Instructions may not be amendedby the parties hereto unless there. shall first have been filed with: the County and the Prior Trustee (i) a written opinion of nationally recognized bond counsel stating that such amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest represented by the Prior Certificates or on the Refunding Bonds, and (ii) unless such amendment is not materially adverse to the interests of the registered owners of the Prior' Certificates, the written:consent of all the registered owners of the Prior Certificates then'outstanding. DOCSSF 1:59 4383: 40511-121 1\1';16 5 Section 11. Severability. If any section, paragraph, clause or provision of this Letter of Instructionsshall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Letter. COUNTY OF CONTRA COSTA By Chair of the Board of Supervisors County of Contra Costa, State of California Attest: John R. Sweeten, Clerk of the Board of Supervisors and County Administrator By: Chief Clerk BNY WESTERN TRUST COMPANY, as Prior Trustee By Authorized Officer DOCSSV 1:5'94389. 40511-121 NfA SCHEDULE I Escrow Securities United States Treasury Obligations as set forth below: Cash in the amount of$ State and Local Government Series Refunding Band Proceeds and other available moneys Escrow: Purchase Type of Type of Maturity First Int Par Total Date Security SLGSDate Pmt Date Amount Rate Cost 12002 SLGS Certificate 1,2002 1,2002 $ .00 % $ .00 1)OCSSI 1:594389, 40511-121 MAC 1-1 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement(the "Disclosure Agreement"), dated as of 2002, is executed and delivered by the COUNTY OF CONTRA COSTA, CALIFORNIA (the "County"),;and STATESTREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A., as trustee(the"Trustee")in connection with the issuance by the County of Contra :Costa Public Financing Authority (the "Authority") of $ Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series A:(the "Bonds"). The Bonds are being issued pursuant to a Trust Agreement stated as of February 1, 1999, as supplemented by a First Supplemental Trust Agreement dated as of January 1, 2001, a Second Supplemental Trust Agreement dated as of May 1, 2001 and a Third Supplemental Trust Agreement dated as of April 1, 2002(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 Facility Lease dated as of February 1, 1999, as amended by the First Amendment to Facility Lease dated as of January 1, 2001, the Second Amendment to Facility Lease dated as of May 1 2001 and the Third Amendment to Facility Lease dated as of April 1, 2002 (collectively, the "Facility Lease"), the County has covenanted to comply with its obligations hereunder and to assume all obligations for Continuing Disclosure with respect to the Bonds. The County and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose_of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the County, the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule ;15c2-12(b)(5). SECTION 2. Definitions. In addition to the definitions set; forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the County pursuant to,and as described in, Sections 3 and 4'of this Disclosure Agreement. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning the ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Disclosure Representative shall mean the County Administrator, Director, Capital Facilities and Debt Management or his or her designee, or such,other officer or employee as the County shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean the County, or any successor Dissemination Agent, which may be designated in writing by the County and which has filed with the Trustee a written acceptance of such designation: D CSSFt:594G12. 40511-121 NIAC "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement: "National Repository" shall mean any Nationally Recognized Municipal Securities InformationRepository for purposes of the Rule. The National Repositories approved by the Securities and Exchange Commission as of the date of this Agreement are set forth at the following;website: http://www.sec.gov/consumer/nrmsir.htm. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the.:Rule in connection with offering of the Bonds. "Repository shall mean each National Repository and the State Repository. "Rule" shall` mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State"shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as the state repository for the purpose of the Rule'and recognized as such by the Securities and Exchange Commission. As of the date of this Agreement, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The County'',shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the County's fiscal year (presently June 30), commencing with the report for the 2000-2001 Fiscal Year, provide to each Repository an Annual' Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package,and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the"County may be submitted separately'from the balance of the Annual 'Report and later than the date>required above for the filing of the Annual Report if they are not available by that date. If the County's fiscal year changes, it°shall give notice of such change in the same manner as for Listed Event under Section 5(f). (b) Not Tater than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the County shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee' is not the Dissemination 'Agent); provided,'however, that the 'County may distribute the Annual Report itself after providing written notice to the Trustee and the Dissemination Agent. If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the County to determine if the County is in compliance with the first sentence of this subsection(b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date'required in subsection (a), the Trustee shall send a notice to each DO SSFI:5t94Gi2. 40511-121 MAC Repository, the Municipal Securities Rulemaking Board and the State';Repository, if any, in substantially the form'attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository' and the State Repository, if any; and (ii) to the extent the County has provided the Annual Report to the Dissemination Agent, file a report with the County and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The County's Annual Report shall contain or include by reference the following: 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted'accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions; (a) "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Base Rental Payments" (report changes in DEBT SERVICE SCHEDULE); (b) "APPENDIX B — COUNTY FINANCIAL INFORMATION - Recent County General Fund Budgets" (update table entitled "COUNTY OF CONTRA COSTA GENERAL FUND BUDGET"; (c) "APPENDIX B -- COUNTY FINANCIAL INFORMATION-- Ad Valorem Property ''Taxes" (update table entitled "COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION"); (d) "APPENDIX B — COUNTY FINANCIAL INFORMATION — Accounting Policies, Reports and Audits" (update table entitled "COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES"); 1)€9(.SS 1:594612: 40511-121 NLAC (e) "APPENDIX B COUNTY FINANCIAL INFORMATION - Long Term Obligations -- General Obligation>'Debt and "--Lease Obligations" (update table on annual debt service). Any or all of the items listed above may be included by specific reference to other documents,, including,official statements of debt issues of the County or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The County shall clearly identify each such other; document so included by reference. SECTION 5. Reporting of Significant'Events. (a) Pursuant to the provisions of this Section 5 and to the extent applicable, the County shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds,if material: I. principal and interest payment delinquencies 2. non-payment related defaults; 3. modifications to rights of Holders of Bonds; 4. optional, contingent or unscheduled bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds; 8. unscheduled draws on the debt service reserves reflecting financial difficulties; 9. unscheduled draws on credit enhancements reflecting financial difficulties, 10. substitution of creditor liquidity providers, or their failure to perform; and 11. release, substitution or sale of property securing repayment of the Bonds. (b) The Trustee shall, promptly, upon obtaining actual knowledge, at its principal corporate trust office as specified in Section 12 hereof of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the County promptly notify the Trustee in writing whether or not to report the event pursuant to subsection (f);' provided that, failure by tht, Trustee to so notify the, Disclosure DOCSS1 1:594 A 2. 40511-121 NfAC Representative and make such request shall not relieve the County of its duty to report Listed Events as required by this Section 5. (c) Whenever the County obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection(b)or otherwise, the County shall as soonas possible determine if such event would be material under applicable federal securities laws. (d) If the County has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the County shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the:occurrence pursuant to subsection(f). (e) If in response to a request under subsection (b),.the County determines that the Listed Event would not be material under applicable federal securities'laws, the County shall so notify the Trustee in writing and instruct the Trustee not to report the occurrence. (f) If the Trustee has been instructed by the County to report the occurrence of a Listed Event,the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository. Notwithstanding the foregoing, notice of Listed' Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying,event is given to Holders of affected Bonds pursuant to the Trust Agreement. (g) The Trustee may conclusively rely on an opinion of counsel that the County's instructions to the Trustee under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. Each party's obligations under this Disclosure.Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the County shall give notice of such termination in the same manner as for a Listed Event under Section 5(f) SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the County pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the County shall be the Dissemination Agent. SECTION 8. Amendment, Waiver. Notwithstanding any other provision of this Disclosure Agreement, the 'County, the Trustee and;the Dissemination Agent may 'amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the County'provided such amendment does not impose any greater duties, nor risk of liability, on the Trustee or the Dissemination Agent, as the case may be), and DOCS5F 1:5')4012. 40511-121 MAC any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied. (a) If the amendment or waiver relates to the previsions of Sections 3(a), 4, or 5(a), it may only be made:in connection with a change in circumstances that arises from a change in legal requirements, change in law,',or change in the identity,nature or status of an obligated person with respect to the Bonds,or the type of business conducted, (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized' bond` counsel, have complied with the requirements of the Rule at the:time of the original issuance of the Bonds, after taking into account''any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the consent of Holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the interests:of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the County shall describe such amendment in the next Annual Report, and shall> include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the ;presentation) of financial information or operating; data being presented by'the County.,In addition,'if the amendment relates to the accounting principles to be followed in preparing financial statements,;(i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles: SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this 'Disclosure' Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the County chooses to include any information in any Annual Report or notice of occurrence of,a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the County shall have no obligation under this Agreement to update such information or include it in any fixture Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the County, the Trusteeor the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee (and, at the written request of any Participating Underwriter or the 'Holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to theextentindemnified to its satisfaction), or any Holder or Beneficial Owner of the Bonds may take such actions as may be DOC.SSV t:594612. 40511-121 MAC necessary and appropriate, including seeking mandate or specific performance by court order, to cause the'County,the Trustee or the Dissemination Agent, as the case may be,to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the County, the Trustee and the Dissemination Agent to comply with this Disclosure Agreement shall be an'action`:to compel performance. SECTION 11. Duties Immunities and Liabilities of Trustee and Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the County, to the extent permitted by law, agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses;'(including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or willful misconduct. The obligations of the County under' this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Notices. Any notices or communications to or,among;any of the parties to this Disclosure Agreement may be given as follows: To the County: County of Contra Costa County Administrator's Office 651 Pine Street,6"' Floor Martinez,CA 94553-0063 Attention:'`Laura W. Lockwood, Director of Capital Facilities and Debt Management Telephone: (925)335-1098 Fax: (925) 646-1228 If to the Trustee: State Street Bank and Trust Company of California,N.A. 633 West 5th Street, 12th Floor Los Angeles, California 90071 Attention: Corporate Trust Department Telephone: (213) 362-7334 Fax (213) 362-7357 Any person may, by written>notice to the other persons listed above, designate a different address or telephone number(s)to which subsequent notices or communications should be sent. SECTION 13. Beneficiaries. This Disclosure Agreement'shall inure solely to the benefit of the County, the Trustee, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity: DO SSF1:594612. 40511-121 i IAC SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. COUNTY OF CONTRA COSTA By Chair of the Board sof Supervisors County of Contra Costa, State of California Attest; John R. Sweeten, Clerk of the.Board of Supervisors and County Administrator By Chief Clerk of the Board of Supervisors STATE STREET BAND.AND TRUST COMPANY OF CALIFORNIA,N.A., as Trustee $Y Authorized Officer D C'N`1i594612. 40511-121 MAC EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of County:` County of Contra Costa Name of Issue: County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds (Various Capital Projects),2002 Series A Date of Issuance: ,2002 NOTICE IS HEREBY GIVEN that the County of Contra Costa (the "County"):.has not provided an Annual Report with respect to the above-named Bonds as,required by Section 13.08 of'the'Third Amendment to Facility Lease, dated as of , 2002, by and between the County of Centra Costa Public Financing Authority and the County. The County anticipates that the Annual Report will be filed by Dated: STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,N.A., on behalf of COUNTY OF CONTRA COSTA cc: County of Contra Costa DOCSSF1:594612. A- 40511-121 MA{: MLIMINAItY OFFICIAL STATEMENT BATED AS OF ,2002 NEW,IS -I340K E NRY 0N—L Y RATINGS- 8 See"RATINGS°"Herein. In the opinion of Orrick,Kerrutgton,& Sutedffe LLP,Band Counsel,based upon existing laws,regulations;rulings and court decisions,and assuming * �= among other matters,compliance with certain covenants,interest an the 21302 Series A Bonds is cretuded from gross income for federal income tax purposes B under Vection 103 of the Internal Revenue Code of 1996 and is exempt from State of Cadifornia personal income taxes. In thefurther rrther opinion of Bond'Counsel,' Q interest an the 2002 Series A Bonds is not a spee}le preference item for purposes of the federal individual or corporate alternative minimum taxes,although 0. g Boni Counsel ohServes that such interest is included In adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of,or the accrual or receipt of the interest on,the 2002 series A Bonds. See"TAX M.A7TERS"herein. .e w o' Insert County COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY ° e Seal LEASE REVENUE BLINDS r at (REFUNDING AND VARIOUS CAPITAL PROJECTS), $ 2002 SERIES,A ro � Dated:']April I,20021 Due:June 1,as shown on inside cover ` The County of Contra Costa Public Financing Authority Lease Revenue Bonds(Refunding and Various Capital Projects),2002 Series A(the'1002 Series A Bondaa")are being issued to effect a cinrrent refunding and de*asance of the County of Contra Costs,California 1992 Refunding Certifrcatcs ofParticipation, vt ''(Consolidated Capital Facilities Project)(the Prior Certificates"), to finance the acquisition of two solar electric panels by the County of Contra Costa, g a 3 California(the"County")and to pay costs of issuance relating to the 2002 Series A Bonds. See'THE 2W2 SERM A PROjECY'and"ESTMATED SOURCES AND USES OF FUNDS." E Interest on the 2002 Series A Bonds will be payable on June I and December:I of each year,commencing December 1,2002_ The 2002 Queries A Bonds will be initially delivered in book-entry form,registered in the name of Cede&Co.,as nominee of The Depository Trust Company;New York,New'York' o g C DTC"). Principal of,redemption premium,if any,and interest on the 2002 Series A Bonds will be paid by State Street Sank and Trust Company of eu California,N.A.,as Trustee,to DTC.. DTC/ri.s obligated to remit such principal and interest to its DTC Participants for disbursement to the beneficial owners of the 2002 Series A Bonds. See""APPENDLK U Book-Entry Only System." The 2002 Series A Bonds are subject to optional,extraordinary and mandatory redemption as described herein. ^0 ° Payment of the principal of and interest,when due,on the 2002 Series A Bonds will be insured by a bond insurance policy to be issued concurrently with the delivery of the 2402 Series A Bonds by MBIA Insurance Corporation. LOGO c The 2402 Series A Bonds are being issued pursuant to a Trust Agreement,dated as of February 1,1993,as previously supplemented,and as further supplemented by the Third'Supplemental Trust Agreement dated as of April 1,2,002,between the County of Contra Costa Public Financing Authority(ilia $i "Authority's and the Trustee. B X33 a The 2002 Series A Bonds are limited obligations of the Authority payable solely from certain revenues of the Authority,consisting primaily of Base Rental Paymenu(as defined herein)to be made by the County to the Authority pursuant to a Facility Lease(Various Capital Projects)r dated as of February 1 .9 ac 1999,as previously amended,and as further amended by Third Amendment to Facility Lease dated as of April 1,2002,(the"Facility Lease's,between the a Authority and the County. Pursuant to the Facility Lease,the County will'team the Facilities(defined herein)from the Authority. The County has covenanted x in the Facility Lease to take such action as may be necessary to include Base Rental Payments in;its annual budgets and to make the necessary annual ° e ;appropriations therefor. 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 condemnation of all or a portion of the Facilities which results in substantial interference with the County's use and occupancy of the Facilities, except as otherwise described herein. " THE 2002 SERIES A BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE NOT SECURED BY A LEGAL OR EQUITABLE `o PLEDGE OF, OR CHARGE OR LIEN UPON, ANY PROPERTY OF THE AUTHORITY OR THE COUNTY €3R ANY OF THEIR INCOME OR a RECEIPTS,EXCEPT THE REVENUES(AS',DESCRIBED HEREIN). NEITHER THE FULL FAITH NOR THE CREDIT OF THE AUTHORITY OR THE o COUNTY IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE 2002 SERIES A BONDS. NEITHER THE PAYMENT - OF THE PRINCIPAL OF OR INTEREST ON THE 2002 SSS A BONDS NOR THE OBLIGATION TO MAKE BASE RENTAL PAYMENTS'UNDER 8 THE FACILITY LEASE CONSM U"l iwS A DEBT,LIABILITY OR.OBLIGATION QF THE AUTHORITY OR THE COUNTY FOR WHICH EITHER ; ENTITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH EITHER ENTITY HAS LEVIED OR.PLEDGED ANY J9: FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER v NIATURrry SCHEDULE,CUSIP NUMBERS,PRINCIPAL.AMOUNTS,INTEREw RATES AND Pitims/Ynam (see Inside cover) M 2002 Series A Bonds will be sold via competitive sate on April.._,,,,,,_,2002 pursuant to an Official Notice ofsale dated as of March 27 2002. The a 2002 Series A Bonds are offered when,as and if Issuers,;subject to approval of validity by Urrkk Herrington of Sutcliffe LLP,San Francisco,Calijomitt Bond a Counsel. Certain other legal matters will be passed upon for the County and the Authority by County Counsel,and by Lofton sir Jennings,San Francisco, California,Disclosure Counsel. 4e ry Capital Inc.is Financial Advisor to the County in connection with the issuance ofthe 2002 Series A Bonds. The 20132 Sen- A Bonds;in book-entrydorm,will be avoilablefor delivery through skef"Rities ofDTG on or about May`, ,20a2. C � a > 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 STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. *Preliminary,subject to ehani e. b Dated DRAFT#3,3/12/2402 12.12 PM MATURITY SCHEDULE (Base CUSIP Number:21226P) Serial Bonds Maturity Maturity Date CUSIP Principal Interest Price/ Bate CUSIP Principal; Interest Price!' (June 1) Number* Amount Rate Yield (Tune l) N ber* Amount Rate: Yield 2003 2012 2004 201 2005 2014 2006 2015 2007 2016 200E 2017 2009 2018 2010 2019 2011 $ %Term Bond due June 1, Prized to Yield CUSIP Number 212261' * (Plus accrued interest from April 1,2002) *CUSIP numbers are provided for convenience of reference only. Neither the Authority nor the County assumes any responsibility for the accuracy of such numbers. 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 2002 Series A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2002 Series A'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 net 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 expressionsofopinions 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 2002 Series ABonds referred to herein and may not be reproduced or used, in whole or impart, for any Cather 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 teres 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 O VE ALLOT OR EFFECT TRANSACTIONS'WHICH STABILIZE OR. MAINTAIN THE MARKET PRICE OF T 2002 SERIES A BODS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIMG, IF COMMENCED, MAY BE DISCONTINIEI) AT ANY TIME. COUNTY OF<CONTRA COSTA PUBLIC FINANCING AUTHORITY John Gioia Mark DeSaulmer Chair Vice-Chair John R. Sweeten Kenneth J.Corcoran Executive Director and SecretaryTreasurer COUNTY OF CONTRA COSTA,CALIFORNIA BOARD OF SUPERVISORS OF THE COUNTY Jahn Gioia (District 1) Chair Gayle B.Uilkerna Donna Gerber (District 2) (District'3) Mark DeSaulnier Federal Glover (District 4) (District 5) Vice Chair COUNTY OFFICIALS John R.Sweeten 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 Silvan Marchesi Gus Kramer Stephen L Weir, County Counsel Assessor County Clerk-Recorder SPECIAL SERVICES F BOND COUNSEL FINANCIAL ADVISOR Orrick,Herrington&Sutcliffe LLP Sperry Capital Inc. San Francisco,Califomia Sausalito,California TRUSTEE State Street Bank and Trust Company of California,NA. Los Angeles,California TABLE OF CONTENTS Page INTRODUCTION, .. .. ...... ... ... ........................................ I THE 2002 SERIES A PROJECT. .. ... . .... ........... ... ..., , 3 ESTIMATED SOURCES ANI.?USES OF'FI1NDS....................................................................................4 THE LEASED FACILITIES. ......, . .... .. .... .. .......... . .... .,4 THE 2002 SERIES A BONDS. ... .... ..... .. ...... ... ... ..... ..., ....... . . 5 General Provisions ., ...... ...... .. .. ........ ....5 Redemption Provisions.... ... ... .... . ..... . ... ...... ....... .6 Notice of Redemption. .. . .. ..... ..... .... .. , 7 Selection o 2002'Series A Bonds for Optional Redemption.....................................................7 Effect of Redemption .. ... . ... .... ......7 SECURITY AND SOURCES'OF PAYMENT FOR THE BONDS.............................................................7 General. ...... ... .. . .I. ..... .. ... .. . ..... ....... 7 Pledge of Revenues. . . ........ . ..... ........... . . ..... .. . .8 Base Rental Payments. ... ......... . .... .. .. ..... . .... .., ... . . .9 Pledge of Courthouse Funds...... ...... .......... ..... . .., ....... ...., ........... 11 ReserveFund. ........ ......... ...... .. .. ......................................................,...... ...... 11 Substitution of Property... .. . ....., .. . .. .... ..: .. .. . .............. 12 Insurance................................................................................................................................... 12 AdditionalBonds...................................................................................................................... 14 MUNICIPAL BOND INSURANCE POLICY............ . .............. ......... .............. ....... . ....... . .............. 14 2002 SEAS A RESERVE INVESTMENT.... ..... ... ..... . ......... . . ...... '. . 17 CERTAIN RISK FAC'T'ORS. .... ...... ........ . ... .. .. ... . .... . 17 Limited Obligation .., . ... .., 17 Base Rental Payments Not a Debt of the County. ...... .. . ....... . 17 Abatement.. . ., .... ... ..... . .. 18< Limited Recourse on Default. ....... . .. .. .... ......... ... ... ... ... 18 Limitations on Remedies. ., .... ...... .. .... ..... 19 Risk of Earthquake and Other Natural Disasters. .. ............................................. 19 Hazardous"Substances.............................................................................................................. 19 No Liability of Authority to the Owners 19 State Funding of Counties 19 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,REVENUES AND APPROPRIA'T'IONS........ ..... ... .......... ..... .... .... ..... ......... .. ....... ......... ........ ........,.. . ...........20 Article XIII A of the California Constitution... ........... ........ . ....... . ......... . ......... . .........20 Legislation Implementing Article XIII A.......... . ....... . ........ ................. ......... ...............20 Article XIII A Litigation.. ......... ... ..... » ........... ...... .......... ........ ......... ......... ... ............20 Article XIII B of the California Constitution .. .. ..... .. . ........ . .21 Article XIII C and Article XIII D......... ... ...... ........... ,....... ........ ......... ........... ..............22 Proposition 62. .. .. . .. . .22 Future Initiatives and Changes of Law.. ... ...........................................................23 THE AUTHORITY... ................. ..... . .. .. ....... ... .......... ..24 THE COUNTY. ..... .. . .. . ....... . ......... ........ ., .... .. .. .24 RATINGS. ..... ................ .» ... . .... . .... .. ...... ... ..7A LITIGATION. . . .. .. . ........ .25' TAX MATTERS. ., .. .25 LEGAL MATTE. .. . .. .... .. ..26 FINANCIAL ADVISOR................................... ... . .....» .., .26 VERIFICATION. ..... . ......, .... .26' CONTINUING DISCLOSURE.. .. ... ..... ., . . ... .27 i UNDERWRITING. I ... 27 MISCELLANEOUS IINFORMATION .. ........ ...... . .. ., . .,...., .rm APPENDIX A - GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION' . , . .... ......... .. . ... ... .... .... ........ .A-1 APPENDIX B COUNTY FINANCIAL NFORMATION . . ..B-1 APPENDIX C - EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE'30,2001 ........ .............0-1 APPENDIX D - SUMMARY OF CERTAIN PPRO'\ SIONS OF PRINCIPAL `LEGAL DOCUMENTS, ..... . . ..... ...T -I' 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 H - SPECIMEN MUNICIPAL BOND INSURANCE POLICY ........ ........... ...........H-1 DRAFT '3/12/2002 12:12 PIVi ii OFFICIAL STATEMENT COUNTY OF CONTRA COSTAPUBLIC FINANCING AUTHORITY LEASE REVENUE BONUS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2002'SERIES A 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 (Refunding and Capital Projects), 2002 aeries A(the'"2002 Series A:Bonds"), in an aggregate principal amount of$ * by the County of Contra Costa Public Financing Authority(the "Authority"). The 2002 Series A 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 leases the Facilities to the Authority pursuant to a Master Site Lease, dated as of February 1 1999,as previously amended, and as further amended by the Third Amendment to Master Site Lease dated as of April 1, 2002 (collectively, the "site Lease). The Facilities'are then lease by the Authority to the County pursuant to a Facility Lease (Various;Capital Projects), dated as of February 1, 1999, as previously amended, and as further amended by the third Amendment to Facility Lease dated as of.April 1 2002 (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 proceeds of the 2002 Series A'Bonds will be applied along with funds of the County to effect a current refunding and defeasance of $25,870,000 of the County of Contra Costa, California 1992 Refunding Certificates of Participation (Consolidated Capital Facilities Project) on June 1, 2002 ("Component 1 '-Refunding")and to finance the acquisition of two solar electric panels to be installed at two locations inthe County("Component 2-Various Capital Projects"and,collectively with Component 1 =Refunding,the"2002 Series A Project"). In addition, the Authority will utilize proceeds of the 2002' Series A Bonds to pay certain costs associated with the issuance of the 2002 Series A.Bonds. See` 2002 SERIES A PROJECT"and"ESTIMATED SOURCES AND USES OF FUNDS." The 2002 Series A Bonds will be issued pursuant to a Trust Agreement,dated as of February 1, 1999, as previously supplemented,'' and as further supplemented by the Third Supplemental Trust Agreement dated as of April 1, 2002 (collectively, the "Trust A,greernene), between the Authority and State Street Batik 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 the following series of lease revenue bonds pursuant to the Trust Agreement (the`"1999' Series A Bonds", the "2001 series A Bonds" and the "2001 Berries B Bonds'), which bunds are payable on a,parity with the 2002 Series A Bonds. See "Debt Service Schedule"for the outstanding debt service on these bonds *preliminary,suA ect to change. DRAFT 3112/2002 12-12 PM' 1 Original Aggregate Remaining Aggregate Principal Series Principal (as of ALnl 1,2002) 1999 Series A Bonds $74,685,000 $68,540,000 2,001 Series A Bonds 18,030,000 18,030,000 2001 Series B Bonds 23,775 W0 23,775,000 TOTAL $116,490,000 $110,345,000 The Authority may in the future issue additional bonds under the Trust Agreement("Additional Bands")secured on a,parity with the 1999 Series A Bonds, the 2002 Series A Bonds,the2001Series B Bands and the 2002 Series A Bunds. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS— Additional Additional Bonds." The 1999 Series A Bonds, the 2001 Series A Bonds,the 2001 Series B Bands and the 2002Series;A Bonds,together with any Additional Bonds issued pursuant to the Trust Agreement,are herein referred to as the"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 pledgeis 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 Bonds. See"SECURITY AND SOURCES OF PAYMENT FOR TETE BODS." 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 2002 Series A Bondholders receive less than the full amount of principal and interest on the 2002 Series A'Bonds, except to the extent proceeds of insurance or moneys in the Reserve Fund( s described herein)are available to make payments of principal of or interest'on the 2002 Series A Bonds (car the relevant portion thereof)during periods of abatement of Base Rental' As additional°°security for the 2002 Series A Bonds, payment of the principal of and interest on the 2002 Series A Bonds when due will be insured by a"municipal bond insurance policy to be issued by MBIA Insurance Corporation (the "Insurer") simultaneously with the delivery of the 2,002 Series A. Bonds. See '-ME MUNICIPAL BOND INSURANCE POLICY" and ""APPENDIX'H - SPECIMEN MuNiCtPAt.' BOND INSURANCE POLICY." For a discussion of certain risk factors associated with investment in the Bonds, see "CERTAIN RISK FACTORS." Summaries of certain provisions of the principal legal documents relating to the 2002 Series A Bands 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 2002 Series A Bunds are qualified in their entirety by reference to such documents,and the descriptions'herein:of the 2002 Series A 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 "APPENDI D - SUMMARY OF CERTAIN f'ovisms OF PRINCIPAL LEGAL DOCUMENTS--Certain Definitions." DRAT 371212002 1.2:12 PM 2 The 2002 Series A Bonds are berg issued pursuant to the Constitution and the lavas of the State, resolutions adopted by the Authority and the County on [March 26, 20021 and the Trust Agreement, THE 2002 SERIES A PROJECT The components to be financed with the proceeds of the 2002 Series A Bonds are described below. Component 1 Refunding and Component 2—Various Capital Projects comprise the components being financed with proceeds of the 2002 Series A Bonds (the"2002 Series A Project). The remaining proceeds of the 2002 Series A Bonds will be utilized to pay costs of issuance related to the 2002 Series A Bonds. Component 1--Refunding 11992,the County caused to be executed and delivered$37,300,000 aggregate principal amount of its 1992 Refunding Certificates of Participation (Consolidated Capital Facilities Project) (the "Prior Certificates"), pursuant to that certain trust agreement, dated as of June, 1, 1992 (the "Prior Trust Agreement"), by and ween the County, the Contra Costa County Public Facilities Corporation (the "Corporation') and U.S. Trust Company of California, N.A., as trustee (the "Prior Trustee"), which evidenced and represented interests in lyase rental payments payable by the County pursuant to that certain Facility Lease,dated as of Jane 1, 1992 (the "Prior Facility Lease"),by and between the County and the Corporation. As of the slate of delivery of the 2002'Series'A Bonds, $27,425,000 aggregate principal amount of Prior Certificates will be outstanding and will be subject to payment or prepayment prier to their respective stated maturities on June 1, 2002,in accordance with the terms of the Prig Trust Agreement. A portion of the proceeds of the 2002 Series A Bonds will be applied toward the defeasance of all of the Prior Certificates outstanding on the date of delivery of the 2002 Series A Bonds (the "Refunding"),as provided for under the Prior Trust Agreement. Such defeasance will be accomplished by depositing a portion of the 2002 Series A Bond proceeds, together with moneys released from the prior Trust Agreement and prepaid'base rental from the;County,into an Escrow Fund established with the Prior, Trustee, as escrow agent (in such capacity, the "Escrow Agent"), pursuant to the terms of that certain Letter of Instruction, dated as of April 1, 2002,by and between the County and the Escrow Agent. See "ESTNATED SOURCES AND USES OF FUNDS." The amount of funds deposited into the Escrow Fund will be sufficient to timely and fully pay the aggregate principal mount of the Prior Certificates outstanding through and including;June 1 2002,and to prepay the Prior Certificates with principal payment slates on or after June 1, 2003 at a prepayment price of 102% of the aggregate principal amount thereof, plus accrued and unpaid interest through June l;2002. The sufficiency of the Escrow Fund to pay and prepay the Prior Certificates will be verified.by Causey, Demgen&Moore,Denver,Colorado(the"Verification Agent'). See" ERIFICKMN." Component 2"—Various Capital Protects In 2001, the County applied for: and received approval from the State`to participate in an alternative energy program based upon renewable,rather than nonrenewable,energy sources. A portion of the proceeds of the 2002 'Series'A Bonds will be used to find the County's $1.05 million matching funds portion of a $2.1 million project to acquire two solar electric panels that will convert 12-volt electrical capacity into 110 volts via an inverter(the"Solar Electric Panels). The State will reimburse the County for the other$1.05 million portion of project costs. One of the Solar Electric Panels'will be installed at the County detention facility in [Martinez and the other will be installed at the County's Building located at 50 Douglas Drive in Martinez, California.The Solar Electric Panels will provide energy at peak load times and will save approximately $75,000 of energy costs annually. The Solar Electric Panels have a useful life of approximately 25 years. DRAFT' 3112/2002 12:12 FM 3 The County will also use proceeds eds rof the 2,002 Series A Bonds in the amount of$3.2 million to, acquire abuilding located at 1650 Cavallo Road in the City of Antioch (the "Cavallo Road Building"). The two-story building will House staff of the County's'Employment and Human Services Department involved in back-office support for the Medi-Cal program as well as in delivery of general assistance benefits to residents in the eastern portion of the County. Concurrent with the delivery of the 2002 Series A Bonds, the Solar Electric Panels and the Cavallo Road Building will be added to the facilities currently leased under the Master Site Lease. See "THE FACILITIES." The County may change the 2402 Series A Project from time to time by filing a notice of change with the Trustee. EsTi mATED'SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds related to the issuance of the 2042 Series A.Bonds.° _....,.urces 2002 Series A Bonds Aggregate Principal Arount.................. Transferred'Proceeds from Prior Certificates...... . .... Accrued Interest(') Prepaid Base Rental on Prior Certificates. . .. . ...... Transfer of Prior Certificates Reserve Fund Investment Agreement... ... ......... ......... ........ .......... TotalSources....................................... Uses Deposits to 2042 Series A Project Fuad: Prior Certificates Escrow Fund. . Capital Protect I....... .. ......... . ............ .... .. ............. ...... Interest Account(').. .......... ........ .... .... ....... ............. ..... 2002 Series A Reserve Facility'........ ....... .. ............ ............ Costs of Issuance Fund(z).......... ......... ......... ............. . . ..... TotalUses............................................ Represents interest on the 2002 Series A Bands from their crated date to their delivery date; tz) Includes Iegal and professional fees,municipal bond insurance policy and debt service reserve fund surety band premiums, printing costs and.other costs of issuance. THE FACILITIES The County leases the Facilities to the Authority pursuant to the Site Lease, and the Authority leases 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 and the Authority may substitute other properties for the Facilities or portions thereof upon meeting certain conditions. ''See I"SECURITY ANIS SOURCES OF PAYUMNT FOR THE BONDS—Substitution of Property." DRAFT 3/121244212:12 PM 4 The Facilities consist of a number of County properties and the:sites thereof and the Solar Electric Panels,but not the sites at which they are installed,as further described.below.The Facilities include site development, landscaping, utilities,:equipment, furnishings, improvements and appurtenant and related facilities'located on the Demised Premises.' Approx. Original Approx. Building Term of Completion Acreage ware Site Value Facility Address date Of Site Footage Lease' ($millions) Bray Courthouse 1020 Ward Street 1988(2) 0.6 48,900 2016 10.35(') _ Martinez,California Four Buildings at Waterbird Way and [198 _ 7.0 _ 21,10 2019 6.0*0 � Central Crista County Blum Road _ Public Works Yard Martinez California` Contra Costa Regional 2500 Alhambra Dr. 2002 0.6 24,600 2027 8.8 Medical Center' Martinez,California' Laborata Data Processing 30 Douglas 1 _ 1.6 35,300 2019 4,901 Building' Martinez,California East County Social 4545 Delta Fair Blvd. 1988 4.9 52,700 2008 5.00 Services Building Antioch California 141 Forensic Science Center 1960 Muir Reuel 198 [??] 20,131}0 2019 4.40 Martinez California Health services 595 Center Street and 198 [??l 45,000 2019 4.80x° Muir Road ,Building Martinez,California Martinez Detention 2002 [NIA] [N/A] [ ) __ Solar Electric Panels Facility and 50 Douglas Drive Martinez California Public Works 255 Glacier Drive 198 9— 1") 31,200 2019' 2.42 Department Martinez,California Administration Summit Centre 2530 Arnold Dr. 1988 20.8 113,000 2026 25.80 Martinez,California West County 5555 dant Highway' 1991 47.4 243,.300 2028 $ 63.00 Detention Facg Richmond California TOTAL $137.62 tr) Based upon independent appraisals completed in December 1998. t23 A third story to the facility was completed in 1992. tr) Based upon 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 mullion that are currently underway_ t4? Based upon construction cost of the project. t 7 Date'of original financing- Source: inancingSource:County Adrninistirator's Office TnE 2002 Sums A BONDS General Provisions' The 2002 Series A Bonds are limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be:trade by the County under the Facility Lease. The 2002 Series A'Bonds will be prepared in the forth of fully registered bands and, when delivered,will be registered in the name of Cede& Co., as nominee of The Depository Trust Company, DRAFT 3/12/2002 12:12 PM 5 New York, New York ("DTC'). DTC will act as securities depositary of the 2002 Series A'Bonds. Ownership interests in the 2002 Series A Bonds may be purchased in book-entry form only, in the denominations hereinafter set forth. See"APPENDIX G--Book-Entry Only System." Ownership interests in 2002 Series A Bonds will be in $5,€00 denominations or any integral multiple thereof. Interest on the 2002 Series A Bands will be calculated on the basis of a 360-day year composed of twelve 30-day months and is(sayable on June 1 and December 1';(each an"Interest Payment Date") of each year, commencing December 1, 2002. The 2002 Series A Bonds will be dated and bear interest from April 1,2002. The 2002 Series A Bonds will mature on the elates(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 2002 'Series A Bonds maturing on or prior to June 1, 2010,are not subject to optional redemption. The 2002 Series A Bonds maturing on or after June 1,2011 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 start on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after June 1, 2010 at the following redemption prices (expressed as a percentage of the principal amount of the 2002 Series A Bonds called for redemption)plus accrued interest thereon to the date fixed for redemption,as follows; Redemption Period {elates inclusive) R.edemtion Price June 1,2010 through May 31,2011 101% June 1,2011 and thereafter 100 Mandatory Sinking;Fund Redemption. The 2002 Series A Bunds 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, A 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 premiums,in the amounts and on the dates set forth below. Maturity Extraordinary Redemption. The 2002 Series A 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 2002 Series A Bands i 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 insurancereceived 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 PAYNWNT FOR THE BONDS--Insurance." The redemption price will be equal to the principal amount of the 2002 Series A Bonds to be redeemed and accrued interest thereon to the date of redemption, without premium. 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 set 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. DRAFT 3112!200212;12 PM 6 Notice of Redemption Notice of redemption is to be mailed, first class postage prepaid,to the respective Owners of any 2002 Series A 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 SU 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 2002 Series A Bonds to be redeemed, and in the case of each 2002 Series A Bond called for 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 2002 Series A 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 2002 Searles A Bonds for Optional Redemption The Authority will designate which maturities of Bonds are to be redeemed. Whenever less than all the Outstanding 2002 Series A Bands anaturing on any one date are to be redeemed, the Trustee will select the 2002 Series A Bonds of such maturity date to be redeemed from the Outstanding 2002 Series A Bonds payable on such maturity date by lot: For Purposes of such selection,2002 Series A Bonds will be deemed to be composed of$5,000 portions, and any such portion may be separately redeemed. In the event 2002 Series A'Bonds subject to sinking fiend 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 2002'Series A Bonds caped for redemption is held by the Trustee, then on the. redemption date designated in such notice 2002 Series A Blonds so called for redemption will become due and payable,and from and after the date so designated interest on such 2002 Series A Bonds will cease to accrue, and the Owners of such 2002 Series A 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 Bands 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 "fledge of Courthouse Funds"below), are calculated to be sufficient to pay principal of and interest on the Bonds when clue. 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 clay of the month immediately preceding each Interest Payment fate, 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 Bonds.' DRAFT 3/1212002 12:12 PM 7 Under the Facility Lease, the County agrees to pay Additional Payments for the payment of all expensesand all casts 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. 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 Fund ), 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 cast 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 mounts 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 farce and effect and the County waives any tight to terminate the Facility Lease by virtue of any such damage or destruction. If the whale 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 Kase Rental Payments and Additional Payments thereunder(without acceleration)as they become due on an annual basis. See "APPEmix D — SUMMARY OF CERTAIN Pgovisms Q 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 2002 Series A Bonds, payment of the principal of and interest, when due,on the 2002 Series-A Bonds will be insured by a municipal bond insurance policy to be issued by the Insurer simultaneously with the delivery of the 2002 Series A Bonds. See "MUNICIPAL BOND INSURANCE POLICY." Fledge 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 tens of the Trust Agreement The Authorityhas 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 ahrtual budgets and to make the necessary annual' DRAFT 3/12/2002 12:12 PlV[ 8 appropriations therefor. The County has timely made to date all Base Rend Payments and Additional Payments due under the Facility Lease for the 1499 Series A Bonds,the 2001 Series A Bonds and the 2001 Series B Bands. 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 I 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 2002 Series A Bonds will be payable on the 15th day of the month immediately preceding its dine 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 I of the period in which such installments are payable (except the first Base Mental period which commenced on the date of recording of the Facility Leasee). 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 PRQv7.St m OF PRINCIPAL LEGAL D3Ci.Tl4 Ews----Trust Agreement—Creation of Funds and'Accounts°" THE 013LIGATION OF THE COUN'T'Y TO MAKE BASE RENTAL PAYMENTS IS AN OBLIGATION'PAYABLE FROM AMOUNTS IN THE GENERAL FUND AND TIM COURTHOUSE FUNDS`OF T,HE 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 CONSTITfMONAL OR STATUTORY` DEBT LIMITATION OR RESTRICTION'OR AN OBLIGATION FOR fit+MCH THE COUNTY`MUST LEVY OR PLEDGE,OR HAS LEVIED OR PLEDGED,ANY FORM OF TAXATION. DRAFT 3/12/2002 12:12 PM 9 ne followingtable shoves the debt service schedule relating to the 1999'Series A Bonds, the 2001 Series A Bonds,the 2001 Series B Bands and the 2402 Series A Bonds, DEBT SERVICE SCHEDULE Outstanding 2002 Series A Bonds Paym nit Date .Servifl} Principal interest Total Fiscal Year Total 061011'02 $5,791,881:88 12101/02 2,529,730.65 06141/03 6,389,750.53 12/01/03 2,453,22438 06101X04 6,463,224.38 12/01X44 2,373,505.63 06/01705 6,538,505.65 12/01/05 2,290,573.13 06101/06 6,615,573.13 12101706 2,204,195.63 06/01/07 6,704,195.63 12/01107 2,114,193.15 46101108 6;799,193.15 12/01108 2,002,696.88 06/41/09 5,832,646.88 12/01/09 1,923,470.65 06/01/10 5,923,070.63 12/014 1,838,495.63 06/01/11 6,403,495.63 12101/11 1,747,915:63 06/41/12 6,097,915.63 12/01/12 1,638,094.58 06/01113 6,203,094.38 12/001113 1,522,513:13 06101/14 6,317,513.13 12/01/14 1,400,900.65 06141/15 6,445,900.65 12/0-1/15 1,272,571-88 06/01/16 5;567,571.88 12/01/16 1,137,496.88 06101/17 4,272,496.88 12/03/17 1,062,399:38 06/03/18 4,547,399.38 12/03118 982,989.38 06101/19 4,422,989.38 12/41/19 897,577.50 06/01120 4,507,577.54 12/01124 807,297.54 06101121 4,647,297:50 lvolni 712,263.75 06/43122 4,697,263.75 12/01/22 612,282.50 46/01123 4,797,282.50 12141123 507,028.75 416/111124 4,902,428.75 121411'24 396,48154 46101/25 5,021,482.54 12141125 280,147.54 46//11125 5,130,147.54 12/01/26 158,143.75 05/01/27 4;033,143.75 12/41/27 59,254:00 06/01/28 2,429,250,00 TOTAL 5182,786,963.13 t'1 Reflects debtservice on outstanding 1999 Series A Bonds,2042 Serie'A Bonds and 2001 Series B Bonds issued pursuant to the Trust Agreement. DRAFT Y12/2002 12:12 PM 10' 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 Authorityin immediately available funds (front 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 2002 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 fray 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 mounts in the Courthouse Funds available for construction of court facilities began in 1952 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 2002 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 ether lawful''purpose after the allocable amount of Base Rental allocable to the County Project has been funded,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 in excess of the amount needed in such fiscal year to pay such portion of the Base Rental.The County received$2.4 million in Courthouse Funds in Fiscal Year 2001- 02. Reserve Fund The Trust Agreement,requires the Reserve Fund(which secures all of the Bonds)to be funded in an amount equal to the Reserve Fund Requirement,which will be equal to" , upon the delivery of the 2002 Series A Bonds, with cash, permitted investments, a"surety bond, an insurance policy,or a letter of credit,or any combination thereof as firrther described in the Trust Agreement. The portion of the Reserve Fund Requirement determined by reference to the 1999 Series A Bonds,the 2002 Series A Bonds'and the 2001 Series B Bands was satisfied through the issuance of surety bonds (the "'Prior Reserve Facility") issued in the aggregate amount of$8,782,697.04 (of which $2,096,960.68 expires on June' 1, 2027 and $6,,685,736.36 expires on June 1,'2028) by MBIA insurance Corporation,' which also provided a municipal bond insurance policy for a portion of the 1999 Series A Bonds and for all of the 2001 Series A Bonds and the 2001 Series B Bands. In addition,a reserve facility in the form of a guaranteed investment contact in the amount of[$3,272;202]by and between the Prior Trustee and Ai Matched Funding Corp.(the"2002 Series A Reserve investment")will be deposited in the Deserve Fund. The 2002 Series A Reserve investment,as well as the Prior Reserve Facility,will be available to pay the 1999 Series A Bonds, the 2001 Series A Bonds,the 2001 Series B Bands, the 2002'Series A Bonds and any parity Bonds. See "2-002 SERIES A RESERVE INVESTMENT," and "APPEMIX D w SUMMARY OF CERTAIN PROVISIONS Of PRINCIPAL LEGAL DOCUMENTS Trust .Agreement—Creation of Fund and Accounts—Reserve Fund." 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 account 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 Fuad or, if so directed by the Authority, ''deposited into the 2002 Series A' Project Fund during construction of the 2002 Series A Project. DRAFT 3/12/2002 12.12 PM' 11 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 bast equal to the Reserve Fund Requirement for all Outstanding Brands. For the:•••.definition of the term "Reserve Fund Requirement," see "APPENDIX D_ SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS--Certain Definitions." Substkutiion of Property The County and the Authority, with the writtenconsent of the Insurer, may substitute other real property as part of the Facilities for,purposes of the Facility Lease provided tate 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 140% of the maximum.!amount of Rase Rental Payments becoming clue in the then current year ending May 3 l 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 terra "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 them existing Facilities. The Insurer may require additional conditions to the substitution of Facilities. Insra►nce 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 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 DRAFT" 311212002 12:12 PM 12 extended;;coverage insurance will,asnearly as practicable,cover loss or damage by explosion,windstorm, riot,aircraft,vehicle damage,smoke and such other hazards as are normallycovered by such insurance. Such insurance will be in an amount equal to the replacement crest(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 formm sufficient'(together with moneys held under the Trust Agreement), in the event of 7total or partial loss, to enable all Bonds thea 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 described,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 thea 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 Mate 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 Bands 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 i 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 Mate other than the County. So long as such method or playa 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 plant 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,rend interruption or use and occupancy insurance to coven 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 insure required 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'(deterrrnined by reference to the proportion which the cost of such porion bears to the cost of the Facilities)' for a''period', of at least two years, except that such DRAFT 3/12/20.02 12':12 PM 13 t � 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 fii=a=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 on the open market'from reputable insurance companies at a reasonable cost,as determined by 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("CSACEIA").,;The County's current earthquake insurance policy expires on March 31,2002. CSA+CEIA is proposing to reduce the County's earthquake coverage from$280 million to$1201 million with an excess shared aggregate of$25 million. The County is in the"Zone A' designation, which has the highest potential for an earthquake among all zone designations. No assurance is given that the County will renew its earthquake insurance policy or continue to maintain earthquake insurance in the future. See "CERTAIN RISK FACTORS; — Risk of Earthquake and Omer Natural Disasters" and "At*PE'N IX B--COUNTY FINANCIAL INFO MAT[ON--•-Inssurance." The County is also required to obtain certain liability'insurance coverage in protection of the Authority and the Trustee. Additional Bonds, Additional Bonds may, with the consent of the Insurer(who also must consent as the Insurer of a portion of the 1999 Series A Bonds and all of the 2001 Series A Bonds and the 2001 Series B Bonds),be issued on a parity with the 1999 Series A Boards,the 2001 Series A Bonds,the 2001 Series B Bonds and the 2002 Series A 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 Boards." MUNICIPAL BUND INSURANCE POLICY [TO BE REPLACED WITH CURRENT MBIA DISCLOSURE] The following information has been furnished by 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 rued 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 mandator sinking fund payment 'and interest on,the 2002 Series A Bonds as such payments shall become clue 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 have been due had theme not been any such acceleration);and{ii}the reimbursement'of any such payment which is'subsequently recovered from any owner of the 2002 Series A Bonds pursuant to a final judgment DRAFT 3/12/2002 12':12 Plv 14 V by a court of competent jurisdictionthat 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 2002 Series A Bond. The Insurer's policy does not, under any circumstance,insure against loss relating to:(i)optional or mandatory redemptions(other than mandatory shaking fund redemptions); (ii)any'''payments to be made on an accelerated'basis, (iii)payments of the purchase price of 2002 Series A 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 ingest on the 2002 Series:A Bonds resulting from the insolvency, negligence or any other act or omission of the Trustee or any other paying agent for the 2002 Series A 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 2042''Series A Bond the payment of an insured amount for which is then due, that such required payment has not been made, the Insurer on;the clue 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 2002 Series A Bonds or presentment of such other proof of ownership of the 2042 Series A Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the 2042 Series A Bonds as are paid by the insurer,and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the 2002 Series A Bands in any legal proceeding related to payment of insured amounts on the 2002 Series A Bands, such instruments being in a forth satisfactory to State Street Bank'and Trust Coirnpany, 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 2042 Series A 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 c€nnpany,(the"Company'). The Company is not obligated to pay the debts of or claim against the Insurer.`The Insurer is domiciled in the State of New fork and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Conurionwealth of Puerta Rico, the Commonwealth of the Northern Manana 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,hinitingclasses and concentrations of investments and requiring the approval of policy rates and forms. State laws also regulate`the amount of bath 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 o $2.4 billion(andited)detemained'in accordance with statutory accounting practices'prescribed or perorated by insurance regulatory authorities. As of September 30, 2€00,the insurer had admitted assets of$7.5 billion(unaudited), total liabilities;of$5.1 billion(unaudited),anis total capital and surplus of$2A billion(unaudited)determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. 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 Foran 14-K. of the Company is available from the Insurer or the Securities and Exchange Commission. The mess of the Insurer is 113 King Street,Armonk New York 10504. The telephone number of the Insurer is(91.4)273-4545. DRAFT" 311212402 12:12 PM 15 Moody''s Investors Service,Inc.rues 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 pommies 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 2002 aeries A 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 2002 Series A Bonds. The Insurer-,does not guaranty the market price of the 20021 Series A Bonds nor dens it guaranty that the ratings on the 2002 Series A 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. 2002 SERIES A RESERVE INVESTMENT The reserve fund requirement for the Prior Certificates was funded with that certain''Reserve Fund Collateralized Investment Agreement, dated as of.May 14, 1993, between the Prior Trustee and AIG Matched Funding Corp. C AIGMFC") in the amount of x+3,272,2€12 (the "Agreement")., AIGMFC is currently rated'"AAA" by Standard and Poor's C S&P") and "Aaa" by Moody"s Investors Service ("Moody's"). The Agreement provides a guaranteed fixed interest rate of 5.753%, paid'semi-annually and is further secured by a collateral;agreement(the"Collateral Agreement')pursuant to which AIGMFC has posted collateral securities with Norwest Bankinnesota, National Association (the "Collateral Agent"). In event of payment default by AIGMFC, the Collateral Agent will liquidate collateral securities C'Securities"), resulting in the County receiving one hundred percent (1000%) of its invested funds. Securities include (i) securities issued or guaranteed;by the United State Government or the Government National Mortgage Association, including United State Treasury obligations and any other obligations the timely;payment of principal and interest of which are guaranteed,by the United States Government and(ii)bonds,notes,debentures,obligations or other evidence of indebtedness issued and/or guaranteed by .Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, including,, but not limited to, mortgage participation certificates, mortgage pass-through certificates, collateralized mortgage obligations,and ether mortgage-backed securities. The Agreement also provides that, in the event that AIGv1:FC's credit rating;drops below A/A2 by S&P or Moody's, AIGFMC shall repay at the County's option the remaining investee)balances and earnings at par: Concurrent with the simultaneous defeasance of Prier Certificates and execution and delivery of the 2002 Series A Bonds,the Agreement shall be deposited in the Reserve Fund and, together with Prior Reserve Facility, will secure the Bonds. Initially,the transfer will result in the Reserve Fund being funded in the amount of [$12,054,080.53], which will exceed the Reserve Fund Requirement of Sby . [The County expects the overfunded amount to decline when Additional Bonds are issued in the future pursuant to the Trust Agreement, which may occur as early as the summer of 2002 when the County expects to finance approximately [$15.0 million] of capital DRAFT'3/12/2002 12:12 PM 16 projects. In the meantime,and daring any period when the Reserve Fund is overhanded,the County may be required to rebate a portion of the earnings on the Agreement. 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 2002 Series A Bonds. However, the following does not purport to be an exhaustive listing of risksand other considerations, which may be relevant to ingesting in the 2002 Series A 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 2042 Series A 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 2002 Series A Bonds nor for the payment of Base Rental Payments. The Authority has no ting pourer. 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 make 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 tion the obligation of the County to nxake 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 Recital Payments Not a Debt of the County 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 revenge sources are less than its total obligations, the County could choose to fund other municipal' services before making Basi: Dental 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 XM B of the California Constitution. 'For information on the County's current limitations on appropriations, see "CONSTITUTIONAL AND STATUTORY LIM"ATIONS ON TAXES, REVENUES AND APPROPRIATIONS—Article XM 13 of the California Constitution." Valu'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 lava 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 2002 Series A Bands,Band Counsel will render its opinion (substantially in the form of"APPENDIX E—PRoPosED FORM OF BoNn COUNSEL OPINION")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'fD fault and Remeedies"and"Limitations on Remedies." DRAFT '3/12/2002 12.12 PM 17 Abatement In the went of loss or substantial interference in the use and occupancy of the Facilities by the County caused by dame or destruction or condemnation of the Facilities,Base Rental Payments(except for the portion of debt service attributable to the CourtsProject, 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 finds 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 — Sum mARY OF CERTAIN PRov isms OF PRINCIPAL LEGAL D CU ENTs Facility Lease—Abatement." It is not possible to predict the circumstances under which such an abatement of rental may occur. in addition,there is so statute,case or other lave specifying how such an abatement of rental should be measured. For example, it is not Blear whether fair rental value is 1 established as of commencement of the lease or at the time of the abatement. IT the latter,it may be that the value of the Facilities i substantially higher or lower than its value at tete time of the execution;and delivery of the 2002 Series A Bonds. Abatement,therefore, could have an uncertain and material adverse effect on the security for and payment of the 2002 Series A Bands. The County's'obligation to make payments from the Courthouse Funds for the Courts Project is not subject to abatement. See "SECURITY ANIS 'SOURCES OF PAYmENT FOR T14E BONDS—Pledge of Courthouse Funds." Limited'Recourse on Default The enforcement of remedies provided in the Facilities Lease and the Trust Agreement could b both expensive and tie 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 reit 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 lava 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 seeldng 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. 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 lirrritations 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. DRAFT' 3/12/2042 12:12 PM 18 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 ani 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. 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. N 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 and Other Natural Disasters There are several earthquake faults in the greater San Francisco Bay Area that potentially could result in damage to the 2002 Series A Project buildings,roads,bridges,and property within the County in the event of an earthquake. Past experiences,including the 1989 Lorna Prieta earthquake,measuring 7.1 on the Richter scale, Have resulted in minimal damage to the infrastructure and property in the County'. Earthqualm faults that could affect the County include but may not be limited to the San Andreas Fault in the western part of the County, and the Careen Valley,Hayward and Calaveras Faults within the eastern 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 31,2002 to cover all County property,including the Facilities, See"StcuRiTy Am Somas OF PAYMENT FOR THE BONDS—Insurance" and "APPENDix B — CouNw FINANCIAL INFORMAT[ON -- 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 Conrprehensive Environmental Response,Compensation and Liability Act of 1990,sometimes referred to as"CERCLK' or the"Superfund Act,"is the most well Down and widely applicable of these laws,but California lacus 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 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. DRAFT 3/12/2002 12'.12 PM 19 No Liability of Authority to the Owners Except as expressly provided in the Trost Agreement,the Authority will not have any obligation or liability to the Owners of the 2002 Series A Bonds with respect to the payment when due of the Base Rental Payments by the County, or with respect to the performance by the County of other agreements and covenants rewired to be performed by it contained in the:Lease Agreement or the Trust Agreernent, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement. State Funding of Counties The County receives a significant portion of its annual funding from subventions by the State. As a result, decreases in the revenues received by the State can affect subventions made by the State to the County and other counties in the State. The potential impact of State budget actions on the County in; particular, and other counties in the State generally, in future fiscal years is uncertain at this time. See''' "CouNTY FfmgcIAL INF RmA'r ON--State Budget." CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAM, REVENUES AND APPROPRIATIONS Article XM A of the California Constitution In 1978, California voters approved Proposition: 13, adding;Article .XII:! A to the California'. Constitution. Article XIII A was subsequently amended in 1986,as discussed below, and on November: 7,2001 to reduce the percentage of voter approval required for the passage of schoolbonds. 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,;;1975 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 XM A defines fWl cash- value to mean "the county assessor's valuation of real property as shown on the 1975-7+6 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 XM A has been amended to permit reduction of "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 XM A.' Legislation has been enacted and amended a number of times since 1978 to implement Article XM A. Under current law,;local agencies are no longer permitted to levy directly any property tax,' (except to pay voter-approved indebtedness). The 1%property tax is automatically levied by the County'' and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in! proportion to the relative shares of taxes levied prior to 1979. Increases of assessed'valuation resulting from reappraisals of property due to new construction,' change ge in ownership or from the 2%annul'adjustinerit is allocated among the various jurisdictions in the DRAFT ;3/12/2002 12-,12 P'11vf 20 "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 M A Litigation In June 1978, Article X1I1 A, of the California Constitution was amended by Proposition 13 to among other things, limit a County assessor's ability to annually adjust for inflation to 2% per year. See "Article X111 A of the California Constitution"herein.On November 2,:,2001,an Orange County Superior Court ruled. in County of Orange v.' Orange County Assessment Appeals Board Mo 3 that the grange County Assessor raised a homeowner's assessment in violation of Article :SII A by increasing the assessment on the homeowner's property by more than 2%per year,when the price appreciation im prior years was less than 2%per year.Orange County raised assessments by more than 20W in a single year if the value of a property remained flat after a taxpayer purchased the property, and then,increased by more than 2% in a"subsequent year. The County Assessor follows similar procedures in determining assessments in the County. The Court's ruling only applies to the particular assessment involved'in this case.Although quite unlikely,should the Court's reasoning be applied generally,the loss of tax revenue to local jurisdictions,including the County,could be significant. Article XM B of the California Constitution On October 6, 1979, California voters approved Proposition 4, known as the Lamm Initiative, which added Article XTII B to the California Constitution. Propositions 98 and 111, approved by the California voters in 1988 and 1990, respectively„substantially'modified Article SII B. The principal effect of Article XM B is to limit the annual appropriations of the Mate and any city, county, school district, authority, or other political subdivision of the Mate 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 aro appropriations limit was the '1978-79 fiscal year; which was timer 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 1 l I had been in effect. Appropriations subject to limitations of a local government under Article X11 B include generally any authorization tion to,expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of certain Mate 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 urges and user fees(but only to the extent such proceeds exceed the lcost of providing the service or regulation), (2) the investment of tax revenues, and (3)' certain subventions' received from the Mate. 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 XM 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 anmenoled by Proposition 98 Article XM 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 2002 Series A Project are excluded from the limits imposed by Proposition. 111.; DST 3112/21102 12':12 Pry 21 For Fiscal Year 2001-2002, the County's;Article XIII B limitis estimated to be$4,011,076,824 and budget appropriations subject to limitation are.estimated to be $204,053,587. 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 Bands are not subject to an appropriations limit Article XIII C'and Adele XIII la, On November 5, 1996, the voters of the Mate approved Proposition 218,known as the"Right to Vote on Taxes Act." 'Proposition 218 adds Articles XII C and XIU D to the California Constitution and contains`'a number of interrelated provisions affecting the ability of the County to,levy and collect both existing;and future taxes,assessments,fees and charges. The interpretation and application'of Proposition 218 likely will be determined by the courts with respect to a number of the matters discussed below,and it is not possible at this time to predict with certainty the outcome of such determination. Article'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 rewire a majority vote and taxes for specific purposes,even if deposited in the County's General Fund,require a two-thirds vote. Further,any general purpose tax which the County imposed, extended or increased without voter approval after December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which must be held within two years of November 5,' 1996.` The County'believes that no existing County- imposed' taxes;deposited into its General Fund will be affected by the voter approval requirements of Proposition 218, although as indicated below certain tax levies may be affected by Proposition 62. The voter approval requirements of Proposition 218 reduce the flexibility of the County to raise revenues for the General Fund, and no assurance can be given that the County will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Article XIII D also adds several provisions making it generally more difficult for local agencies to levy and maintain fees,', charges, and assessments for municipal services and programs. These provisions include,among other things, (i)'a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a'parcel, (ii) a requirement that assessments roust confer a"special benefit," as defined in Article XIU 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 neer as it is to properly owners. The County estimates that in Fiscal Year 2001-2002 it will collect no such fees and assessments. Article XIH 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's taxes; assessments, fees or charges currently conVrising 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 Proposition 62 was adopted by the voters at the November 4, 1986, general election which (a) requires that any neve or higher taxes for;general'governmental ptoses imposed by local govmunental entities such as the County be approved by a two-muds vete of the governmental entity's legislative body and by,a majority vote of the voters of the governmental entity voting in an election on the tax, (1) DRAFT 3112L2002 1236 PILI^ 22 4 ' requires that any special tax (defined as taxes levied for other than general governmental purposes)` imposed by a local government entity be approved by a twos 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 unposed, d)prohibits the impositionof act valorem taxes' on real properly by local governmental entities except as permitted by article XIIIA of the California' Constitution, (e),prohibits the imposition of transaction taxes and sales taxes on the sale of real property:. by local governmental entities,and(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 the'adoption of the initiative or be terminated by November 15, 1388. On September 28, 1995,the California Supreme Court affirmed the lower court decision in Santa Clara County Logical Transportation Authority v. Guardino, 11 'Cal. 4th 220 ',(1995) ("Cuar°dino"). The action held invalid a half-cent sales tar to be levied by the Santa Clara Comity 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 titan general 'governmental purposes) imposed by a local' governmental entity be approved by a two-thirds vete 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 XIH A of the California Constit€ation, (e)probi its 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 guardina on Proposition 62 grounds, the Court disapproved the decision in City of Woodlake v. Ligan, 230 Cal.:App. 3d 1058 (1991) ("l 'oodlake"), where the Court of Appeal had held 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 unposed or increased without any voter approval in reliance on Roodlake. The Court noted'as apparently distinguishable, but dict not confirm, the decision in;City of Westminster v County of grange, 204 Cal. App. 3d 626'(1988),that held unconstitutional'the section o Proposition 62 requiring voter approval of taxes imposed during the "window period" of August 1, 1985 until November;5, 1986. Proposition fit as an initiative statute does not have the same level of authority as a constitutional initiative,but is akin to legislation adopted by State Legislature. The County has two taxes to which Proposition 62 could appy: a business license tax enacted in 1991,which generates approximately$1,000,000 per year, and'a transient occupancy tax,an increase in which was enacted in 1990, that generates approximately $1,600,000 per year (approximately $240,000 per year of which is from the 1990 increase). Future datives and Changes of Law Article XIII A, Article XIII 13, Article XIII C, Article XIII D and Proposition 62 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 DRAFT 3/12/2002-12.31PMA A 23 Mate legislature couldamend 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. THE AU FHOT"Y The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers Agreement, elated 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 purpose 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 Re evelopinent, the Treasurer of the Authority is the County's Auditor- Controller ud forController and the Assistant Secretary of the .Authority is the Director, Capital Facilities and z Debt Management of the County. The.Authority's powers include,but are mot limited to, the power to issue 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 Bay 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 2001-02 General Fund Budget'of the County totals approximately$1.0 billion. For certain economic, demographic and financial information with respect to the County, see "APPENDIX A - GENERAL COUNTY ECONow AND DEMOGRAPHIC INF©I MAnoN," "APPENDIX B - COUNTY'FINANCIAL INFORMATION" and "APPENDIX C -- EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS©F TME COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2001." RATINGS Moody's Investors Service(' oody's') and Standard& Poor's, a division'of the McGraw-Hill Companies, Inc ("S&P'), are expected to assign the 2002 Series A Bonds the ratings of "Aaa" and "AAA,"rrespectively,, with the understanding that upon delivery of the 2002 Series A Bonds the Policy insuring payment when due of the principal of and interest on the 2002 Series A 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 2002 Series A Bonds. Such ratings express only the views of the rating agencies and are not a recommendation to buy,sell or hold the 2002 Series A Bonds.'' DRAFT 3/12{2002 12:12 PM 24 Thea 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 withdrawalmay have an adverse effect on the market price of the 2002 Series A Bonds. LrrYGArt4rt At the time of delivery of and payment for the 2002 Series A 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 ofoes or seeding to prohibit, restrain or enjoin the sale or delivery of the 2002 Series A 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. Various legal actions are pending against the County. The aggregate amount of the uninsured liabilities of the County which may result from alll 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 male.Base Rental Payments under the Facility Lease. TAX NAT7rERs 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 an the 2002 Series A 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'exemp from Mate of California personal income takes. Bond Counsel is of the opinion that interest on the 2002 Series A 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 ropy of the proposed farm of opinion of Bond Counsel is set forth in Appendix E hereto. 2002 Series A Bands 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 Bondsj will he 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:amortisable bond premium properly;allocable to such purchaser. Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of arnortizable band premium in their particular circumstances. ' he 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 2002 Series A'Bonds. The Authority and the County have covenanted to comply with certain restrictions designed to assure that interest on the 2002 Series A Bonds will not be included in grass income for federaloo'me tax purposes. Failure to comply with these covenants may result in interest on the 2002 Series A Bonds being included in federal gross income,possibly from the!date of issuance of the 2002 Series A Bonds. 'The opinion of Bond Counsel assess compliance with these covenants'. Boned Counsel has not undertaken to determine (oar to inform any person)whether any actions taken(or not talo)or events occurring(or not occurring) after the date of issuance of the 2002 Series A Bonds may adversely affect the value of the 2002 Series A DRAFT 3/12/200212:12 PM 25 t Bonds or the tax status of interest on the 2002 Series A Bonds.' Further, no assurance can be given that pending or future legislation or amendments to the Cade, if enacted into law, or any proposed legislation or amendments to the Cade will not adversely affect the value of,or the tax status of interest on,the 2002 Series ABonds. 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 2002 Series A Bond)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 2002 Series A 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 Bored Counsel has rendered an opinion that interest on the 2002 Series A Bonds is excluded' from gross income for federal income tax purposes and is exempt from State'of California personal income takes,the ownership or disposition of the 2002 Series A Bonds,or the accrual or receipt of interest on the 2002 Series A Bonds,may otherwise affect a Bondholder's federal'or State tax liability. The nage 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 talc consequences.. LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, will render an opinion with respect to the validity of the 2002 Series A Bonds. Copies of such approving opinion will be available at the time of delivery of the 2002 Series A'Bonds The form of the legal opinion proposed to be deliver'by Bond Counsel is included as A-Pt3mtx B to this Official Statemerit. Bond Counsel undertakes no responsibility for the accuracy, completeness, or farness of this Official Statement. Certain legal matters will be passed upon for the County and the Aunty by County Counsel; and by Low&Jennings,San Francisco,California,Disclosure Counsel. Compensation paid to Bond Counsel and Disclosure Counsel is contingent on the sale of the 2002 Series A Bond. +li'iNANCIAL ADvism The County has retained Sperry Capital Inc., Sausalito, California as financial I advisor (the "Financial Advisor") in connection`with the execution and delivery of the 2002 Series A Bonds. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or negotiable instruments. Compensation paid to the Financial Advisor is contingent on the delivery of the 2002 Series A Bonds. VERMCArION Upon execution and delivery of the 2002 Series A Bonds, Causey,Derngen & Moore,Denver, Colorado,a fns of independent certified public accountants,will deliver a report stating that the firm has verified(a) the mathematical accuracy of certain computations'relating to the adequacy of the cash [and securities] being deposited in the Escrow Fund to pay when due the payment price and/or prepayment price,as applicable,and interest clue and to become due with respect to the Prior Certificates on and mor to the redemption date thereof, and (b) the computation of yield on the 2002 Sues A Bonds''and of investments in the Escrow Fund which support the conclusion of Bernd. Counsel that the interest with respect to the 2002 Series A Bonds is excluded from grass income for federal tax.purposes. DRAFT' 3/12/200212:12 PM 26 CONTINUING DISCLOSURE The County will undertake all responsibilities for any continuing disclosure to Owners of the 2002 Series A 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 2002 Series A Bands (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 2002 Series A Bonds to provide certain financial information and operating data relating to the County by not later than nine months after the enol of its fiscal year(which fiscal year currently ends on June'30),commencing with the report for the fiscal year ending June 30, 2002 (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'Rul=taking .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—.PROP©SEI}FORM OF CONTINUING DISCLOSURE AGREEMENT." UNDERWRITING The 2002 Series A Bonds will be purchased from the Authority by the "Underwriter"). The Underwriter has agreed to purchase the 2002 Series A Bonds at a price of $ (which is equal to the aggregate'principal amount of the 2002 Series A Bonds less an underwriting discount of } plus accrued interest. The Underwriter will purchase all of the 2002 Series A Bonds if any are purchased. The 2002 Series A Bands may be offered and sold to certain dealers(including dealers depositing said.2002 Series A Bonds into investment trusts)and others at prices lower than the initial public offering price, and the public offering price may be changed from time to time by the Underwriter. MISCELLAmOUs INI URmAmN References are made herein to certain documents, reports and laws that 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 2,002 Series A 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 FINANCMG AUTHORITY By: DRAFT 3/12/2002 12:12 PM 27 John R. Sweeten Executive Director DRAFT3/12/2002 12.12 PM 28 "PE MIX A GENERAL COUNTY ECONOMIC AND&M0G 2AP C INFORMATION DRAFT'-3/12/2002 12:12 P APPENDIX GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC tC:' FOR fATION 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-Oul and 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 Sart PabloBays. The western and northern shorelines are highly industrialized, while the interior sections are s burbaulresidential, commercial and light industrial, The County contains 19 incorporated cities,including Richmond in the west,Oakley in the northeast,and Concord in the nn ddle. A large part of the County is served by the San Francisco'Bay Area .Rapid Transit District ("BART"),which has enabled the expansion of both residential'and commercial development throughout much of the County. to addition, economic development along'the Interstate'680 corridor n 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-:clic Administrator, Shoff-Coroner and Treasurer-Tax Collector. A County Administrator appointed by the Board of Supervisors runs the day-today business of the County. The current County Administrator is John R. Sweeten: Population The County is the ninth most populous county in California, with its population reaching approximately 972,100 as of January 1, 2001. This'represents an increase of approximately 21% con paured to the County's population in 1990. The availability'of rapid transit,clow proximity to major employment hubs in San.Francisco and Oakland,and relativeIty affordable existing and new housing have combined to attract more residents to the County over the past decade. While population grower in every city in the County during the last decade,population growth has been strangest in unincorporated areas as well as in the eastern portion of the County, particularly in Antioch,Brentwood and Clayton. DRAFT 3/12/2002 12:12 P11 A-1 „ The following is a summary of the County's population levels since 1970. COUNTY OF CONTRA COSTA POPULATION t�) 2000 1970 1980 1990 Census 2001 Antioch 28,060 42,683 62;195 0,532 93,800' Brentwood` 2,649 4,434 7,563 23,302 25,350 Clayton 1,385 4,325 7,317 10,762 11,000' Concord 85,164 103,763 111,308 121,780 124,200' Danville* NI.A 26,243 31,306 41,715 42,854 ]El Cerrito 25,190'- 22,731 22;869 23,171 23,550 Hercules 252 5,500 16;829 19,488 20,000 Lafayette 20,484 20,837 23;.366 23,948 24,200 Martinez 16,506 22,582 31,810 35,866 36,500' Momga "14,205 15,014 15;987 16,290 16,550 Oakley N/A N/A N/A 25,619 26,200 Orinda* N/A 17,1170 16,642 17,.599 17,850 Pinole 15,850 14,253 17;464 19,039 19,45+0 Pittsburg 20,651 33,465 47,607 56,769 58,600 Pleasant Hill 24,614 25,547 31,583 32,837 33,350 Richmond 79,043 74,676 86;019 99,226 lo1,700 San Pablo 21,461 19,750 25,158 30,215 31,000 San Ramon* N/A 20,511 35,303 44,722 46,100 Walnut Creek 39,844` 54,033 60,569 64,296 65,804 Unincorporated 163,035 128,551 152,841 151,690 154,104 Total 558,389 656,331 803;732 948,816 972,100 California 18,136,1}45 23,6684145 29 758,213 33,871,648 34,336,004 Ea3 Totals may not equal sum due to independent rounding. *Dates of incorporation:Danville(711182);Orinda(7/1/85); San Rwom(711/83),and Oakley(1999);the 1990 Census Report created 1980 population levels for all of dim cities except OWdey prise'to of ficialincorporation. Source: United States Census:1970=2000;State Department of Finance:2001. Industry and Employment The County hasone 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 papulation. The County has;experienced an immigration igration of white-collar jobs due to the relocation Of companies from costlier locations in the Bay Area. The combined impact of population growth and itrn-igraton has resulted in significant,job creation in the County, with the 2000 job base of 340,700' hawing grown about 17.8 percent since 1996. DR.AFr 3/12/2{11}2 12.12 PM A As shown below, the'County"s civilian labor force was 509,800 in 2001. 'With average 2001 unemployment.rates of 3.3 % and 5.3 % for the County and the State, respectively, the County has achieved a lower unemployment rate than the State in each of the past six years. COUNTY OF CONTRA COSTA EMPLOYMENT AND UNEMPLOYMENT OF RESIDENT LABOR FORCE RAGE AND SALARY EMPLOYMENT BYINDUSTRY USSTRY AN151T.iAL AVERAGES(IN"THOUSANDS) 1996 1997 1998 1999 2400 2 Civilian Labor Force(* 459.5 472.8 479.9 4917.1 505.1 509- Employment ent 437.0 453.2 462.6' 475.3 490.4 433.1 County Unemployment 22.5 19.6 17.3;' 14.8 13.7 16.7 Unemployment Rate: County 4.9% 4.1% 3.6% 3.0% 2.7% 3.3% State of California 7.2%, 6.3% 5.9% 5.2% 4.9% 5.3% Nage and Salary Employment 12) 1996 1997 1998 1999 Agriculture 1.0 1.1 0.9> 1.3 2.6 Mining and Construction 20.5 22.1 23.3 26.3 28.2 Manufacturing 26.0 26.0 25.6; 24.4 25.4 Transportation and Public utilities 19.8 20.4 20.1 19.9 20.3 olesnleTrade- 111 11.3 11.0, 12..1 12.0 Retail Trade 56.2. 57.4 59.2'` 64.6 62.2 Finance,;Insurance,and heal Estate 26.4 27.9 28.1 28.5 28.5 Services 91.1 98.9 103.8 106.3 113.3 Government 45.3 45.6 45.5 47.2 48.6 Total€s) 297.7 310.8 317.6 326.6 34€1.7 €r) Basel on place of residence. €z) Based on place of work. M "Total"may not be precise due to independent rounding. Source. State of t alifbm a, Employment Development Department, and Labor Market Information Division, March 2000 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 xmjor employers in selected industries follow. DRAFT ''3/12/2002 12:12 PM A-3 Health Care. One of the Bay Area's largest private employers, Kaiser Permanente Medical Group("Kaiser"),has approximately 4,734 employees 'in the County and East Bay communities. Kaiser provides medical coverage to about one in threeBay 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 Communications Inc. (formerly known as"Pacific Telesis'), a major provider of telephone services,employs approximately 7,000 employees in the East Bay. Its headquarters in the East Bay is located in the Bishop Ranch office complex in the County. The following table provides a listing of major employers headquartered or located in the East Bay and their employment levels. MAjoR B+mpLt?'Ym IN THE RAST BAY WITH EMPLOYEES IN THE COUNTY tr) Primary Location Firm In County Product Or'Service Employment U.S.Postal Service Countywide' Postai Services 1€3,000 Chevron(2) Countywide Energy,Oil&Gas 8,730 County of Contra Costa(" Martinez County Government 8,416 Safeway Countywide; Supermarkets 7,9.22 Bank of America Countywide; Banking 7,081 SBCfPaeif"ic Bell/Cingular Wireless San Ram Telecommunications 7,000 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 4,000 Mt.Diablo Unified School District(2) Concord K-12.Education ucation 3,70D Western Contra Costa School District(2) Richmond K 12 Education 3,360 Johan Muir/Mt.Diablo Health System iai Walnut Creek Health Care 3,023 Longs Drug Stores 12) Walnut Creels Retail Drug Stores 2, San Ramon Walley Unified School District Danville IL-12 Educatiort 2,200 Contra Costa Newspapers(a) 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 11050 USS Pasco Industries Pittsburg Steel Manufacturing 1,0(}0 Shell Martinez Refining Co.(Equilon) Martinez Oil Refinery 930 ' Sources. Office of Count Administrator; County A County ty unit, and;various published sources, Past Bay Business Times, November 2000''and 2001;salt Francisco Business Times,November 1999. Data is for the reported entity's latest fiscal year. (a) Headquartered in the County. Effective Buying Ineome "Effective buying income" 'C EBI') is a classification developed exclusively by Sales & Marketing Management magazine to distinguish it frmin other sources reporting income statistics. EBI is defined as "money income" less personal tax and nontax payments- a number often referred to as "disposable"or"alter-tax"income. Money income is the aggregate of wages and salaries, net farm and nonfarm self-employment income,interest,dividends,net rental and royalty income,Social Security and railroad retirement income, 'other 'retirement and disability' income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military > family allotments, net ginning$ from gambling and other periodic income. `Money income does not include money received from the sale of property'' (unless the recipient is engaged in the business of selling property); the value of"lin-kind" income such as food stamps, public Housing;subsidies,medical DRAFT 3/12/2002 12:12 PM A-4 care,employer contributions for persons,etc.;withdrawal of bank deposits;money borrowed;tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments,and othertypes of lump-sum receipts. EBI is computed deducting';from money income all personal income taxes (federal, state and local), personal contributions to social insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate. The total effective buying income for the;County in 2000, as reported by Sales & Marketing Management in its Surly of Buying Power,was$24,823,698 and the median household effective buying income is $60,189. This compares to 20median household effective buying incomes of$49,818 for the(City and County of San Francisco, $54,794 for Alameda County, $65,565 for the San Mateo County, $72,124 for Santa Clam County and$41,627'for Las Angeles County. Table A4 presents the latest available total effective buying income and median household effective buying'.income for the County, the State and the nation for the calendar years 1996 though 2000, COUNTY OF CONTRA COSTA EFFECTIVE BUYING]INCOME CALENDAR YEARS 1996-2000 Total Effective Buyinglacoam Median Household Year ($in 000's) Effective And Area B!!I!ng Income 200D County $24,823,698 $60,189 state 652;190,282 44,464 United States 5,230,824,904 39,129 1999 County $21,772,470 $53,234 State 590;376,663 39,492 United States 4,877,786,658 37,233 1998.... County $20,180,064 $49,645 State 551;999,317 37,091' United States 4,621;49.1,730 35,377 1997 County $19,079,5,64 $48,476 State 524,439,600 36,483 United States 4,399,998,035 34,618 199~6 County $17,773,381 $46,468 State 492,516,981 35,216 United States 4,161,512,384 33,482 Source: Sales&Marketing M nagcrnentf Survey of Buying Power. DRAFT 3/12/200212:12 PM A-5 ....................... Commercial Activity Commercial activity comprises an important part of the County's economy, with taxable transactions totaling approximately $12.33 billion in 2000. Presented below is a summary of taxable transactions in the County since 1996. COUNTY OF CONTRA COSTA TAXABLE TgANSACTIONS 1996 To 2000") (IN THOUSANDS) 1996 1997 1998 1999 2000 Apparel Stores 261,695 $ 277,962 $ 289,750 $304,915 $338a15 General MerchwAse Stores 1,213,152 1,293,994 1,379,504 1,467,490 1,625,482; specialty Stores 890,623 957,509 1,070,135 1,259,681 1,279,513 Food Stores 458,877 478,924 486,580 509,062 544,499 Packaged Liquor Stores 42,925'` 44,700 48,261 54,563 02,907 Eating and Dsinking Places 625,283 664,184 708,982 764,682 832,962 Home Furnishings and Appliances 323,400 333,179 366j400 414,384 471,944 Build ng Materials and Farm Implements 543,324 591,710 643,032 749,691 940,546 Service Stations 538,840 780,957 922,502 669,467 820,701 Automotive mW Vehicle Dealas,Parts and Supplies 1,046,980 1,143,170 1,308,493 1,524,336 1,933o660 TOW R040 Outlets $5,945,099 S6,556,188 17,2235699 $7,718,261 $8,649,419 Business and Personal Services 365,029 407,816 442,696 467,124 542,103 All Other Oudets 2,265i576 2,113,414 2,80,991 2,929,091 3,139,038 Total All Outlets $8,575,704 $9,277,418 S10,093,690 $11,114,476 $12,330,560 Most recent data available. Source: State Board of Equalization. Much of the County's commercial activity is concentrated in central business districts of the cities and unincorporated towns. Regional shopping centers, numerous smaller.centers and several "big box" warehouse stores serve County residents. The County is served by all major banks including Bank of America and Wells Fargo Bank. In addition there Are numerous local banks and branches of smaller California and foreign banks. .There are over 30 savings and loan associations in the County,including Washington Mutual,World Savings and California Federal. Construction Activity The value of residential building activity increased by 6.3 percent in 2001 frorn 2000 levels. The increase was attri utablel to increase in single family units, although the number of new multiple fiunily units declined. Within incorporated cities in the County, Brentwood accounted for the greatest activity with $225.0 million of construction permits in 2001. DRAFT 3/12/2002 12:12 PM A-6 .............. ............ The following table provides a summary of building permit valuations and number of new dwelling units authorized in the County since 1991. COUNTY OF CONTRA COSTA BUILDING PERMrr VALUATIONS 1991 TO 2001 Valuation($rnillior ) Nuniber of New Dwelling Units Residential Single Multiple Year (Neer) Ear ily l+arnity Total 1991 $488,939 2,705 1,275 3,984 1992 638,714 3,279 614 3,893 1993 596,135 3,026 451 3,477 1494 699,395 3,682 230 3,912 1995 613,685 2,137 618 3,755 1996 584,108 3;094 4.50 3,580 1997 582,793 3,105 381 3,486 1998 738,439 3,144 999 4,142 1994 852,256 3,909 544 4,413 2000 841,990 3,692 1,071 4,763 2041 894,892 4,056 483 4,539 source,Econorrtic Sciences Corporation. 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 "MajorEmployers-Petroleum and Petroleum Products"). to addition, 50 million was spent by DART" on its extension to the Fest Pittsbu rglBay Point region of the County which opened in 19%, and $450 million of new construction was completed by the Contra Costa Water District on the Las 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. [NEEDS COUNTY UPDATE] The California Energy Commission has recently licensed and approved the construction of two new natural gas:power plants within the County, Using state-of-the-art environmental control technology, these new facilities will unit 9llpercent less than the average ps-f€red power plant in the United. Mates. The Calpine Corporation opened the $300 million Los Medanos Energy Center'in July 2001. Located in Pittsburg, this natural gas-fired facility generates 500 megawatts of electricity. In June 2000, the joint partnership of Calpine Corporation and Bechtel Enterprises broke ground on the Delta Energy Center;this facility is estimated to cost$459 million and will generate 880 megawatts of electricity upon completion in early 2002. In addition, construction of a natural gas-fired power plant that would be located outside the Ciiy of Antioch and would generate$50 megawatts of electricity;has been proposed to the County by Mirant. INEEDS UPDATE FROM COUNTY] Following months of hearings and the preparation of an environmental impact report,on Auger 1 2000 the Board of Supervisors, unanimously adopted an amendment to the Contra Costa County General Plan, 1995 2010, modifying the 'boundaries of the County's Urban Limit Lime. This action shrinks the growth limit line;by 22,square miles,thus removing approximately 14,000 acres from Mire development. The two regions primarily affected by the Board's action are eastern Contra Costa County and the Tassajara Valley in the south-certtral part of the County. Two cities within. the County lost DRAFT 3/1 2/2002 12.12 PM A-7 lawsuits challenging the environmental,justifications for the boundary shift Ile County anticipates that other parties may also file lawsuits or take other actions challenging the boundary shift. Consequently, the actual number of acres ultimatelyremoved from future development maybe 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 paints north to Interstate 5, the major north-south highway from Mexico to Canada. 'Interstate 680 corrects 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 is currently 'widening Interstate 80 in the western portion of the County at a cost of $200 million. Ground transportation is available to County residents from the following service providers: • Cental Contra Costa Transit Authority provides local bus service to the central area of the County including Walnut Creep,Pleasant Kilt.and Concord'. • BART connects the County to Alameda County, San Francisco and Daly City and Cornu in San Mateo County with two main limes, one from the San Francisco area to Richmond and the other to the Concord/Walnut Creek/Pittsburg/Bay Point area. BART now has 39 stations and 95 miles of roadway in its system. BART is in the process of building an extension to the San Francisco International Airport expected to be completed by 2003. • AC Transit, provides local bus service and connects Contra Costa communities to San Francisco and Oakland. • Other bus service is provided by Greyhound. • Commuter rail service is provided by the Capital Corridor, with daily runs between the Bay Area and.Sacramento that stops at the new intermodal in Martinez,the County seat. • The Santa Fe and Union Pacific Railroads'main lines serve the County,both in the industrial coastal areas and the inland farm section. Commercial rcial water transportation and docking facilities are available through a number of port and marina locations in the County.I The Fort of Richmond on San Francisco Bay and several privately awned industrial docks on both San'Pablo and Suisun:Bays serve the heavy industry luted in tate area. The bort of Richmond, owned acrd; operated by,the City of Richmond, covers 202 acres acrd 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. 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. DRAFT 3/12/2002 12-12 PM A-8 Agriculture The County is comprised of 470,400 acres,with 147,859 of these aures allocated to farmlands and harvested cropland. 12000,the total gross value of agricultural products and crops reached$92,597,600, an increase of$2,106,820 compared to 1999. 'The value of agricultural production since 1996 is illustrated in the following table. COUNTY OF CONTRA COSTA AGRICULTURAL PRODUCTION,1936 To 2000 1996 1997 1998 1999 20W* Nursery products $26,219,000 $31,287,804 $31,643,300 $28,202,204 $32,1115,204 Livestock&poultry 4,668,400 5,044,8110 3,911,3114 7,794,000 8,8299,000 Field crops 12,2$1,800 12,696,004 9,291,000 9,525;000 9,162,000 Vegetable&seed crops 19,899,004 20,033,000 16,756,€00 18,298,000 17,026,400 Fruit and nut crops 15,294,000' 18,520,000 17,180,400 18,197,304 18,054,400 Livc&oek;*ary&poultry products 7,264,490 7,597,420 8,083,250 9,474,280 7,425,400 'notal $85,622,634 $95,175,220 $86,765,250 $94,490,780 $92,597,600 *Most recent data available. 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 69.4 billion gallon capacity Pardee Barn in loner California. 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 ai contact with the U.S.',Water;and Power Resources Service to 195,000 acre-feet per year. Water sold has 'ranged between 80,000 and l 10,000 acre-beet arimially. 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-Beet annually. To provide expanded water storage capacity,CCCwD constructed the Los Vaqueros Reservoir with a capacity of 100,000 acre- feet south of the City of Antioch at an estimated cost of$450 million. [Bay Delta update] 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,expanding and/or building new facilities. Fkod C ontrnl'. The Contra Costa County Flood Control District has been in operation. since 1951 to plan,build, and operate flood control projects in unincorporated ars 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 Fest Antioch Capacity Improvement Project and is nearing completion of the Martinez Improvement Project. The District is responsible for meeting requirements set forth by the Environrnentad Protection.Agency C'EPA!)with;respect to addressing potential pollutants DRAFT'3/12/2002 12:12 PM A-9 in nonspecific groundwater runoff. [The County is not presently able to estimate the cast of compliance with EPA requirements,although such costs mAy significant. Education and Commw9ty 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 137 elementary schools, 41 middle, junior high and intermediate schools, 27 high schools, and a number of preschools, adult schools, and special education facilities. In addition, there are 110 private schools with six or more students in the County. School enrollment in January of 2001 numbered approximately 159,714 students in public schools and 18,643 students in regular graded private schools. Higher' education is available in the County through a combination of'two-year community colleges)and four-year colleges. The Contra Costa County Community College strict has campuses in .Richmond, Pleasant Hill and Pittsburg. Califomia State University at Hayward operates a' brand 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 lt)t3-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., There are twelve privately operated hospitals and one public hospital in the County, with a combined total'of approximately 1,900 beds. Four of the private hospitals are run by Kaiser,the largest health maintenance organization in the United Mates. Kaiser'has opened a new hospital in Richmond with new critical care beds,surgical suites and a full service emergency department. The Walnut Creek- based John Mu ir/Mt Diablo Health System is planning to build'a new campus in Brentwood. The public hospital is Centra Cosh Regional Medical Center(`iCCRMC"),a 164-bed facility,that the County rebuilt and opened to the public in 1998 on the existing campus', in Martinez: Since completion of the hospital in 1998$the County has completed a public healthIchnieal laboratory in 2001, has converted' the former 'Los lvledanos Hospital into the Pittsburg Health Center, has initiated construction of a new ambulatory care clinic on the campus of CCRMC and is in the early planning stages of replacing clinics in Brentwood and Richmond. DRAFT 3112/2402 12:12 PM A-10': APPENDWR COUNTY FINANC AU INFOP.MTION DRAFT3/1212002 12:12 PM APPENDIX$ COUNTY *ANC *i`(3i6IAT ION Counties are the principal agents for providing services on behalf of the State, particularly in the areas of public health,-welfare,judicial and corrections programs,as well as providers of local services i a'variety of areas, including law enforcement, roads, parks,', libraries, agriculture and various social service programs. Substantial portions of many of these services are implementations of Mate mandated programs and State administered federal programs supported by State and federal revenues.The!tension betweencounties and the State is often the adequacy'of State provided revenue for State n=daterl programs. Historically, the County has been able to reduce' expenditures when necessary to match available funding sources,as required by law. Currently, approximately 35% of the County's Fiscal Year 2001-02 General Fund 'Budget consists of payments from the State:.of California. The financial condition of the State has an impact on the level of these revenues. In the past several years the State has turned to counties to help salve the State's budget problems.The shift of nearly$3.0 billion in property takes from counties to schools during fiscal years 1992 through the current fiscal year is the best example. The ,Mate has also diverted other revenues such as cigarette taxes and trailer coach in lieu taxes from counties to the State. California counties administer numerous health and social service programs as the administrative agent of the Mate and pursuant to Mate law.Many of these programs have been either wholly or partially funded with State revenues which have been subject each year to the State budget and appropriation process.`.Currently, the County is required to provide health care to all indigents, administer welfare programs, provide justice facilities (courts and jails) and administer the property)tax system and red estate recordings. Due to competing program priorities and the lack'of available Mate funds, some of these programs have had reduced State support without a corresponding reduction in program responsibilities for county governments.The result has been:that the County has increased its contribution to maintain mandated services while optional local services have been reduced.. The Board of Supervisors has mVonded to this trend in part by instituting measures to improve management, thereby reducing costs while increasing productivity and maintaining services with diminished.funding. In 1991.-92, the State and county governments collectively developed a program realigmnent system to remove State funding for certain'progmnu from the Mate budget process and,at Ihe same time, give counties enhanced program flexibility in the administration of certain health and welfare,programs. Under this plan;the sales tax was increased by l cent and dedicated to the support of specific health and welfare programs adnninistered by the County. In addition, vehicle license fees CVLF") at the time were increased and this increase was similarly dedicated to supporting these,programs. VLF fees have subsequently been reduced,but the amount of reduction has been"backfilled'"by the State.' See "Vehicle License Fee Reduction"below. Counties now receive the Ya cent sales tax on a fixed formula under State lave and the flow of these funds will no longer be subject to the Mate budget process.The program shifted approximately$2.2 billion out of the State budget process. The level of intergovernmental revenues'that the County will receive from the Mate in Fiscal Year 2001-02 and in subsequent fiscal years is likely to be affected by the financial condition of the State.: State Budgets Ae discussion of the Prower Supply Program and State budgets presented below is taken from the most recent State disclosure document available in eleetronie form on the State Treasurer's website. Ae estimates and projections provided below are based upon various assumptions as updated in the 2002.0.3 Governor's Budget, which may be affected by numerr r j+actors, including,future economic conditions in the State and the natio?4 and there can be no assurance that the estimates will be achieved. Forfurther DRAFT 3112/2002 12':12 PM B•1 information and discussion of factors underlying the State's projections,; see the most recent State disclosure document available in electronie form on the Mate Treasurer's website. Power Supply Program Development of the Power Supply Program. In January 2001, Governor Davis determined that the electricity available from California's utilities was insufficient to prevent widespread and prolonged disruption of electric service in California,proclaimed a state of emergency to exist under the California Emergency Services Act, and directed the IJJepartaraent of Nater Resources t DWR") to enter into contracts and arrangements for the purchase and sale of electricpower as necessary to assist in mitigating the effects of the emergency (the"Power;Supply Program").The,Power Supply Program has also been implemented under legislation enacted.in 2001 (Statutes'of 2001,First Extraordinary Session,Chapters 4 and 9,the"Power Supply Act")and orders of the California Public Utilities Commission("CPUC"). DWR sells electricity to approximately 10 million retailend-use customers in California (the "Customers!). The Customers are also served by three investor-owned utilities, Pacific Cray and Electric Company ("PG&E"), Southern California Edison Company ("SCI;") and San Diego ;as & Electric Company("SDG&F')(collectively,called'the"IOUs").DWR purchases power from wholesale suppliers under long-term contracts and in short-term and spot market transactions,DWR electricity is delivered to the Customers through the transmission and distribution systems of the IOUs and payments from the Customers are collected by the IOUs pursuant to servicing arrangements approved Ior ordered by the CPUC(see"CPUC Actions"below). The Power Supply Program is expected to supply the shortfall (the '�iet short") between the amount of electricity required by Customers and the amount of electricity furnished to Customers by the IOUs until December 31,2002.The Administration and the CPUC are developing plan for the provision of the net short after 2002, including plans to enable each of the IOUs'to be able to furnish the portion of the net short not provided by DWR's long-term contracts (the "residual net short'). Alternatively, it is possible that the authorization of DWR to provide the residual net short will be extended by legislation or that another State agency will be authorized to develop a'successor program The proposed rate agreement between'DWR'and the CPUC, described below under "CPUC'Actions," anticipates the imposition of a surcharge on all Customers (based on the aggregate amount of electricity sold by DWR and the IOUs)to pay DWR's debt service cons,with the result haat DWR itself would'not be required to continue to sell electricity to pay its debt service costs. Financing the Power SuMly Program. The Power Supply Program was initially financed b unsecured, Merest-bearing loans from the General Fund of the State ("State loans") aggregating approximately$6.2 billion (of which $116 million has already been repaid).;Advances from the General Fund ceased in Tune 2001,after DWR arranged secured leas from banks and other'financial institutions, producing net proceeds aggregating approximately $4.1 billion ("Interim loans"). The Power',Supply Program is also funded by revenue from electricity sales to Customers;cash receipts from'such revenues have aggregated approximately$3.7 billion through January 31 2002.'' DWR is authorized by the Power Supply Act to issue up to$13.4 billion in revenue bonus. Sale o the bonds has been delayed since mid-2001 by a number of factors,including potential legal challenges and the proceedings described below under"CPUC Actions."At the date of this Official Statement,there is no proposed schedule for sale of the bonds. 'The terms of the Interim loans require Haat the DWR revenue band proceeds be used to prey the Interim Loans (before being' used to repay the Mate loans or to pay expenses of the Power Supply. Program). Unless the Interim-loans are soprepaid,Interim loan principal is payable in eleven quarterly installments coxmnenciug on April 30, 2002. Interest is payable at viable rates tied to met indiees. Interest is capitalized through February 2002,and thereafter principal and interest are payable solely from DRAFT' 3/12/2402 12:12 PSI B-2 revenues from power sales and other funds of the Power Supply Program afar provision is made for the payment of power purchase costsand other operating expenses of the Power Supply',Program. The Interim loans are not a general obligation of the State and are not repayable from or secured by the General Fund.The loan agreement sloes not provide for acceleration of the Interim bans if DWR,is not in compliance with the terms of the bran agreement.. MR's current revenue requirement(described below under-CPUC Actions"j includes prevision to pay scheduled debt service on the Interim loans in 2002. DWR also plans to repay the State loans from the proceeds of sale of DWR revenue bands. DWR's current revenue requirement(described below under"CPUC Actions)does not include provision for repayment of any State loans in 2002 from power sales revenues. CPUC'Actions. Under California law, the retail rates for electricity supplied to Customers by DWR and the IOUs are to be set by the CPUC. The CPUC authorized substantial retail rate increases commencing in 2001,but has not yet set the respective rates to be recovered by DWR and the ICUs. Under the Power Supply Act, DWR is required to establish, revise and notify the CPUC of its revenue requirement for its purchases of electricity and its debt service. DWR has notified the CPUC of its revenue requirement through December 31, 2002, and is seeking CPUC determination'of DWR.rates and charges as early',as February 2002. Under its revenue requirement, DWR is seeking to irecover approximately$5.3 billion more in cash receipts from electricity sales to Customers through December 31,2001,than the approximately$3.7 billion DWR has:received so far.PG&E has filed Pacific c tars and .Electric Company v. The California Department of Rater Resources, et. al., (Sacramento County Superior Court) contesting the DWI,.determination that its revenue requirement is just and reasonable:A hearing in the case is scheduled to be held in April 2002. The Prower Supply Act authorities!DWR,and the CPUC to enter into a rate agreement pertaining to DWI. charges. A proposed rate'agreement was published by the CPUC on January 31, 2002. The proposed rate agreement would provide for the CPUC to impose band charges(irrevocable surcharges imposed upon Customers to pay DWR revenue band debt service) and department power charges (imposed upon Customers for electricity sold by DWR to pay DWR power purchase casts and other operating expenses) in response to DWR's submittal of its revenue requirement. Bond charges are a necessary component of DWR's planned revenue bund`program and will not be imposed'until after the decision of the CPUC approving the rate agreement providing for such charges becomes final and unappealable.The CPUC expects to review public comments on the proposed rate agreement and issue a final decision in the near future. Revisions to the existing servicing agreements and the servicing order (referred to in the following paragraph)to:implement such a rate agreement are also expected. The CPUC has adopted servicing agreements'between DWR and SDG&E and SCE, and a servicing order as to DWR and PG&E 'pertaining tothe delivery,of DR.purchased electricity to Customers through the transmission and distribution systems of the IOUs and the collection of payments for DW I. from Customers by the IOUs. PG&E has challenged the servicing order in Barilauptcy court (although PG&E continues to make-remittances to DWR as required by CPUC orders). The CPUC has. adopted a'decision suspending the right of additional Customers to elect to purchase electricity from suppliers other than DWR and the ICUs until DWR is no longer a supplier of electricity. Petitions for writs of review of this decision have been filed with the California Supreme Court.The Power Supply Act establishes an expedited appeal process,and it is expected that,if accepted by the Cow t,this matter will be heard within the first quarter of 2002.Also pending'before the CPUC are questions regarding the implementation of this decision, including the date by which the affected Customers must have exercised their election,and what,if any,exit fees may be imposed upon Customers choosing other suppliers. The timing of CPUC action or the effective dates of those actions may be affected by appeals or DRAFT' 3/12/200212:1.2 PM B-3 ,4 litigation brought by ICUs, consumer groups or, other interested parties. Although under Stag lave, appeals and litigation of CPUC actions related to the Power Supply Program must be granted a expedited appeal process,there can be no assurance that any such appeals or litigation will not delay the issuance of DWR`s revenue bands or the implementation of DWWs rates. Effect on the County. These developments at the State level may, in turn, affect local governments. The County receives approximately 12 percent of its general fund revenues from property taxes and a significant portion of the balance of its revenues is provided by the State. The State's revenue traders to local governments could be reduced or the State could decide to shift gain of its financial obligations to local governments to compensate for lame expenditures for power.The weakened uncial situation'of the IOUs could '+cause a failure or delay by the IOA J'`s to pay real property taxes or other payments due or allocable to the County. The County is served by PG&E,which is the County's fourth largest taxpayer. On April 6, 2001 PG&E filed for reorganization under Chapter l l of the `I.J.S Bankruptcy Carle. On May 16, 2001, the Bankruptcy Court ruled that PG&E could pay its outstanding property;taxes and such payment was made to thee:.County. PG&E has paid the County both installments of its property taxes as well as any tax penalties and fees for the tax year 2000- 1 and is current on its obligations for the 20(}1-42 tax year. No assurance can be given that PG& will eomtinu a to pay its property taxes in a timely manner. See"Largest Taxpayers"and "lie Teeter Plan"below. In addition, no assurance can be given that voluntary or involuntary bankruptcy proceedings will not be commenced by or against P+,t�ir&E. The power situation has changed materially in California since last year. Electrical power shortages are no longer a substantial''threat due to the increased power generation with the opening of new power plants in the state and decreased demand due to conservation efforts. Electrical rates for the County have stabilized and are expected to remain at current levels through next fiscal year. (Let's fired out if the state power band issue in the fall will result in a surcharge right away or phased n over tiara). Natural gas rates have dropped significantly and the County is planning to login rates for the majority of its natural gas needs next fiscal year at 30% to 40% reductions through a multi-year contract with the ABAG Power lural and a one year contract with PG&E. To date, the 'County has not experiencedpower shortages; however, any future temporary reduction or toss of power could materially'adversely affect the operations of the County. State budget Acts Fiscal Year 1008-011. The State Budget;for 2€0001 was signed into law by the Governor on Jure 30,,2044 !Genal Fund revenues were estimated to be $71.2 trillion for 1999-00 and 573.9 billion for 20OD-01. tell addition,the estimate was adjusted to reflect the following, a real revenue gain o $.238 million in 199900 attributable to stronger;than anticipated May 2000 personal income tai receipts that were largely attributable to the 1999 tax year,a gain of$135 million in 2000O1 due to differences in the tax relief meast,tres that were enacted froom the Governor's original proposals, and I a reduction'of$60 mullion in sales tare revenue from gasoline to be diverted in 2000-01 from the General Fund for transportation purposes. Fiscal Year 20#1-02. The '2001-02 Governor's Budget, released January 14, 2001, estimated 200102 General Fund revenues and transfers to be about $79.4 billion nand proposed $82.9 billion in expenditures, utilizing a portion of the surplus expected front 2000-€ 1. The Governor proposed budget reserves in 2001-02 of$2.4'billion, including $500 mullion for unplanned litigation costs. The May Revision,disclosed a reversal of the recent General Fund financial trend, as a result of the slowdown in economic growth in the State starting in,the first quarter of 2001 and,most p rtivAarly,the-steep cheep in stock market levels since early 2000. The Fiscal Year 200 Budget Act was signed by the Governor on July, 26,'2001,,almost four weeks after the start'of the fiscal year. The Governor vetoed almost $500 million General Fund;expenditures from the Budget pawed by the Legislature. Ile spending plane for 2001-02 included General Fund expenditures of$78.8 billion,a reduction of$1.3 billion from the-prior DRAFT' 311212002 12.12 PM B-4 S year. This could be accomplished without serious program cuts because such a large part of the 2004 Budget Act comprised one-titre expenditures. Tie spending plan utilized more than half)of the budget surplus as of June 30,2001,but still left a projected balance in the SFL3 at June 30,2002,of$2.6 billion, the largest appropriated reserve in State history.The 2001 Budget Act'assumed that,during the course of the fiscal year, the$6.2 billion advanced by the General Fund to the Department of"Water Resources for power purchases would be repaid with interest.See"Power Supply Program" At the time tett the Fiscal Year;2001 Budget Act was adopted, the Department of Finance projected that the California economy would continue to grew,but ata more moderate pace. Although California's growth continues to outpace the nation's by a wide margin,tht State is clearly not immune to a nationwide slowdown in economic activity. The early months of 2001 revealed' a significant moderation in the State's economic growth. Gains in nonfarm'employment, which averaged more than 150,000 each quarter.during 2000, slowed to only 41,500 during the first three months of 2401. In addition,,announcerrients by several'ofthe State's major companies point to a softening in high-tech jobs in the months ahead. The tragic events of September t1, 2001 have resulted in increased uncertainty'regarding the economic and revenue'outlook for the State. Past'experience suggests that shocks to American society o far lesser severity have resulted in a''tempotary lass in consumer and business confidence and a reduction in the rate of economic growth. It is not possible at this time to project how much the State's economy may be affected.. However, it should be noted that California's economy is very diverse, and is as well positioned as any to withstand and eventually recover from the effects of the September 11 attacks On September 12, 2401, the Legislative Analyst sent a letter(the "LAO letter")to a member of the Legislature answering several budgetary questions from the member, including questions gelated to the budgetary and cash flow impacts of a failure of the Department of Water Resources CI)WWI,to sell its revenue bonds and reimburse the$6.1 billion advanced by the State's General Fund. The LAO letter responded by nogg that at present there is no direct effect on the General Fund condition because the $6.1 billion of General.Fund advances for energy;purchases are being treated as an account receivable in the 2001-02 fiscal year budget. The LAO letter stated that adequate cash resources are expected to be mailable in ft current fiscal year to pay the State's obligations. The LAO letter also stated that failure to sell the revenue bonds would not cause a'cash shortfall until the 200243 fiscal year. The LAO letter indicated that failure to sell the revenue bonds would require spending cuts!and/or revenue increases in 2002-03 to maintain cash resources needed to pay ongoing obligations. WDATE with sunnmary of LAO 1102 Release] In 1992-93 and 1993-94, in tense to serious budgetary shortfalls, the Legislature and administration permanently redirected over$3 billion of property taxes from cities,'counties, and special districts to schools and community college;districts. The Legislature,however,provided some additional funding'sources(such ias sales taxes)and reduced certain mandates for local services. Local governments sued the State Goma County, et. al v Commission on State Mandates, et. ao over these transfers. The appeals court denied the plaintiffs' position and the subsequent appeal was not heard by the State Supreme Court': The term"ERAF" is often used as a shorthand'reference for this shift of property taxes-. ERAF actually is an acronym for the fund into which redirected property tams are deposited in each county,the Educational Revenue Augmentation,Fund, The County cannot predict the impact on its:General Fund resulting from future acts of the Legislature to redirect property taxes or the like. 200243 Proposed Governor's.Nudger.The 2002-03 Govemoes Budget released on January 10 2002, provided final 200.0-01 revenue and a cpe nditure . Expenditures itn 2000-01 were $79.0 billion; about $2.0 billion below the 2001 Budget Act estimates. The''June 34,2001 SFS balance, the budget reserve,was approximately$',1.3 billion,a substantial decrease from the 2001'Budget Act estimate of$63 billion.This reserve has been significantly used to pride advances to support the DWR Power Supply DRAFT 3112/200.212:12 PM B5 '' ........... Prov, (see"'ower Supply Program")without the need for the General Fund to seek internal or external borrowing for that purpose. The, 2002-03 Governor's Budget, released on January 10, 2002 (the " €l02-03 Governor's Budget" ,projected a fall-off in General Fund revenues due to the national economic recession combined with the stock market,decline, which began in mid-2000. Personal Income Tax receipts, which include stock option and capital gains realizations, are particularly impacted by the slowingeconomy and stock market decline.As a result,.the Administration projected a combined budget gap for 2001-02 and 2002-03 of approximately$12.5 billion. The 2,002-03 Governoes Budget projected revenues from the drm largest sources of tax revenue (personal income, sales and use and corporation)to be about$64.9 billion in 200t-42.This is more then $5 billion lower than projected in the 2001 Budget Act and more than $7 billion lower than the final estimates for 2NO-0 1.Most of the decline in projected tax revenues is attributable to the,personal income tax. Total revenues and transfers, projected to be$77.1 billion in 2001-02, include the'rectipt of S6;6 billion from the,sale of Department of Water Resources Revenue Bonds and other sources to repay General Fund,loans with interest. Every effort is being made to sell the bonds as quickly as possible; however, the exact timing of this,bond I sale is still uncertain. See"Power Supply Program."The 002-03 Governor's Budget projected major tax revenues of$71.3 billion and total revenues and transfers of$79.3 billion for 2002-03. The State's fiscal outlook is unsettled, given several:potentially negative factors; including last year's energy crisis, a slowdown in the high technology sector,the overall national economic slowdown and the reduced level of State revenuesftom the exercise of stock options by taxpayers.I Final action on budget adjustments for 2001-02 and enactment of the 2002 Budget Act wilt occur following negotiations with the Legislature and the Governor over the coming months. Additional estimates and proposals will be contained in the May Revision to the 2002-03 Governor's Budget, to be relcased on May 14,2002. The County is unable to predict the outcome of such budget negotiations and the impact they may have on the County's finances. Vehicle License Fee:Reduction On September 20, 1998, the Governor approved a 25 percent reduction in Vehicle License Fee CVLF'),beginning on January 1, 1999.An additional 10 percent reduction took effect in January 2000. The VLF is an annual fee on the ownership of a registered vehicle in Califon-da. 'Automobiles, motorcycles,pick-up trucks, commercial trucks and trailers,rental cars and taxicab&are all,subject to the VLF. The VLF revenues are distributed by the State to cities and counties.Approximately three foxes of the VLF revenues are general revenues,and can be used for any purpose,with the remaining funds used to pay for'realigronenf Health and Social Services programs.& In 199&1999,' L revenues in the State were expected to total over $3.9 billion. This permanent reduction was backfilledby State general tax revenue.so that counties and cities see no reduction in revenues. The Count3es fiscal Year 2001-02 budget anficipates receipt of $81.0 million in VLF. Tice County utilizes the general VLF revenues (approudnately $60 nuillion) to fund various Countywide program,and utilizes-realignment"VLF revenues($21 million)to fund,health service programs.As was indicated above,,the State's General Fund will pay local governments for lost VLF revenues on'a dollar per dollar matching basis, from State general ft-td revenues. The repayment funds will be continuous appropriations,however,this is not a firm guamntw:of a continuing replacement. Thus,in future years there could be a loss by local governments of State general fund revenues to offset lost VLF fees. DRAFT 3/12/2002 12-12 PM 11-6 From Welfare to Work [NEEDS COUNTY REVIEW AND UPDATE] In Fiscal Year 1994-95,4,600 single- adults and 14,977 families were on welfare(based upon the Fiscal Year 19349 average monthly caseload) in.the County. In Fiscal Year 2000-2001, that nwnber was only 501 single adults and 9,151 families (based Won the Fiscal Year 20000-01 average monthly caseload). This dramatic decline, 510% overall, was in part due to State, and federalpolicies which set time limits on cash assistance andcreated a new"welfare-to-worle'systern. The federal government and the State have,been the driving forces of changein 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 C-CaIWORKs"), which sets the parameters under which counties provide welfare services,including cash benefits and supportiveservices- 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 populationand required consolidation of employment services to one stop employment centers. Employment 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 ServiceDepartment and the Private 4tidustry 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 Investaient Board; Children and Families Services, Aging,and Adult Services; and Administrative Support. The Department's budget units are aligned to ensure fiscality. accountabili In Fiscal Year 1994-95, the combined budgets of the two form dqwtuents, were $222.9 million,with a net County cost of$27.5 million. In Fiscal Year 2000-01.the Department's budget was $291.2 million, with a net County cost of$24.55 million. Overall, the Department"s, reliance on County General Funds has been reduced from 12.7%to 8.4%. Department Budget and County Cost E�ncpi Year 19241995 Fiscal YM2M:Ql Total Department Budget $215,608,937 $291,220,064 County cost 27,466,711 24,5511133 County Cost as%of Total 12.7% 8.4% Economic self-sufficiency and prosperity for welfhre, recipients are tore missions of the Department The Department is focused on"a job,a bettor job,acareer"for its welfare,clients. The two bureaus with primary responsibility for fWfilling these missions are the,Workforce Investment Board ("WIB")and the Workforce Services Bureau CVSW). The VM is responsible for creating partnerships in the areas of education,training and career development under the guidance of atouirty-wide worldorve development strategic plan. The purpose of this plan is to identify the roles and tesponsib iliti 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 WIB is responsible for overseeing the One-Stop Career Centers,of which four DRAFT 3/12/2002 12:12 PM B-7 are currently operational. One-4top Career Centers offer access to all job seekers=4 integrate numerous employment and job training programs at one location. The WSB is responsible for operating die CaIWORKs program, including cash assistance and supportive services,asi well as the One-Stop Career Centers. The operutional responsibility for the One- , Stop Career Centers is vested by the WIB to the Mandated One-Stop Operator Consortitun of which the WSB is lead agency. 'the Department has taken the initiative to,increase coordination, collaboration and partnerships among public agencies, the employer community and community teased organizations as well as providing its own resources to increase support of working CaIWORKs participants as well as ex- CaIWORKs families. Partnersinps include child welfare services, mental health, substance abuse treatment,transportation and housing. Declining Welfare Caseloads. The CaIWORKs caseload is'projected to be 494,000 in Fiscal Year 2001-02, down from 521,000 in Fiscal Year 2000-01 and a high of 921,000 cases in Fiscal Year 1994-95. The decline of the CaIWORKs 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. 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 moredifficult 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 has taken steps to eliminate the gap between revenue and expendituresin its health care system through revenue enhancements and operational efficiencies. Cost Reduction. In order to close the gap between revenue decline and increasing costs, the County initiated a $3.2 million cost reduction process in the Health Services Department in July 2001. The Health Services Department met its targets in the first seven months and will have ta balanced budget by year-end that reflects these cost reductions. Revenue Enhancement. The board of supervisors affimed its support for:the health services department by allocating to its budget all of the$10.9 million in revenuesarising from the tobacco master settlement agreement in fiscal Year 2001-02. Through restructuring of children'smental health services and outreach the health services department was able to raise$6.8 million in state Medicaid(Medl_ocal) dollars above the level of its expected revenue of$11.5 million for Fiscal Year 2001-02. Fiscal Stability. Although healthcare expenses area concern nationwide, a comparison with eight of the large urban California counties summarized in the table below shows that Contra Costa uses the least amount of generat fund dollars to support health services among the counties operating public hospitals.A management consultant study will be presented to the Board of Supervisors in July 2002 with recommendations to increase stability of its healthcare funding. DRAFT 3/120002 12.3"7 PM^ B-9 COMPARISON OF LARGE CALMORNIA COUNTY HOSPITALS NET COUNTY COSTOF HEALTH FISCAL YEAS 1499-00 ANI?2001-02 (IN MILLIONS OF DOLLARS) FY ii i0 FY 01-02 Net county Costo( Net county', Net Health as Net Cot of Total County 0l0 of Total County Health as% Total health Cost of Total Total Health Gast of o(Total County Budget Budget Health Budget Budget Budget Health Budget Alameda{ 1,5(}9.0 365.8 54.0 14.761% 11822.0 414.4 64.8 1S.64% Contra Costa 1,322.€3 436.9{x) 33.4 7.65% 1,395.3 5$8.5(2) 59.2 10.173% Los Angeles t°3 15,200.13 4,071.7 451.9 11.10% 16,011.4 3,925.0 581.0 17.35% Orange 3,85{}.0 310.8 32.6 10.491% 4,644,0 420.0 52,8 12.58°Io "verside(t) MA 303A 301 9.94% N/A 382.0 43.0 11.2610 Sacramento 1,711.9 329.4 30.0 9.0910 2,€333.13 358.6 34.6 9.65% San]Diego NIA 342.0 27.3 7.97% N/A 444.4 33.9 7.62% San Francisco tip 4200.0 836.7 229.5 27.4% 5,2:3$.$ 970.2 297.0 30-61% Health Services budget includes Hospital!Enterprise funds. (2) This number does not include the Homeless Program,which is not budgeted in the other seven surveyed counties' Health Services Departments. Source:State Controller's Office Trial Court Funding Assembly Bill 233 C`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. Cinder tlie legislation,the State assumed a greater degree of responsnlaslity for trial'court operations costs starting i Fiscal dear 199748. The +bounty's trill court funding requirement declined. from$22.8 million'in Fiscal Year 1997-98 to $16.1 million in Fiscal Year 2000-01 as a result of AB 233. 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 I 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 nein capital facility,expenditures related to judicial officers and support stiff 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 has been evaluated by a Mate'task force. The task force report has been submitted to the State Legislature,but no immediate actions is expected. County Budget Process The County is required by State 'law to adopt Ia balanced budget by August 30 of each year, although the :bard of Supervisors''may, by resolution, extend the date on a permanent basis or for a limited period,to October 2. Tlie 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 DRAFT vi=m 12:12 PM B-9 assumptions and projections contained in the d6Veinot'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 recomincrids 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 resolution to extend the deadline. The County adopted its Final Adopted Budget for on.,August 7, 21001, ahead of the legally extended deadline of October 2,2001. The County is expected to adopt its Fiscal Yea 2002-03 Final Adopted Budget on August 13,2002. 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 Administratorprepar'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 nuior fiscal impacts are also reviewed quarterly.. Ibe Colmtyls 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 "CoNmTunoNAL Am STATUTopy Lmunom ON TAXES, REVENUES AND APPROPRIAMNS" 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 1999-2000 through,2001-2002. For a sunizoary of the actual.audited financial results of the County for Fiscal Year 1,999-2000, see "EXCERPTS FROM THE AUDITED FINANCIAL STATEmmm op THE CouNTY FDR THE FISCAL YEAR ENDED YuNE 30, 2000'11 in Appendix D to this Official Statemxuent Fised Year 1"9-2000r. The County"s 1999-2000;Final Adopted Budget grew 13% over the prior yew budget Public Assistance accounted for nearly half of the increase as State and federal government re-yenues have enriched childr= and family services as well as employment I training and referral services. Publie Works accounted for one quarter of the increase as federal, State and local revenues were allocated prinwxily for State Highway 4 expansi*n. The remaining increase was attributable to staffing additions in criminal justice and health services. The fund'balance increased to $112.7 million. Fiscal Year 2000-01. The County's Fiscal Year 2000-01 Final Adopted Budget was 4% lager than the prior fiscal.year. Salary and benefit increases accounted for the largest share, of the increased costs. Capital projects and building maintenance costs represented a smaller Portion of the increase. Fiscal Year 200142. The County's Fiscal Year 2001-02 Final Adopted Budget is 16.0%bighet, than the prior fiscal year's Final Adopted Budget. Major cost increases are the result of salary and benefit DRAFT 3/12/2002 12:12 PM B-10 } adjustments and rising energy costs; the budget'included the Ions of$3 trillion in ERAF monies from the Mate. The budget was balanced throw a measured strategy aimed at avoiding disruption of delivery of services. The specific elements of the strategy are presented below, Conservation of f and balance by placing a freeze on the funding of new positions in April 2001 and subsequently implementing a hiring freeze in May 2001. Reductions in rine-tithe costs associated with facilities, equipment purchases, computer systems and othernon-continuing expenses. Aggressive limits in budgetbaseline inflationary increases, such that increases are allowed only for prearranged' or unavoidable items, such as salary and benefit growth, energy costs, facility lease increasesand information technology adjustments. Reductions in department baseline budgets through tighter control over vacancies. A comparison'of the County's General Fund budgets for Fiscal'Years 2000-01 and 2001-42 is shown below. DRAFT 3/12/2002 1 :12 PN B-11 C0VNJ Y'6 C6NT"COSTA GENES FUNDBUDGET FOR FISCALYEARS 2OW2001 AND 2001-200 (IN TROUSANDS OF DOLLAIIS) °Final Adopted Final Adopted Budget Budget 2000-2001 2001-2002 RECJF1 lS General Goveriiirient $138,939 $154,936 Public Protection 249,389 272,637 Health and Sanitation 184,432 211,849 Public Assistance 280,127 320,978 Education 172 227 Public Ways and Facilities 19,625 48,809 Recreation and Culture 1 1 Reserves and Debt Se€�vice 15,501 14,706 Total Requirements $888,186 $1,024,143 ; AY'A11.A BU F1 Property Taxes $101,497 $111,332 Fund Balance Available 63,882 86,021 t Cher Tapes 14,663 15,562 Licenses,Permits and Franchises 6,814 7,335 Fines,Forfeitures and Penalties 13,404 13,431 Use of Money and Property 13,011 12,312 Intergovernmental 484,010 539,152 Charges for Current Services 149,046 155,065 (tier Revenue 41,859 83,933 Total Available Funds $858,186 $1,4124#l43 } The€able presents budget information for the General Fund only. Sate: County A"tor-Controller. Fused Year 2002-03. As of the data hereof, the County, is preparing;a normal maintenance level budget for FY 2002-03 which is anticipated to be adopted in August 2002.The first and second quarter budget 'status reports indicate that the current budget year is proceeding within currentbudget authorizations.Preliminary estimates of general iirosel revenue for 2002-03 revenue,including property taxes,indicates a normal growth year. However,the County is cognizant of the State budget deficit and the possibility of State revenue reductions next fiscal year. The County Administrator has requested that department heads develop budget reduction plans in the event that the State reduces revenues to the County tater this year. DRAFT 31121200212.12 PM B-12 Ad Valorem Property Taxes The County administers the property tax levy and collection system for the County and all local governments in the County. Taxes are levied for each fiscal year on taxable real and personal property that is situated in the County as of the precede Januar 1. For assessment and collection pees, property is classified either a "secured!'or"unsecured,"and is listed accordin ly on separate parts of the assessment roll'. The`secured roll" is that part of,the assessment rollcontaining Mate assessed property and property secured by a lien on real property'which is sufficient, in thuopinion of the Assessor, to secure payment of the taxes. 'father property is assessed on the"unsecured roll." Property takes on the secured roll are clue in two installments,on November 1 and February l o each fiscal year. If unpaid,such taxes became delinquent on December 10 and April 1 0,respectively,and a l t}°/a 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 takes and the delinquency penalty, plus a redemption penalty of one and one half percent per mouth to the time of redemption. If taxes are unpaid for a period of fine years or more, the tax.-defaulted property is declared to be subject to the Treasurer's power of sale and may be subsequently sold by the Treasurer. Legislation established the "supplemental roll" in 1984, which directs the Assessor to re-assess real property, at market value, on, the cyte the property changes ownership or upon completion of construction. Property on the supplemental roll is eligible for billing,34 days after the reassessment and notification to the new assessee. The resultant charge (or refund) is a one-bine 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 Lare due on the date mailed. If mailed between the months of July through October,the first installment becomes delinquent on December 10 and the second on April 10. If railed within the months of November through June, the first install€nent becomes delinquent on the last day of the month following the month ofbilling. The second installment becomes delinquent on the last clary of the fourth month following the date the first insttalllnrent is delinquent Property taxes on the unsecured roll are clue as of the January I lett date and become delinquent, if unpaid, on.August 31. A 04%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 Cleric specifying';certain facts in order to obtain a judgment lien on certain property of the taxpayer;(3)byy,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,improvetttents or possessory interest; belonging to the taxpayer. The County and its political subdivisions operate under.the Teeter Platt pursuant to provisions of Sections 4701-4717 of the California Revenue and Taxation Code. See "The Teeter Plan" Pursuant to those sections, the accounts of all,political subdivisions that:levy taxes on the County tax rolls are credited with 1001%of their respective tax.'levies regardless of actual payments and delinquencies. The County 'Treaa is cash position(from tabes) is protected by a special fund (th `Tax Losses Reserve Fund", as described below in "I`he Teeter Plan) into which all county-wide delinquent penalties are deposited. The County has used this method since Fiscal Yee 1950.51. Major property tax assessment appeals by businesses and the oil industry total $3.71 billion in disputed value,with potential loss of revenue in the millions to various units of County local government Of the total amount, approximately$2.35 billion is attributable to appeals by oil refineries pertaining to assessments through the fiscal Year 2001 tax roll. Two oil refineries'have outstanding appeals: Unocal DRAFT '3/12/2002 12',12 Phil B-1 for 1992 and 1.993,and Equilon for 1999, .2000 and 200 1 1. be total assessed values for the refineries over the years still under der appeal and being disputed by the County amount to$5.187 billion, Therefliteriesare seeking value reductions of$2.35 billion,which is approximately 45%of their respective assessed values in the indicated fiscal years and equate to approximately $26 million of tax refunds. Heavy industry accounts for 14.44 percent of the collected property taxes in the County. Ile County has incorporated $3.6 million of property tax revenue adjustments in its Fiscal Year 2001-02 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 30th is shown below. COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM'PROPERTY TAXATION FOR FISCAL YEARS 1990-91 1 THROUGH 2001-2002 Balance in Fiscal Year Current Tax %Levy Tax Lmes Assessed Secured Propetty Delinquencies Delinquent Reserve Fund (June 30) Valuation Tax Levies (June 30) (June 30) (June 30) 1990-91 554,114,860$18 $669,071,124 $19,762,687 2M $24,093,615 1991-92 58,4,22,186,087 714N31082 24,787,991 3.47 26,55V33 199293 61,393,320,089 760,559,294 24,239,204 3.19 29,042,152, 1993-94 63,427,696,578 794,435,830 20,652,106 2.60 311,225,565 1994-95 65,294,364,149 923,495,651 20,640,379 2.51 24,709,211 199596 67,146,461,590 854,519,586 18,296�237 2.14 18,670,811 1996-97 69,242,099,630 869,590,974 18,057,023 -2.08 17,154,539 199798 70,314,800,892 892,581,453 15,547,736 1.74 19,509,732 1998-99 73,699,554,452 939,437,116 15,375,159 1,64 21,550,142 19901W 78,346,533,416 981,579,866 15,904,158 1.62 23,054,893 200"l 84,627X7,952 1,062,831,354 1,6,738,410 1.57 24,515,061 2001-02(est.) 93,490,199,701 1,170,393,100 N/A N/A NIA Source- County Auditor-Controller. The Teeter Plan In 1949, the California Legislature enacted an alternative method for the distribution of secured property taxes to local agencies. This method,.known as the Teeter Plan, is set Porth, in Sections 47014717 of Revenue and Taxation Code of the State of California(the "Law"). Generally,the Teeter Plan provides for a tax distribution procedure bywhich secured ro11 taxes are distributed to taxing agencies within:,the County included,in the Teeter Plan on the basis of the tax,levy, rather than on the basis of actual tax collections. The County receives all fliture delinquent tax payments penalties and interest,and a complex tax redemption distribution system for,all,participating taxing agencies is avoided. While the County bears the risk of loss on delinquent taxes that go unpaid, it benefits from the,penalties associated with these delinquent taxes when they aripaid. In turn,the Teeter Plan I provides participating local agencies with stable cash flow and the elimination of collection risk. The constitutionality of the Teeter Plan wasupheld in Corrie v. County of Contra:Costa, 110 Cal. App.2d 210(1952). The County was the first Teeter Plan county in the State. Under this plan,the County advances the property tax portion(1 peroent tax rate portion)of the levy. Pursuant to the Law,the County is required to establisha tax losses reserve fund(the'7ax Losses Reserve Fund)to cover losses that may occur in the amount of tax hens as a result ofspecial sales of tax- DRAFT 3112/200-2 12;37 RM- B-14 .......... defaulted property(ie.,if the sale price of the 06petty is less than the mount owed). During,each fiscal year, the Tax Losses Reserve Fund is reviewedand when the amount of the fund exceeds certain levels, the excess is credited to the County General Fund as vrovided by Soctions. 4703 and 4703.2 of the California Revenue and Taxation Code. State,law allows any county to draw down their tax losses reserve fund�to'a balance equal, to (i)one percent of the total of all taxies 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 County's Tax Losses Reserve Fund,balances from Fiscal Year 1994-95 through Fiscal Year 1996-97 reflected.multiple reductions in minimum reserve requirements legislatedover that period. The impact of these reductions was to allow increased credits, to the County General Fund. No other material drawdowns have occurred. As of June 30, 2001, the balance in theJax Losses Reserve Fund is estimated to be approximately $20.2 million. Approximately $7.389, million of the'reserve will be. transferred to the County's,General Fund in Fiscal Year 2001-02.1 In :addition, pursuant to the Law,, the County has established a tax resources account to compensate for losses that may occur as a result of uncollected current property taxes. On April 6,, 2001, PG&E, one of the largest taxpayers in the County, filed for voluntary protection under Chapter 11 of the federal Bankruptcy Code. Th. e bankruptcy proceedings(the"PG&E Bankruptcy) are pending in U.S. Banlmiptcy Court in San.Francisco,,California. During the PG&E Bankruptcy, PG&E's operations will continue under current management, while the Barikruptcy Court decides on the allocation of PG&E's available cash flow assets among its various creditors. PG&E has paid the County both installments of its property,taxes.as well as any tax penalties and fees for the tax year 2000-01 and is current on its obligations for the 2001-021ax year. There is no guarantee that PG&E will niake its future property tax payments to the County, in winch case the Countywould potentially need to draw amounts from its tax resources account to cover losses. Bankruptcies involving large and complexcompanies typically take several years to reach a conclusion. PG&Fls parent company has not Med for bankruptcy protection. Largest Taxpayers The ten largest taxpayers in the County,,as shown on the Fiscal Year 20W20101 secured tax roll, and the approximate amounts of their property tax payments are shown below. These ten taxpayers paid a total of$98.96 million in taxes,or about 9.6% aft e County's 2000-2001 secured tax collection. COUNTY OF CONTRA COSTA TEN LARGEST ftopERTY TAxPAYERS Company TOW Taxes.Paid 2000-2001 %of Total County Tax Roll ChevronUSA $24,340,71.1.36 2.37% Tosco l Uhmmar 20,760,797.09 2.02 Paciftim 11,147,940.16 1.82 Pacific Cies&Electric(PG&E}t') 10,569,460.19 1.03 EquiWShen 9,43IA67.27 0.9 Southern Energy 1,874,049.02 0.77 Seeno&Associates 50094,756,99 0.50 USS Posco 4,956,255.84 0.48 Bank of America 2,019,459.36 0.20 Taubtrian(Mall) 1776 032.40 0.17 TOTAL 598,960,429.67 9.63% P- I has fled fur banlaupt-cy protection. PG&E has paid all of its:taxes due. See"Power Supply ftogrant—Effect on the County"'.and"The Teeter Plan". Source. County Treasurer-Tax tollector DRAW 3112/2002 12:12 PM B-15 Taxation of State-Assessed Utility Property [WEDS COUNTY REVIEW AND UPDATE] The State Constitution provides that most classes of property owned or used by regulated'utilities be assessed by the Mate 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. In 1993, the SBE adopted a rule that provides for local assessment of certain investor-owned electric utility facilities. As'a result of this rule, the County Assessor <currently assesses two power plants located in the County. However, assessment of certain power plants has recently been transferred to the SBE, so the ,portion of the County's total net assessed valuation constituting unitary property subject to SBE assessment will likely increase (see further discussion below). Currently, approximately 2.34% of the County's total net assessed valuations constitutes property subject to State assessment by the SBE, for which approximately $21,883,000 of property takes were collected in Fiscal Year 2001-02. The portion of Fiscal Year 001-02 tax collections through the SBE assessment methodology attributable to the County General Fund was $5,417,505. 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. ,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, for example,::methods of assessing utility property and the allocation of'assessed. value to or among local taxing agencies. See"Power Supply Program." URAFr 3/12/2002 12:12 PM B-16 Redevelopment Agencies The California Community Redevelopment Law authorizes city or county redevelopment agenciesto 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 1991-92 THROUGH 2001-02 Fiscal Year Base Year Value Full Cash Value Incrementczt Total Tax Allocations(,) 199192 $1,806,223,553 $4,573,718,772 $48,590,84,1 199293 1,964,029,147 5,409,792,773 53,485,897 1993-94 1,864,029,147 5,236,543,696 55,748,579 1994-95 2,715,784,139 5,320,724,209 56,677,717 1995-96> 3,051,303,629 5,337,629,341 57,204,637 1996-97 3,195,085,095 5,493,724,548 58,807,082 1997-98 2,198,412,52414} 5,687,404,922 60,454,787 199899' 2,343,330,103 6,080,461,083 64,427,525 1999-00 2,480,670,587 6,660,417,603 69,321,686 2040-01 2,704,690,573 7,446,872,533 76,886,217 2001-02 3,578,860,177 8,835,385,357 91,289,481 Full cash values for all redevelopment projects above the"frozen"base year valuations. These data represent growth in full cash values generating tax revenues for use by the community redevelopment agencies. t 3 Does r not include unitary and operating non-unitary utility roll values which are determined by the state Board;of Equalization on a county-wide basis. c3) Actual tact revenues collected by the County which have been or will be paid to the community redevelopment agencies. t$) The Base Year Value is reduced to exclude project areas with negative increment. Source: County Auditor-Controller Accounting Policies,Reports and Audits Except'as mentioned below, the County-believes that its accounting policies used in preparation of its audited financial statements`'conform to generally accepted accounting principles applicable to counties. The County's governmental funds and fiduciary funds use the modified accrual basis of accounting. This 'system recognizes revenues when they become 'available and measurable. Expenditures, with the exception of uninatured 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 became 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 distracts and various trust transactions of the County Treasury. Under California law, independent audits are required of all operating funds under the control of the Board of Supervisors. The County has had independent audits for more than 40 years. See "APPE1"tf31X C-EXCERM FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2001:" DRAFT 3112!2002 12:40 PIU(^ B-17 In addition to the above-mentioned audits,the County Grand Jury may also>conduct management audits of offices of the County. Funds accounted for by the County are categorized as fellows: General County Funds. The primary 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 fiends. 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. SpecialDistrict Funds Under Control of Board of Superybor& 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 ofthe'Board of Supervisors. Special'District Funds Under Control of Local Boards and School Tlistrict 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 f ids 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 30th for the five most recent fiscal years for which audited financial statements are available. More detailed information from the.County's audited financial report for the fiscal year ending June 30,2001 appears in Appendix C to this Official Statement. DRAFT 3/12/2,10212:12 PM B-18 COUNTY OF CONTRA COSTA GENERAL(FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-BUDGETARY BAMS FISCAL YEARS 1996-97 THROUGH 2000-01 (IN THOUSANDS) 1996-97 1997-98 1998-99 1999-00 2000-01 REVENUES Taxes $99,974 $101,370 $110,242 $116,540 $184,513 Licenses,permits&franchises 7,419 6,476 6,597 8,623 14,823 Fines,forfeitures&penalties 14,082 12,725 13,514 15,029 14,364 Use of money&property 12,462 13,459 14,937 14,858 14,029 Intergovernmental revenues 371,750 378,383 411,112 465,245 452,351 Charges for services 103,913 107,530 123,203 143,566 160,130 Other revenue 18,198 15,083 17,750 27,923 18,078 TOTALREVENUES 627,398 635,026 697,355 791,784 863,288 EXPEN131Tt1RE5 General government 77,199 83,847 105,967 100,734 106,250 Public protection 150,121 168,054 148,836 215,919 225,(*8 Health&sanitation 122,676 138,241' 146,927 156,441 153,961 Public assistance 218,081 213,246 233,217 244,934 273,403 Education 133 145 144 145 151 Public ways and facilities 9,266 6,965 11,096 20,140 24,092 Interest 4,204 4,302 5,296 3,878 3,133 Capital outlay(') 2,615 2,947 3,173 3,301 1,269' TOTAL E)TENDITURES 584,295 617,747 704,656 745,442 787,267 Excess of Revenues over(under)Expenditures 43,103 17,279 (7,301) 46,292 76,021 OTHER FINANCING SOURCES(USES) Operating transfers in. 24,581 31,318 49,025 31,294 23,485 Operating transfers out (55,844) (42,005) (34,834)' (55,993) (68,889) Capital lease financing(') 2,615 2,455 3,173 5,500 1,269° TOTAL OTHER FINANCING SOURCES(USES) (28,648) (7,732) 17,364 (19,199) (44,135)' Excess(Deficiency)of Revenues and Other Financing, 14,455 9,547 10,063 27,093 31,886 Sources over(under)Expenditures and Other Financing Uses FUND BALANCE AT BEGINNING OF YEAR, 56,524 68,185' 79,960 85,434 112,721 as Previously Reported Adjustment to beginning fund balance 0 0 0 0 0 FUND BALANCE AT BEGINNING OF YEAR, 56,524 68,185' 79,960' 85,430 112,721 as Restated Residual equity,transfers in 0 0 0 199 0 Residual equitytransferrs out (2,794) (772) (1,593) (1) 0 KM BALANCE at End of Year $68,185 $76,960 $85,430 $112,721 $144,607 These entries are required by NCGA Statenrent 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 DRAFT 3/12/2002 12:12 PM B-19 County Employees A summary of County employees follows: COUNTY OF CONTRA COSTA COUNTY EMPLOYEES tz> Number of As of Permanent June 30 Employees 1994 6,635 1991 7,008 1992 7,080 1993 6,689 1994 6,658 1995 6,822 1996 6,856 1997 6,974 1998 7,10E 1999 7,683 2000 8,090 2001 8,416 Excludes temporary or seasonal employees. Source. County Auditor-Controller. Contract Negotiations County and District employees are represented in 36 bargaining units by 13 labor organizations, the principal ones being Local One of the Contra Costa County Employees Association and Local 2700 of the American Federation of State County and Municipal Employees C AItSCME') which, combined, represent approximately 50%of all County employees in a variety of classifications, The County and eleven of the labor organizations,representing approximately 95%of the County workforce,have reached a conceptual agreement that would extend the memoranda'of understanding and provide for both wage increases and retirement enhancements,contingent upon an offset of$100'million of the unfunded liability by the Retirement Board,'as follows. The MOU's of the employee organizations representing employees with miscellaneous retirement benefits will be extended three years from the current expiration date (September 30, 2042)to the new expiration date of September 30, 2005. Employees would receive salary increases of 5% effective October;1, 2002, 3% effective October 1„ 2003 and 3*/o effective October 1, 2004. The formula for calculating retirement benefits would change from the current 2% at age 58.5 formula to 2% at age 55 effective January 1, 2003. The County will elute the 'Tier H Retirement Plan moving'Tier H employees to Ter III,`effective October 1,,2002. Employees may participate in a shared buy-back plan that would allow employees to convert previously earned retirement service credits to the higher tier(ill) at a 2:1 employee/employer ratio. The employee organizations who are party to this agreement include AFSCME Locals 512 and 2700, California Nurses Association, CCCEA Focal One, Physicians' and Dentists' of Contra Costa County, SEN' Local 535 and Western Council of Engineers. Wage and retirement benefit provisions for employees with safety retirement in the miscellaneous employee organizations of CCCEA.focal One and SE1U Local 535'expire September 30,2006. The MOU's Of employee organizations representing employees with safety retirement benefits will be extended three years fi-om the current expiration date to new expiration dates as follows:Deputy* DRAFT' 3/12/2002 12:12 P1VI B-20 Sheriff's Association, Management and Rank & File Units, and District Attorney ;Investigator's Association,Septernber 30, 2005; LA.FF Local 1230,Fire Suppression;Unit(CCCFPIrD), March 31, 2006; United Chief Officers"Association,'June 30, 2006; and IAFF Local 1230, East Diablo Firefighters Unit, December 31, 2005. Annual wage increase of 5% would be provided, with the exception''of employees represented by the Deputy Sheriffs' Association;who instead;would'receive 6% the first year of their NMOU and 5% annually thereafter. The formula for calculating safety retirement benefits would change from the current 2%at 50 to %at 50 effective July 1, 2002. A deduction of.2.25%of wages to defray the County's cost of providing the enhanced retirement benefits would be:made at the same time the armual wage increases would be received. In the event the above-mentioned conceptual agreement is not implemented, negotiations with each individual employee organization will be required. Contract negotiations with the Oakley-CCnightsen Firefighters Association who represent the reserve firefighters employed by the Oakley-Kni htsen Fire Protection.District and whose memorandum of-understanding expired September;30,2001 continue. Bargaining with.SEMI`Local 250 which represent In-Home Supportive Services Workers whose memorandum of understanding with the In-Home,` Supportive Services Public Authority expires June 30,2002 have connetenced. The Contra Costa County Treasurer's investment Pool State law requires that all moneys of the County, County school districts, and certain. special districts in the County be held in the County 'Treasury by the Treasurer.: The Treasurer has authority to implement and oversee the investment of such funds in the County Pool in accordance with Section 53600 et seq.of the Government Code. The Treasurer accepts funds only from agencies located within the County. The moneys on deposit are predominantly'derived from local government revenues consisting of property taxes, State and federal funding and other fees and charges. As of December 31, 2001,there were 40 participants in the County Pool, the largest being the County. The County,County agencies,and school and community college districts(who are involuntary members of the County Pool) represented an aggregate 86.6 percent of the County Pool's investments as of December 31,2001; The Contra Costa County Investment Policy(the"Policy') governs the County's investments in the County Pool. The Policy has historically been more restrictive than that mandated under the Government Code. Although the Policy permits reverse repurchase agreements between the County and primary dealers with the Federal Reserve Bank of New "York,' the County currently dues not intend to engage in such transactions. The County has an investment oversight committee that meets quarterly to monitor and report on all investment activities of the Treasurer's Office. As of December 31 20001,:investments in the ssCounty Pool were held for the following local agencies in the indicated amounts, DRAFT 3/1212002 12;12 PM B-21 CONTRA COSTA COUNTY,INVESTMENT POOL INVESTMENTS HELD tV TYPE 60 LocAL AGENCY (AS OF DECEMUR 31,2001) Fervent Number Local Agney Par Value of Total of'Agencies County of Contra Costa and,Agencies $ 912,625,194.8 63.57% 1 School Districts 292,970,099;0 20.41 19 Community College District 37,324,670.0 2.60 1 Other Public Agencies* 192,655,302.0 13.42 19 Total $ 1,435,575,265.8 100.09'0 40 *Sanitation,Fire and Transportation Authorities,Community Service Districts,Children's Family Trust and two Joint Power Authorities are the only voluntary participants in the Pool. As of December 31, 2001, the Pool had. approximately 46.39°,0 of its assets invested in U.S. Treasury and federal agency securities.Another 41.614%of the f'ool's assets were invested in highly liquid short-term money market instruments (repurchase agreements, certificates of deposit, bankers' acceptances, and com ercial paper). As of December 31, 2001, the detailed omposi ion, coast, and market value of the Pool were as follows.' TM of Investment Cost Market Value to of Total Cash $ 65,163,511.91 $ :65,163;511.91':- 4:551/10 U.S.Treasuries 16,869,801.03 18,076;644.71 1.18 U.S.Agencies 648,199,003.13 652,284,596.15 45.21 Money Market Instruments 596,970,811.90 597,665,393.07 41.64 Other 106;434,26416 107,329,924.46 7.42 Total* $ 1,433,637,392.13 $ 1,440,520,070.30 100.000/0 *Totals may not add due to independent rounding. The Pool is highly liquid,with 92.9%of the portfolio having a maturity of less than one year and an average weighted days to maturity of 77 days. The maturity distribution of the Pool's port6 o as of December 31,2001 is presented in the following table. Amount Term to m!1turf Cost Basis %of Total Less than 1 year $ 1,333,063,708 92.990/0 1 to 2 years 57,353,836 4.00 2+years to 3 years 29,155,601 2.03 3+year=s to 4 years 3.363,605 0.23 4+years to 5 years 9,751,301 0.69 Greater titan.5;years* 939,172 0.07 Total** $ 1,433,637,392 100.000/0 *Represents bond proceeds of School Districts. "Total may not add due to independent rounding. The mix of investments is<designed to ensure that sufficient liquid funds are available to met disbursement requirements. Funds on hand at the end of each of the past five fiscal years in excess of disbursement requirements were as follows: DRAFT' 3112/2002 12:12 P1v1 B-22 Fiscal Year Available.Funds Ending June Q ilu�o 199 ' $1,135 1998 1,152 1999` 1,248 2000 1,392 2001 1,505 Pension Plan The Contra Costa County Employees' Retirement Association C CCCERA') is,a cost-sharing multiple-employer defined pension benefit plan governed by the County Employees' Retirement Law of 1937. The plait covers substantially all of the employees of the County, its special districts, the Housing Authority and thirteenother 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 Ifi''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 11. The Tier H section includes'all employees hired on or after August 1, 1980 and all General members electing to transfer from Tier I. The Safety section covers all employees in active lave 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 Govermrnent Code Section 31462. For Tier II,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 R to Tier M. Tier M offers abetter retirement plan using Tier I pay-out levels, except that the more stringent requirements for disability retirement are retained from Tier H. CCCERA Funding Status. The most recent actuarial report of the CCCERA reflects its financial status as of December 31,2004. The market value of the plan's assets was$2,931,262, 000. The actuary will begin working on the.Actuarial Valuation Report for the year ending December 31, 2001 within the next month. The report will be completed by raid May and reviewed and accepted by the CCCERA Board of Trustees by June,2002.' The present value of the plan's unfunded actuarial accrued liability'1"LTAAL )was estimated in the most recent actuarial report to be $288,347,000 using an 8.5%actuarial rate of return. This includes the County's portion of the liability as well as that of the other entities comprising CCCERA. County employees represent approximately'86%of the active members in CCCERA. The CAB Statement No. 25 liabilities calculated for 2000 showed that the finided'ration was approximately 890/0. An experience analysis covering active and retired employees for the period December 31, 1997 to December 31,2000 has been completed by the actuary and has been reviewed by the CCCERA Board of Trustees. Based upon the;actuary's analysis of experience and recommended changes in assumptions, the UAAL.would increase by$91,666,000. Annual employer rates beginning in Fiscal Year 2002-2003 will increase by$14,089,000 to amortize the unfunded liability and to pay for the annual ori-going costs. DRAFT 3112/2002 12:12 PM B-23 R ' At its September meeting, the CCCERA Board rejected three of the five recommended changes in assumptions proposed by the actuary. Failure to adopt the three changes could understate the future UAAL by$80,280,000. The two recommended assumptions adopted would result in increased employer rates of$5,227,U00. 1n 200Q, Governor Davis signed legislation that permits 1937 Retirement Act counties to provide increased retirement benefits equal to (a)310 of eligible salary ger year of service to safety employees retiring at age 50,and(b)2%of eligible salary per year of service to regular employees retiring at age 55. If approved by the County Board of Supervisors,the cost of such benefits would have to be paid by the employers,employees°or CCC! F A or some combination of all three. There has been no action taken to date with respect to approving such benefit packages. The Board of Retirement requested an actuarial study which refined projections regarding;cost of such benefits. The actuary completed the steady and found that the UAAI, would'increase by $199,000,000 if the new benefits were approved. The annual cost to pay for the new benefit and to amortize the UAA ,would be $29,192,072. Representatives of the employer and the employees'have been in negotiations'-discussing the approval of the new benefit and what resources will be used to paid for it. In addition to the above, the Board of Retirement has allocated, to be effective July 1, 2001, $127,000,000 of the Unrestricted Reserve (see;the table below) to be used to pay additional'retiree benefits in the amount of$200 per month. Governor'Davis signed legislation on July 21, 2001 that authorized the Board of Supervisors to provide these additional benefits. The Board of Supervisors has not approved the provision of these benefits to date. If the benefit is not enacted or approved by the :Beard of Supervisors and the Retirement Board, the $127,000,000 will remain in the Unrestricted Reserve. Recent negotiations between the Board of Supervisors and employee organizations has resulted in a preliminary agreement to award the new benefit to only those retirees who retired prior to January 1, 1983. The actuary calculated the cast to prefund this benefit at$30,000,000. The agreement will not be finalized:until a formal Memorandum of Understanding is signed by the affected parties. As of December 31,2001,CCCERA had reserves as summarized below: Type of Reserves Amount Unrestricted $376,012,283 Market Stabilization (362,362,595 Total $13,649,688 CCCERA Investment Policy' The Board of Retirement of CCCERA adopted its investment guidelines in 1985 and has amended those guidelines thirteen times,the most recent amendment having been on January 9,2001 (the "Investment Policy'). The Investment Policy prescribes, among other things, asset class targets for investment of CCERA's fluids. The asset allocation targets and their associated ranges, which area function of the returns and risks from various asset class and the nature of CCCERA's liabilities, currently are. Domestic Equity(39%,with a range of 35'—55%),International Equity(12%,with a rangy of 7— 13%),Domestic Fixed Income(29%, with a range of 25''—40%),International.Fixed Income(4°la with arange of'3--7%),Deal Estate(10%, with a range of — 12%),Alternative Investments(5%,with range of 0— 7%) and Cash (1%, with a range of 0 —2%). CCCERA contracts with several investment managers who are responsible for investment of their respective portion of the portfolio. The Investment Policy prescriber.investment guidelines to be followed by the investment managers as well as monitoring procedures regarding their performance. The CCCERA issues a stand-alone';.financial report,which is available at its office bated at 2355 Willow Way, Suite 22'1, Concord, California 94520. For additional information on the County's pension DRAFT' 3/12/20021 :12 PM B-24 plan, see "APPENDIX C - Exams FROM THE AUDITED FINANCIAL STATEMENTS 4F THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2001.- Impact 0,2001."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 hoard 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 buyback to be included in the calculations that determine the retirement benefits that a retiree is eligible to receiver The court decision pertains to'defined pension plats 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 CCCERA has settled its litigation of these two cases that were consolidated into one case,entitled Vernon D Paulson, et at. v Board of retirement o,f`the Contra Costa Employees'Retirement Association,yet al: The consolidated lawsuit was brought on behalf of a class of retired members of the Association regarding the inclusions and the exclusions froth "final" compensation that are used in calculating 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 Berard of Retirement has designated $90 million from unrestricted excess earnings to cover the anticipated liability of the settlement. 'As of December 31, 2001, $48.0 trillion in claims covering 3,203 claimants had been paid from this $90 trillion reserve. There are approximately 960 claimants retraining to be processed. The liability for past benefits cannot be reasonably estimated due to the complexity involved in calculating the benefit.As of December 31,2001,because of interest credits, the reserve held$53.1 million to pay the remaining claims. The Board ofRetirement expects all claims to be paid and the final tune-up completed by January,2003: 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. treneW ObUgadon Debt. The County has no direct general obligation bonded indebtedness,the last issue having been redeemed in Fiscal Year`197'7-78. The County has no authorized'and unissued debt Lease ObUgadons. The County has made use of various lease arrangements with private and public financing entities,nonprofit corporations,the County of Contra Costa Public Financing Authority and the Contra Costa County Employees' Retirement Association for:the use and acquisition of capital assets. These capital lease obligations have terms ranging from five to 30 years. The longest capital lease ends in 2028. For a summary of the County's lease obligations as of,Tune 30,2001, see"APPENDix C ExCERM FROM THE AUDITED FINANCIAL STA'T'EMENTS'OF THE COUNTY FOR THE FISCAL YEAR QED' JUNE 30,2001—Notes to General Purpose Financial Statements"attached hereto. DRAFT '311212002 12:12 PM B-25 Fiscal year debt service for the County's lease obligations and pension obligation bonds' outstanding as of July 1,2001 is shown in the next table. COUNTY OF CONTRA;COSTA OUTSTANDING LEASE OBLIGATIONS AND PENSIgN OBLIGATION BONDS Fiscal Year EndingTotal Lease Total PUB Total Net 6/300) Debt Service Debt Service Debt Service(2)' Debt Service(') 2002 27,256,530 35,269,023 62,525,552 54,264,793 2003 27,116,733 35,266,378 62,383,110 54,617,642 2004 27,105,087 35,268,818 62,373,905 54,615,555 2005 27,104,627 30,583,818 57,688,444 50,074,659 2006 27,111,558 32,880,050 59,991,608 52,313,449 2007 27,112,080 35,266,005 62,378,085 54,638,055 2008 27,128,034 35,269,240 62,397,274 54,659,494. 2009 25,748,217 35,267,578' 61,015,795 53,272,801 2010 24,.531,709 33,519,398 58,051,106 50,365,910 2011 24,531,655 35,362,040 59,893,695 52,158,487 2012 24,535,526' 35,357,058 59,892,584 52,162,073 2013 24,535,845 35,357,500 59,893,345 $2,169,534 2014 24,536,082 35,360,000 59,896,082 52,173,392' 2015 24,558,509 24,558,509 17,901,431 2015 24,550,568 24,550,568 17,893,025 2017 22,131,885 22,131,885 15,484,584 2018 22,128,315 22,128,315 15,486,721 2019 22,149,909 22,149,909, 12,244,298 2020 20,422,920 20,422,920 13,971,939 2021 20,425,553 20,425,553 11,231,679 2022 17,665,166 17,665,166 11,535,287 2023 17,683,416 17,683,415 5,482,235 2024 7,741,687 7,741,687 7,639,746 2025 7,209,644 7,209,644 5,366, 84 2026 5,410,295 5,410,295' 5,410,295 2027 4,191,288 4,191,288 4,191,288 2028 2,488,500 2,489,500 2,488,5€0 Totalm `+ U_07.133 .230 , A portion of the County's lease debt service due in Fiscal Year 2001-02 has already been paid. Excludes the 2002 Series A Bonds (t) Excludes deductions based upon estimated reimbursement from the State for County hospital debt service and estimated earnuip on various debt service and debt service reserve fixods. (3) Includes deductions based upon estimated reimbursem d 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. 44# Totals do not add due to independent rounding. Source. The County. Direct and Overlapping.debt. The County contains,'numerous municipalities, school:districts and special purpose districts, as well as the overlapping East Bay Municipal Utility .District, which has issued general obligation bonded and lease indebtedness. Set forth below is a direct and overlapping debt report (the "Debt Report)'prepared by California Municipal Statistics 'Inc. that summarizes such indebtedness as of March 1,,2002. The Debt Report is included for general information purposes only DRAFT 3112/2002 1 :12 PM B-25 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 net payable from revenues of the<County (except as indicated) nor- are they necessarily obligations secured by land within the County. In many cases, long-tern obligations issued by a public agency are payable only from the general farad or ether revenues of such public agency, DRAFT '3/12/2002 12:12 PM B-27 CON�,t�.�t�TA.COUNT'Y' 2001-02 Assessed Valuation: $93,437,663,121 (includes unitary utility valuation) Redevelopment IncrementalValuation: 8.83uum Adjusted Assessed Valuation: $84,602,277,764 QY9RkAURjG:TAXAM ASMSUMD T %Awhcable; Debt 3/V02 East Bay Municipal Water District and Special District No. 1 49.589:&6.018% S 5,467,343 Martinez Unified School District 100. 41,348,924 Pittsburg Unified School District 100. 28,585,400 San Ramon Valley Unified School District- 140. 66,219,584 Nest Contra Costa Unified School District 100. 92,450;000 Acalanes and Liberty Union high School Districts 100. 106,784;411 Lafayette School District 100. 28,300,000 Other School Districts 0.414-100. 85,387,039 cities 100. 6,120;000 East Bay Regional Park District 44.549 74,595,073 Other Special Districts too— 1,485,000 Community Facilities Districts 100. 246.205,0W 1915 Act Assessment Bonds(Estimate) 100. _436JU,204 TOTAL GROSS OVERLAPPING'TAX AND ASSESSMENT DEBT $1,219,300,574 Less: East Bay Municipal Utility District(l00°fa self-supporting) TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT" $1,216,533,508 OBLIGATION L7 B Contra Costal County{general Fund Obligations 100. she $326," 0,000 Contra Costa County Pension Obligations 100. 247,340,000 Contra Costa County Board of Education Certificates of Participation 100. 2,720,000 Contra Costa County Mosquito Abatement District Certificates of Participation 100. 1,055,01 Alameda-Contra Costa Transit District Certificates of Participation 10.889 2,506 648 Antioch Unified School District Certificates of Participation 100. 19,967,872 San Ramon ValleyUnified School District Educational Facilities Corporation` 100. 27,875,000 Other School District General Fund Obligations 0.140400. 44,921,125 City of Antioch General Fund Obligations 100. 20,777;996 City of Concord General Fund and Judgment Obligations' 100. 42,095,000 City of Richmond General Fund Obligations 100. 53,418,828 City of Richmond Pension Obligations 100. 31,360,000 City of Sant Ramon General Fund Obligations 100. 22,580,400 Other City General Fund Obligations 100. 38,250,000 Hospital Authorities 100. 2,555,000 Other Special District Certificates of Participation 100. 116 ss00t1 TOTAL GROSS DIRECT"AND OVERLAPPING GENERAL FUND OBLIGATION DEBT'' 5945,577;464 Less: Sart Ramon Unified School District Certificates of Participation(self-supporting from GIG from Bayetische Landesbank) - &80 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION.DEBT $936,692,464 GROSS COMBINED TOTAL DEBT $2;164,878;043 (1) NET COMBINED TOTAL DEBT $2,:153:225,977 (1) Excludes talc and revenue anticipation notes,revenue,mortgage revenue and tax'allocation bonds and non-bonded capital lease obligations. 9 Ltins Lo 90-01-(32 As, Wised Valuaticm: Total Cross dapping Tax and Assessment Debt.... 1 30% Total Net Overlapping Tax and Assessment Debt....... 1.30°la Rakops toA "ns As sedY—alvago Combined Direct Debt ($623,840,000)..............„....0.74% Gross Combined Total Debt. .2.56%, Net Combined Total Debt............................................2.55°lti STATE SCHOOL BUR&M-K AMID REPAYABLE ASCEF 6-130601: $4 DRAFT'3/1212002 12:12 PM B-28 Future Financings The County intends to issue an additional series of lease revenue bonds under the terms of the Trust Agreement in the summer of 2002 in the approximate aggregate principal amount of[$14.11 million] to finance four capital projects. The County may undertake the replacement of its mainadministration building and/or the Richmond Health Center, Brentwood Health Center, the sheriff's facilities and replacement of the County's emergency radio system in the next few years. The County may also issue tax and revenue anticipation'notes in the summer of 2002 to finance periodic cash flow deficits that are expected to occur in Fiscal Year 2002-03. Insurance and Self-Insurance Programs The County self-insures its unemployment,.dental, management long'--term disability and employee medical insurance plans. The County self-insures its workers' compensation exposure to $750,000 per occurrence and purchases commercial insurance to provide protection for up to an additional X10 million per occurrence. For its public and automobile liability exposures, the County, purchases $30 million of commercial insurance,excess of $1 million per occurrence self-insured retention The County's airports are protected by commercial liability'insurance that provides up to $75 million in coverage that is subject to neither a deductible nor a self-insured retention. With respect to the medical malpractice liability exposure at the Regional Medical Center, the County purchases $10 million of commercial insurance that is;excess of a $500,000 per occurrence self- insured retention. The County's'buildings,equipment and other property are commercially insured for losses up to $590 million per occurrence,which is subject to a$50,000 deductible.`Losses caused by flood are subject to a minimum$500,000 deductible. As of the date hereof,the County has up to$280 million of commercial earthquake insurance that is subject to a'niinimum $500,000 deductible. The County anticipates that when the current property insurance program renews on March 31, 2€302, commercial earthquake insurance will take the farm of a scarce commodity, with significantly less coverage being available only for a substantially higher cost. See"SECURITY AM SOURCES Of PAYMENT FOR THE BoNDs-Insurance"and"CEP.TAiN RISK FACT€7Rs —Risk of earthquake and tither Natural Disasters"in the forepart of the Official Statement. All claims,with the exception of dental claims,are handled by County staff' During the last three (3)years,one (1)fire loss,and two (2)medical malpractice liability clams have been incurred by the County that will involve payment by a commercial insurance company.. Except for the County's airports and a portion of the excess workers'compensation insurance,the commercial insurance has been purchased'through the California State Association of Counties' Excess insurance Authority, a joint powers'authority, whose purpose is to obtain"group"commercial insurance for its membership,which includes the County. Internal Service Funds are used to account for all self-insurance activities. It is the County policy to periodically infuse capital'into each Fund to sufficiently cover the payment of claims, including those DRAF r 3/12/2002 1.2:12 PM B-2 that either will or may require payment sometime in the future. As of June 30, 2001,the Internal Service Funds had approximately$84.7 million in assets and$82.2 million in liabilities. Current and future liabilities for the workers' compensation,public liability, automobile liability, and medical malpractice liability Funds are determined annually by an outside actuarial firm, while the others are determined'by county management personnel. In the County's opinion the internal 'Service Funds are sufficiently funded,with an allowance for future investment income,to pay both known claims and those that may have been incurred but are not presently known. For additional:information on the County's insurance coverage, see "APPENDIX C - EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 200 1—1` otes to General Purpose Financial Statements"attached hereto. DRAFT 3/12/2002 12:12 PM B-30 APPENDIX ; EXCERPTS FROM THE AUDITED. FINANCLAL STATEMENTS OF THE COUNTY FOR TJHE FISCAL YEAR ENDED'JUNE'30,2001 IA AF r 3/1212002 12-12 PM APPENDIX I} SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS DST '3/1212002 12:12 PM APPENDIX E PROPOSED FORM OF BOND COUNSEL OPMON DRAFT 3/1212002 12:12 PM APPENDIX I" PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT DRAFT 3/12/2002 12;12 P APPENDIX G BOOK-ENTRY ONLY SYSTEM LEAPT 3/12/2002 12;12 PM APPENDIX G BOOK-ENTRY ONLY SYSTEM The following description a,f` the procedures and record keeping with 'respect to beneficial ownership interests in the 2002 Series A .Bonds,payment of principal, redemption premium, if any, and interest with respect to the 2002Series A Bonds to DTC,' its Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2002 Series A.Bonds and other related transactions by and between DTC, its Participants and the Beneficial Owners is based solely on the understanding ofthe Authority of such procedures and record keeping from information provided by DTC. Accordingly, no representations can be made concerning these mutters 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 Authority understands that the current "Rules" appli an authorized representative of DTC. The deposit of 2442 Series A Bonds with DTC and their registration in the name of Cede&Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledgeof the:actual Beneficial Owners of the 2002 Series A Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2042 Series A 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 customs. Conveyance of notices and other' cornmunications by DTC;to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. Neither DTC(nor such other DTC nominee)will consent or vote with respect to the 2042 Series A Bonds. Under its usual procedures,DTC mails an Omnibus Proxy to the Authority 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 2442 Series A Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy). Principal and interest payments with respect to the 24+82 Series A Bonds will be made to Cede& Co.or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or the Trustee, on the payable'date in accordance with their respective holdings shown on DTC's. 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 (noir its nominee), the Trustee, the Authority or the County, subject to any statutory'or regulatory requirements as tray be in effect from time to time. Payment of principal and interest to Cede&Co.(or such other nominee as:may be requested by an authorized representative of DTC is the responsibility of the Authority 6r the Trustee, 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 2002` Series A'Bondsi at any time by giving reasonable notice to the Authority or the "Trustee.. Under such circumstances, in the event that a successor securities depositary is not obtained,physical 2002 Series A Bond certificates are required to be printed and delivered as described in the Trust Agreement. The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository. In that event, 2042 Series the DTC book-entry only system> certificates will be printed. DRAFT /12/2,00212:;12 PM G-2 Disclaimers AS LONG AS A BOOK-ENTRY ONLY S'Y'STEM IS USED FOR THE 2002 SERIES A BUNDS, THE TRUSTEE WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO HOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY PARTICIPANT, OR OF ANY PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMIMON OF THE 2002 SERIES A BONDS CALLER FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. THE AUTHORITY THE COUNTY,THE TRUSTEE,AND THE UNDERWRITER HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THIS 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,2042 SERIES'A BONDS. THE AUTHORITY THE COUNTY, THE TRUSTEE,;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 2402 SERIES A 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 BAMS, OR THAT DTC WILL SERVICE ANIS ACT IN TETE MANNER DESCRIBED IN THIS OFFICIAL'STATEMENT'. DRAFT' 3/12/2002 12:12 PM G-3 APPE"W H SPECIMEN MUNICIPAL BOND INSURANCE POLICY DRAFT 3/12/2002 12.12 FM HERTZ RATE DISPLAY Wage 1 of 2 Based on your rental criteria, here is th e best ``rate` currently available. If you wish to confi rm this reservation, please scroll below and clic k to reserve. Renting Locat ion: DT KAR3'HTNER RING Pickup Date: 07/12/2002 Return 'Location ZURICH HARDTURb Return Date:, 07/1$/2002 Vehicle Type: COMPACT 4DR;MANUAL AIR 11oview Terms and Conditions The total rate for your SHOP ALL ;,RATES wa s calculated based on the following: CDP DISCC7MM PLANT 62455 THE RATE HAS BEEN DISCOUNTED BY 05 PLAN NAMR: UNITRDASL FP DISCOUNT # RATS (RQ) CODIt A€X2MC RATE IN EURO'.CURRENCY EUR GUARANTEED' BASE AMOUNT: WEEKLY: 1 AT 288.83 :EUR' UNLIMITED FREE KM {MI = MILES KM W KILOMETERS} PER RENTAL DROP' FEE: 145.34 EUR TAX 21.20 WINTER FEE (NOV-MARCH)/VLF: 25.41 SUR APPROXIMATE RENTAL CHARGE: 557.02 RIUR UNLTMITRD FRRR RN Approximate rental charges are based on a vailable information at time of reservation. Addit ion-&& fees or surcharges: may be applied at time of rata to 1. For U.S. Frequent Flyer programa a Frequent Flyer Tax Recovery Surcharge may also apply. PER WEEK COLLISION'DAMAGE WAIVER: 127.40 EUR PERSONAL ACCIDENT haps://www2.hertz.com/Inter ctiveRes/secure/ISNIWEBB.EXE? +CK+ONLI E+G: 20/ 311212002 HERTZ RATE DISPLAY Page 2 o 2 INSURANCE /PERSONAL EFFECTS COVERAGE: 35.70 EUR THEFT PROTECTION: 41.30 BUR: PER DAY COLLISION= DAMAGE WAI VER:; 18.20 BUR PERSONAL ACCIDENT INSURANCE /PERSONAL EFFECTS 5.10 BUR COVERAGE: THEFT PROTECTION 5.90 BUR 8 'HOUR ADVANCE BOOKING REQUIRED 5 'DAY MINIMUM RENTAL 999 DAY`-MAXIMUM RENTAL AIRLINE'.TICKET REQUIRED: NO Hertz strongly discourages fictitious or duplicate reservations.s If Hertz establishes that a n individual user has submitted and confirmed multiple identical bookings, we reserve the right to cancel one or all of the reservations without notice to the requestor. If you find you do not need this reservation, pl ease remember to cancel it either through this site or by contacting your local Hertz Reservation Office. US'DOLLARS USIA r Display rate conversion artJUS Rate conversions displayed are subject to change as global currency values fluctuate. t* Reserve using the credit card in your profile r Reserve using a credit card other than the one in your profile Hertz Gold members please note: Gold service may not be confirmed if the credit card you anter is not part of your profile: Q Copyright 1999 The Hertz Corporation.All Rights Reserved. Privacy Policy https://www2.hertz.corn/InteractiveRes/secure/ SNIW EBB.EXE?U'+CK+O LINE+G:32fl1 3/12/2002