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HomeMy WebLinkAboutMINUTES - 07132004 - C.140 BOARD OF SUPERVISORS Contra t t f 1 # # t=Rt)M: JOHN SWEETEN, COUNTY ADMINISTRATOR Costa . . MATE: July 13, 2004 County SUBJECT: WEST CONTRA COSTA U'N'IFIED SCHOOL DISTRICT $70,000,000 GENERAL OBLIGATION BONDS, Election of 2002, Series C ell/40- SPECIFIC REQUESTS;OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ADOPT Resolution 20041 authorizing, on behalf of West Contra Costa Unified School District, the sale and issuance of General Obligation Bonds, Election of 2002, Series C in an aggregate principal amount not to exceed $70,000,000. FISCAL IMPACT There is no fiscal impact to the County related to this item. BACKGROUND Under state law, the Contra Costa County Board of Supervisors is required to authorize the sale and issuance of general obligation bonds for school districts within the County. No financial obligation is assumed with these authorizations. The County's Treasurer/Tax Collector oversees the actual sale and award of the bonds. On March 5, 2002 the West Contra Costa Unified School District held a special municipal election, at which time voters approved the issuance and sale of bands of up to $300,000,000 in aggregate principal amount to provide financing for various school facilities projects. To date, the district has sold$130 million in bonds in two series. Can June 16, 2004, the WCCUSD Board of Education authorized the sale of a third series of bonds, entitled West Contra Costa Unified School District (Contra Costa County, California), General Obligation Bonds, Election of 2002, Series C,"in an aggregate principal of not to exceed $70,000,000 ("Series C Bonds"). CONSEQUENCES OF NEGATIVE ACTION Without the Contra Costal County Board of Supervisors authorization, West Contra Costa Unified School District would not be able to Issue the Series C Bonds, thereby delaying or prohibiting ec ssaryr school facilities projects. 1 CONTINUED ON ATTACHMENT: _YES SIGNATURE. r RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF RD COMMITTE " APPROVE OTHER SIGNATURES): ACTION OF BOAA 1414am�,I / .fir h APPROVE As RECOMMENDED VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN UNANIMOUS(ASSENT '. ` } AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN. ATTESTED CONTACT: Laura Lockwood N STEN,CLERK OF THE BOARD F S RVISORS AND COUNTY ADMINISTRATOR CC: Laura Lockwood John Sweeten,County Admirnstrator The Harrmon Taylor Law Group Quftt&Thi nmlg BY DEPUTY 4 Quint&Thimmig LLP 06/10/04 06/16/04 COUNTY OF CONIRA COSTA RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA AUTHORIZING THE ISSUANCE AND SALE OF WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT GENERAL OBLIGATION BONDS,ELECTION OF 2002,SERIES C,IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED$70,000,000 RESOLVED, by the Board of Supervisors (the "Board") of Contra Costa County, California(the"County"),as follows: WHEREAS, a duly called special municipal election was held in the West Contra Costa Unified School District, Contra Costa County, California (the "District"), on March 5, 2002, at which the following proposition summary was submitted to the electors of the District: "By approval of this proposition by at least 55% of the registered voters voting on the proposition, the West Contra Costa Unified School District shall be authorized to issue and sell bonds of up to $300,000,000 in aggregate principal amount to provide financing for the specific school facilities projects listed in the Bond Project List attached hereto as Exhibit A,and in order to qualify to receive State matching grant funds,subject to all of the accountability safeguards specified below." WHEREAS, at least 55% of the votes cast on said proposition were in favor of issuing said bonds(the"Bonds");and WHEREAS, the District has previously issued and sold its $30,000,000 aggregate principal amount of the Bonds, designated "West Contra Costa Unified School District General Obligation Bonds,Election of 2002,Series A;" WHEREAS, the District has also previously issued and sold its $100,000,000 aggregate principal amount of the Bonds, designated "West Contra Costa Unified School District General Obligation Bonds,Election of 2002,Series B;"" WHEREAS, the Board has received a resolution of the Board of Education of the District adopted on June 16, 2004 (the "District Resolution"), requesting the issuance of a third series of Bonds, to be entitled "West Contra Costa Unified School District (Contra Costa County, California), General Obligation Bonds, Election of 2002, Series C," in an aggregate principal of not to exceed$70,000,000(the"Series C Bonds"); WHEREAS, in its resolution, the District found and informed this Board that all acts, conditions and things required by law to be done or performed have been done and performed in strict conformity with the laws authorizing the issuance of general obligation bonds of the District, and the indebtedness of the District, including the proposed issue of Series C Bonds, is within all limits prescribed by law;and WHEREAS, there have been submitted and are on file with the Clerk of the Board proposed forms of an Official Notice of Sale of Bonds,a Notice of intention to Sell Bonds and an Official Statement,all with respect to the Series C Bonds proposed to be sold;and NOW, THEREFORE, it is hereby RESOLVED, by the Board of Supervisors of Contra Costa County,California,as follows. 23011.07 RESOLUTION NO. 2004/396 Section 1.Certain L}efi_ni ions. As used in this Resolution, the terms set forth below shall have the meanings ascribed to them (unless otherwise set forth in the Official Notice of Sale, hereinafter defined): "Accreted Interest" means, with respect to the Capital Appreciation Bonds, the Accreted Value thereof minus the Denominational Amount thereof as of the date of calculation. "Accreted Value" means with respect to the Capital Appreciation Bonds,as of the date of calculation,the Denominational Amount thereof,plus Accreted Interest thereon to such date of calculation, compounded semiannually on each February 1 and August 1 (commencing on February 1, 2005 (unless otherwise provided in the Official Notice of Sale)), assuming in any such semiannual period that such Accreted Value increases in equal daily amounts on the basis of a 360-day year of twelve 30-day months. "Bond Payment Date" means,with respect to the Current Interest Bonds, February 1 and August 1 of each year commencing February 1,2005,with respect to the interest on the Current Interest Bonds and August 1, of each year commencing August 1, 2006, with respect to the principal payments on the Current Interest Bonds, and,with respect to the Capital Appreciation Bonds,the stated maturity dates thereof,as applicable. "Bond Register" means the registration books for the Series C Bonds maintained by the Paying Agent. "Capital Appreciation Bonds"means the Series C Bonds the interest component of which is compounded semiannually on each Bond Payment Hate to maturity as shown in the table of Accreted Value for such Series C Bonds in the Official Statement. "Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate executed by the District and dated the date of issuance and delivery of the Series C Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. „Current Interest Bands" means the Series C Bonds the interest on which is payable semiannually on each Band Payment Date specified for each such Series C Bond as designated and maturing in the years and in the amounts set forth in the Official Notice of Sale. "Denominational Amount" means, with respect to the Capital Appreciation Bonds, the initial purchase price thereof,which represents the principal amount thereof, and, with respect to the Current Interest Bonds,the principal amount thereof. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor,Jersey City, NJ 07302, Attention: Editor; Mergent/FIS, Inc., 5250-77 Center Drive,Charlotte,NC 28217, Attention: Called Bond Dept.;Denny S&P,55 hater Street, New York, NY 10041, Attention: Notification Department; and,in accordance with then current guidelines of the Securities and Exchange Commission; or to such other addresses and/or such other national information services providing information or disseminating notices of redemption of obligations similar to the Series C Bonds. "Maturity Value" means the Accreted Value of any Capital Appreciation Bond on its maturity date. -2- "Notice of Intention to Sell Bonds" means that certain Notice of intention to Sell Bonds to be published in the Bond Buyer as required by section 53692 of the California Government Code. "Official Notice of Sale"means that certain Official Notice of Sale of Bonds to be circulated to prospective purchasers of the Series C Bonds. "Official Statement" means, collectively, the preliminary and final official statements prepared in connection with the offering and sale of the Series C Bonds. "Oumer" or "Bond Owner" or "Owner of a Bond", or "'Owner of a Series C Bond," or any similar term,means the person in whose name a Series C Bond shall be registered. "Paying Agent" means BNY Western Trust Company or any bank, trust company, national banking association or other financial institution appointed as paying agent for the Series C Bonds,in the manner provided in this Resolution. "Principal" or "Principal Amount" means, with respect to any Current Interest Bond, the principal or principal amount thereof and,with respect to any Capital Appreciation Bond, the Denominational Amount. "Project" means the specific school facilities projects listed in the Bond Project List attached to the ballot proposition for the Bonds. "Purchaser" means the purchaser of the Series C Bonds upon the competitive sale thereof. "Record Date"means the 15th day of the month preceding each Bond Payment Date. "Securities Depositories" means The Depository Trust Company, 55 Water Street, 50'h Floor, New York, NY 10041-0099 Attention: Cali Notification Department, Fax (212) 855-7232, and, in accordance with then current ,guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the County may designate. "Series C Bonds" means the West Contra Costa Unified School District (Centra Costa County,California) General Obligation Bonds, Election of 2002, Series C, issued by the County pursuant to the Bond Resolution. "Term bonds" means those Series C Bonds for which mandatory redemption dates have been established upon the sale thereof. "Transfer Amount" shall mean, with respect to any Outstanding Current Interest Bond, the Principal Amount and,with respect to any Capital Appreciation Bond,the Maturity Value. Section 2. AuthQrization of Seriesds.That for the purpose of raising money for real property acquisition or improvements, namely: (a) for the purpose of raising funds needed for the Project, and (b) to pay all necessary legal, financial, engineering and contingent costs in connection therewith,the Board hereby authorizes the issuance of the Series C Bonds. Section 3.Sale of the Series C Bands, (a) Official Notice of Sale. An official notice of sate for the Series C Bonds, such notice to be substantially in accordance with the Official Notice of Sale on file with the Clerk of the Board, -3- updated as necessary to make current the information described therein (the "Official Notice of Sale"),is hereby approved. (b) Notice of Intention to Sell Bonds. A notice of intention, such notice to be substantially in accordance with the Notice of Intention to Sell Bonds on file with the Clerk of the Board, updated as necessary to make current the information described therein,is hereby approved. (c) Terms and Conditions of Sale. The terms and conditions of the offering and the sale of the Series C Bonds shall be as specified in said Official Notice of Sale. (d) Furnishing of Official Notice of Sale. The Superintendent or the Assistant Superintendent-Fiscal Services of the District,or the designee thereof, and the financial advisor to the District, A. Lopez & Associates, LLC (the "Financial Advisor"), are hereby authorized to cause to be furnished to prospective bidders a reasonable number of copies of the Official Notice of Sale. (e) Receipt of Bids. The Financial Advisor is hereby authorized and directed,on behalf of the Treasurer-Tax Collector, to open the bids at the time and place specified in the Official Notice of Sale, to examine said bids for compliance with the Official Notice of Sale and to compute the bid with the lowest total true interest cost as provided in the Official Notice of Sale. In the event two or more bids setting forth identical interest rates and premium, if any, are received, the Financial Advisor, on behalf of the Treasurer-Tax Collector, may exercise its own discretion and judgment in making the award and may award the Series C Bonds on a pro rata basis in such denominations as she shall determine. The Financial Advisor, on behalf of the Treasurer-Tax Collector,may, in its discretion,reject any and all bids and waive any irregularity or informality in any bid. The Financial Advisor, on behalf of the Treasurer-Tax Collector, shall award the Series C Bonds or reject all bids not later than 26 hours after the expiration of the time prescribed for the receipt of proposals unless such time of award is waived by the successful bidder. Section 4.SerieS C Bond Terms. (a) Denomination; Interest; Dated Dates. The Series C Bonds shall be issued as Bonds registered as to both principal and interest,in the denominations of,with respect to the Current Interest Bonds, $5,000 Denominational Amount or any integral multiple thereof, and with respect to the Capital Appreciation Bonds, $5,000 Maturity Value, or any integral multiple thereof (except that the first numbered Capital Appreciation Bond may be issued in a denomination such that the Maturity Value of such Capital Appreciation Bond shall not be in an integral multiple of$5,000). Each Capital Appreciation Bond shall be dated,and shall accrete Accreted Interest from, its date of initial issuance.Capital Appreciation Bonds will not bear interest on a current basis. Each Current Interest Bond shall be dated as of August 1, 2004, or such other date as shall appear in the Official Notice of Sale (the "Dated Date"), and shall bear interest from the Bond Payment Date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the month next preceding any Bond Payment Date to that Bond Payment Date,inclusive, in which event it shall bear interest from such Bond Payment Date,or unless it is authenticated on or before January 15,2005, in which event it shall bear interest from the Dated Date. The Series C Bonds shall bear interest or accrete interest at a rate or rates such that the interest rate shall not exceed the maximum rate permitted by law. Interest shall be payable on the respective Bond Payment Dates. -4- The Capital Appreciation bands shall mature in the years and shall be issued in the aggregate Denominational Amount set forth in the Official Notice of Sale and shall have an interest rate and shall the Maturity Valines shown in the Accreted Value Table attached to the Official Statement; provided, however, that in the event that the amount shown in such Accreted Value Table and the Accreted Value calculated by the District differ, the latter amount shall be the Accreted Value of such Capital Appreciation bond. (b)Rc tim. (i) Optional Redemption. The Current Interest Bonds shall be subject to optional redemption on the dates and at the redemption prices set forth in the Official Notice of Sale. The Capital Appreciation Bonds shall be subject to optional redemption on the dates and at the redemption prices set forth in the Official Notice of Sale. (ii) Mandatory Redemption, The Term Bonds shall be subject to mandatory redemption from moneys in the Interest and Sinking Fund established in Section 11 hereof prior to their stated maturity date at the Principal Amount or Accreted Value thereof, without premium on each August 1, in Principal Amounts as set forth in the Official Notice of Sale (iii) Selection of Bonds for Redemption. Whenever provision is made pursuant to Section 4(b)(i) hereof for the redemption of Series C bonds and less than all Outstanding Series C Bonds are to be redeemed, the Paying Agent identified below, upon written instruction from the District, shall select Series C Bonds for redemption as so directed and if not directed, in inverse order of maturity. Within a maturity, the Paying Agent shall select Series C Bonds for redemption by lot. Redemption by lot shall be in such manner as the Paying Agent shall determine,provided,however, that the portion of any Current Interest Bond to be redeemed in part shall be in the Principal Amount of$5,000 or any integral multiple thereof. (iv) Notice of Redemption.When redemption is authorized or required pursuant to Section 4(b)(i) hereof, the Paying Agent,upon written instruction from the District, shall give notice (a "Redemption Notice") of the redemption of the Series C Bonds. Such Redemption Notice shall specify: (A) the Series C Bonds or designated portions thereof (in the case of redemption of the Series C Bonds in part but not in whole)which are to be redeemed, (b) the date of redemption, (C) the place or places where the redemption will be made,including the name and address of the Paying Agent,(D) the redemption price, (E) the CtJSIP numbers (if any) assigned to the Series C Bonds to be redeemed, (F) the Bond numbers of the Series C Bands to be redeemed in whole or in part and,in the case of any Series C Bond to be redeemed in part only, the Principal Amount of such Series C Bond to be redeemed, and (C) the original issue date, interest rate or Reoffering Yield and stated maturity date of each Series C Bond to be redeemed in whole or in part.Such Redemption Notice shall further state that on the specified date there shall become due and payable upon each Series C Bond or portion thereof being redeemed at the redemption price thereof, together with the interest accrued or accreted to the redemption date, and that from and after such date, interest with respect thereto shall cease to accrue or accrete. The Paying Agent shall take the following actions with respect to such Redemption Notice: (A) at least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given to the respective Owners of Bonds designated for redemption by registered or certified mail, postage prepaid, at their addresses appearing on the Band Register;(B) at least 30 but not more than 45 days prior -5- to the redemption date, such Redemption Notice shall be given by (i) registered or certified mail,postage prepaid, (ii) telephonically confirmed facsimile transmission, or (iii) overnight delivery service, to each of the Securities Depositories; (C) At least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given by (1) registered or certified mail, postage prepaid, or (2) overnight delivery service,to one of the Information Services. Neither failure to receive or failure to publish any Redemption Notice nor any defect in any such Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of the affected Series C Bonds. Each check issued or other transfer of funds made by the Paying Agent for the purpose of redeeming Series C Bonds shall bear or include the CUSIP number identifying, by issue and maturity, the Series C Bonds being redeemed with the proceeds of such check or other transfer. (v) Partial Redemption of Series C Bonds. Upon the surrender of any Series C Bond redeemed in part only, the Paying Agent shall execute and deliver to the Owner thereof a new Series C Bond or Bonds of like tenor and maturity and of authorized denominations equal in Transfer Amounts to the unredeemed portion of the Series C Bond surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner,and the County and the District shall be released and discharged thereupon from all liability to the extent of such payment. (vi) Effect of Notice of Redemption. Notice having been given as aforesaid,and the moneys for the redemption (including the interest to the applicable date of redemption) having been set aside in the District's Interest and Sinking Fund, the Series C Bonds to be redeemed shall become due and payable on such date of redemption. If on such redemption date, money for the redemption of all the Series C Bonds to be redeemed as provided in Section 4(b)(i) hereof, together with interest accrued to such redemption date, shall be held by the Paying Agent so as to be available therefor on such redemption date, and if notice of redemption thereof shall have been given as aforesaid, then from and after such redemption date,interest with respect to the Series C Bonds to be redeemed shall cease to accrue or accrete and become payable. All money held by or on behalf of the Paying Agent for the redemption of Series C Bonds shall be held in trust for the account of the Owners of the Series C Bonds so to be redeemed. All Series C Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of this Section 4 shall be canceled upon surrender thereof and be delivered to or upon the order of the County and the District. All or any portion of a Bond purchased by the County or the District shall be canceled by the Paying Agent. (vii) Series C Bonds No Longer Outstanding. When any Series C Bonds (or portions thereof), which have been duly called for redemption prior to maturity under the provisions of this Resolution,or with respect to which irrevocable instructions to call for redemption prior to maturity at the earliest redemption date have been given to the Paying Agent, in form satisfactory to it, and sufficient moneys shall be held by the Paying Agent irrevocably in trust for the payment of the redemption price of such Series C Bonds or portions thereof, and, in the case of Current Interest Bonds,accrued interest with respect thereto to the date fixed for redemption, all as provided in this Resolution, then such Series C Bonds shall no longer be deemed Outstanding and shall be surrendered to the Paying Agent for cancellation. Section 5. Execution of Bonds. The Series C Bonds shall be signed by the manual or facsimile signatures of the Chairman of the Board of Supervisors, the Clerk of the Board and the -6- Treasurer-Tax Collector, and the seal of the County shall be reproduced thereon. No Series C Bond shall be valid or obligatory for any purpose or shall be entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series C Bond is signed by the Paying Agent as authenticating agent, that the Series C Bond as authenticated has been duly issued, signed and delivered under this Resolution and is entitled to the security and benefit of this Resolution. Section 6. pgointmntt of P"i= Aga. BNY Western Trust Company is hereby appointed to act as the authenticating agent, band registrar, transfer agent and paying agent (collectively, the "Paying Agent") for the Series C Bonds. The Treasurer-Tax Collector may contract with any third party to perform the services of Paying Agent under this Resolution. The fees and expenses of the Paying Agent shall be the responsibility of the District and, to the extent not paid from the proceeds of the sale of the Series C Bonds, may be paid in each year from the Interest and Sinking Fund of the District insofar as permitted by law including, specifically,section 15232 of the California Education Code. (a) The Paying Agent may at any time resign and be discharged of the duties and obligations created by this Resolution by giving at least 60 days' written notice to the District and the Treasurer-Tax Collector. The Paying Agent may be removed at any time by an instrument filed with such Paying Agent and the Treasurer-Tax Collector and signed by the District.A successor Paying Agent shall be appointed by the District with the written consent of the Treasurer-Tax Collector, which consent shall not be unreasonably withheld, and shall be a bank or trust company organized under the laws of the state or any state of the United States,a national banking association or any other financial institution,having capital stock and surplus aggregating at least $50,000,000, and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Resolution. Such Paying Agent shall signify the acceptance of its duties and obligations hereunder by executing and delivering to the District and the Treasurer-Tax Collector,a written acceptance thereof. Resignation or removal of the Paying Agent shall be effective upon appointment and acceptance of a successor Paying Agent. (b) In the event of the resignation or removal of the Paying Agent, such Paying Agent shall pay over, assign and deliver any moneys held by it as Paying Agent to its successor,or,if there is no successor, to the Treasurer-Tax Collector. In the event that for any reason there shall be a vacancy in the office of the Paying Agent, the Treasurer-Tax Collector shall act as the Paying Agent. The County shall promptly cause to be published at District expense in an Authorized Newspaper the name and principal corporate trust office address of the Paying Agent appointed to replace any resigned or removed Paying Agent. Section 7. ;Pa=ga. Payment of interest on any Current Interest Bond on any Bond Payment bate shall be made to the person appearing on the Bond Register as the Owner thereof as of the Record Date immediately preceding such Bond Payment bate, such interest to be paid by check mailed to such Owner on the Bond Payment Date at his address as it appears on the Bond Register or at such other address as he may have filed with the Paying Agent for that purpose on or before the Record Date. The Owner in an aggregate Principal Amount or Maturity Value of $1,000,000 or more may request in writing to the Paying Agent that such Owner be pard interest by wire transfer to the bank and account number on file with the Paying Agent as of the Record bate. The principal, and prepayment premiums, if any,payable on the Current Interest Bonds and the Accreted Value and prepayment premiums, if any, on the Capital Appreciation Bonds shall be payable upon maturity or redemption upon surrender at the principal office of the Paying Agent. The interest, Accreted Value, Principal and premiums, if any,on the Series C Bonds shall be payable in lawful money of the United States of America. The Paying Agent is hereby authorized to pay the Bonds when duly presented for payment at maturity, and to cancel all Series C Bonds upon payment thereof. The Series C Bonds are -7- general obligations of the District and do not constitute an obligation of the County except as provided in this Bond Resolution. No part of any fund of the County is pledged or obligated to the payment of the Series C Bonds. Section S. lJond Registrationod T1ansf r. If the book entry system is no longer in effect as provided in Section 10, the District shall cause the Paying Agent to maintain and keep at its principal corporate trust office the Bond Register. While such book entry system is in effect, such books need not be kept, as the Bonds will be represented by one Bond for each maturity registered in the name of Cede&Co.,as nominee for DTC(as hereinafter defined). Subject to the provisions of Section 7 above,the person in whose name a Series C Bond is registered on the Bond Register shall be regarded as the absolute owner of that Series C Bond for all purposes of this Resolution. Payment of or on account of the principal of and interest on any Series C Bond shall be made only to or upon the order of that person;neither the District, the County nor the Paying Agent shall be affected by any notice to the contrary, but the r stration may be changed as provided in this Section 8.All such payments shall be valid and effectual to satisfy and discharge the District's liability upon. the Series C Bonds, including interest,to the extent of the amount or amounts so paid. So long as any of the Series C Bonds remains outstanding, the District will cause the Paying Agent to maintain and keep at its principal office all books and records necessary for the registration,exchange and transfer of the Series C Bonds as provided in this Section 8.Subject to the provisions of Section 7, the person in whose name a Series C Bond is registered on the Bond Register shall be regarded as the absolute owner of that Series C Bond for all purposes of this Resolution.Payment of or on account of the Principal or Accreted Value of and premium,if any, and interest on any Series C Bond shall be made only to or upon the order of that person; neither the District, the County nor the Paying Agent shall be affected by any notice to the contrary,but the registration may be changed as provided in this Section 8. All such payments shall be valid and effectual to satisfy and discharge the District's liability upon the Series C Bonds,including interest,to the extent of the amount or amounts so paid. Any Series C Bond may be exchanged for Series C Bonds of like tenor, maturity and Transfer Amount upon presentation and surrender at the principal office of the Paying Agent, together with a request for exchange signed by the Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent. A Series C Bond may be transferred on the Bond Register only upon presentation and surrender of the Series C Bond at the principal office of the Paying Agent together with an assignment executed by the Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent.Upon exchange or transfer,the Paying Agent shall complete,authenticate and deliver a new Series C Bond or Series C Bonds of like tenor and of any authorized denomination or denominations requested by the Owner equal to the Transfer Amount of the Series C Bond surrendered and bearing or accruing interest at the same rate and maturing on the same date. Capital Appreciation Bonds and Current Interest Bonds may not be exchanged for one another. If any Series C Bond shall become mutilated, the County, at the expense of the Owner of said aeries C Bond, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Series C Bond of like series, tenor and Transfer Amount in exchange and substitution for the Series C Bond so mutilated,but only upon surrender to the Paying Agent of the Series C Bond so mutilated.If any Series C Bond issued hereunder shall be least,destroyed or stolen,evidence of such loss,destruction or theft may be submitted to the Paying Agent and, if such evidence be satisfactory to the Paying Agent and indemnity for the Paying Agent, the County and the District satisfactory to the Paying Agent shall be given by the Owner, the County, at the expense of the Owner of the Series C Bonds,shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Series C Bond of like tenor in lieu of and in -8- substitution for the Series C Bond so last,destroyed or stolen(or if any such Series C Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Series C Bond the Paying Agent may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Paying Agent). The Paying Agent may require payment of a reasonable fee for each new Series C Bond issued under this paragraph and of the expenses which may be incurred by the County and the Paying Agent. If manual signatures on behalf of the County are required in connection with an exchange or transfer, the Paying Agent shall undertake the exchange or transfer of Series C Bonds only after the new Series C Bonds are signed by the authorized officers of the County. In all cases of exchanged or transferred Series C Bonds, the County shall sign and the Paying Agent shall authenticate and deliver Series C Bonds in accordance with the provisions of this Resolution. All fees and costs of transfer shall be paid by the requesting party. Those charges may be required to be paid before the procedure is begun for the exchange or transfer. All Series C Bonds issued upon any exchange or transfer shall be valid obligations of the District, evidencing the same debt,and entitled to the same security and benefit under this Resolution as the Series C Bonds surrendered upon that exchange or transfer. Any Series C Bond surrendered to the Paying Agent for payment, retirement, exchange, replacement or transfer shall be canceled by the Paying Agent. The District and the County may at any time deliver to the Paying Agent for cancellation any previously authenticated and delivered Series C Bonds that the District and the County may have acquired in any manner whatsoever, and those Series C Bonds shall be promptly canceled by the Paying Agent. Written reports of the surrender and cancellation of Series C Bonds shall be made to the District and the County by the Paying Agent on or before February 1 and August 1 of each year. The canceled Series C Bonds shall be retained for six years, then returned to the District or destroyed by the Paying Agent as directed by the District. Neither the District, the County nor the Paying Agent will be required (a) to issue or transfer any Series C Bonds during a period beginning with the opening of business on the 15th business day next preceding either any Bond Payment Date or any date of selection of Series C Bonds to be redeemed and ending with the close of business on the Bond Payment Date or any day on which the applicable notice of redemption is given or(b) to transfer any Series C Bonds which have been selected or called for redemption in whole or in part. Section 9. Forms f Bonds The Series C Bonds shall be in substantially the forms set forth in Exhibits A and B attached hereto and incorporated herein, allowing those officials executing; the Series C Bonds to make the insertions and deletions necessary to conform the Series C Bonds to this Resolution,and the Official Notice of Sale. Section 10. Book-Entry 4st m. Except as provided below, the Owner of all of the Series C Bonds shall be The Depository Trust Company,New York,New York ("DTC"),and the Series C Bonds shall be registered in the name of Cede &Co.,as nominee for DTC.The Series C Bonds shall be initially executed and delivered in the form of a single fully registered Series C Bond for each maturity date of each type of the Series C Bonds in the full aggregate principal amount of the Series C Bonds maturing on such date. The County, the Paying Agent and the District may treat DTC (or its nominee)as the sole and exclusive owner of the Series C Bonds registered in its name for all purposes of this Resolution, and neither the County, the Paying Agent nor the District shall be affected by any notice to the contrary. The County, the Paying Agent and the District shall not have any responsibility or obligation to any participant of DTC (a "Participant"), any person claiming a beneficial ownership interest in the Series C Bonds under or through DTC or a Participant, or any other person which is not shown on the register of the District as being an owner, with respect to the accuracy of any records maintained by DTC or any Participant or the payment by DTC or any Participant by DTC or any Participant of any -9- amount in respect of the principal or interest with respect to the Series C Bonds. The County and the District shall cause to be paid all principal and interest with respect to the Series C Bonds only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the District's obligations with respect to the principal and interest with respect to the Series C Bonds to the extent of the sum or sums so paid. Except under the conditions noted below, no person other than DTC shall receive a Series C Bond. Upon delivery by DTC to the District of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede &Co., the term "Cede &Co." in this Resolution shall refer to such new nominee of DTC. If the District determines that it is in the best interest of the beneficial owners that they be able to obtain Series C Bonds and delivers a written certificate to DTC and the County to that effect, DTC shall notify the Participants of the availability through DTC of Series C Bonds. In such event, the County shall issue, transfer and exchange Series C Bonds as requested by DTC and any other owners in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Series C Bonds at any time by giving notice to the District and the County and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the County shall be obligated to deliver Series C Bonds as described in this Resolution. Whenever DTC requests the District and the County to do so, the District and the County will cooperate with DTC in taking appropriate action after reasonable notice to (a) make available one or more separate Series C Bonds evidencing the Series C Bonds to any DTC Participant having Series C Bonds credited to its DTC account or (b) arrange for another securities depository to maintain custody of certificates evidencing the Series C Bonds. Notwithstanding any other provision of this Resolution to the contrary, so long as any Series C Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal and interest with respect to such Series C Bond and all notices with respect to such Series C Bond shall be made and given, respectively, to DTC as provided as in the representation letter delivered on the date of issuance of the Series C Bonds. Section 11. Establishment of Funds--and Accounts-, D liv ry of Series C Bond Djsjosition of Pm ds of the S ri s C Bonds. (a)Establishment of Funds and Accounts. (i) Building Fund. A fund, to be known as the "West Contra Costa Unified School District, General Obligation Bonds, Election of 2002, Series C, Building Fund" (the "Building Fund"), is hereby created and established within the County Treasury, which fund shall be accounted for separate and distinct from all other District and County funds. Moneys deposited therein shall be used solely for the purpose for which the Series C Bonds are being issued and shall be applied solely to authorized purposes which relate to the acquisition or improvement of real property. The interest earned on the moneys deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof. (ii) Interest and Sinking Fund. A fund, known as the "West Contra Costa Unified School District,General Obligation Bonds,Election of 2002, Interest and Sinking Fund" (the "Interest and Sinking Fund"),previously created and established within the County Treasury for the Bonds is hereby continued and shall be utilized for the Series C Bonds. Moneys deposited therein shall be used only for payment of principal and interest on the Bonds. Any excess proceeds of the Series C Bonds not needed for the authorized purposes set forth herein for which the Series C Bonds are being issued shall be transferred to the Interest and Sinking Fund and applied to the payment of principal -10- and interest on the Series C Bonds at the direction of the District. If,after payment in full of the Bonds, there remain excess proceeds, any such excess amounts shall be transferred to the general fund of the District.Notwithstanding the foregoing provisions of this Section 11, any excess proceeds of the Series C Bonds not needed for the authorized purposes set forth herein for which the Series C Bonds are being issued shall be applied solely in a manner which is consistent with the requirements of applicable state and federal tax law,including but not limited to the requirements of federal tax law (if any)relating to the yield at which such proceeds are permitted to be invested. (iii) Costs of Issuance Fund. A fund, to be known as the "West Contra Costa Unified School District, General Obligation Bonds, EIection of 2002, Series C, Costs of Issuance Fund" (the "Costs of Issuance Fund"),is hereby created and established by the Paying Agent, which fund shall be accounted for separate and distinct from all other funds and accounts held by the Paying Agent. Amounts on deposit in the Costs of Issuance Fund shall be disbursed for the purpose of paying all items of expense directly or indirectly reimbursable to the District relating to the issuance, execution and delivery of the Series C Bonds including,but not limited to,filing and recording costs,settlement costs, printing costs, reproduction and binding costs, legal fees and charges, fees and expenses of the Paying Agent, financial and other professional consultant fees, costs of obtaining credit ratings, fees for execution, transportation and safekeeping of the Series C Bonds and charges and fees in connection with the foregoing ("Costs of Issuance"). Payment of the Costs of Issuance shall be made only upon the receipt by the Paying Agent of a written request of the District in a form similar to Exhibit C attached hereto. Can February 1, 2005, all amounts remaining on deposit in the Costs of Issuance Fund shall be withdrawn therefrom transferred by the Paying Agent to the Treasurer-Tax Collector for deposit in the Building Fund, and the Costs of Issuance Fund shall be closed. (b) Delivery of Series C Bonds. The proper officials of the County shall cause the Series C Bonds to be prepared and, following their sale, shall have the Series C Bonds signed and delivered, together with a true transcript of proceedings with reference to the issuance of the Series C Bonds, to the original purchaser upon payment of the purchase price in funds which are immediately available to the Paying Agent. (e) Disposition of Proceeds of the Series C Bonds. On the date of delivery of the Series C Bonds (the "Closing Date"), the proceeds of sale of the Series C Bonds shall be paid by the Purchaser to the Paying Agent which shall deposit or transfer such amounts as follows. (i) The Paying Agent shall transfer to the Treasurer-Tax Collector for deposit in the Interest and Sinking Fund an amount equal to the accrued interest on the Series C Bonds,and premium,if any,paid by the Purchaser, (ii) The Paying Agent shall deposit in the Costs of Issuance Fund the proceeds of the Series C Bonds required to pay the Costs of Issuance (as shall be designated by the District on or prior to the Closing Date),and (iii)The Paying Agent shall transfer to the Treasurer-Tax Collector the remaining proceeds of the Series C Bonds for deposit in the Building Fund. Subject to federal tax restrictions, moneys in the funds created hereunder shall be invested in any lawful investment permitted by sections 16429.1 and 53601 of the California Government Code, in shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by section 53635 of the California Government Code, in the California -11- Local Agency Investment Bund ("LAIF"), or in a guaranteed investment contract with a financial institution or insurance company which has, at the date of execution thereof, one or more outstanding issues of unsecured, uninsured and unguaranteed debt obligations, or a claims paying ability, rated not lower than the second highest rating category (without regard to subcategories)by Standard &Poor's Ratings Services and Moody's Investors Service. Section 12.Source of Payment. There shall be levied by the County on all the taxable property in the District, in addition to all other taxes, a continuing direct and ad valorem tax annually during the period the Series C Bonds are outstanding in an amount sufficient to pay the principal of and interest on the Series C Bonds when due, which moneys when collected will be placed in the Interest and Sinking Fund of the District, which fund is irrevocably pledged for the payment of the principal of and interest on the Series C Bonds when and as the same fall due. The moneys in the Interest and Sinking Fund, to the extent necessary to pay the principal of and interest on the Bonds as the same become due and payable, shall be transferred by the County to the Paying Agent, as paying agent for the Bonds, as necessary to pay the principal of and interest on the Bonds. Section 13. Acknowledgment of Tax Covenants. The County acknowledges that the District has,in the District Resolution,covenanted to: (a) assure that the proceeds of the Series C Bond are not so used as to cause the Series C Bonds to satisfy the private business tests of section 141(b) of the Code (as hereinafter defined) or the private loan financing test of section 141(e)of the Code; (b) take no action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series C Bonds to be "federally guaranteed" within the meaning of section 149(b)of the Code; (c) take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series C Bond; (d) not take, or permit or suffer to be taken any action with respect to the proceeds of the Series C Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series C Bonds would have caused the Series C Bonds to be"arbitrage bonds"within the meaning of section 148 of the Code; (e) take all actions necessary to assure the exclusion of interest on the Series C Bonds from the gross income of the Owners of the Series C Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Series C Bonds;and For purposes of this Section 13, the term "Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Series C Bonds or(except as otherwise referenced herein)as it may be amended to apply to obligations issued on the date of issuance of the Series C Bonds, together with applicable proposed, temporary and final regulations promulgated,and applicable official public guidance published,under the Code. Section 14. Ar nowl dgment__of Continuing Disclosure. Covenant. The County acknowledges that the District has, in the District Resolution,covenanted and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. -12- Section 15. Official Statpmen - The District is hereby authorized to prepare an official statement relating to the Series C Bonds to be used in connection with the offering and sale of the Series C Bonds. The District is hereby authorized to distribute copies of a preliminary Official Statement to persons who may be interested in the purchase of the Series C Bonds and is directed to deliver copies of the final Official Statement to the purchasers of the Series C Bonds, in such time and manner as to conform with the requirements of Rule 15c2-12 of the Securities and Exchange Commission. Section 16. D2ef sane s. All or any portion of the outstanding maturities of the Series C Bonds may be defeased prior to maturity in the following ways: (a) Cash: by irrevocably depositing with the Paying Agent or with an independent escrow agent selected by the District and approved by the County an amount of cash which together with amounts then on deposit in the Interest and Sinking Fund is sufficient to pay all Series C Bonds outstanding and designated for defeasance, including all principal and interest and premium,if any;or (b) Defeasance Obligations: by irrevocably depositing with the Paying Agent or with an independent escrow agent selected by the District, Defeasance Obligations (hereinafter defined) in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and moneys then on deposit in the Interest and Sinking Fund together with the interest to accrue thereon,be fully sufficient to pay and discharge all Series C Bonds outstanding and designated for defeasance (including all principal and interest represented thereby and prepayment premiums,if any)at or before their maturity date; then, notwithstanding that any of such Series C Bonds shall not have been surrendered for payment, all obligations of the District and the County with respect to all such designated outstanding Series C Bonds shall cease and terminate, except only the obligation of the County and the Paying Agent or an independent escrow agent selected by the District and approved by the County to pay or cause to be paid from funds deposited pursuant to paragraphs (a)or (b) of this Section 16, to the Owners of such designated Series C Bonds not so surrendered and paid all sums due with respect thereto. For purposes of this Section 16(b),Defeasance Obligations shall mean: (a) cash; (b) non- callable direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury) or obligations the payment of principal of and interest on which are unconditionally guaranteed by, the United States of America ('including State and Local Government Securities) ("Federal Securities"); (c) direct obligations of the United States of America which have been stripped by the Department of the Treasury of the United States of America; (d) CATS, TIGRS and similar securities; (e) bonds, debentures,notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America: (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) obligations of the Federal Financing Bank; (iv) participation certificates of the General Services Administration; (v) guaranteed Title XI financings of the U.S. Maritime Administration; (vii) U.S. government guaranteed public housing notes and bonds; and (vii) project notes and local authority bonds of the U.S. Department of Housing and Urban Development; and (f) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and (A) which are rated, based on the escrow, in the highest rating category of Moody's Investors Service or -13- Standard & Poor's Ratings Services or any successors thereto,or (B)(1) which are fully secured as to principal and interest and redemption premium, if any,by a fund consisting only of cash or Federal Securities,which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (2) which fund is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above,as appropriate. Section 17. Necessaa its an =ditinns. This Board determines that all acts and conditions necessary to be performed by the Board precedent to and in the'issuing of the Series C Bonds in order to make them legal,valid and binding general obligations of the District have been performed and have been met, or will at the time of delivery of the Series C Bonds have been performed and have been met, in regular and due form as required by law, that the full faith, credit and revenues of the District are pledged for the timely payment of the principal of and interest on the Series C Bonds; and that no statutory or constitutional limitation of indebtedness or taxation will have been exceeded in the issuance of the Series C Bonds. Section 18.Approval of Acts.Officers of the Board and County officials and staff to do any and all things and to are hereby authorized and directed,jointly and severally,execute and deliver any and all documents which they may deem necessary or advisable in order to proceed with the issuance of the Series C Bonds and otherwise carry out, give effect to and comply with the terms and intent of this Resolution. Such actions heretofore taken by such officers, officials and staff are hereby ratified,confirmed and approved. Section 19. Limited Lia defy. Notwithstanding anything to the contrary contained herein, in the Series C Bonds or in any other document mentioned herein, neither the County nor the Board shall have any liability hereunder or by reason hereof or in connection with the transactions contemplated hereby and the Series C Bonds shall be payable solely from the moneys of the District available therefor as set forth in Section 12 hereof. Section 20. Certified_Copy to Auditor-Controller. The Clerk of the Board of Supervisors is hereby directed to provide a certified copy of this Resolution to the Auditor-Controller of Contra Costa County. Section 21. Effertive Date.This Resolution shall take effect immediately upon its passage. The foregoing resolution was on the 13tI day of July, 2004, adopted by the Board of Supervisors of the County of Contra Costa ano ex-officio the governing body of all other special assessment and taxing districts,agencies and authorities for which said Board so acts. By. .� rk of the Board of Sup iso of County of Contra Costa -14- EXHIBIT.'C FORM OF REQUISITION FROM COSTS OF ISSUANCE FUND WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (Contra Costa County,California) GENERAL OBLIGATION BONDS Election of 2002,Series C REQUISITION NO.—FOR DISBURSEMENT-FROM COSTS OF ISSUAjtilCE FUND The undersigned hereby states and certifies that: (i) that the undersigned is the duly appointed, qualified and acting Superintendent of the West Contra Costa Unified School District (the "District"), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) pursuant to Section 11(a)(iii) of the resolution adopted by the Board of Supervisors of Contra Costa County on July 6, 2004 (the "County Resolution"), BNY Western Trust Company, as paying agent, is hereby requested to disburse cause the disbursement this date, from the Costs of Issuance Fund established under the County Resolution, to the payees set forth on Exhibit A attached hereto and by this reference incorporated herein, at the addresses identified thereon, the amount set forth opposite such payee for payment or reimbursement of Costs of Issuance; (iii) each item of cost identified herein has been properly incurred, constitutes payment of Costs of Issuance and has not been the basis of any previous disbursement; (iv) attached hereto is an invoice for each disbursement to be made pursuant to the Requisition;and (v) capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the County Resolution. Dated: ,2004 WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT By Superintendent Exhibit C Page 1 EXHIBIT A TO REQUISITION FROM COSTS OF ISSUANCE FUND Payee A=unt Exhibit C Page 2 Quint&Thimmig LLP 06/10/04 WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT RESOLUTION NO. 112-0304 RESOLUTION OF THE BOARD OF EDUCATION OF WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT REQUESTING THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY TO ISSUE AND SELL GENERAL OBLIGATION BONDS OF THE DISTRICT IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED$70,000,000 RESOLVED by the Board of Education (the "'Board") of the West Contra Costa Unified School District(the""District"),Contra Costa County(the"County"),State of California, WHEREAS, this Board duly called and an election was regularly held in the District on March 5,2002,at which the following proposition summary was submitted to the electors of the District: "'By approval of this proposition by at least 55% of the registered voters voting on the proposition,the West Contra.Costa Unified School District shall be authorized to issue and sell bonds of up to $300,000,000 in aggregate principal amount to provide financing for the specific school facilities projects listed in the Bond Project List attached hereto as Exhibit A,and in order to qualify to receive State matching grant funds,subject to all of the accountability safeguards specified below." WHEREAS, at least 55% of the votes cast on said proposition were in favor of issuing said bonds;and WHEREAS, $301,000,000 aggregate principal amount of said bonds, designated "'West Contra Costa Unified School District General Obligation Bonds,Election of 2002,Series A"have heretofore been issued and sold; WHEREAS, $100,000,000 aggregate principal amount of said bonds, designated "West Contra Costa Unified School District General Obligation Bonds,Election of 2002,Series B"have heretofore also been issued and sold; WHEREAS, this Board deems that it is necessary and desirable to offer for sale at public bid on July 21, 2004, or such other date as may be determined, as provided herein, a portion of said bonds in a single series as "West Contra Costa Unified School District General Obligation Bonds, Election of 2002, Series C"(the "Series C Bonds") in an aggregate principal amount not exceeding$70,000,000,according to the terms and in the manner hereinafter set forth; WHEREAS, there have been submitted and are on file with the Clerk of the Board proposed forms of an Official Notice of Sale of Bonds, a Notice of.Intention to Sell Bonds, an Official Statement, and a Continuing Disclosure Certificate, all with respect to the Series C Bonds,proposed to be sold;and M11.07 WHEREAS, section 15140 of the California Education Cade (the "Education Cade") requires that general obligation bonds of the District shall be offered for sale by the board of supervisors of the county, the county superintendent of which has jurisdiction over the District, as soon as possible following receipt of a resolution adopted by the Board; NOW, THEREFORE, IT IS RESOLVED, DETERMR JM AND ORDERED by the Board of Education of the Nest Contra Costa Unified School District,as follows: Section 1. Certain Definitions As used in this Resolution, the terms set forth below shall have the meanings ascribed to them (unless otherwise set forth in the Official Notice of Sale, hereinafter defined): "Accreted Interest" means, with respect to the Capital Appreciation Bonds, the Accreted Value thereof minus the Denominational Amount thereof as of the date of calculation. "Accreted Value" means with respect to the Capital Appreciation Bonds,as of the date of calculation,the Denominational Amount thereof,plus Accreted Interest thereon to such date of calculation, compounded semiannually on each February 1 and August 1 (commencing on February 1, 2005 (unless otherwise provided in the Official Notice of Sale), assuming in any such semiannual period that such Accreted'Value increases in equal daily amounts on the basis of a 360-4ay year of twelve 30-day months. "Bond .Payment Late" means (unless otherwise provided by the Official Notice of Sale), with respect to the Current Interest Bonds, February 1 and August 1 of each year commencing February 1, 2005, with respect to the interest on the Current Interest Bonds and August 1, of each year commencing August 1, 2006, with respect to the principal payments on the Current Interest Bonds, and, with respect to the Capital Appreciation Bonds, the stated maturity dates thereof,as applicable. "Bond Register" means the registration books for the Series C Bonds maintained by the Paying Agent. "Bond Resolution" means the resolution of the County Board authorizing issuance of the Series C Bonds. "Capital Appreciation Bonds"means the Series C Bonds the interest component of which is compounded semiannually on each Bond Payment bate to maturity as shown in the table of Accreted"Value for such Series C Bonds. "County Board" means the Board of Supervisors of Centra Costa County. "Current Interest Bonds" means the Series C Bonds the interest on which is payable semiannually on each Bond Payment Date specified for each such Series C Bond as designated and maturing in the years and in the amounts set forth in the Official Notice of Sale. "Denominational Amount" means, with respect to the Capital Appreciation Bonds, the initial purchase price thereof, which represents the principal amount thereof, and, with respect to the Current Interest Bonds, the principal amount thereof. -2- "Information Services" means Financial Information, Inc.`s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Mergent/FIS, Inc., 5250--77 Center Drive,Charlotte,NC 28217,Attention:Called Bond Dept.;Kenny S&P,55"Mater Street, New York, NY 10041, Attention: Notification Department; and, in accordance with then current guidelines of the Securities and Exchange Conunission; or to such other addresses and/or such other national information services providing information or disseminating notices of redemption of obligations similar to the Series C Bonds. "Maturity Value" means the Accreted Value of any Capital Appreciation Bond on its maturity date. "Paying Agent" means BNY Western Trust Company or any bank, trust company, national banking association or other financial institution appointed as paying agent for the Series C Bonds,in the manner provided in this Resolution. "Principal" or "Principal Amount"means,with respect to any Current Interest Bond, the principal or principal amount thereof and, with respect to any Capital Appreciation Bond, the Denominational Amount. "Record Date"means the 15th day of the month preceding each Bond Payment Date. "Securities Depositories" means The Depository 'Frust Company, 55 Water Street, 50' Floor, New York, NY 10041-0099 Attention: Call Notification Department, Pax (212) 855.7232; and, in accordance with thenn current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the District may designate. "Series C Bonds" means the West Contra Costa Unified School District (Contra Costa County, California) General Obligation Bonds, Election of 2002, Series C,issued by the County pursuant to the Bond Resolution. "Term Bonds"means those Series C Bonds for which mandatory redemption dates have been established in the Official Notice of Sale. *'Transfer Amount" shall mean, with respect to any Outstanding Current Interest Bond, the Principal Amount and,with respect to any Capital Appreciation Bond,the Maturity Value. Section 2. •Rgg=.The Board hereby requests the County Board to issue a third series of the Bonds, to be designated the "West Contra Costa Unified School District (Contra Costa County, California) General Obligation Bonds, Election of 2002, Series C," in the aggregate principal amount of not to exceed$70,000,000. Section 3. $erics C Do-nd le=. (a) Denomination; Interest; Dated Dates. The Series C Bonds shall be issued as Bonds registered as to both principal and interest,in the denominations of,with respect to the Current Interest Bonds, $5,000 Denominational Amount or any integral multiple thereof, and with respect to the Capital Appreciation Bonds, $5,000 Maturity Value, or any integral multiple -3- thereof (except that the first numbered Capital Appreciation Bond may be issued in a denomination such that the Maturity Value of such Capital Appreciation Bond shall not be in an integral multiple of$5,000). Each Capital Appreciation Bond shall be dated, and shall accrete Accreted interest from, its date of initial issuance. Capital Appreciation Bonds will not bear interest on a current basis. Each Current Interest Band shall be dated as of August 1, 2004, or such other date as shall appear in the Official Notice of Sale (the "Stated gate"), and shall bear interest from the Bond Payment Date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the month next preceding any Bond Payment Date to that Bond Payment Date,inclusive,in which event it shall bear interest from such Bond Payment Date,or unless it is authenticated on or before January 15,2005,in which event it shall bear interest from Dated Bate. The Series C Bonds shall bear interest or accrete interest at a rate or rates such that the interest rate shall not exceed the maximum rate permitted by law. interest shall be payable on the respective Bond Payment Dates. The Capital Appreciation Bonds shall mature in the years and shall be issued in the aggregate Denominational Amount set forth in the Official Notice of Sale and shall have an interest rate and shall have Denominational Amounts per each five thousand dollars($5,000)in Maturity Value; provided, however, that in the event that the amount shown in the Accreted Value Table and the Accreted Value calculated by the District differ, the latter amount shall be the Accreted Value of such Capital Appreciation Bond. (b)Redex Rtion. (i) Optional Redemption. The Current interest Bonds shall be subject to optional redemption on the dates and at the redemption prices set forth in the Official Notice of Sale. The Capital Appreciation Bonds shah be subject to optional redemption on the dates and at the redemption prices set forth in the Official Notice of Sale. (ii) Mandatory Redemption. The Term Bonds shall be subject to mandatory redemption at the Principal Amount or Accreted Value thereof, without premium on each August 1,in Principal Amounts as set forth in the Official Notice of Sale. (iii) Selection of Bands for Redemption. Whenever provision is made pursuant to Section 3(b)(i)hereof for the redemption of aeries C Bonds and less than all Outstanding Series C Bonds are to be redeemed, the Paying Agent identified below, upon written instruction from the District, shall select Series C Bonds for redemption as so directed and if not directed, in inverse order of maturity. Within a maturity, the Paying Agent shall select Series C Bonds for redemption by lot. Redemption by lot shall be in such manner as the Paying Agent shall determine;provided, however, that the portion of any Current Interest Bond to be redeemed in part shall be in the Principal Amount of$5,000 or any integral multiple thereof. -4- (iv) Notice of Redemption. When redemption is authorized or required pursuant to Section 4(b)(i) hereof, the Paying Agent, upon written instruction from the District, shall give notice (a "Redemption Notice") of the redemption of the Series C Bonds. Such Redemption Notice shall specify: (A) the Series C Bonds or designated portions thereof (in the case of redemption of the Series C Bonds in part but not in whole)which are to be redeemed, (B) the date of redemption, (C) the place or places where the redemption will be made, including the name and address of the Paying Agent, (D) the redemption price, (E) the CUSIP numbers(if any) assigned to the Series C Bonds to be redeemed,(F) the Bond numbers of the Series C Bonds to be redeemed in whole or in part and, in the case of any Series C Bond to be redeemed in part only, the Principal Amount of such Series C Bond to be redeemed,and(G) the original issue date,interest rate or Reoffering Yield and stated maturity date of each Series C Bond to be redeemed in whole or in part. Such Redemption Notice shall further state that on the specified date there shall become due and payable upon each Series C Bond or portion thereof being redeemed at the redemption price thereof, together with the interest accrued or accreted to the redemption date, and that from and after such date, interest with respect thereto shall cease to accrue or accrete. The Paying Agent shall take the following actions with respect to such Redemption Notice: (A) at least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given to the respective Owners of Bonds designated for redemption by registered or certified mail, postage prepaid, at their addresses appearing on the Bond Register; (B)at least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given by (i) registered or certified mail, postage prepaid, (ii) telephonically confirmed facsimile transmission, or (iii) overnight delivery service, to each of the Securities Depositories, (C) At least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given by (1) registered or certified mail, postage prepaid, or (2) overnight delivery service,to one of the Information Services. Neither failure to receive or failure to publish any Redemption Notice nor any defect in any such Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of the affected Series C Bonds:Each check issued or other transfer of funds made by the Paying Agent for the purpose of redeeming Series C Bonds shall bear or .include the CUSIP number identifying, by issue and maturity, the Series C Bonds being redeemed with the proceeds of such check or other transfer. (v) Martial Redemption of Series C Bonds. Upon the surrender of any Series C Bond redeemed in part only, the Paying Agent shall execute and deliver to the Owner thereof a new Series C Bond or Bonds of like tenor and maturity and of authorized denominations equal in Transfer Amounts to the unredeemed portion of the Series C Bond surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner,and the County and the District shall be released and discharged thereupon from all liability to the extent of such payment. (vi) Effect of Notice o�f Redemption. Notice having been given as aforesaid, and the moneys for the redemption(including the interest to the applicable date of redemption) -5- having been set aside in the District's Interest and Sinking Fund, the Series C Bonds to be redeemed shall become due and payable on such date of redemption. If on such redemption date, money for the redemption of all the Series C Bonds to be redeemed as provided in Section 5(b)(i) hereof, together with interest accrued to such redemption date,shall be held by the Paying Agent so as to be available therefor on such redemption date, and if notice of redemption thereof shall have been given as aforesaid, then from and after such redemption date,interest with respect to the Series C Bonds to be redeemed shall cease to accrue or accrete and become payable. All money held by or on behalf of the Paying Agent for the redemption of Series C Bonds shall be held in trust for the account of the Owners of the Series C Bonds so to be redeemed. All Series C Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of this Section 5 shall be canceled upon surrender thereof and be delivered to or upon the order of the County and the District. All or any portion of a Bond purchased by the County or the District shall be canceled by the Paying Agent. (vii) Series C Bonds No Longer Outstanding. When any Series C Bonds (or portions thereof), which have been duly called for redemption prior to maturity under the provisions of this Resolution,or with respect to which irrevocable instructions to call for redemption prior to maturity at the earliest redemption date have been given to the Paying Agent, in form satisfactory to it, and sufficient moneys shall be held by the Paying Agent irrevocably in trust for the payment of the redemption price of such Series C Bonds or portions thereof, and,in the case of Current Interest Bonds, accrued interest with respect thereto to the date fixed for redemption, all as provided in this Resolution, then such Series C Bonds shall no longer be deemed Outstanding and shall be surrendered to the Paying Agent for cancellation. Section 4. Sale of the Series C Bond . (a) Official Notice of Sate.An official notice of sale for the Series C Bonds,such notice to be substantially in accordance with the Official Notice of Sale substantially in the form on file with the Clerk of the Board, updated as necessary to make current the information described therein (the "Official Notice of Sale"),is hereby approved. (b) Notice of Intention to Sell Bonds.A notice of intention,such notice to be substantially in accordance with the Notice of Intention substantially in the form on file with the Clerk of the Board, updated as necessary to make current the information described therein (the "Notice of Intention"), is hereby approved. The Clerk of the Board of Education is hereby authorized and directed to cause to be published, once at least fifteen(15) days prior to the date to receive bids, the Notice of Intention in The Bond Buyer, a financial publication generally circulated throughout the State and reasonably expected to be disseminated among prospective bidders for the Series C Bonds. (c) Terrns and Conditions of Sale. The terms and conditions of the offering and the sale of the Series C Bonds shall be as specified in said Official Notice of Sale. -6- (d) Furnishing of Oficial Notice of Sale. The Superintendent or the Assistant Superintendent-Fiscal Services, or the designee thereof, and the financial advisor to the District, A. Lopez & Associates, LLC (the "Financial Advisor"), are hereby authorized to cause to be furnished to prospective bidders a reasonable number of copies of said Official Notice of Sale. (e) Receipt of Bids. The Financial Advisor is hereby authorized and directed, on behalf of the District, to open the bids at the time and place specified in the Official Notice of Sale, to examine said bids for compliance with the Official Notice of Sale and to compute the bid with the lowest total true interest cost as provided in the Official Notice of Sale. In the event two or more bids setting forth identical interest rates and premium, if any, are received, the Financial Advisor, on behalf of the District,.may exercise its own discretion and judgment in making the award and may award the Series C Bonds on a pro rata basis in such denominations as she shall determine. The Financial Advisor, on behalf of the District,may,in its discretion,reject any and all bids and waive any irregularity or informality in any bid.The Financial Advisor,on behalf of the District, shall award the Series C Bonds or reject all bids not later than 26 hours after the expiration of the time prescribed for the receipt of proposals unless such time of award is waived by the successful bidder. Section 5.Tax Covenants. (a) Private Activity Bond Limitation. The District shall assure that the proceeds of the Series C Bonds are not so used as to cause the Series C Bonds to satisfy the private business tests of section 141(b)of the Code (as hereinafter defined)or the private loan financing test of section 141(c)of the Code. (b)Federal Guarantee Prohibition. The District shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series C Bonds to be "federally guaranteed"within the meaning of section 149(b)of the Code. (c) Rebate Requirement. Title District shall take any and all actions necessary to assure compliance with section 148(f) of the Code,relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series C Bonds. (d) No Arbitrage. The District shall not take, or permit or suffer to be taken any action with respect to the proceeds of the Series C Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series C Bonds could have caused the Series C Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code. (e) Maintenance of Tax-Exemption. The District shall take all actions necessary to assure the exclusion of interest on the Series C Bonds from the gross income of the registered owners of the Series C Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Series C Bonds. For purposes of this Section 5, the term "Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Series C Bonds or(except as otherwise referenced herein) as it may be amended to apply to obligations issues on the date of issuance of the Series -7- C Bonds, together with applicable temporary and final regulations promulgated, ant applicable official public guide published, under the Code. Section 6. Continuing, Disclosure. The District hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution or the Bond Resolution, failure of the District to comply with the Continuing Disclosure Certificate shall not be considered an event of default; however, any holder or beneficial owner of the Series C Bands may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. For purposes of this Section 6, the term "Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate executed by the Issuer and dated the date of issuance and delivery of the Series C Bonds, as originally executed and as it may be amended from time to time in accordance with the terms hereof. For purposes of this Section 6, the term, "Participating Underwriter„ shall have the meaning ascribed thereto in the Continuing Disclosure Certificate. Section 7. Offidal 5tatement The Board hereby approves the preparation of a preliminary official statement describing the Series C Bands, substantially in the form on file with the Clerk of the Board, updated as necessary to make current the information described therein (the "Preliminary Official Statement"). Upon preparation, the Board hereby authorizes the Superintendent or the Assistant Superintendent-Fiscal Services, or the designee thereof, to deem the Preliminary Official Statement nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934.Distribution of the Preliminary Official Statement in connection with the sale of the Bonds is hereby approved. The Superintendent or the Assistant Superintendent-Fiscal Services, or the designee thereof, is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement,and the execution thereof by the Superintendent or the Assistant Superintendent-Fiscal Services, or the designee thereof, shall be conclusive evidence of his approval of any such changes and additions. The Beard hereby authorizes the distribution of the final Official Statement by the purchaser of the Bonds. The final Official Statement shall be executed in the name and on behalf of the District by the Superintendent or the Assistant Superintendent-Fiscal Services,of the designee thereof. Section 8. Apnoi tment of Paying Agent.The Board hereby appoints BNY Western Trust Company to act as the authenticating agent, Bond registrar, transfer agent and paying agent (collectively, the "Paying Agent") for the Series C Bonds. All fees and expenses incurred for services of the Paying Agent shall be the sole responsibility of the District. (a) The Paying Agent may at any time resign and be discharged of the duties and obligations created by this Resolution by giving at least 60 days' written nonce to the District and to the County Treasurer Tax Collector. The Paying Agent may be removed at any time by an instrument filed with such Paying Agent and signed by the District and the County Treasurer-Tax Collector. A successor Paying Agent shall be appointed by the District with the written consent of the County Treasurer-Tax Collector,which consent shall not be,unreasonably withheld, and shall be a bank or trust company organized under the laws of the state or any state of the United States, a national banking association or any other financial institution, having capital stock and surplus aggregating at least$50,000,000,and willing and able to accept -8- the office on reasonable and customary terms and authorized by law to perform all the dunes imposed upon it by this Resolution.Such Paying Agent shall signify the acceptance of its duties and obligations hereunder by executing and delivering to the district and the County Treasurer-Tax Collector, a written acceptance thereof. Resignation or removal of the Paying Agent shall be effective upon appointment and acceptance of a successor Paying Agent. (b) in the event of the resignation or removal of the Paying Agent, such Paying Agent shall pay over, assign and deliver any moneys held by it as Paying Agent to its successor. The County shall promptly cause to be published at District expense the name and principal corporate trust office address of the Paying Agent appointed to replace any resigned or removed Paying Agent. Section 9. Official Actions. The Superintendent or the Assistant Superintendent-Fiscal Services, or the designee thereof,are each authorized and directed,for and in the name and on behalf of the District, to do any and all things and take any and all actions,including execution and delivery of any and all assignments,certificates,requisitions,agreements"notices,consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful sale and issuance of the Series C Bonds. Section 10. Indemmfi amt cin.The District shall indemnify and hold harmless,to the extent permitted by law, the County and its officers and employees (the "Indemnified Parties"), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Parties may become subject, because of action or inaction related to the .Series C Bonds.The District shall also,reimburse the Indemnified Parties for any legal or other expenses incurred in connection with investigating or defending any such claims or actions. Section 11. Sub .r„gn of Eegil The Secretary to the Board of Education is hereby directed to file a certified copy of this Resolution with the Clerk of the County Board, the County Superintendent of schools and the County"Treasurer-Tax Collector. Section 12. f c .This Resolution shalt take effect immediately. _g. PASSED AND ADOPTED this 16th day of June, 2004, at a meeting of the Board of Education by the following vote: AYES: 4 NOES: 0 ABSENT: 1 tjpdetary to the Board -10- PRELIMINARY OFFICIAL STATEMENT DATED � 2004 CD [©raft of June 28, 2004] NEW ISSUE BOOK-ENTRY ONLY RATINGS: C Fitch.-- Standard&Pooes:-- in the opinion of Quint& Thimmig LLP, San Francisco, California,and Harrison Taylor Law Group, Oakland,California,(together 2 o "Co--Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants,interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Cade of 1986 and is exempt from State of California personal income taxes. in the further opinion of Co-Bond Counsel, interest on the Bonds is not a specific B preference item for purposes of the federal individual or corporate alternative minimum taxes, although Co-Bond Counsel observe that such interest is included in adjusted current eamings when calculating federal corporate alternative minimum taxable income. Co-Bond Counsel express no opinion regarding any other tax consequences related to the ownership or disposition of,or the accrual or receipt of interest on, the Bonds. See "LEGAL MATTERS-Tax Matters"herein. $40,000,000" $30,000,00()* WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (Contra Costa County,California) (Contra Costa County,California) General Obligation Current Interest BondsGeneral Obligation Capital Appreciation Bonds Election of 2002,Series C Election of 2002,Series C Dated: Current Interest Bonds:August 1,2004 Due:August 1,as shown below ti Capital Appreciation Bonds:Date of Delivery The West Contra Costa Unified School District General Obligation Bonds, Election of 2002, Series C (the "Bonds") in the ._ aggregate principal amount of$70,000,000`,are issued by the Board of Supervisors of Contra Costa County(the"County")on behalf of the West Contra Costa Unified School District(the District"). The Board of Supervisors of the County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount,upon all property subject to taxation within the District (except certain personal property which is taxable at limited rates),for the payment of principal or accreted value of, and interest on, the Bonds, all as more fully described herein under "THE BONDS -- Security and Sources of Payment",and"SCHOOL DISTRICT PROPERTY TAXATION". "R-6 The Bonds will be issued as current interest bonds (the"Current Interest Bonds")and capital appreciation bonds (the"Capital Appreciation Bonds"). The Current Interest Bonds will be issued in denominations of$5,000 principal amount or any integral multiple thereof. Interest with respect to the Current Interest Bonds is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2005. The Capital Appreciation Bands will be delivered in denominations such that the accreted value of each such Capital Appreciation Bond on the stated maturity date thereof will be$5,000 or an integral multiple thereof(except that the first numbered Capital Appreciation Bond may be issued in a denomination such that the accreted value on the stated maturity date thereof shall not be in an integral multiple of$5,000). No payments are due to the Owners of the Capital Appreciation Bonds until the maturity dates of the respective Capital Appreciation Bonds [or the earlier redemption thereof-if not subject to call,delete). The Bonds will be initially issued in book--entry form only,registered to Cede&Co.,as nominee of The Depository Trust Company, New York, New York ("DTC"). Principal, accreted value, premium, if any and ro interest on the Bonds will be payable to DTC. DTC is obligated to remit such principal,accreted value, premium, if any, and interest to its Participants, as defined herein,for subsequent disbursement to the Beneficial Owners of the Bonds,as defined herein. See "THE BONDS - Book-Entry System" and "Discontinuation of Book-Entry System" herein. The Currant y Interest Bonds slue on or before August 1, 2013, are not subject to optional redemption; the Bonder due on and after 2 August 1, 4014, are subject to optional redemption, as described herein. The Capital Appreciation Bonds ere not subject to redemption prior to maturity. The following firm, serving as financial advisor to the District, has structured this issue: A. LOPEZ&ASSOCIATES LLC m MATURITY SCHEDULE (inside cover page hereof) m� The Bonds will be sold pursuant to the terms of sale set forth in the Official Notice of Sale dated July 21, 2004. The Bonds will m be offered when, as and if issued by the District and received by the Underwriter, subject to approval of their legality by Quint 9. Thimmlg LLP, San Francisco, California, and Harrison Taylor Law Group, Oakland, California, Co-Bond Counsel. Certain legal E matters are bring passed upon for the District by Sidley Austin Brown & Wood LLP, Los Angeles, California, as Disclosure a z� Counsel. !t is anticipated that the Bonds,in book-entry form, will be available for delivery through DTC in New York,New York, on or about August 4, 2004. THE COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT A 15 SUMMARY OF THE 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 change. Official Statement dated:__—______ 2004 MATURITY SCHEDULE $40,000,000'`Current interest Bonds Maturity Principal interest Price Maturity Principal interest Price (Au=11 AMOUnt.: Ball 2645,000 % oryislti% 2{At Ot 11 21 $1 3Am1(i�,000 &1w % 8 2007 675,000 2022 1,380,000 2008 710,000 2023 1,450,000 2009 745,000 2024 1,530,000 2010 780,000 2025 1,610,000 2011 820,000 2026 1,695,000 2012 860,000 2027 1,785,000 2013 905,000 2028 1,880,000 2014 950,000 2029 1,980,000 2015 990,000 2030 2,085.000 2016 1,035,000 2031 2,195,000 2017 1,085,000 2032 2,315,000 2018 1,135,000 2033 2,440.000 2019 1,190,000 2034 2,570,000 2020 1,250,000 (Plus accrued interest from August 1,2004) $30,000,0004 Capital Appreciation Bonds ©ammins oonai Dancer iiratiorml Total Finest ArnD par Approximate Total Fismo t Aunt par Approximate Maturity Denominatiornai Accreted $5,000 Roosted Ywtd to Maturity Denominational Accreted WODO Aouated Yield to Af stt 1 Amount Value Value at Meturky Maturity Au uw 1 Amount Values Values at Maturity Ma4txtly. 2006 $ 10.000 $ % 2021 2022 $VKOW 3.400,000 f % 3007 166;tN30 2008 325,0W 2623 3,700,060 2WO 490,000 2024 4,015;060 2010 655,000 2025 4,345.000 2011 835.000 2026 4,690.000 2012 1,020,000 2027 5,055,000 2013 1.215,000 2028 5,430,060 2014 1.4151600 2029 5.826.000 2015 1,620.000 2030 6,235.000 2016 1,840,000 2031 6,670.600 2017 2,005,000 2032 7,650,00 2018 2,305,006 2033 9.780.000 2019 2.560,00x3 2034 10,270,000 2026 2,630,000 Preliminary;subject to change. No dealer, broker, salesperson or other person hes been authorized by the District to give any information or to snake any representations other than as contained herein and If=or made, such other information or representations must not be relied upon as having been authorized by the District. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation,or sale. This Official Statement is not to be construed as a contract with purchasers of the Bonds. Statements contained in this Official Statement which involve estimates,forecasts,or matters of opinion, whether expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes, and constitutional previsions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each such document,statute and constitutional provision. The information set forth herein, other than that furnished by the District, although obtained from sources which are believed to be reliable, is not guaranteed by the District as to accuracy or completeness, and is not to be construed as a representation by the District. The information and expression of opinion herein are subject to change without notice and neither 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 District since the date hereof. The Preliminary Official Statement dated---is In a form deemed final as of its slate by the District for the purposes of Rule 15c2w12 of the Securities and Exchange Commission (except for the omission of certain information permitted to be omitted under Rule 15c2-12(b)(1)). When used in this Official Statement and in any continuing disclosure by the District, in any press release and in any oral statement made with the approval of an authorized officer of the District, the words or phrases Wil likely result," "are expected to," Wit continue,° "is anticipated, " "estimate," "project,"` *forecast," "expect," "intend" and similar expressions identify "forward looking statements." Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material, The information and expressions of opinion herein are subject to change without notice,and neither the delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the District since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANDS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATEN ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE BONDS HAVE. NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2)OF SUCH ACT. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Board of Education Charles T. Ramsey President Glen Price George A. Harris Ill Clerk Member Patricia A. Player Karen Leong Fenton Member Member Administration Dr. Gloria L. Johnston Superintendent Ruth A.Vedovelll Vince Kilmartin Assistant Superintendent, Associate Superintendent Fiscal Services for Operations PROFESSIONAL SERVICES Financial Advisor A. Lopez&Associates LLC Oakland, California Co-Bond Counsel Quint&Thimmig LLP San Francisco, California Harrison Taylor Law Group Oakland, California Disclosure Counsel Sidley Austin Brown&Wood LLP Los Angeles, California Paying Agent BNY Western Trust Company San Francisco, California TABLE OF CONTENTS INTRODUCTION ............................................................................................................................1 TheDistrict.............. .......... ......................................................................................................................1 Sourcesof Payment for the Bonds............................................................................................................2 Purposeof theBonds.................................................................................................................................2 Descriptionof the Bonds...........................................................................................................................2 TaxMatters................................................................................................................................................2 Offeringand Delivery of the Bonds.......................................................................................,...................3 Professionals Involved in the Offering. .....................................................................................................3 THEBONDS. ........................................................................................................................ .................4 Authorityfor Issuance.......................................................................................................... .................4 Purposeof the Bonds................................................................................................................................4 Descriptionof the Bonds...........................................................................................................................4 Security and Sources of Payment for the Bonds......................................................................................5 Investmentof Bond Proceeds...................................................................................................................5 Estimated Sources and Uses of Funds.....................................................................................................6 SemiannualDebt Payments......................................................................................................................6 Redemption...............................................................................................................................................8 BondTransfer and Exchange....................................................................................................................9 Boom-Entry System....................................................................................................................................9 Discontinuation of Book-Entry Only System............................................................................................11 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUE AND APPROPRIATIONS....................................................................................................................................11 Limitationson Revenues................................................................................................................. ....11 Expendituresand Appropriations............................................................................................................13 SCHOOL DISTRICT PROPERTY TAXATION...........................................................................................14 AdValorem Property Taxation................................................................................................................14 AssessedValuation...................................................................................................................... .......14 UtilityAssessment. .................................................................................................................................15 Tax Levies,Collections and Delinquencies.............................................................................................16 TaxRates................................................................................................................................................17 MajorTaxpayers......................................................................................................................................18 GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION...................................................................19 StateFunding of Education.....................................................................................................................19 Allocation of State Funding to Districts....................................................................................................20 Other Sources of Education Funding .....................................................................................................20 District Budget Process and County Review...........................................................................................21 CountyInvestment Pool..........................................................................................................................22 AccountingPractices...............................................................................................................................22 STATEBUDGET.........................................................................................................................................22 TheBudget Process................................................................................................................................23 Recent Developments Regarding State Economy and Finances..................................... ...................23 PriorFiscal Yeats`Budgets.....................................................................................................................24 FiscalYear 2003104 Budget....................................................................................................................24 FiscalYear 2004105 Budget....................................................................................................................24 THEDISTRICT...........................................................................................................................................25 GeneralInformation..................................... ...........................................................................................25 Average Daily Attendance and Revenue Limit........................................................................................26 AppropriationsLimit.................................................................................................................................26 LotteryIncome.........................................................................................................................................26 LaborRelations.......................................................................................................................................27 RetirementPrograms..............................................................................................................................27 ------------- --'- -- ---------- ~----------~__-- ------ - - --_--~-^ ` Assessment District ........,,.........'^'... .................... ................................................................ ....... ....,'27 Comparative Financial Statements................................................................................. .................... ,2@ DistrictDebt Structure...................................... ................................................ ..................... ...............29 Statement ofDirect and Overlapping Debt...-..-,,.....^..~...-...^..~-..~.--^..-^.~'-.-.~.....,,~-.32 COUNTY INVESTMENT POLICIES AND PRACTICES........... ............ ................... ......... ......................34 PRIOR FINANCIAL HISTORY OFTHE DISTRICT... ................................................................................36 Ge="=~^—~--^------~^-~-~--^-^^~------^--~^-~~^.------..--.-,,35 Financial. .................. ..................................... .................................. .............. .......... ........35 The 1Q88Codifioahes................. .-- ....----.^^-...._...- .... ..,-..-............-_~..~--',.-.^.36 Loans From the State ofCalifornia........._- ............. ............................................................................ 36 Bankruptcy_ ^ .. _.-~.-~~..--^----.~-_-.-.-_.~--.^-.-^'~-..^,.---,—.~36 Assembly _ 3' """=. 37 ~=' ^^-^~^^-~^^^--^^^'-`----'~~^^-^ ................................... .................38 The _ Five-Year Plan ECONOMIC PROFILE.... — ..................................... ....................... 3A Introduction—~—''~^-'-~-'--'—''~^~--^—'-~^'................ ......... ........ ..................... ............ `3Q P"p°a"=`'- ........................... ........... ..............................................- ........^.......... ...........,----........3g Employment-" '-^^'^--^-----`.--._.~-''.-.-.^-_—~~.----^--.-~_.-.-...4U Largestxz, ................'.......................................................... .................... ...... _ .................�42 CommercialActivity......................... ............................ ..........- ........................................... ........~ ...42 Median Household Income-...................... .................. -_~.'....~^-~_..~.~.....~...-._--.-.4� BuildingActivity................................. .................... ...........^............... ............................................-..44 LEGALMATTERS ............................................. ........... ................................ _~.. .................. -. ......44 TaxMatters......-...,.---.--...-_.-_...-,—,'.`'..^_,._-,_.,__,,.._-__.-_.44 Legality for Investment in the State ofCalif/nlia-..................... ..........................................................45 .""Litigation............................ ................... ......................................................... ................ ..............45 Legal,Opinion................................................................ ........................................_-..' .............-_45 MISCELLANEOUS...... - ......... ' .............................. ............................................... ........—..............45 Ratings ................ .............................. ....... ...... .............. - ......----...................... .................- .... 45 Underwriting................................. ............ ....... -.............................. ....... .................. ..... .......... .....45 FinancialAdvisor......... ............................................ ...... ........................................ ..............................4G Continuingvisooaure-......... . ............................. ....................... .................----............ -...........48 ClosingPapers..................... ...........................................- ........................................... .......................4B AdditionalInformation...........................................................~................. ............................ .........._..47 APPENDIX A-PROPOSED FORM OFOPINION QFCO-BOND COUNSEL........... ....... ...... ......... A~ APPENDIX B-EXCERPTS FROM DISTRICT'S 2003K}3AUDITED FINANCIAL STATEMENTS--.B-1 APPENDIX C-FORM OFCONTINUING DISCLOSURE CERTIFICATE................... ..........................O~ APPENDIX D-ACCRETED VALUE TABLES- ............................................................ ........................D'1 � � , � ' $40,000,000* $30,000,000* WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (Contra Costa County,California) (Contra Costa County,California) General Obligation Current Interest Bonds General Obligation Capital Appreciation Brands Election of 2002,Series C Election of 2002,Series C INTRODUCTION This introduction is not a summary of this Official Statement. it is only a grief desaiption of and guide to, and is gue iged by, more complete and detailed information contained in the entire Official Statement, inchrding the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Ofiicfaf Statement The offering of the Bonds to potential investors is made only by means of the entire Official Statement. This Official Statement, which includes the cover page and appendices hereto, Is provided to furnish information in connection with the sale of$40,000;000*'West Contra Costa Unified School District General Obligation Current Interest Bonds, Election of 2002, Series C and $30,000,000* West Contra Costa Unified School District General Obligation Capital Appreciation Bonds, Election of 2002, Series C (together, the"Bonds"),as described more fully herein. This Official Statement speaks only as of its date, and the information contained herein is subject to change. The District has no obligation to update the information in this Official Statement, except as required by the Continuing Disclosure Certificate to be executed by the District. See "MISCELLANEOUS — Continuing Disclosure" and "APPENDIX C — FORM OF CONTINUING DISCLOSURE CERTIFICATE"herein. The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations from and summaries and explanations of the Bonds, and the constitutional provisions, statutes and other documents described herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for the complete provisions thereof. Copies of District or Bonet documents referred to herein and information concerning the Bonds are available from the District through the Assistant Superintendent, Fiscal Services, West Contra Costa Unified School Districzt, 1108 Bissell Avenue; Richmond, CA 94801-3135, Telephone: (510) 620-2241. The District may impose a charge for copying, mailing and handling. 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 of agreement between the District and the original purchasers or Owners, as defined herein, of any of the Bands. The District The District is located in Contra Costa County (the "County"), California (the "State"), approximately 15 miles northeast of San Francisco. The District encompasses approximately 110 square miles and provides educational services to the residents of the cities of El Cerrito, Hercules, Pinole, Richmond and San Pablo, the unincorporated communities of EI Sobrante and Kensington and certain other unincorporated areas within the County. The District's average daily attendance ("ADA") for fiscal year 2004/05 is projected to be 31,420 and its 2004105 general fund expenditures are projected to be approximately $246 million. Taxable property in the District has a 2003/04 assessed valuation of approximately $17.4 billion. See "THE DISTRICT" and "SCHOOL DISTRICT PROPERTY TAXATION" herein. Preliminary;subject to change. 1 Authority for Issuance of the Bands The Bonds are issued pursuant to certain provisions of the California Education Cade and other applicable law, and pursuant to a resolution adopted by the Board of Education of the District. The District received authorization to issue $300,000,000 of bonds at an election held on March 5, 2002, by an affirmative vete of more than fifty-five percent of the votes cast, under the provisions of the State Constitution and applicable laws. See"THE BONDS—Authority for Issuance"herein. Sources of Payment for the Bonds The County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rata or amount, upon all property subject to taxation within the District (except certain personal property which is taxable at limited rates), for the payment of the interest on and principal of the Bonds. See "THE BONDS — Security and Sources of Payment," and "SCHOOL DISTRICT PROPERTY TAXATION"herein. Purpose of the Bonds Bond proceeds will be used to finance specific construction and modernization projects approved by the voters. See"THE BONDS—Purpose of the Bonds"herein. Description of the Bonds Denominations. The Current Interest Bonds will be issued in denominations of $5,000 principal amount or any integral multiple thereof. The Capital Appreciation Bonds will be issued in denominations such that the accreted value of each such Capital Appreciation Bond on the stated maturity date will be $5,000 or an integral multiple thereof(except that the first numbered Capital Appreciation Bond may be issued in a denomination such that the accreted value of such Capital Appreciation Bond shall not be in an integral multiple of$5,000). See"THE BONDS--Description of the Bonds"herein. Registration, Transfers and Exchanges. The Bonds, will be issued as fully registered bonds, and when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, Now York, New York ("DTC"). DTC will act as securities depository for the Bonds and all transfers and exchanges will occur through book-entries made by DTC. In the event that a boob-entry system is no longer used with respect to the Bonds, Registered Owners listed in the Bond Register will receive payment o€principal or accreted value of, premium, if any, and interest on, the Bands directly from the Paying Agent. See "THE BONDS — Book-Entry System" and "-- Discontinuation of Book. Entry System"herein. Payments. Interest on the Current Interest Bonds is payable semiannually each February 1 and August 1, commencing February 1, 2005. Principal of the Current Interest Bonds is payable on August 1 in each year clue, as set forth on the cover page hereof. Interest on the Capital Appreciation Bonds will be compounded semiannually at the yield set forth on the inside cover page and on every February 1 and August 1, commencing on February 1, 2005,and will be payable at maturity of the Capital Appreciation Bonds. See"THE BONDS--Description of the Bonds"herein. Redemption. The Current Interest Bonds maturing on and after August 1, 2014, may be redeemed prior to maturity at the option of the District beginning on August 1, 2013, The Capital Appreciation Bonds are not subject to redemption prior to maturity. See "THE BONDS--Redemption" herein. Tax Matters In the opinion of Quint & Thimmig LLP, San Francisca, California, and Harrison Taylor Law Group, Oakland, California, Co-Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in 2 determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. Other federal tax consequences to of the Bonds, if any, are not addressed in the opinion. See"LEGAL MATTERS-w-Tax Matters"herein. Offering and Delivery of the Bands The Bonds will be offered when, as and if issued by the District end received by the Underwriter, subject to the approval of their legality by Quint & Thimmig LLP, San Francisco, California, and Harrison Taylor Law Group, Oakland, California, Co-Bond Counsel. It is anticipated that the Bonds, in book-entry form,will be available for delivery through DTC in New York,New York on or about August 4,2004. Professionals Involved in the Offering A. Lopez& Associates LILAC, Oakland, California, is acting as Financial Advisor to the District with respect to the Bonds. Quint &Thimmig LLP, San Francisco, California, and Harrison Taylor Law Group, Oakland, California, are acting as Co-Bond Counsel to the District with respect to the Bonds. Sidley Austin Brown &Wood LLP, Los Angeles, California, is acting as Disciosure Counsel to the District. BNY Western Trust Company, San Francisco, California, will act as the District's paying agent, registrar and transfer agent {the "baying Agent"} with respect to the Bonds. A. Lopez & Associates LLC, Quint & Thimmig LLP and Harrison Taylor Law Group will receive compensation from the District contingent upon the sale and delivery of the Bonds. END OF INTRODUCTION 3 THE BONDS Authority for Issuance The Bonds are issued under the provisions of Section 15140 of the California Education Code(the "Education Code"), and other applicable law, and pursuant to resolutions adopted by the Board of Education of the District on June 16, 2004, and by the Board of Supervisors of the County on July 6, 2004,(collectively,the"Resolution"). The District received authorization to issue $300,000,000 of bonds at an election held on March 5, 2002, by an affirmative vote of more than fifty-five percent of the votes cast, under the provisions of the State Constitution and applicable laws (the "2002 Authorization.") The District has previously issued $30,000,000 aggregate principal amount, Election of 2002, Series A, dated June 1, 2003, and $100,000,000 aggregate principle amount of General Obligation Bonds, Election of 2002, Series B, dated August 1, 2003, under the 2002 Authorization. The Bonds represent the third series under the 2002 Authorization. Purpose of the Bonds Bond proceeds will be used to finance specific construction and modernization projects listed in the 2002 Authorization,summarized as follows: "To complete repairing all of our schools, improve classroom safety and relieve overcrowding through such projects as: building additional classroom; making seismic upgrades; repairing and renovating bathrooms, electrical plumbing, heating and ventilation systems, leaking roofs, and fire safety systems,shall West Contra Cost unified School District issue$300 million in bonds at authorized interest rates, to renovate, acquire, construct and modernize school facilities, and appoint a citizens' oversight committee to monitor that funds are spent accordingly." Description of the Bonds The Bonds will be issued as fully registered bonds, (i) with respect to the Current interest Bonds, in the denominations of, $5,000 principal amount or any integral multiple thereof, and (ii) with respect to the Capital Appreciation Bonds, in denominations such that the accreted value of such Capital Appreciation Bonds at maturity will be $5,000 or any integral multiple thereof (except that the first numbered Capital Appreciation Bond may be issued in a denominational amount such that the accreted value at maturity of such Capital Appreciation Bond shall not be in an integral multiple of $5,000). The denominational amount of each Capital Appreciation Bond per $5,000 accreted value at maturity is set forth on the inside cover page of this Official Statement. The Bonds will initially be registered in the name of Cede & Co., as nominee for DTC. DTC will act as security depository of the Bonds. Purchases of Bonds under the DTC book-entry system must be made by or through a DTC Participant, as defined herein, and ownership interests in Bonds will be recorded as entries on the books of said Parkicipant. Except in the event that use of this book-entry system is discontinued for the Bonds, Beneficial Owners, as defined herein, will not receive physical certificates representing their ownership interests. See "-- Book-Entry System"and Discontinuation of Book-Entry System"in this section. The Current Interest Bonds shall be dated August 1, 2004, and shall bear interest at the rates set forth on the cover page hereof, payable on February 1 and August 1 of each year to maturity, or the earlier redemption thereof, commencing on February 1, 2005 (each, an "interest Payment Date"), calculated on a 301360 day basis. No payments are due to Owners of the Capital Appreciation Bonds until the maturity dates of such Capital Appreciation Bonds [or the earlier redemption thereof]. Interest on the Capital Appreciation Bonds shall be compounded semiannually at the yield set forth on the inside front cover of this Official Statement, on each February 1 and August 1, commencing February 1, 20105 until maturity [or earlier redemption], assuming in any year that the accreted value of such Capital Appreciation Band accrues on a 301360 day basis, and shall be payable only at maturity [or earlier redemption]. A table of accreted values (as of each February 1, and August 1) of the Capital Appreciation Bonds of each maturity per $5,000 accreted value at maturity is attached hereto as "APPENDIX D." The accreted value on any date 4 ether than February 1 and August 1 of any year shall be calculated by straight-1ne interpolation. Such table is presented for illustrative purposed only. Any accreted value determined by computing interest in accordance with the terms of the Resolution shall control over any different accreted value determined by reference to such table. See the maturity schedule on the cover page hereof and "Semiannual Debt Payments" in this section. The interest, principal, accreted value, and premiums, if any, on the Bunds shall be payable in lawful money of the United States of America from moneys on deposit in the interest and sinking fund of the District within the County treasury (the "Interest and Sinking Fund"), consisting of ad valorem taxes collected and held by the County Treasurer–Tax Collector (the *Treasurer"), together with any premium and accrued Interest received upon Issuance of the Bonds.. So long as all outstanding Bunds are bold In book-entry farm and registered In the name of a securities depositary or its nominee, all payments of principal or accreted value of, premium, if any, and interest on the Bonds and all notices with respect to such Bonds shall be made and given, respectively,to such securities depository or its nominee and not to Beneficial Owners,as defined herein. So long as the Bonds are held by Cede&Co., as nominee of DTC, payment shall be made by wire transfer. See "– Book-Entry System°' and "Discontlnuatlon of Book- Entry System"in this section. Security and Sources of Payment for the Bonds The Board of Supervisors of the County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount, upon all property subject to taxation within the District (except certain personal property which is taxable at limited rates), for the payment of the interest on and principal of the Bonds. Such taxes, when collected, will be deposited in the Interest and Sinking Fund. Monies In the Interest and Sinking Fund will be applied .solely for the payment of interest on, accreted value of, and principal of the Bands. After the sale of the Bonds, the District will have approximately$381 million of outstanding bonds payable from ad valorem taxes. For further information regarding the District's overlapping debt structure, see "THE DISTRICT — Statement of Direct and Overlapping Debt"herein. The annual tax rate will be based on the assessed value of taxable property in the District and scheduled annual debt service on the Bands. Fluctuations in the annual debt service on the Bands and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate. Economic and other factors beyond the District's control, such as a general market decline in land values, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local ,agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by natural or manmade disaster, such as earthquake,flood, toxic dumping, etc., could cause a reduction in the assessed value of taxable property within the District and necessitate a corresponding increase in the annual tax rate(see "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUE AND APPROPRIATIONS-- Limitations of Revenues"), and will have remaining outstanding authorized bonds of$100 million from the 2002 Authorization after the issuance of the Brands. The Issuance of these additional bonds is expected to cause the tax rate to Increase. For further information regarding the District's tax base, tax nates, debt and other matters concerning taxation. See"THE DISTRICT"and"SCHOOL DISTRICT PROPERTY TAXATION"herein. Investment of Bored Proceeds The proceeds from the sale of the Bands, in the amount of the principal or denomination amount thereof, shall be paid to the County to the credit of the building fund of the District (the "Building Fund") and shall be accounted for separately from all other district and County funds. Such proceeds shall be applied .solely for purposes authorized by the voters under the 2002 Authorization. An amount equal to accrued interest and bid premium, if any, on the sale of the Bonds will be deposited to the Interest and Sinking Fund, to be used only for payment of principal of and interest on outstanding bonds of the District. A portion of the proceeds deposited into the Building Fund will be deposited by the District in a costs of issuance account held by the Paying Agent and used to pay costs associated with the issuance of the 5 Bonds. Any balance therein after payment of such costs shall be transferred to the Treasurer for deposit in the Building Fund. Interest earned on the investment of monies held in the Building f=und shall be retained in the Building Fund. Meanies in the Building Fund, the Interest and Sinking Fund, and the costs of issuance account shall be invested in any one or more investments generally permitted to school districts under the laws of the State as authorized under Sections 16429.1 and 53601 at seq. of the California Government Code, in shares in a California common law trust established pursuant to California law which invests exclusively in investments permitted by Section 53635 of the California Government Code, in the Local Agency Investment Fund held by the State Treasurer, or in investment agreement with a financial institution or insurance company which has, at the date of execution thereof, one or more outstanding issues of unsecured, uninsured and unguaranteed debt obligations, or a claims paying ability, rated not lower than the second highest rating category(without regard to subcategories)by Standard&Poor's and MoWs investors Service. Estimated Sources and Uses of Funds The estimated sources and uses of funds with respect to the Bonds is as follows: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Estimated Sources and Uses of Funds Sources of Funds Principal Amount of Current Interest Bonds $40,000,000.00* Denominational Amount of Capital Appreciation Bonds 30,000,000.00* Original Issue Premium on Current Interest Bonds Accrued Interest on Current Interest Bonds Total Sources Uses Deposit to Building Fund Underwriting Spread t'a Deposit to costs of issuance account2} Deposit to Interest and Sinking Fund(3) Total Uses t1>Includes cost of bond insurance and underwriter's,compensation. (2) Includes estimated fees for rating agencies,Co-Bond Counsel, Financial Advisor, printing and distribution of the Official Statement,and miscellaneous casts of issuing the Bonds. of Represents accrued interest and bid premium,if any. Semiannual Debt Payments The semiannual debt service obligation for the Bonds and previously issued and outstanding general obligation bonds of the District,assuming no optional redemptions, is as follows: *Preliminary;subject to change. 6 ffi 'Y7 `Li YS TI '71 T 'ft "it 'fl '1T 1S 1f Z7 Z3 �i 'PI 71 `1i `R 'it '/! T[ 'ii 'It 't9 7i T n A9 A Y�bh YT C FY tT C7' L O all O• �• N{©�y: ht�6,y.:yt�paNq,�2i F.��Oi iV N�pGSIV�G7y G16NGJ� ON�, 4N�,Li Qd: `��'j `hySN: �sd m tB tit m W 9Y � W {iB..e G6Ib+ter[ v..VN V[;V VN�.lN INM�J.N VCdw WCt Ld trialWtii 6fWOtW+RWtb W7> a w HUM m � v�gw�gg.wv tch I N V.�A}IC(+.7 wtat CD W�W�tn iStt3 3V�. -SSA p A A�V N09 f.5 d1N V O KSbiSt IV K1 W� N1.+ W W CfjO Wt.SN V Ate. to t71 WKo(is iit Lit 451 V`l tit tat t31 E71 V V N Ut tit Kfi ESt Citi w r i�� 3n t' to s ro3 ocavw fS'c' wcsta ' 6s H a — � a BM '��}��iit #p tit C ii.?)t iR O i3 aR..�VI i3t ttf tit Ut Os P�CS�9 L7;it tit OY Ori fn ri:tit to� N N I.i N Co W ..... �. 8SSS88888�8�888888 $ i CAw $ f �_cs r� �- — r « *V �C `' moo 119199901 60 c�i-auiwcautfstaaa�mw�i,{a �r .. +�+ Redemption Current Interest Bonds Optional Redemption. The Current Interest Bonds maturing on or before August 1, 2013, are not subject to redemption prior to their respective stated maturity dates. The Current interest Bonds maturing on and after August 1, 2014 are subject to redemption prior to their respective stated maturity dates, at the option of the District, from any source of available funds, as a whole or in part on any date on or after August 1,2013, at a redemption price equal to the principal amount thereof together with accrued interest thereon to the date fixed for redemption, plus a premium (expressed as a percentage of the principal amount of the Current interest Bonds to be redeemed)as set forth in the following table: Redemption Dates Redemption Premium August 1, 2013 through July 31,2014 1% August 1,2014 and thereafter 0 [if applicable] Mandatory Sinking Fund Redemption. The Current interest Bonds maturing on August 1, are subject to mandatory sinking fund redemption in part by lot on August 1 of each year beginning August 1, _ _, at the principal amount to be redeemed together with accrued Interest thereon to the redemption elate,without premium, in the amounts and at the times,as follows: Redemption Date u ust 1 Redemption Amo, ur t The principal amount to be redeemed in each year shown above will be reduced proportionately, in integral multiples of$5,000, by any portion of the Current Interest Term Bond optionally redeemed prior to the mandatory sinking fund redemption date. Selection of Bonds for Redemption. If less than all of the Current Interest Bonds are called for redemption,the particular Current Interest Bonds or portions thereof to be redeemed will be called in such order as directed by the District and, in lieu of such direction, in inverse order of maturity. Within a maturity, the Paying Agent will select the Current Interest Bonds for redemption by lot; provided, however that that the portion of any Current Interest Bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof and that, in selecting Current Interest Bonds for redemption, the Paying Agent will treat each Current Interest Bond as representing that number of Current Interest Bonds that is obtained by dividing the principal amount of such Current Interest Bond by$5,000, Capital Appreciation Bonds The Capital Appreciation Bonds are not subject to redemption prior to maturity. Notice of Redemption. Notice of redemption of any Bond will be given by the Paying Agent, upon written instruction from the District, not less than 30 nor more than 45 days prior to the redemption date(1) by registered or certified mail, postage prepaid, to the respective Owners designated for redemption at their addresses appearing on the bond registration books; (ii) by registered or certified mail, postage prepaid or telephonically confirmed facsimile transmission or overnight delivery service I to each of the securities depositories, (Iii) by registered or certified mail, postage prepaid or overnight delivery service, one of the information services; and (iv) as may be further required in accordance with the Continuing Disclosure Certificate of the District. See "APPENDIX C -- FORM OF CONTINUING DISCLOSURE CERTIFICATE," Each notice of redemption will contain the following information: (i) the Bonds or designated portions thereof (in the case of redemption of Bonds in part but not in whole)which are to be redeemed, (ii)the date of redemption, (iii)the place or places where redemption will be made, including the name and address of the Paying Agent, (iv) the redemption price, (Iv) the CUSIP numbers, if any, assigned to the 8 Bonds to be redeemed; (v)the Bond numbers of the Bonds to be redeemed in whole or in part, and in the case of any Band to be redeemed in part only, the principal amount of such Bond to be redeemed, and (vii) the original issue date, interest rate or reoffering yield and started maturity date of each Bond to be redeemed in whole or in part. Such redemption notice shall further state that on the specified date there shall become due and payable upon each Bond or portion thereof being redeemed, the redemption price thereof, together with the interest accrued or accreted to the redemption date, and that from and after such date, interest with respect thereto shall cease to accrue or accrete. Neither failure to receive or failure to publish any redemption notice nor any defect in any such redemption notice so given shall affect the sufficiency of the proceedings for the redemption of the affected Bonds.Effect of Notice of Redemption. When notice of redemption has been given as described above, and when the moneys for redemption (including the interest to the applicable date of redemption) having been set aside in the Ctistrict;s interest and Sinking Fund, the Bonds to be redeemed shall become due and payable on such date of redemption. Defeasance3 of Bonds. The District may pay and discharge any or ail of the Bonds by depositing in trust with the Paying Agent or an escrow agent at or before maturity, certain specified defeasance obligations in an amount which will, in the opinion of an independent certified public accountant, together with the interest to accrue thereon and available moneys then on deposit in the interest and Sinking Fund of the District together with interest to accrue thereon, be fully sufficient, to pay and discharge all Bands outstanding and designated for defeasance (including all principal or accreted value, interest and redemption premiums, if any)at or before their respective maturity dates. Bond Tranr and Exchange While the DTC book-entry system, described below, is in effect, the Bonds will be represented by one bond for each maturity registered in the name of Cede & Co., as nominee for DTC. For information on bond registration and payment in the event the book-entry system is no longer used, see " - Discontinuation of Book-Entry Only System," Bonk-Entry System The information in this section has been provided by DTC, New York, NY, for use in securities offering documents, and the District takes no responsibility for the accuracy or completeness thereat They District cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants, as defined herein, will distribute to the Beneficial Owners, as defined herein, either (a) payments of interest, principal or premium, if any, with respect to the Bonds or(b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so deo on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Official Statement. 1. DTC will act as securities depository for the Bonds (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede &Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate Wit be issued for each maturity of the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the worid's largest depository, is a limited purpose trust company organized under the Now York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing:for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities 9 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the issuer or the paying agent or bond trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. The issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. Discontinuation of Book-Entry Only System In the event that the book-entry system described above is no longer used with respect to the Bonds,the District shall cause the baying Agent to maintain and keep at its principal corporate trust office the registration books for the Series C Bonds(the"Bond Register"). Interest on the Current Interest Bonds shall be made to the person appearing on the Bond Register as the registered owner thereof(the "Owner") as of the preceding Record Date, such interest to be paid by check mailed to such Owner at such Owner's address as it appears on such registration books or at such other address as the Owner may have filed with the Paying Agent for that purpose on or before the Record Date, as defined below. The Owner of an aggregate principal amount of$1,000,000 or more of Bonds may request in writing to the Paying Agent that such Owner be paid interest by wire transfer to the bank and account number on file with the Paying Agent as of the applicable Record Date. The Principal, and prepayment premiums, if any, payable on the Current Interest Bonds and the accreted value and prepayment premiums, if any, on the Capital Appreciation Bonds, shall be payable at maturity,or upon redemption prior to maturity,upon surrender at the principal office of the Raying Agent. Any Bond may be exchanged for other Bends of like tenor, maturity and transfer amount upon presentation and surrender at the principal office of the Paying Agent, together with a request for exchange signed by the Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent. A Bond may be transferred on the Bond Register only upon presentation and surrender of the Bond at the principal office of the Paying Agent together with an assignment executed by the Owner or by a person legally empowered to deo so in a€orris satisfactory to the Paying Agent. Upon exchange or transfer, the Paying Agent shall complete, authenticate and deliver a new Bond or Bonds of like tenor and of any authorized denomination or denominations requested by the Owner equal to the transfer amount of the Bond surrendered and bearing or accruing interest at the same rate and maturing on the same date. Capital Appreciation Bonds and Current Interest Bonds may not be exchanged for one another. CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUE AND APPROPRIATIONS This section discusses Articles X111A, .X1111 , X111C and X111D of the California Constitution, Propositions 218 and 9 11, and certain other provisions of California law, in order to describe the potential effect of these constitutional and statutory measures on the ability of the District to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laves impose any limitation on the authority and obligation of the County to levy an ad valorem property tax as necessary for payment of the Bonds. yes "THE BONDS — Security and Sources of Payment"and "SCHOOL DISTRICT PROPERTY TAXATION"herain. The tax levied by the County for payment of the Bonds was approved by the District's voters in compliance with Article X111A,Article X111C, and all applicable laws. Limitations on Revenues Article X111A of the California Constitution. Article XIIIA of the California Constitution, adopted and known as Proposition 13,was approved by the voters in June 1978. Section 1(a)of Article XIIIA limits the maximum ad valorem tax on real property to 1% of"full cash value," and provides that such tax shall be collected by the counties and apportioned according to State law. Section 1(b) of Article XIIIA, as subsequently amended, provides that the 1% limitation does not apply to ad valorem taxes levied to pay 11 interest and redemption charges on (€) indebtedness approved by the voters prior to July 1, 1978, or (€i) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978,by two-thirds of the votes cast on the proposition, or(€ii)bonded indebtedness incurred by a school district orcommunity college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55°x, of the voters of the district, but only it certain accountability measures are included in the bond proposition. The tax for the payment of the Bonds falls within*the exception for bonds approved by a 55%vote. Section 2 of Article XIIIA defines "full cash value"to mean the county assessoes valuation of real property as shown on the Fiscal Year 1975176 tax bill, or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed % per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction, or me yy be reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the Legislature to implement Article XIIIA provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except the 1% base tax levied by each county and taxes to pay debt service on indebtedness approved by the voters as described above. Since Its adoption, Article XIIIA has been amended a number of times. These amendments have created a number of exceptions to the requirement that property be reassessed when purchased, newly constructed or a change in ownership has occurred These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. Both the California State Supreme Court and the United States Supreme Court have upheld the validity of Article XIIIA. County of Orange v. Orange County Assessment Appeals Boars}No. 3. In a Minute Order issued on November 2, 2004, in County of Orange v. Orange County Assessment Appeals Board No. 3, Case No. 00CC03385, the Orange County Superior Court held that the Orange County assessor violated the 2% annual inflation adjustment provision of Article XIIIA when the assessor tried to "recapture" the taxable value of a single family residential property by increasing its assessed value by approximately 4% in a single year. The assessor had not increased the assessed value of the property during a year in which the market value of the property was determined by the assessor to have declined below its taxable value pursuant to Article XIIIA. In the following year, the assessor established the taxable value of the property by determining that its then-current market value was greater than if the 2% annual inflation adjustment had been applied in the previous year. The assessor enrolled the property at a taxable value that recaptured the foregone 2% inflation adjustment from the previous year, resulting in a one-year increase of approximately 4%. The assessors in most California countries use a similar methodology in raising the taxable values of certain property beyond 2% in a single year. Similar actions have been filed in other counties. in a ruling issued on December 12, 2002, the Orange County Superior Court held that any Orange County taxpayer whose propertys assessed value rose more than 2% since 1979 due to recapturing was part of the certified class action lawsuit filed against the County of Orange in 2000. If upheld on appeal, the class action suit may result in $1 billion in improperly collected taxes being returned to Orange County taxpayers,. Can January 30, 2003, the Orange County Superior Courthold a hearing and ruled on the motions to determine if the Orange County Tax Collector must notify affected taxpayers of their right to file tax refund claims. The Court granted the motion, but immediately put a (sold on its implementation penning further review by the appellate courts on this entire case. On April 18, 2003, a final judgment was entered, ruling against the current statewide practice of restoration of a property assessment based can the market value after a prior assessment reduction due to an economic downturn. On June 12,2003, an appeal was filed. On January 7, 2004, oral arguments on the appeal were conducted before the Court of Appeal of the State of California, Fourth District (the "Fourth District Court of Appeal"). On March 26, 2004,the Fourth District Court of Appeal upheld Orange County's method of assessing taxes. On May 5, 2004, a petition for appeal was filed with the California Supreme Court for review of the decision. The court is expected to issue its decision to accept or deny this petition for review within 60 to 90 days. Article X111C and Article X111D of the California Constitution. On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Might to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the California Constitution, which contain a number of provisions affecting the 12 ability of local agencies, including school districts, to levy and collect bath existing and future taxes, assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a "general tax" (imposed for general governmental purposes) or a "special tax" (imposed for specific purposes); prohibits special purpose government agencies such as school districts from levying general taxes; and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote. Article XIIIC also provides that no tax ►'tray be assessed on property other than ed valorem property taxes imposed in accordance with Articles X111 and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4. Article XIIIC also provides that the initiative bower shall not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. The California Constitution and the laws of the State impose a duty on the county treasurer-tax collector to levy a property tax sufficient to pay debt service on school bonds coming due in each year. The initiative power cannot be used to reduce or repeal the authority.and obligation to levy.such taxes which are pledged as security for payment of the Bonds or to otherwise interfere with performance of the duty of the district and the County with respect to such taxes which are pledged as security for payment of the Bonds. legislation adopted in 199'provides that Article XIIIC shall not be construed to mean that any owner or beneficial owner of a municipal security assumes the risk of or consents to any initiative measure which would constitute an impairment of contractual rights under the contracts clause of the U.S. Constitution. Article XIIib deals with assessments and property-related fees and charges. Article XIIICI explicitly provides that nothing in Article XIIIC or MID shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development; however it is not clear whether the initiative power is therefore unavailable to repeal or reduce developer and mitigation fees or assessments imposed by the district. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. Expenditures and Appropriations Article,X1118 of the California Constitution. In addition to the limits Articie XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and local governments are subject to an annual"appropriations limit"or"Gann Limit"imposed by Article XIIIB of the California Constitution, which effectively limits the amount of such revenues that government entities are permitted to spend. Article XIIIB, approved by the voters in .lune 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to "proceeds of taxes,"which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed "the cost reasonably borne by such entity in providing the regulation, product or service." "Proceeds of taxes" excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not"proceeds of taxes,"such as reasonable user charges or fees, and certain other non-tax funds. Article XII18 also does not limit appropriation of local revenues to pay debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in cases of emergency; however, the appropriations limit for the three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the 'emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. The State and each local government entity each has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Each school district is required to establish an appropriations limit each year. In the event that a school districts 13 revenues exceed its spending limit, the district may Increase Its appropriations limit to equal its spending by taking appropriations limit from the State. Proposition 111 requires that each agency's actual appropriations be tested against its limit every two years. If the aggregate"proceeds of taxes"for the preceding two-year period exceeds the aggregate limit,the excess must be returned to the agency's taxpayers through tax rete or fee reductions over the following two years, if the State's aggregate "proceeds of taxes" for the: preceding two-year period exceeds the aggregate limit,50%of the excess is transferred to fund theState's contribution to school and college districts. See "THE DISTRICT—Appropriations Limit" herein for the District's current year and budget year appropriations limit and appropriations subject to the limit. Future lrrltiatives. Article XIIIA,Article XIIIS, Article XIIIC,Article XIIID,as well as propositions 218 and 111, were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time rather initiative measures could be adapted,farther affecting District revenues or the district's ability to expend revenues. SCHOOL DISTRICT PROPERTY TAXATION Ad Valorem Property Taxation The district uses the services of the County for the assessment and collection of taxes for District purposes. School district prop"taxes are assessed and collected by the County at the same time and on the same rolls as county,special district and city property taxes. The valuation of secured property and a statutory tax lien is established as of January 1 and is subsequently equalized in August. The resulting secured property tax is payable in two equal installments due November # and,February 1, and payments become delinquent on December 10 and April 10, respectively. Most unsecured bills are mailed before July 31. These bills must be paid on or before August 31. If the bill is retailed after Julyy 31, the delinquent nate is extended to the end of the month following the bill's issuance. 'faxes on unsecured properly are levied at the preceding fiscal year's secured tax rater and become delinquent on September 1. State law exempts from taxation $7,000 of the cash va-lue of an owner-occupied dwelling provided that the owner files for such exemption. This exemption does not result in any kiss of revenue to local agencies,since the State reimburses local agencies for the value of the exemptions. Assessed Valuation All prop" is assessed using full cash value as defined by Article XlllA of the California Constitution. State lair provides exemptions from aid valorem property taxation for certain classes of property such as churches,colleges,non-profit hospitals,and charitable institutions. Future assessed valuation growth under Article XII€A (allowed for increases in value clue to new construction, certain changes of ownership, and an inflation allowance of not more than 2% per year)will be allocated on the basis of"situs" among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts will share the growth of"base"revenues from the tax rater area. Each year's growth allocation becomes part of each agency's alto-cation in the following year. For assessment and tax collection purposes, property is classified either as "secured" or "unsecured,"and is listed accordingly on separate parts of the assessment tall. The "secured roti"is that part of the assessment roll containing state-assessed property and property(real or personal) the taxes on which are secured by a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. All other property is"unsecured",and is assessed on the"unsecured roll". Assessments may be adjusted during the course of the year when real property changes ownership or now construction is completed. Taxpayers seeking a reduction may also appeal assessments. When necessitated by changes in assessed value in the course of a year, taxes are pro- rated for each portion of the tax year. 14 Pursuant to California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization (°SBE") with the appropriate county board of equalization or assessment appeals board (the "Appeals Board"). After the applicant and the assessor have presented their arguments,the Appeals Board makes a final decision on the property assessed value. The Appeals Board may rule in the assessor's favor, in the applicant's favor, or the Appeals Board may set their own opinion of the proper assessed value, which may be more or less than either the assessor's opinion or the applicant's opinion. Any reduction in the assessment ultimately granted applies to the year for which the application is made and may also affect the values in subsequent years. Refunds for taxpayer overpayment of property taxes may include refunds for overpayment of taxes in years after that which was appealed. Current year values may also be adjusted as a result of a successful appeal of prior year valines. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downwardwill require a refund of overpayment. Appeals for reduction in the °base year" value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The "base year" is determined by the completion date of new construction or the date of change of ownership. Any"base year"appeal must be made within four years of the change of ownership or new construction date. Some appeals are based on Section 51 of the Revenue and Taxation Code which requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the California Constitution or its full cash value, taking Into account reductions in value due to damage, destruction, depreciation, obsolescence,removal of property or other factors causing a decline in value. During the recession of the 1990's significant reductions took place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner. After a roll reduction is granted udder this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Counties and SBE have generally determined that such increases must be in accordance with the full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the California Constitution. Cance the property has regained its base year value, adjusted for inflation, it once again is subject to the maximum annual inflationary factor growth rate allowed under Article XIIIA. Utility Assessment A portion of property tax revenue of the District is derived from utility property subject to assessment by SBE. State-assessed property, or "unitary property, " is property of a utility system with components located in many taxing jurisdictions that are assessed as part of a "going concern" rather than as individual pieces of real or personal property. In the wake of electric utility deregulation in the State in the late 1990'x, county assessors appraised some electric generation plants. Starting January 1, 2003, SBE is now responsible for appraising all electric generation facilities in the State that generate over 50 megawatts (except co- generation plants and "qualifying facilities," as defined by the Federal Energy Regulatory Commission.) Initially,22 electric generation facilities were affected by this change and were added to the utility facilities already assessed by SBE. SBE appraises all property at market value. In general, the utility facilities that had been assessed by county assessors had been assessed at Proposition 13 values, which closely reflected market values at the time of deregulation. All utility property in the State is taxed a uniform'1'% rate plus locally approved tax"add-erns". In the past, tax revenues from county assessed utilities were distributed to taxing jurisdictions (including the District) according to statutory formulae generally based on the distribution of taxes in the prior year. For SBE-appraised utility property, SBE collects the property tax and sends it to each county in which the facility is located. Utility tax is then allocated by tax rate area and distributed to taxing jurisdictions in the same manner other county assessed secured taxes are allocated. 15 The District is unable to predict the impact of these changes on its utility property tax revenues,or whether legislation or litigation may affect the State's methods of assessing utility property and the allocation of assessed value to local taxing agencies including the District. Because the District is not a basic aid district, any taxes lost due to a reduction in, or transfer to another jurisdiction of, utility property assessed valuation will be compensated by the State as equalization aid under the State's school financing formula. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION—Allocation of State Funding to Districts,"herein. The historical secured and unsecured assessed valuation for this District is listed below: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Five-Year Summary of Assessed Valuation fiw Y Lalali 1999100 $42,156,311,974 $38,694,311 $805,325,851 $12,810,332,136 20003/01 12,891,483,345 38,578,988 803,952,252 43,733,514,955 2004102 14,425,070,001 50,470.907 819,530,920 15,295,071,828 20021133 15,264,716,553 47,769,561 845,837,829 16,158,323,943 2003104 16,523,400,415 47,437,220 832,007,819 17,402,845,454 Soures: California Music€pal Statistics, Inc. Tax Levies, Collections and Delinquencies A 10% penalty attaches to any delinquent payment for secured roll taxes. In addition, property on the secured roll for which taxes are delinquent becomes tax-defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to auction sale by the Treasurer. Collection efforts against a taxpayer who has sought protection from creditors in United States Bankruptcy Court, or against secured property the value of which has been compromised by environmental contamination or natural disaster, may be fruitless to recover unpaid taxes due with respect to such property. In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1.5%v per month begins to accrue beginning November 1st of the fiscal year, and a lien is recorded against the assessees. The taxing authority has four ways of collecting unsecured personal property taxes: (a) filing a civil action against the taxpayer; (b)filing a bond in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on specific property of the taxpayer, (c) filing a bond of delinquency for record in the County Recorder's office in order to obtain a lien on specified property of the taxpayer; and (d) seizing and selling personal property, improvements or possessory interests belonging or assessed to the taxpayer. Teefer Plan and Tax Losses Reserve Fuad, The County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in Section 4701 of seq. of the California Revenue and Taxation Code and has created a tax losses reserve fund. Under the Teeter Plan, each participating local agency, including school districts, levying property taxes in the County receives the amount of uncollected taxes credited to its fund, in the same manner as if the amount credited had been collected. In return, the County receives and retains delinquent payments, penalties and interest as collected,that would have been due the local agency. The Teeter Plan is to remain in effect unless the County Board of Supervisors orders its discontinuance or unless, prior to the commencement of any fiscal year of the County(which commences on ,July 1), the Board of Supervisors receives a petition for its discontinuance from two thirds of the participating revenue districts in the County. The board of supervisors may,after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency in its county in which delinquencies exceed 3% in any tax year. 16 The secured historical tax levy and year-end delinquencies for all ad valorem taxes levied within the District's boundaries are shown in the following table: WEST CONTRA COSTA UNIFIED SCHOOL.DISTRICT Secured Tax Charges and Delinquencies Amount Delinquent Percent Delinquent Fiscal YAC Swcyred Tax Charm{'3 asluneU #, 10 1998/99 $164,796,928.88 $4,514,971.68 2.74% 1999/00 168,950,049.54 3,972,878.70 2.35 2000101 178,796,036.92 4,603,055.60 2.57 2001102 195,044;021,02 4,881,720.67 2.50 2002103 212,918,218.87 5,206,917.27 2.45 Ali taxes collected by the County within the District, Source. California Municipal Statistics,Inc. Tax Rates For taxiing purposes, the State Board of Equalization has divided the area served by the District into tax rate areas ("TRA"). The largest TRA in the District is TRA 08001. TRA 08001 has a total 2003/04 assessed valuation of $4,528,858,772, approximately 1.26% of the District's total assessed value. The components of the 20008/04 property tax rate levied in TRA 08001 are set forth below. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Tax Rate Components—TRA 08001 203104 Rata General ixt 1. W City of Richmond .4400 East Bay Regional Park District .0057 West Contra Costa!Unified School District .1064 Contra Costa Community College District 00 8 Total 1.255% Maximum rate for purposes other than paying debt service in accordance with Article XIIIA of the State Constittrtion, Source: California Municipal Statistics,Inc, 17 Major Taxpayers The 20 largest taxpayers in the District, as shown on the 20031114 secured tax roil, and the amounts of their assessed valuation for a€l taxiing jurisdictions within the District, are shown bye€ow. Assessed valuation for the 20 largest taxpayers amounted to $2,864,340,442 or approximately 17.34%0 of the Districts total 2003/014 secured tax roll. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Major Taxpayers 2003104 Fri g Land Uses �Ce'Ton :.A tnc. #ndustriai 1,914,94718,2 I81 ! ` 9 r Sertex Laboratories Inc. lndtztriai 140,032,249 0.85 Bio-Rad Laboratories Inc. Industrial 83,861555 0.51 Dison Fibetoptics Inc. Industrial 73,283.067 0.44 Richmond Associates LLC Shopping Center 64,257,164 0.39 Regency Realty Group Inc. Shopping Carrier 62,608,261 0.38 Watch HoIdIrQs LLC Apartments 56,103,288 0.34 Richmond Essex LP Apartments 46,523,125 0.28 Developers Diversified Realty Corp. Shopping Center 46488;305 0.28 security Capital Pedfic Tnw Apartments 44,809,461 0.27 Cherokee Simeon Venture 1 Office Building 42,200,000 0.26 William Lyon Homers Inc. Residential Development 34,679,189 021 Mervyn's f Dayton Hudson Corp. Shopping Center 34,181,677 0.21 Steadfast Hilltop Common Apartments 33,971,100 0.21 Point Richmond R&D Associate's 11 LLC Industrial 32,148;800 0.19 Wam*xjton Hercules Associates. Residential Development 32,089,263 0.19 Stasiscape Inc. Industrial 30,99 5,817 0.18 National Gypsum Company Industrial 30,754,866 0.19 8ri�a Housing Acquisition Apartments 30,303,254 0.18 SP VYest Coast Products Industrial A,� 0-11 to 2003104 Total Local Secured Assessed Valuation:$16,523;400,415. > l Source, California Municipal Statistics,Inc. Chevron USA, Ina, the largest taxpayer In the District, currently represents 11.59% of the total local secured assessed valuation. Below are historical local secured assessed valuations of Chevron USA.Inc.,as of January 1 of each year. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT History of Secured Assessed Valuation Chevron USA,Inc. 1 11,708,027 1994195 1,889,968,323 1995196 2,044,953,751 1996197 2,1005,073,633 1997198 1,885,402,056 1998W 1,791,637,701 1999100 1,811,178,226 2000101 1,656,340,976 2001102 2,215,633,236 2002103 1,974,950,102 2003104 1,514,978,281 Source; California Municipal Statistics,Inc. 15 GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION The Information in this section concerning the State funding of public education Is provided as supplementary information only, and it should not be interred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable from State revenues. The Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient to make such payments. See 'THE BONDS — Security and Sources of Payment" and"SCHOOL DISTRICT PROPERTY TAXATION"herein. State Funding of Education General. The California Constitution requires that from all State revenues there shall first be set apart the moneys to be applied by the State for the support of the public school system and public institutions of higher education. California school districts receive a significant portion of their funding from State appropriations. State income tax and other receipts can fluctuate significantly from year to year, depending on economic conditions in the State and the nation. As a result, decreases in State revenues can affect appropriations made by the Legislature to school districts. In periods when State funding for public education is reduced or the State experiences budget problems, the District's financial position may be affected, even in the absence of significant education policy changes. The District cannot predict how State income or State education funding will vary over the entire term to maturity of the Bonds. As is true for all school districts in California, District operating income consists of four components: (1) Revenue Limit Sources(consisting of a mix of State and local property tax revenues), (2) Federal Sources, (3) Other State Sources and (4) Other Local Sources. The Revenue Limit Sources includes both a State portion funded from the State's general fund and a locally-generated portion derived from the District's share of the I% local ad valorem property tax authorized by the California Constitution. In addition, school districts may be eligible for other funding, including State and Federal program funding, as well as revenue derived from local sources besides property taxes. See "— Allocation of State Funding to Districts"and"—Other Sources of Education Funding"below. State Budget. According to the California Constitution, the Governor is required to propose a budget to the Legislature no later than January 10 of each year, and a final budget must be adopted by a two-thirds vote of each house of the Legislature no later than June 15. The budget becomes law upon the signature of the Governor, who retains veto power over specific items of expenditure. For information about recent developments regarding the State's economy and finances and on recent and current State budgets,see"STATE BUDGET"herein. Proposition 98. On November 8, 1988, voters of the State approved Proposition 98,a combined initiative constitutional amendment and statute called the "Classroom Instructional Improvement and Accountability Act." Proposition 98 changed State funding of public education below the university level, primarily by guaranteeing K-14 schools a minimum share of State general fund revenues. Proposition 98 (as modified by Proposition 111, enacted on June 5, 1990)guarantees K-14 schools the greater of: (a) in general, a fixed percentage of State general fund revenues ("Test 1"), (b) the amount appropriated to K- 14 schools in the prior year, adjusted for changes in the cost of living (measured as in Article X111 B by reference to State per capita personal income) and enrollment ("Test 2"), or (c) a third test, which replaces Test 1 and Test 2 in any year the percentage growth in per capita State general fund revenues from the prior year plus one half of one percent is less than the percentage growth in State per capita personal income ("Test 3"). Under Test 3, schools receive the amount appropriated in the prior year adjusted for changes in enrollment and per capita State general fund revenues, plus an additional small adjustment factor, If Test 3 is used in any year, the difference between Test 3 and Test 2 becomes a "credit" (called the "maintenance factor") to schools and the basis of payments in future years when per capita State general fund revenue growth exceeds per capita personal income growth. Proposition 98 implementing legislation adopted prior to the end of the 1988/89 fiscal year determined the K-14 schools' funding guarantee under Test I to be 40.3% of the State general fund tax revenues, based on 1986187 appropriations. However, this funding guarantee has been adjusted to approximately 35% of 1986/87 appropriations to account for subsequent changes in the allocation of local property taxes, since these changes altered the share of State general fund revenues received by schools. Proposition 98 also contains provisions for the transfer of certain State tax revenues in excess of the Article XIII B limit to K- 14 schools in Test 1 years when additional moneys are available. 19 .....................................I......................................................................................................................................................................................... The Proposition 98 guarantee is funded from two sources: local property taxes and the State general fund. Any amount not funded by local property taxes is funded by the State general fund. Thus, local property tax collections represent an offset to State general fund costs in a Test 2 or Test 3 year. Proposition 98 permits tate Legislature, by a two-thirds vote of both and with the Governor's concurrence, to suspend the K-14 schools' minimum funding guarantee for s one-year period. Restoration of the Proposition 98 funding level to the level that would have been required in the absence of such a suspension occurs over future fiscal years according to a specified State constitutional formula. Allocation of State Funding to Districts Under Education Code Section 42238 et saq. each school district is determined to have a target funding level: a revenue limit ("Revenue Limit") per student multiplied by the district's student enrollment measured in units of average daily attendance ("ADA"), a measure used upon the actual attendance Of students without provision for excused absences. Enrollment can fluctuate due to factors such as district population, competition from private,parochial, and public charter schools, inter-district transfers in or out, and other causes. Losses in enrollment will lower a school district's Revenue Limit (and may result in loss of operating revenues), without necessarily permitting the district to make adjustments in fixed operating casts. The Revenue Limit Is calculated from the district's prior-year funding level, as adjusted for a number of factors such as inflation, special or increased instructional needs and costs, and especially low enrollment. Generally,the amount of State funding allocated to each school district is the amount needed to reach that district's Revenue Limit after taking into account certain other revenues, in particular, locally generated property taxes. This is referred to as State"equalization aid" or colloquially as "backfill". To the extent local tax revenues increase due to growth in local property assessed valuation, the additional revenue is offset by a decline in the State's contribution. A school district's property tax revenues Is comprised of the district's share of the local 1% property tax, received pursuant to Sections 75 et seq. and Sections 95 et seq. of the California Revenue and Taxation Code. Education Code Section 4228(h) itemizes the local revenues that are counted towards the base revenue limit before calculating how much the State must provide in"equalization aid." The more local property taxes a district receives,the less State equalization aid it is untitled to, ultimately, a school district whose local property tax revenues exceed its Revenue Limit is entitled to receive no State equalization aid, and receives only its special categorical aid and the"basic aid"of$120 per student per year guaranteed by Article IX, Section 8 of the California Constitutions. Such districts are known colloquially as "basic aid districts". Districts that receive some equalization aid may be referred to as "revenue limit districts". The District is not a"basic aid district," See "THE DISTRICT - Average Daily Attendance and Revenue Limit" for historical and projected ADA and Revenue Limit per ADA of the District. Other Sources of Education Funding In addition to the Revenue Limit, school districts in the State may receive other revenue from the State and from federal and local sources including grants and funding for specific programs. Federal Revenues. The federal government provides funding for several programs, Including special education programs, programs under the Educational Consolidation and Improvement Act (Title 1),No Child Left Behind funding,and specialized programs such as Drug Free Schools. Other State Revenues. in addition school districts receives Other State Revenues. These Other State Revenues are primarily restricted revenues that fund items such as special education programs, K-- 3 class size reduction,staff development and Healthy Start. Included among Other State Revenues are moneys the school district receives from the California State tottery(the"Lottery"), which was established by a constitutional amendment approved in the November 1984 general election. Lottery revenues must be used for the education of students and cannot be used for non-instructional purposes, such as real property acquisition, facility construction, or 20 the financing of research. State Lottery net revenues (gross revenues less prizes and administration expenses)are allocated by computing an amount per ADA or full time equivalent(*FTE"). This figure is derived by dividing the total net revenues figures by the total ADA for grades K-12 and.community colleges, and by the total FTE for the University of California system and the California State University and College system. Each entity receives an amount equal to its total ADA or FTE, as applicable, multiplied by the per ADA or FTE figure. See "THE DISTRICT — Lottery Income" for tottery income amounts received by the District. Other Local Revenues. In addition to property taxes, a school district may receive additional local revenues from items such as the leasing of property owned by the school district, fees collected for providing bus transportation for children, and interest earnings. District Budget Process and County Review State law requires school districts to maintain a balanced budget in each fiscal year. The State Department of Education imposes a uniform budgeting and accounting format for school districts. Under current law, a school district governing board must adopt and file with the county superintendent of schools a tentative budget by Ju€y 1 in each fiscal year. The District is under the jurisdiction of the Contra Costa County Superintendent of Schools('County Superintendent°). A county superintendent of schools must review and approve or disapprove the budgets for each district under its jurisdiction no later than August 15. The county superintendent of schools is required to examine a district's adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance with the established standards. If a budget is disapproved, it is returned to the district with recommendations for revision. The district is then required to revise the budget, hold a public hearing thereon, adopt the revised budget and file it with the county superintendent of schools no later than September 1. Pursuant to State law, the county superintendent of schools has available various remedies by which to impose and enforce a budget that complies with State criteria, depending on the circumstances, if a budget is disapproved. After approval of an adopted budget, the district's administration may submit budget revisions for governing board approval. Subsequent to approval, the county superintendent of schools will monitor each district in its jurisdiction throughout the fiscal year pursuant to its adopted budget to determine on an ongoing basis if the district can meet its current and subsequent year financial obligations, If the county superintendent of schools determines that the district cannot meet its current or subsequent year obligations, the county superintendent of schools will notify the district's governing board of the determination and may then do either or both of the following: (a)assign a fiscal advisor to enable the district to meet those obligations or (b) if a study and recommendations are made and a district fails to take appropriate action to meet its financial obligations, the county superintendent will so notify the State Superintendent of Public Instruction, and then may do any or all of the following for the remainder of the fiscal year: (1) request additional information regarding the districts budget and operations; (ii) develop and impose, after also consulting with the district's governing board, revisions to the budget that will enable the district to meet its financial obligations; and (IN)stay or rescind any action inconsistent with such revisions. However, the county superintendent of schools may not abrogate any provision of a collective bargaining agreement that was entered into prior to the date upon which the county superintendent of schools assumed authority. A State law adopted in 1991 (known as "AB 1200") imposed additional financial reporting requirements on school districts, and established guidelines for emergency State aid apportionments. Under the previsions of AB 1200, each school district is required to file interim certifications with the county superintendent of schools (on December 15, for the period ended October 31, and by mid-March for the period ended January 31) as to its ability to meet its financial obligations for the remainder of the then-current fiscal year and, based on current forecasts, for the subsequent fiscal year. The county superintendent of schools reviews the certification and issues either a positive, negative or qualified certification. A positive certification is assigned to any school district that will meet its financial obligations for the current fiscal year and subsequent two fiscal years. A negative certification is assigned to any school district that is deemed unable to meet its financial obligations for the remainder of the fiscal year or subsequent fiscal year. A qualified certification is assigned to any school district may not meet its financial obligations for the current fiscal year or two subsequent fiscal years. A school district that 21 receives a qualified or negative certification may not issue tax and revenue anticipation notes or certificates of participation without approval by the county superintendent. The Districts latest interim report,as of January 31,2004,was certified"positive" by the County Superintendent. County Investment Pool In accordance with Education Code Section 41001, each California public school district maintains substantially all of its operating funds in the county treasury of the county in which it is located. Each county treasurer serves as ex officio treasurer for those school districts under jurisdiction of the county superintendent of schools of the county. Each county treasurer has the authority to implement and oversee the investment of school district funds held in the county treasury. Generally, the county treasurer pools county funds with school district funds and funds from certain other public agencies and invests the cash. These pooled funds are carried at cost. Interest earnings are accounted for on either a cash or accrual basis and apportioned to pool participants on a regular basis. Each county is required to invest funds, including those pooled funds described above, in accordance with California Government Code Section 53601 at seq, In addition, each county is required to establish its own investment policies, which may provide further limitations beyond those required by the California Government Code. See "COUNTY INVESTMENT POLICIES AND PRACTICES" for a discussion of the County investment pool,valuation procedures, and investment policies. Accounting Practices The accounting policies of the District conform to generally accepted accounting principles In accordance with policies and procedures of the State School Accounting Manuel. This manual,according to Section 41010 of the Education Code, is to be followed by all State school districts. Revenues are recognized in the period in which they become both measurable and available to finance expenditures of the current fiscal period. Expenditures are recognized in the period in which the liability is incurred. The District retains an independent auditor (the "Auditor") and excerpts of its audited financial report for fiscal year ended June 20, 2003, are attached hereto as "APPENDIX S —EXCERPTS FROM DISTRICT'S 2002/03 AUDITED FINANCIAL STATEMENTS." The District considers its audited financial statements to be public Information, and accordingly no consent has been sought or obtained from the Auditor in connection with the inclusion of such statements in this Official Statement, The Auditor has made no representation in connection with inclusion of the audit excerpts herein that there has been no material change in the financial condition of the District since the audit was concluded. STATE BUDGET The State has not entered into any contractual commitment with any party related to this financing to provide State budget information. Although the State sources of information listed below are believed to be reliable, the District, the Financial Advisor, and the Underwriter assume no responsibility for the accuracy of the State budget information set forth or referred to herein. Information about the State budget and State spending for education is regularly available at various State-maintained websites. Text of the budget may be found at the website of the Department of Finance at www.dof.ca.gov, under the heading"California Budget". An unpartial analysis of the budget is posted by the Office of the legislative Analyst at www.lao.ca.gov. In addition, various State of California official statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on school districts in the State, may be found at the wa bsite of the State Treasurer at www.treasurer.ca.gov. The discussion below of the fiscal year 2003104 and 20041d5 budgets are based on estimates and projections of revenues and expenditures for the current fiscal year and future fiscal years and must not be construed as statements of fact. These estimates and projections are based upon various 22 assumptions, which may be affected by numerous factors, including future economic conditions in the State and the nation, and there can be no assurance that the estimates will be achieved. The Budget Process According to the California Constitution, the Governor is required to propose a budget to the Legislature no later then January 10 of each year,and a final Budget Act must be adopted by a two-thirds vote of each house of the legislature no later than June 15. The budget becomes law upon the signature of the Governor,who retains veto power over specific items of expenditure. Recent Developments Regarding Stage Economy and Finances Following a severe recession in the early 1990s, the State's economy grew strongly between 1994 and 2000, generally outpacing the nation, and as a result, for the five fiscal years from 1995196 to 1999100, the State's general fund tax revenues exceeded the estimates made at the time the budgets were enacted. These additional funds were largely directed to school spending as mandated by Proposition 98. In recent years, the State has experienced a decline in State revenues attributable in large part to declines in personal income tax receipts including, particularly,stock market related income tax revenues, such as capital gains realizations and stock option income. The State estimates that stock market related revenue declined from $17.6 billion in fiscal year 2000101 to $8.6 billion in fiscal year 2001[02,and to$5.2 billion in 2002103, a total decline of 70%. Total personal income tax revenue declined from $44.6 billion to $32.7 billion in the same period. The State's economy continued to grow slowly through the and of 2003. Recall Election. At a special election held on October 7, 2003, the Governor, Gray Davis, was recalled and replaced by Arnold Schwarzenegger. The 2004105 Governor's Budget. The 2004/05 Governor's Budget, released on January 9, 2004 by Governor Schwarzenegger, reported that in the absence of structural corrective actions to change existing policies, operating deficits, then estimated at $14 billion in 2004105, would continue to be Incurred. See"—Fiscal Year 2004105 Budget"below. March 2004 Election and Economic Recovery Bond Sale. Two measures intended to address the existing cumulative budget deficit and to implement structural reform were berth approved at the March 2, 2004, statewide primary election. The Balanced Budget Amendment(Proposition 58), requires the State to adopt and maintain a balanced budget and establish an additional reserve, and restricts future long-term deficit-related borrowing. The second measure,The California Economic Recovery Bond Act (Proposition 57) authorizes the issuance of up to $15 billion of economic recovery bonds (the "Economic Recovery Bands") to finance the negative State general fund reserve balance as of June 30, 2004, and other State general fund obligations undertaken prior to June 30, 2004. Three series of Economic Recovery Bonds have been issued, which provided approximately $11.254 billion of net proceeds to the State general fund. The Economic Recovery Bonds are being issued in lieu of "fiscal recovery bonds" previously authorized by the California Fiscal Recovery Financing Act (Government Code Section 99000 et seq.). In connection with the issuance of the bonds, the Department of Finance certified that the State had accumulated an inherited debt of more than $22 billion, consisting of a $9.3 billion accumulated deficit through 2002103, a$3.0 billion operating deficit in 2003104, and $9.8 billion of debt to be repaid in fiscal years 2004105 and thereafter for prior obligations. The Economic Recovery Bonds are secured by a pledge of revenues from an increase in the State's share of the sales and use tax of one-quarter cent beginning July 1, 2004. The share of the tax going to local governments will be reduced by the sante amount and, in exchange, local governments will receive an increased share of the local property tax (and K-14 districts a reduced share) during the time the one-quarter cent is being used to pay off the bonds (estimated to be between 9 and 14 years). This shift in revenues between the state and local governments is known as the "triple flip." On May 5, 2004, the State sold $7.9 billion of Economic RecoveryBonds. See"--Fiscal Year 2003104 Budget"and"—Fiscal Year 2004106 Budget"below. 23 Prior Fiscal Years`Budgets 2001 Budget Act. The 2001 Budget Act(far fiscal year 2001/02) was signed by Governor Davis on July 26, 2001. The spending plan included spending reductions of$1.3 billion from the prior year and utilized more than half of the budget surplus. The final estimate of fiscal year 2001/02 revenues and expenditures showed an unprecedented drop in revenues compared to the prior year. The final estimate for the three largest tax sources was$59.7 billion,a drop of over$13 billion from 2000/01;the vast bulb of which was attributable to reduced personal income taxes from stock options and capital gains activity. 2002 Budget Act. The 2002 Budget Act (for fiscal year 2002103) was signed by Governor Davis on September 5, 2002. The 2002 Budget Act addressed the$23.6 billion gap between expenditures and resources through a combination of program reductions, inter€und borrowings, fund shifts, payment deferrals,accelerations and transfers,debt service restructuring savings and modest tax changes. Within a few months after the 2002 Budget. Act was adopted, it became evident that revenue projections incorporated In the 2002 Budget Act were substantially overstated and that certain program cost savings included in the 2002 Budget Act would not be realized. In late November 2002, Governor Mavis directed State agencies to take Immediate action to reduce any non-critical or non-essential activities. In the spring of 2003, the Legislature passed bud at adjustment legislation, totaling about $10.4 billion in spending reductions, deferrals and funding. he largest part of the reductions was for K-12 education funding. Fiscal Year 2003104 Budget 2003 Budget Act. After months of negotiation between Governor Davis and the Legislature, the 2003 Budget Act (for fiscal year 2003/04)'wars adopted by the Legislature on July 29, 2003, along with a number of implementing measures, and signed by Governor Davis on August 2, 2003. The 2003 Budget Act largely reflected the proposals contained in the May Revision to the 2003/04 Governor's Budget, including, most significantly, the issuance of "fiscal recovery bonds" to address the budget deficit accumulated through June 30, 2003, which was estimated to be $10,675 billion at that time. See Recent Developments Regarding State Economy and Finances"above. Fiscal Year 2004/05 Budget The Govemor's Budget, On January 9, 2004, Governor Schwarzenegger released the 2004/05 Governor`s Budget. The Governor proposed a budget that dealt with a roughly $17 billion estimated shortfall. About$5 billion of the January solution was related to the use of bond proceeds authorized by Proposition 57, anticipated to be approved by the voters at the March 2004 election. After voter approval, of Proposition>57 and Proposition 58 in March 2004, the state was thus left with a $12 billion shortfall, which the 2004/05 Governor's Budget proposed to close through a variety of,spending reductions,funding shifts, additional borrowing, and a diversion of local property taxes for the benefit of the state. See "-- Recent Developments Regarding State Economy and Finances"above. Possible impacts on K-12 education funding as reported by the State's Legislative Analyst's Office includes the following: • The Governor's Budget proposal suspends the Proposition 98 minimum guarantee by$2 billion in 2004105. It also spends below the minimum guarantee in 2002/03 and 2003/04 by a combined $966 million, but does not suspend for these years, thereby creating a .settle-up"obligation. • An estimate that the state would end 2004105 with a $3.8 billion debt to K•14 education under the 2004105 proposed budget. The 2004105 May Revision. The 2004105 Governor's Budget May Revision("Thea May Revision") was released can May 13, 2004. The May Revision proposes about $17 billion in solutions to cover the fiscal shortfall that remains after taking into account both new resources and the offsetting cost increases related to higher caseloads, court decisions, and erosion of savings related to the proposedmid-year spending reductions. Key features of the May Revision include: 24 1. About $5.4 billion of the solutions are related to program reductions and savings. These include the suspension of Proposition 98, reductions in higher education, elimination of social services cost-of-living adjustments,and savings related to employee compensation and contracting. 2. About $2.7 billion of the solution is related to the used of $11.3 billion of voter approved Economic Recovery Bonds. Another$1.3 billion is related to lower annual debt service related payments on the Economic Recovery Bonds in 2004105 compared to the "fiscal recovery bonds" previously authorized. 3. Other loans and borrowing account for $3.8 billion in savings. These include the proposed pension obligation bond, the Proposition! 98 settlement loans from education, and increase In the vehicle license fee"gap°loan from local governments,and the Proposition 42 loan from transportation. 4. The remainder is related to various fund shifts, transfers, and revenues. This category includes student fee Increases along with assumed increase in federal funds. Specifically, the May Revision retains the January proposal to suspend Proposition 98 and provide $2 billion less than the guarantee. The May Revision also modestly increases K-12 funding from the January proposal for various purposes. 0}verall, about $5 billion of the May Revision solutions are strictly one time in nature. These include the use of$2 billion in Economic Recovery Bond proceeds; $1 billion in pension obligation bond proceeds; $1.2 billion related to the loan of Proposition 42 funds from transportation special funds; and a variety of one-time savings from the Medi-Cal program, special fund loans, and other funding shifts. The Legislative Analyst Office comments that the State's near-term fiscal picture brightened significantly in the May Revision, although an imposing structural budget problem still exists that will require further major action in the future. The District cannot predict,when and in what form,the 2004105 Budget will actually be adopted. THE DISTRICT The information in this section concerning the operations of the District and the District's operating finances is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Oficial Statement that the principal of or interest ort the Bonds is payable from the general Fund of the DistricL The Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. See "SCHOOL DISTRICT PROPERTY TAXATION" and "THE BONDS -- Security and Sources of Payment': Investors` attention is directed to the information in this section concerning District Debt Structure and Statement of Direct and Overlapping Debt which contain information about certain bond obligations payable from ad valorem taxes. General Information The District, unified in November 1964, is located approximately 15 miles northeast of San Francisco, California and consists of approximately 1101 square miles in western Contra Costa County. It provides educational services to the residents of the cities of EI Cerrito, Hercules, Pinole, Richmond and San Pablo, the unincorporated communities of El Sobrante and Kensington and certain other unincorporated areas in the County. The District maintains 40 elementary schools, 6 middle/junior high schools, 1 middle/high school, 5 comprehensive high schools, 1 alternative high school, 6 continuation high schools, 1 specialized school serving Independent study students, 1 adult education center, 2 special education sites and 9 state-funded preschools. The pupi€-teacher ratio in the District is 28;1. 25 Average Daily Attendance and Revenue Limit The District computes ADA based on actual attendance only, with no allowances for excused absences. The following table sets forth the ADA based on the Second Period Report of Attendance for the past four years and an estimate for 2003104: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Average DailyAttendanca 6QWmrnic Year A ill.Atteridame 2000/01 31,771 2WI102 32,398 2002103 32,398 2003/04 32,343 2004/05 projected 31,4213 Nate: includes grade levels K—12 and special education, Source: The District. The district's annual revenue limit per ADA was $4,836.20 for 2003/04 and is projected to be $4,966.13 for 2004/05. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION — Allocation of State Funding to district"herein. Appropriations Limit The District had a 2003104 appropriations limit of $178,167,220 and had appropriations subject to the limit of $168,670,534. The District projects a 20104105 appropriations limit of $177,270,104 and appropriations subject to the limit of $175,183,288. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS --- Limitations on Revenues"herein. Lottery Income The District's State Lottery revenue is estimated to be $4,267,362 for 2003104 and is projected to be$4,149,062 for 2004105. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION--Other Sources of Education Funding"herein. 26 Labor Relations The District employs 1,987.34 full-time equivalent ("FTE") certificated and 900.10 FTE classified employees including management and confidential employees. The following table summarizes the labor organizations in the District. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Labor Organizations Labor QMnization umber of Emnlovees Contract Expiration i1} United Teachers of Richmond 1,935 full-and part-time June 30,2005 Public Employees Union,Local 1 957 full-and part-time June 30,2005 School Supervisors Association 93 full-and part-time June 30,2005 Administrators Association 107 full-and part-time June 30,2005 t»All contracts are subject to annual reopeners. Source: The District. Retirement Programs The District participates in the State Teachers Retirement System ("STRS"). This plan covers all full-time certificated employees. In order to receive SIRS benefits, an employee must bre at least 55 years old and have provided five years of service to California public schools. The District's actual contribution to SIRS for fiscal year 2003104 is estimated to be $9,950,732 and in fiscal year 2004/05 is expected to be$8,937,102. The District also participates in the State Public Employees Retirement System ("PERS"), This plan covers all classified personnel who are employed more than four hours per day. In order to receive PERS benefits, an employee must be at least 50 years old and have provided five years of creditable service in PERS. The District's actual contribution to PERS for fiscal year 2003104 is expected to be $3,783,640 and is projected to be$3,075,731 for 2004/05. See the notes to the District's audited financial statements, which are excerpted and contained in "APPENDIX B"for additional information concerning SIRS and PERS. Assessment District On August 3, 1994, the District completed formation of a Maintenance and Recreation Assessment District("MRAD") pursuant to the Landscape and Lighting Act of 1972. Annual assessments are $72 per living unit (a single-family residence is a "living unit"; for multi-family housing the number of living units are assigned on a sliding scale according to the number of apartments in the complex). There are approximately 70,000 defined living units within the MRAD. The District has received approximately $5 million annually in assessment revenue since 1994/95. On November 5, 1996, the MRAD received over two-thirds majority approval at the general election. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUE AND APPROPRIATIONS -- Limitations on -Revenues.*' The use of MRAD revenue is restricted to expenditures for recreation, lighting, and landscape operations and maintenance; it does not count towards the District's revenue limit and effectively relieves the District from funding these expenditures from general fund revenue. MRAD assessments must be levied annually by the District Board acting in its capacity as the MRAD governing board. 27 _...........................................................................................................................__.._...._... - - ............................................................................................................................................................................................................................................................................................................................ Comparative Financial Statements The following table summarizes the District's General Fund revenue, expenditures.and fund balances for the fiscal years 2000/01 through 2003104 and budgeted revenue, expenditures and fund balance for the fiscal year 2004/05. Beginning with the 2001102 audited financial statements, the State Controller's office Includes In the General Fund the revenue of approximately $5 million annually from the District's f!ARAD and the corresponding expenditures, which were excluded In prior years. See"Assessment District"in this section. WEST CONTRA COSTA UNIFIED SC1400L DISTRICT General Fund Revenues,Expenditures and Fund Balance* 2000101 through 2004105 (in Thousands) 2003/04 2004105 20001% 2001/0 2002/9 Esimat1 Adopt Actual Aglu3l 62 w.0# Aawal REVENUE Revenue limit Sources $145,105 $154,348 $158,488 $156,771 $158,324 Federal Revenue 17,378 20,064 22,445 34,196 22,668 Other State Revenue 56,188 71,601 63,570 57,255 52,260 Other Local Revere 7,807 15.072 TOTAL REVENUE $235,771 255,535 $253,453 $256,029 $248,324 EXPENDITURES Cert&Ated Salaries $111,534 $115,804 $119,354 $119,105 $107,109 Classified Salaries 33,383 39,100 39,673 39,117 34,188 Employee Benefits 34,282 40,429 45„982 53,904 56,906 State cin-behalf Payments -- 4,833 - -- - Books and supplies 10,573 17,978 12,703 15,170 19,081 Services/Other Operating Exp. 29,771 32,313 33,778 38,346 27,187 Capital Outlay 3,471 1,172 888 1,213 661 Other Outgo 2,842 252 1,013 1,310 1,480 Direct SupportAndirect Costs (623) (473) (730) (768) (872) Debt Service TOTAL XPE DITURESi43 $227, $251,519 $252,662 267,399 $245,761 EXCESS OF REVENUE.OVR/ (UNDER)EXPENDITURES $ 8,413 $ 4,016 $ 791 ($11,370) $ 2,562 OTHER FINANCING SOURCES/(USES) Transfers In/Other Sources $ -4 $ 23 $ 180 $ - $ 174 Tranefg?Out/tither uses L4, (2,6841 ,Q.559) 11,0291 X22 TOTAL $(4,663) $ (2,661) $ (2,379) ($15,232) ($ 2,562) BEGINNING FUNIS BALANCE, JULY 1 $21,085 $ 26,0450} $ 27,400 $25,811 $12,726 ENDING FVND BALANCE, JUNE 3014e (1)Excerpted from the District's respective Audited Financial Reports. 123 Estimated,based on the District's Estimated Actuals as of July 15,2004. l31 Estimated based on Districts Adopted Budget as of July 15,2004, £4I Items may not add to totals due to independent rounding. i63 The beginning fund balance in 2001102 includes MRAD revenue and corresponding expenditures which were excluded in 2000101. 28 District Debt Structure Emergency Apportionment Loans -- In July 1990, the District obtained ars emergency apportionment loan from the State of California In the amount of$9,525,000. In May of 1991,the District received an additional loan from the State of California for $19,0010,000. On June 30, 1993, the State agreed to restructure the payment of these loans by consolidating therm into a single Ivan with a 15-year repayment period (the "State Loan"). Subsequent legislation,AB 437 signed by the Governor on October 13, 1997, amortizes over 20 years the $21,919,651 State Loan remaining after the February 1998 payment. loan payments are made on February 1 of each year from any available funds of the District. A schedule of State loan payments remaining is shown below. See "PRIOR FINANCIAL HISTORY OF THE DISTRICT—Loans From the State of California","—AS 535"and"—AS 437"herein. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Payment of State Loan fear End€na,lune 30 Amount Due 2405 $ 11863,550 2006 1,863,554 2407 1,863,554 2008 1,863,554 2009 1,863,550 Thereafter 16171,N5 Total ¢ e ag 7 5 General Obligation Bonds – On June 2, 1998, the District received authorization to issue $40 million in general obligation bonds (the "1998 Authorization.") All of the bonds under the 1998 Authorization have been issued. The District received a letter dated March 11, 2004,from the Internal Revenue Service(the"IRS") advising that the $10,000,000 of bonds issued under the 1998 Authorization in August 1998 (the "1998 Series A Bonds") have been selected for examination as part of an IRS initiative involving "yield burning.' That letter requested that certain items be delivered to the IRS with respect to the 1998 Series A Bonds and the District hes compiled with the request. The IRS has not asserted that the interest on the 1998 Series A Bonds is subject to inclusion in the gross income of the owners thereof and the District does not believe there is a basis for any such assertion. However, no assurance can be given that the IRS will not make a demand or claim relating to the tax-exempt status of the 1998 Series A Bonds. The District will use its best efforts to take any reasonable actions, including settling any possible claims or demands from the IRS, to preserve the tax- exempt status of the 1998 Series A Bonds. Regardless of the outcome of the IRS examination of the 1998 Series A Bonds,the Bonds should not be affected thereby. On November 7, 2000, the District received authorization to issue $150 million in general obligation bonds under the 2000 Authorization (the"2000 Authorization"), All of the bonds under the 20030 Authorization have been issued. On March 5, 2002, the District received authorization to issue $3001 million in general obligation bonds (the "2002 Authorization"). The District has issued $30 million aggregate principal amount of general obligation bonds dated .lune 1, 2002, and $100 million aggregate principal amount of general obligation bonds dated August 1, 2003, under the 2002 Authorization. Following issuance of the Bonds, the District will have$1010 million aggregate principal amount remaining of authorized and unissued bonds under the 20012 Authorization. Bonds issued under the 1898 Authorization, the 20003 Authorization and the 2002 Authorization are payable from an unlimited tax upon all property subject to taxation within the District and the Board of Supervisors is empowered and is obligated to levy such tax for the repayment of such bonds. 29 Following is a schedule of principal payments remaining as of June 30, 2004, on the District's general obligation bonds: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT General Obligation Bonds Final Maturity Interest Original Principal EssueAmrt �ililq 1988 Authorization($40 million) 2001 3RoNriding Bonds,Series A 4'} Nov.6,2001 2025 4.15-5.75% $28,610,000 $ 26,025,000 2001#Afundin9 Bonds,Series S ta} Nov.16 2001 2024 4.30-6.00% 10,255,000 9,390,000 2080 Authorization($fists million) Series 2000-A Bonds May 15,2001 2031 5.[}".00% 15,000,000 14,740,000 Series 2000-8 Bonds Feb.26,2002 2031 4.00-6,00% 40,000,1100 44,000,(300 Series 2000-C Bonds Apr.22,2003 2032 2.50-5.250 95,000,000 95,000,000 2002 Authorization(000 million) Sodas 2002-A Bonds Jun.26,2002 2031 4.25-7.W% 30,000,000 30,000000 Serres 2002 B Bonds August 25,2003 2032 4.113-&00% 1000 M0:000 10a,0.0.0;boo Total $316,565,000 $315,155,000 "I The 2001 Refunding sands,Series A and B,were issued to refund four series of bonds In the initial aggregate principal amount of$40 million Issued under the 1998 AAuthoriaatiun. Source. The District Certificates of Participation On May 15, 1988, the Richmond Unified School District Financing Corporation(the "Corporatiionj issued $9,800,000 aggregate principal amount certificates of participation (the "1986 Certificates") in order to provide additional working capital for the District's continuing operations. The 1988 Certificates were to be repaid solely from the semi-annual lease payments made to the Corporation under the terms of the lease-purchase agreement between the Corporation and the District. On July 15, 1991, the District defaulted on its obligation to make payments under the lease- purchase agreement that secured the 1988 Certificates. In October 1993, the Education Code was amended to provide for the refunding of the 1988 Certificates by allowing the District to enter into a lease of its property and use the proceeds of such lease for the purpose of terminating the 1988 lease and repaying the 1988 certificates, On April 1, 1994, the Corporation issued certificates of participation in the aggregate principal amount of$11,150,000 for such purposes to be repaid from any available Rinds of the District (the 01994 Certificates"). The trustee, as assignee of the Corporation, will receive base rental payments on January 1 and July 1 of each year for the benefit of the owners of the 1994 Certificates. The fallowing table shows bass rental payments remaining on the 1994 Certificates. 30 WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT 1994 Certificates of Participation Year Ending June30 Prlwjgai Interes 1219 2005 $ 120,000 $ 341,543.75 $ 461,543.75 2006 245,000 670,712.50 915,712.50 2007 265.000 653,525.01 918,525.01 2008 285,000 634,962.50 919,962.50 2009 305,000 615,025.01 920,025.01 Thereafter BA1Q. X420,6 9 1" 13.830.87. .2{1 Total tR 13B 847:9717.+ 8 Bd7 a7 Voluntary Integration Program — The Voluntary Integration Program obligation represents cost disallowances of $7,652,000 based on State audits of program expenditures in fiscal years 1988/89 to 1989190. Subsequently, the District entered into an agreement with the State to repay this amount from any source of available funds of the District to the Voluntary Integration Program beginning in June of 1993. During the 1992193 fiscal year, the original agreement was restructured allowing the District to make the June 30, 1393, payment as scheduled, with the remaining balance scheduled to be paid over a longer period. Remaining payments of the Voluntary Integration Program obligation are shown below: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Payment of the Voluntary Integration Program Obligation Year EndlM JIM 0 Ann,al Pav MIg 2005 $ 300,000 2006 300,000 2007 300,000 2008 3000,000 2009 300,000 2010-2014 1,500,000 2015-2019 1,500,000 2020-2022 _852.M Total Computer Equipment Acquisition Loans -- During the fiscal year 1989/90, the District financed the acquisition of an administrative and instructional computer system with a loan from IBM. The acquired assets secure the loan. Subsequent to June 30, 1993, the District restructured the obligation allowing for one payment during fiscal year 1993/94 and the remaining payments of $5,000,000 comprised of $2,459,111 of principal and $2,540,889 of interest payable in fiscal years 2007108 through 2010/11. The Pooled Money Investment Rate at June 30, 1993, of 4.402%, was used to impute the interest costs implicit in the repayment amounts, which will be paid from any available funds of the District. At June 30, 2004, the imputed interest payable is $1,430,689. Therefore, the carrying balance of the loam at June 30, 2004, is$3,509,311. The restructuring agreement with IBM provides that if, prior to August 16, 2011, the District receives funding for the specific purpose of paying outstanding obligations, the above amounts will be considered then due for purposes of that payment, and amounts owing to IBM will be paid to the same extent as outstanding debts of other creditors. 31 Child Care Facilities—On February 7, 2001, the District received a no4nterest loan of$573,048 from the California Department of Education in fiscal year 2000/01 for the development and acquisition of childcare facilities. The loam balance is to be repaid from any available funds of the District. The repayment schedule is as follows: WEST CONTRA COSTA UNIFIED SC1400L DISTRICT Childcare Facilities Loan Repayment Schedule Year E .9 J Amount tJ 2003 $ 54,005 2004 54,005 2005 54,005 2006 54,006 2007 54,005 1 Total Charter School Loan—On May 7, 2001, a loan with an interest rate of 5.37%was made from the California Department of Education to the Alternative Education Learning Center Charter school. This charter school is sponsored by the District. The charter school received the loan amount of$250,000 and made the payment of $63,425 ($50,000 principal and $13,425'interest) during the fiscal year 2001102, leaving a balance of $200,000. Payments are automatically deducted by the State Controller's Offtce from the charter school's State School Fund apportionments. The repayment schedule is as follows: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Charter School Loan Repayment Schedule Ytar Fndlna June 30 �i I" 2003 $54,000 $40,740 $60,740 2004 50 OM 6,055 58,055 2005 50,000 5,370 55,3701 2006 5p.0Q2 um Total Statement of Direct and Overlapping Debt Contained within the District are numerous overlapping local agencies providing public services. These local agencies have outstanding bonds issued in the form of general obligation, lease revenue and special assessment bonds and outstanding certificates of participation. The following represents the tote assessed valuation and the direct and overlapping banded debt of the District as of August 1, 2004, according to California Municipal Statistics, Inc. The District makes no assurance as to the accuracy of the following table, and inquiries concerning the scope and methodology sof procedures carried out to complete the information presented should be directed to Califomia Municipal Statistics, Inc., Oakland, California. The first column in the table names each public agency which has outstanding debt as of the date of the report and whose territory overlaps the District in whole or in part. The second column shove the percentage of each overlapping agency's assessed value located within the boundaries of the District. This percentage, multiplied by the total outstanding debt of each overlapping agency(which is not shown in the table) produces the amount shown in the third column, which is the apportionment of each overlapping agency's outstanding debt to taxable property in the District. 32 WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Statement of Direct and Overlapping Debt 2003104 Assessed Valuation, $17,402,845,454(before deduction of redevelopment incremental valuation of$3,433,980,785) QVERLAMIN!�TA SSMENT DEBT. ab DPAA&1 East t3ay Municipal u6ftff 12. 1 $ 496,834 East Bay Municipal Utility District,Special District No.1 6.0376 2,449,843 West Contra Costa Community Coilege District 14.646 6,825,036 West Contra Costa Unified School District 100. 311,635,000 ('1 East Bay Regional Park District 6.590 10,094,562 City of EI Cerrito Parcel Tax Obligations 100, 4,440,000 Richmond Redevelopment Community Facilities District No.1998-1 100. 4,255,000 City and County 1915 Act Bonds 100. 48,380,000 TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $388,576,275 Less: East Bay Municipal Utility District 100%self-supporting) TOTAL NET OVERLAPPING T AND ASSESSMENT DEBT 388,079,441 )DIRECT ANS�+�Ei GN, QENEB,FUND QBLIGA� BT; Contra Costa County General Fund Obligations 14.632% $ 48,023,887 Contra Costa County Pension Obligations 14.632 83,288,270 Contra Costa County Board of Education Certificates of Participation 14.632 301,419 Contra Costa County Mosquito Abatement District Certificates of Participation 14.632 81.939 Alameda-Contra Costa Transit District Certificates of Participation 10.804 2,198,739 Contra Costa Community College District Certificates of Participation 14.646 191,863 West Contra Costa Unified School District Certificates of Participation 10303. 9,630,000 City of Hercules Certificates of Participation 89.512 14,456.188 City of Richmond General Fund Obligations 100. 47,187,002 City of Richmond Pension Obligations 100. 26,24, TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $231.5U,107 GROSS COMBWED TOTAL DEBT $620,160,382 ,21 NET COMBINED TOTAL DEBT $619,663,548 Excludes general obligation bonds to be sold. r Excludes tax and revenge anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. DirectDebt(311,635,000) 1.79% Gross Ov Total erlapping Tax and Assessment Debt 2.231l0 Total Net Overlapping Tax and Assessment Debt 2.23% t' Combined Direct Debt($321,265,000) 2.30% Gross Combined Total Debt 4.44% Net Combined Total Debt 4.44% NATE SCHOOL BUIL 3NG AID REPAYABLE AS OF 613{1/03' $0 Source: California Municipal Statistics,Inc. The direct debt of the District after issuance of the Bonds Will be approximately$381,835,000 or 2.19% of the approximately $17.4 billion 2003104 assessed valuation of taxable property Within the District. The District's statutory general obligation bonding capacity is 2.5% of the assessed valuation of taxable property within the District, or approximately$435 million for fiscal year 20031134. The District will have $100 trillion in authorized and unissued general obligation bonds following the issuance of the Bonds. The District has applied to and received from the State Board of Education a waiver of its statutory debt limit up to 3.0%of assessed value to issue brands under the 2002 Authorization. 33 COUNTY INVESTMENT POLICIES AND PRACTICES This section provides a general description of the County's investment policy, current portfolio holdings, and valuation procedures. The information has been prepared by the Treasurer for inclusion in this Official Statement. The District makes no representation as to the accuracy or completeness of such information. Further information may be obtained from the Office of they Treasurer, 625 Court Stmt, Room 102,Martinez, CA 94533. In accordance with California Laws, the District maintains substantially all of its cash In the Contra Costa County Treasury Investment Pool (the "County Poor). The County pools the Distriers funds with these of the County and other districts in the County for investment purposes. Poled funds in the County Pool are carried at cast,which approximates market value. The Treasurer has authority to implement and oversee the investment of such funds in the County Pool in accordance with State Government Code Section 53601 of seq. The Treasurer accepts funds only from agencies located within the County. As of March 31,2004, tate cost value of the County Pool was$1,860,924,489.46 and the market value was$1,863,669,644.59. As of March 31, 2004, the County Pool had 59.77% of its assets managed by the T'reasurer's office, 36.76% of its assets managed by outside contractors, and 3.47% in cash. Of those assets managed by the Treasurer's office 11.96% of the pool's assets are Invested in U.S. Treasury and U.S. Agency Securities; and 47.81% in Lather money market instruments including repurchase agreements, commercial paper, bankers acceptances, medium terra motes and time deposits. Of those assets managed by outside contractors 29.17% of its assets are invested with the Local Agency Investment Fund,which is managed by the State T'reasurer's Office, and 7.59% are either in guaranteed investment contracts or managed by investment managers outside of the Treasurer's office. The following table summarizes the composition of tate County Pool as of March 31,2004. CONTRA COSTA COUNTY TREASURY INVESTMENT POOL PORTFOLIO COMPOSITION (As of March 31,21144) Percent of Totai Lva!l Immirnent Cg§t Value Marltet Valm LQast1 Value) Investments Managed by Treasurer's Office United States Treasury Securities $ 18,000?49.94 $ 17,464,977,54 0.86% United States Agencies Securities 248,673,457.59 206,503,962.41 11.10% Money Market Instruments 138$,847:4#1.26 �i�'�4 1 7 # TOTAL $1,1#2,521,8#9.09 $MINN. 69. 7% Investments Managed by Outside Contractors Local Agency Investment Fund $ 542,907,356.04 $ 543,317,047.05 29.17% Other investment Managers #41. TOTAL $ 884,01778,68 B $ 4501'39M4 35.76 Cash $ 64,324,802.01 $ 64,324,802.01 3.47% TOTAL 8 rig Notes. 1J All reported Information Is unaudited but duce diligence was utilized In its preparation. 2 In general,the Treasurer's records reflect booked casts at the beginning of a period. 34 As of March 31, 2004, the County Pool had a weighted average maturity of 65.8 days with 94.67% of the portfolio maturing in less than one year, 2.41% in securities maturing in one to two years, 2.05% in securities maturing in two to three years, and 0.87% in securities maturing in more than three years. The following table summarizes the portfolio liquidity of the County Pool as of March 31,2004. CONTRA COSTA COUNTY TREASURY INVESTMENT POOL PORTFOLIO LIQUIDITY (As of March 31,2044) Torm to Mis tur Y Cost VA Percent of Total )Cot Value) Less than 1 year $1,761,842,963 94.67% 1 years to 2 years 44,918,320 2.41% 2 years to 3 years 38,114,184 2.OS% 3 years to 4 years 10,184,284 0.55% d years to 5 years 5,3 52,956 0.29% Greater than 5 years t+a 511.782 a Total R 4 dAg t,}Represents bond proceeds of school districts in the County. Motes: All reported informations is unaudited but due diligence was utilized In Its preparation. In general,the Treasurer's records reflect booked costs at the beginning of a period. The Treasurer's investment portfolio is in compliance with the State Government Code 53601 et seg. and with the Treasurer's current investment policy. The County Pool investment portfolio has no securities lending, reverse repurchase agreements, or derivatives. As of March 31, 2004, the County is able to meet its cash flow needs for the next six months. As of June 29, 2004, the State does not have an adopted budget. It is unknown what impact the budget will have on the Counties ability to meet future cash flaw needs. PRIOR FINANCIAL HISTORY OF THE DISTRICT General The District experienced substantial financial difficulties beginning in 1986. These difficulties resulted in, among other things, the District filing for bankruptcy in April 1991 and failing to pay certain lease payments on the District's $9,800,000 original aggregate principal amount of the 1988 Certificates. Since that time, all new Hoard of Education members have been elected and the Superintendent and certain other administrative officers of the District have been replaced, the District has implemented measures to improve its financial condition, has borrowed substantial amounts of money from the State and has cured the defaults with respect to, and defeased to maturity, the 1988 Certificates. No assurance can be given with respect to the future financial condition of the District. Financial Difficulties The District's financial difficulties resulted in part from an accumulation of several years of deficit spending, which began in fiscal year 1983/84. In 1986187, the District overspent by $2.6 million. In 1987188, the District overspent by$4.6 million and accumulated $10.4 million in debt obligations. These circumstances contributed to the decision of the then-management of the District to execute and deliver the 1988 Certificates. In 1988/89 and 1989/90 State auditors found that the District misspent$7.7 million in Voluntary Pupil Integration funds provided by the State, increasing the district's debt obligations by $11.5 million. In 1989/90, the District overspent by $10 million and added $19.3 million to its debt. in 1990/91, the District overspent by$20 million and added $33.3 million to its debt. The District rare out of funds and filed for federal bankruptcy protection in April 1991. These financial difficulties of the District are discussed in greater detail in the following sections. 35 The 1988 Certificates The 1988 Certificates were executed and delivered to provide,$6,700,000 for deposit into the District's general fund to correct general fund budget deficits projected for the 1987188 and 1988/89 fiscal years, as well as to provide $800,000 for a computerized management system and $1,000,000 for the construction of one multipurpose room at three elementary schools. At the time of execution and delivery of the 1988 Certificates, the District viewed the primary causes of the deficits as increased expenditures for employee salaries due to an adverse arbitration award and fess than anticipated revenues due to a shortfall in projected student,enrollment. At that time, the District was considering several alternatives to eliminate future deficits, including negotiating a cap on future salary increases, pursuing joint ventures in connection with the development of surplus property, and reducing staff. The District failed to make the lease payments due on July 15, 1991 and thereafter with respect to the 1988 Certificates,causing a default on the 1988 Certificates. Legislation provided for the refunding of the 1988 Certificates by allowing the District to enter into a lease of its property and use the proceeds of such lease for the purpose of terminating the 1988 Lease. See "Assembly Bill 536" below. In April 1994, the District executed and delivered Certificates of Participation In the original ,aggregate principal amount of $11,150,000. (The "1994 Refunding Certificates,") The proceeds from the execution and delivery of the 1994 Refunding Certificates were sufficient to pay the outstanding principal amount of the 1988 Certificates, including principal payments in default, together with interest thereon, including interest payments in default, as well as legal expenses, interest and other costs related to the default. The District has made all payments as due on the 1994 Refunding Certificates and expects to continue to do $o. Loans From the State of California The District encountered severe difficulties in attempting to produce a balanced budget for the 1989190 fiscal year, resulting in a rejection of its proposed budget by the State in April 1990. In the following month, the District requested an emergency $14 million loan from the State and on June 22, 1990, the governor signed Assembly Bill 171,which authorized a $9.525 million loan. This loam was only sufficient to fund the District through the end of the 1990/91 fiscal year. The loan legislation required that a State trustee be appointed to oversee District operations. Other provisions of the legislation required the District to obtain an audit of Its current financial condition, a management review and a financial recovery plan. See"Management Changes"below. Notwithstanding the first loan from the State, a budget review by the District administration and auditors in October 1990 projected s$21 million deficit and resulted in a request to the,State for a second emergency loan. The April 1991 bankruptcy filing by the District and decision of the District Board to close the Distriefs schools, together with lawsuits related to the school closure decision, led to a loan proposal coupled with financial accountability measures. See"Bankruptcy of the District"below. In May 1991 a superior court approved a second loan from the State to the District in the amount of $19 million. Conditions to the loan included suspension of the District Board's powers, establishment of a State appointed administrator of the District with the ability to set wages, benefits and terms and conditions of employment and to accelerate the collective bargaining process. See"Management Changes"below. In June 1993, further legislation was enacted providing than the two loans from the State be consolidated into one debt. See"Assembly Bill 535"below. In October 1997,the State Loan remaining after the February 1998 payment was amortized over 20 years. See"Assembly Bill 437"below. Bankruptcy of the District Beginning in March 1986 the Contra Costa County Office of Education expressed concern over what it perceived as the District's potential insolvency and reliance on uncertain revenue sources. Two months after the issuance of the 1388 Certificates, a $125 parcel tax initiative was defeated by voters. Audits by the State determined in early 1989 that $7.7 million in Voluntary Pupil Integration Grogram funds received by the District had been inappropriately spent in fiscal years 1988/89 and 1989190, and in July 1989 the District added $8.75 million to its debt by signing a contract with IBM for instructional and business systems. These occurrences, among others, caused the rejection of the District's proposed 1980/90 budget by the State. Under State law, such a rejection mandated the establishment of a three- member State budget review committee to resolve the District's budget issues. In February 1990 the 36 budget review committee, in a preliminary report, concluded that the District would end 1989/90 with a $6.4 million deficit which would increase to a $15 million deficit in 1990/91. The budget committee's efforts resulted in the rejection of the District's budget by the State in April 1990 and the subsequent District request for an emergency $14 million loan from the State. See "Loans From the State of Cal€fornix"above. As to the budget process generally for school districts in California, see "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION --- District Budget Process and County Revelw" herein. A budget review by the District administration and auditors in October 1990 projected a $21 million deficit and led to a request to the State for a second emergency loan.Officials of the State resisters loan legislation, and in April 1991 the District Board voted to proceed with a Chapter 9 bankruptcy filing, which occurred on April 18, 1991. Six days later, the board agreed to close schools effective April 1991. The school closure decision immediately generated lawsuits, one filed by concerned parents of students in the special education program asking that the program remain open, one by the California Teacher's Association alleging that the State allocates less money per student to those in the District over other similar districts, and a third by concerned parents alleging that their children were not being afforded a free and equal education as guaranteed by the California Constitution. Legal activity with respect to these lawsuits contributed to the decision of the State to provide a second loan to the District In the amount of $19 million. Dr. Fred Stewart, as the State-appointed trustee of the District, developed a balanced 1991/92 budget by providing for $30 million in budget reductions, primarily through the layoff of 450 certified and 40 classified positions, the elimination of 40 administrative positions and a 9% salary reduction. The Contra Costa County Office of Education chose not to act on this budget, however, in part because the budget did not provide for payment of the 1988 Certificates or for the obligations of the District under the IBM contract. The District withdrew from bankruptcy in November of 1991 upon determining that operation of the District while remaining under the bankruptcy proceeding did not result in economic advantages to the District. Assembly Bill 535 Assembly Bill 535 ("AB 535") was signed by the Governor of the State on June 30, 1993. This legislation created the State Loan by providing that the loans of$9,525,000 and$19,000,000 made to the District in 1991 be consolidated into one outstanding debt,with an outstanding balance of$30,313,895 as of September 1, 1993. See "Loans From the State of California"above. AB 535 provided for a 15-year payment schedule for the State Loan with an interest rate of 4.543% per annum with payments due on February 1 of each year and a final payment on February 1, 2007. Such payment structure was amended by Assembly Bill 437 which amortized the State Loan remaining after the February 1998 payment over a 20-year period. See "AB 437" below. In the event payment is not made within 60 days after the scheduled payment date, AB 535 provides that the State Controller will pay the defaulted payment by withholding that amount from the next available payment that would otherwise be made to the District as a State apportionment. AB 535 additionally provides that proceeds from the sale of surplus property owned by the district may be used to generate money to pay the State Loan. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION—State Funding of Education". Assembly Bill 536 On October 1, 1993, the Governor of the State signed Assembly Bill 536 ("AB 536"). This legislation provided for the refunding of the 1988 Certificates by allowing the District to enter into a lease of its property and use the proceeds of such lease for the purpose of terminating the lease on the 1988 Certificates. AB 536 also established an intercept program with the State (the "AB 536 Intercept") wherein the trustee of the 1994 Refunding Certificates may notify the State Controller that one or more of the lease payments due under the lease related to the 1994 Refunding Certificates (the "Base Rental Payments") have not been paid. Upon such notification by April 1 for Base Rental Payments due July I and by October 1 for Base Rental Payments due January 1, the State Controller will pay to the Trustee from the District's next available State apportionment entitlement the defaulted rental payment no later than on its respective due date. The payment by the State Controller may not exceed the amount of any apportionment entitlement of the District to moneys in the State School Fund, less any payments required 37 in that fiscal year to pay any State loans made to the District (including the State Loan). The State Controller will withhold the amount of any payment made under AS 536,which will include reimbursement of the State Controller's administrative costs as determined under a schedule approved by the California Debt Advisory Commission, from the next available payment that would otherwise be made by the State to the District as a State apportionment from the State School Fund, The AB 536 Intercept is only available to pay defaulted Base Rental Payments which the District Is legally obligated to pay and therefore does not apply to Base Rental Payments which have been abated or are otherwise not payable under the terms of the Lease Agreement relating to the 1994 Refunding Certificates or under applicable laws, or to any other obligations of the District, Including the Bonds. Moneys available to pay Base Rental Payments under the AS 536 Intercept do not constitute e guarantee by the State. The AB 536 Intercept provides a method whereby moneys otherwise payable to the District as its State apportionment may be diverted to the Trustee to pay Bass Rental Payments and the availability of the AS 536 Intercept is limited to the amount available to the District as a State apportionment at the time the Trustee of the 1994 Refunding Certificates requests money under the AS 536 Intercept program. As to apportionments generally, sea "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION-State Funding of Education"herein. Assembly 13111437 On October 13, 1997, the Governor signed into law Assembly Bill 437,which amortized the State Lean remaining of $21,919,651 after the February 1998 payment over a 20-year period. The remaining annual payments will be due February 1 of each year through February 1, 2018. This legislation was Intended to facilitate the District's class size reduction program implementation. Annual payments are approximately $1.8 million thereby relieving the District from selling surplus property to make balloon payments on the State Loan every three years as required by AS 535. See "AB 535" above. Some properties designated as surplus will be used to implement class size reduction while others will be sold to pay the State Loan payments and other District debt. Management Changes As a condition of the $9.525 million first State loan, a State trustee was appointed to oversee District operations with the power to stay or rescind any action of the District Board, which might have an adverse effect on the financial condition of the District. On July 1, 1990, Car. Fred Stewart was named as the State trustee. Soon thereafter Waiter Marks resigned as Superintendent of the District, a position held by him since July 1987. Conditions of the second State lean included suspension of the District Board's powers, establishment of a State appointed administrator of the District with the ability to set wages, benefits and terms and conditions of employment and requirements to accelerate the collective bargaining process. The powers and duties of the District Board were suspended effective May 3, 1991 and the State appointed Dr. Fred Stewart as the District Administrator. Upon withdrawal of the District from bankruptcy in November 1991, the search for a superintendent commenced, leading to the hiring of tar. Herbert Cole,who served as superintendent from April 1992 until his retirement on January 31, 1999. Dr. Gloria L. Johnston was selected to succeed Dr. Cole as superintendent of the District in February 1999, fir. Fred Stewart remains as State trustee for the District. A State trustee will remain with the power to stay or rescind any action of the District Board that might have an adverse effect on the financial condition of the District until the State Loan has been paid. The Flve-Year PIsn Under legislation providing for the first State loan to the District, the District was required to produce a financial recovery plan, resulting in the adoption of the Five-Year Plan by the District Board in February 1992. See "Loans From the State of California" above. The Five-Year Plan Includes the following major components: (a) an agreement to develop a balanced budget for 1992193; (b) an agreement to update the Five-Year Plan on an annual basis; and (c) an agreement to develop a comprehensive Education Plan (as described in the Five-Year Plan) consistent with the approved Five- Year Plan. 38 ECONOMIC PROFILE The information in this section regarding economic activity within the general area in which the District is located Is provided as background information only, to describe the general economic health of the region. However,the District encompasses a relatively small area within the County, and the property tax required to be levied by the County to repay the Bands will be levied only on property located In the District. Introduction The District is located in western Contra Costa County. Cites within the District include El Cerrito, Hercules, Pinole, Richmond and San Pablo; also, within the District are certain unincorporated areas, including the communities of El Sobrante and Kensington. The County is situated northeast of San Francisco, bounded by San Francisco and San Pablo bays to the west and north, the Sacramento River delta to the north, San Joaquin County to the east, and by Alameda County on the South. Ranges of hills effectively divide the County into three distinct regions. The Western portion, with its access to wester, contains much of the County's heavy industry. The central section is rapidly developing from s suburban area into a major commercial and financial headquarters center. .The eastern part of the County is also undergoing substantial change, from a rural, agricultural area to a suburban region. The County has extensive and varied transportation facilities — pods accessible to ocean-going vessels, railroads, freeways, and rapid transit lines connecting the area with Alameda County and San Francisco. These advantages, combined with a mild climate and available land, make Contra Costa County attractive for industrial and residential development. Population The following table summarizes the population statistics for the County and Cities within the District. WEST CONTRA COSTA UNIFIED SCHOOL CISTRIC� Population of County and Cities within the District 1i) Contra Costa City of City of City of Glty of City of Fi. 1970 555 5 t3,266 79,043 2 4 1 1980 656,380 22,731 5,963 14,253 74,676 19,750 1990 797,600 22,900 16,500 17,000 86,700 24,700 2000 948,816 23,171 19,488 19,039 99,216 30,215 2004 1,003,900 23,400 21,700 19,550 104.700 31,050 Excludes population statistics of unincorporated territory within the District. Source: 1970-.2000:U.S.Census Bureau,2004.California Department of Finance,Demographic Research Unit, estimates as of January 1. 39 Employment The following table summarizes historical employment and unemployment in the County. Such information is not seasonally adjusted and is based on the 2003 Benchmark. CONTRA COSTA COUNTY Civilian Labor Force,Employment and Unemployment Annual Averages Civilian Lahr force E» 2Z2= Employment 486,DDD 491,700 493,000 489,000 491,100 Unemployment 13-ow 7-(Q 26,TTdall 499,5W `5 8 619,900 547,1,100 515,400 Unemployment Rete E4 2.7% 3.3% 5.2% 5.5% 4.7% E»Based on place of reslderww ( The unemployment rate Is calculated using unrounded data. Source, California Employment Development Department,Labor Market Information Division. The fallowing table summarizes the unemployment rates in Contra Costa County and the cities within the District as of May 2004. CIVILIAN LABOR FORCE Unemployment Rates as of May 3004(1; Contra Costa County 4.7% City of EJ Cerrito 3.4% City of Hercules 4.2% City of Pinola 4.2% City of Richmond 9.0% City of San Pablo 9,7% State of California 6.20 USA 5.6% E1?Preliminary,used on 2003 benchmark and place of residence;calculated based on unrounded data,not seasonally adjusted. Soured:California Employment Development Department,Labor Market Information Dmsion. 40 The following table summarizes the historical number of workers by industry in tate Oakland Metropolitan Statistical Area ("MSA"),which includes Alameda and Contra Costa Counties. OAKLAND MSA t+? Estimated Number of Wage and Salary Workers by Industry 3 2 Farm 1,600 1200 800 1,000 , Natural Resources and Mining 69,700 66,600 67,200 68,200 Construction 113,200 103,600 97,400 35,900 Manufacturing 55,400 53,100 51,100 50.200 Wholesale Trade 113,300 112,000 110,000 106,100 Retall Trade 41,300 39,500 36,9W 36,600 Transportation&Public Utilities 37,700 35,200 332,300 7,900 30,200 200 58,6 Information 00 62,500 Financial Activities 159,600 149,600 143,400 143,70 0 Professional and Business Services 112,500 114,700 117,400 119,300 Education and Health 77 900 79,900 80,600 80,100 Leisure and Hospitality 35,800 37,800 37,700 38,200 Other Services 178M 184.2W 182,100 182,600 Government 1,057,800 4,042,800 1,027,404 1,023,000Total All Industries t'u March 2003 benchmark using the North American Industry Classification System. Note: Does not include proprietors,self-employed,unpaid volunteers or family workers,domestic workers In households,and persona involved in laborimanagement trade disputes. Employment reported by place of work. Items may not add to totals due to Independent rounding, Not seasonally adjusted. Source: California Employment Development Department. 41 Largest Employers The following table summarizes the largest employers in the bast Say, which includes.Alameda and Contra Costa Counties. EAST BAY:ALAMEDA AND CONTRA GSTA CotJNTiES Largest Employers i University of California Pubic Education 23,862 Kaiser Permanente Health Care 16,566 Alameda County Local moment 10,617 SBC Communications Inc. Telecommunications 10,132 Lawrence Livermore National Laboratory Government R&D 8,805 United States Postal Service mail services 8,283 Contra Costa County Local Government 8,267 Safeway Inc. Grocery Stores 7,680 State of Caiiforrsie State Government 7,600 Oakland Uni led School District Public Education 7,000 ChevronTexaco Corp. E 6,824 Target Corporation l2e Stores 5;822 New United Motor Manufacturing Inc. Auto 1 Light truck maker 5,700 West Contra Costa Unified School District 14 Public Education 5,318 John Muir I Mt,Diablo Health System Health Care 4,783 City of Oakland Local Govemrnent 4,248 Lawrence Berkeley National Laboratory Government R&D 4,100 Alta Bates Summit Medical Cuter Health Care 3,848 Wells Fargo&Co. Financial Services 3,554 PeopleSoft lnc, Software 3,504 Source.,East Say Business Times,December 19,2003 and the District. Commercial Activity The following table summarizes historical taxable transactions in Contra Costa County. CONTRA COSTA COUNT( Taxable Transactions (Dollars in Thousands) Qwa Tm e T` 1998 23,093 $10,093,690 1999 22,733 11,114,476 2000 22,674 12,330,560 2001 22,609 12,256,721 2042 22,541 12,159,424 January—July,2003 22,253 5,814,510 {at As of July 1. Source: California State Board of Equalizat€on, 42 The following table summarizes historical taxable transactions in the District. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Taxable Transactions for Cities in the District iii—All Outlets (Dollars In Thousands) SItY 1; 9 2 ? 7 2242 ,lulu 1.2003 El Cerrito $ 204,716 $ 224,899 $ 238,380 $ 266,426 $137,029 Hercules 63,066 72,472 80,482 88,473 36,957 Pinole 239,778 273,840 290,141 282,681 135,348 Richmond 1,026,829 1,162,470 1,116,329 1,065,747 505.419 San Paulo 126,676 141,742 145,193 153,126 76,105 tti Excludes taxable transactions occurring in unincorporated territory within the District. Source: Califomia State Board of Equalization. Median Household income Effective Buying income ("EBI") is defined as money income less personal income tax and non- tax payments, such as fines, fees or penalties. Median household ESI for the County is shown in the table below. CONTRA COSTA COUNTY Median Household Effective Buying Income Y&K Contrata Qgunt, 1998 $49,645 1999 53,234 2000 60,189 2001 56,507 2002 54,448 Source: "Survey of Buying Power,"Sales and Marketing Management Magazine. 43 Building Activity Showa below is a history of residential building activity in the County: CONTRA COSTA COUNTY Residential Building Permit Valuation (Dollars in Thousands) YM Res*nlkt Permb Resident#a#Valkgft 1999 4,413 $ 852,256 2000 4,763 $41,990 2001 4,920 921,370 2002 5,764 1,267,673 2003 6,883 1,451,454 Source: "California Bu#ldir g Permit Activity,Annual Summary",Economic Sciences Corporation. Shown below is the 2003 building activity for cities in the District: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT 2003 Building Permit Valuation for Cities in the District t+) (Dollars in Thousands) CSX R22W tial Un#t ResWentlal Valuation El Cerrito 8 $ 2.321 Hercules 685 193,455 Pinole 21 4,375 Richmond 425 64,033 San Pablo 148 24,672 fe Excludes bonding permit valuation for un#neorporated territory within the District. Sour—..e: "California BuRding Permit Activity,Annual Summary,"Economic Sciences Corporation. LEGAL MATTERS Tax Matters In the opinion of Quint&Thimmig LLP, San Francisco,California and Harrison Taylor Law Group, Oakland, California, Co-Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluders from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed In Individuals and corporations, provided however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such Interest is taken into account in determining certain income and tax earnings. The opinions set forth In the preceding paragraph are subject to the condition that the District comply with all requirements of the Internal Revenue Codi: of 1336 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that such interest be,or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date bf issuance of the Bonds. 44 t In the further opinion of Co-Bond Counsel, interest on the Bonds is exempt from California personal income taxes. Owners of the Bonds should also be aware that the ownership or disposition of,or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Co-Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above. A copy of the proposed Form of Final Opinion of Bond Counsel is attached hereto as "APPENDIX A." Legality for Investment in the State of California Under the provisions of the Financial Code of the State, the Bonds are legal investments for commercial banks in the State to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment funds of its depositors, and under provisions of the Government Code of the State are eligible to secure deposits of public moneys in the State. No Litigation No litigation is pending or threatened against the District concerning the validity of the Bonds and a certificate of the District to that effect will be available at the time of original delivery of the Bonds. The District is not aware of any litigation pending or threatened questioning the political existence of the District or contesting the County's agility to levy and collect ad valorem taxes, or to collect other revenues, or contesting its ability to issue and retire the Bonds. Legal Opinion The validity of the Bonds and certain other legal matters are subject to the approving opinions of Quint & Thimmig LLP, and Harrison Taylor Craw Group, Co-Bond Counsel. A complete copy of the proposed form of Co-Bond Counsel opinion is contained in "APPENDIX A --- PROPOSED FORM OF OPINION OF CO-BOND COUNSEL." Go-Bond Counsel undertake no responsibility for the accuracy, completeness or fairness of this Official Statement. MISCELLANEOUS Ratings Fitch Ratings and Standard & Poor's Ratings Group have assigned their municipal bond ratings Of" " and " ,"respectively, to the Bonds. Any rating issued reflects only the views of such rating agency, and any explanation of the significance of such rating should be obtained from such rating agency. The address of Fitch Ratings is One State Street Plaza, 31st Floor, New York, New York 10004. The address of Standard&Poor`s Rating Group is 55 Water Street,New York,New York 10041. Generally,a rating agency bases its rating on the information and materials furnished to it,and on investigations, studies, and assumptions of its own. In addition, the District has furnished certain information to the rating agencies not included in this Official Statement. There is no assurance that a rating assigned will continue for any given period of time or that a rating will not be revised downward or withdrawn entirely by a rating agency if, in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of a rating obtained may have an adverse effect on the market price of the Bonds. Underwriting Pursuant to the terms of a public bid taken on ._ 2004, as Underwriter, has agreed to purchase the Bonds from the District at the purchase price of 45 $ plus accrued interest on the Current Interest Bonds and has certified that it has reoffered the Bands to the general public at the initial offering prices and yields stated on the cover page of this Official Statement. The Underwriter will be obligated to take and pay for all Bands if any Bond is purchased. Financial Advisor A. Lopez & Associates LLC, Oakland, California, has served as Financial Advisor In connection with the issuance of the Bonds. The Financial Advisor has not independently audited, authenticated or otherwise verified the information set forth the Official Statement with respect to accuracy and completeness and as such makes no guaranty,warranty or other representations respecting the accuracy and completeness of any of the information contained herein. Continuing Disclosure The District has covenanters for the benefit of the holders and beneficial Owners of the Bonds to provide certain financial information and operating data relating to the District(the"Annual report")by not later than nine (9) months following the end of the District's fiscal year (currently ending June 30), commencing with the report for the 2003/04 Fiscal Year(which is due no later than March 31, 2005), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the District with each Nationally Recognized Municipal Securities Information Repository ("NRMSIR"), and with the State information repository, if any. The notices of material events will be filed by the District with each Nationally Recognized Municipal Securities Information Repository or with the Municipal Securities Rulemaking Board, and with the State information repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below under the caption "APPENDIX C — FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). With respect to the District's outstanding general obligation bonds (See "THE DISTRICT — District Debt Structure" herein), the District is required to file annual reports not later than nine months following the end of each fiscal year and to file a material events notice when bonds are defeased. Until March 2003, the District annually filed a current official statement and audit with each NRMSIR containing all of the information required to be included in the annual reports, but did not expressly identify such documents as "annual reports". The official statement filed in March 2003 as the annual report did not include audited financial statements for the prior year since the State Controller had not yet completed the audit. Unaudited financial statements for 2001/02 were filed with the NRMSIRs in June 2003, and the audited financial statements were filed upon completion of the audit by the Controller on July 16, 2003. The District filed an official statement relating to its 2001 Refunding Bonds in November 2001 and distributed to bondholders notices of defeasance of the bonds refunded thereby(See"THE DISTRICT— District Debt Structure" herein), but did not expressly identify this as a material event notice with respect to the defeasance. As of June 4, 2003, the District has instructed the NRMSIRs to file such information as annual reports and notices of defeasance for the appropriate bond issues. Closing Papers The District will furnish to the Underwriter, without charge, concurrently with payment for and delivery of the Bonds,the fallowing closing papers, each dated the date of such delivery; (a) The opinion of Co-Bond Counsel, substantially in the form attached as "APPENDIX A" hereto; (b) The Tax Certificate of the District upon which Co-Band Counsel will rely in delivering their tax opinion; (c) The Certificate on behalf of the District certifying that there is no litigation pending affecting the validity of the Bands; (d) The Certificate of an appropriate District official, acting on behalf of the District solely in his or her official and not in his or her personal capacity, certifying that at the time of the sale of the Bonds 46 and at all times subsequent thereto up to and including the time of delivery of the Bonds to the initial purchasers thereof, to the best knowledge and belief of said official, the Official Statement of the District pertaining to said Bonds (excluding the description of DTC and its book-entry system, information relating to a municipal bond insurance policy, if any, and the provider thereof, information provided by the underwriter including the reoffering prices of the Bonds and the CUSIP numbers, and the description of the County's investment policy, current portfolio holdings and valuation procedures), did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,in light of the circumstances under which they were made, not misleading; (e) The certificate of an appropriate County official, acting on behalf of the County solely in his or her official and not in his or her personal capacity,certifying that at the time of the sale of the Bonds and at all times subsequent thereto up to and including the time of delivery of the Bonds to the initial purchasers thereof, to the best knowledge and belief of said Official, the description of the County's investment policy, current portfolio holdings, and valuation procedures contained in the section"COUNTY INVESTMENT POLICIES AND PRACTICES" of the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (f) The signature certificate of the officials of the District certifying that said officials have signed the Bonds, whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; (g) The receipt of the Treasurer for the purchase price of the Bonds, including interest accrued to the date of delivery thereof; and (h) The Continuing Disclosure Certificate of the District in substantially the form shown in "APPENDIX C"attached hereto. Additional Information The purpose of this Official Statement is to supply information in connection with the sale of the Bonds. Quotations from and summaries and explanations of the Bonds, the Resolution, and the constitutional provisions, statutes,and other documents contained herein do not purport to be complete, and reference is hereby made to said Bonds, Resolution, constitutional provisions, statutes, and other documents for full and complete statements of their provisions. This Official Statement and its distribution have been duly authorized and approved by the District WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT By:_..._..._..__ — ____ _ Superintendent 47 APPENDIX A PROPOSED FORM OF OPINIONS OF CO-BOND COUNSEL A-1 APPENDIX B EXCERPTS FROM DISTRICT'S 2002103 AUDITED FINANCIAL STATEMENTS ............. .................. ........................................ ............... .......... ................................. APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE c-� APPENDIX Q ACCRETED VALUE TABLES D-1 Quint&Thimmig LLP 06116104 CONTINUING DISCL©SURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the WEST CONTRA COSTA UNIFIER SCHOOL DISTRICT (the "District") in connection with the issuance by the Board of Supervisors of Contra Costa County (the "Board") in the name of the District of $ West Contra Costa Unified School District (Contra Costa County, California) General Obligation Bonds, Election of 2002, Series C (the "Bonds"). The Bonds are being issued pursuant to a resolution adopted by the Board of Education of the District on June 16,2004,and a resolution adopted by the Board on July 6,2004 (collectively,the"Resolution").The District covenants and agrees as follows: SECTION 1. Pu=osc of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bunds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). SECTION 2. L2afiniticns. In addition to the definitions set forth in the Resolution,which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section,the following capitalized terms shall have the fallowing meanings: "Annual Report" shall mean any Annual Report provided by the District pursuant to, and as described in,Sections 3 and 4 of this Disclosure Certificate. "Bene,fkial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries). "Dissemination Agent" shall mean the District, or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. "Holder"shall mean the person in whose name any Band shall be registered. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule.The National Repositories currently approved by the Securities and Exchange Commission are set forth at http://www.9m.gov/info/municipal/nr sirhtm. "Participating Underwriter" shall mean any of the original underwriters of the Bands required to comply with the Rule in connection with offering of the Bands. "Repository"shall mean each National Repository and the State Repository. 23011.07 "Rule" shall mean Rule 15c2-12(b)(5) adapted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State Depositary"shall mean any public or private repository or entity designated by the State of California as the state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. The current State Repositories are set forth at http://www.sec.gov/info/municipal/nrmsir.htm. SECTION 3.Pro-visign of Amual R=o. (a) The District shall., or shall cause the Dissemination Agent to, not later than nine (9) months after the end of the District's fiscal year (currently ending June 30), commencing with the report for the 2003-04 Fiscal Year(which is due not later than April 1,2005),provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the District 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 District's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) Not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the District shall send a notice to the Municipal Securities Rulemaking Board and the State Repository,if any,in substantially the form attached as Exhibit A. (c)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) (if the Dissemination Agent is other than the District), file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Con= Qf A=ual R=grta. The District's Annual Report shall contain or include by reference the following: (i) Audited financial statements of the District for the preceding fiscal year,prepared in accordance with the laws of.the State of California and including all statements and information prescribed for inclusion therein by the Controller of the State of California. If the District'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. To the extent not included in the audited financial statement of the District, the Annual Report shall also include the following: -2- (ii)total average daily attendance in Distract schools for the preceding fiscal year, (iii)pension plan contributions made by the District for the preceding fiscal year; (iv) aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the enol of the preceding fiscal year, (v)description of amount of general fund revenues anda ditures which have been budgeted for the current fiscal year,together with audited actual=figures for the preceding fiscal year; (vi)the District's total revenue limit for the preceding fiscal:year; (vii) prior fiscal year total secured property tax levy and: collections, showing current collections as a percent of the total levy,and (viii)current fiscal year assessed valuation of taxable properties in the District,including assessed valuation of the top ten properties. 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 District 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 District shall clearly identify each such other document so included by reference. SECTION 5.Reparling.of Significant eats (a) Pursuant to the provisions of this Section 5, the District 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. (ii)non-payment related defaults, (iii)modifications to rights of Holders. (iv)optional,contingent or unscheduled bond calls, (v)defeasances. (vi)rating changes. (vii.)adverse tax opinions or events affecting the tax-exempt status of the Bonds. (viii)unscheduled draws on the debt service reserves reflecting financial difficulties. (ix)unscheduled draws on the credit enhancements reflecting financial:difficulties.. (x)substitution of the credit or liquidity providers or their failure to perform. (xi)release,substitution or sale of property securing repayment of the Bonds. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the District determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the District shall promptly file a notice of such occurrence with each National Repository or with the Municipal Securities Rulemaking Board, and with the State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4)and (5) need not be givers under this subsection any earlier than the notice(if arty) of the underlying event is givers to Holders of affected Bonds pursuant to the Resolution. -3- SECTION 6. Termination of Reporting QWigation. The District's obligations under this Disclosure Certificate 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 District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). SECTION 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, 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 District pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the District. SECTION 8. Amendment. Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions 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 Resolution for amendments to the Resolution with the consent of Holders, or (ii) does not, in the opinion of 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 Certificate, the District 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 district. 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(c),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 Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate 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 Certificate. If the District 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 Certificate, the District shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. -4- SECTION M Tlefau In the event of a failure of the District to comply with any provision of this Disclosure Certificate any Halder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate,provided, that any such action may be instituted only in Superior Court of the State of California in and: for the County of Contra Costa or in V.S. District Court in or nearest to the County. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 11. Benef ciaria This Disclosure Certificate shall inure solely to the benefit of the ;District, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bands,and shall create no rights in any other person or entity. Date.August 4, 004 VEST CONTRA COSTA UNIFIED SCHOOL DISTRICT By Superintendent EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD AND EACH STATE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: West Contra Costa Unified School District Name of Issue: $ West Contra Costa Unified School District (Contra Costa County,California)General Obligation Bonds,Election of 2002,Series C Date of Issuance: August 4,2004 NOTICE IS HEREBY GIVEN that the West Contra Costa Unified School District (the "District") has not provided an Annual Report with respect to the above-named Bonds as required by Section 4 of the Continuing Disclosure Certificate of the District, dated the Date of Issuance. [The District anticipates that the Annual Report will be filed by j Dated: WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT By Title Exhibit A Quint&Emig LLP 06/16/04 OFFICIAL NOTICE OF SALE $70,000,000* WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (Contra Costa County,California) GENERAL OBLIGATION BONDS ELECTION OF 2002, SERIES C Consisting of. Current Interest Bonds and (Maturity Amount)* Capital Appreciation Bunds NOTICE IS GIVEN that the Board of Education (the "Board") of the West Contra Costa Unified School District(the"District"),Contra Costa County,California,will receive "all-car-none" bids pursuant to this Official Notice of Sale (the "Official Notice of Sale") for the purchase of an issue of general obligation bonds of the District, in the aggregate amount of $70,000,000* to be designated as the "West Contra Costa Unified School District (Contra Costa County, California) General Obligation Bonds, Election of 2002,Series C" (the "Bonds"). The Bonds of this issue are comped of current interest bonds(the"Current Interest Bonds")and capital appreciation bonds (the"Capital Appreciation Bonds"). All bids must be submitted in their entirety on Grant Street Group's MuniAuction ("MuniAuction")website between 8.45 A.M.and.9:00 A.M.PDT on: WEDNESDAY,JULY 21,2004 The auction will begin at 8.45 A.M., Pacific time.The MuniAuction website is accessible via the auction link on the Grant Street Group Horne Page at either www.GrantStreet.com or www.MuniAuction.com. To bid via the MuniAuction website, bidders must have both (1) completed the :registration form on the MuniAuction website, and. (2) requested and received admission to the District's auction, as described under "Registration and Admission to Bid" below.The use of MuniAuction shall be at the bidder's risk and expense, and neither the District, the District's financial advisor, A. Lopez & Associates LLC (the "Financial Advisor"),nor Quint& Thimmig LLP and Harrison Taylor Law Group ("Co-Bond Counsel") shall have any liability with respect thereto.No fax or hand delivery bids will be accepted. Bidders are urged to check the MuniAuction website for any change in the terries of the sale or the date and time for the receipt of bids.Failure by the District to announce any such change on any particular information or news service, or the failure of any such information or nears service to publish such change, does not affect the validity of'such change and therefore bidders should check all sources. *Preliminary,subject to change. This Official Notice of Sale is not a part of the POS (defined below). The inclusion of this Official Notice of Sale as an attachment to the POS is for purposes of convenience only. Amendment and Modification.The District reserves the right to amend this Official Notice of Sale at any time prior to the bidding start time for the Bonds on Wednesday, July 21, 2004, by publishing such amendments on the Amendments Page of the MuniAuction website. Postponement. The District reserves the right to postpone, from time to time, the date established for the receipt of bids. Any such postponement will be announced through the Amendments Page of the MuniAuction website prior to any announced date for receipt of bids. If any date fixed for the receipt of bids and the sale of the Bonds is postponed, any alternative sale date will be announced via the Amendments Page of the MuniAuction website at least 20 hours prior to such alternative sale date. On any such alternative sale date,any bidder may submit a bid for the purchase of the Bonds in conformity in all respects with the previsions of this Official Notice of Sale except for the date of sale and except for the changes announced through MuniAuction. The Bonds Current Interest Bonds General. The Current interest Bonds will be dated as of August 1, 2004. The Current Interest Bonds will be serial bonds or term bonds, as hereinafter described, and will be stated to mature on August 1 in each year in the amounts as finally determined in accordance with this Official Notice of Sale(see"Bid Procedure and Award"). The Current Interest Bonds will be issued in a book entry only system with no physical distribution of the Current Interest Bonds made to the public. The Depository Trust Company, New York,New York ("DTC"),will act as depository for the Current interest Bonds which will be immobilized in its custody. The Current Interest Bonds will be registered in the name of Cede& Co., as nominee for DTC, on behalf of the participants in the DTC system and the subsequent beneficial owners of the Current interest Bonds. Individual purchases will be made in the maturities described below. Payments of principal and interest to DTC will be the responsibility of BNY Western Trust Company, as paying agent {the "Paying Agent"} and disbursement of such payments to the beneficial owners shall be the responsibility of DTC`s direct participants or indirect participants. As of the date of award of the Current Interest Bonds, the successful bidder must either participate in DTC or must clear through or maintain a custodial relationship with an entity that participates in DTC. The fees and charges of DTC shall be borne by the successful bidder. -z- The final principal amount of the Current Interest Bonds and the final amount of each maturity of the Current Interest Bonds will be subject to increase or reduction as described below under the heading „Adjustment of Principal Amounts."The preliminary maturity schedule is as follows. Maturity Principal Maturity Principal (8tagit-d:1) Am=t (Aug .0 Amsuaut The Current Interest Bonds will bear interest, calculated on a 30{360 day basis,at a rate or rates to be fixed upon the sale thereof but not to exceed 120 per annum,payable semiannually on each February 1 and August 1,commencing February 1,2005. Principal of the Current Interest Bonds will be payable upon surrender at the office of the Paying Agent. Interest on the Current Interest Bonds will be payable by check or draft mailed by first class mail to the owner at the address listed on the registration books maintained by the Paying Agent for such purpose. Adjustment of Principal Amounts. The District reserves the right to increase or decrease the principal amount of any maturity of the Current Interest Bonds as the District deems advisable in order to accomplish its financing objectives. No such adjustment will have the effect of altering the basis upon which the best bid is determined. The District shall not be responsible for the effect of any such adjustment on the compensation to the successful bidder. Mandatory Redemption; Bidder's Right to Designate Term Current Interest Bonds. Bidders may designate two or more consecutive maturities of Current Interest Bonds as term bonds, subject to the following limitations: (1) the final maturity date for the Current Interest Bonds,including any term bond:,shall be August 1, ;(2) each term. Current Interest Bond shall bear a single rate of interest; and (3) the tercet Current Interest Bond(s) shall be subject to mandatory sinking fund redemption by lot on August 1 of each year,commencing with the year following the final serial band maturity(or,if there is more than one term bond, the maturity date of any ter :bond having an earlier maturity, as the case may be), with the aggregate principal amount to be redeemed in each such year to be same as the aggregate principal amount set forth in the above maturity table and with each such redemption to be at a price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon to the date fixed for redemption but without premium. If no term Current Interest Bunds are designated in the winning bid, the Current Interest Bonds will mature serially as shown in the preceding schedule. -3- Optional Redemption The Current Interest Bonds maturing on or before August 1, 2012, are not subject to redemption prior to their respective stated maturities.The Current Interest Bonds maturing on or after August 1,2013,are subject to redemption prior to maturity,at the option of the District,from any available source of funds, on any date on and after August 1, 2012, at a redemption price equal to the principal amount thereof together with accrued interest thereon to the date fixed for redemption, plus a premium (expressed as a percentage of the principal amount of Current Interest Bonds to be redeemed)as set forth in the following table: $edsri3l HM Bates Rgdgrnptian Premium August 1,2012 through July 31,2013 1% August 1,2013 and thereafter 0 If less than all of the Current Interest Bonds are called for redemption, the particular Current Interest Bonds or portions thereof to be redeemed will be called in such order as shall be directed by the District and, in lieu of such direction, in inverse order of their maturity. Within a maturity, the Paying Agent will select the Current Interest Bonds for redemption by lot,provided, however, that the portion of any Current Interest Bond to be redeemed shall be in the principal amount of five thousand dollars ($5,000) or some integral multiple thereof and that, in selecting Current Interest Bonds for redemption, the baying Agent will treat each Current Interest Bond as representing that number of Current Interest Bonds which is obtained by dividing the principal amount of such Current Interest Bond by five thousand dollars($5,000). Capital Appreciation Bonds General, The Capital Appreciation. Bonds will be dated, and will accrete Accreted Interest (hereinafter defined) from, their date of initial issuance. Capital Appreciation Bonds will not bear interest on a current basis. The Capital Appreciation Bonds will mature in the years and shall be issued in the Denominational Amounts (hereinafter defined) as finally determined in accordance with this Official Notice of Sale(see"Bid Procedure and Award"). The Capital Appreciation Bonds will be issued in a book entry only system with no physical distribution of the Capital Appreciation Bonds made to the public. ITC will act as depository for the Capital Appreciation Bonds which will be immobilized in its custody. The Capital Appreciation Bonds will be registered in the name of Cede&Co.,as nominee for DTC,on behalf of the participants in the DTC system and the subsequent beneficial owners of the Capital Appreciation Bonds. Individual purchases will be made in the maturities described below. Payments of principal and Accreted Interest to ITC will be the responsibility of the Paying Agent and disbursement of such payments to the beneficial owners shall be the responsibility of DTC's direct participants or indirect participants. As of the date of award of the Capital Appreciation Bonds, the successful bidder must either participate in DTC or must clear through or maintain a custodial relationship with an entity that participates in DTC. The fees and charges of DTC shall be borne by the successful bidder. -4- The final maturity amount of the Capital Appreciation Bonds and the final amount of each maturity of the Capital Appreciation Brands shall be subject to increase or reduction as described below under the heading "Adjustment of Principal Amounts."The preliminary maturity schedule is as follows; Maturity Maturity Maturity Maturity (Augmt l) Amount tBt>gint;L1 AUt Principal of the Capital Appreciation Bands will be payable upon surrender at the office of the Paying Agent. Adjustment a,f Principal amounts. The District reserves the right to increase or decrease the principal amount of any maturity of the Capital Appreciation Brands as the District deems advisable in order to accomplish its financing objectives. No such adjustment will have the effect of altering the basis upon which the best bid is determined. The District shall not be responsible for the effect of any such adjustment on the compensation to the successful bidder. No Redemption. The Capital Appreciation. Bonds are not subject to redemption pricer to maturity. Security The Bonds are general obligations of the District.The Board of Supervisors of Contra Costa County has the power and is obligated to levy ad valorem taxes for the payment of the Bonds and the interest thereon without limitation as to rate or amount upon all property within the District subject to taxation(except for certain classes of personal property). The Bonds are issued under the lawns of the State of California,and the requisite two-thirds vote of the electors of the District cast at a special bored election held on March S, 2002, upon the question of issuing brands in the amount of$300,000,000(the"Authorization"). In June of 2002,the District issued its $30,000,000 West Contra Costa Unified School District (Contra Crista County, California) General Obligation Bonds,Election of 2002,Series A,representing the first issue under the Authorization. in August of 2003, the District issued its $100,000,000 West Contra Costa Unified School District (Centra Costa County, California.) General Obligation Bonds, Election of 2002, Series B, representing the second issue under the Authorization. The Bonds represent the third issue under the Authorization. Municipal Bond Insurance and Credit Rating The District has applied for commitments for municipal bond insurance policies from the following: Ambac Assurance Corporation("Ambac"); Financial Guaranty Insurance Company("FGIC"); Financial Security Assurance("FSA");and MBIA Insurance Corporation("MBIA"). Such commitments, if and when received, shall provide for policies of municipal bond insurance under such conditions and containing such terms as may be provided therein or in the policies of respective insurers.Such commitments and/or policies as are received are incorporated herein by reference. If a commitment for insurance is received, the Bonds will be offered under an optional bidding program, whereby bidders may bid for the Bonds with or without such insurance (and if multiple commitments are received,specifying the insurer). In the event the winning bidder elects to bid with municipal bond insurance, the premium for such insurance and the costs of any related ratings will be paid by the bidder, and neither the County nor the District will have any responsibility for payment of such premium and costs. The District has also applied for a municipal bond credit rating from Pitch Ratings and Moody's Investors Service. Interested bidders can view the identity of insurers from whom commitments have been received and the cost of such insurance and the credit rating no later than the day before the date established for submission of bids on the Amendments Page of the MuniAuction website. Type of Bids Allowed Subject to the bid requirements described below,bids for the Bonds may be submitted on an "all-or-none" basis only, whereby such bidder may submit a conforming bid for the entire issue (i.e., all Current Interest Bonds and all Capital Appreciation Bonds), and if such bid is accepted by the District, the bidder will be required to purchase the entire issue (i.e.,all Current Interest Bonds and all Capital Appreciation Bonds) in accordance with such bid. There will not be maturity-by-maturity bidding. Interest Rates and Limitations Current Interest Bonds. The Current Interest Bonds will bear interest from August 1, 2004, payable on February 1 and August 1 of each year,beginning February 1,2005,until maturity or in the case of Current Interest Bonds which shall be subject to redemption and which shall have been called for redemption and payment of the redemption price shall have been made or shall have been provided for, until the date fixed for redemption, at a rate or rates of interest to be specified by the bidder, in a multiple or multiples of one-eighth (1/8) or one-twentieth (1/20) of one per cent(1%);provided, however, that: (1) no rate of interest may be bid which exceeds 129' per annum. No Current Interest Bond may bear more than one interest rate, and all Current Interest Bonds of the same maturity must bear the same rate, Each Current Interest Bond must bear interest at the rate specified in the bid from its date to its fixed maturity date. The rate on any maturity or group of maturities shall not be more than 3% higher than the interest rate on any other maturity or group of maturities. Capital Appreciation Bonds. All bids must state the following, based on the maturity schedule for the Capital Appreciation Bonds shown above and assuming that closing occurs on -6- August 4, 2004. (1) the price to be paid to the District and (2) the approximate reoffering yield to maturity for each maturity of the Capital Appreciation Bonds, specified to the nearest one thousandth of one percent (0.001%). The approximate yields to maturity will be used by the District to calculate the underwriter's discount, the reoffering price and the price paid to the District for each maturity. If the District adjusts the bidding maturity schedule after the sale, the District will use its calculation of the price paid to the District for each maturity to determine the final price to be paid by the successful bidder. Minimum.Bid;gales Below Par or at a Miscount Prohibited The District will not accept any bid of less than: the aggregate principal amount of the Bands plus accrued interest (with respect to the Current Interest Bonds) to the date of their delivery.The foregoing provision sloes not preclude original issue discount on the Bonds so long as the bid is at least equal to the aggregate principal amount of the Bonds plus accrued interest (with respect to the Current Interest Bonds) to the date of their delivery. Each bid shall state that the bidder offers par and accrued interest to the date of delivery,the premium,if any,and the rate or rates not to exceed those specified herein, at which the bidder offers to buy said Bonds. The purchase price of the Bonds must be paid in funds which are immediately available. Each bidder shall state in his bid the total true interest cost in dollars, which shall be considered informative only and not a part of the bid.Each bid roust be in accordance with the term and conditions set forth herein. The winning bidder shall deliver a certificate at settlement in such form: as satisfactory to Band Counsel with respect to the initial offering prices or revised initial offering prices to the public (excluding bond houses, brokers and ethers acting in the capacity of underwriters or wholesalers)with respect to each maturity of the Bonds. Registration and Admission to Bid To bid by MuniAuction,bidders must first visit the MuniAuction website where, if they have never registered with MuniAuction, they can register and then request admission to bid on the Bonds. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only NASD registered broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid. Bidders who have previously registered with Grant Street Croup (parent of MuniAuction) may call auction support at (412) 391-5555 (ext. 370) for their ID Number or password. No bid will be considered which does not offer to purchase all of the Bonds.Each bid trust specify an annual rate of interest and a dollar purchase price for the entire issue of the Bonds. Bidding Details--Closed Auction Bidders may change and submit bids as many times as they wish during the auction,but they may not withdraw a submitted bid. The last bid submitted by a bidder prior to the deadline for the receipt of bids will be compared to all ether final bids to determine the winning bid. During the auction,no bidder will see any ether bidder's bid,nor will they see the statins of their bid relative to other bids(e.g.,whether their bid is a leading bid). Rules of MuniAuction The "Rules" of MuniAuction can be viewed on the MuniAuction website and are incorporated herein by reference. Bidders must comply with. the Rules of MuniAuction in addition to the requirements of this Official Notice of Sale. further information about MuniAuction can be obtained from.MuniAuction, Inc.,429 Forbes Avenue,Suite 1800,Pittsburgh, PA 15219, Attention: Myles Harrington, telephone (412) 391-7686. To the extent there is a conflict -7- between the Rules of MuniAuction and this Official Notice of Sale,this Official Notice of Sale shalt control. Bid Procedure and Basis of Award Subject to the right reserved to the District to reject any or all bids, the Bonds will be sold to the highest responsible bidder. The Bonds will be awarded to the bidder whose bid produces the lowest true interest cost ("TIC") for the District on the Bonds and otherwise complies with this Official Notice of Sale. The TIC for the Bonds will be determined by doubling the semi-annual interest rate, compounded semiannually, necessary to discount the semiannual debt service payments from the payment dates to the dated date of the Bonds and to the aggregate purchase price,excluding interest accrued to the date of delivery. Biel Security Each bidder must submit a cashier's check, treasurer's check or a certified check drawn on a solvent bank or trust company having a shareholders'equity(i.e. capital,surplus and undivided profits), however denominated, of not less than $10,000,000, or a financial surety bond (a "Financial Surety Bond") issued by an insurance company licensed to issue such a surety bond in the State of California, payable to the Contra Costa County Treasurer and Tax Collector, in the amount of$100,000(the"Deposit"). If the Deposit is evidenced by a check, the check must be submitted to the Contra Costa County Treasurer and Tax Collector prior to the receipt of bids. If the Deposit is evidenced by a Financial Surety Bond, the Financial Surety Bond must be submitted to the Financial Advisor prior to the receipt of bids. A Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond.The successful bidder is required to submit its Deposit to the Treasurer by checkconforming to the requirements stated above or by wire transfer as instructed by the District not later than 11.00 A.M.,pacific time,on the business clay following the sale date. If the Deposit is not received by that time, the District will draw on the Financial Surety Bond to satisfy the Deposit requirement. No interest on the Deposit will accrue to any bidder.The Deposit of the successful bidder will be applied to the purchase price of the Bonds.In the event the successful bidder fails to honor its bid, the Deposit plus any interest accrued on the Deposit will be retained by the District. Any investment income earned on the Deposit will not be paid to the successful bidder in the event that the District is unable to deliver the Bonds awarded to the successful bidder provided under "Manner and Time of Delivery"below. Deposits accompanying bids not accepted by the District will be returned promptly. Manner and Time of Delivery The Deposit of the successful bidder will be applied to the purchase price of the Bonds. If the successful bidder fails or neglects to complete the purchase of the Bonds when the Bands are tendered by the District for delivery, the amount of the Deposit will be forfeited (as liquidated damages for non-compliance with the bid) to the District,except as hereinafter provided. In that event the District may reoffer the Bonds for public or negotiated sale. The successful bidder will not be required to accept delivery of the Bonds if they are not tendered for delivery within sixty (60) days from the date herein stated for opening bids. If the Bonds are not so tendered within said period of time, the Deposit will be returned to the successful bidder upon request. However, the District contemplates effecting delivery of the Bonds to the successful bidder on or about August 4,2004. -8- Conditions of Closing The enactment,at any time prior to the delivery of the Bonds,of Federal legislation which, by repeal or omission of exemptions or otherwise, shall cause the interest on the Bands not to be excludable from gross income under section 103 of the Cade, at the election of the successful bidder, will entitle the successful bidder to the return of its bid security deposited with the bid without interest thereon. As a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds,the successful bidder will be furnished the following documents: (a) The opinion of Bond Counsel approving the validity of the Bonds and stating that, under existing law, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of preference for purposes of the federal alternative minimum tax imposed on individuals and corporations;however,noting that with respect to corporations, such interest is taken into account in determining certain income and earnings for the purpose of computing the alternative minimum tax imposed on such corporations, and that such interest is also exempt from personal income taxes of the State of California under present state income tax laws. Other federal tax consequences to holders of the Bonds, if any, are not addressed in the opinion. A copy of the opinion of Bond Counsel will be attached to each.Bond.No charge will be made to the purchaser for such printing or certification. (b) A certificate of the District certifying that on the basis of the facts, estimates and circumstances in existence on the date of issue, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds; (c) A certificate of the District, signed by officers and: representatives of the District, certifying that the officers and representatives have signed the Bonds whether by facsimile or manual signature,and that they were respectively duty authorized to execute the same; (d) The receipt of the Treasurer and Tax Collector evidencing the receipt of the purchase price of the Bonds,including interest accrued to the date of delivery thereof; (e) A 'certificate of the District, certifying that there is no known litigation threatened or pending affecting the validity of the Bonds,and (f) A certificate of the District, signed by an officer of the District, acting in his official capacity, to the effect that at the time of the sale of the Bonds,and at all times subsequent thereto up to and including the time of the delivery of the Bonds,the CSS(defined below)does not contain an untrue statement of a material fact or omit to state any material fact necessary in,carder to snake the statements made therein, in the light of the circumstances under which they were made, not misleading, and further certifying that the signatory knows of no material adverse change in the condition of the District which would make it unreasonable for the purchaser of the Brands to rely upon the OS in connection with the resale of the Bonds.. CUSIP Numbers It is anticipated that CUSIP numbers will be printed on the Bonds,but neither the failure to print such numbers on any Bund nor error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms of the purchase contract. All expenses of printing CUSIP numbers on the Brands and the CUSIP Service Bureau charge for the assignment of said numbers shall be paid by the successful bidder. .9_ IIIA ii 1 Certification of Reoffering Price The successful bidder shall be required, as a condition to the issuance of the Bonds, to deliver to the District a certificate,in form and substance satisfactory to Bond Counsel, stating (i) that, as of the date of award, the Bonds were expected to be reoffered in a bona fide public offering, and (ii) the initial offering price at which a substantial amount (at least 133°/0) of each maturity of the Bonds were sold to the public. Continuing Disclosure In order to assist bidders in complying with S.B.C. Rule 15c2-12(b)(5), the District will undertake, pursuant to the resolution authorizing issuance of the Bands and a Continuing Disclosure Agreement, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the POS(defined below)and will also be set forth in the OS. California Debt and Investment Advisory Commission and California PSA The successful bidder will be required, pursuant to State law, to pay any fees to the California Debt and investment Advisory Commission and California PSA when due. Preliminary and Final Official Statement The District's Preliminary Official Statement ("POS"), dated July 15, 2004, is available for viewing in electronic format on the MuniAuction website. In addition, NASD registered broker- dealers and dealer banks with DTC clearing arrangements may either: (a) print out a copy of the POS on their awn printer, or(b) at any time prior to,July 20, 2004,elect to receive a photocopy of the POS in the mail by requesting it on the MuniAuction website or by contacting the Financial Advisor, A. Lopez & Associates LLC, at 5622 Maxwelton Road, Oakland, CA 94618, telephone (510) 547-1976). In order to print a copy or request a photocopy of the PUS from MuniAuction, click the"View POS" button on the MuniAuction Selections Page and follow the instructions. All bidders must review the POS and certify that they have done so prior to participating in the bidding. The POS is deemed by the District to be final as of its date,for purposes of SBC Rule 15C2- 12(b)(1) under the Securities Exchange Act of 1934, except for the omission of information concerning the offering price(s), interest rates(s), selling; compensation, aggregate principal amount of the Bonds, description of bond insurance, and any other terms or provisions to be determined from the successful bid or depending on such matters, and the identity of the underwriter(s). The POS is, however, subject to such further revisions, amendments and completion in a final official statement the("OS")as may be necessary. The District shall provide the successful bidder with 250 conformed copies of the OS within seven(7)business days following the date of acceptance of the bid. Miscellaneous The District,at its own expense,will provide for preparation of the Bonds and will pay the fees of the Paying Agent. The Bonds will be delivered through the facilities of DTC at a mutually agreeable location on or about August 4, 2004, or such later date as shall be determined by the District. The actual time of day and place of such delivery shall)be such as shall be agreeable,mutually, to the District and to the successful bidder. -10- The right is reserved to reject any or all bids, and to waive any informality, mistake,error or omission in any bid. Additional Information Additional information and the POS may be obtained from the Financial Advisor, A. Lopez & Associates LLC, at 5622 Maxwelton Road,Oakland, CA 94618, telephone(510) 547-1976. The Official Notice of Sale and the POS may be viewed on the MuniAuction website. However, the District makes no assurance or representation with respect to the form of the Official Notice of Sale and the PCIS on the MuniAuction website, and no investment decision should be made in reliance thereon. Additional information relating to the auction or a private bidding tutorial may be obtained by calling the Auction Administrator,MuniAuction,at(412/393-7686). Dated:July 13,2004 WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT By Superintendent -12- Quint&Thimmig LLP 06/16/04 NOTICE OF INTENTION TO SELL BONDS $70,000,000 (Approximate,subject to change) WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (Contra Costa County, California) GENERAL OBLIGATION BONDS ELECTION OF 2002, SERIES C Consisting of: (Approximate,subject to change) Current Interest Bonds and $ (Maturity Amount) (Approximate, subject to change) Capital Appreciation Bonds NOTICE IS HEREBY GLEN, pursuant to section 53692 of the California Government Cade, that the West Contra Costa Unified School District (the "District") invites bids for the purchase of $70,000,000 aggregate principal amount of West Contra Costa Unified School District (Contra Costa County, California) General Obligation Bonds, Election of 2002, Series C (the "Bonds"). All bids must be submitted in their entirety on the Grant Street Group's MuniAuction website (www.muniauction.com) prior to 9:00 A.M., Pacific time on WEDNESDAY, JULY 21, 2004 The sale will be awarded by the District within 26 hours after the expiration of the time prescribed for the receipt of bids. The sale of the Bonds will be conducted upon the terms and conditions set forth in the official notice of sale for the Bonds (the "Notice of Sale"). The Notice of Sale and the preliminary official statement describing the Bonds are available for (i) viewing online, (ii) downloading, and (iii) receipt of hard copy, all on the MuniAuction website. To bid via the MuniAuction website, bidders must have both (1) completed the registration form on the MuniAuction website,and(2) requested and received admission to a particular auction, as described in the Notice of Sale. Further information may be obtained by contacting the District's Financial Advisor, A. Lopez & Associates LLC, 5622 Maxwelton Road, Oakland, CA 94618, telephone (510) 547-1976, or MuniAuction at (412) 391-7686, x316. Dated: July 6,2004 [TO BE PUBLISHED IN THE BOND BUYER ON TUEDAY,JULY 6, 2004,TO BE ARRANGED BY QUINT AND THIMMIG LLP] 23011.03