NEW ISSUE–BOOK-ENTRY ONLY Ratings: Moody's: "A2" S&P: "AA-"

(See "RATINGS" herein.)

In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the County, based upon an analysis of existing laws, regulations, rulings and court decisions and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the interest component of Base Rental Payments paid by the County under the Lease and received by the Owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Special Counsel, such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Special Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of the Certificates, or the accrual or receipt of the interest portion of the Base Rental Payments. See "TAX MATTERS" herein.

$16,745,000

COUNTY OF SOLANO SERIES 2009 REFUNDING CERTIFICATES OF PARTICIPATION

Dated: Date of Delivery Maturity: November 15, as shown below

The County of Solano Series 2009 Refunding Certificates of Participation (the "Certificates") are being executed and delivered pursuant to a Trust Agreement dated as of December 1, 2009 by and among the County of Solano (the "County"), the Solano County Facilities Corporation, Inc. (the "Corporation") and Union Bank, N.A., as trustee (the "Trustee"). The Certificates are being issued to: (i) refund the Solano County Facilities Corporation, Inc. Certificates of Participation (1999 Capital Improvement Program) (the "1999 Certificates"), the proceeds of which were used to finance the acquisition of, and certain capital improvements on, the Site (as defined herein) related to the County's health and social services headquarters, (ii) fund the Certificate Reserve Fund (as defined herein), and (iii) pay certain expenses of the financing. See "PLAN OF REFUNDING" herein.

The Certificates evidence proportionate interests in certain Base Rental Payments (the "Base Rental Payments") to be made by the County under the Lease (as described herein) to be entered into by the County and the Corporation, pursuant to which the Corporation, as lessor, has agreed to lease to the County, as lessee, the Leased Property (as defined herein). The County has covenanted under the Lease that, so long as the Leased Property is available for the County's use, it will take such action as may be necessary to include the Base Rental Payments and Additional Payments due under the Lease in its annual budget and to make the necessary annual appropriations therefor. See "SECURITY FOR THE CERTIFICATES – Appropriations Covenant" herein. The Base Rental Payments are subject to abatement under certain circumstances as described herein. See "RISK FACTORS FOR THE CERTIFICATES – Abatement" herein.

The Certificates will be delivered as fully registered certificates in book-entry form only, initially registered to Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases of the Certificates will be in the denomination of $5,000 each or any integral multiple thereof. Interest due with respect to the Certificates is payable semiannually on May 15 and November 15, commencing May 15, 2010. Interest and principal with respect to the Certificates shall be payable by the Trustee to DTC. DTC is obligated to remit such principal and interest to its Participants for subsequent disbursement to the beneficial owners of the Certificates. See "THE CERTIFICATES – General Provisions" and Appendix E – "DTC AND THE BOOK-ENTRY SYSTEM" herein.

THE CERTIFICATES ARE SUBJECT TO EXTRAORDINARY PREPAYMENT PRIOR TO MATURITY AS DESCRIBED HEREIN. See "THE CERTIFICATES – Prepayment" herein.

THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE COUNTY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE COUNTY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE CERTIFICATES NOR THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS CONSTITUTES A DEBT OF THE COUNTY, THE CORPORATION, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Certificates.

Maturity Schedule

Certificate Payment Date (November 15)

Principal Amount

Interest Rate Yield

CUSIP No.†

(834131)

Certificate Payment Date (November 15)

Principal Amount

Interest Rate

Yield

CUSIP No.†

(834131) 2010 $1,780,000 3.00% 1.210% GL2 2015 $1,435,000 4.25% 3.500% GR9 2011 1,845,000 4.00 1.730 GM0 2016 1,500,000 5.00 3.840 GS7 2012 1,930,000 5.00 2.180 GN8 2017 1,580,000 5.00 4.230 GT5 2013 2,030,000 5.00 2.670 GP3 2018 1,660,000 5.00 4.450 GU2 2014 2,120,000 4.25 3.100 GQ1 2019 865,000 5.00 4.620 GV0

The Certificates are offered when, as and if delivered and received by the Underwriter, subject to the approval as to their legality by Orrick,

Herrington & Sutcliffe LLP, Special Counsel to the County, and certain other conditions. Certain legal matters will be passed upon for the Underwriter by Hawkins Delafield & Wood LLP, San Francisco, California. Certain legal matters will be passed upon for the County by County Counsel. It is anticipated that the Certificates will be available for delivery through the facilities of DTC in New York, New York, on or about December 1, 2009.

Dated: November 20, 2009 † Copyright, American Bankers Association. CUSIP data herein is provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill

Companies, Inc. CUSIP data herein are set forth herein for convenience of reference only. None of the County, the Corporation or the Underwriter assumes responsibility for the accuracy of such information.

No dealer, broker, salesperson or other person has been authorized by the Corporation or the County to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation may not be relied upon as having been authorized by the Corporation or the County. This Official Statement does not constitute an offer to sell or a solicitation or an offer to buy nor shall there be any sale of the Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the Certificates. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.

The information set forth herein has been obtained from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter. The information and expression of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of the Corporation or the County since the date hereof.

Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements." Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget" or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the County's forecasts in any way, regardless of the level of optimism communicated in the information. The County is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. See "CONTINUING DISCLOSURE OBLIGATION" herein.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The Certificates have not been registered under the Securities Act of 1933, as amended, in reliance upon the exemption contained in Section 3(a)(2) of such Act. The Trust Agreement has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon an exemption contained in such Act.

In connection with this offering the Underwriter may over-allot or effect transactions which stabilize or maintain the market price of the Certificates at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

COUNTY OF SOLANO, CALIFORNIA

BOARD OF SUPERVISORS

John M. Vasquez, Chair District 4

Barbara Kondylis, Vice-Chair District 1

Linda Seifert District 2

James P. Spering

District 3 Michael J. Reagan

District 5

COUNTY OFFICIALS

Charles Lomeli Treasurer/Tax Collector/County Clerk

Michael D. Johnson County Administrator

Simona Padilla-Scholtens

Auditor-Controller Dennis Bunting County Counsel

SOLANO COUNTY FACILITIES CORPORATION, INC.

Board of Directors

President John M. Vasquez Vice President Barbara Kondylis Director Linda Seifert Director James P. Spering Director Michael J. Reagan Secretary Michael D. Johnson Chief Financial Officer Simona Padilla-Scholtens

FINANCIAL ADVISOR Public Financial Management, Inc.

San Francisco, California

SPECIAL COUNSEL Orrick, Herrington & Sutcliffe LLP

San Francisco, California

TRUSTEE Union Bank, N.A.

San Francisco, California

[THIS PAGE INTENTIONALLY LEFT BLANK]

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TABLE OF CONTENTS

Page

INTRODUCTION .......................................................................................................................................................1 GENERAL ...................................................................................................................................................................1 COUNTY OF SOLANO..................................................................................................................................................1 THE CORPORATION....................................................................................................................................................1 SECURITY FOR THE CERTIFICATES .............................................................................................................................2 CONTINUING DISCLOSURE .........................................................................................................................................3 REFERENCE TO ORIGINAL DOCUMENTS.....................................................................................................................3

PLAN OF REFUNDING.............................................................................................................................................4 ESTIMATED SOURCES AND USES OF PROCEEDS..........................................................................................4 THE CERTIFICATES................................................................................................................................................4

GENERAL PROVISIONS ...............................................................................................................................................4 PREPAYMENT.............................................................................................................................................................5

SECURITY FOR THE CERTIFICATES.................................................................................................................6 GENERAL ...................................................................................................................................................................6 CERTIFICATE RESERVE FUND ....................................................................................................................................6 THE LEASED PROPERTY.............................................................................................................................................7 ABATEMENT ..............................................................................................................................................................8 APPROPRIATIONS COVENANT ....................................................................................................................................8 INSURANCE ................................................................................................................................................................8 SUBSTITUTION .........................................................................................................................................................10

SCHEDULE OF CERTIFICATE PAYMENTS.....................................................................................................12 THE COUNTY ..........................................................................................................................................................13 THE CORPORATION .............................................................................................................................................13 RISK FACTORS FOR THE CERTIFICATES......................................................................................................13

NO TAX PLEDGE ......................................................................................................................................................13 OUTSTANDING AND FUTURE ADDITIONAL GENERAL FUND OBLIGATIONS..............................................................13 LOCAL ECONOMY ....................................................................................................................................................14 ABATEMENT ............................................................................................................................................................14 LIMITATION ON ENFORCEMENT OF REMEDIES .........................................................................................................15 BANKRUPTCY ..........................................................................................................................................................15 CHANGES IN LAW ....................................................................................................................................................15 EARTHQUAKES AND NATURAL DISASTERS..............................................................................................................15 STATE BUDGET........................................................................................................................................................16

CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS ..........................16 ARTICLE XIII A .......................................................................................................................................................16 ARTICLE XIII B .......................................................................................................................................................17 PROPOSITION 62.......................................................................................................................................................18 RIGHT TO VOTE ON TAXES INITIATIVE – PROPOSITION 218 .....................................................................................19 FUTURE INITIATIVES................................................................................................................................................20

LITIGATION ............................................................................................................................................................20 RATINGS...................................................................................................................................................................20 TAX MATTERS........................................................................................................................................................20 APPROVAL OF LEGALITY ..................................................................................................................................22 CONTINUING DISCLOSURE OBLIGATION.....................................................................................................23 UNDERWRITING ....................................................................................................................................................23

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FINANCIAL ADVISOR ...........................................................................................................................................23 MISCELLANEOUS ..................................................................................................................................................24 THE COUNTY OF SOLANO................................................................................................................. APPENDIX A

AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2008..........................................................................APPENDIX B

DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.....................................................................APPENDIX C

FORM OF OPINION OF SPECIAL COUNSEL.................................................................................... APPENDIX D

DTC AND THE BOOK-ENTRY SYSTEM ............................................................................................APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT....................................................................APPENDIX F

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OFFICIAL STATEMENT

$16,745,000 COUNTY OF SOLANO

SERIES 2009 REFUNDING CERTIFICATES OF PARTICIPATION

INTRODUCTION

General

The purpose of this Official Statement, which includes the cover page, table of contents and appendices included herewith (the "Official Statement"), is to provide certain information concerning the sale and delivery of the County of Solano Series 2009 Refunding Certificates of Participation (the "Certificates") in the aggregate principal amount of $16,745,000, representing proportionate interests of the registered owners thereof (the "Owners") in certain lease payments (the "Base Rental Payments") to be made by the County of Solano (the "County"). Base Rental Payments are to be made as rental in connection with the County's use of certain real property (the "Leased Property"). Under the Lease, the County is obligated to pay Base Rental Payments to Solano County Facilities Corporation, Inc. (the "Corporation") for the occupancy and use of the Leased Property. The Leased Property generally consists of the Solano Park Health Facility and the County's health and social services headquarters building and the sites thereof (the "Site"). See "SECURITY FOR THE CERTIFICATES – The Leased Property" herein.

The Certificates are being issued to (i) refund the Solano County Facilities Corporation, Inc. Certificates of Participation (1999 Capital Improvement Program) (the "1999 Certificates"), the proceeds of which were used to finance the acquisition of, and certain capital improvements on, the Site relating to the County's health and social services headquarters, (ii) fund the Certificate Reserve Fund (as defined herein), and (iii) to pay certain expenses of the financing. See "PLAN OF REFUNDING " herein.

County of Solano

The County lies in the northeast section of the nine-county San Francisco Bay Area. It is located approximately 35 miles northeast of San Francisco, and 35 miles southwest of Sacramento. The County covers 823 square miles, a majority of which lies in the fertile Sacramento Valley. It is bordered by Napa County to the northwest, Yolo County to the northeast, Sacramento County to the east and Contra Costa County to the south. As of January 1, 2009, the County's population was estimated by the State of California Department of Finance to be approximately 426,729. The County's 2009-10 final adopted General Fund budget includes revenues of approximately $206.6 million. See Appendix A – "THE COUNTY OF SOLANO" attached hereto.

The Corporation

The Corporation was organized on June 7, 1994, as a nonprofit public benefit corporation to render assistance to the County in its acquisition of equipment, real property and improvements on behalf of the County. The Corporation is a separate legal entity from the County. It is governed by a five-member Board of Directors appointed by the Board of Supervisors of the County. See "THE CORPORATION" herein.

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Security for the Certificates

The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of December 1, 2009 (the "Trust Agreement"), by and among the County, the Corporation and Union Bank, N.A., as trustee (the "Trustee"). The Certificates represent the proportionate interests of the Owners in the Base Rental Payments to be made by the County as rental in connection with the County's use of the Leased Property. The County will lease the Leased Property to the Corporation pursuant to an Amended and Restated Site Lease, dated as of December 1, 2009 (the "Site Lease"), by and between the County and the Corporation, and the Corporation will lease the Leased Property back to the County pursuant to an Amended and Restated Lease Agreement, dated as of December 1, 2009 (the "Lease"), between the County and the Corporation.

Pursuant to the Assignment Agreement dated as of December 1, 2009 (the "Assignment Agreement") the Corporation has assigned to the Trustee, for the benefit of the respective Owners, its rights and remedies under the Lease and Site Lease, including its rights to amounts payable by the County under the Lease.

The County is obligated under the Lease to make Base Rental Payments for the use and occupancy of the Leased Property. The County has covenanted under the Lease that so long as the Leased Property is available for use it will take such action as may be necessary to include its Base Rental Payments and Additional Payments in its annual budgets, and to make the necessary annual appropriations therefor. See "SECURITY FOR THE CERTIFICATES – Appropriations Covenant" herein.

A Certificate Reserve Fund (the "Certificate Reserve Fund") has been established for the benefit of the Owners of the Certificates. The Certificate Reserve Fund Requirement for the Certificates is $1,763,467.30 and will initially be funded by a portion of the proceeds of the Certificates on the delivery date of the Certificates. The Certificate Reserve Fund Requirement may be provided by a policy of insurance issued by a municipal bond insurance company obligations insured by which have ratings by Moody's Investors Service ("Moody's") and Standard & Poor's Ratings Service ("S&P") which are the highest ratings then issued by such rating agencies or by a letter of credit issued by a Qualified Bank. See "SECURITY FOR THE CERTIFICATES – Certificate Reserve Fund."

Under the Lease, during any period in which, by reason of material damage, destruction, title defect or condemnation there is substantial interference with the use and possession by the County of any portion of the Leased Property, rental payments due under the Lease with respect to the Leased Property are subject to abatement to the extent that the annual fair rental value of the portion of the Leased Property in respect of which there is no substantial interference is less than the annual Base Rental Payments and Additional Payments, in which case rental payments are required to be abated only by an amount equal to the difference. Any abatement of rental payments pursuant to the Lease will not be considered an event of default as defined under the Lease. See "RISK FACTORS FOR THE CERTIFICATES – Abatement" herein. Certain funds may be available to make rental payments under the Lease if there is an abatement. See "THE CERTIFICATES – Prepayment," "SECURITY FOR THE CERTIFICATES – Abatement" and "– Insurance" herein.

THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS UNDER THE LEASE IS AN OBLIGATION PAYABLE FROM THE COUNTY'S GENERAL FUND AND ANY OTHER SOURCE OF FUNDS LEGALLY

3

AVAILABLE TO THE COUNTY FOR THE PAYMENT OF BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS. THE OBLIGATION OF THE COUNTY TO PAY BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE COUNTY FOR WHICH THE COUNTY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE COUNTY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE COUNTY TO PAY BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS UNDER THE LEASE DOES NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF THE COUNTY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE COUNTY IS OBLIGATED TO PAY ONLY ITS BASE RENTAL PAYMENTS OR ADDITIONAL PAYMENTS UNDER THE LEASE.

For a discussion of certain considerations relevant to an investment in the Certificates, see "RISK FACTORS FOR THE CERTIFICATES" herein.

Continuing Disclosure

The County has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board or any other repository as may be designated by the Securities and Exchange Commission, certain annual financial information and operating data and, in a timely manner, notice of certain material events. These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5). See "CONTINUING DISCLOSURE OBLIGATION" herein and Appendix F – "FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto for a description of the specific nature of the annual report and notices of material events and a summary description of the terms of the disclosure agreement pursuant to which such reports are to be made.

In the last five years, the County has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.

Reference to Original Documents

The descriptions of the Certificates, the Lease, the Site Lease, the Assignment Agreement, the Trust Agreement and other documents described in this Official Statement do not purport to be definitive or comprehensive, and all references to those documents are qualified in their entirety by reference to the approved form of those documents, which documents are available at the principal corporate trust office of the Trustee in San Francisco, California. During the period of the offering of the Certificates, copies of such documents will also be available from Wedbush Securities Inc. See Appendix C – "DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" attached hereto for the definitions of some of the terms used in the Lease, the Trust Agreement and this Official Statement and not otherwise defined.

All of the summaries of statutes, resolutions, opinions, agreements, financial and statistical data, and other related reports described in this Official Statement are made subject to the provisions of such documents. These summaries do not purport to be complete statements of such provisions and reference is to such documents, copies of which are either publicly available or available for inspection by written request mailed to the County of Solano, Auditor-Controller's Office, 675 Texas Street, Suite 2800, Fairfield, California 94533.

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PLAN OF REFUNDING

The Certificates are being delivered to (i) refund the 1999 Certificates, the proceeds of which were used to finance the acquisition of, and certain capital improvements on, the Site relating to the County's health and social services headquarters, (ii) fund the Certificate Reserve Fund, and (iii) to pay certain expenses of the financing.

A portion of the proceeds of the Certificates, together with certain other available moneys, will be used to prepay the outstanding 1999 Certificates in full on December 1, 2009.

ESTIMATED SOURCES AND USES OF PROCEEDS

SOURCES Par Amount of Certificates $16,745,000 Net Original Issue Premium 889,673 Transfer from the 1999 Certificates reserve fund 2,619,719

$20,254,392 TOTAL PROCEEDS

USES

Prepayment of 1999 Certificates $18,189,334 Deposit to the Certificate Reserve Fund 1,763,467 Costs of Delivery(1) 301,591

$20,254,392 TOTAL USES __________________________ (1) Includes legal fees, initial Trustee fees, Financial Advisor fees, Underwriter's discount, printing costs,

rating agency fees and other expenses. For information regarding the Underwriter's discount for the Certificates, see "UNDERWRITING" herein.

THE CERTIFICATES

General Provisions

The Certificates will be dated the date of delivery and will represent interest from the date of delivery at the rates per annum set forth on the cover page hereof with respect to the Certificates, payable semiannually on May 15 and November 15 of each year, commencing May 15, 2010 (each, an "Interest Payment Date"), and will have Certificate Payments Dates on November 15 in each of the designated years in the amounts shown in the schedule on the cover page hereof.

The Certificates will be executed and delivered in fully registered form without coupons, in denominations of $5,000 each or any integral multiple thereof. Principal and premium, if any, with respect to the Certificates will be payable at the principal corporate trust office of the Trustee. The interest represented by the Certificates will be payable in like lawful money to the person whose name appears on the Certificate registration books of the Trustee as the Owner thereof as of the close of business on the last day of the month preceding each Interest Payment Date, whether or not such day is a business day, such interest to be paid by check mailed by first class mail on the date such interest is due to such Owner at such address as appears on such registration books. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Certificates.

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The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for the Certificates, in the aggregate principal amount of the Certificates, and will be deposited with DTC. For more information regarding DTC and the book-entry only system, see Appendix E – "DTC AND THE BOOK-ENTRY SYSTEM" attached hereto.

Prepayment

No Optional Prepayment. The Certificates are not subject to optional prepayment prior to maturity.

Extraordinary Prepayment Due to Casualty, Loss or Defect in Title of Leased Property. The Certificates are subject to prepayment on any date prior to their respective Certificate Payment Dates, as a whole, or in part by lot within each Certificate Payment Date so that the aggregate annual amounts of principal represented by the Certificates which will be payable after such prepayment date will correspond to the principal component of the reduced Base Rental resulting from a casualty loss or governmental taking or defect in title of the Site and the Leased Property or portions thereof, from prepaid Base Rental Payments made by the County from funds received by the County due to such casualty loss or governmental taking or defect in title, if such amounts are not used to repair or replace the Site and the Leased Property in accordance with the provisions of the Lease, under the circumstances and upon the conditions and terms prescribed in the Trust Agreement and in the Lease, at a prepayment price equal to the sum of the principal amount represented plus accrued interest represented thereby to the date fixed for prepayment, without premium.

The Certificates will not otherwise be subject to prepayment before their respective stated Certificate Payment Dates. See Appendix C – "DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" attached hereto.

Effect of Prepayment. If notice of prepayment has been duly given as provided below and moneys for the payment of the prepayment price on the Certificates to be prepaid are held by the Trustee, then on the prepayment date designated in such notice the Certificates so called for prepayment will become payable at the prepayment price specified in such notice; and from and after the date so designated interest represented by the Certificates so called for prepayment will cease to accrue, such Certificates will cease to be entitled to any benefit or security under the Trust Agreement and the Owners of such Certificates will have no rights in respect thereof except to receive payment of the prepayment price represented thereby.

Notice of Prepayment. Notice of prepayment will be mailed, first class postage prepaid, to the respective Owners of any Certificates designated for prepayment at their addresses appearing on the books required to be kept by the Trustee not less than thirty (30) nor more than sixty (60) days prior to the date fixed for prepayment. Each notice of prepayment will state the date fixed for prepayment, the prepayment price and will designate the serial numbers of the Certificates to be prepaid by giving the individual number of each Certificate or by stating that all Certificates between two stated numbers, both inclusive, have been called for prepayment, and will require that such Certificates be then surrendered for prepayment; and will also state that the interest represented by the Certificates designated for prepayment will cease to accrue from and after such date fixed for prepayment and that on such date there will become due and payable on each of the Certificates designated for prepayment the prepayment price represented thereby. Such notice will, in addition to setting forth the above information, in the case of each Certificate called for prepayment in part only

6

state the amount of the principal amount represented thereby which is to be prepaid. Any notice mailed as provided herein will be conclusively presumed to have been given, whether or not such Owner receives the notice.

At any time prior to one day before the date fixed for prepayment of any Certificates, the Trustee may rescind the notice of prepayment, upon prior written notice to the Trustee from the Corporation in accordance with the Trust Agreement.

SECURITY FOR THE CERTIFICATES

General

Each Certificate represents an undivided proportionate interest in the Base Rental Payments to be made by the County under the Lease. The Corporation, pursuant to the Assignment Agreement, will absolutely and unconditionally assign its rights and remedies under the Lease and Site Lease to the Trustee for the benefit of the Owners of the Certificates, including its right to receive Base Rental Payments thereunder. Principal and interest due with respect to the Certificates will be made from the Base Rental Payments payable by County for the use and possession of the Leased Property, insurance or condemnation Net Proceeds pertaining to the Leased Property, interest or other income derived from the investment of the funds and accounts held by the Trustee for the County pursuant to the Trust Agreement, or in certain instances, from the Certificate Reserve Fund established by the Trust Agreement.

The County has covenanted under the Lease to make Base Rental Payments for the use and possession of the Leased Property and so long as the Leased Property is available for the County's use, to take such action each year as may be necessary to include all Base Rental Payments and Additional Payments in its annual budget and annually to appropriate an amount necessary to make such Base Rental Payments and Additional Payments. The amounts payable to the Trustee are to be used to make the payments of principal and interest due with respect to the Certificates. Base Rental Payments are required to be deposited in the Interest Fund, Principal Fund or the Prepayment Fund maintained by the Trustee. On each Certificate Payment and Interest Payment Date, the Trustee will withdraw from the appropriate account the aggregate amount of the Base Rental Payments and will apply such amounts to make principal and interest payments due with respect to the Certificates. UNDER CALIFORNIA LAW, EVEN THOUGH THE LEASE BECOMES EFFECTIVE AS OF THE DATE OF THE LEASE, THE OBLIGATION OF THE COUNTY TO MAKE THE BASE RENTAL PAYMENTS MAY BE ABATED PRO RATA IF THE FULL USE AND POSSESSION OF THE LEASED PROPERTY IS NOT AVAILABLE TO THE COUNTY.

The obligation of the County to make Base Rental Payments does not constitute an obligation of the County for which the County is obligated to levy or pledge any form of taxation. Neither the Certificates nor the obligation of the County to make Base Rental Payments constitutes an indebtedness of the County, the State of California or any of its political subdivisions within the meaning of the Constitution of the State of California or otherwise a pledge of the faith and credit of the County. See "RISK FACTORS FOR THE CERTIFICATES" herein.

Certificate Reserve Fund

A Certificate Reserve Fund has been established for the County for the benefit of the Owners of the Certificates. The Certificate Reserve Fund Requirement for the Certificates is $1,763,467.30

7

and will be satisfied upon the delivery date of the Certificates with a sum to be deposited with the Trustee equal to the Certificate Reserve Fund Requirement. The Certificate Reserve Fund Requirement may be provided by a policy of insurance issued by a municipal bond insurance company obligations insured by which have ratings by S&P and Moody's which are the highest ratings then issued by such rating agencies or by a letter of credit issued by a Qualified Bank.

If on June 1 or December 1 of any year the amount in the Certificate Reserve Fund exceeds the Certificate Reserve Fund Requirement, the Trustee, if the County is not then in default under the Lease and if the Corporation and the County are not then in default under the Trust Agreement, will pay the amount of such excess to the County by depositing such amount in the Base Rental Payment Fund. Except for such withdrawals, moneys on deposit in the Certificate Reserve Fund will be used solely for the payment of Base Rental Payments due and payable by the County if and when rental is abated in accordance with the Lease or when other moneys of the County are not otherwise available to make such Base Rental Payments.

Under the Lease, the County will pledge and grant a lien on and a security interest in the Certificate Reserve Fund to the Corporation to secure the County's obligation to pay the Base Rental Payments. The County further agrees under the Lease that if at any time the balance in the Certificate Reserve Fund is reduced below the Certificate Reserve Fund Requirement, the first payments of Base Rental Payments thereafter payable by the County and not needed to pay Base Rental interest and principal components payable to the Certificate Owners on the next Base Rental due date will be used to increase the balance in the Certificate Reserve Fund to the required Certificate Reserve Fund Requirement. At the termination of the Lease in accordance with its terms, any balance remaining in the Certificate Reserve Fund will be released from the said pledge, lien and security interest and may be transferred to such other fund or account of the County, or otherwise used by the County for any other lawful purposes, as the County may direct.

The Leased Property

Under the Lease, the County is obligated to pay Base Rental Payments to the Corporation for the occupancy and use of the Leased Property. The Leased Property consists of (i) the Site, (ii) the Solano Park Health Facility located on the Site, and (iii) the Health & Social Services Building (the "H&SS Building") located on the Site. All of the land and improvements are located in the Solano Business Park in Fairfield, California, the County seat of Solano County. The Solano Business Park is an office / light manufacturing business park located approximately two miles south of Interstate 80 and west of Highway 12. Main access to the Solano Business Park is from arterial feeders that extend across Highway 12.

Solano Park Health Facility. The Solano Park Health Facility is a one floor, 50,650 square foot structure built on a concrete slab foundation with concrete wall construction and adjacent parking and landscaping. The Solano Park Health Facility is located on a 6.84 acre parcel within the Solano Business Park. The Solano Park Health Facility and the land were acquired by the County in July 1994 from a private company which originally acquired the site in August 1989 and completed the health facility improvements in 1991. The Solano Park Health Facility represented the first phase of the County's plan to consolidate the various programs administered by its Health and Human Services Department at one location. Construction of the Solano Park Health Facility and related improvements was completed in 1996 and conformed to then-applicable seismic requirements. The completion of the Solano Park Health Facility has enabled the Country's Health and Human Services to consolidate delivery functions and a variety of its programs including the Family Primary Medical

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Clinic 24-Hour Crisis and Detox Service, Coordinated Patient Care / Personal Care Services, Dental Clinic, Adult Mental Health, Forensic Out-Patient and Institutional Services, Intensive Care Management, Nutrition Services, Public Health Nursing and a Psychiatric Health Unit.

The H&SS Building. The H&SS Building is a 114,500 gross square foot, two-story, tilt-up concrete structure with a slab, on-grade foundation and structural steel second floor with concrete deck and wood framed roof structure with built-up roofing. The H&SS Building is primarily used for administrative functions of the County's Department of Health and Social Services, and is adjacent to the Solano Park Health Facility. The H&SS Building also includes parking and a childcare center with a capacity of up to 60 children.

Abatement

Under the Lease, except to the extent of (a) amounts held by the Trustee in the Base Rental Payment Fund or the Certificate Reserve Fund, (b) amounts received in respect of use and occupancy insurance, and (c) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Certificates, during any period in which, by reason of material damage, destruction, title defect or condemnation there is substantial interference with the use and possession by the County of any portion of the Leased Property, rental payments due under the Lease with respect to the Leased Property are subject to abatement to the extent that the annual fair rental value of the portion of the Leased Property in respect of which there is no substantial interference is less than the annual Base Rental Payments and Additional Payments, in which case rental payments are required to be abated only by an amount equal to the difference. Any abatement of rental payments pursuant to the Lease will not be considered an event of default as defined under the Lease. The County waives the benefits of Civil Code Sections 1932(2) and 1933(4) and any and all other rights to terminate the Lease by virtue of any such interference and the Lease will continue in full force and effect. Such abatement will continue for the period commencing with the date of such damage, destruction, title defect or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Leased Property so damaged, destroyed, defective or condemned.

Appropriations Covenant

Under the Lease, the County covenants to take such action as may be necessary to include all such Base Rental Payments and Additional Payments due thereunder in its annual budgets, to make necessary annual appropriations for all such Base Rental Payments and Additional Payments and to take such action annually as may be necessary to provide funds in such year for such Base Rental Payments and Additional Payments. The County will deliver to the Corporation and the Trustee copies of the portion of each annual County budget relating to the payment of Base Rental Payments and Additional Payments within thirty (30) days after the filing or adoption thereof. The Lease provides that covenants on the part of the County thereunder will be deemed to be and will be construed to be duties imposed by law and that it will be the duty of each and every public official of the County to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the County to carry out and perform the covenants and agreements in the Lease agreed to be carried out and performed by the County.

Insurance

Property Insurance; No Earthquake Insurance. Under the Lease, the County agrees to maintain insurance from a Qualified Carrier, as defined under the Lease, against loss or damage to

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any structures constituting any part of the Leased Property by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance. Said extended coverage insurance is required to, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance is required to be in an amount equal to the replacement cost (without deduction for depreciation) of all structures constituting any part of the Leased Property, excluding the cost of excavations, of grading and filling, and of the land (except that such insurance may be subject to deductible clauses for any one loss of not to exceed $10,000), or, in the alternative, is required to be in an amount and in a form sufficient (together with moneys in the Certificate Reserve Fund), in the event of total or partial loss, to enable all Certificates then outstanding to be prepaid.

In the event of any damage to or destruction of any part of the Leased Property caused by the perils covered by such insurance, the Corporation, except as provided in the Lease, is required to cause the proceeds of such insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion of the Leased Property, and the Trustee is required to hold said proceeds separate and apart from all other funds, in a special fund to be designated the "Insurance and Condemnation Fund," to the end that such proceeds are required to be applied to the repair, reconstruction or replacement of the Leased Property to at least the same good order, repair and condition as they were in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. Alternatively, the Corporation, at its option, with the written consent of the County and of the Trustee, and if the proceeds of such insurance together with any other moneys then available for the purpose are at least sufficient to prepay an aggregate principal amount represented by outstanding Certificates, equal to the amount of outstanding Certificates attributable to the portion of the Leased Property so destroyed or damaged (determined by reference to the proportion which the acquisition and construction cost of such portion of the Leased Property bears to the acquisition and construction cost of the Leased Property), may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Leased Property and thereupon will cause said proceeds to be used for the prepayment of outstanding Certificates pursuant to the provisions of the Trust Agreement. See "THE CERTIFICATES – Prepayment" herein.

As an alternative to providing the property insurance described above, or any portion thereof, the County, with the written consent of the Corporation, may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection shall afford reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the County.

The County is not required to obtain earthquake insurance under the Lease.

Liability Insurance. Under the Lease, the County is required to procure or cause to be procured and maintain or cause to be maintained, throughout the term of the Lease, standard comprehensive general liability insurance, in such amounts as provided in the Lease, in protection of the Corporation and the Trustee against all direct or contingent loss or liability for damages for personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Under certain circumstances, the County may provide a self insurance method or plan of protection in lieu of obtaining comprehensive general liability insurance.

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Rental Interruption or Use and Occupancy Insurance. Under the Lease, the County is required to maintain rental interruption or use and occupancy insurance from a Qualified Carrier to cover loss, total or partial, of the rental income from or the use of the Leased Property as the result of any of the hazards covered by the insurance required by the Lease, in an amount sufficient to pay the part of the total rent under the Lease attributable to the portion of the Leased Property rendered unusable (determined by reference to the proportion which the acquisition and construction cost of such portion bears to the acquisition and construction cost of the Leased Property) for a period of at least two years. Any proceeds of such insurance are required to be used by the Trustee to reimburse to the County any rental theretofore paid by the County under the Lease attributable to such structure for a period of time during which the payment of rental under the Lease is abated, and any proceeds of such insurance not so used will be applied as provided in the Lease (to the extent required for the payment of Base Rental) and Additional Payments.

Title Insurance. Under the Lease, the County is required to obtain title insurance on the Leased Property, in the form of a lender's leasehold title policy or policies, in an aggregate amount equal to the aggregate principal component of unpaid Base Rental Payments, issued by a company of recognized standing duly authorized to issue the same, subject only to Permitted Encumbrances naming the Trustee as insured thereunder.

"Permitted Encumbrances" is defined under the Trust Agreement as (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the County may, pursuant to the Lease, permit to remain unpaid; (2) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the date of recordation of the Lease in the office of the County Recorder of Solano County and which the County certifies in writing will not materially impair the use of the Leased Property; (3) the Site Lease, as it may be amended from time to time; (4) the Lease, as it may be amended from time to time; (5) the Assignment Agreement, as it may be amended from time to time; (6) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (7) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease and to which the Corporation and the County consent in writing and which do not materially adversely affect the rights of owners of the Certificates; and (8) liens relating to special assessments levied with respect to the Leased Property.

Substitution

The Lease provides that the County and the Corporation may substitute property as part of the Leased Property for purposes of the Site Lease and the Lease, but only after the County has filed with the Corporation and the Trustee, with copies to each rating agency then providing a rating for the Certificates, all of the following: (a) executed copies of the Site Lease and the Lease or amendments thereto containing the amended description of the Leased Property, including the legal description of the Leased Property as modified if necessary; (b) a Certificate of the County with copies of the Site Lease, the Lease and the Assignment Agreement, if needed, or amendments thereto containing the amended description of the Leased Property stating that such documents have been duly recorded in the official records of the County Recorder of the County of Solano; (c) a Certificate of the County, accompanied by a written appraisal, from a qualified appraiser, who may but need not be an employee of the County, evidencing that the annual fair rental value of the Leased Property which will constitute the Leased Property after such substitution will be at least equal to 100 percent of the maximum amount of Base Rental Payments becoming due in the then current year ending

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October 31 (this requirement will be deemed satisfied if the property to be substituted has a fair market value at least equal to the remaining principal amount of the Base Rental Payments unpaid) or in any subsequent year ending October 31, or, in the case of facilities constructed within two years of the date of the substitution, evidence that the cost of the facility being substituted is at least equal to the cost or estimated cost of the facility being replaced; (d) a California Land Title Association leasehold owner's policy or policies or a commitment for such policy or policies or an amendment or endorsement to an existing policy or policies resulting in title insurance with respect to the Leased Property after such substitution in an amount at least equal to the amount of such insurance provided with respect to the Leased Property prior to such substitution; each such insurance instrument, when issued, is required to name the Trustee as the insured, and will insure the fee or leasehold estate of the Corporation in such substituted property subject only to such exceptions as do not substantially interfere with the County's right to use and occupy such substituted property and as will not result in an abatement of Base Rental Payments payable by the County under the Lease; (e) a Certificate of the County stating that such substitution does not adversely affect the County's use and occupancy of the Leased Property; and (f) an Opinion of Counsel stating that such amendment or modification (i) is authorized or permitted by the Constitution and laws of the State and the Trust Agreement; (ii) complies with the terms of the Constitution and laws of the State and of the Trust Agreement; (iii) will, upon the execution and delivery thereof, be valid and binding upon the Corporation and the County in accordance with its terms; and (iv) will not cause the interest component of the Base Rental Payments to be included in gross income for federal income tax purposes.

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SCHEDULE OF CERTIFICATE PAYMENTS

The following is a schedule of the payments due with respect to the Certificates:

Payment Date Principal

Component Interest

Component Total Annual Debt

Service

05/15/2010 -- $344,644.86 $344,644.86 -- 11/15/2010 $1,780,000.00 378,268.75 2,158,268.75 $2,502,913.61 05/15/2011 -- 351,568.75 351,568.75 -- 11/15/2011 1,845,000.00 351,568.75 2,196,568.75 2,548,137.50 05/15/2012 -- 314,668.75 314,668.75 -- 11/15/2012 1,930,000.00 314,668.75 2,244,668.75 2,559,337.50 05/15/2013 -- 266,418.75 266,418.75 -- 11/15/2013 2,030,000.00 266,418.75 2,296,418.75 2,562,837.50 05/15/2014 -- 215,668.75 215,668.75 -- 11/15/2014 2,120,000.00 215,668.75 2,335,668.75 2,551,337.50 05/15/2015 -- 170,618.75 170,618.75 -- 11/15/2015 1,435,000.00 170,618.75 1,605,618.75 1,776,237.50 05/15/2016 -- 140,125.00 140,125.00 -- 11/15/2016 1,500,000.00 140,125.00 1,640,125.00 1,780,250.00 05/15/2017 -- 102,625.00 102,625.00 -- 11/15/2017 1,580,000.00 102,625.00 1,682,625.00 1,785,250.00 05/15/2018 -- 63,125.00 63,125.00 -- 11/15/2018 1,660,000.00 63,125.00 1,723,125.00 1,786,250.00 05/15/2019 -- 21,625.00 21,625.00 -- 11/15/2019 865,000.00 21,625.00 886,625.00 908,250.00

Total: $16,745,000.00 $4,015,801.11 $20,760,801.11 $20,760,801.11

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THE COUNTY

Information with respect to the County, including financial information, a summary of County debt, the County Investment Pool and certain economic and demographic information relating to the County is provided in Appendix A – "THE COUNTY OF SOLANO" attached hereto. A copy of the financial statements of the County for the fiscal year ended June 30, 2008 is attached hereto as Appendix B and should be read in its entirety.

THE CORPORATION

The Solano County Facilities Corporation, Inc., was incorporated on June 7, 1994 as a nonprofit public benefit corporation pursuant to the Nonprofit Public Benefit Corporation Law of the State of California (Title 1, Division 2, Part 2 of the California Corporations Code). The Corporation's principal place of business is in the County of Solano. The Corporation is governed by a five-member Board of Directors approved by the County. Corporate Directors receive no compensation. The Corporation has no employees. All staff work is performed by the County.

The purpose of the Corporation is to provide financial assistance to the County by financing the acquisition, construction, improvement and remodeling of public buildings and facilities for the County, together with parking, site development, landscaping, utilities, equipment, furnishings, improvements and all appurtenant and related facilities.

RISK FACTORS FOR THE CERTIFICATES

The following risk factors associated with investing in Certificates, along with all other information in this Official Statement, should be considered by potential inventors in evaluating an investment in the Certificates. The following list is not intended to be conclusive and no significance should be associated with the order of presentation of the risk factors.

No Tax Pledge

The obligation of the County to pay the Base Rental Payments does not constitute an obligation of the County which the County is obligated to levy or pledge any form of taxation or for which the County has levied or pledged any form of taxation. The obligation of the County to pay Base Rental Payments does not constitute a debt or indebtedness of the County, the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.

Outstanding and Future Additional General Fund Obligations

The County is currently liable for approximately $209.35 million outstanding principal amount of obligations as of November 1, 2009 payable from general revenues (not including the Certificates), and the Lease does not prohibit the County from incurring additional obligations payable from general revenues. To the extent that additional obligations are incurred by the County, the funds available to make Base Rental Payments may be decreased. See Appendix A – "THE COUNTY OF SOLANO – COUNTY FINANCES – Outstanding Payment Obligations" attached hereto.

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Local Economy

In recent years, the United States and California economy have been in a recession. A major factor in this recession has been a decline in real estate values. The national and California recession and decline in real estate values have been experienced in the local County of Solano economy. The County unemployment rate as of September 2009 was 11.5 percent, compared to State and national rates of unemployment of 12.0 percent and 9.8 percent, respectively. See Appendix A attached hereto for additional information on the County of Solano economy.

Real estate market values have declined in recent years. One factor is that some homeowners have financed the purchase of their homes using "sub-prime loans" with features that may include little or no downpayment and adjustable interest rates that are subject to being reset at higher rates on a specified date or on the occurrence of specified conditions. Some homeowners, including those within the County of Solano, who purchased their homes with sub-prime loans have experienced difficulty in meeting loan payments, leading to increased defaults and foreclosures. As a result of increasing defaults and foreclosures on sub-prime and other loans and other factors, real estate values have declined and credit has become more difficult and more expensive to obtain, not only in the residential market, but also in the commercial, retail and industrial sectors. Unavailability of loans for the purchase and development of real property in the County of Solano may continue to adversely impact assessed values.

The County's finances have faced challenges in recent years from the various economic factors described above and other factors. High foreclosure rates and lower assessed values have adversely impacted the County's property tax revenues, the credit crisis has resulted in reduced income from the County's investments, sluggish retail sales have resulted in lower sales tax revenues, and the State budget crisis has resulted in reduced funding to local governments, including the County. For Fiscal Year 2009-10, the County Assessor reduced the assessed value on a significant number of residences in the County. See Appendix A – "THE COUNTY OF SOLANO" attached hereto for additional information on the County's finances.

Abatement

Under the Lease, except to the extent of (a) amounts held by the Trustee in the Base Rental Payment Fund or the Certificate Reserve Fund, (b) amounts received in respect of use and occupancy insurance, and (c) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Certificates, during any period in which, by reason of material damage, destruction, title defect or condemnation there is substantial interference with the use and possession by the County of any portion of the Leased Property, rental payments due under the Lease with respect to the Leased Property are subject to abatement to the extent that the annual fair rental value of the portion of the Leased Property in respect of which there is no substantial interference is less than the annual Base Rental Payments and Additional Payments, in which case rental payments are required to be abated only by an amount equal to the difference. Any abatement of rental payments pursuant to the Lease will not be considered an event of default as defined under the Lease. The County waives the benefits of Civil Code Sections 1932(2) and 1933(4) and any and all other rights to terminate the Lease by virtue of any such interference and the Lease will continue in full force and effect. Such abatement will continue for the period commencing with the date of such damage, destruction, title defect or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Leased Property so damaged, destroyed, defective or condemned, and if such abatement period lasts beyond the period of time funds are available from insurance

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policies or the Reserve Facility, Base Rental Payments may be insufficient to cover payments to Certificate holders.

Limitation on Enforcement of Remedies

The enforcement of any remedies provided in the Lease and Trust Agreement could prove both expensive and time consuming. Although the Lease provides that the Corporation may take possession of the Leased Property then subject to the Lease and lease such Leased Property if there is a default by the County and the Lease further provides that the Corporation may have such rights of access to the Leased Property as may be necessary to exercise any remedies, portions of such Leased Property may not be easily recoverable since they may be affixed to property not owned by the Corporation and even if recovered, could be of little value to others. Furthermore, due to the essential nature to the governmental functions of the Leased Property, it is uncertain whether a court would permit the exercise of the remedies of repossession and leasing with respect thereto.

In the event of a default under the Lease, there is no available remedy of acceleration of the total Base Rental Payments due over the terms of the Lease. The County will only be liable for Base Rental Payments on an annual basis as they come due, and the Trustee would be required to seek separate judgments for the annual Base Rental Payments. In addition, any such suit for money damages could be subject to limitations on legal remedies against public agencies in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest.

Bankruptcy

In addition to the limitations on remedies contained in the Lease and the Trust Agreement, the rights and remedies provided in the Lease and the Trust Agreement may be limited by and are subject to provisions of federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect the enforcement of creditors' rights.

Changes in Law

There can be no assurance that the California electorate will not at some future time adopt initiatives or that the Legislature will not enact legislation that will amend the laws or the Constitution of the State of California resulting in a reduction of the funds legally available to County to make Base Rental Payments, and consequently, having an adverse effect on the security for the Certificates.

Earthquakes and Natural Disasters

The obligation to pay Base Rental Payments may be adversely affected if the Leased Property is damaged or destroyed by natural hazard such as earthquake or flood. There are several faults in the area that potentially could result in damage to buildings, roads, bridges, and property within the County in the event of an earthquake. The Leased Property is also located in a FEMA-designated Special Flood Hazard Area and is designated as Zone AO. This designation means that the Leased Property is subject to shallow flooding every 100 years, with average depths of one foot.

The County is not obligated under the Lease to maintain flood or earthquake insurance on the Leased Property. The Leased Property is currently not covered by earthquake insurance, but is

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covered by flood insurance. There can be no assurance that the County will continue to obtain flood insurance for the Leased Property in the future. In the event of damage or destruction to the Leased Property caused by perils for which the County does not provide insurance and is not required to provide insurance under the Lease, the County will not be obligated to repair, replace or reconstruct the Leased Property. See "SECURITY FOR THE CERTIFICATES – Insurance" herein and Appendix C – "DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" attached hereto.

State Budget

In recent years, the State has experienced significant financial and budgetary stress. The County receives a significant portion of its funding from subventions by the State. Recent State budgets have included or propose substantial reductions in funding received by the County from the State. The State budget for Fiscal Year 2009-10 proposes that the State borrow approximately eight percent of property tax revenues from counties (including the County), cities and special districts totaling approximately $2 billion, which amount will be repaid within three years, in accordance with Proposition 1A (2004).

The County cannot predict the extent of the budgetary problems the State will encounter in this or in any future fiscal years, and it is not clear what measures would be taken by the State to balance its budget, as required by law. Accordingly, the County cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on the County's finances and operations, or what actions will be taken in the future by the State legislature and Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by national and economic conditions and other factors over which the County has no control. For a discussion of the potential impact of State budget actions on the County, see Appendix A – "THE COUNTY OF SOLANO – COUNTY FINANCES – State Budget" attached hereto.

CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS

Described below are certain measures which have impacted or may in the future impact the County's General Fund Budget.

Article XIII A

On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIII A to the California Constitution, among other things affects the valuation of real property for the purpose of taxation in that it defines the full cash property value to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under "full cash value," or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed two percent per year, or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and bonded indebtedness for

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the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition.

Legislation enacted by the California Legislature to implement Article XIII A provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100 percent of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100 percent of assessed value.

Future assessed valuation growth allowed under Article XIII A (new construction, change of ownership, two percent annual value growth) will be allocated on the basis of "sites" 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" revenue from the tax rate area. Each year's growth allocation becomes part of each agency's allocation the following year. The County is unable to predict the nature or magnitude of future revenue sources which may be provided by the State to replace lost property tax revenues. Article XIII A effectively prohibits the levying of any other ad valorem property tax above the one percent limit except for taxes to support indebtedness approved by the voters as described above.

Article XIII B

On November 6, 1979, California voters approved Proposition 4, the Gann Initiative, which added Article XIII B to the California Constitution. In June 1990, Article XIII B was amended by the voters through their approval of Proposition 111. Article XIII B of the California Constitution limits the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The "base year" for establishing such appropriation limit is the 1978-79 fiscal year. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the Constitutional limit. Decreases are required where responsibility for providing services is transferred from the government entity.

Appropriations subject to Article XIII B include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation pursuant to Article XIII B do not include debt service on indebtedness existing or legally authorized as of January l, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the Federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January l, 1990 levels. "Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues and (iii) certain State subventions received by local governments. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of

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the aggregate "proceeds of taxes" received by the County over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years.

As amended in June 1990, the appropriations limit for the County in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the County's option, either (i) the percentage change in California per capita personal income, or (ii) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth, and change in attendance at local school and community college ("K-14") districts.

Article XIII B permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter-approved change can only be effective for a maximum of four years.

The County's appropriations limit for Fiscal Year 2007-08 was $441,358,171 and amount subject to the limitation was $125,435,265. The County's appropriations limit for the Fiscal Year 2008-09 was $463,146,249, and the amount shown in its budget for that year as the appropriations subject to limitation was $132,771,998. The County's appropriations limit for Fiscal Year 2009-10 is $470,398, 321 and the amount subject to limitation is $111,892,850.

Proposition 62

Proposition 62 was adopted by the voters at the November 4, 1986, general election which (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the County be approved by a two-thirds vote of the governmental entity's legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local government entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIII A of the California Constitution, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.

The requirements imposed by Proposition 62 were upheld by the California Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal. 4th 220; 45 Cal. Rptr. 2d 207 (1995). In this case, the Court held that a county-wide sales tax of one-half of one percent was a special tax that, under Section 53722 of the Government Code, required a two-thirds voter approval. Because the tax received an affirmative vote of only 54.1 percent, this special tax was found to be invalid.

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Following the California Supreme Court's decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62. On June 4, 2001, the California Supreme Court released its decision in one of these cases, Howard Jarvis Taxpayers Association v. City of La Habra, et al. ("La Habra"). In La Habra, the Court held that the public agency's continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period begins anew with each collection. The Court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.

The County is of the opinion that Proposition 62 will not materially impact any existing taxes, fees or assessments collected by the County. No revenues collected by the County have been challenged under Proposition 62.

Right to Vote on Taxes Initiative – Proposition 218

On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to Vote on Taxes Act." Proposition 218 added Articles XIII C and XIII D to the California Constitution, which contain a number of provisions affecting the ability of cities and counties to levy and collect both existing and future taxes, assessments, fees and charges.

Article XIII C requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the County require a majority vote and taxes for specific purposes, even if deposited in the County's general fund, require a two-thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the Board of Supervisors to raise revenues for the general fund, and no assurance can be given that the County will be able to impose, extend or increase such taxes in the future to meet increased expenditure requirements. In addition, Article XIII D contains new provisions relating to how local agencies may levy and maintain "assessments" for municipal services and programs. "Assessment" is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property. This definition applies to landscape and maintenance assessments for open space areas, street medians, street lights and parks.

In addition to the provisions described above, Article XIII C removed many of the limitations on the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No assurance can be given that the voters of the County will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the County's general fund.

In addition, Proposition 218 added several requirements making it generally more difficult for counties and other local agencies to levy and maintain assessments for municipal services and programs.

Finally, Proposition 218 requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general government purposes of the County require a majority vote and taxes for specific purposes only require a two-thirds vote. The voter approval requirements reduce the Board of Supervisor's flexibility to deal with fiscal problems by raising revenue and no assurance can be given that the County will be able to raise taxes in the future to meet increased expenditure requirements.

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The County is of the opinion that Proposition 218 will not materially impact any existing taxes, fees or assessments collected by the County. No revenues collected by the County have been challenged under Proposition 218.

Future Initiatives

Article XIII A, Article XIII B, Proposition 62 and Proposition 218 were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time, other initiative measures could be adopted, which may place further limitations on the ability of the State, the County or local districts to increase revenues or to increase appropriations which may affect the County's revenues or its ability to expend its revenues.

LITIGATION

There is no action, suit or proceeding known to be now pending or threatened against the Corporation or the County restraining or enjoining the sale, execution or delivery of the Certificates or the Lease, or in any way contesting or affecting the validity of the foregoing or an proceedings of the Corporation or the County taken with respect to any of the foregoing.

In the opinion of legal counsel to the Corporation and the County, there is no action, suit proceeding known to be pending or threatened, restraining or enjoining the Corporation or the County in any way which would have a material adverse effect on the County's financial position or ability of the County to pay the Base Rental Payments.

RATINGS

Moody's and S&P are expected to assign their ratings of "A2" and "AA–," respectively, to the Certificates. An explanation of the significance of the ratings may be obtained from Moody's and from S&P, respectively. There is no assurance that the ratings will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by such rating agencies, if in their respective judgments, circumstances so warrant. Any such downward revision or withdrawal of the ratings may have an adverse effect on the market price of the Certificates.

TAX MATTERS

In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the County, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the interest portion of the Base Rental Payments paid by the County under the Lease and received by the Owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Special Counsel is of the further opinion that the interest portion of the Base Rental Payments is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Special Counsel is included in Appendix D hereto.

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To the extent the issue price of any maturity of the Certificates is less than the amount to be paid at maturity of such Certificates (excluding amounts stated to be interest and payable at least annually over the term of such Certificates), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Owner thereof, is treated as interest which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Certificates is the first price at which a substantial amount of such maturity of the Certificates is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Certificates accrues daily over the term to maturity of such Certificates on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Certificates to determine taxable gain or loss upon disposition (including sale, prepayment, or payment on maturity) of such Certificates. Owners of the Certificates should consult their own tax advisors with respect to the tax consequences of ownership of Certificates with original issue discount, including the treatment of Owners who do not purchase such Certificates in the original offering to the public at the first price at which a substantial amount of such Certificates are sold to the public.

Certificates purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Certificates") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium for certificates, like Premium Certificates, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Owner's basis in a Premium Certificate, will be reduced by the amount of amortizable bond premium properly allocable to such Owner. Owners of Premium Certificates should consult their own tax advisors with respect to the proper treatment of amortizable certificate premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Certificates. The County has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that the interest portion of the Base Rental Payments will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in the interest portion on the Base Rental Payments being included in gross income for federal purposes, possibly from the date of execution and delivery of the Certificates. The opinion of Special Counsel assumes the accuracy of these representations and compliance with these covenants. Special Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Special Counsel's attention after the date of execution and delivery of the Certificates may adversely affect the value of the Certificates or the tax status of the interest portion of the Base Rental Payments. Accordingly, the opinion of Special Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Special Counsel is of the opinion that the interest portion of the Base Rental Payments is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest with respect to, the Certificates may otherwise affect a Owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the

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Owner and the Owner's other items of income or deduction. Special Counsel expresses no opinion regarding any such other tax consequences.

Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause the interest portion of the Base Rental Payments to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from State income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding any pending or proposed federal tax legislation, regulations or litigation, as to which Special Counsel expresses no opinion.

The opinion of Special Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Special Counsel's judgment as to the proper treatment of the interest portion of the Base Rental Payments for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Special Counsel cannot give and has not given any opinion or assurance about the future activities of the County, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The County has covenanted, however, to comply with the requirements of the Code.

Special Counsel's engagement with respect to the Certificates ends with the execution and delivery of the Certificates, and, unless separately engaged, Special Counsel is not obligated to defend the County or the Owners regarding the tax-exempt status of the interest portion of the Base Rental Payments in the event of an audit examination by the IRS. Under current procedures, parties other than the County and its appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt obligations is difficult, obtaining an independent review of IRS positions with which the County legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Certificates for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues may affect the market price for, or the marketability of, the Certificates, and may cause the County or the Owners to incur significant expense.

APPROVAL OF LEGALITY

The validity of the Certificates and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, California, Special Counsel to the County. A complete copy of the proposed form of such opinion is contained in Appendix D hereto. Special Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Underwriter by Hawkins Delafield & Wood LLP, San Francisco, California, Underwriter's Counsel. Certain legal matters will be passed upon for the County by County Counsel. The compensation of Special Counsel and Underwriter's Counsel is contingent upon the sale and delivery of the Certificates.

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CONTINUING DISCLOSURE OBLIGATION

The County has covenanted in the Continuing Disclosure Agreement for the benefit of the holders and beneficial owners of the Certificates to provide certain financial information and operating data relating to the County by not later than March 31 following the end of the fiscal year (currently their fiscal years end on June 30) (the "Annual Report"), commencing with the fiscal year ending June 30, 2009, and to provide notices of the occurrence of certain enumerated events, if material.

The Annual Report and the notices of material events will be filed by the Trustee as Dissemination Agent with the Municipal Securities Rulemaking Board (the "MSRB") or any other repository designated by the Securities and Exchange Commission. The specific nature of the information to be contained in the Annual Reports and the notice of material events is set forth in Appendix F – "FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934.

In the past five years, the County has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.

UNDERWRITING

The Certificates are being purchased through negotiation by Wedbush Securities Inc. (the "Underwriter"). The Underwriter has agreed to purchase the Certificates at a price of $17,505,685.05 (computed as the par amount of the Certificates, plus a net original issue premium of $889,673.05, and less an Underwriter's discount of $128,988). The purchase agreement relating to the Certificates provides that the Underwriter will purchase all of the Certificates if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said purchase agreement, including the approval of certain legal matters by counsel and certain other conditions.

FINANCIAL ADVISOR

The County has retained Public Financial Management, Inc., San Francisco, California as financial advisors (the "Financial Advisor") in connection with the delivery of the Certificates. Public Financial Management, Inc. is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Financial Advisor will receive compensation from the County contingent upon the sale and delivery of the Certificates.

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MISCELLANEOUS

The foregoing summaries do not purport to be complete and are expressly made subject to the provisions of the documents, copies of which may be obtained from the Trustee, or during the period of the offering, the Underwriter.

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 does not constitute an agreement between the Corporation, the County or the Underwriter and the purchasers or owners of any of the Certificates.

This Official Statement, and its distribution and use by the Underwriter, has been duly authorized and approved by the Corporation and the County.

COUNTY OF SOLANO By: /s/ Michael D. Johnson County Administrator

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APPENDIX A

THE COUNTY OF SOLANO

General Information

Solano County (the "County") lies in the northeast section of the nine-county San Francisco Bay Area. It is located approximately 45 miles northeast of San Francisco and 45 miles southwest of Sacramento. The County covers 823 square miles, a majority of which lies in the fertile Sacramento Valley. It is bordered by Napa County to the northwest, Yolo County to the northeast, Sacramento County to the east and Contra Costa County to the south. Between Solano and Contra Costa Counties lies Suisun Bay, which is an extension of San Francisco Bay, and the confluence of the Sacramento and San Joaquin Rivers, which empty into San Pablo Bay through the Carquinez Straits. The western edge of Solano County consists of low mountains which are part of the Coast Range.

Agriculture and military installations have historically been strong contributors to the County's economy. In recent years, the County has fostered economic growth and diversification by encouraging industrial, manufacturing and biotechnology development. The availability of land and the relatively low cost of housing, as well as job opportunities, have encouraged additional economic development in the County.

County Government

The County was incorporated in 1850 as one of the original 27 counties in the State of California (the "State"). Two of the County's seven cities – Benicia and Vallejo – served as the State's Capital in the early 1850's. The City of Fairfield is the County seat. The County has a general law form of government. Its five-member Board of Supervisors is elected by district for four-year terms of office. Other elected officials include the Assessor/Recorder, Auditor-Controller, District Attorney, Sheriff/Coroner/Public Administrator and Treasurer/Tax Collector/County Clerk. The County Administrator and County Counsel are appointed by the Board of Supervisors.

Local Economy

In recent years, the County's finances have faced challenges from various economic factors. High foreclosure rates and lower assessed values have adversely impacted the County's property tax revenues, the credit crisis has resulted in reduced income from the County's investments, sluggish retail sales have resulted in lower sales tax revenues, and the State budget crisis has resulted in reduced funding to local governments, including the County. See "COUNTY FINANCES" herein.

As a consequence of the recession, the County has seen a significant increase in demand for social services. From January 2008 to January 2009, applications for food stamps increased by 36.9 percent, CalWORKs aid increased by 12.5 percent, general assistance increased by 64.3 percent and Medi-Cal aid increased by 11.1 percent.

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Population

The County's population as of January 1, 2009, as estimated by the State of California Department of Finance, is approximately 426,729. A key element of Solano County's growth has been migration into the County; in-migration has accounted for most of the County's growth since 1980. The majority of the County's population increase has occurred within its three largest cities: Vallejo, Fairfield and Vacaville. The other cities in the County also showed population increases over this period.

The table shown below provides a historical summary of population in the County and its incorporated cities over the past five years, as compared to the County's population in 1980, 1990 and 2000, and to the overall statewide population.

TABLE 1 COUNTY OF SOLANO

POPULATION

4/1/1980(1) 4/1/1990(1) 4/1/2000(1) 1/1/2005(2) 1/1/2006(2) 1/1/2007(2) 1/1/2008(2) 1/1/2009(2) Benicia 15,376 24,437 26,865 27,154 27,114 27,755 27,815 27,977 Dixon 7,541 10,417 16,103 17,072 17,461 17,542 17,477 17,573 Fairfield 58,099 78,650 96,178 104,079 104,897 4,814 106,142 106,440 Rio Vista 3,142 3,316 4,571 6,796 7,329 7,798 8,044 8,222 Suisun City 11,087 22,704 26,118 27,545 27,570 27,820 28,031 28,856 Vacaville 43,367 71,476 88,642 96,195 95,838 95,991 96,404 96,450 Vallejo 80,303 109,199 117,148 120,486 120,338 120,746 120,416 121,055 Unincorporated 16,288 19,272 19,305 19,549 19,937 20,011 20,068 20,156 County Total 235,203 339,471 394,930 418,876 420,514 422,477 424,397 426,729 California 23,667,836 29,758,213 33,873,086 36,676,931 37,086,191 37,472,074 37,883,992 38,292,687

________________________________ (1) Based on census data. (2) Uses a 2000 DRU benchmark. Sources: State of California Department of Finance.

The County's seven cities are long-established communities. Relatively low costs for land and housing, proximity to major population and recreation centers, and job opportunities make Solano County an attractive place to live. The County is home to a significant number of biotech companies. The County believes that it is well suited to attract this type of business because of its proximity to UC Davis, UC Berkeley and major research and medical centers, and Solano Community College's Biotechnology Production Technician Training Program.

The City of Vallejo is the largest city within the County. In May 2008, the City of Vallejo filed a case seeking bankruptcy protection and the adjustment of its debts under Chapter 9 of the United States Bankruptcy Code. The County does not anticipate that the City of Vallejo's budget challenges would have a material adverse impact on the finances of the County.

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Industry and Employment

In general, the County's unemployment rate for the past five calendar years and as of September 2009 has been lower than or comparable to the State unemployment rate, as profiled in the table below.

TABLE 2 COUNTY OF SOLANO

LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT Annual Averages and September 2009 Data(1)(2)

Year and Area Labor Force Civilian Employment Unemployment Unemployment Rate

2004 Solano County 207,100 195,000 12,100 5.8% California 17,444,400 16,354,800 1,089,700 6.2

2005 Solano County 209,600 198,400 11,300 5.4 California 17,629,200 16,671,900 957,200 5.4

2006

Solano County 210,000 199,700 10,200 4.9 California 17,821,100 16,948,400 872,700 4.9

2007

Solano County 210,400 199,300 11,100 5.3 California 18,078,000 17,108,700 969,300 5.4

2008

Solano County 213,500 198,700 14,700 6.9 California 18,391,800 17,059,600 1,332,300 7.2

September 2009(3)

Solano County 214,400 189,700 24,700 11.5 California 18,365,000 16,164,300 2,200,700 12.0 _________________ (1) Uses a March 2008 benchmark. (2) Not seasonally adjusted. (3) Most recent monthly data available. Source: State Department of Employment Development.

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Commercial Activity

The following table provides a summary of taxable transactions since 2003.

TABLE 3 COUNTY OF SOLANO

TAXABLE TRANSACTIONS 2003 to 2007(1)

(in thousands of dollars)

2003 2004 2005 2006 2007(1) Apparel stores $ 182,142 $ 220,821 $ 258,882 $ 270,804 $ 288,352 General merchandise stores 701,505 746,018 780,862 818,163 777,756 Specialty stores(2) 417,323 447,538 475,569 502,688 - Food stores 225,641 228,018 240,703 239,650 238,481 Eating and drinking places 380,271 401,862 426,248 442,864 458,588 Home furnishings and appliances 156,856 166,439 160,899 156,149 139,132 Building materials 345,636 413,259 427,550 375,818 314,776 Automotive Group 1,186,592 1,282,780 1,346,611 1,419,613 1,474,041 All other retail 137,380 143,770 156,138 172,109 640,717 TOTAL RETAIL OUTLETS 3,733,346 4,050,505 4,273,462 4,397,858 4,331,843 Business and personal services 215,523 225,527 234,215 247,909 269,417 All other outlets 1,390,156 1,476,599 1,529,628 1,807,370 1,676,572 TOTAL ALL OUTLETS $5,339,025 $5,752,631 $6,037,305 $6,453,137 $6,277,832 ______________ (1) Most recent annual data available. (2) For 2007, the Board of Equalization grouped specialty stores with all other retail transactions. Source: State of California State Board of Equalization.

According to the most recent quarterly data from the California State Board of Equalization, in the third quarter of calendar year 2008, total taxable transactions in the County totaled approximately $1.53 billion, representing a 1.4 percent decline from total taxable transactions in the County for the third quarter of calendar year 2007.

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Agriculture

Agriculture is one of the major contributors to the County's economy. A majority of the County's acreage is devoted to the production of crops and livestock, and the Board of Supervisors of the County adopted a resolution in July 1997 which implemented the provisions of the Orderly Growth Initiative (the "Initiative"). The Initiative places limits on the amount of residential growth and development that may occur in areas currently designated as "Agricultural" or "Open Space," in an effort to avoid uncontrolled urban sprawl in unincorporated areas of the County and to assure the continued preservation of agricultural lands and open space in the County. The following table provides a summary of gross values of agricultural production in the County for the calendar years indicated.

TABLE 4 COUNTY OF SOLANO

AGRICULTURAL PRODUCTION 2004 to 2008

2004 2005 2006 2007 2008 Field Crops $ 50,423,200 $ 52,812,700 $ 46,945,000 $ 54,811,900 $ 89,365,400 Nursery Stock 43,645,000 50,018,000 47,856,000 56,610,700 43,056,300 Fruit and nut crops 29,285,900 37,918,500 39,964,300 43,430,000 44,036,600 Seed crops 7,114,600 10,533,500 9,987,600 10,820,900 10,827,900 Vegetable crops 36,903,400 36,505,000 40,899,400 47,762,100 55,623,500 Animal Production 45,207,100 50,901,900 47,852,200 54,819,600 49,930,500 TOTAL $ 211,229,900 $238,689,600 $233,505,000 $268,255,200 $292,840,200 _____________________

Source: Solano County Department of Agriculture.

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Construction Activity The value of residential building permits issued in the County through the end of 2008

totaled approximately $126.8 million. The following table provides a summary of residential building permits and valuations in the County for the calendar years indicated.

TABLE 5 COUNTY OF SOLANO

BUILDING PERMIT VALUATIONS 2004 to 2008 (in millions)

2004 2005 2006 2007 2008 Residential Units Single Unit 2,418 2,161 1,081 820 323 Multi-Family Units 604 392 219 153 239 Total Residential Units 3,022 2,553 1,300 973 562 Valuations (in 000s) Single Unit $461,639 $458,686 $247,542 $197,987 $76,247 Multiple Units 43,144 33,620 36,666 16,522 27,947 Residential Alterations and Additions 42,063 53,706 48,030 38,938 22,637 Total Residential(1) $546,846 $546,012 $332,238 $253,447 $126,831 ____________________ (1) Totals may not add to sums due to rounding. Source: Construction Industry Research Board.

Real Estate Foreclosures

The County has seen a significant increase in foreclosures and default proceedings since the third quarter of 2006. The tables below provide a summary of foreclosure activity within the County and comparable counties surrounding the County from 2006 through August 2009.

TABLE 6 COUNTY OF SOLANO

SUMMARY OF FORECLOSURE ACTIVITY Annual Data from 2006 to 2008 & Data for January – August 2009

Notices of Default Trustee Deeds (Foreclosures) City(1) 2006 2007 2008 Jan – Aug 09 2006 2007 2008 Jan – Aug 09

Benicia 57 163 250 239 5 39 130 90 Dixon 66 166 301 231 9 51 194 105 Elmira 0 1 3 3 1 0 2 0 Fairfield 439 1,445 2,154 1,736 53 481 1,516 710 Rio Vista 22 96 124 123 2 30 77 59 Suisun City 178 523 740 559 28 188 555 267 Vacaville 334 791 1,212 1,042 45 281 752 468 Vallejo 643 2,018 2,932 2,283 85 683 2,073 1,015 County Total(2) 1,745 5,211 7,720 6,230 230 1,754 5,303 2,717 (1) Includes data for the unincorporated areas surrounding the cities, which have been grouped by zip code boundaries. (2) Totals include certain properties which were not grouped by city. Source: MDA DataQuick Information Systems.

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TABLE 7 COMPARABLE COUNTIES

SUMMARY OF FORECLOSURE ACTIVITY Annual Data from 2006 to 2008 & January – August 2009

Notices of Default Trustee Deeds (Foreclosures)

County 2006 2007 2008 Jan - Aug 09 2006 2007 2008 Jan - Aug 09

Alameda 2,940 7,792 12,859 11,067 405 2,566 7,347 3,674 Contra Costa 3,702 11,140 16,697 13,256 481 4,031 11,270 5,198 Napa 219 586 1,027 959 15 175 659 301 Sacramento 4,979 18,002 23,817 18,130 1,324 7,733 17,772 8,225 San Joaquin 2,981 10,175 15,007 10,216 451 3,971 11,623 5,051 Solano 1,745 5,211 7,720 6,230 230 1,754 5,303 2,717 Sonoma 841 2,549 4,401 3,495 110 759 2,869 1,324 Yolo 314 1,067 1,691 1,419 42 398 1,115 574 Source: MDA DataQuick Information Systems.

Transportation

The County has a well-developed transportation network which includes road, rail and shipping service. Interstate 80, a transcontinental highway linking San Francisco with points east, bisects the County. Interstate 680 and 780 connect Alameda and Contra Costa Counties with Solano County before joining at Interstate 80. Interstate 505 branches north from Interstate 80 near Vacaville, and joins Interstate 5, a transcontinental north-south route.

The interstate highway network is supplemented by state and County roads and highways. State Route 12 provides cross-county transportation from Fairfield to Rio Vista and into the northern San Joaquin Valley. Interstate 680 is a four-lane divided freeway from the Benicia-Martinez Bridge to Interstate 80 at Cordelia.

Union Pacific Railroad crosses the County with its main line generally paralleling Interstate 80, and trunk lines running from Vallejo north into adjoining counties. Western Pacific Railway has connecting track from Fairfield to Sacramento. Freight transportation is also provided by several intrastate and transcontinental trucking firms.

The Vallejo Baylink Ferry provides Solano County commuters with ferry service to and from San Francisco on a daily basis including weekends and holidays. Vallejo Transit provides a shuttle service to and from Six Flags Marine World from the Vallejo Ferry Terminal. Local transit needs are served by Benicia Breeze, Vallejo Transit, Vacaville City Coach, Rio Vista Delta Breeze, Dixon Readi-Ride and Fairfield-Suisun Transit. Greyhound Bus Lines provides transcontinental bus service.

The deep water ports of Benicia, Sacramento and Stockton (in neighboring San Joaquin County) serve the County. The Port of Benicia is the largest port facility in Solano County. It has

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a 2,400 foot pier that can handle ships with up to 38-foot draft. It is less than two hours steaming time from the Golden Gate.

The Nut Tree County Airport at Vacaville (the "Airport") features a 4,700-foot runway and primarily accommodates business and privately owned aircraft. The Airport apron has recently been reconstructed, road improvements have been made, and a new waterline was installed to support future expansion. Additionally, two instrument approaches are available to accommodate aircraft during periods of inclement weather. The Airport also has an Automated Surface Observation System ("ASOS"), a certified weather station operated by the National Weather Service. The system provides information on current local weather for flight planning purposes and is available to the general public. The Airport's onsite fixed base operators offer aircraft rentals, sales, flight lessons, pilot training, and aircraft/helicopter maintenance or repair.

Residents of the County utilize commercial airlines flying out of San Francisco International Airport (approximately 65 miles from Fairfield), Oakland Airport (47 miles), and Sacramento Airport (45 miles).

On March 2, 2004, the voters in the nine Bay Area counties passed Regional Measure 2 ("RM2"), raising the toll by $1.00 on the seven State-owned bridges in the Bay Area. RM2 provides Solano County an annual allocation of $1.8 million for expanded express bus service on the I-80 corridor, and an additional $2.7 million dollars for expanded ferry service. The RM2 funds are allocated to Solano County to reduce congestion on the very busy highways linking Solano County to the Bay Area. These allocations have an annual 1.5 percent adjustment factor for inflation.. In addition to the operating funds, the enabling legislation for RM2 also includes $169 million in future capital funds for a variety of Solano County Transportation projects, such as the intermodal facilities for express buses, ferry and rail; the I-80/I-680 interchange complex; and the Solano North Connector project.

Education and Community Services

Solano County has a full range of educational institutions. In addition to the basic kindergarten through 12th grade system, the County includes facilities for the State of California Maritime Academy, the University of California at Davis and Solano Community College. Touro University California, a private not for profit graduate education institution, is also located on Mare Island in Vallejo.

The University of California at Davis is located on the Solano-Yolo County line in the northeast corner of the County. The university is well-known for its agricultural research and veterinary medicine programs. Originally a university farm, the campus developed into a four-year agricultural college in the 1920's. The University contains professional schools in the fields of engineering, law, medicine and veterinary medicine, in addition to a complete undergraduate curriculum.

Solano Community College, a two-year, publicly supported institution, with a current enrollment of 18,054 students, offers degree and certificate programs in a wide variety of occupational fields including computer programming, industrial management, ornamental

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horticulture, electronics, shipbuilding, welding and water and wastewater technology. The college is located in Fairfield.

The State of California Maritime Academy (with an enrollment of 823 full-time students), in Vallejo, is a highly specialized four-year college that prepares students in maritime and related industries through accredited degree programs in Marine Engineering Technology and Nautical Industrial Technology.

Touro University California opened the College of Osteophatic Medicine on Mare Island in 1999. Current programs also include a College of Health Sciences (providing a dual degree program in the Master of Science in Physician Assistant Studies and Master of Public Health – MPAS/MPH), College of Education (providing teacher preparation credentials and Master of Arts in Education programs), and a College of Pharmacy (offering the Pharm.D. Degree).

Public school education is provided by six unified school districts plus schools maintained by the County Superintendent of Schools for handicapped, Juvenile Court and occupational and vocational training students. For 2007-08, the Solano County Office of Education reports that K-14 public school enrollment in the County totaled 85,257. Private school enrollment for K-12 totaled 9,309.

There are five full service hospitals in the County – California Specialty Hospital, Kaiser Permanente and Solano Medical in Vallejo; NorthBay Medical Center in Fairfield; and Vaca Valley Hospital in Vacaville. David Grant Medical Center at Travis Air Force Base provides medical services to active duty and retired military personnel and dependents.

COUNTY FINANCES

The following is a description of the County's budget process, its major revenues and expenditures, and certain other financial information.

Budget Procedure and Budgets

2008-09 Final Budget. The County is required by State law to adopt a final balanced budget each year by October 2. The County published its Fiscal Year 2008-09 proposed budget in June 2008 and adopted its Fiscal Year 2008-09 final budget (the "2008-09 Final Budget") on June 24, 2008. The 2008-09 Final Budget provided for $981.9 million in total financing available and appropriations, a 1.5 percent decrease above the final budget for Fiscal Year 2007-08 of approximately 996.6 million, and a 33.16 percent increase above the actual budget for Fiscal Year 2007-08 of approximately $737.4 million. The 2008-09 Final Budget included approximately $91.9 million in appropriations for Contingencies and increases to Reserves for all funds, representing nine percent of the all funds budget.

The 2008-09 Final Budget includes a General Fund spending plan of approximately $266.7 million. Public Protection represents the largest category of General Fund spending at 44 percent, followed by the All Other category (includes the AG Commissioner, Animal Care, Environmental Management and others) at 24 percent, and Health and Social Services at 15 percent. The largest source of revenue for the General Fund under the 2008-09 Final Budget was Taxes, representing 47 percent, followed by Fund Balance and Reserves (19 percent), Charges

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for Services (15 percent) and Intergovernmental Revenues (10 percent).

2009-10 Proposed Budget. The County presented its Fiscal Year 2009-10 proposed budget (the "2009-10 Proposed Budget") to the Board in June 2009. The 2009-10 Proposed Budget provides for approximately $836.1 million in total financing available and appropriations, representing a 15 percent decrease from the 2008-09 Final Budget. The 2009-10 Proposed Budget also proposes a General Fund budget of $235.5 million, representing a 12 percent decrease from the 2008-09 Final Budget; the Public Safety Fund budget of $153.9 million, representing a two percent decrease from the 2008-09 Final Budget; the Health and Social Services Fund budget of $267.4 million, representing an increase of 1.5 percent from the 2008-09 Final Budget; and an Other Funds budget of $179.3 million, representing a decrease of 40 percent from the 2008-09 Final Budget.

The 2009-10 Proposed Budget reflects substantial reductions in revenues – particularly in property and sales taxes and fees. The reductions impact the General Fund most significantly, which is the major source of local discretionary spending.

In the General Fund budget, the Public Safety category represents the single largest category of General Fund expenditures at 40.5 percent, followed by the All Other category at 28.1 percent, and Health and Social Services at 14.4 percent. The largest source of revenue for the General Fund continues to be Taxes (representing 57.4 percent of total General Fund revenues), followed by Fund Balance and Reserves (20.8 percent) and Intergovernmental Revenues (at 11.5 percent).

The County's 2009-10 Proposed Budget incorporated the impacts of the State budget approved in February 2009. However, it did not take into account any proposals included in the May Revise. The May Revise was taken into account in the 2009-10 Final Budget. See "State Budget" below.

2009-10 Final Budget. The County approved its Fiscal Year 2009-10 final budget (the "2009-10 Final Budget" in June 2009. The 2009-10 Final Budget provides for approximately $849.8 million in total financing available and appropriations, representing a 13.46 percent decrease from the 2008-09 Final Budget.

The 2009-10 Final Budget includes a General Fund Budget of approximately $243.3 million. Public Safety represents the largest category of General Fund appropriations at 47 percent, followed by the All Other category at 23 percent, and Health and Social Services at 14 percent. The largest sources of revenue for the General Fund budget are Taxes (representing 44 percent of total General Fund revenues), Fund Balance and Reserves (19 percent), Charges for Services (17 percent), Intergovernmental Revenues (11 percent) and All Other sources (seven percent). Licenses, Permits & Franchises provides two percent of General Fund revenues. See "Employees" below for a description of certain personnel reductions by the County in June 2009.

The County adopted several measures in September 2009 as a consequence of State budget reductions and the continued economic downturn, including:

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• deleting 66.6 full-time equivalent positions (five of which were laid off);

• continuation of hiring freeze;

• imposing limited terms on positions funded by one-time revenues;

• deleting positions that have been vacant for more than six months; and

• adoption of a resolution providing for the closure of certain County facilities.

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Budget Comparison. The table below summarizes the County's 2008-09 Final Budget, the 2009-10 Proposed Budget, and the 2009-10 Final Budget.

TABLE 8 COUNTY OF SOLANO

FINAL ADOPTED AND PROPOSED BUDGETS FOR FISCAL YEARS 2008-09 AND 2009-10

REQUIREMENTS: 2008-09

Final Budget 2009-10

Proposed Budget 2009-10

Final Budget

General Government $277,662,394 $210,502,834 $212,139,128 Public Protection 196,294,608 191,231,248 192,029,870 Public Ways & Facilities 17,710,256 24,800,920 25,193,595 Health and Sanitation 175,089,214 123,411,053 125,830,428 Public Assistance 160,387,547 165,371,548 166,022,164 Education 25,845,191 25,388,653 25,456,187 Recreation & Cultural Services 1,577,408 1,420,538 1,349,313 Debt Service 35,468,081 23,790,458 23,798,760 Reserves 7,147,405 250,000 255,950 Contingencies 84,751,342 69,915,956 77,714,598 Total Financing Requirements $981,933,444 $836,083,208 $849,789,993 AVAILABLE FUNDS: Fund balance available $106,864,032 $86,663,907 $83,682,486 Taxes (Property and other) 141,202,560 120,302,588 120,327,588 Licenses, permits and franchises 6,696,942 6,382,912 6,382,912 Fines, forfeitures and penalties 5,612,733 5,383,887 5,383,887 Use of money and property 9,359,578 5,753,832 5,718,044 Intergovernmental revenues 320,301,166 328,524,172 332,286,274 Charges for services 81,369,266 90,962,048 92,059,541 Miscellaneous revenues 11,933,612 15,104,606 15,133,878 Other financing sources 238,056,808 161,572,939 176,215,536 Residual Equity Transfers - - 274,415 From Reserve 60,536,746 15,432,317 12,325,432 Total Revenues $981,933,444 $836,083,208 $849,789,993

_________________ Source: County of Solano Auditor-Controller.

Accounting Policies, Reports and Audits

The County's financial accounts are maintained in accordance with the uniform accounting system for counties prescribed by the State Controller in compliance with the State Administrative Code. The diverse nature of governmental operations and the necessity of determining legal compliance require accounts to be organized on the basis of funds, each of which is a separate accounting entity. A self-balancing set of accounts is provided for each fund to show its assets, liabilities, reserves, fund balance, revenues and expenditures. The funds and accounts are grouped in the financial statements in the following categories:

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Governmental Fund Types (County-Wide Funds):

• General – The general fund is the chief operating fund of a state or local government. It accounts for all financial resources except those required to be accounted for in another fund.

• Special Revenue – Account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes.

• Debt Service – Account for the accumulation of resources for and the payment of interest and principal on general long-term debt.

• Capital Projects – Account for financial resources to be used for the acquisition or construction of major capital facilities.

• Permanent Funds – A fiduciary fund type used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government.

Proprietary Fund Types:

• Enterprise – Account for the financing of services to the general public where all or most of the costs involved are paid for in the form of charges by users of such services.

• Internal Service – Account for the financing of special activities and services provided to other funds, departments, or agencies of the primary government and its component units or to other governments, on a cost-reimbursement basis.

Fiduciary Funds:

• Trust and Agency – Account for assets held by a governmental unit as trustee or agent for others and therefore cannot be used to support the government's own programs.

The accounting records of the governmental funds (i.e., the General Fund) are maintained on the modified accrual basis of accounting. Revenues from secured property taxes are recorded under the alternate method of apportionment, as explained below under "Assessed Valuation and Ad Valorem Property Taxes." Revenues from unsecured property taxes are recorded when apportioned, based upon receipt. Other revenues are primarily recorded when the cash is received, except at year-end when revenues are accrued. Expenditures are recorded at the time payment is made, except at year end when all significant expenditures are accrued and the liability recorded. Accounting records of the Airport Fund and the Fouts Springs Boys Camp Fund (Enterprise Funds) are maintained on a full accrual basis.

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Independent Auditor

Since Fiscal Year 1977-78, the County has maintained its policy of requiring an annual audit of its financial statements by an independent certified public accounting firm selected by the Board of Supervisors. The County's financial statements for fiscal year ended June 30, 2008 were audited by Macias, Gini & O'Connell LLP (the "Auditor") and are attached hereto as Appendix B. The financial statements should be read in their entirety. The Auditor has not reviewed or audited this Official Statement.

Major Revenues and Expenditures

The County's principal revenue sources consist of ad valorem property taxes and funds received from the State in the form of categorical aids under ongoing programs of local assistance. All State aid is subject to the appropriation of funds in the State's budget. See "State Budget" herein for a discussion of the State budget and the effect it has had and could have on State aid for the County.

As noted in the financial statements included herein, the County's major expenditures each year are in public assistance and public protection.

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TABLE 9 COUNTY OF SOLANO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR GENERAL FUND Fiscal Years Ended June 30, 2004 Through June 30, 2009

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

(Unaudited)

Beginning Balance $48,907,060 $55,222,848 $72,467,570 $91,680,585 $121,616,484 $120,645,670 Revenues: Taxes 54,365,565 64,874,580 111,214,271 116,431,497 122,638,505 119,714,939 Licenses, permits and franchises 4,445,047 5,060,448 6,518,667 6,070,150 5,820,403 5,967,381 Fines, forfeitures and penalties 2,601,106 3,196,405 2,948,905 2,543,313 2,407,979 2,400,461 Revenue from use of money 1,073,396 1,991,616 3,118,100 6,183,436 5,049,647 2,445,515 Aid from other governmental agencies 42,948,365 56,195,193 21,014,825 26,674,789 25,051,335 25,751,927 Charges for current services 31,574,343 33,321,552 36,239,918 37,795,095 36,662,865 39,635,732 Other revenues 5,144,914 7,189,067 6,153,276 7,488,191 7,227,623 9,217,708 Total Revenues 142,152,736 171,828,861 187,207,962 203,186,471 204,858,357 205,133,663

Expenditures(1): General government 47,827,443 52,475,159 55,476,080 47,187,003 52,711,728 54,718,749 Public safety 50,558,699 13,768,229 33,377,058 15,916,544 17,678,344 17,925,596 Health and sanitation 15,807,082 - 6,675,049 - - - Welfare 21,102,713 1,053,422 9,756,885 1,053,490 577,860 634,655 Education and Recreation 3,969,583 276,706 2,050,870 294,832 429,076 389,314 Public ways and facilities 2,121,901 - 954,481 - - - Capital Outlay 65,189 1,477,258 1,369,215 544,749 208,729 50,194 Debt Service principal retirement 126,737 137,480 144,528 149,611 155,477 160,485 Debt Service interest and fiscal charges 1,489,858 596,935 667,365 15,380 9,513 4,505 Total Expenditures 143,069,205 69,785,189 110,471,531 65,161,609 71,770,727 73,883,498 Excess of Revenues Over (Under)

Expenditures (916,469) 102,043,672

76,736,431 138,024,862 133,087,630 131,250,165 Other financing sources (uses) Proceeds from debt issuance(2) 89,642,160 56,736 42,143,231 - - - Operating transfers in 352,380 6,929,599 706,659 2,908,634 1,458,570 877,775 Operating transfer out (82,784,771) (91,815,348) (100,414,668) (111,063,063) (135,623,904) (144,779,690) Sale of fixed assets 22,488 30,063 41,362 65,466 106,890 104,508 Total Other Financing Sources (uses) 7,232,257 (84,798,950) (57,523,416) (108,088,963) (134,058,444) (143,797,407) Over (Under) Expenditures and Other Uses 6,315,788 17,244,722 19,213,015 29,935,899 (970,814) (12,547,242) Ending Fund Balance $55,222,848 $72,467,570 $91,680,585 $121,616,484 $120,645,670 $108,098,428

_________________________ (1) Larger than normal increases in expenditures in Fiscal Years 2003-04 and 2005-06 are primarily due to the allocation of proceeds of the County's Pension Obligation Bond issuances

to certain categories to refinance unfunded accrued actuarial liability attributable to employees associated with such category. See "PERS Pension Plans" and "Outstanding Payment Obligations" below.

(2) See "Outstanding Payment Obligations" for a description of the County's issuances. Source: County of Solano Auditor-Controller.

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TABLE 10 COUNTY OF SOLANO

COMPARISON OF BALANCE SHEETS – GENERAL FUND Fiscal Years Ended June 30, 2004 Through June 30, 2009

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

(Unaudited)

ASSETS Cash and Investments $40,204,319 $63,488,452 $76,602,302 $95,591,043 $79,652,694 $77,137,891Accounts receivable 3,375,948 647,015 1,921,822 1,613,143 1,691,307 2,151,286Due from other agencies 13,891,348 13,467,223 14,601,295 27,347,512 47,153,435 33,602,233Due from other funds 11,509,077 7,906,797 13,882,548 1,897,629 9,043,270 19,622,954Advance to other funds - - - - 7,827,384(1) 5,044,201(2)

Other assets 335,711 162,935 100,077 524,068 516,338 795,574

Total assets $69,316,403 $85,672,422 $107,108,044 $136,343,490 $145,884,428 $138,354,139 LIABILITIES AND FUND Liabilities Accounts payable and accrued $2,546,424 $3,123,998 $4,427,173 $3,663,513 $4,737,756 $4,053,708Due to other funds & agencies 854,992 1,009,485 1,365,591 1,171,898 9,453,554 12,889,256 Outstanding warrants 195,736 753,326 439,044 1,277,167 706,257 946,157Deferred revenue 10,064,987 8,306,011 9,183,768 8,610,237 10,327,318 12,351,770Other liabilities 431,416 12,032 11,883 4,191 13,873 14,820 Total Liabilities $14,093,555 $13,204,852 $15,427,459 $14,727,006 $25,238,758 $30,255,711 Fund balances: Reserved for general,

encumbrance and other $27,158,613 $40,787,063 $59,519,253 $70,075,207 $9,591,064 $60,686,546 Unreserved and undesignated 28,064,235 31,680,507 32,161,332 51,541,277 111,054,606 47,411,882 Total Fund Equity 55,222,848 72,467,570 91,680,585 121,616,484 120,645,670 108,098,428 Total Liabilities and Fund Equity $69,316,403 $85,672,422 $107,108,044 $136,343,490 $145,884,428 $138,354,139

________________________________________ (1) The General Fund loaned approximately $7.7 million to the Nut Tree Airport Fund to acquire real property for purposes of airport expansion, and

approximately $114,700 to the Transportation Fund to cover costs of Regional Transportation Projects. (2) The General Fund loaned approximately $5 million to the Fair Grounds, Nut Tree Airport, Regional Transportation Fund and Department of Information

Technology. Source: County of Solano Auditor-Controller.

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Assessed Valuation and Ad Valorem Property Taxes

Assessed Valuation. Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State assessed property and real property which can be secured by liens. Other property is assessed on the "unsecured roll."

According to the requirements of Article XIII A of the California Constitution (initially adopted by California voters as Proposition 13 in 1978), the County levies a one percent ad valorem property tax on behalf of all taxing agencies in the County and the ad valorem property tax for payment of any general obligation bonds of school districts and other governmental entities in the County. The proceeds of the one percent ad valorem property taxes are apportioned on the basis of a formula established by State law. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of "situs" growth in assessed value prorated among the jurisdictions which serve the tax rate areas within which the growth occurs. Tax rate areas are specifically defined geographic areas which were developed to permit the levying of taxes for less than countywide or less than citywide special districts. Certain other ad valorem property taxes and assessments and other per-parcel taxes and assessments are also included in the levy pursuant to the County's tax rolls.

The assessed valuation of property located within the County is established by the County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100 percent of the full cash value of the property, as defined in Article XIII A of the California Constitution. Full cash value is defined as "the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or a reduction in the consumer price index or comparable local data for the area or may be reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The full cash value may also be adjusted due to change of ownership or new construction. See "CONSTITUTIONAL AND STATUTORY TAX LIMITS ON TAXES AND APPROPRIATIONS" in the forepart of the Official Statement. The County Assessor may also temporarily reduce assessed values of property within the County. Pursuant to Proposition 8, property owners are entitled to the lower of the fair market value of their property as of January 1 or the assessed value as determined at the time of purchase or construction, and increased by no more than two percent annually. See "– Assessment Appeals and Proposition 8 Reductions" below.

Payment Dates and Liens. Property taxes on the secured roll are due in two installments during the fiscal year that become delinquent on December 10 and April 10, respectively, and a ten percent penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared to be in default on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of one and one-half percent per month to the

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time of redemption. If taxes are unpaid for a period of five years or more, the tax-defaulted property is declared to be subject to the Tax Collector's power of sale and may be subsequently sold within two years by the County Tax Collector.

Legislation established the "supplemental roll" in 1984 which directs the Assessor to reassess real property, at market value, on the date the property changes ownership or upon completion of construction. Property on the supplemental roll is eligible for billing 30 days after the reassessment and notification to the new assessee. The resultant charge (or refund) is a one-time levy on the increase (or decrease) in value for the period between the date of the change in ownership or completion of construction and the date of the next regular tax roll upon which the assessment is entered.

Billings are made on a monthly basis and due on the date mailed. If mailed between the months of July through October, the first installment becomes delinquent on December 11th and the second on April 11th. If mailed within the months of November through June, the first installment becomes delinquent on the last day of the month following the month of billing. The second installment becomes delinquent on the last day of the fourth month following the date the first installment is delinquent.

Property taxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of one and one-half percent per month begins to accrue beginning November 1 or the fiscal year. The taxing authority has four ways of collecting unsecured personal property taxes: (1) by filing a civil action against the taxpayer; (2) by filing a certificate in the office of the County Clerk by specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) by filing a certificate of delinquency for record in the County Recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) by seizure and sale of personal property, improvements or possessory interest, belonging to the taxpayer.

The County and its political subdivisions operate under the provisions of Sections 4701-4717 of the State Revenue and Taxation Code (the "Teeter Plan"). Pursuant to those sections, the accounts of all political subdivisions which levy taxes on the County tax rolls are credited with 100 percent of their respective tax levies regardless of actual payments and delinquencies. The County treasury's cash position (from taxes) is protected by a special fund (Tax Losses Reserve Fund) into which all countywide delinquent penalties are deposited. See "The Teeter Plan" below.

Assessment Appeals and Proposition 8 Reductions. The County reviews assessment appeals upon individual request. Proposition 8 (passed by voter initiative in 1978) provides that property owners are entitled to an assessment based on the lower of the fair market value of their property as of the lien date (January 1), or the assessed value as determined at the time of purchase or construction, and increased by no more than two percent annually.

In general, a taxpayer who disagrees with the assessed value of his or her property may request a review of his or her assessment. If the County Assessor finds that an adjustment is appropriate, the assessment is revised accordingly. If a difference of opinion still exists by July

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1, the taxpayer may file an appeal. With the residential market in decline, 473 appeals were filed by County homeowners in Fiscal Year 2008-09, representing a 514 percent increase from the prior fiscal year, and 407 appeals were filed by business property owners, representing a 74 percent increase from the prior year.

As a matter of policy and in accordance with Proposition 8, the County Assessor has proactively responded to declining market values by temporarily reducing assessed values of residential properties. In early 2009, the County Assessor reduced the value on 58,000 residential single family properties (out of 114,000 total properties), by an average of 20 to 25 percent.

To reflect the downturn in the real estate market, the County budgeted for a ten percent decline in property tax revenue for Fiscal Year 2009-10, or a decline of $10.1 million to the General Fund. See "Budget Procedure and Budgets – 2009-10 Final Budget" herein. The County projects a further decline in assessed values for Fiscal Year 2010-11 of eight percent, representing an $8.2 million decline in the General Fund budget for Fiscal Year 2010-11. The County does not assume any real estate recovery until Fiscal Year 2012-13.

Assessed Value and Related Information. A five-year history of County tax levies, delinquencies and the Tax Losses Reserve Fund cash balances as of June 30, and certain information for Fiscal Year 2009-10 is shown in the table below.

TABLE 11 COUNTY OF SOLANO

SUMMARY OF FULL CASH VALUE AND AD VALOREM PROPERTY TAXATION Fiscal Years 2004-05 through 2009-10

Fiscal Year Full Cash Value Secured Property

Tax Levies

Current Levy Delinquent

June 30

Percentage Current Levy

Delinquent June 30

Tax Losses Reserve Fund

Balance (1) June 30

2004-05 $32,794,563,264 $395,076,579 $7,775,031 1.97% $16,349,893 2005-06 37,488,995,768 442,845,322 11,841,358 2.67 16,779,466 2006-07 42,638,590,569 499,556,165 23,548,317 4.71 16,753,566 2007-08 46,864,878,078 546,113,047 36,692,652 6.71 18,334,040 2008-09 47,575,861,183 544,363,886 27,793,520 5.11 21,823,937 2009-10 43,477,313,342 498,371,082 Not yet available Not yet available Not yet available

_____________ (1) Tax loss reserve is at 3 percent as approved by the County Board of Supervisors. Source: County of Solano Auditor-Controller.

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Ten Largest Taxpayers. The 10 largest property taxpayers in the County for Fiscal Year 2008-09 and the approximate amounts of their property tax payments for all taxing jurisdictions within the County are shown below.

TABLE 12 COUNTY OF SOLANO

LARGEST TAXPAYERS Fiscal Year 2008-09

Taxpayer Business Type

Assessed Value for 2008-09

Tax Obligation(1)

1. Genentech Incorporated Manufacturing $1,277,528,638 $14,445,165 2. Valero Refining Company California Oil 806,626,616 9,302,126 3. Pacific Gas & Electric Company Utility 446,696,609 6,071,498 4. Anheuser Busch Incorporated Manufacturing 266,279,837 2,925,065 5. Shiloh I Wind Project LLC Energy 203,580,627 2,100,341 6. Alza Corporation Manufacturing 194,877,973 2,155,022 7. High Winds LLC Energy 172,527,012 1,779,961 8. California Northern Railroad Transportation 156,205,502 2,158,582 9. Pacific Bell Telephone Company Utility 125,809,701 1,661,222 10. Walton CWCA BN WRHS 21 LLC Property Mgmt 125,460,000 1,443,628

Total $3,775,592,515 $44,042,610

__________________ (1) Calculated at one percent plus voter approved bonds and any special assessments. Rates vary by tax area code. Source: County of Solano Tax Collector/County Clerk.

The Teeter Plan

The County has adopted the alternate procedure authorized in Chapter 3, Part 8, Division 1 of the Revenue and Taxation Code of the State of California (comprising Sections 4701 through 4717, inclusive) (the "Teeter Plan Law"), commonly referred to as the "Teeter Plan," for distribution of certain property tax and assessment levies on the secured roll. The Teeter Plan Law has authorized the use of the Teeter Plan for over 40 years; however, until Fiscal Year 1993-94, it had been implemented in only five counties in the State (including the County).

Generally, the Teeter Plan provides for a tax distribution procedure by which secured roll taxes and assessments are distributed to taxing agencies within the County participating in the Teeter Plan on the basis of the tax levy, rather than on the basis of actual tax collections. The County then receives all future delinquent tax payments, penalties and interest.

In addition, pursuant to the Teeter Plan Law, the County is required to establish a tax losses reserve fund to cover losses which may occur in the amount of tax liens as a result of special sales of tax-defaulted property. Previously under the Teeter Plan Law, once the tax losses reserve fund reached a level of three percent of the total of all taxes and assessments levied on the secured roll for that year, any additional penalties and interest that otherwise would be credited to the tax losses reserve fund were credited to the County General Fund. Senate Bill No. 97, signed by the Governor on May 11, 1995, amended Section 4703 of the State of

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California Revenue and Taxation Code by, among other things, to allow reducing the three percent tax losses reserve fund threshold to one percent. Although the legally required threshold is one percent, the County has continued to maintain the reserve between 2 percent and 3 percent. See "Assessed Valuation and Ad Valorem Property Taxes" above.

Only the outstanding secured delinquent property taxes attributable to taxing agencies participating in the Teeter Plan were advanced by the County. All of the taxing agencies in the County participate in the Teeter Plan. The total County-wide secured tax levy for such taxing entities is approximately $497,937,480 for Fiscal Year 2009-10.

State Assistance

The County's largest revenue source is the State of California. The County received total State aid for Fiscal Year 2008-09 of $181,342,864 and has budgeted to receive approximately $190,982,606 in State aid for Fiscal Year 2009-10. See "Budget Procedure and Budgets" herein. Based on information provided by the State to the County, the County believes that its aggregate revenue estimates of moneys to be received from the State in its current budget are reasonable. The timeliness of payments to the County by the State may depend on the ability of the State to access the credit markets with respect to its own cash flow borrowings.

The Revised 2009-10 State Budget (as described below) requires cities, counties, and special districts to lend up to $1.9 billion of Proposition 1A (2004) property tax revenues to the State, with the promise of repayment in three years. Local governments have the opportunity to receive the monies being borrowed by the State upfront through a State-sponsored securitization financing offered by California Communities. California Communities will issue bonds securitizing the future payments by the State and remit the proceeds of the bonds to the local governments who opt to participate in the securitization. The State will then repay the bondholders, to pay off the outstanding bonds including interest costs. The County has decided to participate in the securitization financing program in order to recoup up to approximately $9.8 million in property taxes that the County expects to lose to the State borrowing. See "State Budget" below.

State Budget

The following information concerning the State of California's budgets has been obtained from publicly available information which the County believes to be reliable; however, the County takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information.

Fiscal Year 2009-10 State Budget. On February 20, 2009, the Governor signed the 2009 Budget Act (the "Original 2009-10 State Budget"). The Original 2009-10 State Budget estimated Fiscal Year 2008-09 revenues and transfers of $89.37 billion, total expenditures of $94.09 billion and a year-end deficit of $2.34 billion, which included a $2.37 billion prior-year State General Fund balance, a $3.42 billion withdrawal from the reserve for economic uncertainties and an allocation of $1.08 billion to the reserve for the liquidation of encumbrances. The Original 2009-10 State Budget projected Fiscal Year 2009-10 revenues and transfers of $97.73 billion, total expenditures of $92.21 billion and a year-end surplus of $3.18

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billion (net of the $2.34 billion deficit from Fiscal Year 2008-09), of which $1.08 billion would be reserved for the liquidation of encumbrances and $2.10 billion would be deposited in a reserve for economic uncertainties.

Features of the Original 2009-10 State Budget affecting counties, in general, included the following:

1. The Original 2009-10 State Budget increased the VLF rate from 0.65 percent to 1.15 percent of a vehicle's value. A portion of such increase (0.15 percent of the vehicle's value) will be dedicated to local government public safety grant programs to reduce General Fund spending. Pursuant to the Original 2009-10 State Budget, the increased VLF rate is scheduled to terminate on July 1, 2013.

2. The Original 2009-10 State Budget continued the projected allocation of $66.2 million contained in the 2008-09 State Budget for the Youthful Offender Block Grant program, pursuant to which counties receive State funds to provide local supervision and services for juvenile offenders. The Original 2009-10 State Budget increased funding for the Youthful Offender Block Grant program to $92 million in Fiscal Year 2009-10.

3. The Original 2009-10 State Budget eliminated the 2009-10 County Medi-Cal Cost of Doing Business Adjustment for county eligibility operations, which will reduce appropriations to the counties in the amount of $49.4 million. The Original 2009-10 State Budget also included the elimination of certain optional Medi-Cal benefits in the amount of $183.6 million.

4. The Original 2009-10 State Budget (i) suspended the June 2010 State COLA with regard to the Supplemental Security Income – State Supplementary Payment ("SSI/SSP") Program in order to reduce expenditures from the State General Fund of approximately $27.0 million in Fiscal Year 2009-10; (ii) eliminated the pass-through, beginning May 1, 2009, of the federal Supplemental Security Income COLA, which would have been applied to the SSI/SSP Program, to reduce State General Fund expenditures by $79.8 million in Fiscal Year 2008-09 and $487.3 million in Fiscal Year 2009-10; and (iii) reduced SSI/SSP monthly grants by an additional 2.3 percent to reduce State expenditures by approximately $267.8 million.

5. The Original 2009-10 State Budget suspended the 2.94 percent COLA scheduled for July 2009 in connection with CalWORKs and eliminated the CalWORKs pay-for-performance program, which provides counties with funding incentives to increase employment rates. The Original 2009-10 State Budget also eliminated an appropriation to the CalWORKs program in the amount of $146.9 million.

6. The Original 2009-10 State Budget deferred until October 2009 payments to counties originally scheduled for July 2009 and August 2009 for certain social services. Such deferment was expected to total approximately $714 million for social services and $92 million for mental health cash advances.

According to the Legislative Analyst's Office, the Original 2009-10 State Budget relied in particular upon the passage of three measures appearing on the ballot at a special election held on May 19, 2009 (the "Special Election"), which accounted for an aggregate $5.8 billion in additional revenues to the State. None of the measures received the requisite voter approval.

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Revised State Budget for Fiscal Year 2009-10. On July 28, 2009, the Governor signed certain amendments to the Original 2009-10 State Budget (as amended, the "Revised 2009-10 State Budget") to address a projected $24.16 billion shortfall in revenues. The Revised 2009-10 State Budget estimates Fiscal Year 2008-09 revenues and transfers of $84.1 billion, total expenditures of $91.5 billion and a year-end deficit of $3.38 billion, which includes a $4.07 billion prior-year State General Fund balance, a $4.46 billion withdrawal from the reserve for economic uncertainties and an allocation of $1.08 billion to the reserve for the liquidation of encumbrances. The Revised 2009-10 State Budget projects Fiscal Year 2009-10 revenues and transfers of $89.54 billion, actual expenditures of $84.58 billion and a year-end surplus of $1.58 billion (net of the $3.38 billion deficit from Fiscal Year 2008-09, of which $1.08 billion is expected to be reserved for the liquidation of encumbrances and $500 million is expected to be deposited in a reserve for economic uncertainties.

Features of the Revised 2009-10 State Budget affecting counties, in general, include the following:

1. The Revised 2009-10 State Budget borrows $1.9 billion of city, county and special district property taxes pursuant to Proposition 1A (2004) to offset General Fund spending for education and other programs. Pursuant to the enabling legislation, the State is required to repay the borrowed sums by June 30, 2013. The Revised 2009-10 State Budget Act also establishes a State-financed loan repayment securitization program, which will allow local agencies to issue bonds in order to offset local fiscal effects of the borrowing.

2. The Revised 2009-10 State Budget suspends various non-education local government mandates, with the exception of certain mandates relating to public safety, elections, and tax collection, for State spending reductions of approximately $66 million.

3. The Revised 2009-10 State Budget uses $562 million in additional spillover gasoline sales tax revenues projected to be available in Fiscal Year 2009-10 to reimburse the General Fund for transportation debt service.

4. The Revised 2009-10 State Budget eliminates requirements for statutory COLAs for CalWORKs and SSI/SSP beginning in Fiscal Year 2009-10.

5. The Revised 2009-10 State Budget shifts $25.6 million in Proposition 99 funds from County Health Services to the General Fund.

6. The Revised 2009-10 State Budget reduces funding by approximately $28 million for the Early and Periodic Screening, Diagnosis and Treatment program related to county programs developed in Fiscal Years 2007-08 and 2008-09. Such programs were funded by counties with funds made available through the MHSA.

7. The Revised 2009-10 State Budget (i) eliminates the statutory COLA for CalWORKs grants beginning in Fiscal Year 2010-11, (ii) reduces funding for county operation of the CalWORKs Program by $375 million in Fiscal Year 2009-10 and (iii) exempts parents and relative caregivers of certain young children from having to meet work participation requirements between July 1, 2009 and July 1, 2011 in order to reduce county expenditures relating to the program.

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November 2009 LAO Report on Budget. On November 18, 2009, the California Legislative Analyst's Office issued a report on the fiscal outlook for the State's budget. The report includes a forecast of California's General Fund revenues and expenditures reflecting a General Fund budget deficit of $20.7 billion: a $6.3 billion projected deficit for Fiscal Year 2009-10 and a $14.4 billion gap between projected revenues and spending in Fiscal Year 2010-11. The report attributes the majority of the budget problem for Fiscal Year 2009-10 to the State's inability to implement several major solutions in the Revised 2009-10 State Budget, such as:

• The expected inability of several programs – in particular, the prison system and Medi-Cal – to collectively achieve billions of dollars of spending reductions assumed in the Revised 2009-10 State Budget.

• The expected inability of the State to sell the State Compensation Insurance Fund (SCIF), a quasi-public workers' compensation insurer, for the budgeted amount of $1 billion in Fiscal Year 2009-10.

• The State's loss of a court case that makes the General Fund unable to benefit from over $800 million in transportation funds in Fiscal Year 2009-10.

• A nearly $1 billion increase in the Proposition 98 funding guarantee for K-14 education in Fiscal Year 2009-10.

Impact of Current and Future State Budgets. The County receives a significant portion of its funding from the State. Changes in the revenues received by the State can affect the amount of funding, if any, to be received from the State by the County and other counties in the State.

The County cannot predict the extent of the budgetary problems the State will encounter in this fiscal year or in any future fiscal years, and, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the County cannot predict the final outcome of current and future State budget negotiations, the impact that such budgets will have on its finances and operations or what actions will be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn, over which the County has no control.

The County adopted several measures in September 2009 as a consequence of State budget reductions and the continued economic downturn. See "Budget Procedures and Budgets" above.

Impact of the American Recovery and Reinvestment Act on the County

On February 17, 2009, the President of the United States signed the American Recovery and Reinvestment Act (the "ARRA") into law. The ARRA intends to stimulate the economy by reducing taxes and creating jobs directly and indirectly through the funding of various infrastructure projects and other programs by up to $828 billion. One of the stated purposes of

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the ARRA is to stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and state and local tax increases.

The County stands to benefit both directly and indirectly from the ARRA. The ARRA includes a variety of funding mechanisms including block grants, competitive grants and loans. The ARRA also includes increases to some existing formula-based grants and payments.

The ARRA provides funds for the Energy Efficiency and Conversation Block Grant program, which would help state and local governments implement innovative practices to improve energy efficiency, lower energy usage, and reduce greenhouse gas emissions. Additional energy-efficiency programs funded by the ARRA that may benefit the County include grants to encourage electric transportation, federal aid to help state and local governments purchase efficient alternative fuel vehicles, and various grants and loans to state and local governments for diesel emissions reduction projects.

The ARRA also includes funding for road, highway and transit infrastructure improvements, including funding for upgrades and repairs to modernize existing transit systems.

The ARRA also provides funding for health information technology projects, including projects to computerize health records to cut costs and reduce medical errors.

States and local governments are also expected to receive financial aid under the ARRA. The ARRA includes a temporary increase in the Federal Matching Assistance Program for Medicaid, funds for training and employment services, expansion of the Food Stamp Program, funds for child support enforcement, funds for block grants for the Temporary Assistance for Needy Families, and an increase to local law enforcement grants. While some of these funds will go directly to the State and not to the County, the ARRA may provide some relief to the State's current budget crisis, which, in turn, may help prevent some of the cuts proposed to County-operated health and welfare programs.

The specific benefits to the County from the ARRA have not been quantified at this time. The County will continue to monitor the impacts of the ARRA on its finances, and may modify budgets to adapt to the effects of the ARRA as necessary.

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Employees

A summary of County employment levels follows. Some employees are hired under various federally funded programs.

TABLE 13 COUNTY OF SOLANO

COUNTY ALLOCATED PERMANENT POSITIONS Fiscal Years 2005-06 to 2009-10

Permanent

Fiscal Year Number of Positions

2005-06 3,059 2006-07 3,092 2007-08 3,116 2008-09 3,077 2009-10 2,855

__________ Source: County of Solano.

County employees are represented by nine labor unions with the remaining employees designated as "unrepresented." The principal labor union is the Service Employees International Union (SEIU), Local 1021 ("Local 1021"), AFL-CIO, which represents 1,837 employees. The labor agreements represented by Local 1021 are currently under negotiations with no current projected settlement date.

In June 2009, the County implemented personnel reductions (by 212 positions) and adopted measures to adjust employee compensation in order to achieve costs savings commencing in Fiscal Year 2009-10. Several of these measures include:

• re-opening all existing Memoranda of Understanding with existing employee organizations and unrepresented employees to defer COLAs scheduled to be implemented in Fiscal Year 2009-10;

• offering an Early Retirement Incentive program effective August 2009;

• reduction of Management Incentive Program by 33 percent;

• deferral of three percent COLAs for Executive and Senior Management;

• modified cash-back option through the health insurance cafeteria plan;

• exploring mandatory furloughs; and

• adopting lower retirement tier for future County employees.

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PERS Pension Plans

The following section includes information concerning PERS that is excerpted from publicly available sources. PERS is not obligated in any manner for debt service payments on the Series 2004 Bonds and Series 2005 Bonds (as defined below), and the assets of PERS are not available for such payments. PERS should be contacted directly at CalPERS, Lincoln Plaza, 400 P Street, Sacramento, CA 95814, Telephone: (888) 225-7377 for other information, including information relating to its financial position and investments. The financial information provided by PERS is usually for dates and periods ending more than a year in the past. Further, the valuations and actuarial calculations involved in providing financial information on a large pension fund are complex and based on many assumptions. Among other items, declines in the market value of various investments will not be reported until long after such declines have occurred. It should be expected that a portfolio of investments such as that held by PERS has and will experience declines in its value as a result of declines in the values of the broader market for investments and possibly as a result of specific investments that may be underperforming or illiquid.

General. The County provides retirement benefits to all full-time County employees through a contract with PERS, a multiple-employer public sector employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to PERS members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State. PERS is a contributory plan deriving funds from employee contributions as well as from employer contributions and earnings from investments.

PERS maintains two pension plans for the County, a Safety Plan (the "Safety Plan") and a Miscellaneous Plan (the "Miscellaneous Plan" and, together with the Safety Plan, the "PERS Plans"). The County contributes to PERS amounts equal to the recommended rates for the PERS Plans multiplied by the payroll of those employees of the County who are eligible under PERS.

The staff actuaries at PERS prepare annually an actuarial valuation which covers a fiscal year ending approximately 15 months before the actuarial valuation is prepared (thus, the actuarial valuation delivered to the County on October 27, 2008 covered PERS' Fiscal Year ended June 30, 2007). The actuarial valuation expresses the County's required contribution rates in percentages of payroll, which percentages the County contributes in the fiscal year immediately following the fiscal year in which the actuarial valuation is prepared (thus, the County's contribution rates derived from the actuarial valuation as of June 30, 2007 will be effective during the County's Fiscal Year 2009-10). PERS rules require the County to implement the actuary's recommended rates.

In calculating the annual actuarially required contribution rates, the PERS actuary calculates on the basis of certain assumptions the actuarial present value of benefits that PERS will fund under the PERS Plans, which includes two components, the normal cost and the unfunded accrued actuarial liability ("UAAL"). The normal cost represents the actuarial present value of benefits that PERS will fund under the PERS Plans that are attributed to the current year, and the UAAL represents the actuarial present value of benefits that PERS will fund that are attributed to past years. The UAAL represents an estimate of the actuarial shortfall between

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assets on deposit at PERS and the present value of the benefits attributable to past service that PERS will pay under the PERS Plans to retirees and active employees upon their retirement. The UAAL, is based on several assumptions such as, among others, the rate of investment return, average life expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition, the UAAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing losses and gains over multiple years (which is described in more detail below). As a result, prospective investors are encouraged to consider the UAAL as an estimate of the unfunded actuarial present value of the benefits that PERS will fund under the PERS Plans to retirees and active employees upon their retirement and not as a fixed or hard expression of the liability the County owes to PERS under the PERS Plans.

In calculating the UAAL in an actuarial valuation, the PERS actuary smoothes gains and losses over 15 years using a smoothing technique that generally only recognizes 1/15 of the gain or loss realized in a given fiscal year. In each actuarial valuation, the PERS actuary calculates what was the expected actuarial value of the assets (the "Expected Value") of the PERS Plans at the end of the fiscal year (which assumes, among other things, that the real rate of return during that fiscal year equaled the assumed rate of return of 7.75 percent). However, PERS does not allow the Expected Value to be less than 80 percent or more than 120 percent of the Market Value. These policies for smoothing and calculating Expected Value are new policies that were adopted in April 2005, as described below.

In addition to making annual contributions to PERS in accordance with the applicable actuarial valuation, the County also is obligated pursuant to the collective bargaining arrangements with the County's employee unions to pay a portion of the employees' required contribution to PERS (these payments by the County are referred to herein as the "Employee Offsets"), which, for safety employees of the County, between five percent to nine percent of their salary and which, for non-safety employees is three percent to eight percent of their salary.

In April 2005, the PERS Board adopted new policies aimed at stabilizing rising employer costs. These policies were used to set Fiscal Year 2009-10 employer contribution rates for the County. These policies include:

• Spreading PERS market value asset gains and losses over 15 years rather than the current three years.

• Widens the "corridor" limits for establishing the actuarial value of assets from 90 to 110 percent of market value to 80 to 120 percent of market value.

• Established a rolling 30-year amortization on all remaining net unamortized gains or losses, instead of amortizing 10 percent of the net unamortized gain or loss each year.

For complete updated inflation and actuarial assumptions, please contact PERS at the above-referenced address.

Pension Advisory Committee. In 2004, the County established a Pension Advisory Committee (the "Committee") composed of the County Administrator, the Auditor-Controller and the Director of Human Resources, and established a Pension Stabilization Fund. The

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Committee meets at least three times a year to consider pension and benefit-related issues, preview the PERS annual statement to determine if the County needs to take action on its liability, preview mid-year information to determine if funding levels for pension bond debt service and funding levels in the stabilization fund are adequate or need adjustment, and set rates charged to departments to cover debt service and stabilization contributions, and determine expenditures from the stabilization fund.

On June 17, 2004, the County issued $96,665,000 aggregate principal amount of Taxable Pension Funding Bonds, Series 2004 (the "Series 2004 Bonds"). On November 23, 2005, the County issued $42,385,000 aggregate principal amount of Taxable Pension Funding Bonds, Series 2005 (the "Series 2005 Bonds"). The bonds were used to refinance the UAAL attributable to the County's pension plans. See "Outstanding Payment Obligations" below. Over the past three years, the Committee has opted to pay down approximately $50 million of the Series 2004 Bonds after reviewing the County's fiscal situation, PERS status, and the interest rate environment.

Funding Status. As of June 30, 2007, the most recent PERS actuarial valuation date, the County's assets in the Safety Plan had an actuarial value of approximately $221.4 million. The accrued liability for the Safety Plan was approximately $235.1 million. The Safety Plan was approximately 94.2 percent funded as of June 30, 2007, with a UAAL of approximately $13.7 million. For Fiscal Year 2009-10, the County's required employer contribution rate for the Safety Plan is 15.144 percent based on the June 30, 2007 PERS Actuarial Valuation Report.

As of June 30, 2007, the County's assets in the Miscellaneous Plan had an actuarial value of approximately $744 million. The accrued liability for the Miscellaneous Plan was approximately $781.6 million. The Miscellaneous Plan was approximately 95.2 percent funded as of June 30, 2007, with a UAAL of approximately $37.6 million. For Fiscal Year 2009-10, the County's required employer contribution rate for the Miscellaneous Plan is 12.003 percent based on the June 30, 2007 PERS Actuarial Valuation Report.

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Historical Funding Status. The following table sets forth estimates for the Fiscal Years 2005-06 through 2009-10 the amount of the total employer contributions made by the County, the UAAL and the funded ratio of the Safety Plan as of the actuarial valuation dates June 30, 2003-2007 based on the PERS Actuarial Reports for those years.

TABLE 14 COUNTY OF SOLANO

HISTORICAL FUNDING STATUS (Safety Plan)

Actuarial Valuation

Date June 30, UAAL Funded Ratio

Affects County Contribution for

Fiscal Year:

County Contribution

Amount Employee Offsets Paid by County

2003 $21,913,847 85.9% 2005-06 $5,053,543 $3,150,000 2004 15,328,452 91.2 2006-07 5,734,843 3,228,750 2005 20,444,622 89.5 2007-08 5,341,410 3,285,000 2006 11,664,245 94.6 2008-09 5,608,109 3,400,000 2007 13,705,651 94.2 2009-10 6,018,507 Not Yet Available

__________________________ Source: PERS Actuarial Reports for June 30, 2003-2007.

The following table sets forth estimates for the Fiscal Years 2005-06 through 2009-10 the amount of the total employer contributions made by the County, the UAAL and the funded ratio of the Miscellaneous Plan as of the actuarial valuation dates June 30, 2003-2007 based on the PERS Actuarial Reports for those years.

TABLE 15 COUNTY OF SOLANO

HISTORICAL FUNDING STATUS (Miscellaneous Plan)

Actuarial Valuation

Date June 30, UAAL Funded Ratio

Affects County Contribution for

Fiscal Year:

County Contribution

Amount Employee Offsets Paid by County

2003 $112,892,838 78.8% 2005-06 $20,217,060 $6,762,000 2004 45,716,994 92.2 2006-07 19,120,703 6,897,240 2005 53,001,820 91.8 2007-08 16,237,080 8,280,000 2006 33,862,451 95.2 2008-09 18,648,391 8,023,455 2007 37,597,356 95.2 2009-10 20,578,366 Not Yet Available

__________________________ Source: PERS Actuarial Reports for June 30, 2003-2007.

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TABLE 16 COUNTY OF SOLANO

SCHEDULE OF FUNDING PROGRESS (Safety Plan)

A five-year schedule of the funding progress of the Safety Plan is presented in the table below.

Actuarial Valuation

Date June 30,

Actuarial Value of Assets

(a)

Actuarial Accrued Liability

(AAL) Entry Age (b)

Unfunded/ (Over funded)

AAL (b-a)

Funded Ratio (a/b)

Annual Covered Payroll

(c)

Unfunded/ (Over funded)

AAL as a Percentage of

Covered Payroll ((b-a)/c)

2003 $ 133,254,142 $155,167,989 $21,913,847 85.9% $30,940,152 70.8% 2004 158,822,616 174,151,068 15,328,452 91.2 33,376,960 45.9 2005 173,601,306 194,045,928 20,444,622 89.5 33,246,575 61.5 2006 203,675,580 215,339,825 11,664,245 94.6 34,553,886 33.8 2007 221,423,489 235,129,140 13,705,651 94.2 37,478,773 36.6

_______________ Source: PERS Actuarial Reports for June 30, 2003-2007.

TABLE 17 COUNTY OF SOLANO

SCHEDULE OF FUNDING PROGRESS (Miscellaneous Plan)

A five-year schedule of the funding progress of the Miscellaneous Plan is presented in the table below.

Actuarial Valuation

Date June 30,

Actuarial Value of Assets

(a)

Actuarial Accrued

Liability (AAL) Entry Age

(b)

Unfunded/ (Over funded)

AAL (b-a)

Funded Ratio (a/b)

Annual Covered Payroll

(c)

Unfunded/ (Over funded)

AAL as a Percentage of

Covered Payroll ((b-a)/c)

2003 $420,445,948 $533,338,786 $112,892,838 78.8% $135,215,061 83.5% 2004 542,591,874 588,308,868 45,716,994 92.2 135,207,449 33.8 2005 594,320,985 647,322,805 53,001,820 91.8 137,816,885 38.5 2006 678,791,077 712,653,528 33,862,451 95.2 145,880,582 23.2 2007 744,049,108 781,646,464 37,597,356 95.2 161,687,049 23.3

_______________ Source: PERS Actuarial Reports for June 30, 2003-2007.

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The following table shows the percentage of salary which the County was responsible for contributing to PERS from Fiscal Year 2005-06 through Fiscal Year 2009-10 to satisfy its retirement funding obligations.

TABLE 18 COUNTY OF SOLANO

SCHEDULE OF EMPLOYER CONTRIBUTION RATES

Actuarial Report for Fiscal Year Ended June 30

Affects Contribution Rate for Fiscal Year: Safety Plan

Miscellaneous Plan

2003 2005-06 14.8% 13.6% 2004 2006-07 15.6 12.8 2005 2007-08 14.6 11.8 2006 2008-09 15.3 12.1 2007 2009-10 15.1 12.0

________________________ Source: PERS Actuarial Reports for June 30, 2003-2007.

Other Retirement Plans

The County also participates in Public Agency Retirement System Trust Program ("PARS") for the benefit of certain of its senior and executive officers. PARS is a private retirement system benefit plan. Fiscal Year 2003-04 was the first full fiscal year during which the County has participated in PARS. The County contributed approximately $600,000 and $476,000 to PARS in Fiscal Year 2007-08 and 2008-09, respectively. The County's expected contributions to PARS for Fiscal Year 2009-2010 is estimated to be approximately $400,000. On March 1, 2006 the County pre-funded $1.3 million of the County's unfunded liability for both the excess benefit plan and the retirement enhancement plan as of July 1, 2004.

Other Post-Employment Benefits

The County contracts with CalPERS to provide health care benefits to County employees and eligible retirees. Both the employee and the County pay for these benefits on a biweekly basis through payroll deductions.

In June 2004, the Governmental Accounting Standards Board ("GASB") issued Statement No. 45 ("GASB 45"), which addresses how state and local governments should account for and report their costs and obligations related to post-employment health care and other non-pension benefits ("OPEB"). GASB 45 generally requires that employers account for and report the annual cost of OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner as they currently do for pensions. Annual OPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. The provisions of GASB 45 may be applied prospectively and do not require governments to fund their OPEB plans. An employer may establish its OPEB liability at zero as of the beginning of the initial year of implementation. However, the unfunded actuarial liability is required to be amortized over future periods on the income statement. GASB 45 also established disclosure requirements for information about the plans in which an employer participates, the funding

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policy followed, the actuarial valuation process and assumptions, and for certain employers, the extent to which the plan has been funded over time. These disclosure requirements were effective for the County's fiscal year ending June 30, 2008.

In 2009, the County retained the services of an actuary to update the County's OPEB liability as of January 1, 2009. The majority of the County's liability consists of the minimum required contribution for retirees under the CalPERS Health Plan. Based on the actuarial analysis, the County's OPEB unfunded actuarial liability as of January 1, 2009 was $27 million. Full funding of the annual required contribution ("ARC") would require annual contributions of $3.8 million. The County pre-funds its OPEB by depositing amounts into an irrevocable trust fund maintained by PARS.

The County's annual OPEB cost is calculated based on the ARC, which is actuarially determined in accordance with GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The County's ARC rate for Fiscal Year 2008-09 was 1.8 percent of annual covered payroll. The County's Fiscal Year 2009-10 ARC rate is 1.95 percent of annual covered payroll.

For Fiscal Year 2007-08, the County's annual OPEB cost was approximately $3.28 million, which was equal to the ARC. The County made contributions in Fiscal Year 2008-09 of approximately $3.385 million to the plan. The County's estimated contribution for Fiscal Year 2009-10 is $2 million.

Insurance Program

On October 27, 1998, the Board of Supervisors approved moving from a self-insured general liability program to a fully insured program offered by the California State Association of Counties – Excess Insurance Authority (the "CSAC Insurance Authority"), and the County currently is utilizing that insurance. On March 25, 2003, the Board of Supervisors approved the withdrawal of the County from the CSAC Excess Insurance Authority Primary Workers' Compensation Program and to self-insure the County for workers' compensation effective July 1, 2003. The County self insures for the first $125,000 of each workers' compensation claim. The County will continue to participate in excess coverage with limits up to $300 million.

Outstanding Payment Obligations

The County currently has no long-term general obligation bonded indebtedness outstanding.

On June 23, 1999, the County executed and delivered $31,710,000 aggregate principal amount of Certificates of Participation (1999 Capital Improvement Program) in connection with a health and social services facility financing and refunding which mature at various dates through 2019. As of November 1, 2009, the amount outstanding on these certificates is $17,970,000. The 1999 Certificates will be refunded using the proceeds of the Certificates.

On December 3, 2002, the County issued $118,325,000 aggregate principal amount of Certificates of Participation (the "2002 Certificates") in connection with the Solano County

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Government Center which matures at various dates through 2032. The 2002 Certificates were refunded with a portion of the proceeds of the 2007 Certificates, as defined below. As of November 1, 2009, the amount outstanding on these certificates is $8,810,000.

On June 17, 2004, the County issued $96,665,000 aggregate principal amount of Taxable Pension Funding Bonds, Series 2004 to refinance a portion of the County's statutory obligation to make payments to the California Public Employees Retirement System ("PERS") for certain amounts arising as a result of retirement benefits accruing to members of PERS. As of November 1, 2009, the principal amount outstanding on these bonds is $43,230,000.

On November 23, 2005, the County issued $42,385,000 aggregate principal amount of Taxable Pension Funding Bonds, Series 2005 to refinance a portion of the County's statutory obligation to make payments to PERS for certain amounts arising as a result of retirement benefits accruing to members of PERS. As of November 1, 2009, the principal amount outstanding on these bonds is $39,980,000.

On January 11, 2007, the County issued $99,860,000 aggregate principal amount of Certificates of Participation (the "2007 Certificates") to refund and defease a portion of the 2002 Certificates. As of November 1, 2009, the principal amount outstanding on these certificates is $99,360,000.

As of November 1, 2009, the County also has certain other capital lease and notes payable obligations amounting to $2,283,729. The County has no authorized but unissued long-term debt.

Debt Burden

Contained within the County's tax code area are numerous municipalities, school districts and special purpose districts providing public services. These entities have outstanding bonds issued in the form of general obligation bonds. Direct debt constitutes debt directly issued by the County while overlapping debt constitutes that portion of debt issued by different public entities within the same tax code area as the County's. The County is not responsible for the overlapping debt of other local agencies.

The statement of direct and overlapping debt (the "Debt Report") set forth below was prepared by California Municipal Statistics, Inc., and dated as of October 15, 2009. The Debt Report includes only such information as has been reported to California Municipal Statistics, Inc. by the issuers of the debt described therein and by others. The Debt Report is included for general information purposes only. The County has not independently verified its completeness or accuracy.

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TABLE 19 COUNTY OF SOLANO

DIRECT AND OVERLAPPING DEBT STATEMENT (as of October 15, 2009)

2009-10 Assessed Valuation: $42,182,126,984 (includes unitary utility valuation) Redevelopment Incremental Valuation: 6,357,656,333 Adjusted Assessed Valuation: $35,824,470,651

OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable (1) Debt 10/15/09 Solano County Community College District 98.084% $110,275,929 Benicia Unified School District 100. 34,794,057 Fairfield-Suisun Joint Unified School District 99.070 86,527,738 Vacaville Unified School District 100. 89,875,957 Vallejo Unified School District 100. 91,760,000 Other School Districts Various 42,022,895 Cities 100. 21,896,488 Fairfield Municipal Park Facilities District, I.D. No. 1 100. 10,880,000 Davis Joint Unified School District Community Facilities District No. 1 0.256 78,246 Fairfield-Suisun Unified School District Community Facilities Districts 100. 42,546,415 Vallejo Unified School District Community Facilities District No. 2 100. 23,390,000 City of Fairfield Community Facilities Districts 100. 33,580,000 City of Rio Vista Community Facilities District No. 2004-1 100. 14,815,000 City of Rio Vista Community Facilities District No. 2006-1 100. 14,750,000 Vacaville Community Facilities District No. 2 100. 3,315,000 City of Vallejo, Improvement District No. 1998-1 100. 18,345,000 City 1915 Act Assessment Districts (Estimate) 100. 77,869,250 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $716,721,975

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Solano County General Fund Obligations 100% $133,355,000 (2)

Solano County Pension Obligations 100. 118,830,000

Solano County Office of Education Certificates of Participation 100. 2,750,000

Travis Unified School District Certificates of Participation 100. 36,320,000 Vallejo Unified School District Certificates of Participation 100. 39,525,000 Other School District General Fund Obligations Various 25,921,322 City of Fairfield Pension Obligations 100. 36,345,000 City of Vacaville Certificates of Participation 100. 15,815,000 City of Vallejo General Fund Obligations 100. 104,310,000 Other City General Fund Obligations 100. 17,672,626 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $530,843,948 COMBINED TOTAL DEBT $1,247,565,923 (3)

(1) Based on 2008-09 ratios. (2) Excludes issue to be sold. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and

non-bonded capital lease obligations.

Ratios to 2009-10 Assessed Valuation: Total Direct and Overlapping Tax and Assessment Debt...... 1.70% Ratio to Adjusted Assessed Valuation: Combined Direct Debt ($252,185,000) ................................ 0.70% Combined Total Debt ............................................................ 3.48% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/09: $0 Source: California Municipal Statistics, Inc.

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THE COUNTY INVESTMENT POOL

The County maintains an Investment Pool managed by the Treasurer/Tax Collector/County Clerk, which acts as a depository for over eighty units of local government including funds of the County school districts, special districts and other entities. Not included in the Investment Pool are some school district Tax and Revenue Anticipation Note proceeds, which are managed by the Treasurer/Tax Collector/County Clerk separately from the Investment Pool.

The County has also formed a Treasury Oversight Committee that consists of five members and two alternates. The committee reviews the Investment Policy, insures the Treasury activities are in compliance with the Investment Policy, causes an external audit of the Investment Pool annually and reviews the internal auditors quarterly audits. The committee meets quarterly and is composed of the County's budget officer and superintendent of schools director of business and finance, two members of the public and one business director from a school district.

Investment Policy & Procedures

Investment Objectives. The objectives of the pool are to meet the cash requirements of the pool participants, invest the funds in a safe, legal and prudent manner, and achieve a money market rate of return. To achieve this objective the Treasurer/Tax Collector/County Clerk maintains a one-year countywide cash flow projection. This projection is reviewed and updated monthly in consultation with the pool participants and the County Auditor-Controller. Historically, the amounts and timing of cash requirements have been predicted with high level of certainty. The pool is managed in a prudent manner by always maintaining a high level of liquidity. Quarterly, the Treasurer/Tax Collector/County Clerk analyzes the liquidity of the portfolio and certifies to the Board of Supervisors the availability of cash to meet obligations for the next six months.

Investment Policy. The pooled funds are invested in accordance with the County's Investment Policy and the State of California Government Code. The Investment Policy is prepared annually by the Treasurer/Tax Collector/County Clerk who is aided by a 5-member Investment Oversight Committee and submitted to the County Board of Supervisors for approval. In general the Investment Policy allows investments as established by the Government Code.

It is the policy of the County not to accept funds from units of government located outside the County or from agencies or units of government not required to use the County Treasury as a repository. About 95 percent of the funds in the Investment Pool are required to be on deposit in the County Treasury.

Custodial Clerk. The County maintains a contract with Union Bank of California to provide custodial services for the pool securities.

Apportionment of Earnings. Interest income from investments along with profits or losses from the sale of individual securities are apportioned at least quarterly on an accrual basis to pool members based on an average daily balance.

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Portfolio Oversight. A monthly investment report is distributed on the County of Solano Treasurer's web site, to the Board of Supervisors to pool members and to the Treasury Oversight Committee summarizing the Treasurer's balance sheet, income statement, net asset value, and the monthly rate of return. A more comprehensive report is submitted quarterly which includes a complete listing of the portfolio holdings, a statement of compliance, a calculation of duration, and a narrative on the general economic environment impacting the portfolio as well as expected adjustments to duration or average maturity. The report reviews the current portfolio strategy, the current economic environment and reports adjustments by pool managers. The Bloomberg information system and Sendero accounting system are used to manage and account and report the status of the portfolio.

Current Status of the Investment Portfolio. The book value of the Treasury Investment Portfolio is $508,985,353 as of September 30, 2009. Throughout the year the Treasury Investment Portfolio typically ranges from about $500 million to $850 million depending on the tax collection schedule and Teeter Plan payments. The average days to maturity for the portfolio is 527 days. There is no leverage or derivatives in the portfolio.

Current Strategy. The Treasurer/Tax Collector/County Clerk's goal is to return to provide sufficient liquidity to fund withdrawals demands, and invest the balance to provide market rates of return.

Investment Summary Report. The following table sets forth a summary of the County's investments, by type of investment, as of September 30, 2009.

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TABLE 20 COUNTY OF SOLANO TREASURY

INVESTMENT PORTFOLIO SUMMARY As of September 30, 2009

Investments Book Value Percent of Portfolio

Cash On Hand $39,199 0.01% Cash in Bank 1,988,510 0.39 Money Markets & LAIF 73,777,173 14.49 Mutual Funds & JPAs 31,916,666. 6.27 Commercial Paper - - Treasury Bills, Notes & Bonds 14,345,499 2.82 Federal Agency Bills, Notes & Bonds 302,581,438 59.45 Corporate Notes 63,548,925 12.49 Municipal Bonds 18,100,000 3.56 Non Cash Assets 2,687,943 0.53 $508,985,353 100.00% _____________ Source: County of Solano Treasurer/Tax Collector/County Clerk.

APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2008

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County of Solano, California Comprehensive Annual Financial Report

Fiscal Year Ended June 30, 2008

Sunflower Field Dixon CA

Simona Padilla-Scholtens, CPA Auditor-Controller

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County of Solano, California

Comprehensive Annual Financial Report

For the Fiscal Year Ended

June 30, 2008

Prepared by:

Office of the Auditor-Controller

Simona Padilla-Scholtens, CPA Auditor-Controller

INTRODUCTORY SECTION

County of Solano, California Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2008

Table of Contents

Page INTRODUCTORY SECTION (Unaudited):

Letter of Transmittal …………………………………………………………. 1 GFOA Certificate of Achievement…………………………………………… 7 Organization Chart …………………………………………………………… 8 Department Head Listing …………………………………………………... 9

FINANCIAL SECTION:

Independent Auditor’s Report.….….….….….….……………………………. 11 Management’s Discussion and Analysis (Required

Supplementary Information) ………………………………………………… 13 Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Assets …………………………………………………. 25 Statement of Activities …………………………………………………... 26

Fund Financial Statements: Balance Sheet – Governmental Funds .………………………………….. 28 Statement of Revenues, Expenditures and Changes in

Fund Balances – Governmental Funds ..…………………………….… 30 Reconciliation of the Statement of Revenues, Expenditures and

Changes in Fund Balances of Governmental Funds to the Statement of Activities ………………………………………………… 32

Statement of Net Assets – Proprietary Funds …………………………….. 33 Statement of Revenues, Expenses and Changes in

Fund Net Assets – Proprietary Funds ………………………………….. 34 Statement of Cash Flows – Proprietary Funds ……………………………. 35 Statement of Fiduciary Net Assets – Fiduciary Funds ……………………. 36 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds ………... 37

Notes to the Financial Statements …………………………………………….. 39 Required Supplementary Information:

Schedules of Funding Progress ………………………….…………………… 73 Schedule of Revenues, Expenditures and

Changes in Fund Balance - Budget and Actual – General Fund ………….. 74 Schedules of Revenues, Expenditures and

Changes in Fund Balance - Budget and Actual – Major Special Revenue Funds:

Health and Social Services …………………………………………….. 75 Public Safety ………………..…………………………………………. 76 Tobacco Settlement ……………………………………………………. 77

Note to Required Supplementary Information…………………………….…. 78

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Page Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet – Other Governmental Funds ………………………. 80 Combining Statement of Revenues, Expenditures and

Changes in Fund Balances – Other Governmental Funds …………………… 81 Combining Balance Sheet – Nonmajor Special Revenue Funds ……..………… 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds …………….. 86 Schedules of Revenues, Expenditures and

Changes in Fund Balance – Budget and Actual – Nonmajor Special Revenue Funds:

Public Facilities Fees ..……………………………………………………. 88 Library ……………………………………………………………………. 89 Transportation …………………………………………………………….. 90 First 5 Solano ……………………………………………………………... 91 Homeacres Loan Program…………………………………………………. 92 Rural North Vacaville Water District …………………………………….. 93 Micrographics and Modernization ………………………………………... 94 Other Special Revenue Funds …………………………………………….. 95

Combining Balance Sheet – Nonmajor Capital Projects Funds .……..……..…... 97 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Capital Projects Funds ……………… 98 Schedules of Revenues, Expenditures and

Changes in Fund Balance – Budget and Actual – Nonmajor Capital Projects Funds:

Fairfield Downtown Project ……………………………………………….. 99 Accumulated Capital Outlay ………………………………….…………… 100 Juvenile Hall Project ………………………………………………………. 101

Combining Balance Sheet – Nonmajor Debt Service Funds ……………………. 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Debt Service Funds …………….. ….. 106 Schedules of Revenues, Expenditures and Changes in Fund Balance –

Budget and Actual – Nonmajor Debt Service Funds: Rural North Vacaville Water District …………………………………….. 108 1998 Certificates of Participation ………………………………………… 109 1999 Certificates of Participation ………………………………………… 110 Government Center Debt Service Fund …………………….……………… 111 Pension Debt Service Fund ....……………………………………………. 112

Combining Statement of Net Assets – Internal Service Funds ………………….. 114 Combining Statement of Revenues, Expenses and

Changes in Fund Net Assets – Internal Service Funds ………………..…….. 116 Combining Statement of Cash Flows – Internal Service Funds ………………… 118 Combining Statement of Changes in Assets and Liabilities – Agency Funds ….. 121

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Page

STATISTICAL SECTION (Unaudited): Financial Trends Information Net assets by component, last eight fiscal years…………… ……………………. 125

Changes in net assets, last eight fiscal years……………….……..………………. 126 Fund balances of governmental funds, last ten fiscal years………….………… 128 Changes in fund balances of governmental funds, last ten fiscal years.….…..… 130

Revenue Capacity Information Assessed value of taxable property, last ten fiscal years ..……….……….……. 132 Direct and overlapping property tax rates, last ten fiscal years ………………… 133 Principal property tax payers, June 30, 2008 and June 30, 1999…..……..…….. 134 Property tax levies and collections, last ten years ……………………………… 135

Debt Capacity Information Ratios of outstanding debt by type, last ten fiscal years ……………………….. 136 Legal debt margin information, last ten fiscal years ……..……………………. 138

Demographic and Economic Information Demographic and economic statistics, last ten fiscal years ….…..……………. 139 Principal employers, June 30, 2008 and June 30, 2000 ……………………..… 140

Operating Information Full-time equivalent county government employees by function,

last ten fiscal years .………………………………………………………. 142 Operating indicators by function, last six fiscal years …………..…………… 144 Capital assets statistics by function, last eight fiscal years …………..…………… 145

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SIMONA PADILLA-SCHOLTENS, CPA AUDITOR-CONTROLLER

PHYLLIS TAYNTON, CPA

ASSISTANT AUDITOR-CONTROLLER

675 Texas Street, Suite 2800 Fairfield, California 94533-6338

Phone (707) 784-6280 Fax (707) 784-3553

December 20, 2008 To the Honorable Board of Supervisors, Grand Jury and the citizens of Solano County, California: We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the County of Solano (County) for the fiscal year ended June 30, 2008. In accordance with Sections 25250 and 25253 of the Government Code of the State of California, general-purpose local governments must publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants. This report consists of management’s representations concerning the finances of the County. Therefore, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the County has established a comprehensive internal control framework designed both to protect the County’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the County’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The County’s financial statements have been audited by Macias Gini & O’Connell LLP, a firm of licensed public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2008, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the County’s financial statements for the year ended June 30, 2008, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the County was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standard governing the Single Audit requires the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls

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and compliance with legal requirements, with special emphasis on internal controls over compliance involving the administration of federal awards. These reports are available in the County’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The County’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government General Information The County lies in the northeast section of the nine-county San Francisco Bay Area. It is located approximately 45 miles northeast of San Francisco and 45 miles southwest of Sacramento. The County consists of a total area of 907 square miles. Land area is represented by 829 square miles and water area by 78 square miles. It is bordered by Napa County to the northwest, Yolo County to the northeast, Sacramento County to the east and Contra Costa County to the south. Between Solano and Contra Costa Counties lies Suisun Bay, which is an extension of the San Francisco Bay, and the confluence of the Sacramento and San Joaquin Rivers, which empty into San Pablo Bay through the Carquinez Straits. The western edge of the County consists of low mountains, which are part of the Coast Range. The County limits residential and commercial development outside of cities, thus preserving almost 85% of the land for open space and agricultural uses. Agriculture and military installations have historically been strong contributors to the County’s economy. In recent years, the County has fostered economic growth and diversification by encouraging industrial, manufacturing and biotechnology development. The availability of land and the relatively low cost of housing, as well as job opportunities, continue to encourage economic development in the County. With its strategic location, natural and human resources, history of responsible land planning, and attractive quality of life, the County continues to offer a promising future as a place to live, learn, work and play. County Government The County was incorporated in 1850 as one of California’s original 27 counties in the State of California (the “State”). Two of the County’s seven cities, Benicia and Vallejo, served as the State’s Capital in the early 1850’s. The County serves seven city jurisdictions: Benicia, Dixon, Fairfield, Rio Vista, Suisun City, Vacaville and Vallejo in addition to the unincorporated areas. The City of Fairfield is the County seat. The County has a general law form of government. Its five-member Board of Supervisors (the “Board”) is elected by district for four-year terms of office. The Supervisors’ terms are staggered -- two Supervisors are elected in one general election, and three Supervisors in the next. District boundaries are adjusted after every federal census to equalize district population as closely as possible. Other elected officials include the Assessor-Recorder, Auditor-Controller, District Attorney, Sheriff-Coroner and Treasurer-Tax Collector-County Clerk. The County Administrator and County Counsel are appointed by the Board.

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As the governing body for the County, the Board is responsible for the planning and providing of services related to public needs, as required by state and federal law including: adopting the annual budget, adopting County ordinances, setting policies, confirming appointments of most non-elected officials, and assisting citizens in solving problems and addressing local concerns. County Services As the only countywide general-purpose local government, we are in a unique position to facilitate and coordinate the work of cities, school districts, special districts and other organizations. In addition, the County is specifically charged by the State with providing services to those most at risk: children, the elderly, the poor, those with health problems and those involved in the criminal justice system. Counties have dual responsibilities. We provide “unincorporated area” services (e.g., land use planning) in the areas of the County that are not in cities. We also provide certain “countywide” services to County residents regardless of where they live. These services generally focus on the most disadvantaged members of the community (e.g., health clinics), or criminals after they have been arrested or supporting other local governments (e.g., property tax collection & apportionment). The following is a list of services provided by the County:

• Environmental Health • Tax Assessment, Collection and Apportionment

• Agricultural Commissioner • Elections and Voter Registration • Weights and Measures • Parks • Airport • Jails and Juvenile Facilities • Indigent Medical Services • Probation Supervision • Public and Mental Health Services • Clerk-Recorder • Child Protection and Social Services • Public Defender/Alternative Defense • Emergency Medical Services • Coroner and Forensic Services • Public Assistance • Grand Jury

• Oversight and Permitting of Landfills and Solid Waste Disposal and Collection

• Criminal Prosecution (District Attorney)

• Family Support Collections • Libraries (as Contract Services for Cities)

• Veterans Services • Animal Care Services

• Maintenance of County Roads and Bridges

• Building and Safety (Unincorporated County Only)

• Law Enforcement (Primarily Unincorporated County)

• Land Use (Unincorporated County Only)

• U.C. Cooperative Extension Services

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Factors Affecting Financial Condition Budgetary Information The annual budget serves as the foundation for the County’s financial planning and control. All agencies under the control of the Board of Supervisors are required to submit budget requests to the County Administrator for review. The County Administrator recommends a proposed budget to the Board for consideration and approval. The Board is required to hold public hearings on the proposed budget and to adopt a final budget by September 30th of each year. The Board generally holds its public hearing on the proposed budget and adopts a final budget before June 30 of each year. The budget is prepared by fund, function (e.g. public safety), and department (e.g., Sheriff). Transfers of appropriations between divisions, bureaus and sections within a department, provided the total appropriation of the budget is not changed, may be authorized by the County Administrator. Transfers of appropriations between departments within a fund, however, require a majority vote of the Board. Transfers of appropriations between funds require a four-fifths vote of the Board of Supervisors. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an annual budget was adopted. These schedules, which are part of the required supplementary information section of this report, start on page 74. Population and Local Economy The County’s population as of January 2008 was approximately 426,757, an increase of approximately 0.5% over last year’s estimate and 8.2% over the 2000 census. The County’s population ranks 21st out of 58 California counties in terms of population size. A key element of the County’s rapid growth has been migration into the County; immigration has accounted for most of the County’s growth since 1980. The County population has increased 9.5% since 1999, an average of 1% annually. The two largest cities within the county are Vallejo and Fairfield with populations of 121,097 and 106,753, respectively. The fastest growing Solano County city over the last ten years is Rio Vista with 85.8% growth, followed by Dixon with 16.4%. In contrast, Benicia’s population has decreased by 2.4% since 1999. The County’s seven cities are long-established communities. Relatively moderate costs for land and housing, proximity to major population and recreation centers, and job opportunities continue to make the County an attractive place to live. The County is home to a significant number of biotech companies. The County believes that it is well suited to attract this type of business because of its proximity to UC Davis, UC Berkeley and major research and medical centers, and Solano Community College’s Biotechnology Production Technician Training Program. Long-term Financial Planning On February 13, 2007, the Board adopted a policy to maintain General Fund Reserves (reserves) equal to 10% of the County’s total budget, excluding inter fund transfers, and to maintain General Fund Contingencies equal to 10% of the General Fund’s total budget. The General Fund reserve should be used (1) to phase into fiscal distress periods gradually, focusing on maintaining the Board’s priorities, (2) as the last resort to balance the County Budget, and (3) to maintain, at all times, a minimum of 5% of the total budget in the General Fund reserves and (4) spending of the reserves should not exceed $6 million a year. The General Fund contingency is used to mitigate the impact of potential risks to the General Fund from funding problems that may occur during the fiscal year.

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In addition, on December 11, 2007, the Board approved the Pre-Funding of the County’s Other Post Employment Benefits (OPEB) Annual Required Contribution to be effective for Fiscal Year 2007-2008. The OPEB liability includes retiree healthcare benefits for County employees and eligible retirees. The County is in the pre-construction and construction stages of the South County Government Center Project which includes the construction of a 58,000 square foot, three-story Health & Social Services (H&SS) office building and clinic, and the renovation of the existing 68,000 square foot H&SS building at 355 Tuolumne Street in Vallejo. The new County building, along with the renovated H&SS building, will be designed to accommodate H&SS functions, relocated Court Support agencies (Probation, Public Defender and District Attorney), as well as provide for future growth to serve the needs of South County residents. The project also includes off-site parking improvements to expand available parking to support the project. The project also includes the modernization and construction of a larger, state-of-the-art Public Health Laboratory facility at a centralized location on the existing County-owned land in Fairfield. This project consists of a two-story, 30,000 gross square foot building that will house the Public Health Laboratory, the first phase of a Forensic Laboratory, an H&SS clinic and associated site improvements including parking, landscaping and hardscaping. The construction of the new Public Health Facility will meet the standards associated with the Federally Qualified Health Center (FQHC) requirements. This project will provide laboratory testing for public health, clinical and forensic needs. In addition, this will meet the County’s immediate needs as well as the long-term projected growth in services to the public, since the site has been master-planned to support an additional 30,000 square foot building to be constructed in the future. The Board of Supervisors strategic plan goals include Health and Well-Being, Responsible and Sustainable Land Use, Safe Communities, and Invest In and For the Future. The catalytic projects identified to achieve Solano County’s goals are a Healthy Communities Initiative, Intergovernmental Planning Collaborative, a Comprehensive Crime Prevention, Intervention and Re-entry System and Optimal Service Design and Delivery. Also, contained within the County’s tax code areas are numerous municipalities, school districts and special-purpose districts providing public services. These entities have outstanding bonds issued in the form of general obligation bonds. Direct debt constitutes debt directly issued by the County while overlapping debt constitutes that portion of the debt issued by different public entities within the same tax code area as the County’s. The County is not responsible for the overlapping debt of the other local agencies. Cash Money Policies and Practices The County maintains an Investment Pool managed by the Treasurer-Tax Collector-County Clerk, which acts as a depository for over 80 units of local government including funds of the county school districts, special districts and other entities. Not included in the Investment Pool are some school district Tax and Revenue Anticipation Note proceeds, which are managed by the Treasurer-Tax Collector-County Clerk separately from the Investment Pool. The County formed a Treasury Oversight Committee consisting of five members and two alternates. The committee reviews the Investment Policy, ensures the Treasury activities are in compliance with the Investment Policy, ensures an annual audit of the Investment Policy is conducted, and reviews the internal auditor’s quarterly audits of the Investment Pool. The

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committee meets semiannually and is composed of the County’s Budget Officer, Superintendent of Schools - Director of Business Finance, two members of the public and one business director from a school district. The objectives of the pool are to meet the cash flow requirements of the pool participants, invest the funds in a safe, legal and prudent manner and achieve a money market rate of return. To achieve this objective the Treasurer-Tax Collector-County Clerk maintains a one-year countywide cash flow projection. This projection is reviewed and updated monthly in consultation with the pool participants and the County Auditor-Controller. Historically, the amounts and timing of each requirement have been predicted with a high level of certainty. The pool is managed in a prudent manner by always maintaining a high level of liquidity. The pooled funds are invested in accordance with the County’s Investment Policy and the State of California Government Code. Cash temporarily idle during the year was invested in certificates of deposit, money market mutual funds, Local Agency Investment Fund (LAIF), CalTRUST, CAMP, corporate notes, obligations of the U.S. Treasury, U.S. federal agency notes, and municipal notes. The maturities of the investments range from one day to five years, with an average maturity of 9 months. Interest rates on investments were between 1.000% and 6.875% for the government. Investment earnings include appreciation in the fair value of its investments. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of Solano for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2007. This is the sixth consecutive year that the County has achieved this prestigious award. In order to be awarded the Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this comprehensive report would not have been possible without the efficient and dedicated services of the entire staff in the Auditor-Controller’s Office. I want to express my appreciation to staff for their outstanding support in the preparation of this report. I would like to specifically acknowledge Phyllis Taynton, Sheila Turgo, Raymond Catapang, Magen Yambao and Suganthi Krishnan for their hard work and dedication. Credit also must be given to the County Administrator and the Board of Supervisors for their support in maintaining the highest standards of professionalism in the management of the County’s finances. Respectfully submitted, Simona Padilla-Scholtens, CPA Auditor-Controller

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7

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

County of Solano

California For its Comprehensive Annual

Financial Report

for the Fiscal Year Ended

June 30, 2007

A Certificate of Achievement for Excellence in Financial Reporting is presented by the Govermnent Finance Officers

Association of the United States and Canada to government units and public employee retirement systems whose comprehensive anriual fmancial

reports ( CAFRs) achieve the highest standards in government accounting

and financial reporting.

President

Executive Director

County of Solano, 2008/2009 Proposed Budget v

County of SolanoOrganizational Chart

Electorate

.....Personnel/Budgetary Controls Only

Elected Officials

Appointed Officials

Barbara R. KondylisDistrict 1

John F. SilvaDistrict 2

James P. SperingDistrict 3

John M. VasquezDistrict 4

Michael J. ReaganDistrict 5

Auditor-ControllerSimona Padilla-Scholtens

District AttorneyDavid W. Paulson

County CounselDennis Bunting

County AdministratorMichael D. Johnson

Assessor-RecorderMarc Tonnesen

Sheriff/CoronerGary Stanton

Tax Collector/County Clerk/TreasurerCharles Lomeli

Ag. Comm./SealerJim Allan

Human ResourcesDonald Turko

General ServicesSpencer C. Bole

UC Coop ExtensionCarole Paterson

CIO/ROVIra Rosenthal

Veterans ServicesWilliam Reardon

Resource Mgmt.Birgitta Corsello

LibraryAnn Cousineau

Public DefenderJeffery Thoma

H&SSPatrick Duterte

Child Support ServicesPamela Posehn

ProbationIsabelle Voit

Board of Supervisors

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SOLANO COUNTY DEPARTMENT HEAD LISTING

ealer of Weights & Measures

(530) 963-3101

Workforce Investment Board (WIB) Robert L. Bloom 864-3370

Ag Commissioner/S Jim Allan 784-1310

Assessor/Recorder Marc C. Tonnesen 784-6200

Auditor-Controller Simona Padilla-Scholtens 784-6280

Chief Information Officer/Registrar of Voters Ira Rosenthal 784-2703

Cooperative Extension Carole Paterson 784-1317

County Administrator Michael D. Johnson 784-6100

County Counsel Dennis Bunting 784-6140

Department of Child Support Services Pamela Posehn 784-3606

District Attorney David W. Paulson 784-6800

Fouts Springs Youth Facility Isabelle Voit

General Services Spencer C. Bole 784-7900

Health & Social Services Patrick Duterte 784-8400

Human Resources/Risk Management Donald W. Turko 784-6170

Library Ann Cousineau 784-6510

Probation Isabelle Voit 784-7600

Public Defender/Conflict Public Defender Jeffrey E. Thoma 784-6700

Resource Management Birgitta Corsello 784-6765

Sheriff/Coroner Gary Stanton 421-7030

Treasurer-Tax Collector-County Clerk Charles Lomeli 784-6295

Veteran Services William Reardon 784-6584

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FINANCIAL SECTION

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The Honorable Board of Supervisors and the Grand Jury of the County of Solano, California

INDEPENDENT AUDITOR’S REPORT We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the County of Solano, California (County), as of and for the fiscal year ended June 30, 2008, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the basic financial statements of the Solano County Fair component unit, which statements reflect total assets and revenues constituting 1 percent and 5 percent, respectively, of the related totals for the aggregate discretely presented component units and remaining fund information. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for that entity, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the aggregate discretely presented component units and remaining fund information of the County of Solano, California, as of June 30, 2008, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note I to the financial statements, effective July 1, 2007, the County implemented Governmental Accounting Standards Board (GASB) Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions and No. 50, Pension Disclosures.

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In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2008 on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management’s discussion and analysis, schedules of funding progress and budgetary comparison information for the General Fund and major special revenue funds as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Certified Public Accountants Sacramento, California December 19, 2008

   

Simona Padilla-Scholtens, CPA Auditor-Controller Phyllis Taynton, CPA

Assistant Auditor-Controller

675 Texas Street, Suite #2800 Fairfield, California 94533-6338

Phone (707) 784-6280 Fax (707) 784-3553

Management’s Discussion and Analysis As management of the County of Solano, California, (County) we offer readers of the County’s financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, 2008. We encourage readers to consider the information presented here in conjunction with additional information in our financial statements. Financial Highlights • The assets of the County exceeded its liabilities at June 30, 2008 by $651,422,013 (net

assets). Of this amount, $251,958,009 (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors.

• The County’s total net assets increased by $25,734,217 as a result of the current year’s operations.

• At June 30, 2008, the County’s governmental funds reported combined ending fund balances of $309,667,493, an increase of $7,711,106, as a result of the current year’s operations. Approximately 79% of this total amount, or $243,571,963, is available for spending at the County’s discretion (unreserved fund balance) and 21% of this amount, or $66,095,530, is reserved.

• At the end of the current fiscal year, unreserved, undesignated fund balance for the General Fund was $46,821,807 or 65% of total General Fund expenditures.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the County’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating.

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The statement of activities presents information showing how the County’s net assets changed during the recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes, and earned but unused vacation leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public protection, public ways and facilities, health services, public assistance, and education and recreation. The business-type activities of the County include the Nut Tree Airport and the Fouts Springs Youth Facility. The government-wide financial statements include not only the County itself (known as the primary government), but also the legally separate Workforce Investment Board and the Solano County Fair, both known as component units for which the County is financially accountable. Financial information for these component units are reported separately from the financial information presented for the primary government itself. Solano County Facilities Corporation, Solano County Building Corporation, Solano County Housing Authority and the East Vallejo Fire Protection District, although also legally separate, function for all practical purposes as departments of the County, and therefore, have been included as an integral part of the primary government. The government-wide financial statements can be found on pages 25 – 27 of this report. Fund financial statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a County's near-term financing requirements. Because the focus of governmental funds is narrower than the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the County’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains 20 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Health & Social Services Special Revenue Fund, Public Safety Special Revenue Fund and Tobacco Settlement Special

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Revenue Fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts annual appropriated budgets for all of its governmental funds. Therefore, budgetary comparison schedules have been provided for each fund presented in this report. These statements demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 28-32 of this report. Proprietary funds. The County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for the Nut Tree Airport and the Fouts Springs Youth Facility. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for Communications, Fleet Management, Risk Management, Information Technology, and Reprographics. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Nut Tree Airport and the Fouts Springs Youth Facility. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 33 – 35 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the County. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 36 – 37 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 39 – 71 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County’s budgetary comparison schedules for the General Fund and all major special revenue funds as well as the schedules of funding progress for the retirement programs. Required supplementary information can be found on pages 73 – 78 of this report. The combining statements referred to earlier in connection with nonmajor governmental and internal service funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 79 – 121 of this report.

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Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a County’s financial position. In the case of the County, assets exceeded liabilities by $651,422,013 at June 30, 2008.

Solano County’s Net Assets

Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Current and other assets $ 563,610,272 $ 548,430,282 $ (4,737,802) $ (587,972) $ 558,872,470 $ 547,842,310Capital assets 438,515,549 437,072,443 20,940,385 15,097,584 459,455,934 452,170,027

Total assets $ 1,002,125,821 $ 985,502,725 $ 16,202,583 $ 14,509,612 $ 1,018,328,404 $ 1,000,012,337 Long-term obligations $ 296,073,399 $ 310,721,490 $ 574,402 $ 444,052 $ 296,647,801 $ 311,165,542Other liabilities 69,850,903 62,548,066 407,687 610,933 70,258,590 63,158,999Total liabilities 365,924,302 373,269,556 982,089 1,054,985 366,906,391 374,324,541 Net assets: Invested in capital assets, net of related debt 306,156,899 290,318,976 20,790,532 14,896,619 326,947,431 305,215,595Restricted net assets 72,516,573 70,229,693 - - 72,516,573 70,229,693Unrestricted net assets 257,528,047 251,684,500 (5,570,038) (1,441,992) 251,958,009 250,242,508Total net assets 636,201,519 612,233,169 15,220,494 13,454,627 651,422,013 625,687,796Total liabilities and net assets $ 1,002,125,821 $ 985,502,725 $ 16,202,583 $ 14,509,612 $ 1,018,328,404 $ 1,000,012,337

By far the largest portion of the County’s net assets (50%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure) less any related outstanding debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the County’s net assets (11%) represents resources subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (39%) may be used to meet the County’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the County is able to report positive balances in all categories of net assets for its governmental activities, as well as for the County as a whole. Analysis of Change in Net Assets At fiscal year end, the County reported a 4.1% increase in total net assets. The increase is primarily due to an increase of $21,731,835 or 7.1% in invested in capital assets, net of related debt. This increase represents the capital acquisitions and deletions, less current year depreciation, and the retirement of capital-related long-term debt. Restricted net assets increased by $2,286,880 or 3.3% as a result of an increase in restricted assets for Library Services and Transportation as revenues exceeded expenses. Unrestricted net assets increased $1,715,502 or less than 1%. Governmental activities. Governmental activities increased the County’s net assets by $23,968,346 thereby accounting for 93% of the total growth in the net assets of the County. This increase was primarily due to the degree to which increases in ongoing revenues have outpaced similar increases in ongoing expenses.

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The following table demonstrates the changes in net assets for governmental and business-type activities:

Solano County’s Change in Net Assets For the fiscal year ended June 30, 2008

Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Revenues: Program revenues: Charges for services $ 72,743,095 $ 73,009,635 $ 4,325,972 $ 4,030,254 $ 77,069,067 $ 77,039,889 Operating grants and contributions 295,815,325 288,680,255 540,360 648,139 296,355,685 289,328,394 Capital grants and contributions - - 2,296,465 2,918,130 2,296,465 2,918,130General revenues: Property taxes 129,866,189 121,438,731 287,733 270,370 130,153,922 121,709,101 Other taxes 4,046,875 5,528,726 - - 4,046,875 5,528,726

Tobacco settlement proceeds - - - - - - Intergovernmental 22,701,977 20,122,940 54,251 47,008 22,756,228 20,169,948 Interest and investment earnings 13,477,706 14,671,265 22,835 27,837 13,500,541 14,699,102 Other 14,487,535 17,339,503 119,989 181,734 14,607,524 17,521,237 Gain on sale of capital assets - 233,932 - - - 233,932Total Revenues 553,138,702 541,024,987 7,647,605 8,123,472 560,786,307 549,148,459Expenses: General government 66,076,091 53,610,176 - - 66,076,091 53,610,176 Public protection 167,025,179 152,135,516 - - 167,025,179 152,135,516 Public ways and facilities 13,749,283 12,524,903 - - 13,749,283 12,524,903 Health services 106,905,228 101,162,646 - - 106,905,228 101,162,646 Public assistance 140,654,444 132,795,943 - - 140,654,444 132,795,943 Education and recreation 21,958,611 21,241,168 - - 21,958,611 21,241,168 Interest on long-term debt 13,010,423 12,781,989 - - 13,010,423 12,781,989 Nut Tree Airport - - 2,022,955 1,639,976 2,022,955 1,639,976 Fouts Springs Youth Facility - - 3,649,876 3,398,461 3,649,876 3,398,461Total Expenses 529,379,259 486,252,341 5,672,831 5,038,437 535,052,090 491,290,778Excess before transfers 23,759,443 54,772,646 1,974,774 3,085,035 25,734,217 57,857,681 Transfers 208,907 (1,407,628) (208,907) 1,407,628 - -Change in net assets 23,968,350 53,365,018 1,765,867 4,492,663 25,734,217 57,857,681Net assets – beginning 612,233,169 558,868,151 13,454,627 8,961,964 625,687,796 567,830,115Net assets – ending $ 636,201,519 $ 612,233,169 $ 15,220,494 $ 13,454,627 $ 651,422,013 $ 625,687,796

Revenues: Total revenues for the County’s governmental activities increased by 2.24% over the prior year. Several factors contributed to the increase:

• Operating grants and contributions serve multiple programs representing 53% of the County’s funding for governmental activities. The funding is directly related to various mandated services to the public. These revenues increased by 2.47% over the prior year primarily due to state and federal grants for a) the Health & Social Services Department resulting from an increase in caseload for various health services and public assistance programs; and b) the Transportation Fund for the construction and repair of various roads and bridges and Proposition 1B grant funds received in FY07/08 (Highway Safety, Traffic Reduction, Air Quality, and Port Security Act).

• General revenues increased by 2.92% primarily from the increase in property taxes due to

growth in assessed values of real property and intergovernmental revenues from higher redevelopment pass-through revenue.

Expenses: Total expenses for governmental activities increased by 8.87% from prior year. Total salaries and benefits expense increased across all functions by approximately $9.5 million or 3.3% primarily due to salary adjustments, cost of living adjustments (COLA) and additional staffing. Total expenses in services and supplies increased by approximately $14 million or

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14.67% primarily from various maintenance projects, data processing charges, contractual and professional services charges. Other charges increased by approximately $9.56 million or 7.74% primarily from expenses related to the support and care of persons and contracted direct program costs resulting from increased caseload in health services and public assistance. Business-type activities. Business-type activities increased the County’s net assets by $1,765,867 as a result of current year operations. The key element of this increase is the receipt of a capital grant from the Federal Aviation Administration (FAA) for the Nut Tree Airport to finance the construction of the parking apron and access road. Financial Analysis of the County’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The general government functions are accounted for in the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Funds. The focus of the County’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At June 30, 2008, the County’s governmental funds reported combined ending fund balances of $309,667,493, an increase of $7,711,106 from prior year. Of the $309,667,493, 79% (or $243,571,963) constitutes unreserved fund balance, which is available for spending at the County’s discretion. The remainder of fund balance is reserved to indicate it is not available for spending because it has been committed: a) to reflect long-term assets that do not represent available spendable resources ($11,783,681); b) for health programs ($2,669,083); c) to pay debt service ($17,023,929); d) to liquidate contracts and purchase orders of the prior period ($34,547,518); and e) for imprest cash ($71,319). The General Fund is the chief operating fund of the County. At the end of the current fiscal year, unreserved, undesignated fund balance of the General Fund was $46,821,807, while total fund balance reached $120,645,670. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved, undesignated fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 65% of the total General Fund expenditures while total fund balance represents 168% of that same amount.

For fiscal year ended June 30, 2008, the total revenues for governmental functions totaled $565,494,610. This represents a 2.62% increase from FY 06/07.

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The following table presents revenues from various sources as well as increases or decreases from the prior year.

Revenues Classified by Source Governmental Funds

2008 2007 Increase (Decrease)

Revenues by Source Amount Percent of

Total Amount Percent of

Total Amount Percent of

Change Taxes $ 138,987,233 24.58% $ 132,730,738 24.09% $ 6,256,495 4.71%Licenses, permits and franchises 6,180,001 1.09% 6,758,843 1.23% (578,842) (8.56)%Fines, forfeitures and penalties 5,458,554 0.97% 5,870,027 1.07% (411,473) (7.01)%Use of money and property 13,022,335 2.30% 14,115,648 2.56% (1,093,313) (7.75)%Intergovernmental 312,049,066 55.18% 299,974,644 54.43% 12,074,422 4.03%Charges for services 77,340,255 13.68% 75,908,930 13.77% 1,431,325 1.89%Miscellaneous 12,457,166 2.20% 15,709,000 2.85% (3,251,834) (20.70)%

Total $ 565,494,610 100.00% $ 551,067,830 100.00% $ 14,426,780 2.62% Significant changes in the governmental funds’ revenues are as follows:

• Taxes: The increase of $6,256,495 is attributable to secured taxes and property tax-in lieu revenues due to an increase in assessed values of real property.

• Licenses, permits and franchises: The decrease of $578,842 is due to a decrease in the number of permits issued during the year due to a decline in building/construction activity.

• Use of money and property: The decrease of $1,093,313 is due to lower interest rates in the marketplace.

• Intergovernmental: The increase of $12,074,422 is attributable to increases in funding to Health & Social Services for various health services and public assistance programs; an increase in redevelopment pass-through revenue from higher tax increment; increase in federal grants for road and bridge construction and repairs; and receipt of Proposition 1B (Highway Safety, Traffic Reduction, Air Quality, and Port Security Act) funds beginning in FY07/08.

• Charges for services: The net increase of $1,431,325 is attributable to increases in billing for child health fees for Mental Health Early Periodic Screening Diagnosis and Treatment (EPSDT) revenues, and timely receipt of state reimbursements for claims submitted during the year; decrease in Public Facilities Fees collected due to fewer building permits issued due to the decline in construction activities during the year; and decrease in fees collected by the various departments associated with sluggish real estate activity (e.g., land use application fees, recording fees, etc.).

• Miscellaneous: The decrease of $3,251,834 is attributable to one-time revenues received in the prior fiscal year.

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The following table presents expenditures by function compared to prior year amounts.

Expenditures by Function Governmental Funds

2008 2007 Increase (Decrease)

Expenditures by Function Amount Percent of

Total Amount Percent of

Total Amount Percent of

Change General government $ 57,450,491 10.31% $ 49,616,574 9.46% $ 7,833,917 15.79%Public protection 170,321,250 30.55% 162,742,367 31.03% 7,578,883 4.66%Public ways and facilities 9,925,757 1.78% 9,664,948 1.84% 260,809 2.70%Health services 107,707,061 19.32% 103,618,977 19.76% 4,088,084 3.95%Public assistance 141,943,318 25.46% 135,117,611 25.77% 6,825,707 5.05%Education and recreation 22,292,796 4.00% 22,087,999 4.21% 204,797 0.93%Debt service – principal retirement 11,685,419 2.10% 11,080,862 2.11% 604,557 5.46%Debt service – interest charges 13,171,464 2.36% 12,405,119 2.37% 766,345 6.18%Debt service – issuance cost - 0.00% 1,650,505 0.32% (1,650,505) (100.00)%Capital outlay 22,992,641 4.12% 16,423,879 3.13% 6,568,762 40.00%

Total $ 557,490,197 100.00% $ 524,408,841 100.00% $ 33,081,356 6.31% The following provides an explanation of the expenditures by function that changed significantly over the prior year.

• General government: The increase of $7,833,917 is due primarily to salaries and benefits due to annual COLA, extra help, overtime pay and health insurance costs; the increased costs associated with holding three elections in the current year as opposed to two elections held in the prior year; an increase in various contributions to non-county agencies; and an increase in payments to the State for the Trial Court/County Facility payment.

• Public protection: The increase of $7,578,883 is due primarily to increases in salaries and benefits due to annual COLA, extra help, overtime pay and health insurance costs. In addition, services and supplies expenditures increased significantly for contracted and professional services for hospitalization and catastrophic medical care, laboratory costs for alcohol and drug testing, maintenance costs, central data processing, county garage costs due to higher fuel prices, and county wide overhead charges.

• Health services: The increase of $4,088,084 is due primarily to increases in salaries and benefits due to annual COLA, retirement costs and health insurance costs. In addition, other charges for services cost increased primarily for contracted direct services to meet expanded health services for the implementation of the Mental Health Services Act (MHSA).

• Public assistance: The increase of $6,825,707 is due primarily from increased contracted direct services costs and support/care costs resulting from increased caseload, specifically in medical and dental care, Food Stamps, foster care and placement of Seriously Emotionally Disturbed Children.

• Capital outlay: The net increase of $6,568,762 is due primarily for project costs related to the South County Government Center which is in the early stages of the project, the acquisition of land for future use and various road and bridge construction projects.

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Proprietary funds. The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Unrestricted net assets of the Nut Tree Airport at the end of the year was a negative $5,630,372 and the unrestricted net assets for the Fouts Springs Youth Facility was $60,334. Net assets for the Nut Tree Airport increased by $1,840,776 and net assets for Fouts Springs Youth Facility decreased by $74,909. The increase in net assets for the Nut Tree Airport was due primarily from the capital grant received from the Federal Aviation Administration (FAA) to finance the construction of the parking apron and access road. The decrease in net assets for Fouts Springs Youth Facility was due primarily from increases in operating expenses due to increases in personnel costs. General Fund Budgetary Highlights The General Fund Budget (Original and Final versions) is reflected in the Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual, as presented on page 74 in the Required Supplementary Information (RSI) section of this report. The County’s final budget differs from the original budget as a result of supplemental appropriations approved during the year. Total budgeted revenues increased by $482,857 or 24%, from the original budget. Actual revenues were more than the final budgeted revenues by $2,315,254 or 1.14%. Total appropriations increased by $3,579,775 or 4.53%, from the original budget. Actual expenditures were less than the final appropriations by $10,769,802, or 13.05%. Significant factors affecting these changes were as follows: Original Budget vs. Final Budget Appropriations Variances:

• Increases of $3,579,775 in appropriations consist of various adjustments from individual departments within the General Fund. $1.1 million is due primarily to increases in maintenance & contracted services for encumbrances from the prior year by the General Services Department; $892,000 increase primarily due to a contribution to Mission Solano; and $981,000 primarily due to increases to contracted and professional services by Resource Management to cover the costs for the general plan update.

Final Budget vs. Actual Amounts

During the year, revenues recognized exceeded budgetary revenue estimates by $2.3 million and expenditures were less than appropriations by $10.7 million, thus eliminating the need to draw upon existing fund balance. Revenue Variances:

• Revenue from use of money and property was higher than budgeted due to the continued healthy cash balance and the conservative budget estimate.

• Intergovernmental revenues were higher than budgeted primarily due to increased redevelopment pass-through revenues resulting from higher tax increment from various redevelopment projects.

Expenditure Variances:

• General Services - $1.69 million favorable variance primarily due to appropriations for salaries and benefits not spent due to vacant positions; contracted services did not

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materialize during the current year, and utilities costs were lower than anticipated. • General Expenditures - $1.83 million favorable variance primarily due to appropriations

for other professional services for new programs and contributions to non-county agencies which did not materialize in the current year.

• Recorder – $1.9 million favorable variance primarily due to contracted services which did not materialize for the Records Preservation Project, which was postponed. In addition, the Recorder had salary savings due to a voluntary hiring freeze on two vacant positions.

• Environmental Management - $1.4 million favorable variance primarily due to salaries and benefits savings from vacancies and contracted and professional services for various projects that did not materialize in the current fiscal year.

Capital Asset and Debt Administration Capital assets. The County’s capital assets for its governmental and business-type activities as of June 30, 2008, amount to $459,455,934 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment, roads, and bridges. The total increase in the County’s capital assets for the current fiscal year was $7,285,907 or 1.61%.

Governmental Activities Business-type Activities Total Increase

(Decrease)

2008 2007 2008 2007 2008 2007 Percent

of change Land $ 156,043,196 $ 152,915,345 $ 10,302,382 $ 4,440,940 $ 166,345,578 $ 157,356,285 5.71%Infrastructure 90,639,816 97,026,102 - - 90,639,816 97,026,102 (6.58)%Construction in progress 27,731,794 15,242,177 3,907,501 3,542,539 31,639,295 18,784,716 68.43%Buildings 292,180,764 292,408,580 11,262,909 11,262,909 303,443,673 303,671,489 (0.08)%Machinery and equipment 44,873,868 41,951,527 552,155 465,687 45,426,023 42,417,214 7.09%Less: accumulated depreciation (172,953,889) (162,471,288) (5,084,562) (4,614,491) (178,038,451) (167,085,779) 6.56%

Total $ 438,515,549 $ 437,072,443 $ 20,940,385 $ 15,097,584 $ 459,455,934 $ 452,170,027 1.61% In the governmental activities, the significant increase is due to the purchase of land; the increase in construction in progress primarily due to costs for various capital projects including the South County Government Center Project and the Public Health Laboratory Facility Project; and the increase to machinery and equipment primarily due to the purchase of equipment for the Sheriff, Health and Social Services, Central Data Processing and Fleet Management. The decrease in infrastructure is due to the separation of the Rural North Vacaville Water District as a separate legal entity. In the business-type activities, the significant increase is due to the purchase of land for the Nut Tree Airport. Additional information on the County’s capital assets can be found in Note E on pages 57 – 59 of this report. Long-term obligations. At the end of the fiscal year, the County had total debt outstanding for its governmental and business-type activities of $296,647,801, which is entirely backed by the full faith and credit of the County.

22

Governmental Activities Business-type Activities Total

2008 2007 2008 2007 2008 2007 Notes payable $ 1,171,043 $ 11,864,718 $ 149,853 $ 200,965 $ 1,320,896 $ 12,065,683Capital leases 16,874 28,968 - - 16,874 28,968Certificates of participation 138,013,241 142,576,213 - - 138,013,241 142,576,213Pension obligation bonds 121,020,000 127,805,000 - - 121,020,000 127,805,000Self-insurance liability 10,565,011 10,015,118 - - 10,565,011 10,015,118Compensated absences 25,287,230 18,431,473 424,549 243,087 25,711,779 18,674,560

Total $ 296,073,399 $ 310,721,490 $ 574,402 $ 444,052 $ 296,647,801 $ 311,165,542

The County’s total debt decreased by $14,517,741 primarily due to scheduled principal payments on long-term debt, a $5 million early redemption of Pension Obligation Bonds (POB) and the removal of $11.2 million of Notes Payable for the Rural North Vacaville Water District during the current fiscal year. The total decrease was offset by an increase in compensated absences. The County maintains an “A2” rating from Moody’s and an “AA-” rating from Standard & Poor’s for general obligation debt. State statutes limit the amount of general obligation debt a governmental entity may issue to 5% of its total assessed valuation. The County does not have any general obligation debt outstanding. Additional information on the County’s long-term debt can be found in Note I on pages 61 – 66 of this report. Economic Factors and Next Year’s Budgets and Rates • The unemployment rate for the County is currently 6.9%. This is comparable to the state’s

average unemployment rate of 7.0% (unadjusted, as of June 2008). • The growth in property tax revenues is projected to decrease by 2.5% for FY 08/09. • The Board of Supervisors’ (Board) policy for General Fund Contingency and Reserve allows

the County to normalize the County’s budget during periods of fiscal distress. During FY 07/08, the Board decreased the total unreserved designated fund balance by $1.7 million. The decrease in designated fund balance was used for the maintenance of capital facilities.

• On November 25, 2008, the Board approved the redemption ahead of schedule of the County’s Series B-2 POB in the amount of $15 million, to be paid in January 2009.

These factors were considered in preparing the County’s budget for FY 08/09 and during the First Quarter Budget update. Requests for Information This financial report is designed to provide a general overview of the County’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Auditor-Controller’s Office, 675 Texas Street, Suite 2800, Fairfield, CA 94533.

23

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24

BASIC FINANCIAL STATEMENTS

Governmental Activities

Business-Type Activities Total

Solano County Fair

Workforce Investment

BoardASSETS Current assets

Cash and investments 323,046,929$ 572,140$ 323,619,069$ 1,343,783$ 380,100$ Accounts receivable 5,552,773 177,380 5,730,153 380,810 - Due from other agencies 83,088,955 2,160,147 85,249,102 107,171 178,288 Internal balances 7,720,450 (7,720,450) - - - Other assets 2,245,865 72,981 2,318,846 12,988 105,065

Total current assets 421,654,972 (4,737,802) 416,917,170 1,844,752 663,453 Noncurrent assets

Long-term assets 7,186,016 - 7,186,016 - - OPEB Asset 159,801 - 159,801 - - Pension asset 134,609,483 - 134,609,483 811,227 - Capital assets:

Capital assets, not being depreciated 183,774,990 14,209,883 197,984,873 167,085 - Capital assets, being depreciated, net 254,740,559 6,730,502 261,471,061 1,882,754 989

Total noncurrent assets 580,470,849 20,940,385 601,411,234 2,861,066 989 Total assets 1,002,125,821$ 16,202,583$ 1,018,328,404$ 4,705,818$ 664,442$

LIABILITIES Current liabilities

Primary Government Component Units

COUNTY OF SOLANO, CALIFORNIAStatement of Net Assets

June 30, 2008

Outstanding warrants 5,948,789$ 61,927$ 6,010,716$ -$ 155,555$ Payables 40,352,323 230,898 40,583,221 315,272 290,803 Unearned revenue 14,678,173 - 14,678,173 2,061 - Other liabilities 887,298 103,370 990,668 62,392 - Due to other agencies 7,984,320 11,492 7,995,812 - 90 Current portion of long-term

obligations 18,294,603 191,585 18,486,188 10,534 140,000 Total current liabilities 88,145,506 599,272 88,744,778 390,259 586,448

Noncurrent liabilities Noncurrent portion of long-term

obligations 277,778,796 382,817 278,161,613 814,714 5,136 Total liabilities 365,924,302 982,089 366,906,391 1,204,973 591,584

NET ASSETS Invested in capital assets,

net of related debt 306,156,899 20,790,532 326,947,431 2,049,839 989 Restricted for:

Debt service 4,291,702 - 4,291,702 - - Health services 20,642,608 - 20,642,608 - - Library services 16,940,547 - 16,940,547 - - Public facilities fees 23,343,031 - 23,343,031 - - Transportation services 7,298,685 - 7,298,685 - -

Unrestricted 257,528,047 (5,570,038) 251,958,009 1,451,006 71,869 Total net assets 636,201,519 15,220,494 651,422,013 3,500,845 72,858

Total liabilities and net assets 1,002,125,821$ 16,202,583$ 1,018,328,404$ 4,705,818$ 664,442$

The notes to the financial statements are an integral part of this statement.

25

Functions/programs ExpensesCharges for

servicesOperating grants and contributions

Capital grants and contributions

Primary Government:Governmental Activities:

General government 66,076,091$ 26,780,958$ 4,152,844$ -$ Public protection 167,025,179 19,913,381 62,987,345 - Public ways and facilities 13,749,283 1,507,009 17,879,374 - Health services 106,905,228 17,499,502 73,610,024 - Public assistance 140,654,444 810,422 131,122,935 - Education and recreation 21,958,611 6,231,823 6,062,803 - Interest on long-term debt 13,010,423 - - -

Total Governmental Activities 529,379,259 72,743,095 295,815,325 - Business-type Activities:

Nut Tree Airport 2,022,955 1,141,736 - 2,296,465 Fouts Springs Youth Facility 3,649,876 3,184,236 540,360 -

Total Business-type Activities 5,672,831 4,325,972 540,360 2,296,465 Total Primary Government 535,052,090$ 77,069,067$ 296,355,685$ 2,296,465$

Component Units:

COUNTY OF SOLANO, CALIFORNIAStatement of Activities

For the Fiscal Year Ended June 30, 2008

Program Revenues

Component Units: Solano County Fair 5,296,075$ 4,983,643$ 103,985$ -$ Workforce Investment Board 5,377,702 - 5,302,099 -

Total Component Units 10,673,777$ 4,983,643$ 5,406,084$ -$

General revenues: Property taxes Sales and use tax Property transfer tax Interest and investment earnings Other

Transfers Total general revenues and transfers Change in net assets Net assets - beginning, as restated

Net assets - ending

The notes to the financial statements are an integral part of this statement.

Intergovernmental not restricted to specific programs

26

Component Units

Governmental Activities

Business-type Activities Total

Solano County Fair

Workforce Investment

Board

Primary Government:Governmental Activities:

(35,142,289)$ -$ (35,142,289)$ -$ -$ General government(84,124,453) - (84,124,453) - - Public protection

5,637,100 - 5,637,100 - - Public ways and facilities(15,795,702) - (15,795,702) - - Health services

(8,721,087) - (8,721,087) - - Public assistance(9,663,985) - (9,663,985) - - Education and recreation

(13,010,423) - (13,010,423) - - Interest on long-term debt(160,820,839) - (160,820,839) - - Total Governmental Activities

Business-type Activities:- 1,415,246 1,415,246 - - Nut Tree Airport- 74,720 74,720 - - Fouts Springs Youth Facility- 1,489,966 1,489,966 - - Total Business-type Activities

(160,820,839) 1,489,966 (159,330,873) - - Total Primary Government

Component Units:

COUNTY OF SOLANO, CALIFORNIAStatement of Activities

For the Fiscal Year Ended June 30, 2008

Net (Expense) Revenue and Changes in Net Assets

Primary Government

Component Units:- - - (208,447) - Solano County Fair- - - - (75,603) Workforce Investment Board- - - (208,447) (75,603) Total Component Units

129,866,189 287,733 130,153,922 - - 2,338,436 - 2,338,436 - - 1,708,439 - 1,708,439 - -

22,701,977 54,251 22,756,228 - - 13,477,706 22,835 13,500,541 26,671 10,611 14,487,535 119,989 14,607,524 40,000 68,052

208,907 (208,907) - - - 184,789,189 275,901 185,065,090 66,671 78,663

23,968,350 1,765,867 25,734,217 (141,776) 3,060 612,233,169 13,454,627 625,687,796 3,642,621 69,798 636,201,519$ 15,220,494$ 651,422,013$ 3,500,845$ 72,858$

The notes to the financial statements are an integral part of this statement.

27

GeneralHealth & Social

Services Public SafetyASSETS

Cash and investments 79,652,694$ 15,973,218$ 11,465,913$ Accounts receivable 1,691,307 2,136,843 470,436 Due from other agencies 47,153,435 23,309,240 8,281,894 Due from other funds 9,043,270 10,838,756 298,704 Advance to other funds 7,827,384 - - Other assets 516,338 243,242 326,885

Total assets 145,884,428$ 52,501,299$ 20,843,832$

LIABILITIES AND FUND BALANCESLiabilities:

Outstanding warrants 706,257$ 3,874,057$ 846,760$ Payables 4,737,756 15,538,693 6,629,091 Deferred revenue 10,327,318 21,131,327 2,863,672 Due to other funds 8,619,493 5,743,918 3,938,965 Advance from other funds - - - Other liabilities 13,873 79,865 - Due to other agencies 834,061 6,828,509 94,708

Total liabilities 25,238,758 53,196,369 14,373,196

Fund balances:Reserved:

Long-term assets 8 325 668 - -

COUNTY OF SOLANO, CALIFORNIABalance Sheet

Governmental FundsJune 30, 2008

Long term assets 8,325,668 Health programs - - - Debt service - - - Encumbrances 1,262,291 433,488 910,040 Imprest cash 3,105 52,494 12,033

Unreserved:Designated, reported in:

General fund 64,232,799 - - Capital projects funds - - -

Undesignated, reported in:General fund 46,821,807 - - Special revenue funds - (1,181,052) 5,548,563 Capital projects funds - - - Total fund balances 120,645,670 (695,070) 6,470,636

Total liabilities and fund balances 145,884,428$ 52,501,299$ 20,843,832$

The notes to the financial statements are an integral part of this statement.

28

TobaccoSettlement

Other Governmental Funds

Total Governmental

FundsASSETS

56,515,906$ 128,112,957$ 291,720,688$ Cash and investments- 907,349 5,205,935 Accounts receivable- 4,261,089 83,005,658 Due from other agencies- 1,038,831 21,219,561 Due from other funds- - 7,827,384 Advance to other funds- 3,698,638 4,785,103 Other assets

56,515,906$ 138,018,864$ 413,764,329$ Total assets

LIABILITIES AND FUND BALANCESLiabilities:

-$ 492,071$ 5,919,145$ Outstanding warrants- 6,459,075 33,364,615 Payables- 205,602 34,527,919 Deferred revenue

1,738,290 1,258,131 21,298,797 Due to other funds- 114,742 114,742 Advance from other funds- 793,560 887,298 Other liabilities- 227,042 7,984,320 Due to other agencies

1,738,290 9,550,223 104,096,836 Total liabilities

Fund balances:Reserved:

- 3 458 013 11 783 681 Long-term assets

COUNTY OF SOLANO, CALIFORNIABalance Sheet (Continued)

Governmental FundsJune 30, 2008

3,458,013 11,783,681 Long term assets2,669,083 - 2,669,083 Health programs

- 17,023,929 17,023,929 Debt service- 31,941,699 34,547,518 Encumbrances- 3,687 71,319 Imprest cash

Unreserved:Designated, reported in:

- - 64,232,799 General fund52,108,533 - 52,108,533 Capital projects funds

Undesignated, reported in:- - 46,821,807 General fund- 72,297,548 76,665,059 Special revenue funds- 3,743,765 3,743,765 Capital projects funds

54,777,616 128,468,641 309,667,493 Total fund balances 56,515,906$ 138,018,864$ Total liabilities and fund balances

426,939,170

20,335,131

4,087,164

28,797,619

134,769,284

(3,789,810)(284,604,532)636,201,519$

Amounts reported for governmental activities in the statement of net assets are different because:

not financial resources and, therefore, are not reported in the funds.

resources and, therefore, are not reported in the funds.Capital assets used in governmental activities are not financial

Accrued interest payable

Net assets of governmental activitiesLong-term obligations

The notes to the financial statements are an integral part of this statement.

Other long-term assets are not available to pay for current-period

Deferred costs of issuance for debt used in governmental activities are

The OPEB asset and the Pension asset of the governmental activitiesgovernmental activities in the statement of net assets.

of Communications, Fleet Management, Risk Management, Information Information Technology and Reprographics. The assets and liabilities of the internal service funds are included in the

expenditures and, therefore, are deferred in the funds.

therefore, are not reported in the funds.

Internal service funds are used by management to charge the costs

Long-term liabilities are not due and payable in the current period and, are not financial resources and, therefore, are not reported in the funds.

29

GeneralHealth & Social

Services Public SafetyREVENUES

Taxes 122,638,505$ -$ -$ Licenses, permits and franchises 5,820,403 11,792 175,271 Fines, forfeitures and penalties 2,407,979 633,520 2,412,008 Use of money and property 5,049,647 290,258 609,081 Intergovernmental 25,051,335 200,400,104 57,645,888 Charges for services 36,662,865 17,675,097 9,480,597 Miscellaneous 7,227,623 2,383,297 1,662,366

Total revenues 204,858,357 221,394,068 71,985,211

EXPENDITURESCurrent:

General government 52,711,728 - - Public protection 17,678,344 - 149,787,871 Public ways and facilities - - - Health services - 101,878,735 - Public assistance 577,860 141,365,458 - Ed ti d ti 429 076

For the Fiscal Year Ended June 30, 2008

Statement of Revenues, Expenditures and Changes in Fund BalancesCOUNTY OF SOLANO, CALIFORNIA

Governmental Funds

Education and recreation 429,076 - - Debt service:

Principal 155,477 - - Interest and other charges 9,513 - -

Capital outlay 208,729 380,666 1,101,126 Total expenditures 71,770,727 243,624,859 150,888,997

Excess (deficiency) of revenues over (under) expenditures 133,087,630 (22,230,791) (78,903,786)

OTHER FINANCING SOURCES (USES)Proceeds of long-term capital-related debt - - - Transfers in 1,458,570 30,910,826 89,213,824 Transfers out (135,623,904) (10,010,441) (8,729,218) Sale of capital assets 106,890 - -

Total other financing sources (uses) (134,058,444) 20,900,385 80,484,606

Net change in fund balances (970,814) (1,330,406) 1,580,820 Fund balances - beginning 121,616,484 635,336 4,889,816 Fund balances - ending 120,645,670$ (695,070)$ 6,470,636$

The notes to the financial statements are an integral part of this statement.

30

TobaccoSettlement

Other Governmental

Funds

Total Governmental

FundsREVENUES

-$ 16,348,728$ 138,987,233$ Taxes- 172,535 6,180,001 Licenses, permits and franchises- 5,047 5,458,554 Fines, forfeitures and penalties

2,174,625 4,898,724 13,022,335 Use of money and property- 28,951,739 312,049,066 Intergovernmental- 13,521,696 77,340,255 Charges for services- 1,183,880 12,457,166 Miscellaneous

2,174,625 65,082,349 565,494,610 Total revenues

EXPENDITURESCurrent:

- 4,738,763 57,450,491 General government- 2,855,035 170,321,250 Public protection- 9,925,757 9,925,757 Public ways and facilities

64,500 5,763,826 107,707,061 Health services- - 141,943,318 Public assistance

21 863 720 22 292 796 Ed ti d ti

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIAStatement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds

- 21,863,720 22,292,796 Education and recreationDebt service:

- 11,529,942 11,685,419 Principal- 13,161,951 13,171,464 Interest and other charges- 21,302,120 22,992,641 Capital outlay

64,500 91,141,114 557,490,197 Total expenditures

2,110,125 (26,058,765) 8,004,413 Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES)- 1,023,891 1,023,891 Proceeds of long-term capital-related debt- 47,995,657 169,578,877 Transfers in

(3,357,558) (13,289,094) (171,010,215) Transfers out- 7,250 114,140 Sale of capital assets

(3,357,558) 35,737,704 (293,307) Total other financing sources (uses)

(1,247,433) 9,678,939 7,711,106 Net change in fund balances56,025,049 118,789,702 301,956,387 Fund balances - beginning54,777,616$ 128,468,641$ 309,667,493$ Fund balances - ending

The notes to the financial statements are an integral part of this statement.

31

Net change in fund balances - total governmental funds 7,711,106$

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period.

Capital outlay 22,992,641 Depreciation expense (14,209,597) 8,783,044

The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net assets. 229,346

Revenues deferred in the governmental funds because they were not collected within the County's availablity period, were recognized in the statement of activities. 1,159,682

The issuance of long-term debt provides current financial resources to

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIAReconciliation of the Statement of Revenues,

Expenditures, and Changes in Fund Balances of Governmental Fundsto the Statement of Activities

governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Debt issued (1,023,891) Debt principal payments 11,685,419 10,661,528

Some expenditures reported in governmental funds require the use of current financial resources but are not reported as expenses in the statement of activities.

Excess postemployment benefit contributions 159,801

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Accrued interest payable 161,608 Amortization expense (1,237,365) Compensated absences (6,570,803) (7,646,560)

Internal service funds are used by management to charge the costs of certain activities to individual funds. The change in net assets of the internal service funds is reported with governmental activities. 2,910,403

Change in net assets of governmental activities 23,968,350$

The notes to the financial statements are an integral part of this statement.

32

Nut Tree Airport

Fouts Springs Youth Facility Total

Governmental Activities - Internal

Service FundsASSETSCurrent assets Cash and investments 251,250$ 320,890$ 572,140$ 31,326,241$ Accounts receivable 161,639 15,741 177,380 346,838 Due from other agencies 1,855,915 304,232 2,160,147 83,297 Due from other funds - - - 230,001 Other assets 45,774 27,207 72,981 559,614

Total current assets 2,314,578 668,070 2,982,648 32,545,991 Noncurrent assetsCapital assets:

Land 10,282,382 20,000 10,302,382 - Construction in progress 3,881,874 25,627 3,907,501 3,001,372 Buildings and improvements 6,866,681 4,396,228 11,262,909 264,471 Equipment 144,232 407,923 552,155 20,066,348 Less: accumulated depreciation (3,466,197) (1,618,365) (5,084,562) (11,755,812)

Total capital assets 17,708,972 3,231,413 20,940,385 11,576,379 Total assets 20,023,550$ 3,899,483$ 23,923,033$ 44,122,370$

COUNTY OF SOLANO, CALIFORNIAStatement of Net Assets

June 30, 2008

Business-type Activities - Enterprise Funds

Proprietary Funds

LIABILITIESCurrent liabilities

Outstanding warrants 57,482$ 4,445$ 61,927$ 29,644$ Payables 46,871 184,027 230,898 3,197,898 Unearned revenue - - - 485,385 Due to other funds 648 7,160 7,808 142,957 Other liabilities 103,370 - 103,370 - Due to other agencies 11,397 95 11,492 - Current portion of long-term obligations 64,154 127,431 191,585 2,010,460

Total current liabilities 283,922 323,158 607,080 5,866,344

Noncurrent liabilitiesAdvances from other funds 7,712,642 - 7,712,642 - Noncurrent portion of long-term obligations 98,239 284,578 382,817 9,458,407

Total noncurrent liabilities 7,810,881 284,578 8,095,459 9,458,407 Total liabilities 8,094,803 607,736 8,702,539 15,324,751

NET ASSETS Invested in capital assets, net of related debt 17,559,119 3,231,413 20,790,532 11,576,379 Unrestricted (5,630,372) 60,334 (5,570,038) 17,221,240 Total net assets 11,928,747 3,291,747 15,220,494 28,797,619

Total liabilities and net assets 20,023,550$ 3,899,483$ 23,923,033$ 44,122,370$

The notes to the financial statements are an integral part of this statement.

33

Nut Tree Airport

Fouts Springs Youth Facility Total

Governmental Activities - Internal

Service FundsOPERATING REVENUESCharges for sales and services 1,141,736$ 3,184,236$ 4,325,972$ 34,669,874$

OPERATING EXPENSES Personnel services 281,176 2,705,962 2,987,138 8,014,757 Maintenance 198,623 97,604 296,227 1,467,687 Materials and supplies 561,551 245,435 806,986 773,664 Depreciation 307,759 162,312 470,071 1,841,889 Insurance 52,227 67,296 119,523 8,177,437 Rent, utilities and others 610,395 371,267 981,662 13,696,482

Total operating expenses 2,011,731 3,649,876 5,661,607 33,971,916 Operating income (loss) (869,995) (465,640) (1,335,635) 697,958

Intergovernmental 54,251 540,360 594,611 125,832 Investment earnings 24,028 (1,193) 22,835 1,441,642 I t t (11 223) (11 223)

NONOPERATING REVENUES (EXPENSES)

Business-type Activities - Enterprise Funds

COUNTY OF SOLANO, CALIFORNIAStatement of Revenues, Expenses and Changes in Fund Net Assets

Proprietary FundsFor the Fiscal Year Ended June 30, 2008

Interest expense (11,223) - (11,223) - Property taxes 287,733 - 287,733 - Other revenue 79,775 40,213 119,988 1,045,688 Loss on sale of capital assets - - - (9,273)

Total nonoperating revenues, net 434,564 579,380 1,013,944 2,603,889 Income (loss) before capital contributions and transfers (435,431) 113,740 (321,691) 3,301,847

Capital contributions 2,296,465 - 2,296,465 - Transfers in - - - 967,943 Transfers out (20,258) (188,649) (208,907) (1,359,387)

Change in net assets 1,840,776 (74,909) 1,765,867 2,910,403 Total net assets - beginning 10,087,971 3,366,656 13,454,627 25,887,216 Total net assets - ending 11,928,747$ 3,291,747$ 15,220,494$ 28,797,619$

The notes to the financial statements are an integral part of this statement.

34

Nut Tree Airport

Fouts Springs Youth Facility Total

Governmental Activities -

Internal Service Funds

Cash flows from operating activities:Receipts from customers and users 1,480,850$ 3,227,334$ 4,708,184$ 1,394,462$ Receipts from interfund services provided 1,753 12,708 14,461 34,728,798 Payments to suppliers (1,678,322) (747,213) (2,425,535) (23,724,427) Payments to employees (281,878) (2,523,799) (2,805,677) (7,729,803) Payments for interfund services used (25,404) - (25,404) (2,398,101)

Net cash provided (used) by operating activities (503,001) (30,970) (533,971) 2,270,929

Transfers in - - - 967,943 Transfers out (20,258) (188,649) (208,907) (1,359,386) Subsidy from federal/state grant 54,251 505,361 559,612 125,832

Net cash provided (used) by noncapital financing activities 33,993 316,712 350,705 (265,611)

Capital contributions 441,407 - 441,407 - Interest paid (11,223) - (11,223) - Debt principal paid (51,112) - (51,112) - Advances from other funds 5,861,442 5,861,442 (5,484,917) Acquisition of capital assets (6,289,554) (23,318) (6,312,872) - Proceeds from sale of capital assets - - - (81,203)

Net cash provided (used) by capital and related financing activities (49,040) (23,318) (72,358) (5,566,120)

Cash flows from capital and related financing activities:

Cash flows from noncapital financing activities:

COUNTY OF SOLANO, CALIFORNIAStatement of Cash Flows

For the Fiscal Year Ended June 30, 2008

Business-type Activities - Enterprise Funds

Proprietary Funds

( , ) ( , ) ( , ) ( , , )

Cash flows from investing activities:Investment income (expense) 24,028 (1,193) 22,835 1,441,641

Net increase (decrease) in cash and cash equivalents (494,020) 261,231 (232,789) (2,119,161)

Cash and cash equivalents - beginning 745,270 59,659 804,929 33,445,402 Cash and cash equivalents - ending 251,250$ 320,890$ 572,140$ 31,326,241$

Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) (869,995)$ (465,640)$ (1,335,635)$ 697,958$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:Depreciation 307,759 162,312 470,071 1,841,889 Property taxes 287,733 - 287,733 - Other nonoperating revenue 79,775 40,213 119,988 1,045,688 Changes in assets and liabilities:

(Increase) decrease in receivables, net (28,394) 3,901 (24,493) (61,062) Decrease in due from other funds 1,753 10,493 12,246 57,986 (Increase) decrease in due from other agencies - - - (80,403) Increase in other assets (8,669) (10,238) (18,907) (190,169) Increase (decrease) in outstanding warrants 31,908 (8,175) 23,733 (86,540) Increase (decrease) in payables (44,021) 52,802 8,781 611,217 Increase (decrease) in due to other funds (25,404) 2,215 (23,189) (2,398,729) Increase (decrease) in due to other agencies 11,397 (1,016) 10,381 (1,753) Increase (decrease) in accrued compensated absences (702) 182,163 181,461 - Increase in unearned revenue - - - 284,954 Increase in other liabilities (246,141) - (246,141) 549,893

Total adjustments 366,994 434,670 801,664 1,572,971 Net cash provided (used) by operating activities (503,001)$ (30,970)$ (533,971)$ 2,270,929$

Noncash investing, capital and financing activities:Book value of disposed capital assets -$ -$ -$ 89,823$

The notes to the financial statements are an integral part of this statement.

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External Investment Trust Private Purpose Trust Agency FundsASSETSCash and investments 415,193,886$ 4,532,751$ 16,052,258$ Property tax receivable - - 66,946,738 Property of estates - 1,213,520 -

Total assets 415,193,886$ 5,746,271$ 82,998,996$

LIABILITIESDue to others -$ -$ 82,998,996$

NET ASSETSNet assets held in trust for:

Individuals - 5,746,271 Pool participants 415,193,886 -

Total net assets 415,193,886$ 5,746,271$

COUNTY OF SOLANO, CALIFORNIAStatement of Fiduciary Net Assets

Fiduciary FundsJune 30, 2008

The notes to the financial statements are an integral part of this statement.

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External Investment Trust Private Purpose TrustADDITIONS

Contributions on pooled investments 628,684,607$ 5,619,384$ Other contributions/additions/deductions 620,657 (3,756,664) Interest and investment income 48,957,343 42,908

Total additions 678,262,607 1,905,628

DEDUCTIONSDistributions from pooled investments 671,118,047 2,868,481

Change in net assets 7,144,560 (962,853) Net assets - beginning 408,049,326 6,709,124 Net assets - ending 415,193,886$ 5,746,271$

COUNTY OF SOLANO, CALIFORNIAStatement of Changes in Fiduciary Net Assets

Fiduciary FundsFor the Fiscal Year Ended June 30, 2008

The notes to the financial statements are an integral part of this statement.

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COUNTY OF SOLANO, CALIFORNIA NOTES TO THE FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2008

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

Solano County (the County) is a political subdivision of the State of California (the State). An elected, five-member Board of Supervisors (the Board) governs the County. The County defines its reporting entity in accordance with accounting principles generally accepted in the United States of America (GAAP), which provides guidance for determining which governmental activities, organizations, and functions should be included in the reporting entity. The accompanying financial statements present information on the activities of the reporting entity, including all fund types of the County (the primary government) and its component units. GAAP requires that the component units be separated into blended or discretely presented units for reporting purposes. Although legally separate entities, blended component units are, in substance, part of the County's operations. Therefore, they are reported as part of the primary government. The primary government is financially accountable for these component units. Discretely presented component units are reported in a separate column in the financial statements to emphasize that they are legally separate from the County. Each blended and discretely presented component unit has a June 30 fiscal year-end except for the Solano County Fair, which has a December 31 year-end. Component units blended in the County's financial statements include the Solano County Facilities Corporation, Solano County Building Corporation, Solano County Housing Authority and the East Vallejo Fire Protection District. The Solano County Facilities Corporation (SCFC) was established for the purpose of providing financing for the acquisition and construction of property known as the Health & Social Services Administration Building. The SCFC's board consists exclusively of all five members of the County's Board of Supervisors. The Solano County Building Corporation (SCBC) was established for the purpose of financing the construction of the Solano County Justice Facility and Public Building Improvement Project. The SCBC's board consists exclusively of all five members of the County's Board of Supervisors. The Solano County Housing Authority (SCHA), under an agreement with the U.S. Department of Housing and Urban Development, provides housing assistance through the Section 8 Housing Assistance program for the unincorporated areas of Solano County and the cities of Dixon and Rio Vista. The County Board of Supervisors serves as the SCHA board. The East Vallejo Fire Protection District provides fire protection services to the citizens of the unincorporated area in Vallejo. The County’s Board of Supervisors governs the fire protection district. The Rural North Vacaville Water District (District) provides domestic water, and water for fire protection, through a public distribution system, owned and operated by the District. On August 28, 2007, the residents of the District elected their board of directors which replaced the County’s Board of Supervisors. Effective December 7, 2007, the District was no longer under the control of the County Board of Supervisors and therefore, is not considered as a blended component unit.

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The Solano County Fair (Fair), which is managed by the Solano County Fair Association (Fair Association), is a discretely presented component unit in the County's basic financial statements. The Fair is governed by a board of directors whose members are appointed by the County's Board of Supervisors. The Fair Association was formed solely to act as the County's agent in operating the county fair that provides services entirely to the general public. The Workforce Investment Board (WIB) is a discretely presented component unit in the County's basic financial statements. WIB's primary responsibility is to involve the business community in employing and training economically disadvantaged and unemployed persons and to increase private sector employment opportunities for such persons. The WIB is fiscally dependent on the County because the WIB's budget is approved by the County's Board of Supervisors and the County is the primary recipient of the Workforce Investment Act (WIA) grant which represents a significant portion of the WIB's revenues. Financial information for individual component units may be obtained at the County Auditor-Controller's Office. The County Board of Supervisors is responsible for appointing the members of other organizations, but the County's accountability for these organizations does not extend beyond making the appointments. These organizations related to the County consist of the following special districts: The Cordelia Fire Protection District, Dixon Fire Protection District, Montezuma Fire Protection

District, Suisun Fire Protection District and Vacaville Fire Protection District are fire protection districts that provide fire protection services to the citizens of the County. A five-member board appointed by the County Board of Supervisors governs each fire protection district, except for the Cordelia Fire Protection District, which has a board that is elected by the general public.

The Rio Vista-Montezuma Cemetery District, Silveyville Cemetery District, Suisun-Fairfield

Rockville Cemetery District and Vacaville-Elmira Cemetery District are cemetery districts that provide burial services for all qualifying district residents and their families. A five-member board appointed by the County Board of Supervisors governs each cemetery district.

The Dixon Resource Conservation District, Suisun Resource Conservation District and Solano

Resource Conservation District develop and administer various resource conservation programs within the County. The County Board of Supervisors appoints the governing board for each of these districts.

These special districts related to the County are accounted for as an External Investment Trust Fund for reporting purposes (see Fiduciary Funds Statements). For its business-type activities and proprietary funds, pursuant to Governmental Accounting Standards Board (GASB) Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the County applies all applicable GASB pronouncements as well as any applicable pronouncements of the Financial Accounting Standards Board (the FASB), the Accounting Principles Board or any Accounting Research Bulletins issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards, which along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units.

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B. Government-wide and Fund Financial Statements The County's financial accounts are maintained in accordance with GAAP and the uniform accounting system for counties prescribed by the State Controller in compliance with the Government Code of the State of California. The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on user fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The primary government includes certain indirect costs as part of the program expenses reported for the various functional activities. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds report only assets and liabilities and, therefore, do not have a measurement focus. Agency funds, however, use the accrual basis of accounting to recognize receivables and payables. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 90 days of the end of the current fiscal period, except for property taxes, which the County considers available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Secured property taxes, franchise taxes, licenses, grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the County receives cash.

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The County reports the following major governmental funds:

The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Health and Social Services Fund is used to account for services to County residents in the areas of health, mental health, substance abuse, social services, employment assistance and public assistance. The Public Safety Fund is used to account for services to County residents in the areas of legal representation, substance abuse, crime prevention, public protection and probation services. The Tobacco Settlement Fund is used to account for revenues received from the Nationwide Tobacco Master Settlement Agreement (MSA) to address health related issues in the county.

The County reports the following enterprise funds:

The Nut Tree Airport Fund (Airport) accounts for the operating activities and aviation services for commercial and recreational uses.

The Fouts Springs Youth Facility Fund (Fouts Springs) accounts for the activities of the youth correctional facility operated under a Joint Powers Agreement between the counties of Colusa and Solano.

Additionally, the government reports the following fund types:

Internal Service Funds account for management information systems, fleet management services, communications, reprographics and risk management services provided to other departments or agencies of the County, or to other governments, on a cost reimbursement basis.

The External Investment Trust Fund is used to account for the pooling of resources in an investment portfolio for external county agencies and legally separate participants. The Private Purpose Trust Funds are used to account for escheat property under the responsibilities of Guardian/Conservator and Administrator. The Agency Funds are used to account for assets held by the County in an agency capacity for other local government units.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements; however, such interfund services provided/used are not eliminated in the process of consolidation.

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The amounts reported as program revenues in the statement of activities include (1) charges to customers or applicants for goods, services, or privileges provided, including special assessments, (2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating from nonoperating revenues and expenses. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operation. The principal operating revenues of the Airport and Fouts Springs are charges to customers for sales and services. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, then unrestricted resources as they are needed. D. Fund Consolidation Effective July 1, 2007, the County consolidated the 2001 Debt Service Fund with the Government Center Debt Service Fund and the Solano County Integrated Property System (SCIPS) Internal Service Fund with the Information Technology (IT) Internal Service Fund. The 2001 Debt Service Fund had a beginning fund balance of $265 which is reflected in the beginning fund balance for the Government Center Debt Service Fund. E. Assets, Liabilities, and Net Assets or Equity

1. Cash and Investments The County pools cash and investments with the County Treasurer except for investments managed by paying agents under bonded debt agreements. Interest from bank accounts and investments are allocated monthly to the various funds based on the average daily cash balances of the funds entitled to receive interest. It is the County's policy to charge interest to funds which have a negative cash balance. Income from non-pooled investments is recorded based on the specific investments held by the fund. The interest income is recorded in the fund that earns the interest. The County has stated required investments at fair value in the accompanying financial statements. The fair value of investments is based on published market prices and quotations from major investment brokers. The investments are marked to market and the net asset value is calculated for the County Treasurer’s Investment Pool ("Pool") annually. For purposes of the statement of cash flows, proprietary funds consider all highly liquid investments with a remaining maturity of three months or less at the time of acquisition and pooled amounts in the County Treasury to be cash equivalents. The Pool values participants’ shares on an amortized cost basis. Specifically, the Pool distributes income to participants based on their relative participation during the period. Income is calculated based on (1) realized investment gains and losses calculated on an amortized cost basis, (2) interest income based on stated rates (both paid and accrued), (3) amortization of discounts and premiums on a straight-line basis, and (4) investment and administrative expenses. This method differs from the fair value method used to value investments in these financial statements because the amortized cost method is not designed to distribute to participants all unrealized gains and losses in the fair values of the Pool’s investments.

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The Treasurer invests on behalf of most funds of the County and external participants in accordance with the County's investment policy and the California State Government Code. The County Treasurer who reports on a monthly basis to the Board of Supervisors manages the Pool. In addition, the function of the County Treasury Oversight Committee is to review and monitor the County's investment policy and to monitor compliance with the investment policy and reporting provisions of the law. The Pool is comprised of two components: a) pooled deposits and investments and b) dedicated investment funds. The dedicated investment funds represent restricted funds. In addition to the Pool, the County has other funds which are held by trustees. These funds are related to the issuance of bonds and certain programs of the County. The public school districts as well as cemetery districts, pest control districts, recreation and park districts, and levee districts within the County are required by legal provisions to participate in the County’s investment pool. The deposits held for these districts are included in the External Investment Trust. The County’s cash and investments include $4,532,751 at June 30, 2008 for Private Purpose Trust Funds. The County provides personal and financial services to individuals who are not able to manage their own affairs. The Public Administrator and Public Guardian administer the funds for individuals who are either deceased or incapacitated. The County also administers funds for adults and juveniles who are incarcerated. The County has not provided nor obtained any legally binding guarantees during the fiscal year ended June 30, 2008, to support the value of shares in the Pool. 2. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances to other funds, as reported in the fund financial statements, are offset by a fund balance reserve account in the applicable governmental funds to indicate such amounts are not available for appropriation and are not expendable available financial resources. 3. Property Tax Levy, Collection and Maximum Rates The County is responsible for assessing, collecting and apportioning property taxes. Article XIII A of the California Constitution (Proposition 13) provides that the combined maximum property tax rate on any given property may not exceed one percent of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be adjusted upward by no more than two percent per year unless the property is sold or transferred. The State Legislature has determined the method of distribution of receipts from the tax levy among the counties, cities, school districts and other districts.

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The County assesses properties and bills for and collects property taxes as follows: Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates October 1 July 1 Due dates 50% on November 1, 50% on February 1 August 1 Delinquent dates December 11 (for November)

April 11 (for February) August 31

The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are enforced by liens on the property being taxed. The County uses the advance apportionment method of accounting for apportioning property taxes, commonly referred to as the Teeter Plan, as provided in the State Revenue and Taxation Code Section 4701-4717. Under this method, anticipated secured property tax monies are advanced to the various county funds and governmental agencies prior to the collection of such monies from the taxpayers. 4. Other Assets The County reports inventory in the other asset category. The County values inventory at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when purchased rather than when consumed. Also, included in the other assets are prepaid costs which are payments made to vendors for costs that benefit future periods. 5. Long-term Assets The County reports receivables greater than one year as long-term assets, including receivables arising from loan subsidy programs. 6. Capital Assets Capital assets, which include property, plant, equipment and infrastructure (e.g., roads, bridges and easements), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the County as assets with an initial cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their fair value on the date of donation. The County has not reported infrastructure assets acquired prior to fiscal year ended June 30, 1980. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

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Property, plant, equipment, and depreciable infrastructure assets of the primary government and its component units, are depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Bridges 99Computer equipment 3-7Office equipment 3-7Specialty equipment and vehicles 2-20Construction equipment 10-20Buildings and improvements 10-40Roads (surface only) 10-20

7. Federal, State and Local Grants Proprietary fund grants received for operating assistance are recorded as nonoperating revenues in the year in which the grants are expended and the related grant conditions are met. Governmental fund grants are recorded as revenues in the year they become both measurable and available and when all eligibility requirements imposed by the provider have been met. The County uses a 90-day availability period. Funds received that do not meet this criterion are recorded as deferred revenue in the governmental funds financial statements.

8. Outstanding Warrants

Outstanding warrants represent the amount of warrants issued but not yet presented to the County for payment. Such amounts are recorded in the individual funds. When warrants are mailed, expenditures are recorded in the individual funds and an outstanding warrant liability is created, pending payment of the warrant.

9. Due To/Due From Other Agencies Included in "Due to/due from other agencies" are amounts owed to/by governmental entities outside the reporting entity. 10. Deferred/Unearned Revenue Deferred/unearned revenue represents financial resources received before qualifying expenditures are made. These resources are advances from the State of California and the federal government for costs of various programs administered by the County. Deferred/unearned revenue also represents receivables recorded before the revenue availability criterion has been met as disclosed in Note III - B.

11. Compensated Absences Vested unused vacation hours may be accumulated and, if not taken, is paid at the date of termination from County employment. All leave balances are accrued when incurred in the government-wide and proprietary fund financial statements. Expenditures for these amounts are reported in the governmental funds as employees resign or retire. In addition, upon retirement, eligible employees can elect to cash out their unused sick leave balance (up to a maximum of 500 hours) and/or apply all or a portion of their sick leave balance to CalPERS service credit, or apply all of their sick leave balance to a retirement health savings account. Payments for accrued compensated absences at termination or retirement are paid and liquidated by the General Fund or the respective Special Revenue Fund.

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12. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term debt obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary funds statement of net assets. Bond premiums/discounts, issuance costs and the deferred amount on the refunding (i.e., the difference between the carrying amount of defeased debt and its reacquisition price) are deferred and amortized over the life of the bonds using the straight-line method. The deferred amount on refunding is reported as a direct reduction or increase to the carrying amount of the refunding debt, similar to bond premiums/discounts. Bond issuance costs are reported as a component of long-term assets and amortized over the term of the related debt.

In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 13. Net Assets/Fund Balances The government-wide and proprietary fund financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets - net of related debt, restricted and unrestricted.

• Invested in capital assets, net of related debt – This category groups all capital assets, including

infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

• Restricted for: Debt service – This category represents external restrictions imposed by the trust agent as stated in the bond indenture agreements for the issuance and repayment of long-term debt.

• Restricted for: Health services – This category represents external restrictions imposed by grantors, contributors and restrictions imposed by law through constitutional provisions for the implementation of various health and social services programs.

• Restricted for: Library services – This category represents external restrictions imposed by grantors, contributors and restrictions imposed by law through constitutional provisions for increased library services to the public.

• Restricted for: Public facilities fees – This category represents restrictions imposed by county code to collect fees due to the increase needs in County public facilities.

• Restricted for: Transportation services – This category represents external restrictions imposed by creditors, grantors, and laws or regulations of other governments to provide transportation facilities and services for the public.

• Unrestricted – This category represents net assets of the County, not restricted for any project or other purpose.

The government-wide statement of net assets reports $72,516,573 of restricted net assets, of which $23,343,031 is restricted by enabling legislation. In the fund financial statements, reservations and designations segregate portions of fund balance that are either not available for appropriation or have been earmarked for specific purposes. The various reserves and designations are established by GAAP, bond indenture agreements and by actions of the Board and/or management.

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As of June 30, 2008, reservations of fund balance are described below: • Long-term assets – to reflect the amounts due from others that are long-term in nature. Such

amounts do not represent available spendable resources. • Health programs – to reflect funds held by trustee in accordance with the tobacco securitization

program and designated by the Board to address health issues in the County. These funds are not available for spending.

• Debt service – to reflect the funds held by trustees or fiscal agents for future payment of principal and interest required by the indenture agreement. These funds are not available for general operations.

• Encumbrances – to reflect the outstanding contractual obligations for which goods and services have not been received as of June 30, 2008.

• Imprest cash – to reflect the portion of assets that do not represent available spendable resources.

As of June 30, 2008, the portion of fund balance classified as unreserved is described below:

• Designated, reported in: General fund – funds set aside for general purposes designated by the Board consists of General Reserves ($52,067,119) to be utilized during times of financial distress; Unfunded Employee Leave Payoffs ($7,700,000) during the subsequent fiscal years and Deferred Maintenance ($4,465,680) for upkeep and maintenance costs of capital assets.

• Designated, reported in: Capital Project fund – funds set aside for the South County Government Center Capital Project.

• Undesignated – to reflect the fund balance available in the funds.

14. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. F. Implementation of New Accounting Standards GASB No. 45

Effective July 1, 2007, the County implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pension. This statement requires that governments account for, and report, the annual cost of other postemployment benefits (OPEB) and the outstanding obligation and commitments related to OPEB in the same manner as they do for pensions. The County offers postretirement medical benefits.

Annual OPEB costs for most employers are based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. This Statement’s provisions may be applied prospectively and does not require governmental entities to fund their OPEB plans. An employer may establish its OPEB liability at zero as of the beginning of the initial year of implementation; however, the unfunded actuarial liability, if any, is required to be amortized over future periods. The County has elected to implement the requirements of GASB Statement No. 45 on a prospective basis. This statement also established disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions, and, for certain employers, the extent to which the plan has been funded over time. As a result, the County has recorded its net OPEB asset and included the related financial statement disclosures regarding the County’s OPEB plan in Note IV B.

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GASB No. 50

For the fiscal year ended June 30, 2008, the County implemented GASB Statement No. 50, Pension Disclosures – an amendment of GASB Statements No. 25 and No. 27. GASB Statement No. 50, Pension Disclosures, more closely aligns the financial reporting requirements for pensions with those for other postemployment benefits and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information (RSI) by pension plans and by employers that provide pension benefits. The reporting changes required by this Statement amend applicable note disclosure and RSI requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State and Local Governmental Employers, to conform with requirements of Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The County has included the related financial statement disclosures required by GASB Statement No. 50 in Note IV A.

G. Restatement of Net Assets A prior period adjustment of $21,803 was made to increase the beginning net assets of the Solano County Fair as a result of adjusting the Fair’s share of the County’s pension obligation bonds based on the incorrect amortization of payments made by the Fair.

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II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

Explanation of certain differences between the governmental funds balance sheet and the

government-wide statement of net assets

The governmental funds balance sheet includes a reconciliation between fund balances-total governmental funds and net assets-governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that “Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.” The details of this $426,939,170 difference are as follows:

Land, not being depreciated $ 156,043,196 Construction in progress 24,730,422 Infrastructure, net of $38,353,508 accumulated depreciation Buildings, net of $106,709,471 accumulated depreciation

52,286,308 185,206,822

Machinery and equipment, net of $16,135,098 accumulated depreciation 8,672,422 Net adjustment to increase fund balances-total governmental funds to arrive at net assets-governmental activities $ 426,939,170

Another element of that reconciliation explains that “long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.” The details of this $284,604,532 difference are as follows: Notes payable $ 1,171,043 Capital leases 16,874 Certificates of Participation 137,955,000 Less: Deferred amount on refunding (2,835,305) Less: Issuance discount (190,145) Add: Issuance premium 3,083,691 Pension obligation bonds 121,020,000 Compensated absences 24,383,374 Net adjustment to reduce fund balances – total governmental funds to arrive at net assets – governmental activities $ 284,604,532

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III. DETAILED NOTES ON ALL FUNDS

A. Cash and Investments

The County had the following cash and investments at June 30, 2008: Fair Value County Deposits $ 3,337,067 County Investments

Money Market Mutual Funds 43,238,604 Negotiable Certificates of Deposits 5,002,775Repurchase Agreement 3,915,113LAIF 34,541,455 CalTRUST 19,926,340 CAMP 2,847 Corporate Notes 145,616,943 Mortgage Pass-through 209,059 U.S. Federal Agency Notes

Federal Farm Credit Bank 36,340,990Federal Home Loan Bank 218,717,325 Federal Home Loan Mortgage Corporation 80,393,577Federal National Mortgage Association 82,741,902

U.S. Treasury Notes 50,245,800Municipal Notes 12,523,648

Total County Investments 733,416,378 Total County Treasury 736,753,445 Cash and Investments with Fiscal Agents

Imprest cash 75,190 Cash in bank 1,932,693 Held with others

Money Market Mutual Funds 22,360,519Total Cash and Investments with Fiscal Agents 24,368,402

Total Cash and Investments $ 761,121,847

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Reconciliation to financial statements: Government-wide Statement of Net Assets $ 323,619,069 Statement of Fiduciary Net Assets:

External Investment Trust 415,193,886 Private Purpose Trust 4,532,751 Agency Funds 16,052,258

Component Units: Solano County Fair 1,343,783 Workforce Investment Board 380,100

Total $ 761,121,847 The County Treasurer manages cash and investments of the County. The County Treasurer maintains an investment pool used for substantially all funds held by the County except for specified funds, which by law must be segregated. Cash and investments held by third party fiscal agents are legally or contractually restricted for specific purposes and consist primarily of debt reserve requirements. The County is a voluntary participant in the State of California Local Agency Investment Fund (LAIF). The total amount invested by all public agencies in LAIF as of June 30, 2008 was $25.2 billion. LAIF is part of the State of California’s Pooled Money Investment Account (PMIA), which, as of June 30, 2008 had a balance of $69.9 billion. PMIA is not SEC registered, but is required to invest according to California State Government Code. The weighted average to maturity of PMIA investments was 212 days as of June 30, 2008. The Local Investment Advisory Board (LIAB) has oversight responsibility for LAIF. The LAIB consists of five members as designated by state statute. The value of the pool shares in LAIF, which may be withdrawn, is determined on an amortized cost basis, which is different than the fair value of the County Treasurer’s portion of the pool. Included in PMIA’s investment portfolio are certain derivative securities or similar products in the form of structured notes totaling $6.1 billion, and asset-backed securities totaling $4.2 billion. 1. Authorized Investments

Statutes authorize the County to invest in obligations of the U.S. Government securities, U.S. Government agencies and instrumentalities, certificates of deposit of nationally or state-charted banks or savings institutions, commercial paper rated A-1 by Standard and Poor’s Corporation or P-1 by Moody’s Commercial Paper Record, bankers’ acceptances, medium term corporate notes, mortgage pass-through, repurchase agreements, reverse repurchase agreements, municipal bonds, mutual funds as permitted by the California Government Code, California State Treasurer’s investment pool (LAIF), and shares of beneficial interest issued by Joint Power Authorities that invest in allowable securities.

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2. Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment or a deposit. As a means of limiting its exposure to fair value losses arising from rising interest rates, the County’s investment policy mitigates its exposure to interest rate risk by:

• Structuring the portfolio so securities mature to meet the cash requirements of the pool participants

and laddering call dates and maturities.

• Maintaining a portion of the County’s investment portfolio in short-term investments (1 year or less to maturity), which have a minimum interest rate risk.

As of June 30, 2008, the weighted average to maturity of the Treasurer’s Pool was 455 days.

3. Credit Risk

Investment Maturities Fair Value (in Years)

Fair Value Less than 1 1 to 5 More than

5 County Investments Money Market Mutual Funds $ 43,238,604 $ 43,238,604 $ - $ - Negotiable Certificates of

Deposits

5,002,775 5,002,775 -

Repurchase Agreement 3,915,113 3,915,113 - - LAIF 34,541,455 34,541,455 - - CalTRUST 19,926,340 19,926,340 - - CAMP 2,847 2,847 - - Corporate Notes 145,616,943 77,602,328 68,014,615 - Mortgage Pass-through 209,059 - 209,059 - U.S. Federal Agency Notes

Federal Farm Credit Bank 36,340,990 15,112,550 21,228,440 - Federal Home Loan Bank 218,717,325 118,180,196 100,537,129 - Federal Home Loan Mortgage Corporation 80,393,577 44,228,930 36,164,647 - Federal National Mortgage

Association

82,741,902 45,504,068 37,237,834 -

U.S. Treasury Notes 50,245,800 50,245,800 - - Municipal Notes 12,523,648 3,771,528 - 8,752,120

Total County Investments 733,416,378 456,269,759 268,394,499 8,752,120 Investments with Fiscal Agent

Money Market Mutual Funds 22,360,519 22,360,519 - - Total Investments $ 755,776,897 $ 478,630,278 $ 268,394,499 $ 8,752,120

Credit risk is the risk of loss due to the failure or credit downgrade of an issuer or backer. State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. The County’s investment policy mitigates its exposure to credit risk by: • Limiting purchases to “investment grade securities”.

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• Diversifying the portfolio so the failure or downgrade of an individual security will have a minimal impact on the portfolio as a whole.

• Performing ongoing reviews of economic or financial conditions that may impact the credit of a

single issuer or a market segment of issuers.

• When the County Treasurer deems necessary, an in-depth analysis on the credit quality of an individual issuer within the portfolio will be conducted, and based on the findings, the County Treasurer may elect to retain the securities in question or sell them.

At June 30, 2008, the County’s credit risks, expressed as a percentage of total investments, are as follows:

Investment Type Credit Rating

Moody’s % of Investments County Investments Money Market Mutual Funds AAA 5.72% Negotiable Certificates of Deposits AA 0.66% Repurchase Agreement AAA 0.52% LAIF Not Rated 4.57% CalTRUST AAA 2.64% CAMP AAA 0.00% Corporate Notes A 2.62% Corporate Notes A+ 2.52% Corporate Notes A1P1 5.29% Corporate Notes AA 2.77% Corporate Notes AA- 4.21% Corporate Notes AAA 1.85% Mortgage Pass-through AAA 0.03% U.S. Federal Agency Notes

Federal Farm Credit Bank AAA 4.81% Federal Home Loan Bank AAA 28.94% Federal Home Loan Mortgage Corporation AAA 10.64% Federal National Mortgage

Association AAA 10.95% U.S. Treasury Notes AAA 6.65% Municipal Notes AA 0.23% Municipal Notes AA- 0.09% Municipal Notes AAA 1.34% Investments with Fiscal Agents Money Market Mutual Funds Aaa 2.95%

Total 100.00%

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4. Concentration of Credit Risk The County’s investment policy has no limitation on the amount that can be invested in any one issuer beyond what is stipulated by the California Government Code. Investments in any one issuer (other than Money Market Mutual Funds, U.S. Treasury Securities, or external investment pools) that represent 5% or more of the total investments of the County are as follows:

Investment Type Fair Value Federal Home Loan Bank $ 218,717,325Federal Home Loan Mortgage Corporation

80,393,577

Federal National Mortgage Association

82,741,902

5. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the County’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. A summary of the investments held by the Treasurer’s Pool is as follows:

Investment

Fair Value

Principal

Interest Rate Range

Maturity Range

Money Market Mutual Funds $ 43,238,604 $ 43,224,032 3.000% 07/08 Negotiable Certificates of

Deposits 5,002,775 4,984,000

5.445

04/10 Repurchase Agreement 3,915,113 3,915,113 3.000 07/08 LAIF 34,541,455 34,541,455 3.000 07/08 CalTRUST 19,926,340 19,926,340 3.000 07/08 CAMP 2,847 2,847 3.000 07/08 Corporate Notes 145,616,943 145,466,648 2.049 – 6.875 07/08 – 10/12 Mortgage Pass-through 209,059 209,059 2.576 – 2.590 10/11 – 10/12 U.S. Federal Agency Notes 418,193,794 417,094,087 2.069 – 6.700 07/08 – 05/13 U.S Treasury Notes 50,245,800 50,274,937 1.522 – 4.875 08/08 – 11/08 Municipal Notes 12,523,648 12,105,565 3.475 – 6.000 07/08 – 08/27 $ 733,416,378 $ 731,744,083

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The following represents a condensed statement of net assets and changes in net assets for the Treasurer’s Pool as of June 30, 2008:

Statement of net assets Net assets held in trust for all pool participants $ 730,587,174

Equity of internal pool participants $ 315,393,288 Equity of external pool participants 415,193,886 Total equity $ 730,587,174

Statement of changes in net assets Net assets as of July 1, 2007 $ 717,096,754 Net change in investments by pool participants 13,490,420 Net assets as of June 30, 2008 $ 730,587,174

Reconciliation to financial statements

Held by County Treasurer: Primary government $ 735,589,516 Component units: Solano County Fair Workforce Investment Board

755,450 408,479

736,753,445 Less outstanding warrants:

Primary government 6,010,716 Component unit-Workforce Investment Board 155,555

Total $ 730,587,174

B. Receivables/Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenues not considered available to liquidate liabilities of the current period. Governmental and enterprise funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of June 30, 2008, the various components of deferred revenue were as follows:

Fund Unavailable Unearned Total General $ 9,307,755 $ 1,019,563 $ 10,327,318 Health and Social Services 10,593,426 10,537,901 21,131,327 Public Safety 433,950 2,429,722 2,863,672 Other Governmental Funds - 205,602 205,602 Internal Service Fund - 485,385 485,385 Total deferred revenue $ 20,335,131 $ 14,678,173 $ 35,013,304

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C. Due To/Due From Other Funds The composition of the interfund balances as of June 30,2008, is as follows:

Due To

General

Health & Social

Services Public Safety Tobacco

Settlement Other

Governmental Nut Tree Airport

Fouts Springs Youth

Facility

Internal Service Funds Total

Due

Fro

m

General

$ - $ 5,229,237 $ 3,399,616 $ - $ 414,304 $ 80 $ - $ 33 $ 9,043,270

Health & Social Services

8,232,959 - 257,454 1,738,290 489,590 - - 120,463 10,838,756

Public Safety 63,033 235,671 - - - - - - 298,704Other Governmental

106,201 270,869 278,457 - 353,119 568 7,160 22,457 1,038,831

Internal Service

217,300 8,141 3,438 - 1,118 - - 4 230,001

Total

$ 8,619,493 $ 5,743,918 $ 3,938,965 $ 1,738,290 $ 1,258,131 $ 648 $ 7,160 $ 142,957 $ 21,449,562

The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

D. Advances To/From Other Funds The General Fund loaned $7,712,642 to the Nut Tree Airport Fund to cover the costs of acquiring real property for purposes of airport expansion and $114,742 to the Transportation Fund to cover costs of Regional Transportation Projects. The General Fund expects to collect the loans in the subsequent years.

E. Capital Assets Capital assets activity for the fiscal year ended June 30, 2008, was as follows:

Governmental activities Beginning Balance Additions & Transfers-in

Retirements & Transfers-out Ending Balance

Capital assets, not being depreciated: Land $ 152,915,345 $ 3,127,851 $ - $ 156,043,196Construction in progress 15,242,177 12,489,617 - 27,731,794

Total capital assets, not being depreciated 168,157,522 15,617,468 - 183,774,990 Capital assets, being depreciated

Buildings 292,408,580 994,833 (1,222,649) 292,180,764Machinery and equipment 41,951,527 5,475,362 (2,553,021) 44,873,868Infrastructure 97,026,102 6,440,568 (12,826,854) 90,639,816

Total capital assets, being depreciated 431,386,209 12,910,763 (16,602,524) 427,694,448

Less accumulated depreciation for: Buildings (99,324,040) (8,668,176) 1,222,648 (106,769,568)Machinery and equipment (26,148,079) (4,054,467) 2,371,733 (27,830,813)Infrastructure (36,999,169) (3,328,843) 1,974,504 (38,353,508)

Total accumulated depreciation (162,471,288) (16,051,486) 5,568,885 (172,953,889) Total capital assets, being depreciated, net 268,914,921 (3,140,723) (11,033,639) 254,740,559Governmental activities capital assets, net $ 437,072,443 $ 12,476,745 $ (11,033,639) $ 438,515,549

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Business-type activities Beginning BalanceAdditions & Transfers-in

Retirements & Transfers-out Ending Balance

Capital assets, not being depreciated: Land $ 4,440,940 $ 5,861,442 $ - $ 10,302,382Construction in progress 3,542,539 364,962 - 3,907,501Total capital assets, not being depreciated 7,983,479 6,226,404 - 14,209,883

Capital assets, being depreciated

Buildings 11,262,909 - - 11,262,909Machinery and equipment 465,687 86,468 - 552,155

Total capital assets, being depreciated 11,728,596 86,468 - 11,815,064

Less accumulated depreciation for: Buildings (4,249,506) (442,111) - (4,691,617)Machinery and equipment (364,985) (27,960) - (392,945)

Total accumulated depreciation (4,614,491) (470,071) - (5,084,562) Total capital assets, being depreciated, net 7,114,105 (383,603) - 6,730,502 Business-type activities capital assets, net $ 15,097,584 $ 5,842,801 $ - $ 20,940,385

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General government $ 4,769,039 Public protection 4,149,430 Public ways and facilities 3,584,396 Health and sanitation 516,026 Public assistance 773,458 Education 349,209 Recreation 68,039 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 1,841,889 Total depreciation expense-governmental activities $ 16,051,486

Business-type activities:

Nut Tree Airport $ 307,759 Fouts Springs Youth Facility 162,312

Total depreciation expense-business-type activities $ 470,071

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Capital assets activity for component units for the fiscal year ended June 30, 2008 was as follows:

Component Units

BeginningBalance

Additions

Retirements

Ending Balance

Solano County Fair Capital assets, not being depreciated: Land $ 167,085 $ - $ - $ 167,085 Capital assets, being depreciated: Buildings 9,186,734 3,817 - 9,190,551 Machinery and equipment 549,581 19,367 - 568,948

Total capital assets, being depreciated 9,736,315 23,184 - 9,759,499 Less accumulated depreciation for: Buildings (7,089,391) (277,080) - (7,366,471) Machinery and equipment (481,110) (29,164) - (510,274)Total accumulated depreciation, net (7,570,501) (306,244) - (7,876,745)

Total capital assets, being depreciated, net

2,165,814 (283,060) - 1,882,754

Total Solano County Fair capital assets, net $

2,332,899 $ (283,060) $ - $ 2,049,839

Workforce Investment Board (WIB) Capital assets: Machinery and equipment $ 28,344 $ - $ (21,749) $ 6,595

Less accumulated depreciation (25,925) (1,430) 21,749 (5,606)Total WIB capital assets, being

depreciated, net $ 2,419 $ (1,430) $ - $ 989 Depreciation expense was charged to component units as follows:

Component units: Solano County Fair $ 306,244 Workforce Investment Board 1,430

Total depreciation expense-component units $ 307,674

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F. Interfund Transfers The composition of interfund transfers for the year ended June 30, 2008, is as follows:

Transfers Out

General

Health & Social

Services Public Safety

Tobacco Settlement

Other Governmental

Nut Tree

Airport

Fouts Springs Youth

Facility

Internal Service Funds Total

Tra

nsfe

rs In

General $ - $ 576,319 $ 220,671 $ - $ 661,580 $ - $ - $ - $ 1,458,570

Health & Social Services

27,246,197 - 307,071 3,357,558 - - - - 30,910,826

Public Safety 88,991,109 222,715 - - - - - - 89,213,824Other Governmental

19,348,208 9,146,579 8,093,142 - 10,595,825 20,258 188,649 602,996 47,995,657

Internal Service

38,390 64,828 108,334 - - - - 756,391 967,943

Total $ 135,623,904 $ 10,010,441 $ 8,729,218 $ 3,357,558 $ 11,257,405 $ 20,258 $ 188,649 $ 1,359,387 $ 171,835,881

Transfers are used to 1) move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due, 2) move unrestricted revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs. Other Governmental Funds included the residual equity transfer of $2,031,689 to the External Investment Trust Fund, which is not included in the table above. The amount represents the transfer of the Rural North Vacaville Water District equity as a county department to the fiduciary funds.

G. Payables The composition of payables as of June 30, 2008, was as follows:

Accounts Payable

Accrued Payroll

Accrued Interest

Total

Governmental activities: General $ 3,062,484 $ 1,675,272 $ - $ 4,737,756 Health & Social Services 10,905,546 4,633,147 - 15,538,693 Public Safety 1,763,726 4,865,365 - 6,629,091 Other Governmental Funds 5,558,301 900,774 - 6,459,075 Internal Service Funds 2,841,382 356,516 - 3,197,898 Reconciliation of balances in fund financial statements to government-wide financial statements

-

-

3,789,810

3,789,810 Total governmental activities $ 24,131,439 $ 12,431,074 $ 3,789,810 $ 40,352,323

Business-type activities: Nut Tree Airport $ 36,811 $ 10,060 $ - $ 46,871 Fouts Springs Youth Facility 58,766 125,261 - 184,027

Total business-type activities $ 95,577 $ 135,321 $ - $ 230,898

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H. Operating Leases

The County leases office space and equipment under operating leases. Total rental expenditures for such leases were $3,636,953, for the year ended June 30, 2008. Future minimum rental payments under all noncancelable operating leases with initial or remaining terms in excess of one year as of June 30, 2008 are summarized as follows:

Year Ending

June 30 Primary

Government

WIB

Total 2009 $ 2,431,973 $ 500,295 $ 2,932,2682010 2,132,991 - 2,132,9912011 1,672,842 - 1,672,8422012 739,083 - 739,0832013 310,000 - 310,000

$ 7,286,889 $ 500,295 $ 7,787,184

I. Long-term Obligations Capital Leases: The County has entered into lease agreements as lessee for financing the acquisition of machinery and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows:

Governmental activities Machinery and equipment $ 59,286 Less: Accumulated depreciation (41,500)

Total $ 17,786 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2008, were as follows:

Year ending June 30

Governmental activities

2009 $ 14,516 2010 3,628

Total minimum lease payments 18,144 Less: amount representing interest (1,270)Present value of minimum lease payments $ 16,874

Notes Payable: The County has entered into various note payable agreements as borrower for financing arrangements. These agreements qualify as notes payable for accounting purposes.

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The annual debt service requirements to maturity for notes payable are as follows:

Governmental activities

Business-type activities

Year ending June 30 Principal

Interest

Principal Interest

2009 $ 147,153 $ 64,756 $ 55,000 $ 7,018 2010 - 61,433 94,853 6,283 2011 - 61,433 - - 2012 - 61,433 - - 2013 - 61,433 - -

2014-2018 - 307,167 - - $ 147,153 $ 617,655 $ 149,853 $ 13,301

During FY 07/08, the County entered into a new loan agreement with the Suisun Redevelopment Agency in the amount of $1,023,890 for its share of construction costs of the Suisun City Library. The loan will be repaid using future public facilities fees collected by Suisun City plus interest at three (3%) percent per annum. As of June 30, 2008, there is no agreed upon maturity date set for the loan. Certificates of Participation: The County issued Certificates of Participation (COP) to provide funds for the acquisition and construction of major capital facilities. Certificates of Participation were issued for governmental activities only. Annual debt service requirements to maturity for the Certificates of Participation are as follows:

Year ending

June 30 Principal Interest 2009 $ 4,600,000 $ 6,301,3132010 4,775,000 6,117,5952011 4,970,000 5,903,1712012 5,215,000 5,655,2612013 5,470,000 5,415,638

2014 – 2018 28,985,000 22,930,9092019 – 2023 24,860,000 16,012,3972024 – 2028 26,345,000 10,377,2132029 – 2033 32,735,000 3,811,838

$ 137,955,000 $ 82,525,335 Debt Defeasance: The County partially refunded and defeased the 2002 COP with certificate payment dates from and including November 1, 2013 to 2032. Due to prepayment restrictions, the proceeds from the 2007 COP are held in an escrow account until the 2002 COP are refunded after the call date of November 1, 2012. The amount held in the escrow account and the liability for the defeased bonds are not included in the County’s financial statements. As of June 30, 2008, the amount outstanding for the defeased bonds is $96,215,000.

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Pension Obligation Bonds: On June 16, 2004, the County issued $96,665,000 of Taxable Pension Obligation Bonds to prepay a partial obligation under its contract with CalPERS. These bonds were issued in four series: Series A in the amount of $36,665,000 which are fixed rate Current Interest Bonds; Series B-1, B-2 and B-3 in the amount of $20,000,000 each, which carry a variable rate and are Auction Rate Securities. On November 1, 2005 the County issued an additional $42,385,000 of Taxable Pension Obligation Bonds to prepay a partial obligation under its contract with CalPERS for the County’s Unfunded Accrued Actuarial Liability (UAAL). Annual debt service requirements to maturity for Pension Obligation Bonds are as follows:

Year ending June 30 Principal Interest

2009 $ 2,190,000 $ 6,728,2332010 2,725,000 6,827,6232011 3,300,000 6,826,0702012 3,925,000 6,724,2162013 4,595,000 6,528,110

2014 – 2018 34,825,000 27,990,0132019 – 2023 51,025,000 15,869,0992024 - 2025 18,435,000 1,372,870

$ 121,020,000 $ 78,866,234

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The composition of the long-term debt obligations for the governmental activities as of June 30, 2008, was as follows:

Type and description Maturity Interest Rates Original Issue Outstanding

Notes payable: California Energy Commission June 22, 2009 3.00 $ 924,379 $ 147,153 Suisun City Redevelopment Agency 3.00 1,023,890 1,023,890

Total notes payable 1,171,043

Capital leases: Pitney Bowes Credit Corporation September 30, 2009 10.36 27,776 8,327 Pitney Bowes Credit Corporation September 30, 2009 9.41 28,960 8,547

Total capital leases 16,874

Certificates of participation: 1998 Court Expansion Improvements

Serial November 15, 2013 2.95 - 4.68 6,455,000 1,385,000 Term November 15, 2018 4.93 1,480,000 1,480,000 Issuance Premium 1,185 593

1999 Health and Social Services Capital Improvements

Serial November 15, 2014 3.20 - 5.13 23,515,000 13,075,000

Term November 15, 2019 5.23 8,195,000 8,195,000

Issuance Discount (345,718) (190,145)

2002 Certificates of Participation Serial November 1, 2025 4.98 74,460,000 14,120,000 Issuance Premium 4,628,748 771,458

2007 Certificates of Participation Serial

November 1, 2007 – November 1, 2024 4.00 - 5.00 50,620,000 50,460,000

Term November 1, 2026 4.25 10,770,000 10,770,000 Term November 1, 2032 4.50 38,470,000 38,470,000 Issuance Premium 2,568,489 2,311,640 Deferred amount on refunding

(3,150,339) (2,835,305)

Total certificates of participation 138,013,241

Pension obligation bonds Series 2004A January 15, 2018 5.80 36,665,000 35,390,000 Series 2004B-1 January 15, 2021 4.50* 20,000,000 15,000,000 Series 2004B-2 January 15, 2023 6.00* 20,000,000 15,000,000 Series 2004B-3 January 15, 2024 4.16* 20,000,000 15,000,000 Series 2005 January 15, 2025 5.36 42,385,000 40,630,000

Total pension obligation bonds 121,020,000

Self-insurance liability 10,565,011 Compensated absences 25,287,230

Total governmental obligations $ 296,073,399

* Variable rate bonds

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The composition of the long-term debt obligations for the business-type activities as of June 30, 2008, was as follows:

Interest Original

Type and description Maturity Rates Issue Outstanding Nut Tree Airport Notes Payable: CalTrans/Dept. of Transportation January 3, 2018 5.22 1,300,000 $ 149,853 Compensated absences 12,540 Total Nut Tree Airport 162,393 Fouts Springs Youth Facility Compensated absences 412,009

Total business-type activities $ 574,402

The composition of the long-term obligations of the County’s component units activities as of June 30, 2008, was as follows:

Type and description OutstandingSolano County Fair

County pension liability $ 746,773 Compensated absences 78,475 Total Solano County Fair $ 825,248

Workforce Investment Board (WIB) Compensated absences $ 145,136

Long-term liability activity for the fiscal year ended June 30, 2008, was as follows:

Governmental activities:

Beginning Balance Additions Reductions Ending Balance Due Within One Year

Capital leases

$ 28,968 $ - $ (12,094) $ 16,874 $ 13,332 Certificates of participation 142,410,000 (4,455,000) 137,955,000 4,600,000 Deferred amounts:

For issuance discounts (207,431) - 17,286 (190,145) (17,286) For issuance premiums 3,366,466 (282,775) 3,083,691 282,775

Deferred amount on refunding

(2,992,822) - 157,517 (2,835,305) (157,517)

Pension obligation bonds 127,805,000 - (6,785,000) 121,020,000 2,190,000 Notes payable 11,864,718 1,023,890 (11,717,565) 1,171,043 147,153 Self-insurance liability 10,015,118 2,753,755 (2,203,862) 10,565,011 1,700,000 Compensated absences 18,431,473 16,007,365 (9,151,608) 25,287,230 9,536,146 Governmental activities long-

term liabilities

$ 310,721,490 $ 19,785,010 $ (34,433,101) $ 296,073,399 $ 18,294,603

Business-type activities:

Beginning Balance Additions Reductions Ending Balance Due Within

One Year

Notes payable $ 200,965 $ - $ (51,112) $ 149,853 $ 55,000 Compensated absences 243,087 335,263 (153,801) 424,549 136,585 Business-type activities long-term

liabilities $ 444,052 $ 335,263 $ (204,913) $ 574,402 $ 191,585

Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities are included as part of the above totals for governmental activities. $11,468,867 of the internal service funds’ long-term liabilities was included in the above amounts.

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Component units activities: Beginning Balance Additions Reductions Ending Balance Due Within One Year

Solano County Fair: County pension liability $ 776,208 $ - $ (29,435) $ 746,773 $ 10,534 Compensated absences 70,274 22,749 (14,548) 78,475 -

Total Solano County Fair $ 846,482 $ 22,749 $ (43,983) $ 825,248 $ 10,534

WIB:

Compensated absences $ 146,761 $ 142,374 $ 143,999 $ 145,136 $ 140,000

IV. OTHER INFORMATION A. Employee Retirement Plan 1. Plan Description The County’s defined benefit pension plan, the County’s Safety and Miscellaneous Plans, provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The County’s Safety and Miscellaneous Plans are part of the Public Agency portion of the California Public Employees Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions as well as other requirements is established by State statutes within the Public Employees’ Retirement Law. The County selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through County ordinance. CalPERS issues a separate comprehensive annual financial report; however, a separate report for the County’s Safety and Miscellaneous Plans are not available. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, PO BOX 942701 Sacramento, CA 94229. 2. Funding Policy Active plan members in the Fund are required to contribute 7.773% for miscellaneous and 8.966% for safety of their annual covered salary. The County is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The required employer contribution rate for the fiscal year ended June 30, 2008 was 11.766% for miscellaneous and 14.634% for public safety employees. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS. 3. Annual Pension Cost For fiscal year 2007/2008, the County’s annual pension cost was $41,738,331. The required contribution for fiscal year 2007/2008 was determined as part of the June 30, 2005 actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percentage of covered payroll. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary increases that range from 3.25% to 14.45% (13.15% for the safety plan) depending on age, service, and type of employment; (c) inflation of 3.00%; and (d) payroll growth of 3.25%. The actuarial value of the Fund’s assets was determined using a technique that smoothes the effect of short-term volatility of the market value of investments over a 15 year period. The Fund’s excess assets are being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period as of the June 30, 2005 actuarial valuation was 30 years for the miscellaneous and safety plans.

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The County’s annual pension cost and pension asset for the year ended June 30, 2008 were as follows:

Annual required contribution (ARC) $ 40,700,539 Interest on pension asset (10,481,283) Adjustment to the annual required contribution 11,519,075 Annual pension cost (APC) 41,738,331 Contributions made 40,700,539 Decrease in pension asset (1,037,792) Pension asset, beginning of year 135,647,275 Pension asset, end of year $ 134,609,483

Three-year trend information for the Plan

Fiscal Year Ending APC Contribution

Percentage of APC

Contributed Net Pension

Asset 6/30/06 $ 31,690,137 $ 72,881,848 230% $ 136,273,3546/30/07 34,178,742 33,552,663 98 135,647,2756/30/08 41,738,331 40,700,539 97 134,609,483

The County has made its ARC for each of the past three years. 4. Funded Status and Funding Progress – Pension Plan As of June 30, 2008, the most recent actuarial valuation date, the Miscellaneous and Safety plans were funded as noted below:

Plan

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Unfunded Actuarial Liability

Funded Status

Annual Covered Payroll

Unfunded Actuarial Liability as a % of Payroll

Miscellaneous $ 781,646,464 $ 744,049,108 $ 37,597,356 95.20% $ 161,687,049 23.30%

Safety 235,129,140 221,423,489 13,705,651 94.20% 37,478,773 36.60% The schedule of funding progress, presented as Required Supplementary Information (RSI) following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. B. Post Employment Health Care Benefits 1. Plan Description The County participates in a single-employer defined benefit healthcare plan administered by the California Public Employees’ Retirement System (CalPERS). The plan provides postemployment healthcare benefits to eligible retirees by contributing a minimum of $97 per month towards medical insurance benefits. This benefit is provided based on the Board of Supervisor’s election to participate under the Public Employees’ Medical and Hospital Care Act (PEMHCA) [Government Code Section 22750]. The County’s Board may elect to pay more than the minimum contribution; however, the

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County’s Board has elected to pay the minimum contribution of $97 per month per eligible retiree. The County has not executed a formal plan document that provides for these benefits and the plan does not have a name. The County established an irrevocable trust to pre-fund the other postemployment Annual Required Contribution benefits with Public Agency Retirement Services (PARS). 2. Funding Policy The County’s minimum required contribution is set by Government Code Section 22892. Effective January 1, 2009, the CalPERS Board will adjust the rate to reflect any change in the medical care component of the Consumer Price Index. Contribution requirements in excess of the minimum for plan members and the County are established and may be amended by the Board of Supervisors and the employee associations. Currently, plan members are required to pay the balance of the premiums. A one-time employer contribution of $1,808,824 was made on February 28, 2008. This contribution was not reflected in the January 1, 2007 actuarial valuation. During the fiscal year ended June 30, 2008, the County contributed $3,279,801 to the plan, including pay-as-you-go premiums of $175,730. The purpose of these contributions was to cover the Annual Required Contribution rate of 1.8% of covered payroll (annual payroll of active employees covered by the plan) and to prefund the postemployment medical benefits. 3. Annual OPEB Cost and Net OPEB Asset The County’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The County’s current ARC rate is 1.8% of annual covered payroll. The following table shows the components of the County’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the County’s net OPEB asset:

Annual Required Contribution (ARC) $ 3,120,000 Adjustment to ARC - Annual OPEB Cost (expense) 3,120,000 Contributions Made (3,279,801) Increase in Net OPEB Asset (159,801) Net OPEB Asset, July 1, 2007 - Net OPEB Asset, June 30, 2008 $ (159,801) % of annual OPEB cost contributed 105%

For fiscal year 2008, the County’s annual OPEB cost (expense) of $3,279,801 was equal to the ARC. Since this fiscal year is the transition year, information on the County’s annual OPEB cost, percentage of Annual OPEB Cost Contributed, and Net OPEB Asset is only available for the current fiscal year, as presented on the following page:

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Fiscal Year

Ended Annual

OPEB Cost

Percentage of Annual OPEB

Cost Contributed

Net OPEB Asset

6/30/2008 $3,279,801 105% $ 159,801

4. Funded Status and Funding Progress The funded status of the plan as of January 1, 2007, the most recent actuarial valuation date, was as follows:

Actuarially accrued liability (AAL) $ 23,331,000 Actuarial value of plan assets - Unfunded actuarial accrued liability (UAAL) $ 23,331,000 Funded ratio (actuarial value of plan assets/AAL) 0% Covered payroll (active plan members) $ 174,910,000 UAAL as a percentage of covered payroll 13.34%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress is presented as required supplementary information following the notes to the financial statements. 5. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the County’s January 1, 2007 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 7.75 percent investment rate of return (net of administrative expenses) and an annual healthcare cost trend rate between 10.4% - 11.7% initially, reduced by decrements to an ultimate rate of 4.5% after 10 years. Both rates included a 3% inflation assumption. The UAAL is being amortized as a level percentage of projected payroll on a closed basis. The amortization period was 30 years. C. Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the County carries insurance. Premiums are paid through the Risk Management Internal Service Fund. The County participates in property and

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general liability insurance programs organized by the California State Association of Counties – Excess Insurance Authority (CSAC-EIA), a joint powers authority created to provide self-insurance programs for its 53 member counties. Each county has a representative on the Joint Powers Board, which governs management, financing and budgeting of CSAC-EIA activities. The County paid premiums totaling $4,489,983 during the fiscal year ended June 30, 2008. The County participates in the CSAC-EIA Property Program. The County’s deductible is $5,000 per occurrence. The County has primary coverage up to $6,000,000. Effective July 1, 2003, the County elected to self-insure for the County’s workers’ compensation program. The County has a self-insured retention level of $125,000 per occurrence, and will continue to participate in excess coverage subject to statutory limits. Based on the current trends of the claims filed, the County is expecting a payout of $1,700,000 in the next fiscal year. The governmental and proprietary funds contribute amounts to the Risk Management Internal Service Fund based on actuarially determined estimates of the settlements. Such estimates are generally based upon a 90% confidence level. As of June 30, 2008, the accrued loss contingency for the County’s workers’ compensation program was $10,310,000 and is reported as a liability in the Risk Management Internal Service Fund. Effective November 1, 1998, the County elected to fully insure the County’s general liability coverage under the CSAC-EIA Primary General Liability Program. The County no longer self-insures for this risk. The County continues to be liable for all claims incurred prior to November 1, 1998, with a $10,000 deductible per claim. As of June 30, 2008, the accrued loss contingency for the general liability claims incurred prior to November 1, 1998 was $255,011 and is reported as a liability in the Risk Management Internal Service Fund. The County also participates in excess coverage up to $15,000,000 with an additional $10,000,000 of coverage through the Optional, Excess Liability Program. In County management’s opinion, the liability reported is adequate to cover any potential claims not covered by insurance. Insurance and claims expenses are recorded in the Risk Management Internal Service Fund. Insurance expenses represent changes in the estimate of the amounts needed to pay general liability claims incurred prior to November 1, 1998, workers’ compensation claims, as well as premiums paid to CSAC-EIA for the property, primary general liability, excess liability and excess workers ’ compensation programs. The County does not believe that any unreported general liability claims incurred prior to November 1, 1998 will have a material effect on the financial statements. Revenues for the Risk Management Internal Service Fund are represented by charges to other County funds based on each fund’s allocated share of the insurance expenses. Settled claims have not exceeded coverage since the effective dates. Changes in the Risk Management Internal Service Fund’s accrued loss contingency amount for general liability and worker’s compensation for the years ended June 30, 2008 and 2007 were:

Current Year Claims and Beginning Changes in Claim Ending

Year Ended Liability Estimates Payments Liability June 30, 2007 $ 10,836,817 $ 1,181,738 $ (2,003,437) $ 10,015,118 June 30, 2008 10,015,118 2,735,024 (2,185,131) 10,565,011

D. Commitments and Contingencies The County is exposed to various types of claims and litigation arising from its normal operations. The ultimate outcome of these matters is not presently determinable. However, in County management's opinion, these matters should not have a significant adverse effect on the County's financial position.

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The County is a defendant in a collective action lawsuit for the alleged unpaid overtime wages under the Fair Labor Standards Act (FLSA) for Bargaining Unit 13 (Correctional Officers) for the period September 19, 2003 to September 19, 2006. Our attorneys are unable to reasonably estimate the amount of the contingency and are unable to determine the probability of an unfavorable outcome at this time. However, County Management believes that any potential payout has no significant impact to the County’s financial position. Amounts received or receivable under grants are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the County's management expects such amounts, if any, to be immaterial. The South County Government Center Project has a total budget of $37.7 million. The project includes the construction of a 58,000 square foot, three-story Health & Social Services (H&SS) office building and clinic along with the renovation of the existing H&SS building. The anticipated completion date is October 2010. The commitments for this project as of June 30, 2008 were $7.4 million. The Public Health Laboratory Facility Project in Fairfield has a total budget of $19.2 million. The project consists of a two-story, 30,000 gross square foot building and the purchase of additional land for parking. The anticipated completion date is September 2009. The commitments for this project as of June 30, 2008 were $1.03 million. E. New Accounting Pronouncements The County will implement the following new accounting pronouncements issued by the GASB. Statement No. 49 – Accounting and Financial Reporting for Pollution Remediation Obligations The objective of this Statement will enhance the usefulness and comparability of pollution remediation obligation information reported by State and other local governments by setting uniform standards requiring more timely and complete reporting of those obligations and by requiring all governments to account for pollution remediation obligations in the same manner, including required reporting of pollution remediation obligations that previously may not have been reported. Statement No. 49 will be implemented by the County during FY 2008/09. Statement No. 51 – Accounting and Financial Reporting for Intangible Assets The objective of this Statement is to establish accounting and financial requirements for intangible assets to reduce inconsistencies in the accounting and financial reporting of such assets among state and local governments. This statement also provides authoritative guidance that specifically addresses the nature of the intangible assets including internally generated intangible assets. Statement No. 51 will be implemented by the County during FY 2009/10. F. Subsequent Events The County’s Series B-1 Pension Obligation Bonds, in the amount of $15 million, were paid off in July 2008, ahead of the schedule. By paying off the bonds ahead of schedule the County would realize savings of about $300,000 annually over the remaining 13 years.

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REQUIRED SUPPLEMENTARY INFORMATION

COUNTY OF SOLANO, CALIFORNIA

Schedules of Funding Progress For the Fiscal Year Ended June 30, 2008

Unaudited

Miscellaneous Plan Retirement Program

Valuation Date

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Unfunded Actuarial Liability

Funded Status

Annual Covered Payroll

Unfunded Actuarial Liability as a % of Payroll

6/30/05 $ 647,322,805 $ 594,320,985 $ 53,001,820 91.8% $ 137,816,885 38.5%

6/30/06 712,653,528 678,791,077 33,862,451 95.2% 145,880,582 23.2%

6/30/07 781,646,464 744,049,108 37,597,356 95.2% 161,687,049 23.3%

Safety Plan

Retirement Program

Valuation Date

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Unfunded Actuarial Liability

Funded Status

Annual Covered Payroll

Unfunded Actuarial Liability as a % of Payroll

6/30/05 $ 194,045,928 $ 173,601,306 $ 20,444,622 89.5% $ 33,246,575 61.5%

6/30/06 215,339,825 203,675,580 11,664,245 94.6% 34,553,886 33.8%

6/30/07 235,129,140 221,423,489 13,705,651 94.2% 37,478,773 36.6%

Other Postemployment Benefits (OPEB) Plan

Valuation Date

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Unfunded Actuarial Liability

Funded Status

Annual Covered Payroll

Unfunded Actuarial Liability as a % of Payroll

1/01/07 $ 23,331,000 $ - $ 23,331,000 0% $ 174,910,000 13.34%

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Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 123,336,000$ 123,336,000$ 122,638,505$ (697,495)$ Licenses, permits and franchises 6,077,957 6,077,957 5,820,403 (257,554) Fines, forfeitures and penalties 2,510,800 2,510,800 2,407,979 (102,821) Use of money and property 4,071,400 4,110,900 5,049,647 938,747 Intergovernmental 22,054,393 22,374,083 25,051,335 2,677,252 Charges for services 37,205,917 37,329,584 36,662,865 (666,719) Miscellaneous 6,803,779 6,803,779 7,227,623 423,844

Total revenues 202,060,246 202,543,103 204,858,357 2,315,254

EXPENDITURESCurrent:

General governmentBOS-District 1 264,397 262,577 258,940 3,637 BOS-District 2 286,183 286,183 270,796 15,387 BOS-District 3 233,776 264,301 259,210 5,091 BOS-District 4 257,747 280,647 274,652 5,995 BOS-District 5 249,591 248,808 248,806 2 BOS-Administration 482,625 440,857 350,637 90,220 Administration 3,312,466 3,325,175 3,132,299 192,876 General Revenue 875,000 875,000 749,372 125,628 Employee Development & Recognition 680,674 934,044 555,186 378,858 General Services 16,240,610 17,365,472 15,667,488 1,697,984 Assessor 5,506,539 5,506,539 4,835,735 670,804 Auditor-Controller 4,192,844 4,193,095 3,724,342 468,753 Tax Collector/County Clerk 1,830,923 1,859,731 1,739,881 119,850 Treasurer 941,033 940,311 832,721 107,590 County Counsel 3,361,359 3,361,359 3,134,612 226,747 Delta Water Activities - 85,750 76,750 9,000 Human Resources 2,772,847 2,772,623 2,569,246 203,377 Registrar of Voters 4,224,587 4,219,487 4,172,429 47,058 Property Management 400,511 466,591 433,114 33,477

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

General FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Promotion 759,000 801,514 315,559 485,955 General Expenditures 9,963,467 10,855,512 9,022,539 1,832,973 Surveyor/Engineer 86,121 86,121 76,907 9,214 General Svcs. Special Revenue 5,268 26,525 10,507 16,018

Total general government 56,927,568 59,458,222 52,711,728 6,746,494 Public protection

Grand Jury 162,788 166,788 157,284 9,504 Agricultural Commissioner 2,780,431 2,842,334 2,606,635 235,699 Animal Care Services 2,311,015 2,347,139 2,277,660 69,479 Recorder 3,867,401 3,941,730 1,997,847 1,943,883 Environmental Management 10,064,203 11,045,267 9,614,956 1,430,311 LAFCO 446,923 445,422 428,683 16,739 Office of Family Violence Prevention 670,904 670,904 595,279 75,625

Total public protection 20,303,665 21,459,584 17,678,344 3,781,240 Public assistance

Indigent Burial General Relief 8,248 13,248 12,503 745 Veterans Services 576,429 575,447 565,357 10,090

Total public assistance 584,677 588,695 577,860 10,835 Education and recreation

Cooperative Extension Service 385,696 390,436 387,793 2,643 Vallejo Veterans Building 43,257 43,257 41,283 1,974

Total education and recreation 428,953 433,693 429,076 4,617 Debt service:

Principal 152,176 154,976 155,477 (501) Interest and other charges 12,815 12,815 9,513 3,302

Total debt service 164,991 167,791 164,990 2,801 Capital outlay:

Land - 50,000 50,000 - Construction in progress 350,000 170,000 - 170,000 Buildings and improvements 66,400 - - - Equipment 134,500 212,544 158,729 53,815

Total capital outlay 550,900 432,544 208,729 223,815 Total expenditures 78,960,754 82,540,529 71,770,727 10,769,802

Excess of revenues over expenditures 123,099,492 120,002,574 133,087,630 13,085,056

OTHER FINANCING SOURCES (USES)Transfers in 2,958,331 2,997,978 1,458,570 (1,539,408) Transfers out (142,953,061) (144,018,035) (135,623,904) 8,394,131 Sale of capital assets 60,000 60,000 106,890 46,890

Total other financing sources (uses) (139,934,730) (140,960,057) (134,058,444) 6,901,613

Net change in fund balance (16,835,238) (20,957,483) (970,814) 19,986,669 Fund balance - beginning 121,616,484 121,616,484 121,616,484 - Fund balance - ending 104,781,246$ 100,659,001$ 120,645,670$ 19,986,669$

The notes to required supplementary information are an integral part of this schedule.

74

Original Final Actual AmountsVariance with Final Budget

REVENUESLicenses, permits and franchises 375,313$ 375,313$ 11,792$ (363,521)$ Fines, forfeitures and penalties 807,319 807,319 633,520 (173,799) Use of money and property 345,603 345,603 290,258 (55,345) Intergovernmental 204,501,098 206,773,778 200,400,104 (6,373,674) Charges for services 19,008,314 19,051,314 17,675,097 (1,376,217) Miscellaneous 2,190,737 2,190,737 2,383,297 192,560

Total revenues 227,228,384 229,544,064 221,394,068 (8,149,996)

EXPENDITURESCurrent:

Health services 107,704,634 108,762,863 101,878,735 6,884,128 Public assistance 145,639,340 146,873,707 141,365,458 5,508,249

Capital outlay:Equipment 25,000 469,044 380,666 88,378

Total expenditures 253,688,974 256,105,614 243,624,859 12,480,755

Deficiency of revenues under expenditures (26,460,590) (26,561,550) (22,230,791) 4,330,759

OTHER FINANCING SOURCES (USES)f i ( )

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Health and Social Services Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Transfers in 36,004,677 36,204,648 30,910,826 (5,293,822) Transfers out (9,757,579) (10,005,839) (10,010,441) (4,602)

Total other financing sources (uses) 26,247,098 26,198,809 20,900,385 (5,298,424)

Net change in fund balance (213,492) (362,741) (1,330,406) (967,665) Fund balance - beginning 635,336 635,336 635,336 - Fund balance - ending 421,844$ 272,595$ (695,070)$ (967,665)$

The notes to required supplementary information are an integral part of this schedule.

75

Original Final Actual AmountsVariance with Final Budget

REVENUESLicenses, permits and franchises 176,565$ 176,565$ 175,271$ (1,294)$ Fines, forfeitures and penalties 1,906,686 1,931,686 2,412,008 480,322 Use of money and property 110,168 110,168 609,081 498,913 Intergovernmental 60,738,869 62,885,165 57,645,888 (5,239,277) Charges for services 8,858,784 8,895,871 9,480,597 584,726 Miscellaneous 1,500,982 1,497,606 1,662,366 164,760

Total revenues 73,292,054 75,497,061 71,985,211 (3,511,850)

EXPENDITURESCurrent:

Public protectionLaw Library 364,043 365,258 341,690 23,568 Department of Child Support Services 12,209,603 12,209,603 11,508,842 700,761 Homeland Security Grant 199,733 877,673 305,071 572,602 LLEBG 54,660 187,394 132,049 55,345 Sheriff Special Revenue Fund 50,031 85,719 60,147 25,572 DA Special Revenue 191,996 177,473 92,872 84,601 Sheriff Asset Forfeiture 152 152 152 - CJ Fac Temp Const Fund 8,334 8,334 8,334 - C th T C t F d 8 900 8 900 8 900

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Public Safety Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Courthouse Temp Const Fund 8,900 8,900 8,900 - District Attorney 18,978,916 19,291,495 18,718,292 573,203 Public Defender 9,351,919 9,662,793 9,662,791 2 Conflict Public Defender 2,910,551 2,755,514 2,751,317 4,197 Sheriff 76,485,017 76,823,327 72,485,194 4,338,133 Probation 32,807,817 33,726,432 30,650,357 3,076,075 Other Public Defense 2,309,642 2,812,358 2,812,358 - CMF Cases 129,683 234,683 231,921 2,762 JH Rec Hall-Ward 43,400 43,400 17,584 25,816

Total public protection 156,104,397 159,270,508 149,787,871 9,482,637 Capital outlay:

Land - Construction in progress - 488,272 205,567 282,705 Buildings and improvements 120,000 76,370 - 76,370 Equipment 946,934 1,351,166 895,559 455,607

Total capital outlay 1,066,934 1,915,808 1,101,126 814,682 Total expenditures 157,171,331 161,186,316 150,888,997 10,297,319

Deficiency of revenues under expenditures (83,879,277) (85,689,255) (78,903,786) 6,785,469

OTHER FINANCING SOURCES (USES)Transfers in 93,073,810 83,307,121 89,213,824 5,906,703 Transfers out (8,138,309) (8,606,697) (8,729,218) (122,521)

Total other financing sources (uses) 84,935,501 74,700,424 80,484,606 5,784,182

Net change in fund balance 1,056,224 (10,988,831) 1,580,820 12,569,651 Fund balance - beginning 4,889,816 4,889,816 4,889,816 - Fund balance - ending 5,946,040$ (6,099,015)$ 6,470,636$ 12,569,651$

The notes to required supplementary information are an integral part of this schedule.

76

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 2,907,970$ 2,907,970$ 2,174,625$ (733,345)$ Miscellaneous 500,000 500,000 - (500,000)

Total revenues 3,407,970 3,407,970 2,174,625 (1,233,345)

EXPENDITURESCurrent:

Health servicesTobacco Settlement 70,000 70,000 64,500 5,500

Excess of revenues over expenditures 3,337,970 3,337,970 2,110,125 (1,227,845)

OTHER FINANCING SOURCES (USES)Transfers in 1,452,620 1,452,620 - (1,452,620) Transfers out (5,347,620) (5,347,620) (3,357,558) 1,990,062

Total other financing sources (uses) (3,895,000) (3,895,000) (3,357,558) 537,442

Net change in fund balance (557,030) (557,030) (1,247,433) (690,403) Fund balance - beginning 56,025,049 56,025,049 56,025,049 - Fund balance - ending 55 468 019$ 55 468 019$ 54 777 616$ (690 403)$

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Tobacco Settlement Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Fund balance - ending 55,468,019$ 55,468,019$ 54,777,616$ (690,403)$

The notes to required supplementary information are an integral part of this schedule.

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COUNTY OF SOLANO, CALIFORNIA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION

FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Budgetary Information In accordance with provisions of Sections 29000 through 29144 of the California Governmental Code and other statutory provisions, commonly known as the County Budget Act, the County prepares and legally adopts a final balanced budget each fiscal year by July 1. An operating budget prepared on the modified accrual basis is adopted each fiscal year for the general, special revenue, capital projects and debt service funds. Public hearings are conducted on the proposed budget to review all appropriations and sources of financing. Any shortfall in revenues requires an equal reduction in appropriations. Expenditures are controlled at the object level for all departments within the County except for capital outlay expenditures, which are controlled at the sub object level. The legal level of control is at the department level. This is the level at which expenditures may not legally exceed appropriations. The Board must approve supplemental appropriations generally financed by unanticipated revenues during the year, and any other amendments or transfers. Pursuant to the Board of Supervisors’ Budget Policy, amendments or transfers of appropriations between object levels within a department may be authorized by the County Administrator's Office provided the total appropriation of the department is not changed. Therefore, final budget amounts in the accompanying required supplementary information are reported as amended. Individual budget amendments during the fiscal year ended June 30, 2008, were not material in relation to the original appropriations. The County uses an encumbrance system as an extension of budgetary accounting for the general, special revenue and capital projects funds to assist in controlling appropriations. Under this system, purchase orders, contracts and other commitments are recorded in order to reserve that portion of applicable appropriations. Encumbrances outstanding at year-end are recorded as reservations of fund balance since they do not constitute expenditures or liabilities. Outstanding encumbrances at year-end are automatically reappropriated the following year. Unencumbered and unexpended appropriations lapse at year-end.

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F

COMBINING AND INDIVIDUAL

UND STATEMENTS AND SCHEDULES

Other Governmental Funds

Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. This encompasses legal restrictions imposed by parties outside the government as well as those imposed by the governing body.

Capital Projects Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds.

Debt Service Funds

Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Debt service payments that do not involve the advance accumulation of resources, such as capital leases, are accounted for in the general fund or a special revenue fund.

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Special Revenue Funds

Capital Projects Funds

Debt Service Funds

Total Other Governmental Funds

ASSETSCash and investments 78,332,637$ 33,188,882$ 16,591,438$ 128,112,957$ Accounts receivable 901,383 - 5,966 907,349 Due from other agencies 4,177,135 83,729 225 4,261,089 Due from other funds 5,929 303,301 729,601 1,038,831 Other assets 2,685,480 - 1,013,158 3,698,638

Total assets 86,102,564$ 33,575,912$ 18,340,388$ 138,018,864$

LIABILITIES AND FUND BALANCESLiabilities:

Outstanding warrants 458,801$ 33,270$ -$ 492,071$ Payables 3,332,619 3,126,456 - 6,459,075 Deferred revenue 198,384 7,218 - 205,602 Due to other funds 951,584 3,246 303,301 1,258,131 Advance from other funds 114,742 - - 114,742 Oth li biliti 541 661 251 899 793 560

Other Governmental FundsJune 30, 2008

COUNTY OF SOLANO, CALIFORNIACombining Balance Sheet

Other liabilities 541,661 251,899 - 793,560 Due to other agencies 227,042 - - 227,042

Total liabilities 5,824,833 3,422,089 303,301 9,550,223

Fund balances:Reserved:

Long-term assets 2,444,855 - 1,013,158 3,458,013 Debt service - - 17,023,929 17,023,929 Encumbrances 5,531,641 26,410,058 - 31,941,699 Imprest cash 3,687 - - 3,687

Unreserved, undesignated 72,297,548 3,743,765 - 76,041,313 Total fund balances 80,277,731 30,153,823 18,037,087 128,468,641

Total liabilities and fund balances 86,102,564$ 33,575,912$ 18,340,388$ 138,018,864$

80

Special Revenue Funds

Capital Projects Funds

Debt Service Funds

Total Other Governmental Funds

REVENUESTaxes 13,938,859$ 1,951,850$ 458,019$ 16,348,728$ Licenses, permits and franchises 172,535 - - 172,535 Fines, forfeitures and penalties 5,047 - - 5,047 Use of money and property 3,434,160 1,490,507 (25,943) 4,898,724 Intergovernmental 27,838,558 1,000,681 112,500 28,951,739 Charges for services 11,864,665 37,641 1,619,390 13,521,696 Miscellaneous 371,072 - 812,808 1,183,880

Total revenues 57,624,896 4,480,679 2,976,774 65,082,349

EXPENDITURESCurrent:

General government 404,161 4,076,486 258,116 4,738,763 Public protection 2,853,411 1,624 - 2,855,035 Public ways and facilities 9,925,757 - - 9,925,757 Health services 5,763,826 - - 5,763,826 Education and recreation 21,863,720 - - 21,863,720

Debt service:Principal - - 11,529,942 11,529,942 Interest and other charges 2,392 - 13,159,559 13,161,951

Capital outlay 9 853 211 11 448 909 21 302 120

Other Governmental FundsFor the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Capital outlay 9,853,211 11,448,909 - 21,302,120 Total expenditures 50,666,478 15,527,019 24,947,617 91,141,114

Excess (deficiency) of revenues over (under) expenditures 6,958,418 (11,046,340) (21,970,843) (26,058,765)

OTHER FINANCING SOURCES (USES)Proceeds of long-term capital-related debt 1,023,891 - - 1,023,891 Transfers in 4,418,201 14,568,288 29,009,168 47,995,657 Transfers out (8,559,711) (2,882,242) (1,847,141) (13,289,094) Sale of capital assets 7,250 - - 7,250

Total other financing sources (uses) (3,110,369) 11,686,046 27,162,027 35,737,704

Net change in fund balances 3,848,049 639,706 5,191,184 9,678,939 Fund balances - beginning 76,429,682 29,514,117 12,845,903 118,789,702 Fund balances - ending 80,277,731$ 30,153,823$ 18,037,087$ 128,468,641$

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Nonmajor Special Revenue Funds Public Facilities Fees Fund – This fund is used to account for the collection of impact fees imposed on all new construction within all incorporated and unincorporated areas of the County. Library Fund – This fund is used to account for the County’s library services. Solano County Library offers professional innovative, cost-effective service by providing library materials, resources, information, entertainment and life long learning opportunities to enrich the lives of the people of Solano County. This fund is primarily funded through taxes and charges for services. Transportation Fund – This fund is used to provide transportation facilities and services for the benefit and convenience of the traveling public by providing a roadway system that is safe, well maintained, and efficient and without congestion. The fund is primarily funded through state and federal grants. First 5 Solano Fund – This fund is used to promote, support and improve early childhood development by fostering and partnering with community resources and programs that support healthy and safe children, families and community. The fund is state funded through Proposition 10, the California Children and Families First Act passed by voters in 1998. Homeacres Loan Program Fund – This fund is used to provide low interest loans and grants designed to correct health and safety hazards in deteriorated housing and extend the useful life of affordable housing units. The fund is state funded through a Community Development Block Grant (CDBG). Rural North Vacaville Water District Fund – This fund is used to account for the construction and maintenance of a public water distribution system to serve properties within the District’s boundary with potable water for home and garden use. The fund is funded through user charges to property owners in the District. Micrographics and Modernization Fund – This fund is used to account for the modernization, maintenance and continual improvements to provide modern and efficient records management systems at the County Recorder’s office. The fund is funded through the collection of charges for services.

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Other Special Revenue Funds: • East Vallejo Fire District Fund – This fund is used to provide fire protection services to

an area of East Vallejo. The funding for this district is through property taxes.

• Fish/Wildlife Propagation Fund – This fund is used to provide for the improvement of wildlife habitat and propagation, conservation and education in programs in Solano County. The funding for this program is fines, forfeitures and penalties.

• Housing Authority Fund – This fund is used to provide housing assistance through the

Section 8 Housing Assistance program for the unincorporated areas of Solano County. The funding for this program is through federal pass-through grants.

• Lighting Districts and Service Areas Funds - These funds are used to account for the

provision of overhead street lighting for specific service areas within the County. The funding for these areas is through property taxes allocated to each area.

• Parks and Recreation Fund – This fund is used to account for the provision of clean and

safe park areas and facilities in Solano County. The funding for this fund comes from state grants, charges for services and property taxes.

• Southeast Vallejo Redevelopment Settlement Fund – This fund is used to track revenues

from the City of Vallejo to the General Fund, resulting from the fiscal year 2000/2001 Southeast Vallejo Redevelopment Agreement between the County and the City of Vallejo.

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Public Facilities Fees Library Transportation First 5 Solano

ASSETSCash and investments 22,614,845$ 17,002,995$ 6,933,035$ 20,794,313$ Accounts receivable 475,490 115,408 3,057 293,259 Due from other agencies 300,000 462,345 2,525,883 854,781 Due from other funds - - 5,410 519 Other assets - 742,194 117,153 52,726

Total assets 23,390,335$ 18,322,942$ 9,584,538$ 21,995,598$

LIABILITIES AND FUND BALANCESLiabilities:

Outstanding warrants -$ 220,595$ 70,339$ 87,229$ Payables - 1,132,741 1,539,854 594,620 Deferred revenue - - - - Due to other funds - 29,059 17,534 493,126 Advance from other funds - - 114,742 - Other liabilities - - 541,661 - Due to other agencies 47,304 - 1,723 178,015

Total liabilities 47,304 1,382,395 2,285,853 1,352,990

Fund balances:

COUNTY OF SOLANO, CALIFORNIACombining Balance Sheet

Nonmajor Special Revenue FundsJune 30, 2008

Fund balances:Reserved:

Long-term assets - 742,194 117,153 - Encumbrances - 5,083,009 412,098 35,000 Imprest cash - 3,187 500 -

Unreserved, undesignated 23,343,031 11,112,157 6,768,934 20,607,608 Total fund balances 23,343,031 16,940,547 7,298,685 20,642,608

Total liabilities and fund balances 23,390,335$ 18,322,942$ 9,584,538$ 21,995,598$

84

Homeacres Loan Program

Rural North Vacaville Water

DistrictMicrographics &

ModernizationOther Special

Revenue Funds

Total Nonmajor Special Revenue

Funds

ASSETS1,178,854$ -$ 7,584,461$ 2,224,134$ 78,332,637$ Cash and investments

- - 3,450 10,719 901,383 Accounts receivable11,645 - - 22,481 4,177,135 Due from other agencies

- - - - 5,929 Due from other funds1,585,508 - - 187,899 2,685,480 Other assets2,776,007$ -$ 7,587,911$ 2,445,233$ 86,102,564$ Total assets

LIABILITIES AND FUND BALANCESLiabilities:

69,270$ -$ -$ 11,368$ 458,801$ Outstanding warrants2,176 - - 63,228 3,332,619 Payables

10,545 - - 187,839 198,384 Deferred revenue- - 409,370 2,495 951,584 Due to other funds- - - - 114,742 Advance from other funds- - - - 541,661 Other liabilities- - - - 227,042 Due to other agencies

81,991 - 409,370 264,930 5,824,833 Total liabilities

Fund balances:

COUNTY OF SOLANO, CALIFORNIACombining Balance Sheet

Nonmajor Special Revenue FundsJune 30, 2008

Fund balances:Reserved:

1,585,508 - - - 2,444,855 Long-term assets- - - 1,534 5,531,641 Encumbrances- - - - 3,687 Imprest cash

1,108,508 - 7,178,541 2,178,769 72,297,548 Unreserved, undesignated2,694,016 - 7,178,541 2,180,303 80,277,731 Total fund balances 2,776,007$ -$ 7,587,911$ 2,445,233$ 86,102,564$ Total liabilities and fund balances

85

Public Facilities Fees Library Transportation First 5 Solano

Homeacres Loan Program

REVENUESTaxes -$ 11,502,060$ 1,292,505$ -$ -$ Licenses, permits and franchises - - 172,535 - - Fines, forfeitures and penalties - - - - - Use of money and property 912,162 667,851 267,631 1,000,939 82,498 Intergovernmental - 2,918,950 17,336,146 5,215,481 8,900 Charges for services 3,571,282 5,778,124 1,278,831 - 102 Miscellaneous - 114,223 139,772 91,381 -

Total revenues 4,483,444 20,981,208 20,487,420 6,307,801 91,500

EXPENDITURESCurrent:

General government 403,428 - 733 - - Public protection - - - - 25,214 Public ways and facilities - - 9,799,485 - - Health services - - - 5,763,826 - Education and recreation - 20,431,907 - - -

Debt service:

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Special Revenue FundsFor the Fiscal Year Ended June 30, 2008

Interest and other charges - - 2,392 - - Capital outlay - 573,726 9,262,002 - -

Total expenditures 403,428 21,005,633 19,064,612 5,763,826 25,214 Excess (deficiency) of revenues over (under) expenditures 4,080,016 (24,425) 1,422,808 543,975 66,286

OTHER FINANCING SOURCES (USES)Proceeds of long-term capital-related debt 1,023,891 - - - - Transfers in - 3,009,439 1,034,795 - - Transfers out (4,864,263) (1,337,863) (894,423) (57,323) - Sale of capital assets - - 7,250 - -

Total other financing sources (uses) (3,840,372) 1,671,576 147,622 (57,323) -

Net change in fund balances 239,644 1,647,151 1,570,430 486,652 66,286 Fund balances - beginning 23,103,387 15,293,396 5,728,255 20,155,956 2,627,730 Fund balances - ending 23,343,031$ 16,940,547$ 7,298,685$ 20,642,608$ 2,694,016$

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Rural North Vacaville Water

DistrictMicrographics &

Modernization

Other Special Revenue

Funds

Total Nonmajor Special Revenue

FundsREVENUES

-$ -$ 1,144,294$ 13,938,859$ Taxes- - - 172,535 Licenses, permits and franchises- - 5,047 5,047 Fines, forfeitures and penalties464 347,199 155,416 3,434,160 Use of money and property- - 2,359,081 27,838,558 Intergovernmental

72,101 627,284 536,941 11,864,665 Charges for services- - 25,696 371,072 Miscellaneous

72,565 974,483 4,226,475 57,624,896 Total revenues

EXPENDITURESCurrent:

- - - 404,161 General government- - 2,828,197 2,853,411 Public protection

92,544 - 33,728 9,925,757 Public ways and facilities- - - 5,763,826 Health and sanitation- - 1,431,813 21,863,720 Education and recreation

Debt service:

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Special Revenue FundsFor the Fiscal Year Ended June 30, 2008

- - - 2,392 Interest and other charges- - 17,483 9,853,211 Capital outlay

92,544 - 4,311,221 50,666,478 Total expenditures

(19,979) 974,483 (84,746) 6,958,418 Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES)- - - 1,023,891 Proceeds of long-term capital-related debt

15,268 - 358,699 4,418,201 Transfers in(184,548) (409,370) (811,921) (8,559,711) Transfers out

- - - 7,250 Sale of capital assets(169,280) (409,370) (453,222) (3,110,369) Total other financing sources (uses)

(189,259) 565,113 (537,968) 3,848,049 Net change in fund balances189,259 6,613,428 2,718,271 76,429,682 Fund balances - beginning

-$ 7,178,541$ 2,180,303$ 80,277,731$ Fund balances - ending

87

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 775,675$ 775,675$ 912,162$ 136,487$ Charges for services 6,895,329 6,892,329 3,571,282 (3,321,047)

Total revenues 7,671,004 7,668,004 4,483,444 (3,184,560)

EXPENDITURESCurrent:

General governmentPublic facilities fees 442,088 482,088 403,428 78,660

Excess of revenues overexpenditures 7,228,916 7,185,916 4,080,016 (3,105,900)

OTHER FINANCING SOURCES (USES)Proceeds of long-term capital-related debt - 1,098,000 1,023,891 (74,109) Transfers out (18,586,231) (21,844,231) (4,864,263) 16,979,968

Total other financing sources (uses) (18,586,231) (20,746,231) (3,840,372) 16,905,859

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Public Facilities Fees Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Net change in fund balance (11,357,315) (13,560,315) 239,644 13,799,959 Fund balance - beginning 23,103,387 23,103,387 23,103,387 - Fund balance - ending 11,746,072$ 9,543,072$ 23,343,031$ 13,799,959$

88

Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 11,966,037$ 11,973,021$ 11,502,060$ (470,961)$ Use of money and property 364,635 364,635 667,851 303,216 Intergovernmental 2,234,156 2,942,725 2,918,950 (23,775) Charges for services 4,187,083 4,187,083 5,778,124 1,591,041 Miscellaneous 112,700 112,700 114,223 1,523

Total revenues 18,864,611 19,580,164 20,981,208 1,401,044

EXPENDITURESCurrent:

Education and recreationLibrary special revenue 169,400 189,514 126,661 62,853 Library Zone 1 10,612 17,504 17,504 - Library Zone 6 517 517 397 120 Library Zone 7 6,957 6,957 5,447 1,510 Library Zone 2 576 668 540 128 Library 22,188,406 24,999,799 20,281,358 4,718,441

Total education and recreation 22 376 468 25 214 959 20 431 907 4 783 052

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Library Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Total education and recreation 22,376,468 25,214,959 20,431,907 4,783,052 Capital outlay:

Construction in progress - 4,305,849 482,985 3,822,864 Equipment 750,000 696,630 90,741 605,889

Total capital outlay 750,000 5,002,479 573,726 4,428,753 Total expenditures 23,126,468 30,217,438 21,005,633 9,211,805

Deficiency of revenues under expenditures (4,261,857) (10,637,274) (24,425) 10,612,849

OTHER FINANCING SOURCES (USES)Transfers in 755,551 4,046,566 3,009,439 (1,037,127) Transfers out (1,292,744) (1,345,759) (1,337,863) 7,896

Total other financing sources (uses) (537,193) 2,700,807 1,671,576 (1,029,231)

Net change in fund balance (4,799,050) (7,936,467) 1,647,151 9,583,618 Fund balance - beginning 15,293,396 15,293,396 15,293,396 - Fund balance - ending 10,494,346$ 7,356,929$ 16,940,547$ 9,583,618$

89

Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 1,320,869$ 1,320,869$ 1,292,505$ (28,364)$ Licenses, permits and franchises 194,500 194,500 172,535 (21,965) Use of money and property 266,015 266,015 267,631 1,616 Intergovernmental 13,236,779 17,200,779 17,336,146 135,367 Charges for services 1,289,366 1,289,366 1,278,831 (10,535) Miscellaneous 93,500 93,500 139,772 46,272

Total revenues 16,401,029 20,365,029 20,487,420 122,391

EXPENDITURESCurrent:

General governmentSurvey monument 57,108 57,108 733 56,375

Public ways and facilitiesTransportation department 10,545,990 11,872,824 9,799,485 2,073,339

Debt service:Interest and other charges - - 2,392 (2,392)

Capital outlay:

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Transportation Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Capital outlay:Construction in progress 10,934,000 13,382,266 8,754,271 4,627,995 Infrastructure - - 441,742 (441,742) Equipment 195,600 1,315,600 65,989 1,249,611

Total capital outlay 11,129,600 14,697,866 9,262,002 5,435,864 Total expenditures 21,732,698 26,627,798 19,064,612 7,565,578

Excess (deficiency) of revenues over (under) expenditures (5,331,669) (6,262,769) 1,422,808 7,687,969

OTHER FINANCING SOURCES (USES)Transfers in 1,287,306 1,377,306 1,034,795 (342,511) Transfers out (958,845) (1,064,113) (894,423) 169,690 Sale of capital assets - - 7,250 7,250

Total other financing sources (uses) 328,461 313,193 147,622 (165,571)

Net change in fund balance (5,003,208) (5,949,576) 1,570,430 7,520,006 Fund balance - beginning 5,728,255 5,728,255 5,728,255 - Fund balance - ending 725,047$ (221,321)$ 7,298,685$ 7,520,006$

90

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 855,000$ 850,000$ 1,000,939$ 150,939$ Intergovernmental 4,765,587 4,814,587 5,215,481 400,894 Miscellaneous 44,000 74,430 91,381 16,951

Total revenues 5,664,587 5,739,017 6,307,801 568,784

EXPENDITURESCurrent:

Health servicesFirst 5 Solano 6,284,575 6,446,973 5,763,826 683,147 Excess (deficiency) of revenues over

(under) expenditures (619,988) (707,956) 543,975 1,251,931

OTHER FINANCING USESTransfers out (44,557) (51,557) (57,323) (5,766)

Net change in fund balance (664,545) (759,513) 486,652 1,246,165 Fund balance - beginning 20,155,956 20,155,956 20,155,956 -

d b l di 19 491 411$ 19 396 443$ 20 642 608$ 1 246 16$

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

First 5 Solano Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Fund balance - ending 19,491,411$ 19,396,443$ 20,642,608$ 1,246,165$

91

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 50,000$ 50,000$ 82,498$ 32,498$ Intergovernmental 200,000 200,000 8,900 (191,100) Charges for services 102 102 102 -

Total revenues 250,102 250,102 91,500 (158,602)

EXPENDITURESCurrent:

Public protectionHomeacres Loan Program 81,500 83,801 25,214 58,587

Net change in fund balance 168,602 166,301 66,286 (100,015) Fund balance - beginning 2,627,730 2,627,730 2,627,730 - Fund balance - ending 2,796,332$ 2,794,031$ 2,694,016$ (100,015)$

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Homeacres Loan Program Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

92

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property - - 464 464 Charges for services 186,653 193,062 72,101 (120,961)

Total revenues 186,653 193,062 72,565 (120,497)

EXPENDITURESCurrent:

Public ways and facilitiesRural North Vacaville Water District 203,144 307,056 92,544 214,512

Deficiency of revenues under expenditures (16,491) (113,994) (19,979) 94,015

OTHER FINANCING SOURCES (USES)Transfers in - 15,268 15,268 - Transfers out - - (184,548) (184,548)

Total other financing sources (uses) - 15,268 (169,280) (184,548)

Net change in fund balance (16 491) (98 726) (189 259) (90 533)

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Rural North Vacaville Water District Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Net change in fund balance (16,491) (98,726) (189,259) (90,533) Fund balance - beginning 189,259 189,259 189,259 - Fund balance - ending 172,768$ 90,533$ -$ (90,533)$

93

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 300,000$ 300,000$ 347,199$ 47,199$ Charges for services 1,152,000 1,152,000 627,284 (524,716)

Total revenues 1,452,000 1,452,000 974,483 (477,517)

OTHER FINANCING USESTransfers out (2,059,242) (2,059,242) (409,370) 1,649,872

Net change in fund balance (607,242) (607,242) 565,113 1,172,355 Fund balance - beginning 6,613,428 6,613,428 6,613,428 - Fund balance - ending 6,006,186$ 6,006,186$ 7,178,541$ 1,172,355$

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Micrographics and Modernization Special Revenue FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

94

Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 1,150,551$ 1,164,590$ 1,144,294$ (20,296)$ Fines, forfeitures and penalties 8,000 8,000 5,047 (2,953) Use of money and property 105,220 108,882 155,416 46,534 Intergovernmental 2,255,891 2,322,957 2,359,081 36,124 Charges for services 471,322 471,322 536,941 65,619 Miscellaneous 6,475 22,076 25,696 3,620

Total revenues 3,997,459 4,097,827 4,226,475 128,648

EXPENDITURESCurrent:

Public protectionHousing Authority of Solano County 2,169,602 2,236,668 2,236,668 - East Vallejo Fire District 544,042 571,856 571,856 - Fish/Wildlife Propagation 21,234 21,234 19,673 1,561

Total public protection 2,734,878 2,829,758 2,828,197 1,561 Public ways and facilities

County Consolidated Service Area 345 508 345 508 33 728 311 780

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Other Special Revenue FundsSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

County Consolidated Service Area 345,508 345,508 33,728 311,780 Education and recreation

Parks & Recreation 1,442,975 1,439,576 1,431,813 7,763 Capital outlay:

Equipment - 19,000 17,483 1,517 Total expenditures 4,523,361 4,633,842 4,311,221 322,621

Deficiency of revenues under expenditures (525,902) (536,015) (84,746) 451,269

OTHER FINANCING SOURCES (USES)Transfers in 358,699 358,699 358,699 - Transfers out (947,018) (947,018) (811,921) 135,097

Total other financing sources (uses) (588,319) (588,319) (453,222) 135,097

Net change in fund balance (1,114,221) (1,124,334) (537,968) 586,366 Fund balance - beginning 2,718,271 2,718,271 2,718,271 - Fund balance - ending 1,604,050$ 1,593,937$ 2,180,303$ 586,366$

95

Nonmajor Capital Projects Funds

Fairfield Downtown Project Fund – This fund is used to account for the funding and construction activity for the new County administration complex in downtown Fairfield. Accumulated Capital Outlay Fund – This fund is used to account for all other countywide capital projects not accounted for in a specific capital projects fund. Juvenile Hall Project Fund – This fund is used to account specifically for the construction of the new Juvenile Hall Facility. This building is expected to accommodate the increasing number of wards and to provide safe and secure housing for detained youngsters.

96

Fairfield Downtown Project

Accumulated Capital Outlay

Juvenile Hall Project

Total Nonmajor Capital Projects

FundsASSETS

Cash and investments 517,909$ 32,393,411$ 277,562$ 33,188,882$ Due from other agencies - 83,729 - 83,729 Due from other funds - 303,301 - 303,301

Total assets 517,909$ 32,780,441$ 277,562$ 33,575,912$

LIABILITIES AND FUND BALANCESLiabilities:

Outstanding warrants -$ 33,270$ -$ 33,270$ Payables 45,021 3,081,435 - 3,126,456 Deferred revenue - 7,218 - 7,218 Due to other funds - 3,246 - 3,246 Other liabilities - 251,899 - 251,899

Total liabilities 45,021 3,377,068 - 3,422,089

Fund balance:Reserved:

Encumbrances - 26,410,058 - 26,410,058 Unreserved undesignated 472 888 2 993 315 277 562 3 743 765

COUNTY OF SOLANO, CALIFORNIA

Nonmajor Capital Projects FundsJune 30, 2008

Combining Balance Sheet

Unreserved, undesignated 472,888 2,993,315 277,562 3,743,765 Total fund balances 472,888 29,403,373 277,562 30,153,823

Total liabilities and fund balances 517,909$ 32,780,441$ 277,562$ 33,575,912$

97

Fairfield Downtown Project

Accumulated Capital Outlay

Juvenile Hall Project

Total Nonmajor Capital Projects

FundsREVENUESTaxes -$ 1,951,850$ -$ 1,951,850$ Use of money and property 39,234 1,438,111 13,162 1,490,507 Intergovernmental - 1,000,681 - 1,000,681 Charges for services 36,181 1,460 - 37,641

Total revenues 75,415 4,392,102 13,162 4,480,679

EXPENDITURESCurrent:

General government 68,905 4,007,581 - 4,076,486 Public protection - - 1,624 1,624

Capital outlay - 11,448,909 - 11,448,909 Total expenditures 68,905 15,456,490 1,624 15,527,019

Excess (deficiency) of revenues over (under) expenditures 6,510 (11,064,388) 11,538 (11,046,340)

OTHER FINANCING SOURCES (USES)Transfers in - 14,568,288 - 14,568,288 Transfers out (1,045,589) (1,836,653) - (2,882,242)

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Capital Projects FundsFor the Fiscal Year Ended June 30, 2008

Total other financing sources (uses) (1,045,589) 12,731,635 - 11,686,046

Net change in fund balances (1,039,079) 1,667,247 11,538 639,706 Fund balances - beginning 1,511,967 27,736,126 266,024 29,514,117 Fund balances - ending 472,888$ 29,403,373$ 277,562$ 30,153,823$

98

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 19,852$ 19,852$ 39,234$ 19,382$ Charges for services 36,181 36,181 36,181 -

Total revenues 56,033 56,033 75,415 19,382

EXPENDITURESCurrent:

General governmentGovernment Center Complex Project - 70,260 68,905 1,355 Excess (deficiency) of revenues over

(under) expenditures 56,033 (14,227) 6,510 20,737

OTHER FINANCING USES Transfers out (1,045,589) (1,045,589) (1,045,589) -

Net change in fund balance (989,556) (1,059,816) (1,039,079) 20,737 Fund balance - beginning 1,511,967 1,511,967 1,511,967 -

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Fairfield Downtown Project Capital Projects FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Fund balance - ending 522,411$ 452,151$ 472,888$ 20,737$

99

Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 1,839,893$ 1,907,372$ 1,951,850$ 44,478$ Use of money and property 557,000 883,632 1,438,111 554,479 Intergovernmental 3,697,350 3,697,350 1,000,681 (2,696,669) Charges for services 787 787 1,460 673

Total revenues 6,095,030 6,489,141 4,392,102 (2,097,039)

EXPENDITURESCurrent:

General governmentCapital Projects 2,170,303 10,885,929 4,007,581 6,878,348

Capital outlay:Land - 4,010,485 3,945,938 64,547 Construction in progress 140,692,652 146,773,559 7,478,301 139,295,258 Equipment 150,000 156,054 5,670 150,384 Artwork - 138,900 19,000 119,900

Total capital outlay 140,842,652 151,078,998 11,448,909 139,630,089 Total expenditures 143,012,955 161,964,927 15,456,490 146,508,437

Deficiency of revenues under expenditures (136 917 925) (155 475 786) (11 064 388) 144 411 398

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Accumulated Capital Outlay Capital Projects FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Deficiency of revenues under expenditures (136,917,925) (155,475,786) (11,064,388) 144,411,398

OTHER FINANCING SOURCES (USES) Transfers in 30,150,000 30,568,288 14,568,288 (16,000,000) Transfers out (1,660,000) (1,868,298) (1,836,653) 31,645

Total other financing sources (uses) 28,490,000 28,699,990 12,731,635 (15,968,355)

Net change in fund balance (108,427,925) (126,775,796) 1,667,247 128,443,043 Fund balance - beginning 27,736,126 27,736,126 27,736,126 - Fund balance - ending (80,691,799)$ (99,039,670)$ 29,403,373$ 128,443,043$

100

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property -$ -$ 13,162$ 13,162$

EXPENDITURESCurrent:

Public protectionJuvenile Hall Project 1,624 1,624 1,624 -

Net change in fund balance (1,624) (1,624) 11,538 13,162 Fund balance - beginning 266,024 266,024 266,024 - Fund balance - ending 264,400$ 264,400$ 277,562$ 13,162$

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Juvenile Hall Project Capital Projects FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

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102

Nonmajor Debt Service Funds Rural North Vacaville Water District Fund – This fund was established for the payment of the debt used to construct the Rural North Vacaville water distribution system. This is funded through special tax assessments to the landowners.

1998 Certificates of Participation Fund – This fund was established for the payment of the debt used to remodel the court facilities and to purchase the new Court Automated Case Management System (ACMS). This payment is funded through Public Facilities Fees and the Courts. 1999 Certificates of Participation Fund – This fund was established for the payment of debt used to acquire a 4.89-acre parcel of undeveloped land and construction of the new Health and Social Services administration building, and defease the 1994 Certificates of Participation. This payment is funded through the Health and Social Services Department. Government Center Debt Service Fund – This fund was established for the payment of the debt used in the construction of the Solano County Government Center, Probation facility and improvement of the Cogeneration Plant and Fairfield library. Pension Debt Service Fund – This fund was established for the payment of debt used to prepay the County’s Unfunded Actuarial Accrued Liability.

103

Rural North Vacaville

Water District

1998 Certificates of Participation

1999 Certificates of Participation

ASSETSCash and investments -$ 598,686$ 3,527,000$ Accounts receivable - - - Due from other agencies - - - Due from other funds - - - Other assets - - -

Total assets -$ 598,686$ 3,527,000$

LIABILITIES AND FUND BALANCESLiabilities:

Due to other funds -$ -$ 303,301$

Fund balances:Reserved:

Long-term assets - - -

COUNTY OF SOLANO, CALIFORNIACombining Balance Sheet

Nonmajor Debt Service FundsJune 30, 2008

o g e sse sDebt service - 598,686 3,223,699

Total fund balances - 598,686 3,223,699 Total liabilities and fund balances -$ 598,686$ 3,527,000$

104

Government Center Debt Service Fund

Pension Debt Service Fund

Total Nonmajor Debt Service Funds

ASSETS469,317$ 11,996,435$ 16,591,438$ Cash and investments

- 5,966 5,966 Accounts receivable- 225 225 Due from other agencies- 729,601 729,601 Due from other funds- 1,013,158 1,013,158 Other assets

469,317$ 13,745,385$ 18,340,388$ Total assets

LIABILITIES AND FUND BALANCESLiabilities:

-$ -$ 303,301$ Due to other funds

Fund balances:Reserved:

- 1,013,158 1,013,158 Long-term assets

Nonmajor Debt Service FundsJune 30, 2008

COUNTY OF SOLANO, CALIFORNIACombining Balance Sheet

, , , , o g e sse s469,317 12,732,227 17,023,929 Debt service469,317 13,745,385 18,037,087 Total fund balances 469,317$ 13,745,385$ 18,340,388$ Total liabilities and fund balances

105

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Debt Service FundsFor the Fiscal Year Ended June 30, 2008

Rural North Vacaville

Water District

1998 Certificates of Participation

1999 Certificates of Participation

REVENUESTaxes 458,019$ -$ -$ Use of money and property 26,726 23,072 106,959 Intergovernmental - - - Charges for services - - 35 Miscellaneous - - -

Total revenues 484,745 23,072 106,994

EXPENDITURESCurrent:

General government 3,232 73,687 17,971 Debt service:

Principal 289,942 200,000 1,550,000 Interest and other charges 59,252 134,934 1,076,041

Total expenditures 352,426 408,621 2,644,012 Excess (deficiency) of revenues over( y) (under) expenditures 132,319 (385,549) (2,537,018)

Transfers in - 269,468 2,734,215 Transfers out (1,847,141) - -

Total other financing sources (uses) (1,847,141) 269,468 2,734,215

Net change in fund balances (1,714,822) (116,081) 197,197 Fund balances - beginning 1,714,822 714,767 3,026,502 Fund balances - ending -$ 598,686$ 3,223,699$

OTHER FINANCING SOURCES (USES)

106

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Debt Service FundsFor the Fiscal Year Ended June 30, 2008

Government Center Debt Service Fund

Pension Debt Service Fund

Total Nonmajor Debt Service Funds

REVENUES-$ -$ 458,019$ Taxes

60,429 (243,129) (25,943) Use of money and property112,500 - 112,500 Intergovernmental

1,619,355 - 1,619,390 Charges for services- 812,808 812,808 Miscellaneous

1,792,284 569,679 2,976,774 Total revenues

EXPENDITURESCurrent:

15,636 147,590 258,116 General governmentDebt service:

2,705,000 6,785,000 11,529,942 Principal5,253,094 6,636,238 13,159,559 Interest and other charges7,973,730 13,568,828 24,947,617 Total expenditures

Excess (deficiency) of revenues over( y)(6,181,446) (12,999,149) (21,970,843) (under) expenditures

6,158,154 19,847,331 29,009,168 Transfers in- - (1,847,141) Transfers out

6,158,154 19,847,331 27,162,027 Total other financing sources (uses)

(23,292) 6,848,182 5,191,184 Net change in fund balances492,609 6,897,203 12,845,903 Fund balances - beginning469,317$ 13,745,385$ 18,037,087$ Fund balances - ending

OTHER FINANCING SOURCES (USES)

107

Original Final Actual AmountsVariance with Final Budget

REVENUESTaxes 916,000$ 916,000$ 458,019$ (457,981)$ Use of money and property 70,000 70,000 26,726 (43,274)

Total revenues 986,000 986,000 484,745 (501,255)

EXPENDITURESCurrent:

General governmentRNVWD Debt Service Fund 115,819 16,000 3,232 12,768

Debt service:Principal 583,985 583,985 289,942 294,043 Interest and other charges 324,918 324,918 59,252 265,666

Total debt service 908,903 908,903 349,194 559,709 Total expenditures 1,024,722 924,903 352,426 572,477

Excess (deficiency) of revenues over (under) expenditures (38,722) 61,097 132,319 71,222

OTHER FINANCING USESTransfers out (1 847 141) (1 847 141)

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Rural North Vacaville Water District Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Transfers out - - (1,847,141) (1,847,141)

Net change in fund balance (38,722) 61,097 (1,714,822) (1,775,919) Fund balance - beginning 1,714,822 1,714,822 1,714,822 - Fund balance - ending 1,676,100$ 1,775,919$ -$ (1,775,919)$

108

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 23,000$ 28,000$ 23,072$ (4,928)$

EXPENDITURESCurrent:

General governmentCourts Expansion 10,000 75,674 73,687 1,987

Debt service:Principal 200,000 200,000 200,000 - Interest and other charges 134,934 134,934 134,934 -

Total debt service 334,934 334,934 334,934 - Total expenditures 344,934 410,608 408,621 1,987

Deficiency of revenues under expenditures (321,934) (382,608) (385,549) (2,941)

OTHER FINANCING SOURCES Transfers in 321,934 321,934 269,468 (52,466)

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

1998 Certificates of Participation Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Net change in fund balance - (60,674) (116,081) (55,407) Fund balance - beginning 714,767 714,767 714,767 - Fund balance - ending 714,767$ 654,093$ 598,686$ (55,407)$

109

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 90,000$ 135,159$ 106,959$ (28,200)$ Charges for services 35 35 35 -

Total revenues 90,035 135,194 106,994 (28,200)

EXPENDITURESCurrent:

General governmentHSS Admin Refinance 21,548 36,777 17,971 18,806

Debt service:Principal 1,550,000 1,550,000 1,550,000 - Interest and other charges 1,076,041 1,076,041 1,076,041 -

Total debt service 2,626,041 2,626,041 2,626,041 - Total expenditures 2,647,589 2,662,818 2,644,012 18,806

Deficiency of revenues under expenditures (2,557,554) (2,527,624) (2,537,018) (9,394)

OTHER FINANCING SOURCES

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

1999 Certificates of Participation Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

O N NC NG SOU C STransfers in 2,557,562 2,572,791 2,734,215 161,424

Net change in fund balance 8 45,167 197,197 152,030 Fund balance - beginning 3,026,502 3,026,502 3,026,502 - Fund balance - ending 3,026,510$ 3,071,669$ 3,223,699$ 152,030$

110

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 4,712,069$ 27,145$ 60,429$ 33,284$ Intergovernmental 117,500 117,500 112,500 (5,000) Charges for services 1,619,355 1,619,355 1,619,355 -

Total revenues 6,448,924 1,764,000 1,792,284 28,284

EXPENDITURESCurrent:

General governmentGovernment Center DSF 24,000 24,000 15,636 8,364

Debt service:Principal 2,705,000 2,705,000 2,705,000 - Interest and other charges 10,162,531 5,253,094 5,253,094 -

Total debt service 12,867,531 7,958,094 7,958,094 - Total expenditures 12,891,531 7,982,094 7,973,730 8,364

Deficiency of revenues under expenditures (6,442,607) (6,218,094) (6,181,446) 36,648

Budgeted Amounts

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIA

Government Center Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

OTHER FINANCING SOURCES Transfers in 6,158,154 6,158,154 6,158,154 -

Net change in fund balance (284,453) (59,940) (23,292) 36,648 Fund balance - beginning 492,609 492,609 492,609 - Fund balance - ending 208,156$ 432,669$ 469,317$ 36,648$

111

Original Final Actual AmountsVariance with Final Budget

REVENUESUse of money and property 247,321$ 247,321$ (243,129)$ (490,450)$ Miscellaneous 981,975 981,975 812,808 (169,167)

Total revenues 1,229,296 1,229,296 569,679 (659,617)

EXPENDITURESCurrent:

General governmentPension Obligation Bonds Administration 175,000 175,000 147,590 27,410

Debt service:Principal 7,785,000 7,785,000 6,785,000 1,000,000 Interest and other charges 6,676,378 6,676,378 6,636,238 40,140

Total debt service 14,461,378 14,461,378 13,421,238 1,040,140 Total expenditures 14,636,378 14,636,378 13,568,828 1,067,550

Deficiency of revenues under expenditures (13,407,082) (13,407,082) (12,999,149) 407,933

OTHER FINANCING SOURCES

Budgeted Amounts

COUNTY OF SOLANO, CALIFORNIA

Pension Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

For the Fiscal Year Ended June 30, 2008

OTHER FINANCING SOURCES Transfers in 18,212,186 18,212,186 19,847,331 1,635,145

Net change in fund balance 4,805,104 4,805,104 6,848,182 2,043,078 Fund balance - beginning 6,897,203 6,897,203 6,897,203 - Fund balance - ending 11,702,307$ 11,702,307$ 13,745,385$ 2,043,078$

112

Internal Service Funds Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other governmental units, on a cost reimbursement basis. Communications Fund – This fund is used to account for the communications solutions for County employees. Fleet Management Fund – This fund is used to account for the rental and purchase of motor vehicles for other departments and their related maintenance cost. Risk Management Fund – This fund is used to account for the administration and management of the County’s insurance and safety plans as well as the programs to control losses and provide timely information and employee benefit services to County employees. Information Technology Fund – This fund is used to account for the development, implementation and ongoing support costs for the electronic data processing services to County departments.

Reprographics Fund – This fund is used to account for reprographic services to County departments.

113

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ManagementRisk

ManagementInformation Technology

ASSETSCurrent assets

Cash and investments 451,070$ 1,760,185$ 25,891,480$ 2,999,202$ Accounts receivable 167,490 106,881 10,039 60,153 Due from other agencies 1,131 236 - 81,930 Due from other funds 6,152 1,242 222,205 402 Other assets 47,376 262,238 250,000 -

Total current assets 673,219 2,130,782 26,373,724 3,141,687

Noncurrent assetsCapital assets:

Construction in progress - - - 3,001,372 Buildings and improvements 150,000 114,471 - - Equipment 1,215,062 11,476,776 - 7,219,229 Accumulated depreciation (686,209) (6,710,606) - (4,238,833)

Total capital assets 678,853 4,880,641 - 5,981,768 Total assets 1,352,072$ 7,011,423$ 26,373,724$ 9,123,455$

COUNTY OF SOLANO, CALIFORNIACombining Statement of Net Assets

Internal Service FundsJune 30, 2008

LIABILITIESCurrent liabilities

Outstanding warrants 867$ 15,450$ 2,096$ 10,030$ Payables 178,527 403,508 433,123 2,162,197 Unearned revenue - - - 485,385 Due to other funds 2,083 2,727 123,317 14,202Current portion of long-term

obligations 36,435 46,391 1,741,980 175,361 Total current liabilities 217,912 468,076 2,300,516 2,847,175

Noncurrent liabilitiesNoncurrent portion of long-term

obligations 107,420 165,921 8,913,291 251,781 Total liabilities 325,332 633,997 11,213,807 3,098,956

NET ASSETS Invested in capital assets, net of related debt 678,853 4,880,641 - 5,981,768 Unrestricted 347,887 1,496,785 15,159,917 42,731 Total net assets 1,026,740 6,377,426 15,159,917 6,024,499

Total liabilities and net assets 1,352,072$ 7,011,423$ 26,373,724$ 9,123,455$

114

Solano County Integrated

Property System ReprographicsTotal Internal Service Funds

ASSETSCurrent assets

-$ 224,304$ 31,326,241$ Cash and investments- 2,275 346,838 Accounts receivable- - 83,297 Due from other agencies- - 230,001 Due from other funds- - 559,614 Other assets- 226,579 32,545,991 Total current assets

Noncurrent assetsCapital assets:

- - 3,001,372 Construction in progress- - 264,471 Buildings and improvements- 155,281 20,066,348 Equipment- (120,164) (11,755,812) Accumulated depreciation- 35,117 11,576,379 Total capital assets-$ 261,696$ 44,122,370$ Total assets

COUNTY OF SOLANO, CALIFORNIACombining Statement of Net Assets

Internal Service FundsJune 30, 2008

LIABILITIESCurrent liabilities

-$ 1,201$ 29,644$ Outstanding warrants- 20,543 3,197,898 Payables- - 485,385 Unearned revenue- 628 142,957 Due to other funds

Current portion of long-term- 10,293 2,010,460 obligations- 32,665 5,866,344 Total current liabilities

Noncurrent liabilitiesNoncurrent portion of long-term

- 19,994 9,458,407 obligations- 52,659 15,324,751 Total liabilities

NET ASSETS Invested in capital assets, net

- 35,117 11,576,379 of related debt- 173,920 17,221,240 Unrestricted- 209,037 28,797,619 Total net assets-$ 261,696$ 44,122,370$ Total liabilities and net assets

115

CommunicationsFleet

ManagementRisk

ManagementInformation Technology

OPERATING REVENUES Charges for sales and services:

Internal services 2,175,758$ 4,778,881$ 8,469,563$ 18,730,716$

OPERATING EXPENSESPersonnel services 773,538 1,029,390 1,042,984 4,932,367 Maintenance 185,955 816,436 8,940 441,310 Materials and supplies 177,645 21,598 23,160 458,762 Depreciation 91,372 1,179,715 - 561,390 Insurance 15,080 23,578 8,048,412 85,391 Rent, utilities and others 1,263,375 1,461,482 1,589,591 9,233,775

Total operating expenses 2,506,965 4,532,199 10,713,087 15,712,995 Operating income (loss) (331,207) 246,682 (2,243,524) 3,017,721

NONOPERATING REVENUES (EXPENSES)Intergovernmental 94,645 - 31,187 - Investment earnings 13 479 71 393 1 245 942 99 764

Internal Service FundsFor the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenses and Changes in Fund Net Assets

Investment earnings 13,479 71,393 1,245,942 99,764 Other revenue 212,433 163,857 163,641 505,757 Loss on sale of capital assets - (1,993) - (7,280)

Total nonoperating revenues, net 320,557 233,257 1,440,770 598,241 Income (loss) before transfers (10,650) 479,939 (802,754) 3,615,962

Transfers in - 123,999 64,828 779,116 Transfers out (65,923) (74,795) (79,040) (379,522)

Change in net assets (76,573) 529,143 (816,966) 4,015,556 Total net assets - beginning 1,103,313 5,848,283 15,976,883 2,008,943 Total net assets - ending 1,026,740$ 6,377,426$ 15,159,917$ 6,024,499$

116

Solano County Integrated

Property System ReprographicsTotal Internal Service Funds

OPERATING REVENUES Charges for sales and services:

-$ 514,956$ 34,669,874$ Internal services

OPERATING EXPENSES- 236,478 8,014,757 Personnel services- 15,046 1,467,687 Maintenance- 92,499 773,664 Materials and supplies- 9,412 1,841,889 Depreciation- 4,976 8,177,437 Insurance- 148,259 13,696,482 Rent, utilities and others- 506,670 33,971,916 Total operating expenses- 8,286 697,958 Operating income (loss)

NONOPERATING REVENUES (EXPENSES)- - 125,832 Intergovernmental

1 809 9 255 1 441 642 Investment earnings

For the Fiscal Year Ended June 30, 2008

COUNTY OF SOLANO, CALIFORNIACombining Statement of Revenues, Expenses and Changes in Fund Net Assets

Internal Service Funds

1,809 9,255 1,441,642 Investment earnings- - 1,045,688 Other revenue- - (9,273) Loss on sale of capital assets

1,809 9,255 2,603,889 Total nonoperating revenues, net1,809 17,541 3,301,847 Income (loss) before transfers

- - 967,943 Transfers in(742,628) (17,479) (1,359,387) Transfers out(740,819) 62 2,910,403 Change in net assets740,819 208,975 25,887,216 Total net assets - beginning

-$ 209,037$ 28,797,619$ Total net assets - ending

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ManagementInformation Technology

Cash flows from operating activities:Receipts from customers and users 177,541$ 124,429$ 159,652$ 919,368$ Receipts from interfund services provided 2,222,785 4,803,398 8,427,227 18,751,473 Payments to suppliers (1,718,021) (2,181,385) (9,105,174) (9,789,585) Payments to employees (714,578) (1,013,565) (999,655) (4,716,017) Payments for interfund services used (22,542) - (5,767) (2,369,792)

Net cash provided (used) by operating activities (54,815) 1,732,877 (1,523,717) 2,795,447

Transfers in - 123,999 64,828 779,116 Transfers out (65,923) (74,795) (79,040) (379,521) Subsidy from federal/state grant 94,645 - 31,187 -

Net cash provided (used) by noncapital financing activities 28,722 49,204 16,975 399,595

Acquisition of capital assets (21,962) (1,510,751) - (4,627,801) Proceeds from sale of capital assets - (73,923) - (7,280)

Net cash used by capital and related financing activities (21,962) (1,584,674) - (4,635,081)

Cash flows from investing activities:Investment income 13,479 71,393 1,245,942 99,763

Internal Service Funds

COUNTY OF SOLANO, CALIFORNIACombining Statement of Cash Flows

For the Fiscal Year Ended June 30, 2008

Cash flows from noncapital financing activities:

Cash flows from capital and related financing activities:

Net increase (decrease) in cash and cash equivalents (34,576) 268,800 (260,800) (1,340,276)

Cash and cash equivalents - beginning 485,646 1,491,385 26,152,280 4,339,478 Cash and cash equivalents - ending 451,070$ 1,760,185$ 25,891,480$ 2,999,202$

Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) (331,207)$ 246,682$ (2,243,524)$ 3,017,721$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 91,372 1,179,715 - 561,390 Other nonoperating revenue 212,433 163,857 163,641 505,757 Changes in assets and liabilities:

(Increase) decrease in receivables, net (36,419) (39,433) (3,989) 5,307 (Increase) decrease in due from other funds 47,027 23,773 (42,336) 20,757 (Increase) decrease in due from other agencies 1,527 - - (81,930) (Increase) decrease in other assets - (95,018) (100,000) 4,849 Increase (decrease) in outstanding warrants 407 (64,271) (14,237) (1,430) Increase (decrease) in payables (76,373) 300,998 129,273 432,836 Increase (decrease) in due to other funds (22,542) 749 (5,767) (2,369,792) Decrease in due to other agencies - - - (1,753) Increase (decrease) in deferred revenue - - - 485,385 Increase in accrued compensated absences 58,960 15,825 43,329 216,350 Increase in self-insurance liability - - 549,893 -

Total adjustments 276,392 1,486,195 719,807 (222,274) Net cash provided (used) by operating activities (54,815)$ 1,732,877$ (1,523,717)$ 2,795,447$

Noncash investing, capital, and financing activitiesBook value of disposed capital assets -$ 82,543$ -$ 7,280$

118

Solano County Integrated

Property System ReprographicsTotal Internal Service Funds

Cash flows from operating activities:196$ 13,276$ 1,394,462$ Receipts from customers and users

6,136 517,779 34,728,798 Receipts from interfund services provided(663,971) (266,291) (23,724,427) Payments to suppliers(53,526) (232,462) (7,729,803) Payments to employees

- - (2,398,101) Payments for interfund services used(711,165) 32,302 2,270,929 Net cash provided (used) by operating activities

- - 967,943 Transfers in(742,628) (17,479) (1,359,386) Transfers out

- - 125,832 Subsidy from federal/state grant(742,628) (17,479) (265,611) Net cash provided (used) by noncapital financing activities

675,597 - (5,484,917) Acquisition of capital assets- - (81,203) Proceeds from sale of capital assets

675,597 - (5,566,120) Net cash used by capital and related financing activities

Cash flows from investing activities:1,809 9,255 1,441,641 Investment income

Internal Service Funds

COUNTY OF SOLANO, CALIFORNIACombining Statement of Cash Flows (Continued)

For the Fiscal Year Ended June 30, 2008

Cash flows from noncapital financing activities:

Cash flows from capital and related financing activities:

(776,387) 24,078 (2,119,161) Net increase (decrease) in cash and cash equivalents

776,387 200,226 33,445,402 Cash and cash equivalents - beginning-$ 224,304$ 31,326,241$ Cash and cash equivalents - ending

Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

-$ 8,286$ 697,958$ Operating income (loss)Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

- 9,412 1,841,889 Depreciation- - 1,045,688 Other nonoperating revenue

Changes in assets and liabilities:196 13,276 (61,062) (Increase) decrease in receivables, net

6,136 2,629 57,986 (Increase) decrease in due from other funds- - (80,403) (Increase) decrease in due from other agencies- - (190,169) (Increase) decrease in other assets- (7,009) (86,540) Increase (decrease) in outstanding warrants

(177,015) 1,498 611,217 Increase (decrease) in payables (1,571) 194 (2,398,729) Increase (decrease) in due to other funds

- - (1,753) Decrease in due to other agencies(485,385) - - Increase (decrease) in deferred revenue

(53,526) 4,016 284,954 Increase in accrued compensated absences- - 549,893 Increase in self-insurance liability

(711,165) 24,016 1,572,971 Total adjustments(711,165)$ 32,302$ 2,270,929$ Net cash provided (used) by operating activities

Noncash investing, capital, and financing activities-$ -$ 89,823$ Book value of disposed capital assets

119

Agency Funds Agency Funds are custodial in nature and do not involve measurement of results of operations. Such funds have no equity account since all assets are due to individuals or entities at some future time. Property Tax Collection Fund – This fund is used to account for property tax collections awaiting apportionment to governmental agencies. Local Transportation Fund – This fund is used to account for the quarter of one percent sales tax collected by the State Board of Equalization and deposited with the county of origin for local transportation support. The Metropolitan Transportation Commission, the regional agency responsible for administration of these monies, directs their use and distribution. Child Support Services Fund – This fund is used to account for all child support collections pending disbursement. All Other Agency Funds – This fund is used to account for assets held for other governmental agencies by the County in a fiduciary capacity.

120

PROPERTY TAX COLLECTION Balance BalanceJuly 1, 2007 Additions Deductions June 30, 2008

AssetsCash and investments -$ 578,971,780$ 578,971,780$ -$ Property taxes receivable 50,269,924 622,856,167 606,179,353 66,946,738

Total assets 50,269,924$ 1,201,827,947$ 1,185,151,133$ 66,946,738$

LiabilitiesDue to others 50,269,924$ 1,201,827,947$ 1,185,151,133$ 66,946,738$

LOCAL TRANSPORTATION Balance BalanceJuly 1, 2007 Additions Deductions June 30, 2008

AssetsCash and investments 11,360,534$ 15,822,940$ 19,216,213$ 7,967,261$

LiabilitiesDue to others 11,360,534$ 15,822,940$ 19,216,213$ 7,967,261$

CHILD SUPPORT SERVICES Balance BalanceJuly 1, 2007 Additions Deductions June 30, 2008

Assets

Combining Statement of Changes in Assets and LiabilitiesCOUNTY OF SOLANO, CALIFORNIA

For the Fiscal Year Eended June 30, 2008Agency Funds

AssetsCash and investments 124,533$ 337,754$ 335,551$ 126,736$

LiabilitiesDue to others 124,533$ 337,754$ 335,551$ 126,736$

ALL OTHER AGENCY FUNDS Balance BalanceJuly 1, 2007 Additions Deductions June 30, 2008

AssetsCash and investments 3,616,814$ 45,108,200$ 40,766,753$ 7,958,261$

LiabilitiesDue to others 3,616,814 45,108,200 40,766,753 7,958,261$

TOTAL - ALL AGENCY FUNDS Balance BalanceJuly 1, 2007 Additions Deductions June 30, 2008

AssetsCash and investments 15,101,881$ 640,240,674$ 639,290,297$ 16,052,258$ Property taxes receivable 50,269,924 622,856,167 606,179,353 66,946,738

Total assets 65,371,805$ 1,263,096,841$ 1,245,469,650$ 82,998,996$

LiabilitiesDue to others 65,371,805$ 1,263,096,841$ 1,245,469,650$ 82,998,996$

121

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122

STATISTICAL SECTION

STATISTICAL SECTION

This part of the County of Solano’s comprehensive annual financial report provides supplemental information for the benefit of the readers. This section presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the County’s overall financial health. Contents Page Financial Trends 125

These schedules contain trend information to help the reader understand how the County’s financial performance and well-being have changed over time.

Revenue Capacity 132 These schedules contain information to help the reader assess the County’s most significant local revenue source, the property tax.

Debt Capacity 136 These schedules present information to help the reader assess the affordability of the County’s current levels of outstanding debt and the County’s ability to issue additional debt in the future.

Demographic and Economic Information 139 These schedules offer demographic and economic indicators to help the reader understand the environment within which the County’s financial activities take place.

Operating Information 144 These schedules contain service and infrastructure data to help the reader understand how the information in the County’s financial report relates to the services the County provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The County implemented GASB Statement No. 34 in 2001; schedules presenting government-wide information include information beginning with that year.

123

124

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rope

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axes

Sour

ce:

Aud

ited

Fina

ncia

l Sta

tem

ents

127

COUNTY OF SOLANO, CALIFORNIAFund Balances of Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)

2008 2007 2006 2005 2004General FundReserved 9,591,064$ 4,150,844$ 3,575,776$ 2,650,417$ 1,158,613$ Unreserved 111,054,606 117,465,640 88,104,809 69,817,153 54,064,235 Total General Fund 120,645,670 121,616,484 91,680,585 72,467,570 55,222,848

All Other Governmental FundsReserved 56,504,466$ 91,344,253$ 34,558,867$ 31,951,339$ 41,474,664$ Unreserved, reported in:

Special revenue funds 76,665,059 75,946,573 133,282,448 131,227,828 118,657,450 Capital projects funds 55,852,298 13,049,077 15,255,723 2,585,051 17,041,854

Total all other governmental funds 189,021,823 180,339,903 183,097,038 165,764,218 177,173,968

309,667,493$ 301,956,387$ 274,777,623$ 238,231,788$ 232,396,816$

Source: Audited Financial Statements

Fiscal Year

128

COUNTY OF SOLANO, CALIFORNIAFund Balances of Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)

2003 2002 2001 2000 1999General Fund

3,415,066$ 1,541,441$ 597,750$ 737,116$ 329,467$ Reserved45,491,994 43,685,285 31,425,492 17,409,138 10,822,622 Unreserved48,907,060 45,226,726 32,023,242 18,146,254 11,152,089 Total General Fund

All Other Governmental Funds57,585,083$ 22,895,362$ 52,690,983$ 40,868,193$ 28,506,382$ Reserved

Unreserved, reported in:102,116,827 49,268,396 33,256,421 14,580,123 13,160,043 Special revenue funds

68,841,392 10,036,848 7,511,288 10,450,497 23,031,412 Capital projects funds228,543,302 82,200,606 93,458,692 65,898,813 64,697,837 Total all other governmental funds

277,450,362$ 127,427,332$ 125,481,934$ 84,045,067$ 75,849,926$

Fiscal Year

129

COUNTY OF SOLANO, CALIFORNIAChanges in Fund Balances of Governmental Funds

Last Ten Fiscal Years(modified accrual basis of accounting)

2008 2007 2006 2005 2004Revenues

Taxes1 138,987,233$ 132,730,738$ 126,709,867$ 78,793,277$ 66,961,051$ Licenses, permits and franchises 6,180,001 6,758,843 7,260,201 5,658,034 5,094,159 Fines, forfeitures and penalties 5,458,554 5,870,027 7,389,580 6,038,097 4,220,235 Use of money and property 13,022,335 14,115,648 9,038,296 6,415,122 6,981,278 Intergovernmental1 312,049,066 299,974,644 289,299,129 315,166,573 308,978,705 Charges for services 77,340,255 75,908,930 79,239,520 77,819,413 69,730,559 Miscellaneous 12,457,166 15,709,000 10,364,009 11,532,508 10,377,470

Total revenues 565,494,610 551,067,830 529,300,602 501,423,024 472,343,457

ExpendituresGeneral government 57,450,491 49,616,574 58,726,098 55,536,885 49,188,749 Public protection 170,321,250 162,742,367 169,226,372 138,939,757 172,365,652 Public ways and facilities 9,925,757 9,664,948 11,838,586 9,706,357 10,112,629 Health services 107,707,061 103,618,977 106,548,470 103,458,326 111,715,224 Public assistance 141,943,318 135,117,611 142,105,049 123,248,736 150,785,051 Education and recreation 22,292,796 22,087,999 21,363,419 15,670,356 18,172,806 Debt service:

Principal 11,685,419 11,080,862 16,689,194 8,043,797 8,394,452 Interest and other charges 13,171,464 12,405,119 12,321,580 10,561,243 8,069,620 Debt issuance cost - 1,650,505 646,905 - 1,466,120 Advance refunding escrow - - - - -

Capital outlay 22,992,641 16,423,879 13,068,467 30,852,017 86,478,021 Total expenditures 557 490 197 524 408 841 552 534 140 496 017 474 616 748 324

Fiscal Year

Total expenditures 557,490,197 524,408,841 552,534,140 496,017,474 616,748,324

Excess of revenues over (under) expenditures 8,004,413 26,658,989 (23,233,538) 5,405,550 (144,404,867)

Other Financing Sources (Uses)Capital lease financing - - - 56,736 - Payment to refunded bond escrow agent - (100,769,924) - - - Proceeds of refunding bonds - 99,860,000 - - - Proceeds from sale of tobacco settlement revenues - - 17,397,252 - - Debt proceeds 1,023,891 - 42,385,000 - 96,665,000 Premium on debt - 2,568,489 - - - Transfers in 169,578,877 140,741,691 131,966,707 120,245,003 99,408,010 Transfers out (171,010,215) (142,086,480) (132,032,827) (120,065,726) (99,674,693) Sale of capital assets 114,140 205,999 63,241 193,409 2,953,004

Total other financing sources (uses) (293,307) 519,775 59,779,373 429,422 99,351,321

Net change in fund balances 7,711,106$ 27,178,764$ 36,545,835$ 5,834,972$ (45,053,546)$

Debt service as a percentage of noncapital expenditures 4.65% 4.95% 5.50% 4.00% 3.38%

1 Beginning fiscal year 2006, as a result of legislation and as prescribed by the State, amounts previously recorded as Motor Vehicle In Lieu revenues are now recorded as Property Taxes.

Source: Audited Financial Statements

130

COUNTY OF SOLANO, CALIFORNIAChanges in Fund Balances of Governmental Funds

Last Ten Fiscal Years(modified accrual basis of accounting)

Fiscal Year2003 2002 2001 2000 1999

Revenues59,246,973$ 55,027,729$ 49,503,902$ 47,008,652$ 41,724,749$ Taxes1

4,998,512 4,425,099 3,705,314 3,316,382 3,151,701 Licenses, permits and franchises4,729,387 4,586,822 4,236,423 3,645,577 4,125,065 Fines, forfeitures and penalties3,980,609 8,707,718 14,298,160 7,535,374 6,186,024 Use of money and property

277,130,397 273,809,145 259,590,608 224,698,307 212,724,221 Intergovernmental1

59,721,371 53,404,452 50,374,834 46,073,991 46,340,313 Charges for services7,693,931 14,065,157 9,431,653 4,396,998 5,874,815 Miscellaneous

417,501,180 414,026,122 391,140,894 336,675,281 320,126,888 Total revenues

Expenditures40,861,290 39,392,941 34,412,532 31,057,335 31,276,622 General government

128,691,041 117,626,458 104,858,511 95,158,216 88,968,414 Public protection8,152,377 5,883,609 12,107,010 9,815,424 12,240,113 Public ways and facilities

84,249,844 77,897,875 64,297,492 58,778,916 52,830,271 Health services121,296,428 118,637,287 109,732,636 107,609,032 108,025,825 Public assistance

12,713,005 11,728,628 10,746,213 10,118,268 9,622,427 Education and recreationDebt service:

7,193,245 7,081,861 5,452,183 5,499,298 3,937,131 Principal5,157,325 4,930,092 5,712,387 4,271,782 3,879,600 Interest and other charges

- - - - - Debt issuance cost- 4,116,500 - - - Advance refunding escrow

42,466,841 35,290,048 10,033,031 6,714,180 8,064,738 Capital outlay450 781 396 422 585 299 357 351 995 329 022 451 318 845 141 Total expenditures450,781,396 422,585,299 357,351,995 329,022,451 318,845,141 Total expenditures

(33,280,216) (8,559,177) 33,788,899 7,652,830 1,281,747 Excess of revenues over (under) expenditures

Other Financing Sources (Uses)- - - 307,653 63,712 Capital lease financing- (19,090,934) - - - Payment to refunded bond escrow agent- 21,285,000 - - - Proceeds of refunding bonds

55,088,473 - - - - Proceeds from sale of tobacco settlement revenues123,862,438 10,507,356 - - 39,581,288 Debt proceeds

4,628,748 331,173 - - - Premium on debt92,684,021 87,617,423 75,312,142 62,107,737 64,179,671 Transfers in

(93,047,766) (88,274,757) (74,541,218) (61,940,417) (64,475,911) Transfers out87,332 40,095 89,878 67,308 23,480 Sale of capital assets

183,303,246 12,415,356 860,802 542,281 39,372,240 Total other financing sources (uses)

150,023,030$ 3,856,179$ 34,649,701$ 8,195,111$ 40,653,987$ Net change in fund balances

3.02% 4.16% 3.21% 3.03% 2.52% Debt service as a percentage of noncapital expenditures

131

COUNTY OF SOLANO, CALIFORNIAAssessed Value of Taxable Property

Last Ten Fiscal Years

Real Property^Fiscal Year

Residential Property

Commercial Property

Manufacturing Property Other Personal Property Exemptions Total

Total Direct Tax Rate

2008 33,516,047,975$ 4,458,259,827$ 5,137,584,301$ 2,515,019,359$ 1,948,949,721$ (2,257,758,318)$ 45,318,102,865$ 1.000000

2007 34,906,817,027 4,141,589,706 4,555,284,699 2,147,909,474 1,940,449,367 (2,003,357,049) 45,688,693,224 1.000000

2006 31,908,618,677 3,658,979,117 4,058,927,403 1,756,602,406 1,776,148,772 (1,614,923,088) 41,544,353,287 1.000000

2005 27,646,850,121 3,346,190,948 3,755,064,101 1,578,129,310 1,560,714,346 (1,500,576,703) 36,386,372,123 1.000000

2004 23,918,105,041 3,136,567,889 3,658,065,965 1,480,141,832 1,538,561,960 (1,451,287,952) 32,280,154,735 1.000000

2003 21,383,381,995 2,982,448,323 3,567,983,071 1,341,406,615 1,267,778,516 (1,189,231,896) 29,353,766,624 1.000000

2002 19,292,221,465 2,778,751,393 3,294,895,577 1,294,066,360 1,138,301,019 (1,237,780,608) 26,560,455,206 1.000000

2001 17,560,703,004 2,628,348,739 2,958,749,963 1,334,075,873 1,047,792,400 (1,189,645,915) 24,340,024,064 1.000000

2000 15,878,172,910 2,443,059,844 2,660,132,857 1,194,174,257 966,680,913 (1,122,110,110) 22,020,110,671 1.000000

1999 14,386,789,046 2,235,853,229 2,436,874,095 1,159,350,607 869,732,148 (1,120,439,365) 19,968,159,760 1.000000

Notes: ^ Due to passage of the Proposition 13 (Prop 13) property tax initiative in 1978, the County does not track the estimatedvalue of all properties in the County. Under Prop 13 property is assessed at the 1975 market value with an annualincrease limited to 2% on properties not involved in a change of ownership or properties that did not undergo newconstruction. Newly acquired property is assessed at its new market value (usually the purchase price) and the valueof any new construction is added to the existing base value of a parcel. As a result, similar properties can havesubstantially different assessed values based on the date of purchase Additionally Prop 13 limits the property taxsubstantially different assessed values based on the date of purchase. Additionally, Prop 13 limits the property taxrate to 1% of assessed value, plus the rate necessary to fund local voter-approved bonds and special assessments.

Source: County of Solano - Assessor's Office

132

COUNTY OF SOLANO, CALIFORNIADirect and Overlapping Property Tax Rates

Last Ten Fiscal Years

Fiscal Year

Countywide Tax

Local Special Districts Schools Cities Total

2008 1.000000 2.074750 0.392148 0.049006 3.515904 2007 1.000000 1.676970 0.477510 0.051024 3.205504

2006 1.000000 1.670438 0.450651 0.051243 3.172332

2005 1.000000 1.669975 0.409660 0.055807 3.135442

2004 1.000000 1.674536 0.450608 0.061253 3.186397

2003 1.000000 1.668724 0.423867 0.065584 3.158175

2002 1.000000 1.664550 0.230886 0.067263 2.962699

2001 1.000000 1.580959 0.306871 0.073958 2.961788

2000 1.000000 1.582688 0.298638 0.077761 2.959087

1999 1.000000 1.592200 0.356061 0.083774 3.032035

Source: County of Solano Auditor-Controller's Property Tax Division

133

COUNTY OF SOLANO, CALIFORNIAPrincipal Property Tax Payers

June 30, 2008 and June 30, 1999

Fiscal Year 2008 Fiscal Year 1999

Taxpayer Assessed Value Rank

Percentage of Total County

Taxable Assessed Value Assessed Value Rank

Percentage of Total County

Taxable Assessed Value

Genentech Inc $ 1,040,766,887 1 2.30% - -

Valero Refining Company - Calif 771,627,166 2 1.70% $ 592,425,065 1 2.97%

Pacific Gas & Electric Company 401,979,298 3 0.89% 374,663,384 2 1.88%

Anheuser-Busch, Inc. 266,863,523 4 0.59% 214,533,631 4 1.07%

Shiloh I Wind Project LLC 211,569,617 5 0.47% -

High Winds LLC 203,550,313 6 0.45% -

Alza Corporation 178,095,370 7 0.39% 88,274,508 7 0.44%

California Northern Railroad 157,637,286 8 0.35% 98,751,183 5 0.49%

Pacific Bell 141,550,430 9 0.31% 233,158,017 3 1.17%

Deutsche Bank National Trust Company 109,903,227 10 0.24% -

Park Management Corp - 94,285,000 6 0.47%

Western Pacific Housing Inc. - - -

Kaiser Foundation Hospital - - 85,104,398 8 0.43%

CPG Finance II LLC - - 74,045,223 9 0.37%

Ball Metal Beverage Cont Corp - - -

Chiron Corporation - - 50,364,135 10 0.25%

Totals $ 3,483,543,117 6.35% $ 1,905,604,544 9.54%

Sources: Final Budget Document and County of Solano Assessor-Recorder's Office

134

COUNTY OF SOLANO, CALIFORNIAProperty Tax Levies and Collections

Last Ten Fiscal Years

Fiscal Year Amount % of Levy Amount % of Levy

2008 $ 507,245,315 $ 472,447,183 93.14% $ - $ 472,447,183 93.14%2007 477,498,909 449,992,917 94.24% 14,203,910 464,196,827 97.21%

2006 429,891,175 413,880,171 96.28% 11,346,176 425,226,347 98.91%

2005 377,639,034 368,064,913 97.46% 3,872,076 371,936,989 98.49%

2004 338,754,419 332,042,337 98.02% 6,319,708 338,362,045 99.88%

2003 304,563,538 295,257,014 96.94% 9,119,934 304,376,948 99.94%

2002 253,305,116 248,780,029 98.21% 4,461,219 253,241,248 99.97%

2001 233,021,257 229,022,341 98.28% 3,972,634 232,994,975 99.99%

2000 214,752,491 211,270,305 98.38% 3,473,848 214,744,153 100.00%

1999 205,054,382 201,112,484 98.08% 3,936,574 205,049,058 100.00%

Total Collections to DateCollected within the Fiscal Year

of the LevyTaxes Levied for the Fiscal

Year

Collections in Subsequent

Years

Source: County of Solano Treasurer - Tax Collector - County Clerk

135

COUNTY OF SOLANO, CALIFORNIARatios of Outstanding Debt by Type

Last Ten Fiscal Years

Fiscal Year2008 2007 2006 2005 2004

General GovernmentNotes payable 1,171,043$ 3 11,864,718$ 13,356,468$ 14,897,413$ 16,637,923$ Capital leases 16,874 28,968 88,080 191,329 377,880 Certificates of participation 138,013,241 142,576,213 146,692,575 155,954,388 162,086,201 Pension obligation bonds 121,020,000 127,805,000 133,195,000 96,665,000 96,665,000 Revenue bonds - - - - - General obligation bonds - - - - - Term note - - - - - Special assessment debt - - - - -

Business-Type ActivitiesNotes payable 149,853 200,965 247,631 318,517 1,420,051 Capital leases - - - 5,106 12,394

Total primary government 260,371,011$ 282,475,864$ 293,579,754$ 268,031,753$ 277,199,449$

Percentage of Personal Income 1 1.63% 1.87% 2.05% 1.96% 2.12%

Percentage of Actual Value of Taxable Property 2 0.57% 0.62% 0.71% 0.74% 0.86%

Per Capita 1 610.12$ 664.93$ 694.29$ 635.66$ 664.04$

1 See the 'Demographic and Economic Statistics' table for the population and personal income figures. Note that these ratios are calculated using data from January 1Note that these ratios are calculated using data from January 1.

2 See the 'Assessed Value and Actual Value of Taxable Property' table for total taxable assessed value.3 Please note that Rural North Vacaville Water District has become a Special District in FY 2007/08 and therefore

is not part of the General Government. The decrease of $11million in 'Notes Payable' from prior is due to that reason.

Source: Audited Financial Statements

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COUNTY OF SOLANO, CALIFORNIARatios of Outstanding Debt by Type

Last Ten Fiscal Years

Fiscal Year2003 2002 2001 2000 1999

General Government18,022,764$ 15,222,425$ 7,034,007$ 8,838,423$ 4,504,241$ Notes payable

937,955 681,824 537,871 806,743 6,722,495 Capital leases168,748,015 51,921,079 59,765,000 72,065,000 76,630,000 Certificates of participation

- - - - - Pension obligation bonds- - 170,000 330,000 480,000 Revenue bonds- - - - - General obligation bonds- - - - 102,159 Term note- - - - 30,000 Special assessment debt

Business-Type Activities1,608,192 437,665 560,012 675,234 783,331 Notes payable

30,088 36,877 35,657 - - Capital leases189,347,014$ 68,299,870$ 68,102,547$ 82,715,400$ 89,252,226$ Total primary government

1.53% 0.57% 0.59% 0.76% 0.91% Percentage of Personal Income 1

0.65% 0.26% 0.28% 0.38% 0.45% Percentage of Actual Value of Taxable Property 2

457.70$ 166.97$ 169.53$ 211.17$ 232.43$ Per Capita 1

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COUNTY OF SOLANO, CALIFORNIALegal Debt Margin Information

Last Ten Fiscal Years

Fiscal Year

(1) Assessed Value of

Property

(2) Debt Limit, 5% of

Assessed Value

(3) Debt Applicable

to the Limit(4)

Legal Debt Margin

Total net debt applicable to the

limit as a percentage of debt limit

2007-08 45,318,102,865$ 2,265,905,143$ -$ 2,265,905,143$ 0.00%2006-07 45,688,693,224 2,284,434,661 - 2,284,434,661 0.00%2005-06 41,544,353,287 2,077,217,664 - 2,077,217,664 0.00%2004-05 36,386,372,123 1,819,318,606 - 1,819,318,606 0.00%2003-04 32,280,154,735 1,614,007,737 - 1,614,007,737 0.00%2002-03 29,353,766,624 1,467,688,331 - 1,467,688,331 0.00%2001-02 26,560,455,206 1,328,022,760 5,100 1,328,017,660 0.00%2000-01 24,340,024,064 1,217,001,203 185,000 1,216,816,203 0.02%1999-00 22,020,110,671 1,101,005,534 354,300 1,100,651,234 0.03%1998-99 19,968,159,760 998,407,988 513,000 997,894,988 0.05%

Notes: (1) Assessed property value data can be found in Schedule "Assessed Value of Taxable Property and Actual Value of Property".(2) California Government Code, Section 29909, states the total amount of bonded indebtedness shall not at any time

exceed 5 percent of the taxable property of the county as shown by the last equalized assessment roll.(3) Bonded debt applicable to the limit only includes general obligation bonds.(4) The legal debt margin is the County's available borrowing authority under state finance statutes and is

calculated by subtracting the debt applicable to the legal debt limit from the legal debt limit.

Source: Audited Financial Statements

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COUNTY OF SOLANO, CALIFORNIADemographic and Economic Statistics

Last Ten Fiscal Years

Year 1 Population 2 Personal Income 3Per Capita

Personal IncomeUnemployment

Rate 5

2008 426,757 $ 15,946,469,000 4 $ 37,367 7.0% 6

2007 424,823 15,118,419,000 4 35,588 5.3%2006 422,848 14,321,591,000 33,869 5.1%2005 421,657 13,653,624,000 32,381 5.4%2004 417,447 13,091,216,000 31,360 5.9%2003 413,694 12,411,414,000 30,001 6.4%2002 409,060 12,028,734,000 29,406 5.9%2001 401,720 11,622,966,000 28,933 4.6%2000 391,700 10,953,322,000 27,964 4.5%1999 384,000 9,824,035,000 25,583 4.6%

Detail of estimated population, as of January 1, 2008:Incorporated Cities Benicia 27,978 Dixon 17,577 Fairfield 106,753 Rio Vista 8,071 Suisun City 28,193 Vacaville 96,905 Vallejo 121,097 Total of Incorporated 406,574 Total of Unincorporated Areas 20,183 Total Population 426,757

Notes:1 Calendar year2 Obtained from State of California, Department of Finance Demographics Research Unit3 Obtained from US Department of Commerce - Bureau of Economic Analysis4 Estimated amounts5 Obtained from State of California Employment Development Department6 For June 2008

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COUNTY OF SOLANO, CALIFORNIAPrincipal Employers

June 30, 2008 and June 30, 20001

Employer Employees Rank

Percentage of Total County

Employment2 Employees Rank

Percentage of Total County

Employment2

Kaiser Permanente 3,262 1 1.64% 3,120 1 1.88%

County of Solano 2,903 2 1.46% 2,884 2 1.74%

Six Flags Marine World 1,500 3 0.75% 1,200 3 0.72%

NorthBay Medical Center 1,480 4 0.74% 1,200 3 0.72%

Alza Corporation 1,000 5 0.50%

Genentech Inc. 950 6 0.48% 625 5 0.38%

Wal-Mart 872 7 0.44%

Sutter Solano Medical Center 674 8 0.34% 542 6 0.33%

City of Fairfield 651 9 0.33%

City of Vacaville 616 10 0.31%

Westamerica Bancorporation 500 7 0.30%

Anheuser-Busch Brewery 489 8 0.29%

20002008

Albertson's Distribution Center 640 4 0.39%

Providian Financial 500 7 0.30%

Exxon Company USA 400 9 0.24%

Totals 14,436 5.44% 12,100 7.28%

1 Information unavailable prior to FY20002 Total County employment figure obtained from State of California Employment Development Department

Sources: County of Solano, City of Fairfield, City of Vacaville, City of Vallejo Budgets

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COUNTY OF SOLANO, CALIFORNIAFull-time Equivalent County Government Employees by Function

Last Ten Fiscal YearsFull-time Equivalent Employees as of June 30

2008 2007 2006 2005 2004

Function/ProgramGeneral government 280.00 272.00 263.00 250.00 245.00 Public protection 1,237.00 1,194.00 1,191.50 1,180.50 1,241.50 Public ways and facilities 76.50 74.50 73.00 73.00 74.00 Health services 520.83 532.63 483.05 498.08 491.16 Public assistance 713.50 720.50 738.60 718.00 750.50 Education and recreation 152.23 149.73 140.23 137.23 131.13 Nut Tree Airport 4.00 4.00 3.00 3.00 3.00 Fouts Springs Youth Facility 29.00 29.00 30.00 41.00 55.50 Internal service 86.50 82.50 73.50 72.50 71.50

Total 3,099.56 3,058.86 2,995.88 2,973.31 3,063.29

Source: County of Solano Proposed Budget

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COUNTY OF SOLANO, CALIFORNIAFull-time Equivalent County Government Employees by Function

Last Ten Fiscal YearsFull-time Equivalent Employees as of June 30

2003 2002 2001 2000 1999

Function/Program247.00 236.00 223.00 218.60 211.60 General government

1,279.50 1,235.50 1,447.25 1,412.85 1,357.10 Public protection74.00 73.00 73.00 78.00 80.00 Public ways and facilities

511.66 498.66 475.51 474.69 450.74 Health services786.55 767.30 753.80 729.20 674.60 Public assistance130.13 130.63 125.63 119.75 115.50 Education and recreation

3.00 3.00 3.00 3.75 3.00 Nut Tree Airport55.50 54.00 46.00 46.00 42.50 Fouts Springs Youth Facility73.50 53.50 49.50 47.00 48.00 Internal service

3,160.84 3,051.59 3,196.69 3,129.84 2,983.04 Total

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2008 2007 2006 2005 2004 2003

Function/ProgramGeneral government

Clerk-Recorder-Assessor - documents recorded 119,333 172,494 213,267 227,032 240,195 231,751 Public protection

# Number of felony cases filed-District Attorney 3,961 4,198 3,804 4,122 3,795 3,661 # Number of misdemeanor cases filed-District Attorney 11,382 9,404 7,680 8,085 9,819 9,853 # Number of juvenile petitions-District Attorney 1,746 1,964 1,516 1,470 1,367 1,273

Number of Bookings-Sheriff 19,629 25,415 17,780 17,901 17,939 19,174 Average Daily Population-Juvenile Hall 76 89 58 78 78 71 Average Intake-Juvenile Hall 173 180 111 175 153 130

# Number of building permits issued 760 990 829 923 890 940 Public ways and facilities

Miles of roads maintained 587 587 589 595 595 600 Health services & public assistance

Average monthly medical clinic visits 3,197 2,708 2,308 2,547 2,561 2,565 Average monthly dental clinic visits 429 354 344 368 344 403 Average monthly food stamp recipients 22,590 20,599 18,271 16,096 13,878 12,202 Average monthly MediCal enrollment 59,417 57,481 57,373 54,651 52,466 49,694 Average monthly CalWorks cash assistance recipients 13,390 12,486 10,792 11,118 10,330 9,623 Average monthly General Relief recipients 792 685 651 456 371 306

Education and recreation

COUNTY OF SOLANO, CALIFORNIAOperating Indicators by Function

Last Six Fiscal Years+

Education and recreationTotal circulation 3,283,812 2,951,709 2,686,203 2,753,787 2,646,019 2,418,093 Total circulation - SNAPweb 568,493 478,578 448,410 409,897 355,256 287,369 Number of library patrons 2,063,232 1,928,345 1,497,667 1,549,998 1,529,006 1,435,064 Number of parks 4 4 3 3 3 3 Number of park visitors 221,806 261,351 166,735 179,371 171,144 172,143

Nut Tree AirportTakeoffs and landings 102,500 105,000 101,500 n/a n/a n/a

Fouts Springs Youth FacilityAverage Daily Population 58 56 49 65 81 102

Internal serviceNumber of Fleet Vehicles 502 502 507 500 498 462 Number of Annual Fleet Miles Driven 5,300,563 4,947,911 4,529,923 4,519,141 4,579,844 4,443,087

+ 10 year data not readily availablen/a Information not available

# Information based on calendar year

Source: Various County departments

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2008 2007 2006 2005 2004 2003 2002 2001

Function/ProgramGeneral government

Buildings 15 13 13 12 11 11 11 11 Public protection

Sheriff sub stations 3 3 3 3 3 3 3 3 Patrol units 20 20 22 22 22 n/a n/a n/aJail and detention facilities 3 3 3 3 3 3 3 3

Public ways and facilitiesMiles of roads 587 587 589 595 595 600 600 n/a

Health services & public assistanceClinics & administration buildings 7 7 7 7 7 7 6 6

Education and recreationBranch libraries 8 8 7 6 6 6 6 6 Veterans buildings 5 5 5 5 5 5 5 5 Public parks acreage 1,925 1,925 225 225 225 225 225 225

Nut Tree AirportNumber of runways 1 1 1 1 1 1 1 1

Fouts Springs Youth FacilityDetention facilities 1 1 1 1 1 1 1 1

+ 10 Year data not readily availablen/a Information not available

COUNTY OF SOLANO, CALIFORNIACapital Asset Statistics by Function

Last Eight Fiscal Years+

Fiscal Year

Source: Various County departments

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APPENDIX C

DEFINITIONS OF CERTAIN TERMS ANDSUMMARY OF PRINCIPAL LEGAL DOCUMENTS

Certain provisions of the Trust Agreement, the Lease, the Site Lease, and the Assignment Agreement (the“Principal Legal Documents”), not previously discussed in this Official Statement are summarizedbelow. These summaries do not purport to be complete or definitive and are qualified in their entirety byreference to the full terms of the documents, as appropriate. Complete copies of the Principal LegalDocuments are available upon request from the Underwriter.

DEFINITIONS OF CERTAIN TERMS

The following are definitions of certain of the terms used in the Principal Legal Documents towhich reference is hereby made. The following definitions are equally applicable to both the singular andplural forms of any of the terms defined in the Trust Agreement and the Lease:

“Additional Payments” means all amounts payable to the Corporation or the Trustee or any otherperson from the County as Additional Payments under the Lease.

“Assignment Agreement” means that certain Assignment Agreement, by and between theCorporation and the Trustee, dated as of December 1, 2009, or as it may from time to time besupplemented, modified or amended.

“Base Rental Payment Fund” means the fund by that name established in the Lease and held bythe Trustee under the Trust Agreement.

“Base Rental Payments” means the base rental payments with interest components and principalcomponents payable by the County under and pursuant to the Lease.

“Business Day” means any day other than a Saturday, a Sunday or a day on which bankinginstitutions in San Francisco, California or New York, New York are authorized or obligated by law orexecutive order to be closed.

“Certificate of the Corporation” means an instrument in writing signed by the President or theVice President or the Treasurer or the Secretary or the Assistant Secretary of the Corporation, or by anyother officer of the Corporation duly authorized by the Corporation in writing to the Trustee for thatpurpose.

“Certificate of the County” means an instrument in writing signed by the Chair of the Board ofSupervisors of the County, or by the Clerk of the Board of Supervisors of the County, or the CountyAdministrative Officer of the County, or by the County Treasurer-Tax Collector of the County, or by anyother officer of the County duly authorized by the Board of Supervisors of the County in writing to theTrustee for that purpose.

“Certificate Payment Date” means, with respect to any Certificate, the November 15 datedesignated therein, which is the date on which the principal component of the Base Rental Paymentsevidenced and represented thereby shall become due and payable.

“Certificate Reserve Fund” shall have the meaning ascribed to such term in the Lease.

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“Certificate Reserve Fund Requirement” means $1,763,467.30, provided, however, that all or apart of such Certificate Reserve Fund Requirement may be provided by a policy of insurance issued by amunicipal bond insurance company, obligations insured by which have ratings by S&P and Moody’s atthe time of issuance that are the highest ratings then issued by said rating agencies or by a Letter of Creditissued by a Qualified Bank.

“Certificates” means the certificates of participation executed and delivered by the Trusteepursuant to the Trust Agreement and then Outstanding.

“Code” means the Internal Revenue Code of 1986.

“Corporation” means (i) the Solano County Facilities Corporation, Inc., a nonprofit public benefitcorporation duly organized and existing under and by virtue of the laws of the State of California, actingas lessor under the Lease; (ii) any surviving, resulting or transferee entity; and (iii) except where thecontext requires otherwise, any assignee of the Corporation, other than the Trustee.

“Costs of Delivery” means all items of expense directly or indirectly payable by or reimbursableto the County or the Corporation and related to the authorization, execution and delivery of the Lease, theSite Lease, the Trust Agreement, the Assignment Agreement and the execution and delivery of theCertificates, including, but not limited to, costs of preparation and reproduction of documents, costs ofrating agencies and costs to provide information required by rating agencies, filing and recording fees,fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants andprofessionals, fees and charges for preparation, execution and safekeeping of the Certificates, fees of theCorporation and any other authorized cost, charge or fee in connection with the delivery of theCertificates.

“Costs of Delivery Fund” means the fund by that name established pursuant to the TrustAgreement.

“Defeasance Securities” shall mean: (1) Cash; (2) U.S. Treasury Certificates, Notes and Bonds(including State and Local Government Series -- “SLGs”); (3) Direct obligations of the Treasury whichhave been stripped by the Treasury itself, CATS, TIGRS and similar securities; (4) Resolution FundingCorp. (REFCORP) -- only the interest component of REFCORP strips which have been stripped byrequest to the Federal Reserve Bank of New York in book entry form are acceptable; (5) Pre-refundedmunicipal bonds rated “Aaa” by Moody’s and “AAA” by S&P. If however, the issue is only rated byS&P (i.e., there is no Moody’s rating), then the pre-refunded bonds must have been pre-refunded withcash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy thiscondition; and (6) Obligations issued by the following agencies which are backed by the full faith andcredit of the U.S.: (i) U.S. Export-Import Bank (Eximbank) – direct obligations or fully guaranteedcertificates of beneficial ownership; (ii) Farmers Home Administration (FmHA) – certificates ofbeneficial ownership; (iii) Federal Financing Bank; (iv) General Services Administration – participationcertificates; (v) U.S. Maritime Administration – guaranteed Title XI financing; and (vi) U.S. Departmentof Housing and Urban Development (HUD) Project Notes – Leased Property Notes, Local CorporationBonds, new communities debentures – U.S. government guaranteed debentures, U.S. Public HousingNotes and Bonds – U.S. government guaranteed public housing notes and bonds.

“Event of Default” shall have the meaning specified in the Lease.

“Extraordinary Prepayment Fund” means the fund by that name established in the TrustAgreement.

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“Interest Fund” means the fund by that name established in the Trust Agreement.

“Interest Payment Date” means a date on which interest evidenced and represented by theCertificates becomes due and payable, being May 15 and November 15 of each year to which reference ismade (commencing on May 15, 2010).

“Lease” means that certain lease, entitled “Amended and Restated Lease Agreement (Series 2009Refunding Certificates of Participation),” by and between the Corporation and the County, dated as ofDecember 1, 2009, as originally executed and recorded or as it may from time to time be supplemented,modified or amended pursuant to the provisions of the Trust Agreement and the Lease.

“Leased Property” means that certain real property situated in the County of Solano, State ofCalifornia, described in the Lease, together with any additional real property added thereto by anysupplement or amendment to the Trust Agreement; subject, however, to any conditions, reservations, andeasements of record or known to the County.

“Letter of Credit” means an irrevocable and unconditional letter of credit, a standby purchaseagreement, a line of credit or other similar credit arrangement issued by a Qualified Bank to provide all ora portion of the Certificate Reserve Fund Requirement and submitted to and reviewed and approved byS&P and Moody’s.

“Moody’s” means Moody’s Investors Service, Inc., a corporation duly organized and existingunder and by virtue of the laws of the State of Delaware, and its successors and assigns, except that ifsuch corporation shall be dissolved or liquidated or shall no longer perform the functions of a securitiesrating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognizedsecurities rating agency selected by the County.

“Opinion of Counsel” means a written opinion of counsel of recognized national standing in thefield of law relating to municipal obligations, appointed and paid by the County or the Corporation andsatisfactory to and approved by the Trustee (who shall be under no liability by reason of such approval).

“Outstanding,” when used as of any particular time with reference to Certificates, means (subjectto the provisions of the Trust Agreement) all Certificates except –

(1) Certificates cancelled by the Trustee or delivered to the Trustee for cancellation;

(2) Certificates paid or deemed to have been paid within the meaning of thedefeasance section of the Trust Agreement; and

(3) Certificates in lieu of or in substitution for which other Certificates shall havebeen executed and delivered by the Trustee pursuant to the Trust Agreement.

“Owner” means any person who shall be the registered owner of any Outstanding Certificate.

“Payment Date” means that May 15 or November 15 during the period beginning November 15,2010 and terminating on November 15, 2019 to which reference is made.

“Permitted Encumbrances” means (1) liens for general ad valorem taxes and assessments, if any,not then delinquent, or which the County may, pursuant to the Lease, permit to remain unpaid; (2)easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants,conditions or restrictions which exist of record as of the date of recordation of the Lease in the office of

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the County Recorder of Solano County and which the County certifies in writing will not materiallyimpair the use of the Leased Property; (3) the Site Lease, as it may be amended from time to time; (4) theLease, as it may be amended from time to time; (5) the Assignment Agreement, as it may be amendedfrom time to time; (6) any right or claim of any mechanic, laborer, materialman, supplier or vendor notfiled or perfected in the manner prescribed by law; (7) easements, rights of way, mineral rights, drillingrights and other rights, reservations, covenants, conditions or restrictions established following the date ofrecordation of the Lease and to which the Corporation and the County consent in writing and which donot materially adversely affect the rights of owners of the Certificates; and (8) liens relating to specialassessments levied with respect to the Leased Property.

“Permitted Investments” means any of the following to the extent then permitted by the generallaws of the State of California applicable to investments by counties including, without limitation, theprovisions of California Government Code Section 5922(d): (1) Direct and general obligations of theUnited States of America (including obligations issued or held in book-entry form on the books of theDepartment of the Treasury) or obligations the principal of and interest on which are unconditionallyguaranteed by the United States of America; (2) Bonds, debentures, notes or other evidence ofindebtedness issued or guaranteed by any of the following federal agencies and provided such obligationsare backed by the full faith and credit of the United States of America (stripped securities are onlypermitted if they have been stripped by the agency itself): (a) Government National Mortgage Association(GNMA or “Ginnie Mae”); GNMA-guaranteed mortgage-backed bonds, GNMA-guaranteed pass-throughobligations (participation certificates) (not acceptable for certain cash-flow sensitive issues); (b) FarmersHome Administration (FmHA); Certificates of beneficial ownership; (c) General Services Administration;Participation certificates; (d) Federal Housing Administration Debentures (FHA); (e) U.S. MaritimeAdministration; Guaranteed Title XI financing; (f) U.S. Department of Housing and Urban Development(HUD); Project Notes, Local Authority Bonds; (g) Resolution Trust Corporation obligations consisting ofthe right to receive interest which has been separated from the right to receive principal; (3)Bonds,debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-fullfaith and credit U.S. government agencies (stripped securities are only permitted if they have beenstripped by the agency itself): (a) Federal Home Loan Bank System; Senior debt obligations(Consolidated debt obligations); (b) Federal Home Loan Mortgage Corporation (FHLMC or “FreddieMac”); Participation certificates (Mortgage-backed securities), Senior debt obligations; (c) FederalNational Mortgage Association (FNMA or “Fannie Mae”); Mortgage-backed securities and senior debtobligations (excluded are stripped mortgage securities which are valued greater than par on the portion ofunpaid principal); (d) Student Loan Marketing Association (SLMA or “Sallie Mae”); Senior debtobligations; (e) Resolution Funding Corp (REFCORP); Only the interest component of REFCORP stripswhich have been stripped by request to the Federal Reserve Bank of New York in book entry form areacceptable; (f) Farm Credit System; Consolidated systemwide bonds and notes; (4) Money market fundsregistered under the Federal Investment Company Act of 1940, whose shares are registered under theFederal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAAm; or AA-m and if ratedby Moody’s rated Aaa, Aa1 or Aa2; including funds offered by the Trustee, affiliates of the Trustee orother persons sharing an economic interest with the Trustee; (5) Certificates of deposit secured at all timesby collateral described in (1) and/or (2) above. Certificates of deposit must have a one year or lessmaturity. Such certificates must be issued by commercial banks, savings and loan associations or mutualsavings banks whose short term obligations are rated “A-1+” or better by S&P and “Prime-1” byMoody’s. The collateral must be held by a third party and the certificateholders must have a perfectedfirst security interest in the collateral; (6) Certificates of deposit, savings accounts, deposit accounts ormoney market deposits which are fully insured by FDIC, including BIF and SAIF; (7) InvestmentAgreements, including Guaranteed Investment Contracts; (8) Commercial paper rated “Prime-1 byMoody’s and “A-1+” or better by S&P; (9) Bonds or notes issued by any state or municipality which arerated by Moody’s and S&P in one or two of the highest long-term rating categories assigned by suchagencies; (10) Federal funds or bankers acceptances with a maximum term of one year of any bank which

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has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better byMoody’s and “A-1+” by S&P; (11) Repurchase agreements that provide for the transfer of securities froma dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cashfrom the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securitiesfirm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date; (12)Participation in the Solano County Investment Pool; and (13) Participation in the California AssetManagement Program.

“Principal Fund” means the fund by that name established in the Trust Agreement.

“Purchaser” means Wedbush Securities Inc, as underwriter and purchaser of the Certificates.

“Qualified Bank” means a state or national bank or trust company or savings and loan associationor a foreign bank with a domestic branch or agency which is organized and in good standing under thelaws of the United States or any state thereof or any foreign country, which has a capital and surplus of$50,000,000 or more and which has uncollateralized unsecured long term debt ratings by S&P andMoody’s of at least “A+” and “A1”, respectively.

“Rebate Fund” means the fund by that name established in the Trust Agreement.

“Rental Payments” means the Base Rental Payments.

“Representations Letter” means the blanket issuer letter of representations, dated as of December18, 1996, from the County to The Depository Trust Company, New York, New York.

“Site” means that certain real property described as such in the Site Lease, together with allproperty subsequently added thereto.

“Site Lease” means that certain lease, entitled “Amended and Restated Site Lease (Series 2009Refunding Certificates of Participation),” by and between the County and the Corporation, dated as ofDecember 1, 2009, as originally executed and recorded or as it may from time to time be supplemented,modified or amended pursuant to the provisions thereof and of the Trust Agreement.

“S&P” means Standard & Poor’s Ratings Group, a corporation duly organized and existing underand by virtue of the laws of the State of New York, and its successors and assigns, except that if suchcorporation shall be dissolved or liquidated or shall no longer perform the functions of a securities ratingagency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities ratingagency selected by the County.

“Supplemental Trust Agreement” means an agreement amending or supplementing the terms ofthe Trust Agreement entered into pursuant to the terms of the Trust Agreement.

“Tax Certificate” means the certificate relating to Section 103 of the Code, executed by theCounty on the date of delivery of the Certificates to the Purchaser, as originally delivered and as it may beamended from time to time.

“Trust Agreement” means the Trust Agreement by and among the Trustee, the Corporation andthe County, dated as of December 1, 2009, as originally executed and as it may from time to time beamended or supplemented by a Supplemental Trust Agreement or otherwise in accordance with the TrustAgreement.

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“Trustee” means Union Bank, N.A., a national banking association duly organized and existingunder and by virtue of the laws of the United States of America, or any other bank or trust companywhich may at any time be substituted in its place as provided in the Trust Agreement.

“Written Request of the Corporation” means an instrument in writing signed by or on behalf ofthe Corporation by its President or its Vice President or its Treasurer or its Secretary or an AssistantSecretary or by any other person (whether or not an officer of the Corporation) who is specificallyauthorized by resolution of the Board of Directors of the Corporation to sign or execute such a documenton its behalf.

“Written Request of the County” means an instrument in writing signed by the Chair of the Boardof Supervisors of the County, or by the Clerk of the Board of Supervisors of the County, or by theTreasurer-Tax Collector of the County, or by the County Administrative Officer of the County, or by anyother officer of the County duly authorized by the Board of Supervisors of the County in writing to theTrustee for that purpose.

TRUST AGREEMENT

The Trust Agreement, entered into among the County, the Corporation, and the Trustee, providesfor, among other things, the execution and delivery of the Certificates and sets forth the terms thereof,provides for the creation of certain of the funds described below, includes certain covenants of the Countyand the Corporation, defines events of default and remedies therefor, and sets forth the rights andresponsibilities of the Trustee.

Certain provisions of the Trust Agreement setting forth the terms of the Certificates, theprepayment provisions thereof and the use of the proceeds of the Certificates are set forth elsewhere inthis Official Statement. See “THE CERTIFICATES.”

Transfer and Payment of Certificates; Exchange of Certificates

All Certificates are transferable by the Owner thereof, in person or by his attorney dulyauthorized in writing, at the principal corporate trust office of the Trustee in Los Angeles, California onthe books required to be kept by the Trustee pursuant to the provisions of the Trust Agreement, uponsurrender of such Certificates for cancellation accompanied in the case of transfer by delivery of a dulyexecuted written instrument of transfer in the form appearing on the Certificate. The Trustee may treatthe Owner of any Certificate as the absolute owner of such Certificate for all purposes, whether or notsuch Certificate will be overdue, and the Trustee will not be affected by any knowledge or notice to thecontrary; and payment of the interest and principal represented by such Certificate will be made only tosuch Owner, which payments will be valid and effectual to satisfy and discharge the liability representedby such Certificate to the extent of the sum or sums so paid.

Whenever any Certificate or Certificates are to be surrendered for transfer, the Trustee willexecute and deliver a new Certificate or Certificates of the same Certificate Payment Date representingthe same principal amount. The Trustee will require the payment by any Owner requesting such transferof any tax or other governmental charge required to be paid with respect to such transfer.

Certificates may be exchanged at the principal corporate trust office of the Trustee in LosAngeles, California, for a like aggregate principal amount of Certificates of other authorizeddenominations of the same Certificate Payment Date. The Trustee will require the payment by the Ownerrequesting such exchange of any tax or other governmental charge required to be paid with respect tosuch exchange.

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The Trustee will not be required to transfer or exchange any Certificate after the last day of themonth next preceding each Payment Date or during the period designated by the Trustee for selection ofCertificates for prepayment, and the Trustee will not be required to transfer or exchange any Certificateselected for prepayment in whole or in part from and after the date of mailing the notice of prepayment ofsuch Certificate or such part thereof.

Pledge of Base Rental Payments; Base Rental Payment Fund

The Base Rental Payments are irrevocably pledged to and shall be used for the punctual paymentof the interest and principal represented by the Certificates, and the Base Rental Payments shall not beused for any other purpose while any of the Certificates remain Outstanding. This pledge shall constitutea first and exclusive lien on the Base Rental Payments in accordance with the terms of the TrustAgreement.

All Base Rental Payments will be paid directly by the County to the Trustee, and if received bythe Corporation at any time will be deposited by the Corporation with the Trustee within one business dayafter the receipt thereof. All Base Rental Payments will be held in trust by the Trustee the Base RentalPayment Fund, which fund the Trustee has agreed to establish and maintain so long as any Certificates areOutstanding, for the benefit of the County until deposited in the funds provided in the Trust Agreement,whereupon they will be held in trust by the Trustee in such funds for the benefit of the Owners from timeto time.

Deposit of Base Rental Payments

The Trustee shall deposit the Base Rental Payments contained in the Base Rental Payment Fundat the times and in the manner pursuant to the Trust Agreement in the following respective funds, each ofwhich the Trustee agrees to establish and maintain so long as any Certificates are Outstanding, and themoneys in each of such funds shall be disbursed only for the purposes and uses authorized in the TrustAgreement, and if there shall be insufficient money in any such fund, payments from such fund shall bemade in the manner specified in the Trust Agreement.

(a) Interest Fund. The Trustee, on May 15 and November 15 of each year(commencing on May 15, 2010), shall deposit in the Interest Fund that amount of moneys representingthe portion of the Base Rental Payments designated as interest components coming due on each such May15 and November 15 date, respectively. Moneys in the Interest Fund shall be used and withdrawn by theTrustee solely for the purpose of paying the interest represented by the Certificates when due and payable.

(b) Principal Fund. The Trustee, on November 15 of each year (commencing onNovember 15, 2010), shall deposit in the Principal Fund that amount of moneys representing the portionof the Base Rental Payments designated as the principal component coming due on such November 15date, respectively. Moneys in the Principal Fund shall be used and withdrawn by the Trustee solely forthe purpose of paying the principal represented by the Certificates when due and payable, including themandatory prepayment of any Certificates representing the principal components of Base Rental payablein more than one year.

(c) Extraordinary Prepayment Fund. The Trustee, on the prepayment date specifiedin the Written Request of the County filed with the Trustee at the time that any prepaid Base RentalPayment is paid to the Trustee pursuant to the Lease, shall deposit in the Extraordinary Prepayment Fundthat amount of moneys representing the portion of the Base Rental Payments designated as prepaid BaseRental Payments. Moneys in the Extraordinary Prepayment Fund shall be used and withdrawn by theTrustee solely for the purpose of paying the interest and principal and any applicable premium

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represented by the Certificates to be prepaid.

If any funds shall remain on deposit in the Base Rental Payment Fund on any May 15 orNovember 15 after the Trustee shall have transferred the required amounts to the Interest Fund, PrincipalFund and Extraordinary Prepayment Fund as provided above, such excess shall be held in the Base RentalPayment Fund and shall be applied as a credit against the Base Rental Payment next due under the Lease.

Establishment and Application of Rebate Fund

The Trustee will establish and maintain a fund separate from any other fund established andmaintained under the Trust Agreement designated as the Rebate Fund. Within the Rebate Fund, theTrustee will maintain such accounts as will be specified in a Written Request of the County necessary inorder to comply with the terms and requirements of the Tax Certificate. Subject to the transfer provisionsprovided below, all money at any time deposited in the Rebate Fund will be held by the Trustee in trust,to the extent required to satisfy the Rebate Amount (as defined in the Tax Certificate) for payment to thefederal government of the United States of America. The County and the Owners of any Certificates willhave no rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fundwill be governed by the Trust Agreement, by the Lease and by the Tax Certificate (which is incorporatedinto the Trust Agreement by reference). The Trustee will be deemed conclusively to have complied withsuch provisions if it follows a Written Request of the County including supplying all necessaryinformation in the manner provided in the Tax Certificate and will have no liability or responsibility toenforce compliance by the County with the terms of the Tax Certificate.

Investments

Upon the Written Request of the County, any moneys held by the Trustee in the Costs of DeliveryFund, Base Rental Payment Fund or in the Certificate Reserve Fund will be invested as directed in aWritten Request of the County in Permitted Investments which will, as nearly as practicable, mature on orbefore the dates when such moneys are anticipated to be needed for disbursement under the TrustAgreement or under the Lease. Such Written Requests of the County will not be inconsistent with theinvestments permitted under the Trust Agreement. In the absence of such Written Request of the County,the Trustee is instructed to invest the aforementioned moneys in money market funds meeting therequirements of clause (4) of the definition of Permitted Investments. The Trustee or an affiliate of theTrustee may act as agent in the acquisition or disposition of any such investment. The County will notifythe Trustee in writing if any investments included in the definition of Permitted Investments are no longerlegal investments for counties in California or do not constitute Permitted Investments under the TrustAgreement. The Trustee will not be liable or responsible for any loss suffered in connection with anysuch investment made by it under the terms of and in accordance with the Trust Agreement. The Trusteemay sell or present for redemption any obligations so purchased whenever it will be necessary in order toprovide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund oraccount to which such investment is credited and the Trustee will not be liable or responsible for anylosses resulting from any such investment sold or presented for redemption. All interest, profits and otherearnings received from the investment of moneys in any fund or account established under the TrustAgreement and not needed to restore the Certificate Reserve Fund to the Certificate Reserve FundRequirement shall be deposited in the Base Rental Payment Fund created pursuant to the Lease.

Compliance with or Amendment of Site Lease or Lease

The Corporation and the County will faithfully comply with, keep, observe and perform all theagreements, conditions, covenants and terms contained in the Site Lease and the Lease required to be

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complied with, kept, observed and performed by them and will enforce the Site Lease and the Leaseagainst the other party thereto in accordance with their terms.

The Corporation and the County will not alter, amend or modify the Site Lease or the Leasewithout the prior written consent of the Trustee, which consent of the Trustee will be given only (i) if theTrustee receives an Opinion of Counsel and a Certificate of the County, upon which it may conclusivelyrely that such alterations, amendments or modifications are not materially adverse to the interests of theOwners, or (ii) to add to the covenants and agreements of any party, other covenants to be observed, or tosurrender any right or power therein reserved to the County, or (iii) to cure, correct or supplement anyambiguous or defective provision contained therein, or (iv) to resolve questions arising thereunder, as theparties thereto may deem necessary or desirable and which, based upon an Opinion of Counsel and aCertificate of the County (upon which the Trustee may conclusively rely), the Trustee acknowledges donot materially adversely affect the interests of the Owners of the Certificates, or (v) to modify the legaldescription of the Site to conform to the requirements of title insurance or otherwise to add or deleteproperty descriptions to reflect accurately the description of the parcels intended to be included therein, or(vi) to provide for the requirements of any entity providing a policy of municipal bond insurance or letterof credit or similar financial instrument for deposit in the Certificate Reserve Fund established pursuant tothe Lease to satisfy all or a portion of the Certificate Reserve Fund Requirement, so long as suchalterations, amendments or modifications are not materially adverse to the interests of the Owners, or(vii) if the Trustee first obtains the written consents of the Owners of at least a majority in aggregateprincipal amount of the Certificates then Outstanding to such alterations, amendments or modifications;provided, however, that no such alteration, amendment or modification will extend the date for themaking of any Rental Payment, extend a Certificate Payment Date or reduce the rate of interestrepresented by any Certificate or extend the time of payment of such interest or reduce the amount ofprincipal represented thereby without the prior written consent of the Owner of any Certificate soaffected, nor will any such alteration, amendment or modification reduce the percentage of Owners whoseconsent is required for the execution of any alteration, amendment or supplement.

Other Liens

The County will keep the Site and the Leased Property and all parts thereof free from judgmentsand materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liensof whatever nature or character other than Permitted Encumbrances, and free from any claim or liabilitywhich might embarrass or hamper the County in conducting its business or utilizing the Site and theLeased Property, and the Trustee at its option (after first giving the County ten days’ written notice tocomply therewith and failure of the County to so comply within such ten-day period) may defend againstany and all actions or proceedings in which the validity is or might be questioned, or may pay orcompromise any claim or demand asserted in any such actions or proceedings; provided, however, that, indefending against any such actions or proceedings or in paying or compromising any such claims ordemands, the Trustee will not in any event be deemed to have waived or released the County fromliability for or on account of any of its agreements and covenants contained in the Trust Agreement, orfrom its liability under the Trust Agreement to defend the validity of the Trust Agreement and to performsuch agreements and covenants.

So long as any Certificates are Outstanding, neither the Corporation nor the County will create orsuffer to be created any pledge of or lien on the Base Rental Payments other than the pledge and lien ofthe Trust Agreement.

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Action on Default

If an Event of Default (as that term is defined in the Lease) occurs, then such Event of Defaultwill constitute a default under the Trust Agreement, and in each and every such case during thecontinuance of such Event of Default the Trustee or the Owners of not less than a majority in aggregateprincipal amount represented by the Certificates at the time Outstanding will be entitled, upon notice inwriting to the County, to exercise the remedies provided to the Corporation in the Lease and to theTrustee in the Assignment Agreement.

Other Remedies of the Trustee

The Trustee will have the right --

(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rightsagainst the Corporation or the County or any member, director, officer or employee thereof, and tocompel the Corporation or the County or any such member, director, officer or employee to perform orcarry out its or his or her duties under law and the agreements and covenants required to be performed byit or him or her contained in the Trust Agreement;

(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights ofthe Trustee; or

(c) by suit in equity upon the happening of any default under the Trust Agreement to requirethe Corporation and the County and any members, directors, officers and employees thereof to account asthe trustee of an express trust.

Non-Waiver

A waiver of any default or breach of duty or contract by the Trustee will not affect anysubsequent default or breach of duty or contract or impair any rights or remedies on any such subsequentdefault or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedyaccruing upon any default or breach of duty or contract will impair any such right or remedy or will beconstrued to be a waiver of any such default or breach of duty or contract or an acquiescence therein, andevery right or remedy conferred upon the Trustee by law or by the Trust Agreement may be enforced andexercised from time to time and as often as will be deemed expedient by the Trustee.

If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned ordetermined adversely to the Trustee, the Trustee and the Corporation and the County will be restored totheir former positions, rights and remedies as if such action, proceeding or suit had not been brought ortaken.

No Liability by the Corporation to the Owners

The Corporation will not have any obligation or liability to the Owners with respect to thepayment when due of the Rental Payments by the County, or with respect to the performance by theCounty of the other agreements and covenants required to be performed by it contained in the Lease or inthe Trust Agreement, or with respect to the performance by the Trustee of any right or obligation requiredto be performed by it contained in the Trust Agreement.

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No Liability by the County to the Owners

Except for the payment when due of the Rental Payments and the performance of the otheragreements and covenants required to be performed by it contained in the Lease or in the TrustAgreement, the County will not have any obligation or liability to the Owners with respect to the TrustAgreement or the preparation, execution, delivery or transfer of the Certificates or the disbursement of theBase Rental Payments by the Trustee to the Owners, or with respect to the performance by the Trustee ofany right or obligation required to be performed by it contained in the Trust Agreement.

No Liability by the Trustee to the Owners

Except as expressly provided in the Trust Agreement, the Trustee will not have any obligation orliability to the Owners with respect to the payment when due of the Base Rental Payments by the County,or with respect to the performance by the County or the Corporation of other agreements and covenantsrequired to be performed by either of them contained in the Lease or in the Trust Agreement.

Application of Money Collected

Any money collected by the Trustee pursuant to an Event of Default will be applied in thefollowing order, at the date or dates fixed by the Trustee:

FIRST, Costs and Expenses: to the payment of the costs and expenses of the Trustee andof the Owners in declaring such Event of Default and exercising their rights and remedies under the TrustAgreement, including reasonable compensation and disbursements to its or their agents, attorneys andcounsel;

SECOND, Interest: to the payment to the persons entitled thereto of all payments ofinterest represented by the Certificates then due in the order of the due date of such payments, and, if theamount available will not be sufficient to pay in full any payment or payments coming due on the samedate, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitledthereto, without any discrimination or preference; and

THIRD, Principal: to the payment to the persons entitled thereto of the unpaid principalrepresented by any Certificates which will have become due, whether on the Payment Date or by call forprepayment, in the order of their due dates, with interest on the overdue principal and interest representedby the Certificates at a rate equal to the rate paid with respect to the Certificates and, if the amountavailable will not be sufficient to pay in full all the amounts due with respect to the Certificates on anydate, together with such interest, then to the payment thereof ratably, according to the amounts ofprincipal due on such date to the persons entitled thereto, without any discrimination or preference.

Limitations on Suits

No Owner of any Certificate will have any right to institute any proceeding, judicial or otherwise,with respect to the Trust Agreement, or for the appointment of a receiver or trustee, or for any otherremedy under the Trust Agreement, unless

1. such Owner has previously given written notice to the Trustee of a continuingEvent of Default;

2. the Owners of not less than a majority in principal amount of the OutstandingCertificates will have made written request to the Trustee to institute proceedings in respect of such Event

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of Default in its own name as Trustee under the Trust Agreement;

3. such Owner or Owners have offered to the Trustee reasonable indemnity againstthe costs, expenses and liabilities to be incurred in compliance with such request; and

4. the Trustee for 60 days after its receipt of such notice, request and offer ofindemnity has failed to institute any such proceeding;

it being understood and intended that no one or more Owners of Certificates will have any right in anymanner whatever by virtue of, or by availing of, any provision of the Trust Agreement to affect, disturb orprejudice the rights of any other Owners of Certificates, or to obtain or to seek to obtain priority orpreference over any other Owners or to enforce any right under the Trust Agreement, except in themanner provided and for the equal and ratable benefit of all Owners of the Certificates.

Duties, Removal and Resignation of the Trustee

So long as no Event of Default has occurred and is continuing, the Corporation and the County orthe Owners of a majority in aggregate principal amount represented by the Certificates at the timeOutstanding, may by an instrument in writing remove the Trustee initially a party to the Trust Agreementand any successor thereto and may appoint a successor Trustee, but any Trustee under the TrustAgreement will be a bank or trust company (or an affiliate of one) doing business in California, having(alone or together with its corporate parent) a combined capital (exclusive of borrowed capital) andsurplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by federalor state authorities. If such bank or trust company publishes a report of condition at least annually,pursuant to law or to the requirements of any supervising or examining authority above referred to, thenfor the purposes of the Trust Agreement the combined capital and surplus of such bank or trust companywill be deemed to be its combined capital and surplus as set forth in its most recent report of condition sopublished.

Any company into which the Trustee may be merged or converted or with which it may beconsolidated or any company resulting from any merger, conversion or consolidation to which it will be aparty or any company to which the Trustee may sell or transfer all or substantially all of its corporate trustbusiness, provided that such company will be eligible under the Trust Agreement, will be the successor tothe Trustee without the execution or filing of any paper or further act, anything in the Trust Agreement tothe contrary notwithstanding.

The Trustee may at any time resign by giving written notice of such resignation to theCorporation, the County and the Owners, which notice to the Owners will be mailed, first class postageprepaid. Upon receiving such notice of resignation, the Corporation and the County will promptlyappoint a successor Trustee by an instrument in writing; provided, however, that in the event theCorporation and the County do not appoint a successor Trustee within thirty (30) days following receiptof such notice of resignation, the resigning Trustee may petition the appropriate court having jurisdictionto appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successorTrustee will become effective only upon acceptance of appointment by the successor Trustee.

Protection of the Trustee

The Trustee will be protected and will incur no liability in acting or proceeding in good faithupon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, telegram,voucher, waiver or other paper or document which it will in good faith believe to be genuine and to havebeen adopted, executed or delivered by the proper party or pursuant to any of the provisions of the Trust

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Agreement, and the Trustee will be under no duty to make any investigation or inquiry as to anystatements contained or matters referred to in any such instrument, but may accept and rely upon the sameas conclusive evidence of the truth and accuracy of such statements. The Trustee will not be bound torecognize any person as an Owner of any Certificate or to take any action at the request of any suchperson unless such Certificate will be deposited with the Trustee or satisfactory evidence of the ownershipof such Certificate will be furnished to the Trustee. The Trustee may consult with counsel, who may becounsel to the Corporation or the County, with regard to legal questions, and the opinion of such counselwill be full and complete authorization and protection in respect to any action taken or suffered by itunder the Trust Agreement in good faith in accordance therewith.

The Trustee will not be responsible for the sufficiency, validity, or priority of the Site Lease orthe Lease, or of the assignment made to it by the Assignment Agreement of all rights to receive the RentalPayments under the Lease, or of the title to or value of the Site and the Leased Property.

Whenever in the administration of its rights and obligations under the Trust Agreement theTrustee will deem it necessary or desirable that a matter be proved or established prior to taking orsuffering any action under the Trust Agreement, such matter (unless other evidence in respect thereof bespecifically prescribed in the Trust Agreement) may be deemed to be conclusively proved and establishedby a Certificate of the County or a Certificate of the Corporation, and such certificate will be full warrantto the Trustee for any action taken or suffered under the provisions of the Trust Agreement upon the faiththereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or mayrequire such additional evidence as to it may seem reasonable.

The Trustee may buy, sell, own, hold and deal in any of the Certificates and may join in anyaction which any Owner may be entitled to take with like effect as if the Trustee were not a party. TheTrustee, either as principal or agent, may also engage in or be interested in any financial or othertransaction with the Corporation or the County, and may act as agent, depositary or trustee for anycommittee or body of Owners or of owners of obligations of the Corporation or the County as freely as ifit were not the Trustee under the Trust Agreement.

The Trustee will not be answerable for the exercise of any trusts or powers under the TrustAgreement or for anything whatsoever in connection with the funds established under the TrustAgreement, except only for its own negligence or willful misconduct. The Trustee will not be deemed tohave knowledge of any Event of Default under the Trust Agreement unless and until it will have actualknowledge thereof.

The Trustee undertakes to perform such duties and only such duties as are specifically set forth inthe Trust Agreement and in the Lease, and no implied covenants or obligations, fiduciary or otherwise,will be read into the Trust Agreement against the Trustee.

The Trustee has no obligation or liability to the Owners to make payment of principal, premium,if any, or interest pertaining to the Certificates except from Base Rental Payments. No provision of theTrust Agreement will require the Trustee to expend or risk its own funds or otherwise incur any financialliability in the performance of its duties under the Trust Agreement, or in the exercise of any of its rightsand powers, if it will have reasonable grounds for believing the repayment of such funds or adequateindemnity against such risk or liability is not reasonably assured to it.

Amendment or Supplement

The Trust Agreement and the rights and obligations of the Corporation and the County and theOwners and the Trustee under the Trust Agreement may be amended or supplemented at any time by an

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amendment or supplement which will become binding when the written consents of the Owners of amajority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificatesdisqualified as provided in the Trust Agreement, are filed with the Trustee. No such amendment orsupplement will (1) change the fixed Certificate Payment Date of any Certificate or reduce the rate ofinterest represented thereby or extend the time of payment of such interest or reduce the amount ofprincipal represented thereby without the prior written consent of the Owner of the Certificate so affected,or (2) reduce the percentage of Owners whose consent is required for the execution of any amendment orsupplement of the Trust Agreement, or (3) modify any of the rights or obligations of the Trustee withoutits prior written consent thereto, or (4) amend the provisions concerning amendments and supplementswithout the prior written consent of the Owners of all Certificates then Outstanding.

The Trust Agreement and the rights and obligations of the Corporation and the County and theOwners and the Trustee under the Trust Agreement may also be amended or supplemented at any time byan amendment or supplement which will become binding upon execution without the written consents ofany Owners, but only to the extent permitted by law and after receipt of an approving Opinion of Counseland only for any one or more of the following purposes –

(a) to add to the agreements, conditions, covenants and terms required by theCorporation or the County to be observed or performed in the Trust Agreement other agreements,conditions, covenants and terms thereafter to be observed or performed by the Corporation or the County,or to surrender any right or power reserved to or conferred in the Trust Agreement on the Corporation orthe County, and which in either case will not materially adversely affect the interests of the Owners; or

(b) to make such provisions for the purpose of curing any ambiguity or of correcting,curing or supplementing any defective provision contained in the Trust Agreement or in regard toquestions arising under the Trust Agreement which the Corporation or the County may deem desirable ornecessary and not inconsistent with the Trust Agreement, and which will not materially adversely affectthe interests of the Owners; or

(c) to modify, amend or supplement the Trust Agreement or any agreementsupplemental thereto in such manner as to permit the qualification of the Trust Agreement and eitherunder the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or to permit thequalification of the Certificates for sale under the securities laws of the United States of America or ofany of the states of the United States of America, and, if they so determine, to add to the Trust Agreementor any agreement supplemental thereto such other terms, conditions and provisions as may be permittedby said Trust Indenture Act of 1939 or similar federal statute; or

(d) to make any modifications or changes necessary or appropriate in the Opinion ofCounsel to preserve or protect the exclusion from gross income of interest represented by the Certificatesfor federal income tax purposes; or

(e) to provide for the requirements of any entity providing a policy of municipalbond insurance or letter of credit or similar financial instrument for deposit in the Certificate ReserveFund established pursuant to the Lease to satisfy all or a portion of the Certificate Reserve FundRequirement, so long as such alterations, amendments or modifications are not materially adverse to theinterests of the Owners.

Discharge of Certificates and Trust Agreement

If the County will pay or cause to be paid or there will otherwise be paid to the Owners of allOutstanding Certificates the interest and principal and premium, if any, represented thereby at the times

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and in the manner stipulated in the Trust Agreement, then such Owners will cease to be entitled to thepledge of and lien on the Base Rental Payments as provided in the Trust Agreement, and all agreementsand covenants of the Corporation, the County and the Trustee to such Owners under the Trust Agreementwill thereupon cease, terminate and become void and will be discharged and satisfied except only asprovided below.

Any Outstanding Certificates will be deemed to have been paid if there will be on deposit withthe Trustee Defeasance Securities (not callable by the issuer thereof prior to maturity) in an amountsufficient (together with the increment, earnings and interest on such securities) to pay the interest andprincipal and premium, if any, represented by such Certificates payable on their Payment Dates or on anydates of prepayment prior thereto, except that the Owners thereof will be entitled to the principal,premium and interest represented by such Certificates, and the County will remain liable for such BaseRental Payments, but only out of such moneys or securities deposited with the Trustee as aforesaid forsuch payment.

Unclaimed Moneys

Anything contained in the Trust Agreement to the contrary notwithstanding, any moneys held bythe Trustee in trust for the payment and discharge of the interest, premium, if any, or principal representedby any of the Certificates which remain unclaimed for two (2) years after the date when the paymentsrepresented by such Certificates have become payable, if such moneys were held by the Trustee at suchdate, or for two (2) years after the date of deposit of such moneys if deposited with the Trustee after thedate when the interest, premium, if any, and principal represented by such Certificates have becomepayable, shall be repaid by the Trustee to the County as its absolute property free from trust, and theTrustee shall thereupon be released and discharged with respect thereto and the Owners shall look only tothe County for the payment of the interest and principal represented by such Certificates.

Waiver of Personal Liability

No member of the Board of Supervisors, officer or employee of the County will be individuallyor personally liable for the payment of the interest or principal represented by the Certificates, but nothingcontained in the Trust Agreement will relieve any member of the Board of Supervisors, officer oremployee of the County from the performance of any official duty provided by any applicable provisionsof law or by the Lease or by the Trust Agreement.

LEASE

Term; Occupancy

The term of the Lease will commence on the date of its recordation in the office of the CountyRecorder of Solano County, State of California, or on December 1, 2009 whichever is earlier, and willend on November 15, 2019, unless such term is extended or sooner terminated as provided in the Lease.

If on November 15, 2019, the Certificates will not be fully paid, or if the rental payable under theLease will have been abated at any time and for any reason, then the term of the Lease will be extendeduntil ten (10) days after all Certificates will be fully paid, except that the term of the Lease will in noevent be extended beyond November 15, 2029. If prior to November 15, 2019, all Certificates will befully paid, or provision therefor made, the term of the Lease will end ten (10) days thereafter or ten (10)days after written notice by the County to the Corporation, whichever is earlier.

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Substitution

The County and the Corporation may substitute property as part of the Leased Property forpurposes of the Site Lease and the Lease, but only after the County will have filed with the Corporationand the Trustee, with copies to each rating agency then providing a rating for the Certificates, all of thefollowing:

(a) Executed copies of the Site Lease and the Lease or amendments theretocontaining the amended description of the Leased Property, including the legal description of the LeasedProperty as modified if necessary;

(b) A Certificate of the County with copies of the Site Lease, the Lease and theAssignment Agreement, if needed, or amendments thereto containing the amended description of theLeased Property stating that such documents have been duly recorded in the official records of the CountyRecorder of the County of Solano;

(c) A Certificate of the County, accompanied by a written appraisal, from a qualifiedappraiser, who may but need not be an employee of the County, evidencing that the annual fair rentalvalue of the Leased Property which will constitute the Leased Property after such substitution will be atleast equal to 100% of the maximum amount of Base Rental Payments becoming due in the then currentyear ending October 31 (this requirement will be deemed satisfied if the property to be substituted has afair market value at least equal to the remaining principal amount of Base Rental Payments, unpaid) or inany subsequent year ending October 31, or, in the case of facilities constructed within two years of thedate of the substitution, evidence that the cost of the facility being substituted is at least equal to the costor estimated cost of the facility being replaced;

(d) A California Land Title Association leasehold owner’s policy or policies or acommitment for such policy or policies or an amendment or endorsement to an existing policy or policiesresulting in title insurance with respect to the Leased Property after such substitution in an amount at leastequal to the amount of such insurance provided with respect to the Leased Property prior to suchsubstitution; each such insurance instrument, when issued, will name the Trustee as the insured, and willinsure the fee or leasehold estate of the Corporation in such substituted property subject only to suchexceptions as do not substantially interfere with the County’s right to use and occupy such substitutedproperty and as will not result in an abatement of Base Rental Payments payable by the County under theLease;

(e) A Certificate of the County stating that such substitution does not adverselyaffect the County’s use and occupancy of the Leased Property; and

(f) An Opinion of Counsel stating that such amendment or modification (i) isauthorized or permitted by the Constitution and laws of the State of California and the Trust Agreement;(ii) complies with the terms of the Constitution and laws of the State of California and of the TrustAgreement; (iii) will, upon the execution and delivery thereof, be valid and binding upon the Corporationand the County in accordance with its terms; and (iv) will not cause the interest component of the BaseRental Payments to be included in gross income for federal income tax purposes.

Base Rental Payments

The County agrees to pay to the Corporation, as Base Rental Payments for the use and occupancyof the Leased Property annual rental payments with principal and interest components, the interestcomponents being payable semi-annually, in accordance with the Rental Payment Schedule. Base Rental

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will be calculated on an annual basis, for the twelve-month periods commencing on November 1 andending on October 31, and each annual Base Rental will be divided into two interest components, payableon May 1 and November 1 of each rental payment period, and one principal component, payable onNovember 1 of each rental payment period, except that the first Base Rental Payment period willcommence on the date of recordation of the Lease or a memorandum thereof in the office of the CountyRecorder of Solano County and will end on October 31, 2010 and no Base Rental will be payable for suchperiod. Each Base Rental Payment installment will be payable on its due date and any interest or otherincome with respect thereto accruing prior to such due date will belong to the County and will be returnedby the Corporation to the County on June 1 and December 1 of each year. The interest components of theBase Rental Payments will be paid by the County as and constitute interest paid on the principalcomponents of the Base Rental Payments to be paid by the County under the Lease, computed on thebasis of a 360-day year composed of twelve 30-day months. Each annual payment of Base Rental (to bepayable in two installments as aforesaid) will be for the use of the Leased Property or portions thereof forthe twelve-month period commencing on October 1 of the period in which such installments are payable.If the term of the Lease will have been extended, Base Rental Payment installments will continue to bedue on May 1 and November 1 in each year, and payable as described in the Lease, continuing to andincluding the date of termination of the Lease, in an amount equal to the amount of Base Rental payablefor the twelve-month period commencing November 1, 2019. Upon such extension of the Lease, theprincipal and interest components of the Base Rental Payments will be established so that the principalcomponents will in the aggregate be sufficient to pay all unpaid principal components with interestcomponents sufficient to pay all unpaid interest components plus interest on the extended principalcomponents at a rate equal to the rate of interest on the principal component of the Base Rental payableon November 1, 2019.

If at any time the Base Rental under the Lease will not have been paid by the County, for anyreason not permitted under the Lease, and no other source of funds will have been available to make thepayments of principal and interest represented by the Certificates to the persons entitled to receive suchpayments, the principal and interest components of the Base Rental will be recalculated by the County toreflect interest on the unpaid principal components at the rate or rates specified in the Trust Agreement,and revised Rental Payment Schedules will be prepared by the County and supplied to the Corporationand the Trustee reflecting such reallocation.

Additional Payments

The County will also pay such amounts (called the “Additional Payments”) as will be required bythe Corporation for the payment of all costs and expenses incurred by the County in connection with theexecution, performance or enforcement of the Lease or any assignment of the Lease, the TrustAgreement, its interest in the Leased Property and the lease of the Leased Property to the County,including but not limited to payment of all fees, costs and expenses and all administrative costs of theCounty related to the Leased Property, including, without limiting the generality of the foregoing, salariesand wages of employees, all expenses, compensation and indemnification of the Trustee payable by theCounty under the Trust Agreement, fees of auditors, accountants, attorneys or architects, and all othernecessary administrative costs of the County or charges required to be paid by it in order to maintain itsexistence or to comply with the terms of the Certificates or of the Trust Agreement; but not including inAdditional Payments amounts required to pay the principal or interest represented by the Certificates.

Such Additional Payments will be billed to the County by the Corporation or the Trustee fromtime to time, together with a statement certifying that the amount billed has been paid by the Trustee onbehalf of the Corporation, for one or more of the items above described, or that such amount is thenpayable by the Trustee for such items. Amounts so billed will be paid by the County within 15 days afterreceipt of the bill by the County. The County reserves the right to audit billings for Additional Payments

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although exercise of such right will in no way affect the duty of the County to make full and timelypayment for all Additional Payments. Any payments of Additional Payments not expended upon receiptwill be held by the Trustee in the Base Rental Fund pursuant to the Trust Agreement.

Fair Rental Value

Such payments of Base Rental Payments for each rental period during the term of the Lease willconstitute the total rental for said rental period and will be paid by the County in each rental paymentperiod for and in consideration of the right of use and occupancy of, and continued quiet use andenjoyment of, the Leased Property during each such period for which said rental is to be paid. The partiesto the Lease have agreed and determined that such total rental payable for each twelve-month periodbeginning November 1 represents the fair rental value of the Leased Property for each such period. Inmaking such determination, consideration has been given to costs of construction and financing of theLeased Property, other obligations of the parties under the Lease, the uses and purposes which may beserved by the Leased Property and the benefits therefrom which will accrue to the County and the generalpublic.

Lease Fund; Certificate Reserve Fund; Investments

Base Rental Payment Fund. In consideration for the agreements and covenants of the County inthe Lease, upon the sale and delivery of the Certificates, the Corporation agrees to pay to the County asum (which will include the amount of accrued interest, if any, received by the Trustee upon the sale ofthe Certificates) equal to the Base Rental Payments due from the County to the Corporation for deposit ina separate special fund, to be held by the Trustee for and on behalf of the County, known as the “Lease(Series 2009 Refunding Certificates of Participation) Base Rental Payment Fund.

On June 1 and December 1 of each year completed, the Trustee will apply any earnings oninvestments of money in the Base Rental Payment Fund as a credit against the Base Rental Paymentspursuant to the Trust Agreement. The County pledges and grants a lien on and a security interest in theBase Rental Payment Fund to the Corporation in order to secure the County’s obligation to pay the BaseRental Payments.

Certificate Reserve Fund. In further consideration for the agreements and covenants of theCounty in the Lease, the Corporation further agrees to cause to be paid to the County upon the sale anddelivery of the Certificates a sum equal to the Certificate Reserve Fund Requirement for deposit with theTrustee in a separate special fund, to be held by the Trustee for and on behalf of the County, known as the“Certificate Reserve Fund.”

If on June 1 or December 1 of any year the amount in the Certificate Reserve Fund exceeds theCertificate Reserve Fund Requirement, the Trustee, if the County is not then in default under the Leaseand if the Corporation and the County are not then in default under the Trust Agreement, shall pay theamount of such excess to the County by depositing such amount in the Base Rental Payment Fund.Except for such withdrawals, the County agrees to apply the moneys on deposit in the Certificate ReserveFund solely for the payment of Base Rental Payments due and payable by the County if and when rentalshall be abated in accordance with the Lease or when other moneys of the County are not otherwiseavailable to make such Base Rental Payments. The County pledges and grants a lien on and a securityinterest in the Certificate Reserve Fund to the Corporation in order to secure the County’s obligation topay the Base Rental Payments as provided in the Lease. The County further agrees that if at any time thebalance in the Certificate Reserve Fund shall be reduced below the Certificate Reserve FundRequirement, the first payments of Base Rental Payments thereafter payable by the County and notneeded to pay Base Rental interest and principal components payable to the Certificate Owners on the

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next Base Rental due date shall be used to increase the balance in the Certificate Reserve Fund to therequired Certificate Reserve Fund Requirement. At the termination of the Lease in accordance with itsterms, any balance remaining in the Certificate Reserve Fund shall be released from the foregoing pledge,lien and security interest and may be transferred to such other fund or account of the County, or otherwiseused by the County for any other lawful purposes, as the County may direct.

Investments. Investments of any moneys held by the Trustee in the Base Rental Payment Fundwill be invested in accordance with the Trust Agreement.

Use of the Leased Property

The County has agreed to use and occupy the Leased Property for its governmental purposesduring term of the Lease.

Maintenance and Utilities

During such time as the County is in possession of the Leased Property, all maintenance andrepair, both ordinary and extraordinary, of the Leased Property and any taxes on the Leased Property willbe the responsibility of the County, which will at all times maintain or otherwise arrange for themaintenance of the Leased Property in first class condition, and the County will pay for or otherwisearrange for the payment of all utility services supplied to the Leased Property, which may include,without limitation, janitor service, security, power, gas, telephone, light, heating, ventilation, airconditioning, water and all other utility services, and will pay for or otherwise arrange for payment of thecost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want ofcare on the part of the County or any assignee or sublessee thereof or any other cause and will pay for orotherwise arrange for the payment of all insurance policies required to be maintained with respect to theLeased Property. In exchange for the rental provided in the Lease, the Corporation agrees to provide onlythe Leased Property.

Changes to the Leased Property

The County has the right to remodel the Leased Property or to make additions, modifications andimprovements to the Leased Property. All such additions, modifications and improvements shallthereafter comprise part of the Leased Property and be subject to the provisions of the Lease. Suchadditions, modifications and improvements shall not in any way damage the Leased Property or cause itto be used for purposes other than those authorized under the provisions of state and federal law; and theLeased Property, upon completion of any such additions, modifications and improvements, shall be of avalue which is at least equal to the value of the Leased Property immediately prior to the making of suchadditions, modifications and improvements.

Installation of County’s Equipment

The County and any sublessee may at any time and from time to time, in its sole discretion and atits own expense, install or permit to be installed other items of equipment or other personal property in orupon the Leased Property. All such items shall remain the sole property of such party, in which neitherthe Corporation nor the Trustee shall have any interest, and may be modified or removed by such party atany time provided that such party shall repair and restore any and all damage to the Leased Propertyresulting from the installation, modification or removal of any such items. Nothing in the Lease shallprevent the County from purchasing items to be installed under a conditional sale or lease purchasecontract, or subject to a vendor’s lien or security agreement as security for the unpaid portion of the

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purchase price thereof, provided that no such lien or security interest shall attach to any part of the LeasedProperty.

Insurance Proceeds; Form of Policies

All policies of insurance required by the Lease will provide that all proceeds thereunder will bepayable to the Trustee pursuant to a lender’s loss payable endorsement substantially in accordance withthe form approved by the Insurance Services Office and the California Bankers Association. The Trusteewill collect, adjust and receive all moneys which may become due and payable under any such policies,may compromise any and all claims thereunder and will apply the proceeds of such insurance as providedin the Lease. All policies of insurance required by the Lease will provide that the Trustee will be giventhirty (30) days notice of each expiration thereof or any intended cancellation thereof or reduction of thecoverage provided thereby. The Trustee will not be responsible for the sufficiency of any insurancerequired in the Lease and will be fully protected in accepting payment on account of such insurance orany adjustment, compromise or settlement of any loss agreed to by the Trustee. The County will paywhen due the premiums for all insurance policies required by the Lease, and will promptly furnishevidence of such payments to the Corporation.

The County will deliver to the Corporation and the Trustee in the month of September in eachyear a written certificate of an officer of the County stating that such policies satisfy the requirements ofthe Lease, setting forth the insurance policies then in force pursuant to the Lease, the names of theinsurers which have issued the policies, the amounts thereof and the property and risks covered thereby,and, if any self-insurance program is being provided, the annual report of an actuary, independentinsurance consultant or other qualified person containing the information required for such self-insuranceprogram and described in the Lease. Delivery to the Trustee of the certificate under the provisions of theLease will not confer responsibility upon the Trustee as to the sufficiency of coverage or amounts of suchpolicies. The County will also deliver to the Trustee certificates or duplicate originals or certified copiesof each insurance policy described in such schedule.

Defaults and Remedies

(a) If the County will fail to pay any rental payable under the Lease when the same becomesdue and payable, time being expressly declared to be of the essence of the Lease, or the County will fail tokeep, observe or perform any other term, covenant or condition contained in the Lease to be kept orperformed by the County for a period of thirty (30) days after notice of the same has been given to theCounty by the Corporation or the Trustee or for such additional time as is reasonably required to correctthe same, or upon the happening of any of the events specified below (any such case above being an“Event of Default”), the County will be deemed to be in default under the Lease and it will be lawful forthe Corporation to exercise any and all remedies available pursuant to law or granted pursuant to theLease. Upon any such default, the Corporation, in addition to all other rights and remedies it may have atlaw, will have the option to do any of the following:

(1) To terminate the Lease in the manner provided on account of default by theCounty, notwithstanding any re-entry or re-letting of the Leased Property as provided for in subparagraph(2) below, and to re-enter the Leased Property and remove all persons in possession thereof and allpersonal property whatsoever situated upon the Leased Property and place such personal property instorage in any warehouse or other suitable place located within the County of Solano, California. In theevent of such termination, the County agrees to surrender immediately possession of the Leased Property,without let or hindrance, and to pay the Corporation all damages recoverable at law that the Corporationmay incur by reason of default by the County, including, without limitation, any costs, loss or damagewhatsoever arising out of, in connection with, or incident to any such re-entry upon the Leased Property

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and removal and storage of such property by the Corporation or its duly authorized agents in accordancewith the provisions contained in the Lease. Neither notice to pay rent or to deliver up possession of theLeased Property given pursuant to law nor any entry or re-entry by the Corporation nor any proceeding inunlawful detainer, or otherwise, brought by the Corporation for the purpose of effecting such re-entry orobtaining possession of the Leased Property nor the appointment of a receiver upon initiative of theCorporation to protect the Corporation’s interest under the Lease will of itself operate to terminate theLease, and no termination of the Lease on account of default by the County will be or become effectiveby operation of law or acts of the parties to the Lease, or otherwise, unless and until the Corporation willhave given written notice to the County of the election on the part of the Corporation to terminate theLease. The County covenants and agrees that no surrender of the Leased Property or of the remainder ofthe term of the Lease or any termination of the Lease will be valid in any manner or for any purposewhatsoever unless stated or accepted by the Corporation by such written notice.

(2) Without terminating the Lease, (i) to collect each installment of rent as itbecomes due and enforce any other terms or provision of the Lease to be kept or performed by theCounty, regardless of whether or not the County has abandoned the Leased Property, or (ii) to exerciseany and all rights of re-entry upon the Leased Property. In the event the Corporation does not elect toterminate the Lease in the manner provided for in subparagraph (1) above, the County will remain liableand agrees to keep or perform all covenants and conditions contained in the Lease to be kept or performedby the County and, if the Leased Property are not re-let, to pay the full amount of the rent to the end of theterm of the Lease or, in the event that the Leased Property are re-let, to pay any deficiency in rent thatresults therefrom; and further agrees to pay said rent and/or rent deficiency punctually at the same timeand in the same manner as provided for the payment of rent under the Lease (without acceleration),notwithstanding the fact that the Corporation may have received in previous years or may receivethereafter in subsequent years rental in excess of the rental specified in the Lease, and notwithstandingany entry or re-entry by the Corporation or suit in unlawful detainer, or otherwise, brought by theCorporation for the purpose of effecting such entry or re-entry or obtaining possession of the LeasedProperty. Should the Corporation elect to enter or re-enter as provided in the Lease, the Countyirrevocably appoints the Corporation as the agent and attorney-in-fact of the County to re-let the LeasedProperty, or any part thereof, from time to time, either in the Corporation’s name or otherwise, upon suchterms and conditions and for such use and period as the Corporation may deem advisable, and to removeall persons in possession thereof and all personal property whatsoever situated upon the Leased Propertyand to place such personal property in storage in any warehouse or other suitable place located in theCounty of Solano, California, for the account of and at the expense of the County, and the Countyexempts and agrees to save harmless the Corporation from any costs, loss or damage whatsoever arisingout of, in connection with, or incident to any such re-entry upon and re-letting of the Leased Property andremoval and storage of such property by the Corporation or its duly authorized agents in accordance withthe provisions contained in the Lease. The County agrees that the terms of the Lease constitute full andsufficient notice of the right of the Corporation to re-let the Leased Property and to do all other acts tomaintain or preserve the Leased Property as the Corporation deems necessary or desirable in the event ofsuch re-entry without effecting a surrender of the Lease, and further agrees that no acts of the Corporationin effecting such re-letting will constitute a surrender or termination of the Lease irrespective of the use orthe term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, butthat, on the contrary, in the event of such default by the County the right to terminate the Lease will vestin the Corporation to be effected in the sole and exclusive manner provided for in sub-paragraph (1)above. The County further waives the right to any rental obtained by the Corporation in excess of therental specified in the Lease and conveys and releases such excess to the Corporation as compensation tothe Corporation for its services in re-letting the Leased Property or any part thereof. The County furtheragrees to pay the Corporation the cost of any alterations or additions to the Leased Property necessary toplace the Leased Property in condition for re-letting immediately upon notice to the County of thecompletion and installation of such additions or alterations.

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The County waives any and all claims for damages caused or which may be caused by theCorporation in re-entering and taking possession of the Leased Property as provided in the Lease and allclaims for damages that may result from the destruction of or injury to the Leased Property and all claimsfor damages to or loss of any property belonging to the County, or any other person, that may be in orupon the Leased Property.

(b) If (1) the County’s interest in the Lease or any part thereof be assigned or transferred,either voluntarily or by operation of law or otherwise, without the written consent of the Corporation, asprovided for in the Lease, or (2) the County or any assignee will file any petition or institute anyproceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects ofbankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as aninsolvent, or as a debtor, or in any similar capacity, wherein or whereby the County asks or seeks or praysto be adjudicated a bankrupt, or is to be discharged from any or all of the County’s debts or obligations, oroffers to the County’s creditors to effect a composition or extension of time to pay the County’s debts orasks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of theCounty’s debts, or for any other similar relief, or if any such petition or any such proceedings of the sameor similar kind or character be filed or be instituted or taken against the County, or if a receiver of thebusiness or of the property or assets of the County will be appointed by any court, except a receiverappointed at the instance or request of the Corporation, or if the County will make a general or anyassignment for the benefit of the County’s creditors, or if (3) the County will abandon or vacate theLeased Property, then the County will be deemed to be in default under the Lease.

(c) The Corporation will in no event be in default in the performance of any of its obligationsunder the Lease or imposed by any statute or rule of law unless and until the Corporation will have failedto perform such obligations within thirty (30) days or such additional time as is reasonably required tocorrect any such default after notice by the County to the Corporation properly specifying wherein theCorporation has failed to perform any such obligation. In the event of default by the Corporation, theCounty will be entitled to pursue any remedy provided by law.

(d) In addition to the other remedies set forth above, upon the occurrence of an event ofdefault as described above, the Corporation will be entitled to proceed to protect and enforce the rightsvested in the Corporation by the Lease or by law. The provisions of the Lease and the duties of theCounty and of its supervisors, officers or employees will be enforceable by the Corporation by mandamusor other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limitingthe generality of the foregoing, the Corporation will have the right to bring the following actions:

(1) Accounting. By action or suit in equity to require the County and its supervisors,officers and employees and its assigns to account as the trustee of an express trust.

(2) Injunction. By action or suit in equity to enjoin any acts or things which may beunlawful or in violation of the rights of the Corporation.

(3) Mandamus. By mandamus or other suit, action or proceeding at law or in equityto enforce the Corporation’s rights against the County (and its board, officers and employees) and tocompel the County to perform and carry out its duties and obligations under the law and its covenants andagreements with the County as provided in the Lease.

Each and all of the remedies given to the Corporation under the Lease or by any law now orhereafter enacted are cumulative and the single or partial exercise of any right, power or privilege underthe Lease will not impair the right of the Corporation to other or further exercise thereof or the exercise ofany or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in the Lease will

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include, but not be limited to, re-letting by means of the operation by the Corporation of the LeasedProperty. If any statute or rule of law validly will limit the remedies given to the Corporation under theLease, the Corporation nevertheless will be entitled to whatever remedies are allowable under any statuteor rule of law.

In the event the Corporation will prevail in any action brought to enforce any of the terms andprovisions of the Lease, the County agrees to pay a reasonable amount as and for attorney’s fees incurredby the Corporation in attempting to enforce any of the remedies available to the Corporation under theLease, whether or not a lawsuit has been filed and whether or not any lawsuit culminates in a judgment.

Waiver

Failure of the Corporation to take advantage of any default on the part of the County will not be,or be construed as, a waiver thereof, nor will any custom or practice which may grow up between theparties be construed to waive or to lessen the right of the Corporation to insist upon performance by theCounty of any term, covenant or condition of the Lease, or to exercise any rights given the Corporation onaccount of such default. A waiver of a particular default will not be deemed to be a waiver of the same orany subsequent default. The acceptance of rent under the Lease will not be, or be construed to be, awaiver of any term, covenant or condition of the Lease.

Eminent Domain

If the whole of the Leased Property or so much thereof as to render the remainder unusable forthe purposes for which it was used by the County shall be taken under the power of eminent domain, theterm of the Lease shall cease as of the day that possession shall be so taken. If less than the whole of theLeased Property shall be taken under the power of eminent domain and the remainder is usable for thepurposes for which it was used by the County at the time of such taking, then the Lease shall continue infull force and effect as to such remainder, and the parties waive the benefits of any law to the contrary,and in such event there shall be a partial abatement of the rental due under the Lease in an amountequivalent to the amount by which the annual payments of principal and interest represented byCertificates then Outstanding will be reduced by the application of the award in eminent domain to theprepayment of Outstanding Certificates. So long as any of the Certificates shall be Outstanding, anyaward made in eminent domain proceedings for taking the Leased Property or any portion thereof shall bepaid to the Trustee and applied to the prepayment of the Base Rental Payments as provided in the Lease.Any such award made after all of the Base Rental Payments and Additional Payments have been fullypaid, or provision therefor made, shall be paid to the County.

Prepayment

The County shall prepay on any date from insurance and eminent domain proceeds, to the extentprovided in the Lease (provided, however, that in the event of partial damage to or destruction of theLeased Property caused by perils covered by insurance, if in the judgment of the County the insuranceproceeds are sufficient to repair, reconstruct or replace the damaged or destroyed portion of the LeasedProperty, such proceeds shall be held by the Trustee and used to repair, reconstruct or replace thedamaged or destroyed portion of the Leased Property, pursuant to the procedure set forth in the Lease forproceeds of insurance), all or any part (in an integral multiple of $5,000) of the principal components ofBase Rental Payments then unpaid so that the aggregate annual amounts of principal components of BaseRental Payments which shall be payable after such prepayment date shall be as nearly proportional aspracticable to the aggregate annual amounts of principal components of Base Rental Payments unpaidprior to the prepayment date, at a prepayment amount equal to the sum of the principal componentprepaid plus accrued interest thereon to the date of prepayment, plus any applicable premium.

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The County may prepay, from any source of available funds, all or any portion of Base RentalPayments by depositing with the Trustee moneys or securities as provided in the Trust Agreementsufficient to make such Base Rental Payments when due; provided that the County furnishes the Trusteewith an opinion of counsel that such deposit will not cause interest evidenced by and payable with respectto the Certificates to be includable in gross income for federal income tax purposes. The County agreesthat if following such prepayment the Leased Property are damaged or destroyed or taken by eminentdomain, it is not entitled to, and by such prepayment waives the right of, abatement of such prepaid BaseRental Payments and shall not be entitled to any reimbursement of such Base Rental Payments.

Before making any such prepayments, the County shall, within five (5) days following the eventcreating such right or obligation to prepay, give written notice to the Corporation and the Trusteedescribing such event and specifying the date on which the prepayment will be made, which date shall benot less than forty-five (45) days from the date such notice is given.

Option to Purchase; Sale of Personal Property

The County will have the option to purchase the Corporation’s interest in any part of the LeasedProperty upon payment of an option price consisting of moneys or securities of the category specified inclause (1) of the definition of the term Permitted Investments contained in the Trust Agreement (notcallable by the issuer thereof prior to maturity) in an amount sufficient (together with the increment,earnings and interest on such securities) to provide funds to pay the aggregate amount for the entireremaining term of the Lease of the part of the total rent attributable to such part of the Leased Property(determined by reference to the proportion which the acquisition, design and construction cost of suchpart of the Leased Property bears to the acquisition, design and construction cost of all of the LeasedProperty). Any such payment will be made to the Trustee and will be treated as rental payments and willbe applied by the Trustee to pay the interest and principal components of the Certificates and to prepayCertificates if such Certificates are subject to prepayment pursuant to the terms of the Trust Agreement.Upon the making of such payment to the Trustee, (a) the interest and principal components of eachinstallment of Base Rental thereafter payable under the Lease will be reduced by the amount thereofattributable to such part of the Leased Property and theretofore paid as described in this paragraph, (b) theLease will not thereafter be applicable to such part of the Leased Property, (c) the insurance required bythe Lease need not be maintained as to such part of the Leased Property, and (d) title to such part of theLeased Property and of the portion of the Leased Property upon which such part of the Leased Property islocated will vest in the County and the term of the Lease will end as to the portion of the Leased Propertyupon which such part of the Leased Property is located and to such part of the Leased Property.

The County, in its discretion, may request the Corporation to sell or exchange any personalproperty which may at any time constitute a part of the Leased Property, and to release said personalproperty from the Lease, if (a) in the opinion of the County the property so sold or exchanged is no longerrequired or useful in connection with the operation of the Leased Property, (b) the consideration to bereceived from the property is of a value substantially equal to the value of the property to be released, and(c) if the value of any such property will, in the opinion of the Corporation, exceed the amount of$50,000, the Corporation will have been furnished a certificate of an independent engineer or otherqualified independent professional consultant (satisfactory to the Corporation) certifying the value thereofand further certifying that such property is no longer required or useful in connection with the operationof the Leased Property. In the event of any such sale, the full amount of the money or considerationreceived for the personal property so sold and released will be paid to the Corporation. Any money sopaid to the Corporation may, so long as the County is not in default under any of the provisions of theLease, be used upon the Written Request of the County to purchase personal property, which propertywill become a part of the site leased under the Lease. The Corporation may require such opinions,certificates and other documents as it may deem necessary before permitting any sale or exchange of

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personal property subject to the Lease or before releasing for the purchase of new personal propertymoney received by it for personal property so sold.

When (a) there will have been deposited with the Trustee at or prior to the due dates of the BaseRental Payments or date when the County may exercise its option to purchase the Leased Property or anyportion or item thereof, in trust for the benefit of the Owners of the Certificates and irrevocablyappropriated and set aside to the payment of the Base Rental Payments or option price, sufficient moneysand Permitted Investments described in subsection (1) of the definition thereof in the Trust Agreement,not redeemable prior to maturity, the principal of and interest on which when due will provide moneysufficient to pay all principal, premium, if any, and interest of the Base Rental Payments represented bythe Certificates to the due date of the Base Rental Payments or date when the County may exercise itsoption to purchase the Leased Property, as the case may be; and (b) an agreement will have been enteredinto with the Trustee for the payment of its fees and expenses so long as any of the Certificates willremain unpaid, then and in that event the right, title and interest of the Corporation in the Lease and theobligations of the County thereunder will thereupon cease, terminate, become void and be completelydischarged and satisfied (except for the right of the Corporation and the obligation of the County to havesuch moneys and such Permitted Investments applied to the payment of the Base Rental Payments oroption price) and the Corporation’s interest in and title to the Leased Property or applicable portion oritem thereof will be transferred and conveyed to the County.

In such event, the Corporation will cause an accounting for such period or periods as may berequested by the County to be prepared and filed with the Trustee and evidence such discharge andsatisfaction, and the Trustee will pay over to the County as an overpayment of Base Rental Payments allsuch moneys or Permitted Investments held by it pursuant to the Lease other than such moneys and suchPermitted Investments as are required for the payment or prepayment of the Base Rental Payments or theoption price and the fees and expenses of the Trustee, which moneys and Permitted Investments willcontinue to be held by the Trustee in trust for the payment of Base Rental Payments or the option priceand the fees and expenses of the Trustee, and will be applied by the Trustee to the payment of the BaseRental Payments or the option price and the fees and expenses of the Trustee.

Assignment and Subleasing

Neither the Lease nor any interest of the County thereunder will be mortgaged, pledged, assigned,sublet or transferred by the County by voluntary act or by operation of law or otherwise, except with theprior written consent of the Corporation, which, in the case of subletting, will not be unreasonablywithheld; provided such subletting will not affect the tax-exempt status of the interest components of theBase Rental Payments payable by the County under the Lease. No such mortgage, pledge, assignment,sublease or transfer will in any event affect or reduce the obligation of the County to make the BaseRental Payments and Additional Payments required under the Lease.

Tax Covenants

The County and the Corporation will not make any use of the proceeds of the obligationsprovided in the Lease or any other funds of the County or the Corporation which will cause suchobligations to be “arbitrage bonds” subject to federal income taxation by reason of Section 148 of theCode. The County and the Corporation will not make any use of the proceeds of the obligations providedin the Lease or any other funds of the County or the Corporation which will cause such obligations to be“federally guaranteed” and subject to inclusion in gross income for federal income tax purposes by reasonof Section 149(b) of the Code. To that end, so long as any rental payments are unpaid, the County and theCorporation, with respect to such proceeds and such other funds, will comply with all requirements ofsuch Sections 148 and 149(b) and all regulations of the United States Department of the Treasury issued

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thereunder to the extent that such requirements are, at the time, applicable and in effect.

The County further covenants that it will not use or permit the use of the Leased Property by anyperson not an “exempt person” within the meaning of Section 141(a) of the Code or by an “exemptperson” (including the County) in an “unrelated trade or business”, in such manner or to such extent aswould result in the inclusion of interest received under the Lease in gross income for federal income taxpurposes under Section 103 of the Code.

If at any time the County is of the opinion that for purposes of the Lease it is necessary to restrictor limit the yield on or change in any way the investment of any moneys held by the Trustee or theCounty or the Corporation under the Lease or the Trust Agreement, the County will so instruct theTrustee or the appropriate officials of the County in writing, and the Trustee or the appropriate officials ofthe County, as the case may be, will take such actions as may be necessary in accordance with suchinstructions.

In furtherance of the covenants of the County set forth above, the County will comply with theTax Certificates and will cause the Trustee to comply with the Tax Certificates. The Trustee and theCorporation may conclusively rely on any such written instructions, and the County agrees to holdharmless the Trustee and the Corporation for any loss, claim, damage, liability or expense incurred by theCorporation for any actions taken by the Corporation in accordance with such instructions.

The County and the Corporation will at all times do and perform all acts and things permitted bylaw which are necessary or desirable in order to assure that the interest component of the Base RentalPayments will be excluded from gross income for federal income tax purposes and will take no action thatwould result in such interest not being excluded from gross income for federal income tax purposes.

Amendment or Termination

The Corporation and the County may at any time agree to the amendment or termination of theLease; provided, however, that the Corporation and the County agree and recognize that the Lease isentered into in accordance with the terms of the Trust Agreement, and accordingly, that any suchamendment or termination will only be made or effected in accordance with and subject to the terms ofthe Trust Agreement.

ASSIGNMENT AGREEMENT

The Corporation will assign to the Trustee for the benefit of the owners of the Certificates withoutrecourse all of the Corporation’s right, title and interest under the Site Lease and Lease, including withoutlimitation the following; (i) all its rights to receive the rental payments scheduled to be paid by theCounty under and pursuant to the Lease for the benefit of the owners of the Certificates, (ii) all rents,profits, products and proceeds from the Leased Property (as such term is defined in the Lease) to whichthe Corporation has any right or claim whatsoever under the Lease, (iii) the right to take all actions andgive all consents under the Site Lease and Lease and (iv) any right of access provided in the Site Leaseand Lease.

SITE LEASE

The County is the owner of the Site underlying the Leased Property. The County will lease theLeased Property to the Corporation. The term of the Site Lease will commence on the date of recordationof the Site Lease in the office of the County Recorder of Solano County, State of California, or on

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December 1, 2009, whichever is earlier, and will end on November 15, 2019, unless such term isextended or sooner terminated as provided in the Site Lease.

If on November 15, 2019, the Certificates are not fully paid, or if the rental payable under theLease will have been abated at any time and for any reason, then the term of the Site Lease will beextended until 10 days after the Certificates have been fully paid, except that the term of the Site Leasewill in no event be extended beyond November 15, 2029. If prior to November 15, 2019, the Certificatesare fully paid, the term of the Site Lease will end 10 days thereafter or 10 days after written notice by theCounty to the Corporation, whichever is earlier.

The County covenants that it is the owner in fee of the Site, as described in the Site Lease. TheCounty further covenants and agrees that if for any reason this covenant proves to be incorrect, theCounty will either institute eminent domain proceedings to condemn the property or institute a quiet titleaction to clarify the County’s title, and will diligently pursue such action to completion. The Countyfurther covenants and agrees that it will hold the Corporation harmless from any loss, cost or damagesresulting from any breach by the County of the covenants contained in this paragraph.

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APPENDIX D

FORM OF OPINION OF SPECIAL COUNSEL

Upon execution and delivery of the Series 2009 Certificates, Orrick, Herrington & Sutcliffe LLP,Special Counsel, proposes to render its final approving opinion with respect to the Certificates insubstantially the following form:

[Date of Delivery]

Board of Supervisors of theCounty of Solano

Fairfield, California

County of SolanoSeries 2009 Refunding Certificates of Participation

(Final Opinion)

Ladies and Gentlemen:

We have acted as special counsel to the County of Solano (the “County”) inconnection with the execution and delivery of $16,745,000 aggregate principal amount of County ofSolano Series 2009 Refunding Certificates of Participation (the “Certificates”). In such connection,we have reviewed an Amended and Restated Site Lease, dated as of December 1, 2009 (the “SiteLease”), by and between the County and the Solano County Facilities Corporation, Inc. (the“Corporation”); an Amended and Restated Lease Agreement, dated as of December 1, 2009 (the“Lease”), by and between the Corporation and the County; a Trust Agreement, dated as of December1, 2009 (the “Trust Agreement”), by and among the Corporation, the County and Union Bank, N.A.,as trustee (the “Trustee”); an Assignment Agreement, dated as of December 1, 2009 (the“Assignment Agreement”), by and between the Corporation and the Trustee; a Tax Certificate of theCounty, dated as of the date hereof (the “Tax Certificate”); opinions of counsel to the County, theCorporation, the Trustee and others, certificates of the County, the Trustee, the Corporation andothers and such other documents, opinions and matters to the extent we deemed necessary to renderthe opinions set forth herein. Capitalized terms not otherwise defined herein shall have the meaningsset forth in the Lease.

The opinions expressed herein are based on an analysis of existing laws, regulations,rulings and court decisions, and cover certain matters not directly addressed by such authorities.Such opinions may be affected by actions taken or omitted or events occurring after the date hereof.We have not undertaken to determine, or to inform any person, whether any such actions are taken oromitted or events do occur or any other matters come to our attention after the date hereof.Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be reliedupon in connection with any such actions, events or matters. Our engagement with respect to theCertificates has concluded with their execution and delivery, and we disclaim any obligation toupdate this letter. We have assumed the genuineness of all documents and signatures presented to us(whether as originals or as copies) and the due and legal execution and delivery thereof by, andvalidity against, any parties other than the County and the Corporation. We have assumed, without

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undertaking to verify, the accuracy of the factual matters represented, warranted or certified in thedocuments, and of the legal conclusions contained in the opinions, referred to in the first paragraphhereof. Furthermore, we have assumed compliance with all covenants and agreements contained inthe Site Lease, the Lease, the Assignment Agreement, the Trust Agreement and the Tax Certificate,including (without limitation) covenants and agreements compliance with which is necessary toassure that future actions, omissions or events will not cause the interest portion of the Base RentalPayments to be included in gross income for federal income tax purposes.

We call attention to the fact that the rights and obligations under the Certificates, theSite Lease, the Lease, the Assignment Agreement, the Trust Agreement and the Tax Certificate andtheir enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement,fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to theapplication of equitable principles, to the exercise of judicial discretion in appropriate cases and tothe limitations on legal remedies against counties in the State of California. We express no opinionwith respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice ofvenue, waiver or severability provisions contained in the foregoing documents, nor do we expressany opinion with respect to the state or quality of title to or interest in any of the real or personalproperty described in or as subject to the lien of the Site Lease, the Lease, the Assignment Agreementor the Trust Agreement or the accuracy or sufficiency of the description of any such propertycontained therein of, or the remedies available to enforce liens on, any such property. Finally, weundertake no responsibility for the accuracy, completeness or fairness of the Official Statement orother offering material relating to the Certificates and express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof,we are of the following opinions:

1. The Site Lease, the Lease and the Trust Agreement have been duly executedand delivered by the County and the Corporation and constitute valid and binding obligations of theCounty and the Corporation, and the Assignment Agreement has been duly executed and deliveredby the Corporation and constitutes a valid and binding obligation of the Corporation.

2. The obligation of the County to make the Base Rental Payments during theterm of the Lease constitutes a valid and binding obligation of the County, payable from funds ofthe County lawfully available therefor.

3. Assuming due authorization, execution and delivery of the AssignmentAgreement, the Trust Agreement and the Certificates by the Trustee, the Certificates are entitled tothe benefits of the Trust Agreement.

4. The portion of each Base Rental Payment designated as and constitutinginterest paid by the County under the Lease and received by the registered owners of the Certificatesis excluded from gross income for federal income tax purposes under Section 103 of the InternalRevenue Code of 1986 and is exempt from State of California personal income taxes. The interestportion of each Base Rental Payment is not a specific preference item for purposes of the federal

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individual or corporate alternative minimum taxes, although we observe that the interest portion ofeach Base Rental Payment is included in adjusted current earnings when calculating corporatealternative minimum taxable income. We express no opinion regarding other tax consequencesrelated to the ownership or disposition of the Certificates or the accrual or receipt of the interestportion of each Base Rental Payment.

Faithfully yours,

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APPENDIX E

DTC AND THE BOOK ENTRY SYSTEM

The information in numbered paragraphs 1-10 of this Appendix E concerning The Depository Trust Company, New York, New York ("DTC") and DTC's book-entry system, has been furnished by DTC for use in official statements and the County and the Corporation take no responsibility for the completeness or accuracy thereof. The County and the Corporation cannot and do not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest or principal with respect to the Certificates, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Certificates, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Certificates, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. As used in this appendix, "Securities" means the Certificates and "Agent" means the Trustee.

1. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the securities (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 will be issued for the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual

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purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the County or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the County or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. The County may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

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APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by the County of Solano (the "County"), Union Bank, N.A., as Trustee (the "Trustee") and Union Bank, N.A., as dissemination agent (the "Dissemination Agent"), in connection with the execution and delivery by the County of its $16,745,000 Series 2009 Refunding Certificates of Participation (the "Certificates"). The Certificates are being issued pursuant to a Trust Agreement, dated as of December 1, 2009, (the "Trust Agreement"), by and among the County, the Solano County Facilities Corporation, Inc. (the "Corporation") and the Trustee. The County, the Trustee and the Dissemination Agent covenant as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the County, the Trustee and the Dissemination Agent, for the benefit of the Owners and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Annual Report" shall mean any Annual Report provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income purposes.

"Disclosure Representative" shall mean the chief finance officer of the County or his or her designee, or such other officer or employee as the County shall designate from time to time.

"Dissemination Agent" shall mean, initially, Union Bank, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the County.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

"MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended.

"Official Statement" shall mean the Official Statement relating to the Certificates dated November 20, 2009.

"Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates.

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"Repository" shall mean the MSRB and any other repository designated as a repository for purposes of the Rule by the Securities and Exchange Commission in the future.

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

SECTION 3. Provision of Annual Reports.

(a) The County shall provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement not later than March 31 after the end of the County's fiscal year (which currently ends on June 30), commencing with the report for the fiscal year ending June 30, 2009. The County may satisfy this requirement by providing the Annual Report to the Dissemination Agent as provided herein. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the County may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.

An Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The County's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The County will promptly notify the Repository, the Trustee and the Dissemination Agent of a change in the fiscal year dates.

(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the County shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by fifteen (15) Business Days prior to such date the Trustee has not received a copy of the Annual Report, the Trustee shall contact the County and the Dissemination Agent to determine if the County is in compliance with subsection (a). The County shall provide a written statement with each Annual Report furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Trustee may conclusively rely upon such statement of the County and shall have no duty or obligation to review such Annual Report.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to the Repository, in substantially the form attached as Exhibit A.

(d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each Repository; and

(ii) promptly after receipt of the Annual Report, file a report with the County and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

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SECTION 4. Content of Annual Reports. The County's Annual Report shall contain or include by reference:

(a) Financial Statements. The financial statements of the County for the most recent fiscal year of the County then ended. If the County will prepare audited financial statements for such fiscal year, then such audited financial statements shall be filed. If the County prepares audited financial statements each fiscal year and if the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the County in a format similar to the financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the County shall be audited by such auditor as shall then be required or permitted by State law or the Trust Agreement. Audited financial statements, if prepared by the County, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the County may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the County shall modify in any material respect the basis upon which its financial statements are prepared, the County shall provide a description of such modification in its Annual Report, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis.

(b) The following information from the Official Statement shall be updated for the most recently completed fiscal year:

(1) Table 3 entitled "Taxable Transactions" from Appendix A;

(2) Table 9 entitled "Statement of Revenues, Expenditures and Changes in Fund Balances for General Fund" from Appendix A;

(3) Table 11 entitled "Summary of Full Cash and Ad Valorem Property Taxation" from Appendix A; and

(4) a summary of outstanding General Fund obligations as described under "Outstanding Payment Obligations" from Appendix A.

(c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the County or related public entities, which have been submitted to 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 MSRB. The County shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the County shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material:

(1) principal and interest payment delinquencies.

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(2) an event of default under the Trust Agreement other than as described in (1) above.

(3) unscheduled draws on the Reserve Fund.

(4) unscheduled draws on any credit enhancements securing the Certificates.

(5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the Certificates or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on the letter of credit or municipal bond insurance policy.

(6) adverse tax opinions or events adversely affecting the tax-exempt status of the Certificates.

(7) modifications to the rights of Certificate Owners.

(8) unscheduled redemption of any Certificate.

(9) defeasances.

(10) any release, substitution, or sale of property securing repayment of the Certificates.

(11) rating changes.

(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of the Listed Events, contact the County pursuant to the Trust Agreement, inform such person of the event, and request that the County promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Trustee with regular responsibility for the administration of matters related to the Trust Agreement.

(c) Whenever the County obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the County shall as soon as possible determine if such event would be material under applicable federal securities laws.

(d) If the County has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the County shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f).

(e) If in response to a request under subsection (b), the County determines that the Listed Event would not be material under applicable federal securities laws, the County shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).

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(f) If the Dissemination Agent has been instructed by the County to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository, in the manner set forth in Section 14 hereof. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Certificates pursuant to the Trust Agreement. In each case of the Listed Event, the Dissemination Agent shall not be obligated to file a notice as required in this subsection (f) prior to the occurrence of such Listed Event.

(g) The County hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the County and that the Trustee or the Dissemination Agent shall not be responsible for determining whether the County's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

SECTION 6. Termination of Reporting Obligation. The obligation of the County, the Trustee and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates.

SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time by providing at least 30 days written notice to the County and the Trustee. The initial Dissemination Agent shall be Union Bank, N.A.

SECTION 8. Amendment. (a) This Disclosure Agreement may be amended, by written agreement of the parties and the Participating Underwriter, if all of the following conditions are satisfied: (1) this Disclosure Agreement as so amended complies with the requirements of the Rule, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (2) the County shall have delivered to the Trustee an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the County and the Trustee, to the same effect as set forth in clause (1) above, and (3) the County shall have delivered copies of such amendment to each Repository.

(b) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of any Listed Event, in addition to that which is required by this Disclosure Agreement. If the County chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the County shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice.

SECTION 10. Default. In the event of a failure of the County or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the sole remedy of any Owner or

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Beneficial Owner of the Certificates under this Disclosure Agreement shall be an action to compel performance, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement.

SECTION 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement and the Dissemination Agent and the Trustee shall be entitled to the same protections, limitations from liability and indemnities hereunder as are afforded the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Trust Agreement, and the County agrees to indemnify and save the Dissemination Agent and the Trustee and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or the Trustee's respective negligence or willful misconduct. The Dissemination Agent and the Trustee shall have no duty or obligation to review any information provided to them hereunder. The obligations of the County under this Section shall survive resignation or removal of the Dissemination Agent and Trustee and payment of the Certificates.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the County, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity.

SECTION 13. Notices. Notices to the Dissemination Agent and Trustee should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing.

Trustee/Dissemination Agent: Union Bank, N.A. 475 Sansome Street, 12th Floor

San Francisco, CA 94111 Attention: Corporate Trust Department

SECTION 14. Filing of Annual Reports and Notices. Annual Reports and Notices of Listed

Events will be filed with the MSRB through its Electronic Municipal Market Access system in the format and with identifying or other information as may be required by the MSRB, or in such other manner as may hereinafter be required by the SEC or a Repository.

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SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Date: December 1, 2009

UNION BANK, N.A., as Dissemination Agent

By: Authorized Officer

UNION BANK, N.A., as Trustee

By: Authorized Officer

COUNTY OF SOLANO

By: County Administrator

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EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: County of Solano

Name of Bond Issue: County of Solano Series 2009 Refunding Certificates of Participation

Date of Issuance: December 1, 2009

NOTICE IS HEREBY GIVEN that the County of Solano (the "County") has not provided an Annual Report with respect to the above-named Certificates as required by Section 3 of the Continuing Disclosure Agreement, dated as of December 1, 2009. The County anticipates that the Annual Report will be filed by ________.

UNION BANK, N.A., as Dissemination Agent

Dated: By: __________________________________ Authorized Officer cc: County of Solano