ac transit district gm memo no. 03-169 03-169 rans for 03-04 - fb.pdfv3 g, of the district...

AC TRANSIT DISTRICT GM Memo No. 03-169

Board of Directors

Executive Summary Meeting Date: June 4, 2003

Committees: Paratransit Committee □

Planning Committee □ Finance Committee X External Affairs Committee □ Operations Committee □

Board of Directors X

SUBJECT: Review of Documents Associated with the Authorization of Revenue

Anticipation Notes (RANS) for the 2003-2004 Fiscal Year.

RECOMMENDED ACTION:

□ Information Only □ Briefing Item X Recommended Motion

To provide input regarding the documents associated with the RANS.

Fiscal Impact:

The fiscal impact will be approximately $35 million in loan funds.

Background/Discussion:

BOARD ACTION: Approved as Recommended [x] Other [ ] Approved with Modification(s) [ ]

MOTION: PEEPLES/KAPLAN to receive report as presented (7-0-0-0). [Request to include

the cost for the issuance of the notes in subsequent report.]

Ayes: Directors Peeples, Kaplan, Harper, Jaquez, Bischofberger, Vice President

Wallace, President Piras - 7

Noes: None - 0

Absent: None - 0

Abstain: None - 0

The above order was passed on

June 4, 2003.

Rose Martinez, District Secretary

By

GM Memo No. 03-169

Subject: Review of Documents Associated with the Authorization of Revenue Anticipation

Notes (RANS) for the 2003-2004 Fiscal Year

Date: June 4, 2003

age 2 of 2

On March 6, 2003, the Board approved GM Memo No. 03-075A which authorized the

investigation of the use of Revenue Anticipation Notes as a budgetary strategy in the 2003-

2004 fiscal year. (See Attachment A.)

Staff has been working with Kutak Rock, LLP and Public Finance Management, respectively

its legal and financial advisors, on the documents required to proceed with the RANS. These documents ultimately must be approved by the Board before the RANS can be issued. While we are not at that point, the documents which are presently available are being provided for your information and comment. By reviewing them now, it will be possible to ensure that the documents are ready for your approval later in June when action on them

is required.

Prior Relevant Board Actions/Policies:

GM Memo No. 03-075A approved by the Board on March 6, 2003

Attachments:

A-GM Memo No. 03-075A

B-Draft Official Statement

-Draft Resolution

-Draft Contract of Purchase

Approved by: Rick Fernandez, General Manager

Prepared by: Deborah McClain, Chief Financial Officer

Kenneth Scheidig, General Counsel

Date Prepared: May 28, 2003

AC TRANSIT DISTRICT GM Memo No. 03-075A

Board of Directors

Executive Summary Meeting Date: March 6, 2003

Committees:

Executive Committee □ Operations Committee □

External Affairs Committee □ Planning Committee □

Board of Directors H Finance Committee □

SUBJECT:

AUTHORIZE THE INVESTIGATION OF THE USE OF REVENUE ANTICIPATION NOTES

(RANS) AS A BUDGETARY STRATEGY IN FY 2003-04.

RECOMMENDED ACTION: □ Information Only E Recommended Motion

Recommend to the Board of Directors to authorize the investigation of the use of Revenue

Anticipation Notes (RANS) as a budgetary strategy in FY 2003-04.

Fiscal Impact:

The structure and sizing of the amount of RANs must comply with state and federal tax laws,

and with a favorable credit rating (MIG-1/SP1+) could amount to a $40 million loan in FY

2003-04 payable from revenues of the same fiscal year.

Background/Discussion:

The District has limited cash resources to draw upon for paying the operating and capital

obligations necessary to provide bus services in its service area. With the declining U.S. and

State economies, and the resulting negative impact on taxes and subsidies, the District

could experience deficits in its cash position during fiscal year 2003-04.

BOARD ACTION: Approved as Recommended [ ] Other [ ]

Approved with Modification(s) [ ]

[To be filled in by District Secretary after Board/Committee Meeting]

The above order was passed and adopted on

2003.


By

GM Memo No. 03-075A

Subject: Authorize the Investigation of the Use of Revenue Anticipation Notes (RANS) as a

Budgetary Strategy in FY 2003-04.

Date: March 6, 2003

2 of 3

Recently, staff has investigated the use of Revenue Anticipation Notes to generate operating

revenue. Within the coming fiscal year, this arrangement could enable the District to borrow

funds to offset a temporary deficit. Proceeds of a RANs financing may be used for current

expenses, capital expenditures, debt repayment, or investment. Subject to certain

restrictions, the proceeds may be invested at a higher yield than the yield on the RANs. AC

Transit previously issued RANs in 1995 and 1996. In addition to AC Transit, a number of

transportation agencies have issued RANs, or similar financings, including Santa Clara VTA,

SANDAG, LACMTA, and the San Bernardino County Transportation Authority.

Revenue Anticipation Notes Structure and Sizing

The amount of RANs issued are subject to specific state and federal tax laws. In general, the

District may issue an amount equal to, or less than, the sum of its projected fiscal year

maximum cumulative cash flow deficit, plus a reasonable working capital reserve. This

reserve cannot exceed 5% of the total previous fiscal year expenditures paid from the

general fund.

Transaction Risks and Benefits

must be structured to comply with applicable laws in order to be eligible for tax-exempt

financing and re-investment opportunities. Although the interest rate will not be known until

the RANs are priced, note rates have typically been lower than long term financings. Also,

the re-investment rate will not be known until the RANs are priced and these rates are

usually higher than the borrowing rate.

Staff feels that the potential benefit to AC Transit of funding temporary cashflow deficits

exceeds the potential risks (taking into account, among other factors, the relative likelihood

of such risks as well as AC Transit's ability to control such risks).

Staff would thoroughly assess the risks and benefits of such a transaction throughout its

structure and sizing, including compliance requirements and projected cashflows, with its

bond counsel and financial advisor.

Public Financial Management and Kutak Rock. LLP

RANs financing transactions are extremely complex and require the use of highly specialized

consultants. To proceed with this financing mechanism the District would retain Public

Financial Management and Kutak Rock, LLP, who are both currently under contract, to

assist in structuring and sizing a RANs transaction. Both firms have assisted the District,

with favorable results, in the issuance of the October 2001 Certificates of Participation.

Schedule

GM Memo No. 03-075A

Subject: Authorize the Investigation of the Use of Revenue Anticipation Notes (RANS) as a

Budgetary Strategy in FY 2003-04.

Date: March 6, 2003

Page 3 of 3

It is anticipated that the District would issue RANs in July 2003 for FY 2004, following legal

and financial analysis to determine an appropriate amount and structure of the borrowing

and to develop a financing schedule. Prior to issuance of any RANs, staff will submit a

request to the Finance Committee and the Board for authorization through the approval of a

Board Resolution.

Prior Relevant Board Actions/Policies:

GM Memo 03-035, February 20, 2003, FY 02-03 2nd Quarter Financial Performance Report and Adopt Resolution No. 2080 amending the General fund Operating and Capital Budget.

Attachments:

None

Approved by: Rick Fernandez, General Manager

Ken Scheidig, General Counsel

Deborah McClain, Chief Financial Officer

Prepared by: Deborah McClain, Chief Financial Officer

Date Prepared: March 6,2003

GM Memo 03-169

Attachment B

PRELIMINARY OFFICIAL STATEMENT DATED , 2003

NEW ISSUE RATING

BOOK-ENTRY ONLY Moody's Investors Service: " "

(See "—Rating" herein)

In the opinion of Kulak Rock LLP, Denver, ColoradiU-Note Counsel, trnderbased on existing knvssiatuieg, regulations,

rulings and judicial decisionsr and assuming awtiauing-compliance with certain covenants set forth injhejjocuments penaiitiqg

to the Notes and requirements of the Internal ReventtejCad£-(iLL$86*-as amended, as described «w "TAX EXEMPTION" herein,

interest on the Notes (including original- issue discount treated as interest, if any) is excluded from ihe^gross income ofjhc

holders of the Notesjor federal income tax purposes. Note Counsel is further-nftlw opinion that interest on the Notes (including

original issue discount treated as interest, if any),and is not a specific preference item for purposes of the federal alternative

minimum tax imposed on individuals and corporations, although for purposes of computing the alternative minimum tax imposed

on certain corporations,-such interest is token-into account in determining certain income and earnings as described in "TAX

EXEMPTION" herein. Under existing laws, regulations, rulings and judicial decisions, Note Counsel is further of ilw opinion

that. The amount treated as interest on the Notes and excluded from gross income will depend utwJ3Jh£-l(txpayer's election

under Internal Revenue Service Notice 94-84. In the further opinion of Note_Counsel, interest on the Notes is exempt from ett

present State of California personal income taxes-.—See "TAX EXEMPTION" herein for a moreJmmsedJbs the State of

California, Jor a complete description of the opinions of Note Counsel and additional federal tax law conscauences^seeJUAX.

MATTERS" herein.

$[AMOUNT]*

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

(ALAMEDA COUNTY, CALIFORNIA)

2003-04 REVENUE ANTICIPATION NOTES

Dated: Date of Delivery Due: ,

The Notes will be issued in fully registered form, without coupons. The Notes will be registered in the name of Cede &

Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the

Notes. Individual purchases of the Notes will be made in book-entry form only, in the minimum denomination of [$5,000 or any

integral multiple thereof.] Purchasers of the Notes will not receive certificates representing their interest in the Notes. Principal

of and interest on the Notes will be payable at maturity at the Principal Office, as defined herein, of

, as Fiscal Agent, by wire transfer to DTC which will in turn remit such principal and interest to

its Participants, which in turn will remit such principal and interest to the Indirect Participants or the Beneficial Owners of the

Notes, as described herein. The Notes will not be subject to redemption prior to maturity.

| ji The Notes are issued pursuant to a Resolution duly adopted by the Board of Directors of the Alamcda-Contra Costa

S £ Transit District (the "District") on , 2003 under the authorization of Sections 53850 et seq. of the California

S •§ Government Code. The proceeds of the Notes will be used to pay the costs of issuing the Notes and to provide the District with ' | e interim financing for projected operating cash shortfalls due to the timing of receipt of certain revenues for the fiscal year ending I § June 30, 2004 (the "Fiscal Year"). 35 S The Notes are general obligations of the District and are payable from taxes, revenues, cash receipts and other moneys

V3 g, of the District attributable to the District's Fiscal Year and legally available for payment thereof. Certain of said moneys have £ g been specifically pledged to the total payment of the principal of the Notes and the interest therein. The Notes are secured by a

g, g pledge of (a) an amount equal to three quanerstonejbalfl of the principal amount of the Notes plus an amount equal to three | g quartorsrone-halfl of the interest due on the Notes at maturity thereof from the first unrestricted revenues received by the District

1 .^ during the month of [April 2004]; and (b) an amount equal to lone-ttwartefhalQ of the principal amount of the Notes plus an

g H amount equal to [one-quartorhalfl of the interest due on the Notes at maturity thereof from the first unrestricted revenues received

2 S by the District during the month of May 20Q4.[June_ 20041.

_ g. Interest Rate: %

|i Priced to Yield: %

g J [The Notes are legal investments for commercial banks in California and are eligible to secure deposits of public | § moneys in California.]

11 THE OBLIGATION TO PAY THE NOTES IS NOT AN OBLIGATION OF THE FEDERAL GOVERNMENT, g g THE STATE, THE COUNTIES OF ALAMEDA OR CONTRA COSTA, NOR ANY MUNICIPALITY OR POLITICAL

o * ENTITY OTHER THAN THE DISTRICT. NEITHER THE OFFICERS AND EMPLOYEES NOR ANY PERSONS

5 -a EXECUTING THE NOTES ARE LIABLE PERSONALLY ON THE NOTES BY REASON OF THEIR EXECUTION |S OR DELIVERY.

.2 The Notes are offered when, as and if issued by the District and accepted by the Underwriter, subject to the approval as

IM to their legality by Kutak Rock LLP, Denver, Colorado, Note Counsel. Certain legal matters will be passed on for the District by

£ s§ Kenneth SehektigC_ScJieidjg, General Counsel to the District, and for the Underwriter by . It is

* Preliminary; subject to change.

»

anticipated that the Notes, in definitive form, will be available Tor delivery in New York, New York, on or about.

2003.

[UNDERWRITER]

No dealer, broker, salesperson or other person has been authorized by the Alameda-Contra Costa

Transit District or the Underwriter to give any information or to make any representations other than

those contained in this Official Statement in connection with the offers made hereby and, if given or

made, such information or representations must not be relied upon as having been authorized by the

Alameda-Contra Costa Transit District or the Underwriter. The information set forth in this Official

Statement has been obtained from Alameda-Contra Costa Transit District and other sources which are

believed to be reliable, but it is not guaranteed as to accuracy or completeness. The information and

expressions of opinion herein are subject to change without notice, and neither the delivery of this

Official Statement nor any sale made hereunder shall under any circumstances create any implication that

there has been no change in the affairs of the Alameda-Contra Costa Transit District since the date hereof.

This Official Statement does not constitute an offer to sell the Notes in any State or other jurisdiction to

any person to whom it is unlawful to make such an offer in such state or jurisdiction. This Official

Statement is "deemed final" by the District for purposes of Rule 15c2-12 of the Securities and Exchange

Commission.

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN

EXAMINATION OF THE NOTES AND THE TERMS OF THE OFFERING, INCLUDING THE

MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY

ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.

FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY

OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY

OVERALLOTQYEiLALLQI OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN

THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE

PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE

DISCONTINUED AT ANY TIME.

THE DISTRICT HAS COVENANTED TO PROVIDE MATERIAL EVENT NOTICES IN THE

MANNER REQUIRED BY RULE 15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION.

THE DISTRICT HAS ENTERED INTO AN UNDERTAKING FOR THE BENEFIT OF THE

HOLDERS OF THE NOTES, PURSUANT TO THE REQUIREMENTS OF SECTION (d)(3) OF THE

RULE, TO SEND NOTICE OF MATERIAL EVENTS TO THE MUNICIPAL SECURITIES

RULEMAKING BOARD AND TO THE APPROPRIATE STATE INFORMATION DEPOSITORY, IF

ANY.


1600 Franklin Street

Oakland, California 94612

(510)891-4777

BOARD OF DIRECTORS

Patrisha Piras, President

Joe Wallace, Vice President

Rebecca Kaplan

H. E. Christian Peeples

Greg Harper

Dolores Jaquez

Joe Bischofberger

DISTRICT BOARD OFFICERS

Richard C. Fernandez, General Manager


Kenneth C. Scheidig, General Counsel

DISTRICT EXECUTIVE STAFF

Jim Gleich, Deputy General Manager

Joseph V. Schlenker, Chief Transportation Officer

Joe DeProspero, Chief Maintenance Officer

Deborah McClain, Chief Financial Officer

Kathleen Kelly, Deputy General Manager, Service Development

Joe Kinchen, Chief Technology Officer

Kurt DeStigter, Human Resources Director

NOTE COUNSEL

Kutak Rock LLP

Denver, Colorado

FISCAL AGENT, PAYING AGENT,

REGISTRAR AND AUTHENTICATING AGENT

UNDERWRITER

FINANCIAL ADVISOR

Public Financial Management, Inc.

Sacramento, California

i2i6r\ 1422262

TABLE OF CONTENTS

Page

INTRODUCTION.

THE NOTES 3

Authority for Issuance 3

Purpose of the Issue 4

Description of the Notes 4

Registration and Transfer 4

BOOK-ENTRY-ONLY SYSTEM 4

Introduction 4

General 5

SECURITY SOURCES OF PAYMENT FOR THE NOTES 7

General 7

Pledged Revenues 8

Proceeds Fund 9

Payment Fund 9

Investment Agreement and Other Permitted Investments 9

THE DISTRICT 10

General 10

Governance and Management 11

Executive Staff [VERIFY/UPDATE] 12

Labor Relations44.LTpJbe_updated by the_D_isirictl .^.^^^^^^^^^Al

Revenues 13

Ridership and Passenger Fares 44L5

Federal, State and Local Subsidies 4416

-^^^^ 23

Constitutional and Statutory Limitations on Taxes and Appropriations [Any new

amendments?] 20,24

Contract Services 3322

DISTRICT FINANCIAL INFORMATION 3322

Budget Policies 3321

Financial Statements 3428

Cash Flow Forecast 3429

Historical Financial Operations 3429

Management Discussion of Historical Financial Results 3?3J,

Adopted Budget 3832

Projected Financial Results 3935

Consent Decree 3035

Energy Matters 3036

Insurance 3036

Pension System 34-26

Investment Policy 3332

02 113336.1142236JI

TAX EXEMPTION 3318

PENDING LITIGATION 3439

CONTINUING DISCLOSURE OBLIGATION 344j)

RATING 3541

UNDERWRITING 3M1

FINANCIAL ADVISOR 3641

DOCUMENTS ACCOMPANYING DELIVERY OF THE NOTES 36

Legul Matter?; 36

Closing Certificate 36

Other Matter;; 37

Miscellaneous ,^ ^..x..... ^., 41

APPENDIX A AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2002

APPENDIX B CASH FLOW STATEMENTS

APPENDIX C PROPOSED FORM OF NOTE COUNSEL OPINION

OFFICIAL STATEMENT

$[AMOUNT]'




INTRODUCTION

The purpose of this Official Statement, including the cover page and the appendices hereto, is to

set forth certain information concerning the Alameda-Contra Costa Transit District (the "District"),

created and existing under the laws of the State of California (the "State"), and the $[AMOUNT]* 2003-

04 Revenue Anticipation Notes (the "Notes"), to be issued by the District. The Notes are being issued

pursuant to Section 53850 et seq. of the California Government Code (the "Government Code") and a

resolution adopted on , 2003 by the District's Board of Directors (the "Resolution"), to

provide for the payment of current operating expenditures prior to the receipt by the District of a portion

of real property taxes levied within Alameda and Contra Costa counties; special_parceJLtaxL,retai 1

transactions and use tax on sales; governmental subsidy funds, including those disbursed by the Federal

Transportation Administration ("FTA"), the successor to the Urban Mass Transportation Administration

pursuant to the Intermodal Surface Transportation Efficiency Act of 1991 ("ISTEA")-tHkI1 the Federal

Transit Act, as amended (the "FTA Act"). It also receives State transportation fund subsidies pursuant to

the California Transportation Development Act of 1971 ('TDA Funds"), as amended, including State

Transit Assistance Program funds, and other revenues and subsidies available to the District.

The Notes are secured as to principal and interest by a pledge by the District of unrestricted

moneys received during specified periods (see "—Pledged Revenues" herein). Pursuant to the

Resolution, the District will deposit the Pledged Revenues equal to the principal of and interest on the

Notes payable on , in the Payment Fund, as hereinafter defined, to be held in trust for

the benefit of the holders of the Notes until all the Notes and all interest thereon are paid or otherwise

secured. To the extent not paid from Pledged Revenues, the Notes shall be paid from any other moneys

of the District lawfully available therefor (see "—Security for the Notes" herein). The District's 2003-04

Fiscal Year will begin on July 1,2003 and will end on June 30,2004.

Brief descriptions and references to the Resolution and other applicable legislation; the Notes; the

Fiscal Agent Agreement and other documents; and the District's finances are included in this Official

Statement. Such descriptions do not purport to be complete and are qualified in their entirety by reference

to such documents, resolutions and laws, copies of which are available for inspection at the administrative

offices of the District at 1600 Franklin Street, Oakland, California 94612. The District's audited financial

statements for the 12-month period ending June 30,2002 are contained herein as Appendix A.

THE NOTES

Authority for Issuance

The Notes are authorized to be issued pursuant to applicable provisions of the Government Code

and the Resolution.


02-142236 2

Purpose of the Issue

Imbalances in the District's cash flow, created by the timing of local, State and federal subsidies,

necessitate the issuance of short-term indebtedness to meet expenditures payable prior to receipt of

anticipated revenues. Accordingly, the proceeds of the Notes will be used to provide for the payment of

current operation expenses prior to the receipt of certain anticipated revenues.

Description of the Notes

The Notes will be dated the date of delivery of the Notes and will mature on .

The Notes shall bear interest at the rate as set forth on the cover page hereof, payable at maturity and

computed on a 30-day month/360-day year basis. The Notes are not subject to redemption prior to

maturity. The Notes will be issued in the aggregate principal amount of $[AMOUNT]* and will be issued

in fully registered form without coupons, and when issued will be registered in the name of Cede & Co.,

as registered owner and nominee of The Depository Trust Company, New York, New York ("DTC").

DTC will act as securities depository for the Notes. Individual purchases will be made in book-entry

form. Purchasers will not receive certificates representing their interests in the Notes purchased. The

principal of and interest on the Notes are payable upon maturity of the Notes by First Trust of California,

Nationul Association , acting as fiscal agent, paying agent, registrar and authenticating

agent (the "Fiscal Agent") to DTC, which will in turn remit such principal and interest to the Indirect

DTC Participants or the Beneficial Owners of the Notes, as discussed herein under "BOOK-ENTRY-

ONLY SYSTEM."

Registration and Transfer

While the Notes remain in book-entry-only form, transfer of ownership by Beneficial Owners

may be made as described under the caption "BOOK-ENTRY-ONLY SYSTEM." In the event that DTC

ceases to act as securities depository for the Notes, transfers may be effected as described below.

The Notes may be transferred or exchanged at the Principal Office of the Fiscal Agent for a like

aggregate principal amount of Notes of other authorized denominations of the same maturity and interest

rate, upon payment by the transferee of a transfer fee, any tax or governmental charge required to be paid

with respect to such transfer or exchange and any cost of printing notes in connection therewith. Upon

surrender for transfer of any Note, duly endorsed for transfer or accompanied by an assignment duly

executed by the Owner or his or her attorney duly authorized in writing, the District will execute and the

Fiscal Agent will authenticate and deliver in the name of the transferee a new Note.

["Principal Office" of the Fiscal Agent means with respect to the payment, registration, surrender,

exchange or transfer of any Note or Notes, the principal corporate trust office of the Fiscal Agent at

, and with respect to all other matters regarding the

duties and responsibilities of the Fiscal Agent pursuant to this Agreement, the principal corporate trust

office of the Fiscal Agent at , or such other offices as the Fiscal Agent may

designate.]


02-142236.2

BOOK-ENTRY-ONLY SYSTEM

Introduction

Unless otherwise noted, the information contained under the subcaption "—General" below has

been provided by DTC. The District makes no representations as to the accuracy or completeness of such

information. The beneficial owners of the Notes should confirm the following information with DTC, the

Direct Participants or the Indirect Participants.

NEITHER THE DISTRICT NOR THE FISCAL AGENT WILL HAVE ANY

RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT

PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (A) THE ACCURACY

OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT

PARTICIPANT; (B) ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE

OWNERS OF THE NOTES UNDER THE AGREEMENT, (C) THE SELECTION BY DTC OR ANY

DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE

PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE NOTES; (D) THE PAYMENT

BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT OF ANY AMOUNT WITH RESPECT TO

THE OWNER OF THE NOTES; (E) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC

AS THE OWNERS OF NOTES; OR (F) ANY OTHER MATTER REGARDING DTC.

General

DTC will act as securities depository for the Notes. The Notes will be issued as fully registered

securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may

be requested by an authorized representative of DTC. One fully registered note certificate will be issued

for each maturity of the Notes each in the aggregate principal amount of such maturity, and will be

deposited with DTC or held by the Fiscal Agent.

DTC, the world's largest depository, is a limited-purpose trust company organized under the New

York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a

member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York

Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A

of the Securities Exchange Act of 1934. DTC holds and provides great services for over 2 million issues

of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments

from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also

facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in

deposited securities, through electronic computerized book-entry transfers and pledges between Direct

Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct

Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,

clearing corporations and certain other organizations ("Direct Participants"). DTC is a wholly-owned

subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a

number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,

Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets

Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by

the New York Stock Exchange, Inc., the American Stock Exchange LLC. and the National Association

of Securities Dealers, Inc. Access to the DTC system is also available to others such as 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 rules applicable to DTC and its

02-142236 2

Participants are on file with the Securities and Exchange Commission. More information about DTC can

be found at www.dtcc.com.

Purchases of the Notes under the DTC system must be made by or through Direct Participants,

which will receive a credit for the Notes on DTC's records. The ownership interest of each actual

purchaser of each Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect

Participants' records. Beneficial Owners will not receive written confirmation from DTC of their

purchase, but 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 Notes are to be accomplished by entries made on the books of Direct and Indirect

Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates

representing their ownership interests in the Notes, except in the event that use of the book-entry system

for the Notes is discontinued.

To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC are

registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be

requested by an authorized representative of DTC. The deposit of Notes with DTC and their registration

in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.

DTC has no knowledge of the actual Beneficial Owners of Notes; DTC's records reflect only the identity

of the Direct Participants to whose accounts such Notes are credited, which may or may not be the

Beneficial Owners. The Direct and Indirect Participants remain responsible for keeping accounts of their

holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct

Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial

Owners will be governed by arrangements among them, subject to any statutory or regulatory

requirements as may be in effect from time to time. Beneficial Owners of the Notes may wish to take

certain steps to augment the transmission to them of notices of significant events with respect to the

Notes, such as redemptions, tenders, defaults, and proposed amendments to the financing documents. For

example, Beneficial Owners of the Notes may wish to ascertain that the nominee holding the Notes for

their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial

Owners may wish to provide their names and addresses to the registrar and request that copies of notices

be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Notes 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.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to

Notes unless authorized by a Direct Participant on accordance with DTC's Procedures. Under its usual

procedures, DTC mails an Omnibus Proxy to District as soon as possible after the record date. The

Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose

accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Notes are to be made to Cede

& Co., or such other name 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 District or Fiscal Agent, on payable date in accordance with their respective holdings

shown on DTC's records. Payments by Participants to Beneficial Owners are governed by standing

instructions and customary practices, as is the case with securities held for the accounts of customers in

Q2J422M.2 4

bearer form or registered in "street name," and will be the responsibility of such Participant and not of

DTC or its nominee, the Fiscal Agent or District, 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 name as may be requested by an authorized representative of

DTC) is the responsibility of District or the Fiscal Agent, disbursement of such payments to Direct

Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial

Owners shall be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Notes at

any time by giving reasonable notice to District or the Fiscal Agent. Under such circumstances, in the

event that a successor securities depository is not obtained, the Notes are required to be printed and

delivered.

Further, District may decide to discontinue use of the system of book-entry transfers through

DTC (or a successor securities depository). In that event, physical Notes will be printed and delivered.

According to DTC, the foregoing information with respect to DTC has been provided to the

Industry for informational purposes only and is not intended to serve as a representation, warranty or

contract modification of any kind.

District and the Fiscal Agent cannot and does not give any assurances that DTC, DTC

Participants, Direct Participants or Indirect Participants will distribute to the Beneficial Owners (i)

payments of interest, principal or premium, if any, with respect to the Notes, (ii) certificates representing

ownership interest in or other confirmation of ownership interest in the Notes, or (iii) prepayment or other

notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Notes, or that they will do

so on a timely basis or that DTC, DTC Participants, Direct Participants or Indirect Participants will act in

v the manner described in this Official Statement. 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.

BENEFICIAL OWNERS WILL NOT RECEIVE PHYSICAL DELIVERY OF NOTES AND

WILL NOT BE RECOGNIZED BY THE FISCAL AGENT AS OWNERS THEREOF, AND

BENEFICIAL OWNERS WILL BE PERMITTED TO EXERCISE THE RIGHTS OF OWNERS ONLY

INDIRECTLY THROUGH DTC AND THE PARTICIPANTS.

In the event that the book-entry only system is discontinued, payments of principal, premium, if

any, and interest with respect to the Notes and payment of the maturity amount, and prepayment

premium, if any, of the Notes shall be payable as described herein under the caption "DESCRIPTION OF

THE NOTES—General."

Except as stated herein, there is no controversy or litigation now pending against the District or,

to the knowledge of their officers, threatened, restraining or enjoining the sale, execution or delivery of

the Notes, the Indenture or in any way contesting or affecting the validity of the Notes or the Resolution.

SECURITY SOURCES OF PAYMENT FOR THE NOTES

General

The principal of and interest due on the Notes are payable at maturity from funds drawn by the

Fiscal Agent under an and credited to the Payment Fund, as hereinafter defined.

02-1422162

Moneys credited to the Payment Account will be used for the payment of the principal of and the interest

on the notes.

Payments of the principal of and interest on the Notes is secured by a pledge of the first available

amounts of unrestricted moneys expected to be received in the months as indicated:

Amount Month

$ ' f April 2004] $ 2 TJune 20041

1 Includes an annual amount sufficient to pay [three quarters[onejhalfl of the principal and the interest on the Notes at maturity at a rate of interest of %.

2 Includes an annual amount sufficient to pay [one quurterjialf] of the principal and the interest on the Notes at maturity at a rate of interest of %.

Pledged Revenues

The principal amount of the Notes, together with the interest thereon, is payable from income,

revenue, cash receipts and other moneys which are received by or accrue to the District for deposit to the

General Fund of the District during or allocable to the 2003-04 Fiscal Year. The 2003-04 Fiscal Year will

begin on July 1, 2003 and end on June 30, 2004. As used herein, the term "Unrestricted Moneys" shall

mean taxes, income, revenue, cash receipts and other moneys to be received by the General Fund of the

District and which may lawfully be pledged for the payment of the Notes and interest thereon and which

are otherwise not so pledged.

The Notes and any and all amounts owing to the are secured as to principal

and interest by a pledge of an amount equal to [three quartersonejiialf] of the principal amount of the

Notes plus an amount equal to [three quartersone-halfl of the interest due on the Notes at maturity

thereof, and any deficiency in the amounts required to be deposited during any prior month, from

Unrestricted Moneys to be received during the month ending [April 30, 2004]; and an amount equal to

[one-quarterhalfl of the principal amount of the Notes plus an amount equal to [one quarterhalfl of the

interest due on the Notes at maturity thereof, and any deficiency in the amounts required to be deposited

during any prior month, from Unrestricted Moneys to be received during the month ending

[May 31 June 30, 2004] (collectively, the "Pledged Revenues"). Such moneys are pledged to pay the

Notes and interest thereon and pursuant to Section S38S6 of the Government Code, the Notes are a first

lien and charge against, and are payable from, such pledged moneys.

Pursuant to the Resolution, the District will pay the Pledged Revenues to the Fiscal Agent for

deposit to the Payment Account of the Payment Fund to be held in trust for the benefit of holders of the

Notes until all the Notes and all interest thereon are paid or otherwise secured.

The Notes are general obligations of the District and, to the extent not paid from the Pledged

Revenues, shall be paid from any other moneys of the District lawfully available therefor (see

"—Finances of the District"). However, except for the Pledged Revenues, the District is not prohibited

under the Resolution from pledging, encumbering or utilizing moneys for other purposes, and there can

be no assurance that moneys will be available for the payment of the principal of and interest on the Notes

(see "—Debt of the District"). Fromapractical standpoint^onlymoneys availableto[the Disjrictjreceived

after [month!. Fyearl will be available for dep_ojiLtoJiie.PaxmemJFundt_^jefjuie^

02-1422.VS2

THE OBLIGATION TO PAY THE NOTES IS NOT AN OBLIGATION OF THE FEDERAL

GOVERNMENT, THE STATE, THE COUNTIES OF ALAMEDA OR CONTRA COSTA, NOR ANY

MUNICIPALITY OR POLITICAL ENTITY OTHER THAN THE DISTRICT. NEITHER THE

OFFICERS AND EMPLOYEES NOR ANY PERSONS EXECUTING THE NOTES ARE LIABLE

PERSONALLY ON THE NOTES BY REASON OF THEIR EXECUTION OR DELIVERY.

Proceeds Fund

The Resolution creates a trust fund to be held by the Fiscal Agent and designated the 2003-04

Revenue Anticipation Note Proceeds Fund (the "Proceeds Fund"). Amounts on deposit in the Proceeds

Fund will be disbursed to the District upon receipt by the Fiscal Agent of a written request from the

District and used and expended by the District for any purpose for which it is authorized to use and

expend funds from the General Fund of the District.

Subject to the terms of the Resolution, the District will pledge and assign to the Fiscal Agent a

lien on and security interest in amounts deposited in the Proceeds Fund and Payment Fund for the benefit

and security for the payment of the Notes.

The District will direct the Fiscal Agent to transfer, on , 2003, amounts, if any,

remaining on deposit in the Proceeds Fund to the Payment Fund, to assist in satisfying the District's

sinking fund payment obligation to the Payment Fund.

Payment Fund

The Resolution creates a trust fund designated the 2003-04 Revenue Anticipation Notes Payment

Fund (the "Payment Fund"). The Pledged Revenues and any amounts transferred from the Proceeds Fund

in accordance with the Resolution are held in the Payment Fund.

Moneys held by the Fiscal Agent in the Payment Fund are pledged to and may be used solely for

the benefit of the owners of the Notes to be applied to the payment of the Notes until the Principal

Amount of the Notes and all interest thereon is paid in full. The District shall pay the Pledged Revenues

upon receipt to the Fiscal Agent for deposit into the Payment Account. On the Maturity Date, the Fiscal

Agent has been directed to withdraw moneys from the Payment Fund for payment of the principal of and

interest on the Notes.

Upon the written direction of the Treasury Manager, the Fiscal Agent will invest the moneys held

under the Resolution in permitted investments under the Resolution.

Investment Agreement and Other Permitted Investments

Moneys in the Proceeds Fund and Payment Fund, to the greatest extent possible, shall be

invested, pursuant to an Investment Agreement with a provider of an investment agreement meeting the

requirements of paragraph (b) below, and, to the extent of a default pursuant to such Investment

Agreement or if no Investment Agreement is in effect, in Permitted Investments by the Fiscal Agent

which mature no later than the maturity date for the Notes, to the extent permitted by applicable

California law, as now in effect and as such law may be amended, modified or supplemented from time to

time. The Treasury Manager shall direct any such investments in the following "Permitted Investments":

(a) notes, certificates, bonds or other evidences of indebtedness which are

obligations of or guaranteed by the United States of America or any of its agencies or

instrumentalities, or certificates or collateralized perfected repurchase agreements which

02-142236.2 7

represent an interest therein, or a written investment agreement collateralized by obligations of or

guaranteed by the United States of America or any of its agencies or instrumentalities;

(b) a written investment agreement with (i) a bank or trust company organized and

existing under the laws of the United States of America or any state thereof or a foreign bank or

trust company; (ii) a corporation organized and existing under the laws of any state of the United

States which is authorized to do business in California; or (iii) an insurance company organized

under the laws of any state of the United States, and authorized to do business in California, any

of which entities (A) has or is unconditionally guaranteed by an entity which has capital and

unimpaired surplus or allocated liquidity in an amount in excess of $100,000,000, and

(B) provides for the payment of a specified rate or rates of interest or specifies a method for

calculating such rate or rates of interest on moneys deposited thereunder; provided further that the

investment agreement provider or its guarantor is rated, on the date of such agreement, at least in

one of the two highest rating classifications as established by Moody's Investors Service or

Standard & Poor's Ratings Group; or

(c) any investment otherwise permitted by law with the consent of the Credit

BimfcTsecuriiiesperroitted bv Section 25871 of the FîblicJJtilUie^Xad_e^JLlhe_Staieâs it is now

in effect and as it may be amended, modifiedI or supplemented from time to time. AH investment

the Prxjceed&JFund andJhe_Payment Fund_shalLniature_iip.t

latejLthanJ.he date on whicJyiJi^JLtimaiejjjhaUhiLFj.sc^LAge-m-arilLn_eed_such moneys_eit)iejr_lp.

payêjrincipaLamQujiLjaf or interest on thej jjptes or toj)royide jb£ suchpjayjnent oiMto be

Qtherwisejised by theJDistricLfor District purposes.

All moneys held by the Fiscal Agent in the Proceeds Fund and the Payment Fund, if not invested,

shall be held in a money market fund which is rated in the highest rating category of Standard & Poor's

Ratings Group or Moody's Investors Service (including a mutual fund provided by the Fiscal Agent).

Moneys in the Proceeds Fund and the Payment Fund, to the greatest extent possible, shall be

invested in such investment securities as the Treasury Manager shall provide for in written directions to

the Fiscal Agent. Moneys in the Proceeds Fund and the Payment Fund shall be invested in investment

securities permitted by Section 25871 of the Public Utilities Code of the State of California, as it is now

in effect and as it may be amended, modified or supplemented from time to time, and the proceeds of any

such investment shall be deposited in the Proceeds Fund and the Payment Fund and shall be part of the

Pledged Revenues. All investment securities purchased by moneys in the Proceeds Fund and the

Payment Fund shall mature not later than the date on which it is estimated that the Fiscal Agent will need

such moneys either to pay the Principal Amount of or interest on the Notes or to provide for such

payment or to be otherwise used by the District for District purposes.

THE DISTRICT

[To be confirmed/updated]

General

The Alameda-Contra Costa Transit District is a special transit district organized under the laws of

the State of California (the "State") established on November 6, 1956 pursuant to Sections 24501 et seq.

of the State Public Utilities Code. The operations of the District commenced in 1960.

The District is the third largest bus-only system in the State and the fourth largest in the nation,

and serves 13 cities and adjacent unincorporated areas in Alameda and Contra Costa counties (the

02-142236.2 g

"Service Area"). The Service Area extends from San Pablo Bay on the north to the southern city limits of

Fremont, serves the western portions of Contra Costa and Alameda counties, and provides trans-bay

services to San Francisco, San Mateo and Santa Clara counties. For the location of the Service Area, see

the map on inside cover page.

The District operates two main types of service within the Service Area: East Bay Local Service

and Transbay Service. East Bay Local Service consists of: 78 all day routes, including two limited stop

routes; three East Bay Express routes operated during commute hours; 17 commute-only routes, including

one limited stop route; five routes offering community, destination-based service which provides sporadic

service during midday, offering direct access from community centers to shopping and other services; and

Supplemental School Service which provides direct access to elementary, junior high and senior high

schools in the Oakland Unified School District during the academic year. Transbay Service consists of

37 routes originating from areas of the East Bay and terminating at the Transbay Terminal in downtown

San Francisco andone route fromthe east bay^of the^SanMateoJBridge terminating inJSanMateo County.

The District also participates in a jointly funded consortium with the San Mateo Transit District, Santa

Clara Valley Transit, Bay Area Rapid Transit District-€ ("BART") and Union City to provide service

across the Dumbarton Bridge between the cities of Union City and Palo Alto.

In Fiscal Year 2001-02, the District carried approximately 68.9 million passengers within a

360-square mile area, utilizing approximately 843 buses which traveled approximately 21 million miles.

The average age of the District transit vehicles is fseveftjten years. The District currently employs

approximately 2.521 bus drivers, maintenance workers, clerical support and administrative

employees.

The District is also a participant with the Bay Area Rapid Transit District ("BART') in the East

Bay Paratransit Consortium (the "Consortium") which provides Americans with Disabilities Act

("ADA") complementary paratransit services in Alameda and western Contra Costa Counties. The area

served by the Consortium encompasses the District/BART coordinated service area. Revenues to offset a

portion of the costs of providing these services are derived from several sources including, paratransit

passenger fares, TDA funds and STA funds, both as defined herein.

Governance and Management

The District is governed by an elected Board of Directors consisting of seven members, five of

whom are elected from wards and two elected at-large. Each ward represents a specific geographic area

within the Service Area. Ward I includes Richmond, San Pablo, El Cerrito, Kensington, portions of

El Sobrante in Contra Costa County, and Albany and portions of Berkeley in Alameda County; Ward II

includes portions of Berkeley, Oakland and Emeryville; Ward III includes the cities of Alameda,

Piedmont and part of Oakland; Ward IV includes the majority of the cities of San Leandro and Hayward

and the unincorporated areas of Castro Valley, Ashland, Cherryland and San Lorenzo; and Ward V

includes the cities of Fremont, Newark and the southern portions of Hayward. For the location of the five

wards, see the map on the inside cover page. Four terms of the Board members expire simultaneously,

and the remaining three terms expire two years later.

The powers of the Board of Directors include acquiring, constructing, owning, operating and

controlling transit facilities; fixing rates; establishing routes and levels of service; incurring indebtedness;

exercising the right of eminent domain; and acceptance of contributions or loans from the federal

government, the State or any agency thereof. The current members of the Board of Directors are set forth

below.

VERIFY/UPDATE

02-1422^62 Q

Executive Staff [VERIFY/UPDATE]

Reporting directly to the Board of Directors are the General Manager, the District Secretary and

the General Counsel. Four AssistantTwo Deputy General Managers_an^J^pjjiiExejcjiJiyeJ3fficejr5 report to

the General Manager.

The following are brief resumes for key management staff of the District:

Richard C. Fernandez, General Manager. Mr. Fernandez was appointed General Manager of

the District by the Board of Directors in January 2000, after serving as Interim General Manager for a

year. Prior to becoming the General Manager, Mr. Fernandez held the position of Assistant General

Manager for Operations. Prior to coming to the District, Mr. Fernandez held a number of senior

management positions during his 20-year tenure with the New Jersey Transit Authority. Mr. Fernandez

has received training and education in transportation management from the University of Southern

California and other technical institutions throughout the United States.

Rose Martinez, District Secretary. Ms. Martinez was appointed District Secretary m

on S_e_piember_24, 2001. Prior to this appointment, Ms. Martinez served as the

for 28_years__withJ:he,iCinps County Bo^nJjQfL$Jij3eivisoxs_where she was

CJericJo_theJBjQaKLofJSiipgryisors for 25 years. [Ms. Martinez has served in various position!! with tho

District—over the years and—has—mefe—thaw— years—of experience—m—the—transportation

industrv.-1Ms. Martinez ajso_cgmpleted__a three-year Management Certificate Program at California's

^ in the Cau^omiaXlerkjaLtheJoard of Supervisors Associatkm. serving as President in 1995.

KennethJL Scheidig, General Counsel. Mr. Scheidig was appointed General Counsel of the

District in 1992. Prior to joining the District, Mr. Scheidig served as City Attorney for the cities of

Concord and Pleasanton, as well as assistant City Attorney for the cities of Concord, Lafayette, Moraga,

Orinda and Walnut Creek. Mr. Scheidig has held offices in the League of CjUfornjaXities and the

National Institute of Municipal Law Officers. In addition, Mr. Scheidig has extensive experience in land

use regulation and development. Mr. Scheidig is a graduate of the University of California, Riverside in

1966 and received a Juris Doctor degree from Hastings College of Law in 1969.

James Gleich, Deputy General Manager. Mr. Gleich was appointed Deputy General Manager

for the District in January 2000. Mr. Gleich is also a member of the Executive Board of the California

Transit Association and serves as a member of the American Public Transit Association Task Force on

Federal Program Re-Authorization issues. Mr. Gleich has more than 27 years of executive level public

management experience, including 12 years of executive level management experience in human

02-1422362 1Q

resources for the Commonwealth of Massachusetts. Mr. Gleich has served in an executive capacity in the

United States Senate as staff to both the Senate Judiciary and Interior Committees.

Joe Schlenker, Chief Transportation Officer. [NEED BIO]

Joseph V. Schlenkert Chief Transportation Officer. Mr. Schlenker joined the District as

DireciojLO-fJ3p^ratj_ojisJriilcip^ of Chief Transportation QfJGLcerJn

March giJ2j3O^

squaremule service area. Prior to joining the District. Mr.JSchlenketLenioyed^a.23-year career withjbfew Jersey-Transit (16 yearsJn_paaimgejn^jLpi3sMonslJfo]lojveiLbv several years of wcffk_as_anJndgpejndent

in the

United States Marine Corp.11970-1923). His professionaLexDerienc_e,has been.accennjated by studies in business management (QjangeXojjntyjriarunu^pltxCQjIege). leadership_and.lab_qrjelations (UniyersUy_Qf

Milwaukee).

Deborah McClain, Chief Financial Officer. Ms. McClain assumed the duties of Chief Financial

Officer for the District in 2001. Ms. McClain joined the District in 1999 as Budget Manager. Prior to

joining the District, Ms. McClain organized and directed the budget functions for the Oakland Unified

School District and the business services functions (including budget, financial accounting and reporting,

payroll administration, data processing, risk management and food services duties) for the Vallejo City

Unified School District. Ms. McClain holds a bachelor's degree in Economics from Cornell University.

Kathleen Kelly, Deputy General Manager, Service Development. Ms. Kelly was appointed

Deputy General Manager, Service Department for the District in 1997, and is responsible for overseeing

the planning, scheduling, grants and accessible services department of the District. Prior to this

appointment, Ms. Kelly was the budget manager and strategic plan manager for the District. Prior to

joining the District, Ms. Kelly held several positions with the San Francisco Municipal Railway,

including that of budget manager. Ms. Kelly holds a bachelor's degree in Economics from the University

of Notre Dame and a master's from the LBJ School of Public Affairs at the University of Texas.

[Joe DeProspero, Chief Maintenance Officer.] [NEED BIO]

Joe DeProsperor (Actine) Chief Maintenance Officer. In Anri) of 2002, Mr. DeProsnero was

appointed (Acting) ChieJtMaintenance Officer. He asjumedjliis^p_o_sitiQiiJ^Ler serving as theJ3istrici!s

Maiolejiapce_Manager for 5 yearsJ_StartinRjou_t_as_a^laintenaace Supervisor, he_has_heen with the

District since lJ85_and helped implement the current Apprenticeship Program., Priorjo joining the

District, Mr_D£Eraspero was empifly.eJ_by_Sauthern Pacific Railroad and .hasjgen jnit hei Majntenance

field for over 30_xe^K^HisJtoining-in_maiDtenance and management began at V^esLyir^jiiaJUjiiyersity

and includes completion ofjiumerous apprenticeship programs.

Labor Relations FTo he undated hv the District 1

As of June 30, 2002, the District employed approximately non-administrative persons

(including bus operators, mechanics and maintenance employees) represented by the Amalgamated

Transit Union Local 192 (the "ATU"). The contract with the ATU expires June 30, 2004. The

[27] electricians and electronic technicians employed by the District are represented by the International

Brotherhood of Electrical Workers (the "IBEW"). The contract with the IBEW expires June 30, 2005.

The [275] employees represented by the American Federation of State, County and Municipal Employees

("AFSCME") entered into a contract with the District that expires June 30, 2003. {Have they entered

wrteThe_DistrLcJLand_AI£CMEjU'ej;^^ a new contract^.

02-142236 2 11

Revenues

The majority of the revenues of the District are comprised of passenger fare receipts, grants from

the State and the Federal Transit Administration (the "FTA"), local and State taxes, property taxes, and

contract services. In Fiscal Year 2001-02, passenger fare receipts met approximately 43t61L63% of the

annual operating expenses of the District with the remaining S3r4g2,38% funded from other sources,

BasejdjjpjQp the average amojinLoLpjiSSejager fares colleciedJbejween Fjs(aLXear_199Jr96 through 2001-

02, passenger fare receiptsaccounted for approximately 20.58%_oJLthe annual operating^expenses of the

District. The District's Fiscal Year commences on each July 1 and ends the following June 30.

fREMAMDERJ3EgAGEINTEbLTJQNALLXLEET,BLANK1

02^42236.2 J2

Table 2

Summary of Revenues

Alameda-Contra Costa Transit District

Fiscal Years 1995-96 through 2002-03(l)

TABLE 2

Summary of Revenues

Alameda Contra Costa Transit District

Fiscal Years 1997 98 through 2001 02

($ in thousands)

[Please fill in missing information]

Fiscal Farcbox EIA^ Slate Local Comma

Xear Revenues FuMs^i' Funds'3! Siiteidies^.' Services^ Qtheril' Total

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

Forebox

Revenue

s$36.95Q

36.073

$39,209

40,023

44,178

'17.03147

.025 A A Ql-,1 AC

,066

43.323

FFA

■ja 00041

Funds

43.761

$49,915

49,578

55,526

49.414

5JJ25

UULhI

Subsidies

MOJ

64,555 $71,526

77,916

75,574

85.495

9JL86Q

9.311

158.006

$172,161

177,258

200,567

198.896

9.436

245

24.974

28J89

Section 8

(planning)

Section 53

97 f ̂ ̂i f% ■ # ̂ \ 1 \

See

Slate

Local

Subsidies

FTA

California

Transporta

Devolopm

ent—Punds

and—Slate

Assistance

i illicit.

See

State—and

Subsidies

Transporta

Developm

ent Aet^

11 uflSli

02-142216 2 L4

Program^

transaction

taxes—and

eeUeeted

m the

Counties.

See ii—

State—and

Subsidies -

and —

Taxc;"

4See—^

non-operat

ing

revenue^

advertising

preventive

ee

sebsidiesr

3??

!'• Projcclions for Fiscal Year_20Q3-2004 are shown irLAppendix B hereto. lililncliidcs FTA Section 8 (planning) and S£ctio.n_5307 (capitnDJBinds- See "-Federal..Slate and LocaLSubsidies-FTA

Grants."

( * Includes California Transportation Development Funds and_Slatc_Iransit Assistance Propram Funds. See "-Federal, Stale jmd

Local Subsidies-Transportation Development Act" and "- Slate Transit AssistanccLBrofiram."

02-1422^6.2

(4) Includes local, transaction and use taxes and piQpcily_ta&CS_CQllectcd_in_lhc_Countics^_Scc "-Federal. State and Local

Siibsidjes-JLQcaLSubsidies" and "-PropcrtyTaxcs."

'•" See "^-Contract Services". '^Includes other operating and non-operating. revenues, including net interesk and advcrtisinjg income and preventive

maintenance subsidies,

(7) Numbersphased onljjjg^jjjijct^Fjscal Year 2002-2003 foreeggt.

Ridership and Passenger Fares

The District presently charges its passengers over the age of 12 a basic cash fare of $1.50 for

peak-hour travel and off-peak hour travel within the Service Area. The District last raised its basic cash

fare in September 2002. The basic fare for transbay trips for passengers over the age of 12 is $3.00.

Discounts are available for all fares from the basic cash fare upon the purchase of tickets and monthly

passes._The District will be consideriBg_pps^Me^Jhan&ejsJiLth^^^

Total ridership has-increased over-the past five yearsuntil Fiscal Year 2001-2002 as a result of

restoration of service to pre-1996 levels, expansion of service, rerouting and rescheduling of service

within a significant portion of the Service Area. Table 3 shows the ridership, farebox revenues and

operating ratios of the District since Fiscal Year 1997 98.1995-96. based on the audited financial

statements.

02-142236.2

Fiscal

Year

1995-96

1996-97

1997-98

1998-99

1999-:00

2000--0I

2001-02


Ridership, Farehox Revenues and Operating Ratios

Fiscal Years 1995-96 through H\tt2-Mii}

($ in thousands)

TABLE 3


Ridership, Farebox Revenues and Operating Ratios


($ in thousands)

[Please fill in missing info]

Total

Passengers-'*^

63,978,000

62.879.000

63,289,000

65,668,000

67,412,000

7XLOOOJ3QQ

67.000.00fl

1N/A1

Base Fare

L25

$1.25

1.25

1.35

1.35

1.35

1.50

Farebox

Revenues

$36.950

36.073

S39.209

40,023

44,178

025

Total

Operating

Revenue

066

43,323

45,010

S50,'1184 8.114

48,228

52.69155,

667

59,92555,

920

59,849

54,617

Total

Revenues

149.311

158,006

$180,3121

72.161

7,258~ 200.3692Q

2*561

271,75024

2.859

233,584

Percentage of

Operating

Revenues to

Total Revenue

30.46%

21149

23.38

peak

The

'''Projections for Fiscal Year 2O03-2O0Aat(LshQWn in Appendix B hereto.

'3>Numbersbascd on the District's FiscaLYear 2OQ2-2O03 forecast.

Federal, State and Local Subsidies

In Fiscal Year 2001-02, the District received approximately z=M% of its revenue for operations

and capital purchases from various federal, State and local sources, as described below.

17

FTA Grants. Funds for the federal urban mass transportation program are available from the

Federal Transit Administration ("FTA") to qualified transit authorities pursuant to procedures set forth in

the Transportation Equity Act for the 21s' Century ("TEA-21").

TEA-21 was enacted in 1998 for the purpose, among others, of providing substantial federal

assistance to enable mass transportation systems to continue providing vital transit service. The process

of obtaining federal capital assistance is initiated by a recipient designated by state and local officials, and

by publicly owned operators of mass transportation services. The MTC, as the designated recipient for

the nine-county San Francisco Bay Area, prepares and submits a regional program of projects to the FTA

for approval. Additionally, the District is required to file an application with the FTA regional office to

be eligible for any FTA program grant.

Federal operating assistance grants, which are allocable based on population density and bus

revenue miles operated, are authorized by FTA Section 5307 (previously known as the Section 9

program) for the reimbursement of up to 80% of the cost of capital programs and a portion of operating

expenses to improve or continue mass transportation service. However, pursuant to the provisions of

TEA-21, transit providers in urbanized areas in excess of 200,000 people are no longer eligible for

operating assistance from the FTA. The District falls within this category and therefore has not received

operating assistance under Section 5307 since Fiscal Year 1997-98. The District does continue to receive

FTA Section 8 subsidies for planning assistance.

Table 4 shows the amount of FTA operating fund subsidies received by the District since Fiscal

Year 1997 98.1995-96, based on the audited financial statements and the ratio of those funds to total

revenues received by the District.

Table 4


FTA Operating Subsidies

Fiscal Years 1995-96 through 2002-0.1")

C$ in thousands)

02-142236.2

Fiscal Year

1997 081

995-96

1996-97

1997-98

1998-99

1999-00

2000-rOl

2001-02

TABLE 4

Alamoda-Contrn Costa Transit District

FTA Opcroting Subsidies

Fiocol Yours 1997 98 through 2001 02

($ in thousands)

[Please <1H in missing info]

FTA Section-*

8 Subsidy

$5088

22

52 41

41

41

41

FTA Section

5307 Subsidy

2,239

5QJ

0

Total FTA

Subsidies

Total

Revenues

$180,312149

,3.1,1

158,006

172.161

181,320112,

258

200,3692Qjjt

226,22119JL

896

271,750242,

859

233,584

Percentage FTA

Subsidies to

Total Revenue

L28

0.32

0.02

43,55002

0,02

The

2-03 12'

'''Projections for Fiscal YcatlOO3-2OO4 are_shown in Appendix B hereto. '" Numbers based onjhc District's Fiscal Year 2002-2003 forecast.

State Transportation Development Act Funds. The District receives an allocation of sales tax

revenue under the California Transportation Development Act of 1971, as amended, (the 'TDA"), under

which receipts from a 0.25% sales tax, imposed as part of the State's current 7% sales tax, are reserved

for transportation purposes. The TDA provides that revenue for this tax is placed in two funds, the Local

Transportation Fund which was established in 1976 and the State Transit Assistance Program (the

"STA") which was established in 1979.

Transportation Development Act Funds. The Local Transportation Fund is used for the deposit

of sales tax revenues collected by the State Board of Equalization within each respective county ("TDA

Funds"). TDA Funds are apportioned among individual transportation service entities within each county

designated as local or regional transportation planning entities. TDA Funds for operating assistance are

available in amounts of up to 50% of the operating budget of any individual transportation service entity,

after deduction of federal grants; provided that certain TDA criteria are met.

The District is presently an eligible claimant for TDA Funds allocated by the State to Alameda

and Contra Costa counties. In accordance with procedures and eligibility requirements set forth in the

TDA, the District submits a request for TDA Funds to the MTC, the regional transportation planning

entity for the nine-county San Francisco Bay Area, including Alameda and Contra Costa counties, on

02-142236.2 19

each May 1 for the next Fiscal Year. If the MTC approves the request, the MTC directs the auditors of

Alameda and Contra Costa counties to release the TDA Funds to the District.

Under these procedures, the District was allocated $61.2 million in TDA Funds for the 2001 02

Fiscal Year.—For Fiscal Year 2002 03,2001^02, the District estimates it will receive $ received

$6JL2 million in TDA Funds. TDA Funds are received in substantially equal quarterly installments

during the Fiscal Year. The District may submit supplemental claims for TDA Funds during the year.

TDA Funds remaining with the Counties at the end of any Fiscal Year are carried over to the following

Fiscal Year.

Table 5 sets forth the amounts of TDA Funds available to the District for operations fersince. the

ktst-ftveJi)S>5-96 Fiscal ¥eaf»Year, based on the audited financial statements and the ratio of TDA Funds

to total revenues of the District.

Table 5

Alamcda-Contra Costa Transit District

TDA Funds

Fiscal Years 1995-96 through 2002-03'"

($jn thousands)

26.

Fiscal Year

1997 981995-

1996

1997-38

1998-99

1999-00

2000^01

2001-02

Sewee: The

Alamedn-Contra Costa Transit District

TDA Funds


($in thousands)

TDA Funds

Distributed to the District

$12,8'133.1,848

37.7,69

42,843

42,373

47,118

43,950

61,202

48,454

Total Revenue

$180.312149,3

11

118.006

172,161

181.320177,25

§ 300^69250.56

2

226,2211^8,89

6.

271.750242^85

9

233,584

^''Projections forFiscal YcaL2Q03-20Q4 arsLshowninAppendixB hereto, u>Niimhers based tin the District ̂ Fiscaj Year 2002-2003JjirccasT

Percentage of

TDA Funds to

Total Revenue

23.9Q

24.89

20,74

02-1422.^6.2 20

{The TDA prohibits the pledging of TDA Funds without voter approval.} {The District has not

sought voter approval for a pledge of TDA Funds to pay the principal of and interest on the Notes.]

State sales tax revenues devoted to the STA ("STA Funds") are apportioned among the State's

counties on the basis of population and operator revenue-based formulas. They are deposited in the

Counties' State Transportation Assistance Fund and are allocated by the MTC.

Table 6 sets forth the amounts of STA Funds available to the District for operations from annual

sales tax collections in Alameda and Contra Costa counties for the last ftvesix Fiscal Years, based on

audited financial statements and the percentage such funds constitute of total District revenues, as well as

the projection for Fiscal year 2002-03.

Local Subsidies.

(a) A.B. 1107. A 0.5% retail transaction and use tax is imposed within Alameda

County, Contra Costa County and the City and County of San Francisco for transit purposes and

allocated by the MTC. Pursuant to State legislation, 75% of the proceeds from this tax is

allocated to BA4^tJb^Bjiy^re^JlarjidJrransit_IHstricj^'RAJBT!) and the remaining 25% is

allocated among the District and the San ̂ Francisco Municipal Railway. The District received

-30.9 million or 15.58% of its total revenue from this source in Fiscal Year 20i)0-0Land

$3j)J?_jqiiJJLQn_pjlJL2.-?6% of its total revenue from this source in Fiscal Year 2001 02 and

estimates that it will receive $ million or <fr of its total revenue from this source in

Fiscal Year 2002 03. Table 02, Table 7 sets forth the amounts of retail and use tax received by

the District for the last fivesix Fiscal Years, based on audited financial statementST^iorJEiscal


A.B. 1107 Sales Tax Receipts

Fiscal Years 1995-96 through 2002-03"'

($ in thousands)

TABLE 7

Atomedu-Contra Costa Transit District

AiBi 1107 Soles Tax Receipts


($ in thousands)

96

Fiscal Year

1997 981915.-

Z=9J

1998-99

1999-00

2000-;01

2001-02

A.B. J107 Sales Tax

Distributed to the District

4> x. *t ■;■/■/z) JLJs i

Source: Tho

24.725

28,895

Total Revenue

$180,312149^3

H

moss

181,320177,25

S

2O0v3492(KL56

2 226.22119_SJ9

6

271,750242^85

9.

233,584

Percentage of A.B.

1107

=Receipts to

Total Revenue

J4J9

14.31

il-EtPJCCtions for Fiscal Year 2QQJL2QQ4 arc shown in Appendix B hereto.

iJiNumbers based on theJMstricl^E^caLYjMu^QJ12r20JaArecisiir

02-1422362

(b) Alameda County Measure B. At the November J986 general election, the voters

of Alameda County enacted Measure =B by the required majority vote. Measure B created the

Alameda County Transportation Authority (the "Authority") and authorized the Authority to

impose a 0.5% retail transaction and use tax throughout Alameda County for a period of 15 years.

The District is authorized to receive 11.617% of the annual retail transaction and use taxes

collected under the condition that such money be used for service exclusively in Alameda

County. The original authorization to collect the retail transaction and use tax under Measure _B

expifedexpires. March J31, 2002. On November A, 2000 Measure 3 was reauthorized by more

than 81% of the voters for an additional 20 =years. The reauthorization of Measure =B became

effective on April J, 2002 upon the expiration of the prior authorization.

On March 30, 1988, the District executed an agreement with the Authority providing that

the District receive its share of Measure B tax revenues on a monthly basis. The District received

$44:4-13.2 million or 4:$$616Q% of total revenue from Measure _B in Fiscal Year 2001 02

af*J2000-01andSJ2.4 million or 5.10% of totalreygnue from this source inFiscal Year 2001-02.

Ihe_DJLstrict estimates that it will receive $_____ 22Amillion or 9.6% of total revenue from

this source in Fiscal Year 2002-03.

(c) Contra Costa County Measure C. At the November 1988 general election, the

voters of Contra Costa County enacted Measure C by the required majority vote. Measure C

created and provided a 0.5% retail transaction and use tax throughout Contra Costa County for

the improvement of public and paratransit services for a period of 20 years. The authorization to

collect the retail transaction and use tax under Measure C expires in 2008. Currently, revenues

derived from Measure C are available to the District on a project basis and are not utilized as an

operating subsidy.

The District received $1.3 ̂ million or &48Q,64% of its total revenue from Measure C in

Fiscal Year 2001 022QQ0dQi and estimates that it will receive $^^L3 million or 0.54% of

total revenue from this source in Fiscal Year 2002 03.2MUQ2,

Table 8 sets forth the Measure 3 and Measure _C funds received by the District for the

last fivesexen Fiscal Years, based on audited financial statementsJtox-FJscaLYear.2001 -02_andJhe

Table 8


Measure R and Measure C Funds

Fiscal Years 1995-96 through 2OO2.Q3">

($ in thousands')

Q2J42226J 23

NftH^ Eiscal Year

EndedJune 30

Alameda County

Measure B

1997-98

1999-00

2000:01

2001-02

2002=03??

Contra.Co.sta

County

Measure_C

JE984 984

22J23

Total

JfofiflS 10,278

JUL5S

12,804

14r4j6

Eercentageof

MeasuceJLaod

Msasuie.C Funds to

XotalReyenues

illEtQieciions for Fiscal Year 2OO3j^QQ4._aie shown in AppcndiXjBLheretQ.

TABLE 8

Alnmeda Contra Costa Transit District

Measure B and Measure C Funds


($ in thousands)

Fiscal Year

Ended June 30

1997 98

1998 99

1999-00

2000 01

2001 02

Source: The District

Contra Costa

Alameda County County

Measure B Measure C

Percentage of Measure B

and Measure C Funds to

Total Revenues

in "3 so

\-\ I SI TT7jTi7T

1 1 iri 1, 1 1 \s

1 T>|

$11,158

1 1 * IUJ

W?O

1A A1 ̂ j ij i j \j

Property Taxes. In Fiscal Year 2001 02.200p:01 the District received $43^3 43.4 million or

17.3722,11% of total revenue from property taxes assessed in Alameda and Contra Costa counties. For

Fiscal Year 2002 03, tho2QQldQ2JbfiJQistoi^^ from

The District estimates that it will receive SizrriiTj^million or 205% of tfteits total

fevetwereyenwes from property taxes?. in..EiscaLYeaL2QQ2-03,

Assessed Valuation and Tax Collection. Taxes are levied by the Counties each Fiscal Year as of

the preceding March 1 on taxable real and personal property situated within the District.

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 real property having a tax lien which is sufficient, in the opinion of the

Assessor of each County, to secure payment of the taxes. Other property is assessed on the "unsecured roll."

02-142236.2 24

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of

the Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April =10, respectively,

and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with

respect to which taxes are delinquent is sold to the State 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 1.5% per month to the time of redemption. If taxes are unpaid for a period

of five years or more, the property is deeded to the State and then is subject to sale by such County's tax

collector. Deeded property may not be placed on the installment plan; however, it can still be redeemed

in full until sold at public auction.

Property deeded to the State for delinquent taxes may be purchased at public auction by

individuals. County tax collectors auction such property within two years after such property has been

deeded to the State.

Property taxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if

unpaid on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and

if unpaid at the end of the second succeeding month, a 1.5% penalty is added on the first day of each

month starting November 1 until paid or until a court judgment is entered. The taxing authority has four

ways of collecting unsecured personal property taxes: (a) a civil action against the taxpayer; (b) filing a

certificate in the office of the Clerk for each County specifying certain facts in order to obtain a judgment

lien on certain property of the taxpayer; (c) filing a certificate of delinquency for the record in the

Recorder's office for each County, in order to obtain a lien on certain property of the taxpayer; and

(d) seizure and sale of personal property, improvements or possessory interests belonging or assessed to

the assessee.

The Counties assess properties, bill for, collect and distribute property taxes. Property taxes are

recorded as revenue and receivables, net of estimated uncollectibles, in the Fiscal Year of levy. Table c9

sets forth the total assessed valuation of property in the Counties and the Total District Collections for the

last ftvesjx Fiscal Years, based on audited financial statementST^or^JFJ^ciiLJ^ear_2,Q0JbQ2_and^the projection for Fiscal Year 2002-03,

fREMAIMDER OF PAGE INTRNTTONAI .1 .Y LEFT BLANK]

25

Table 9


Total Assessed Valuation and Total District Collections

Alameda County

f$ in thousands')

FiscaLYear

A lamedajCounty

1995-M

199&91

1832=98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

Contra-Costa County

1995-96

1996^97

_2000-01*

2001=02

2002-03

20Q3-Q4

Combined

TotaLAssessed .Valuation TotaLDistrictCollections

$81,45.4,249 83.909.161

94.315.425

101.992.484

111.751.096

$67t146.462

23,659,555

76.811,776

%j?fJDelinquent

Collections

37.552

40,113

43,424

♦Estimated, subject to change.

Sources; Auditor-ControUer of Alameda County and Auditor-Controller of Contra CjgtajCounty

02-142236.2

TABLE-9

Alamedn-Contra Costa Transit District

Total Assessed Valuution and Total District Collections

Alomedu County and Contra Costa County

($ in thousands-)

Total Current

Assessed Total Taxes Taxes

Percent of

Delinquent

Collections Fiscal Year Valuation Levied Collected

Alumeda County

1997 98 $ 87,738,265 $ 911,5 $ 889.

1998 99 91.315.125

1999 00 101,992,181

2000 01 111,751,095 1,111,8

2001 02 123,918.935 1,266,C

Contra Costa County

1997 98 $70,311,801 $ 892,5

1998 99 73.699,555 9W

1999 00 78,287,588 9i

2000 01 81,627,978 1,062.8

2001 02 93,190.020 1.187,1 -M&h

Combined

1997 98 $158,053,066 $1,804,1 $1,766,

1998 99 168,011,980 ),907,9 -H&SSt

1999 00 180,280,072

2000 01 -^96.379.073

2001 02 217.109.135 2,153,2 ZAQCh

Sources: Auditor Controller of Alamuda County-and Auditor Controller of Contra Costa County

Measure AA Special Parcel Tax. At the November 5r 2002, voters within the boundaries of

Special Transit DistrictJJumber One ("District 1") (inJboikAlameda and Contra-Costa CountiesLenacted

jjjjbird&y Qte ._Mejasuie_A A_created_andpjco_vided. a:

tax (the "SpgciaLPareel Tax") of $24 per veanLoLbeimposed on the ownerjpLeach parcel of taxablejaad

in District 1, A parcelJsjfefined as any unit of land in DistrietJLJhat now receives a separate taxJbiJI from

the Alameda County Tax Collector or-the Contra CojtajCgunty Tax Collector. The authorizatiorUQ

collect the Special PacceJ_Tax_under Measure AA_expires on June 3

willj:eceiye_$l,5JQaQ0J)_from the Special Property TaxJui,HscalJ(r_eatL20Q3jJMJ

Constitutional and Statutory Limitations on Taxes and Appropriations [Any new amendments?]

Article XIIIA of the California Constitution. 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 XIIIA 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

22

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 2% per year, or a reduction in the consumer price index

\«««- or comparable local data at a rate not to exceed 2% 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 1% 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 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 XUIA 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% 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% of assessed value.

Future assessed valuation growth allowed under Article XMA (new construction, change of

ownership, 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions that

serve the tax rate area within which the growth occurs. Local agencies and school districts will share the

growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each

agency's allocation the following year. The District is unable to predict the nature or magnitude of future

revenue sources which may be provided by the State of California (the "State") to replace lost property

tax revenues. Article XJHA effectively prohibits the levying of any other ad valorem property tax above

the 1% limit except for taxes to support indebtedness approved by the voters as described above.

Article XIIIB of the California Constitution. On November 6, 1979, California voters approved

Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the California Constitution. In

June 1990, Article XIIIB was amended by, the voters through their approval of Proposition 111.

Article XIIIB 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 XIIIB 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 XIIIB do not

include debt service on indebtedness existing or legally authorized as of January 1, 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 out lay projects, and appropriations by the State of revenues

derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 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. Article XIIIB includes a requirement that if an entity's

02-142236.2 28

revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by

revising tax rates or fee schedules over the subsequent two fiscal years.

As amended in June 1990, the appropriations limit for each 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 option of the respective County, 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 non-residential, 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 districts.

As amended by Proposition 111, the appropriations limit is tested over consecutive two-year

periods. Any excess of the aggregate "proceeds of taxes" received by the respective 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.

Article XIIIB 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.

Proposition 46. On June 3, 1986, California voters approved Proposition 46, which added an

additional exemption to the 1% tax limitation imposed by Article XIIIA. Under this amendment to

Article XIIIA, local governments and school districts may increase the property tax rate above 1% for the

period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election

approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively

to purchase or improve real property.

Proposition 62. Proposition 62 was adopted by the voters at the November 4, 1986 general

election and (i) requires that any new or higher taxes for general governmental purposes imposed by local

governmental entities 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; (ii) 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; (iii) restricts the use of revenues from a special tax to the purposes or for the

service for which the special tax was imposed; (iv) prohibits the imposition of ad valorem taxes on real

property by local governmental entities except as permitted by Article XIIIA of the California

Constitution; (v) prohibits the imposition of transaction taxes and sales taxes on the sale of real property

by local governmental entities; and (vi) 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.

Several California appellate court decisions have overturned the provisions of Proposition 62

pertaining to the imposition of taxes for general government purposes. However, in Santa Clara County

Local Transportation Authority v. Guardino, the California Supreme Court upheld the provisions of

Proposition 62.

Rossi v. Brown. On March 6, 1995 in the case of Rossi v. Brown, the State Supreme Court held

that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the

exemption from the referendum requirements does not apply to initiatives.

02-142236.2 25

Unitary Property. AB 454 (Chapter 921, Statutes of 1987) provides that revenues derived from

most utility property assessed by the State Board of Equalization ("Unitary Property"), commencing with

the 1988/89 Fiscal Year, will be based on a uniform rate within each county and allocated as follows:

(i) each jurisdiction will receive up to 102.0% of its prior year State-assessed revenue; and (ii) if

county-wide revenues generated from Unitary Property are less than the previous year's revenues or

greater than 102.0% of the previous year's revenues, each jurisdiction will share the burden of the

shortfall or excess revenues by a specified formula. This provision applies to all Unitary Property except

railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any state-assessed

properties nor a revision of the methods of assessing utilities by the State Board of Equalization.

Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all

jurisdictions in a county.

Proposition 218. On November 5, 1996, California voters approved an initiative known as the

Right to Vote on Taxes Act ("Proposition 218"). Proposition 218 added Articles XIIIC and XIIID to the

California Constitution. Article XIIIC requires majority voter approval for the imposition, extension or

increase of general taxes and two-thirds voter approval for the imposition, extension or increase of special

taxes by a local government, which is defined to include local or regional governmental agencies such as

the District. Article XIIIC also removes limitations on the initiative power with regard to reducing or

repealing previously authorized local taxes. In the opinion of the District, however, any attempt by the

voters to use the initiative provisions under Proposition 218 to rescind or reduce the levy and collection of

the Sales Tax in a manner which would prevent the payment of debt service on the Notes would violate

the Impairment Clause of the United States Constitution and, accordingly, would be precluded.

JNovember 8, 1988 voters approved an jnjtjatiye known asPropositiorj98, a

combined initiative constitutionaLamendment and statute called the "Classroom_Instructional

Improvement and-Acc_QuntabiUtv Act" (the "Act"). The Act changed State funding of public education

blhilld of the State's ApproprjalLonsJJinit by puaranleeing_5tale ppp y p

fundingior K-12 school districts and communte^ districts") aLaJLevel_equaLtpjtJie_greater of (a) the same

appropriated to such districis_iriJL9_8feL87. and (b) the amounLaciufllbLappioprJated to such durtnclS-ftom

the General FundJn the, previous year^adiusted for increases in enrollment and changes in the cost of liyiDg^_S£e_"PrQriosition 111: Revisions to Proposition 98L

Proposition 111: Revisions to Proposition 98 and Article XIIIB. On June 5. 1990, the voters

approvedAThe Traffic Congestion Relief andSpending Limitation AcLof 19JO," hereafterJ'PrQposition

111," whicJunodifled the ConsJimiipjLtP^lter_th_e_spending limit and the education^funding Proposition 9JLJaD3p.o&ilion 111 took dfeclonJuhLk 199.0,

Adjustments. The annual adjustments tojhe spending limit were liberalizedJP_fas_J3Pore closely

linked to the rate of economic growth. Instead of being tied to the Consumer Price Index, the "change in

Jb^lii'lisjro^

in popuj|tfipj!l^pjgifjesjhat Qortiori^fJiieJ&ueljysBe^ changesJn school attendance.

" tax revenues wexe^deiexrninefLbased on a two-year cycle, so y y,

thatiheJSiate can avoid having to return to taxpayers excej>sJtax_KAgJiuejJuLPJie_xearJfits_appropriations in the next fiscal year wereunder its limit,

02-142236 3

Exclusions From Spending Limit. Two new excepiions__were added to the calculation of

s^ there are excJ^dejLalLapproprimiojisJfoiL!!QuaJUêd

Capital Outlay Projects" as defined by the Legislature. Second, there are excluded any increase.^ in

gasoline taxjes above theiLcurrent 9 cents per gallon Jevel, sales and use taxes QiLsuchJincrement in

^ weight fees above theJeyelsJêJEfesJj?nJanuary_l.

latter pcgyisiflns were neededjo make^^ effectiveJJheJStaleisJiaiisportatiôjTJunding package

which sought to raise^>veL$15 billion in additional taxes over_tlKLJiext several, years to_fund

transportation programs,

Recalculatton of Appropriations Limil^JIhe^QWQDnalxQmJJmil Joteach unit of government.

includingJhejSjate, was recalculated in theJL99Q-91 fiscal year. basedjMiJhe actual limitforthe 1986-87

Possible Future Actions. ArticleXIIIA, ArticleXIIDB, Proposition6362. 98. Ill and

Proposition 218 were each adopted as measures that qualified for the ballot pursuant to California's

initiative process. From time to time other initiative measures could be adopted, further affecting District

revenues or the District's ability to expend revenues. There is no assurance that the California electorate

or Legislature will not at some time approve additional limitations which could reduce property or other

tax revenues and adversely affect the revenues of the District.

Contract Services

The District receives revenues from several sources, primarily from BART and the State of

California Department of Transportation ("Caltrans") to provide specific services. The District annually

receives funds as compensation for some of the feeder service the District provides to BART stations and

permitting BART passengers to ride District buses at a discounted rate when they provide a BART

transfer. The Caltrans contract was for increased service in the Cypress corridor from 1991 through 1998

as part of the construction mitigation program resulting from the collapse of the Cypress freeway during

the Loma Prieta earthquake in 1989. In addition, since 1991 the District has had a contract with the City

of Alameda to operate feeder service to the harbor Bay Island business center. For the amount of revenue

derived from contract services, see 'Table 2—Summary of Revenues."

DISTRICT FINANCIAL INFORMATION

Budget Policies

The Board of Directors has adopted various policies that govern, among other things, the

accounting, budgetary and reserve policies of the District. These policies require: the Board of Directors

to adopt a balanced budget by June 30 of each year (Policy No. 312); limit the issuance of long-term debt

to maturities between 10 and 50 years, provided that such indebtedness does not exceed 20% of the

assessed value of all real and personal property in the District and the annual debt service does not exceed

10% of the operating revenue (including subsidies) of the District (Policy No. 320); establishment of an

internal audit department (Policy No. 334); establishment of procurement policies and procedures (Policy

No. 350); and establishment of reserves (collectively, the "District Reserves") for operations, capital

replacement, self insurance and debt service (Policy No. 360).

The District Reserves have been established to ensure that the District can withstand local and

regional economic disruptions, as well as unanticipated expenditure demands due to natural disasters,

uninsured insurance losses, large-scale capital expenditures or other non-reoccurring expenses. Since

mojsi_ofjhe_Disirict Reserves have,been.usejiJiLFiscalXe_ar_2_0i)^-0J?_tojiQveiLbudget shortfalls, it is likely

3J[

that, the,JQistrjgLB&serves may nQl_fae_aviulable in FiseaLYear_2003-04. See Appendix B. A description

of the District Reserves is set forth below:

Reserve for Operations. The Reserve for Operations is funded through an annual budgeted

appropriation to meet unexpected increases in operating costs such as unanticipated and unbudgeted

increases in fuel costs or emergency funds for use in the event of a major calamity. This Reserve is

maintained at a maximum of 10% of the annual operating budget. For Fiscal Year 30Q32QQ1-Q3Q2 the

District has budgeted $ ,43,098,492 or approximately =^12% of the operating budget, which

will permit transfer from this Reserve to other budgeted categories in the event of shortfalls.

Reserve for Capital Replacement. The Reserve for Capital Replacement is funded through an

annual budgeted appropriation to provide for the continuing depreciation or replacement of equipment.

The goal of the District is to annually budget S%two pejcenl; of the unrestricted general operating

revenues to fund this Reserve. In addition, one time unrestricted revenues from the sale of surplus

property or fixed assets, or generated from rental of District property are credited to this Reserve. The

amount budgeted for deposit in the Reserve for Capital Replacement for Fiscal Year 2002 032001-02 was

$ 4.3 million.

Reserve for Self-Insurance. The amount of moneys allocated to each reserve account (except for

the Vacation Leave Account) within the Reserve for Self—Insurance is determined on an actuarial basis

annually and any funds required to be deposited are to be deposited into each reserve account at the end

of each Fiscal Year. The District has established the following reserve accounts: (a) Workers'

Compensation Reserve; (b) Public Liability Reserve; (c) Sick Leave Reserve; and (d) Vacation Leave.

Each of these Reserve Accounts are restricted in use for funding the payments accruing to the respective

Account. The Workers' Compensation and Public Liability Reserves are funded at a ?55Q% confidence

level in accordance with annual independent actuarial valuations which include provisions for both

incurred and incurred but not reported claims. The amount budgeted for deposit in the Reserve for Self-

Insurance for Fiscal Year 2002 03 in $ miWeH_200J^02_is_$2J_._17 million. The_D.istrictJhi_as_n<it

tecejved_a final independent actuariaI_yaluatiQn_regarding its Worker's Compensation liability aodJs

unable to^dete^

to fund the Workers' CoimejisaligJiJBLe£eryje^^

Financial Statements

A copy of the audited financial statements of the District for the Fiscal Year ended June 30, 2002

prepared by Macias, Gini & Company LLP are included as Appendix A.

Cash Flow Forecast

The District has prepared the accompanying monthly cash flow statements (see Appendix B)

covering 26032002-03 and 2003-04. The 2003-04 cash flow takes into consideration the $ * in

Note proceeds.

The estimates of amounts and timing of receipts and disbursements in the accompanying table are

based on present circumstances and currently available information and are believed to be reasonable.

The assumptions may be affected by numerous factors and there can be no assurance that such estimates

will be achieved.

Preliminary; subject to change.

Our independent accountants have not audited, compiled, or applied agreed-upon procedures to

the forecast and therefore they assume no responsibility for it.

Historical Financial Operations

As a result of its ability to receive intergovernmental operating subsidies, the District has, in

general, balanced its revenue and expenses throughout its nearly f33}33-year existence. The results of

financial operations for the past five Fiscal Years, based on the audited financial statements, are

summarized in Table 10 below.

02-142236.2 33

TABLE 10


Historical Operating Results

Fiscal Years 1997-98 through 2001-02

($ in thousands)

Adjusted Beginning Balance

Operating Revenues:

Farebox

1997-98

$. 39,209

1998-99 1999-00

$.40,023 $_44,I78

Non-Operating Revenues:

Property Taxes $^35,593 S=37,552 L40.133

Total Revenues $172,161 $177,298

2000-01

$ 47.025

2001-02

47.208

$241,689

Expenses:

Operator Wages

Other Wages

Fringe Benefits

Pension Expense

Services

Materials and Supplies-(4) Utilities

Insurance

Taxes

Leases and Rentals

Net Expenses of Joint Venture

Other Expenses

Q2-JA222ii2

'See "THE DISTRICT—Contract Services." Represents amounts received as fees for advertising on the District's vehicles.

'Represents Tines collected in the Counties from illegal parking in bus zones. 'includes fuels and lubricants. 5For additional information, sec "—Management Discussion of Historical Results—Fiscal Years 1999-00 through 2001-02."


Management Discussion of Historical Financial Results

General. The historical data reflects the forward growth that the District has experienced since

Fiscal Year 1995—96. This growth has been both in service restoration and improvements; ridership

increases, and reflects the general strength of the local and state economy as well as the continued fiscal

health of the District. The economic indicators of the past provide promise of the District's positive

outlook.

Ridership has increased from 63,978,000 passengers in Fiscal Year 1995—96 to

—67.000.000 passengers in Fiscal Year 2001 02, and growing. 02. Net farebox revenues

increased from $36,950,000 in Fiscal Year 1995-96 to approximately $44.861.00045,066.002 in Fiscal

Year 2001-02, a QA-A2L96% increase, reflecting the increased ridership, and a small fare increase

implemented in Fiscal Year 1999-00.

Revenues derived from property taxes increased from $31,543.00031,544.000 in Fiscal Year

1995-96 to approximately $ 17,206,00017.708,000 in Fiscal Year 2001-02, a 49r?49_.65% increase, with

property tax revenues increasing approximately &9&ii6% from Fiscal Year 2000-01 to Fiscal Year 2001-

O2.= This increase was related to the increase in property values and new residential and commercial

development within the Counties.

Measure =B Revenues increased from $8,681,000 in Fiscal Year 1995-96 to approximately

$ 12,357,00012,359,000 for Fiscal Year 2001-02, representing a 43t342.35% increase. In November of

2000, Measure J3 was reauthorized with the new measure going into effect late Fiscal Year 2001—02.

The result of the reauthorization is a substantial increase in revenue from this source which the District

will begin to recognize in the-eurrent-Fiscal Year 2002-&M33. Currently, the District is receiving 11,6%

of the^lgasure B sales tax receipts, Under the reauthorization, the District will receive 21.4% of the

Measure =B proceeds.

Measure JZ Revenues increased from $984,000 in Fiscal Year 1995—96 to approximately

$1,316,000 in Fiscal Year 2001-02, representing a ̂ ^33.74% increase. These revenues increased., by

4t©4% from Fiscal Year 2000-01 to Fiscal Year 2001-02. Measure =C is project specific and fluctuations

in receipts result from changes in collections.

Local Sales Taxes (A.B. _1107) increased from $19,680,000 in Fiscal Year 1995-96 to

approximately $30,979,000 in Fiscal Year 2001-02, representing a $hA51Al% increase, with Local Sales

Taxes increasing approximately +2^O12JM% from Fiscal Year 2000-01 to Fiscal Year 2001-02.

While the District's share of the TDA portion of State sales taxes increased from $31,848,000 in

Fiscal Year 1995-96 to approximately $61,202,000 in Fiscal Year 2001-02, a 93t392% increase, these

revenues decreasodincreased approximately 6t?3JL22% between Fiscal Year 2000-01 and Fiscal Year

02-142236.2 35

2001-02. TDA revenue allocations are based on the County Auditors estimates rather than actual

receipts. However, fluctuations in the actual receipts versus estimates of annual sales tax allocations are

adjusted in the subsequent fiscal year, therefore revenues may increase or decrease based upon the

accuracy of the initial estimate. Historically TDA allocations have remained generally stable since their

inception.

Fiscal Years 2000-01 and 2001-02. fin Fiscal Year 2000 01.1999-00, financial projections

anticipated a transfer to equity of $ 4j million for use in Fiscal Year 2001 O2.2O00MIL In addition,

the District planned to use $ 4.5 million of equity from the Reserve for Operations to offset shortfalls

from TDA, AB-1107 and STA funding due to overestimates of these subsidies by the District in the prior

Fiscal Year.

The Fiscal Year 2000--01 shortfall was borne by a planned transfer from the Reserve for

Operations to cover costs for the early start-up of service in connection with the reauthorization of

Measure J3. The reauthorized Measure 3, which beeamebjcojiies effective March =2002, increasedwjll

increase Measure =B funding effective Junej 2002 and will cover future costs of increased service in

Alameda County. See 'THE DISTRICT—^Federal, State and Local Subsidies-^Local Subsidies—^

Alameda County Measure _B."}

Operating expenses increased from $M9.295.000148,695>000 in Fiscal Year 1995-96 to

approximately $239.397,000238JQ24J3_0_0 in Fiscal Year 2001-02, representing a 69t46JU% increase.

Service reductions were implemented between 1995 and 1996. Service restoration and the

implementation of new service plans began in Fiscal Year 1997--98 and substantially explain the

operating cost increases. In Fiscal Year 1996-97 the District implemented complimentary paratransit

service, which was an unfunded mandate of the federal government. Currently, the cost of this service

accounts for $=-15 million of the operating costs in Fiscal Year 3Q01 02. 2000-01. The remaining cost

increases are due to the growth in normal and customary operating expense increases.- Operating

expenses increased approximately 4&31O_J5% from Fiscal Year 2000--01 to Fiscal Year 2001-02.

Adopted Budget

Table 11 shows the District's adopted budget for Fiscal Year 2002-fl^3_andTab_leJ2 shows the

BaseJineJ3udgeL£o_r_Fiscal Year 2003-04.

02-142216.2

TABLE 11


Adopted Budget

2002-03 Fiscal Year

($ in thousands)

Adjusted Beginning Bakmee

Operating Revenues:

Farcbox

Other Transit Fares

BART Transfers' Cypress Mitigation

Service Funding - City of Alameda(l' Supplemental Servicet2) Advertisingl3) Other Income!4) Total Operating Revenues

Non-Operating Revenues:

Property Taxes

Sales Tax (AB 1107) 33,436

Sales Tax (TDA) 48,454

Federal Operating Assistance—Section 5307 4.900

Federal Operating Assistance—Section 8 4J

ADA Paratransit Funding 3,709

ADA Paratransit Set Aside 3,700

ADA Paratransit Vehicle Lease 229

Welfare to Work Funding 2.495

CMA Funding Q

Engines and Transmission 1,575

Measure B 2Z423

Measure C 1.468

STP (Tires and Tubes) jjflj

Proposition 111 {STA) 3J71

Interest Income 1,392

Total Non-Operating Revenues $178.132

Total Revenues $23.3.582

Expenses:

Salary and Wages

Fringe Benefits

Pension Expense

Services 16,824

MaieriaJsjoA-SupplicsJ5.' i6t9_Q3 yjililifisjiridJDaxes 4,870

Insurance

Leases andJRgnjaJs

Net Expenses of Joint Venture

Other Expenses

Interest Expense

Capital Projects

ToialJExpenses

'See "THE DISTRICT—Contract Sgrvices."

^presents funds-received from the Oakland UnifiedJkhOQl District to offset costs of providing suppjernental i^hl ppj Lj^j_jp^

Sepresenls amounts received as fees for advertising on the DJ,slrict!s vehicles. RcprescnlsJGiies collecled in the CfiunjtiesJrQm illcgaLBaikingJn-bus xones.

includesfucls.aacLLubricants, ~~ 6lncludcs expenses

02-1422.16.2 3.7


Baseline Budget

2003-04 Fiscal Year

($ in thousands)

Adjusted Beginning Balance

QpRRATINCi RRVKNUES:

FarebQX Other Transit Fares

JARTTransfers^!" Cypress Mitigation

Service Funding - City of Alameda'"

-SupplcmentaLSctyJce^: '31

Other Income'4? Total Operating Revenues

Non-Operating Revenues: .Properly Taxes

JSalesTaxiABJULQD

Federal Operating Assistance - Section 8

.ADAJEaratransALJEunding

.ADAJaratransit Set Aside

ADA Paralransit Vehicle Lease

Welfare to Work Funding

JZMA Funding

Engines and Transmission

^MeasureJB

■MeasurcC

_STP (Tires and Tubes)

.Proposition 111 (STA)

JntexesLlncomc

Measurs_AA

Lease to Service

School Bus Program Grants

_Bus Deferral Ingoing

JTotal Non-Operating Revenues

Total Rfvrnues

Expenses:

Operator Salnrxand Wages

Qthor Wages

^Fringe Benefits

=Pension Expense

^Services

Materials and Supplies-15' .UtilitiesjtndTaxes

insurance

Taxes Central County Service

Leases and Rentals Service_ReductiflD

.Net Expenses of Joint Venture

;Other Expenses

Jnterest Expense

Transfer tefrom Equity

Capital Projects-**1

.Total Expenses

02-1422^62

'See 'THE DISTRICT Contract Services." 'Represents funds received from the Oakland Unified

School District to offset costs of providing supplemental

transit services to schools.

'Represents-flHteunlw received as fees for advcrtismg-«n the District's v

""Represents fines collected in the Counties from illegal parking in hus /ones.

Încludes Includes fuels

'Includes expenses for engines-and transmissionsr-tires

and tubes, nther-tHtpilal projects;

Source: The Distfi<H

I. subject lo change.

(I) See "TUEJ3tSTRlCT-Conlract Services."

:fepaaentsJuiidsjejadYjedJfLQjnJheJQal^ offseLcoslsoflprovidinK sup,nlejroenlal transit services to

schools.

£presents_amouritS-ra'eiy^djs-tejsS-fQrj>dvA;flisiiiji on the DistricTs vehicles.

^Represents fines cpJlcctcdJn the CounlicsJrQm illegal parking inbus zones-Includes fuels and lubricants.

includes expenses for engines and transmissions, tires and tubes, other capital projects. Source: The District

Projected Financial Results

The While the District's financial outlook has steadily improved over the past few years, steadily.

ijnproved_during_the.- period between Fiscal Year 1998-99^0 JBscal_Jfear_2000-01. the^sudden deteriQratiao-P-fJhe economy. particularly_injhejSanJirmciscQJBi!flLAr^^^^

IbjLDistrict financial projections, while showing reason to be optimistic, also reinforcopartjciilarly after

Fiscal Year_2QQ4-05, showjiiounting deficits as a result of the steep declineJn sales-tax based, re venues

and.sub^dJe.i.JD)jjsJiasjieJnfi2tced the District's need to continue its vigilant efforts in protecting current

revenue sources and seeking new opportunities for funding.. One effort spearheaded by the District to

expand its funding base is the successful reauthorization of Measure B. Sales tax legislation in California

requires a two thirds2/3 vote. Measure 3 received over 80% approval of the voters with the Districjjn

the forefront_asJhe_recMejilj3fêarly_22^^QLthe^^rej'ejme^jmmded-byjthis-tax. Additionally, in 2002.

voters in Alameda andJlontta-Costa ComitLes approved the Measure_AA SpeciaLParcel Tax, which

demonstrates the strong support of this area for transportation and transportation-related projects. The

reauthorization of Measure measure_B plus the passage of a similar transportation sales tax initiative in

other areas of the region also demonstrate the strong support of the region for transit.^ In addition, the

District has been successful in seeking and receiving federal earmarks for many of its capital and Welfare

to Work prqiects.__TJbjLJ^stricLJias_jilji^^

aggressive steps to reduce costsêliminate inefficiencies and streamlinejhe budget.

While the District's 10--year projections reflect sfflatisignifieani deficits in future years, District

Fiscal Policy No. 312 requires the District to prepare a balanced budget for both operating and capital

programs prior to the opening of each Fiscal Year. The stability of the District is ensured by the fact that

it-has^ successfully completed negotiated agreements with its three collective bargaining groups spanning

twe-2: and th*ee-3ryear terms. Historically, the District has not experienced a strike in over 30-twejQty.

years of successful negotiations with its unions.

Over the last five-ryear audited period, District reserves have grown substantially, thereby

allowing the District to spend a portion of these reserves for early implementation of service

D2442236J2 40

improvements that will be funded through the Measure =B sales tax reauthorization. This action was

instrumental in ensuring the passage of the Measure 3 reauthorization.

With theThe presence of a continued positiverecessiye economic outlook atHJfor the short term

KquJmsJkeJrjoplementatiojLQf strong financial controls, the District anticipates a continued ponitive^Cost

containment and Capital deferral actions, jjus the implementation of a significant Service Reduction, will

help theJDistrict maintain actable financial forecast for the foreseeable future. The District's forecast is

consistent with the MTC's Regional Transportation Plan, which covers the period from Fiscal Year 2001

to 2026. MTC is responsible for a large portion of the subsidy and capital allocations for the nine-

County Bay Area Region.

Consent Decree

In April 2001, the District entered into a Consent Decree (the "Consent Decree") with Bayview

Hunters Point Advocates, Communities for a Better Environment, Latino Issues Forum, Our Children's

Earth Foundation, Sierra Club, Transportation Solutions Defense and Education Fund and Urban Habitat

Program, a project of the Tides Center (collectively, the "Plaintiff) as full and final settlement of the

allegation that the District violated the Federal Clean Air Act by failing to prepare and implement a plan

(the "Plan") to increase its ridership over a five year period by 15% above 1982-83 levels. The Consent

Decree requires that no later than December 1, 2001, the District shall have incorporate into the 2001

SR¥PS_hQaJRange_Iransjt__ElaD, a five-year operating plan detailing specific measures, including

implementation timelines and associated additional costs, if any, that if fully funded and implemented,

would increase total annual hoardings by at least 15% over the 1982-83 levels.

The Plan is required to identify "all reasonable alternatives for increasing ridership," which may

include, but is not limited to the following: reducing fares, developing and implementing a single-pass

system among the other Bay Area transit agencies; expanding service; reducing overcrowding, increasing

safety of transit passengers; improving reliability; marketing monthly passes to employers in the Service

Area; expanding frequency of service; and initiating new service. The District has incorporated into the

2001 SRTP all of the requirements of the Consent Decree. Asa result,,the DistricLwas released from the

CojqsenLJ3ecree See "THE DISTRICT—Service and Development Planning—Short Range Transit

Plan."^A_s_a resuJlof this action, the District wjaS-DdeiisedJkaiilhe_re_qmremen^

Energy Matters

The District's peak energy load ranges from 77 to 79 megawatts per hour. Pursuant to an order

issued by the State Public Utilities Commission on April 3, 2001, the District is not subject to rolling

blackouts. The District obtains approximately 95% of its electrical power from two federal power

marketing agencies, the Bonneville Power Administration (the "BPA") and the Western Area Power

Administration (the "WAPA"). The contract with the BPA, which permits the District to purchase up to

70 megawatts of power per hour, expires on June 30, 2016 and is subject to termination upon delivery of

a written notice of termination by either party, such notice of termination is to establish a termination date

which shall be no earlier than the date which is five years from the date of the notice of termination. As

of the date of this Official Statement, neither the District nor the BPA has delivered a notice of

termination. The contract with the WAPA, which permits the District to purchase up to four megawatts

of power per hour, expires on December 31, 2004. The District has executed a new contract with the

WAPA which will commence on January 1, 2005 and expires on December 31, 2024. The District also

purchases supplemental power from PG&E at bundled retail service rates.

The District has increased its budget for electrical power from approximately $ 2.0 million

for Fiscal Year 2001-02 to approximately $ 2.1 million for Fiscal Year 2002-03.

02-I4J2J6.2 4\

Insurance

[UPDATE/VERIFY] The District maintains a combined self-insured and commercially insured

auto/general liability insurance program with per occurrence limits of $50.000.000:32,500,000, The

District maintains a combined self-insured, and commercially insured worker's compensation/employers

liability insurance program with-State statutory coverage and with employers liability with per occurrence

limits of $2,OOO,OOO.JJ3QQJK1IL The District also maintains commercial insurance coverages for all risk

property; boiler and machinery; fiduciary; crime and faithful performanceJjond and others.

Pension System

All permanent full-time District employees are eligible to participate in the Alameda-Contra

Costa Transit Employees' Pension Plan (the "Plan"). The Plan is a noncontributory single

employer-defined benefit retirement plan which provides retirement benefits for all qualifying employees.

The Plan is administered by a pension system board (the "Pension Board"), comprised of two elected

officials of the Amalgamated Transit Union, Local 192 (the "ATU"); one District employee member

appointed by the Board of Directors who is not represented by the ATU; and two members of the general

public appointed by the Board of Directors. The Board of Directors adopted a resolution in

December 1997, amending certain provisions of the Plan based on a collective bargaining agreement with

the ATU. The amendment, which became effective July 1, 1997, revised the benefit calculation for ATU

employees retiring on or after January 1, 1998. Similar benefit provisions were adopted for employees

represented by the American Federation of State, County and Municipal Employees ("AFSCME"), the

International Brotherhood of Electrical Workers (the "IBEW") and unrepresented employees effective

January 1, 1999.

Total District contribution to the Plan for the year ended December 31, 2001 was

$ —1.1.422,000 and for the year ended December 31, 2002, the contribution was

$ -.12.437,000.

The actuarial present value of accrued benefits for the Plan is determined by an actuary, retained

by the Pension Board, and it is that amount that results from applying actuarial assumptions to adjust the

value of accrued benefits.

[UPDATE/VERIFY] The most recent actuarial valuation date was [January 1, 2000.] This

valuation was based upon the Projected Unit Credit Actuarial Cost Method. Under this cost method, the

actuarial accrued liability is the portion of the present value of all projected plan benefits for current

participants attributed to service to the valuation date. Significant actuarial assumptions used to compute

the actuarial present value of accrued plan benefits include the assumed net investment yield on plan

assets of 8.00% and cost-of-living increases of 3.75%. Factors impacting the cost changes from [1999] to

[2000] included favorable demographic experiences; new hires reducing the overall average member age;

slightly lower than expected pay increases and favorable investment returns. In the [January 2000] Plan

evaluation there were also changes in actuarial assumptions relative to the inflation and earnings rates.

To comply with GASB 25 guidelines there was a simplification in the method used to amortize unfunded

accrued actuarial liabilities. Total liabilities were amortized over 30 years beginning in 2000 and the

amortization period will decrease one year each year until the fund has a 20 year amortization period.

The [January 1, 2000] evaluation under GASB 25 disclosure guidelines did not have an unfunded

actuarial accrued liability. Total actuarially computed unfunded pension benefit obligation application to

the District's employee was ($11,766,708) as of [January 1, 2000] as follows (in thousands):]

02-142236.2 42

Projected Unit Credit Normal Cost $ 9,552,766

Active Accrued Liabilities 161,141,206

Inactive Accrued Liabilities 109.499.112

Total pension benefit obligation $270.640.318

Net assets available for benefits, at cost (which approximate market) $282,407,026

Investment Policy

The District has adopted an investment policy (the "Policy") requiring investment of all public

funds in a manner which will provide the highest investment return with the maximum security, while

meeting daily cashflow demands and conforming to all federal, State and local laws governing the

investment of public funds. All financial assets of any funds, including the General Fund and all other

funds that may be created, are administered in accordance with the provisions of this Policy, which is

reviewed annually by the Board of Directors. Excluded from this policy is the Alameda-Contra Costa

District Pension Fund.

In accordance with California Government Code Section 53601, the District may invest in the

following types of investments:

(a) repurchase agreements;

(b) securities of U.S. Government and its agencies;

(c) California Local Agency Investment Fund (LAIF);

(d) Negotiable Certificates of Deposit;

(e) Commercial Paper; and

(f) Bankers Acceptances.

Although LAIF, Negotiable Certificates of Deposit, Commercial Paper and Bankers Acceptances

are allowed under the California Government Code, these types of investments are not utilized without

prior authorization of the Chief Financial Officer, after prudent investigation of the credit risk of such

investments. As a matter of investment policy, the District does not invest funds through the use of

reverse-repurchase agreements, nor does the District invest funds in LAIF.

In accordance with California Government Code Sections 53652, 53656 and 53658, California

banks and savings and loan associations are required to secure District deposits by pledging government

securities as collateral. The market value of the pledged securities must equal at least 110% of the

District's deposits. California law also allows financial institutions to secure deposits by pledging first

trust deed mortgage notes having a value of 150% of the District's total deposits. As a matter of District

policy, all deposits and repurchase agreement transactions of the District are secured by the pledge of

government securities equal to 110% of the District's deposits.

In accordance with California Government Code 53653, the District Treasury Manager may

waive the 110% collateral requirement for deposits which are insured up to $100,000 by the Federal

Deposit Insurance Corporation (FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC).

In accordance with California Government Code Sections 53651 through 53653, securities

purchased as District investments must be physically delivered, either to the District or to a third-party

02-142236,2 43

agent of the District. If U.S. Treasury securities are purchased, delivery may be made by book-entry only.

All investment transactions for the District require "Delivery vs. Payment" method of settlement only.

The District's securities and collateral for those securities are maintained, in the name of the

District, in the Trust Department or Safekeeping Department of the various banks doing business with the

District as established by written third-party safekeeping agreements between the District and the banks.

The District diversifies its investments by security type, institution and maturity. With the

exception of U.S. Treasury securities, no more than 50% of the District's total investment portfolio shall

be invested in a single security type or with a single financial institution.

TABLE 4312

Investment Distribution

Through June 30,2002

Percentage of

Investment Total Value Total Value

Money Market Accounts $8»3_7JL922.23 13.78%

Repurchase Agreements 6,360.000.00 K)L47

Discount Notes 46.034,825.30 75.J5

Total 60J6_8,?47.53

TAX EXEMPTION

In the opinion of Kutak Rock DLLP, Note Counsel, under existing laws, regulations, rulings and

judicial decisions, interest on the Notes (-including-original issue discount, if unv)issued by the District is

excluded from gross income for federal income tax purposes. Interest on the Notes (including original

issue discount treated as interest, if any), is not a specific preference item for purposes of the federal

alternative minimum tax imposed on individuals or corporations, however, such interest is included in the

alternative minimum taxable income of certain corporations which must be increased by 75(fr of the

excess of the adjusted current earning?! of such corporations over the alternative minimiim taxable income

(determined without regard to such adjustment- and prior-to reduction for certain net operating losses) of

such corporations. Under existing laws, regulations, rulings and judicial decisions, Note Counsel is of the

opinion that interest on the Notes is exempt from all present State of California personal income taxes,

and is exempt from all present CAlifpjJiiaJLugojmgJaxes onJndividuals. The opinions described in the

precedingjsentence assumeJhe accuracy of certain representations and complianceJ)y_the District with

covenants designedjQjsatisfy the requirements jif the InternaLRgyenueCode of 1986, as ainendgdjthai

mustJbejtneLaibsequent to the issuance_pf the Notes, Failure to comply with

causeJntexe^LcmJheJfeieiiJiiJ3e_included in gross income forjfe^gKuLiftcg the dateLofjssuance of theNotes. The Djstrictjias covenanted tojcomplywith such requJKmejilsJ_JBo_nd

Counsel has expressed Jio_opinion re£acdin^oiher_federal taxjanieguencesjarising with respect to the

Notes.

The Internal Revenue Code of 1986, as amended (the "Code"), imposes various restrictions,

conditions and requirements relating to the exclusion from gross income for federal tax purposes of

interest on obligations such as the Notes.—The District has covenanted in the [Tax Compliance

Certificate] to comply with certain restrictions, conditions and requirements designed to assure that

interest on the Notes will not become includible in gross income. Failure to comply with these covenants

may result in interest on the Notes being included in gross income retroactively from the date of issue of

the Notes. The opinion of Note Counsel assumes compliance with such covenants;

02-J422J6J 4J

Notwithstanding Note Counsel's opinion thiiLJDlejssjLjmJheJiQtes_is_nQLa specific preference

item for purposes of theJfederaLalteJBfl]jê_jmm^ will be iqcJudedJn-adjusted

current earnings, andjsuch corporations; arejeguiredI toinclude in theâlculation of alteiiialive_minimum

taxable incameJ75% of the,excess of.such corporationsl adjusted current earnings ovetiheir alternative

minimum taxable iiKome(de^

net operatingjosse.s),

The amount treated_asJnterest onJhe_Motes and_excluded fronLgrQSsJncom&JiiaYjdepend upon

the taxpjty^rlsîeîipjojindejr^ 94-84. 1994^2JlB^55SL-JEJPlice 94-84

Stales that the Internal Revenue Service (the "Service") isjJudving whether the amount of thejayjngnlat

maturity excluded from grossjncome foeJederalincomejax purposes joujdebt obligations such asJhs

^ an originaLJssu_e_firemium is either (i) (ii) the diffej^«Jbje*weeiiJJteJsû^pj^^^ Notes and_the_aggregate amount JoJbe,paLd-aLmaturity_pi

the Notes (theJôriginal issmdiscount"). Forjhis purpose, the issue pricej?iLthe Notesisthefirst price at

which a^substantialamount of the Notes issold to the: public (excluding bond houses, brokers or similar

pJjJ£QiiiLPJ_organizationi^ underwriLexsu?iacejiienLagents or wholesalers) Until

^ treat either the stated inteiesi.pambJ_eîLmatujity_or

the originalJssue discount as interest thaUêxcJudedJrom grosînj&meJflrJMaraljncome tax purposes.

However. taxj3ay^jsjmusiJi£aiJhe_ajnc>ujitloJ^ paid at matarjtyj?iuilljtaxH;i(ejiw hU^

consult their own tax advisors with respect to the tax consequences of ownership of Notes if the taxpayer

elects originaLdiscount treatment.

Although Note Counsel has rendered an opinion that interest on the Notes is oxcluded from gross

income for federal income tax purposes, thelhe accrual or receipt of interest on the Notes may otherwise

affect the federal income tax liability of the recipientowners of the Notes- The extent of these other tax

consequences will depend upon the reoipientsiichLQvvnej's particular tax status or other items of income or

deduction. Note Counsel expresseshas expressed no opinion regarding any such consequences.

Purchasers of the Notes, particularly purchasers that are corporations (including S corporations and

foreign corporations operating branches in the United States)^, property or casualty insurance companies*,

banks, thrifts or other financial institutions;, certain recipients of Social Security or Railroad

Retirementsocialsecurity_QrjraUroad retirement benefits*, taxpayers otherwise entitled to claim the earned

income credit, awlor taxpayers who may be deemed to have incurred (or continued) indebtedness to

purchase or carry tax-exempt obligations are adviiied to»_shQuld consult their tax advisors as to the tax

consequences of purchasing or owning the Notes.

From time to time, thoro are legislative proposals in Congress that, if enacted, could alter or

amend the federal income tax consequences referred to above or could adversely affect the market vtilue

of the Notes. It cannot be predicted whether or in what form any such proposal might be enacted or

whether, if enacted, any such proposal would apply to bonds issued prior to enactment. Each purchaser of

the Notes should consult his or her own tax advisor regarding any pending or proposed federal tax

legislation. Note Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

PENDING LITIGATION

There is no litigation now pending or threatened to restrain or enjoin the issuance or sale of the

Notes; questioning or affecting the validity of the Notes, the Resolution or the pledge by the District

under the Resolution; or questioning or affecting the validity of any of the proceedings for the

authorization, sale, execution or delivery of the Notes.

02-142236 2

The District is a party to various legal proceedings seeking damages, injunctive or other relief

arising out of operation of the transit system. In the opinion of the [General Counsel] for the District, the

probable recoveries and the estimated costs and expenses of defense will be either within the District's

applicable insurance policy limits (subject to applicable deductibles) or will not have a materially adverse

effect on the financial condition of the District.

CONTINUING DISCLOSURE OBLIGATION

The District has agreed (the "Undertaking") for the benefit of the holders of the Notes as follows,

pursuant to the requirements of Section (d)(3) of Securities and Exchange Commission Rule 15c2-12

under the Securities Exchange Act of 1934, as amended (17CFR Part 240, Section 240.15c2-12) (the

"Rule"):

The District undertakes to provide Material Event Notices as provided in this Section. If a

Material Event occurs while any Notes are Outstanding, the District shall provide a Material Event Notice

in a timely manner to the Municipal Securities Rulemaking Board and the SID (as defined herein), if any.

Each Material Event Notice shall be so captioned and shall prominently state the date, title and CUSIP

numbers of the Notes.

"Material Event" means any of the following events, if material, with respect to the Notes:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults;

(c) unscheduled draws on debt service reserves reflecting Financial difficulties;

(d) unscheduled draws on credit enhancements reflecting financial difficulties;

(e) substitution of credit or liquidity providers, or their failure to perform;

(0 adverse tax opinions or events affecting the tax-exempt status of the security;

(g) modifications to rights of security holders;

(h) Bond calls;

(i) defeasances;

(j) release, substitution or sale of property securing repayment of the securities; and

(k) rating changes.

"Material Event Notice" means written or electronic notice of a Material Event.

"SID" means a state information depository as operated or designated by the State as such for the

purposes referred to in the Rule.

Unless otherwise required by law and subject to technical and economic feasibility, the District

shall employ such methods of information transmission as shall be requested or recommended by the

designated recipients of the District's information.

The continuing obligation hereunder of the District to provide Material Event Notices shall

terminate immediately once the Notes no longer are Outstanding. This Section or any provision hereof

shall be null and void in the event that the District delivers to each then existing nationally recognized

municipal securities information repository ("NRMSIR") and the SID, if any, an opinion of nationally

recognized bond counsel to the effect that those portions of the Rule which require this Section or any

such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Notes. This

Section may be amended without the consent of the holders of the Notes, but only upon the delivery by

the District to each then existing NRMSIR and the SID, if any, of the proposed amendment and an

opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect

thereto, will not adversely affect the compliance of this Section and by the District with the Rule.

The District has not failed to comply with any prior such undertaking under the Rule. Any failure

by the District to comply with the Undertaking will not constitute an Event of Default under the

Resolution. Nevertheless, such a failure must be reported in accordance with the Rule and must be

considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale

of the Notes in the secondary market. Consequently, such a failure may adversely affect the

transferability and liquidity of the Notes and their market price.

RATING

The Notes have been assigned a rating of " " by Moody's Investors Service ("Moody's").

An explanation of the significance of such rating may be obtained from Moody's. The rating reflects the

views of Moody's and the District makes no representation as to the appropriateness of the rating.

Further, there is no assurance that such rating will continue for any given period of time or that it will not

be revised or withdrawn entirely if in the sole judgment of Moody's circumstances so warrant. Any such

downward revision or withdrawal of a rating may have an adverse effect on the trading value and the

market price of the Notes. Any explanation of the significance of the rating may be obtained only from

Moody's Investors Service, 99 Church Street, New York, New York 10007, (212) 553-0300. [S&P or

Fitch?]

UNDERWRITING

The Notes are being purchased initially by (the "Underwriter") at a price of

$ . The Contract for Purchase of the Notes provides that the Underwriter will purchase all of

the Notes, if any are purchased, the obligation to make such purchase being subject to certain terms and

conditions set forth in the Contract for Purchase, the approval of certain legal matters by counsel and

certain other conditions. Under the terms of the Contract for Purchase, the Underwriter is obligated to

pay to the District accrued interest from the dated date of the Notes to the date of delivery of the Notes.

The Underwriter may offer and sell the Notes to certain dealers and others at a price lower than

the initial public offering price. The offering price may be changed from time to time by the Underwriter.

FINANCIAL ADVISOR

The District has retained Public Financial Management, Inc., Newport BoachSacjamentQ,

California, as Financial Advisor in connection with the authorization and delivery of the Notes. The

Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent

verification or to assume responsibility for the accuracy, completeness or fairness of the information

contained in the Official Statement.

02-142236.2 47

Public Financial Management, Inc., is an independent advisory firm and is not engaged in the

business of underwriting, trading or distributing municipal or other public securities.

DOCUMENTS ACCOMPANYING DELIVERY OF THE NOTES

Legal Matters

Legal matters incident to the authorization, issuance and sale of the Notes will be subject to the

final approving opinion of Kutak Rock LLP. Note Counsel. Such opinion will be available at the time of

delivery of the Notes and will be to the effect that the Notes are valid and legally binding obligations of

the District and that interest on the Notes, under existing statute;!, regulations, rulings and court decisions,

is exempt from personal income taxes imposed by the State of California, and assuming compliance by

the District with certain representations and covenants in the Resolution, such interest is excluded from

the gross income for federal income tax purposes (see 'Tax Exemption").—Said opinion shall contain

further statements to the effect that the enforceability of rights or remedies with respect to such Notes

may be limited by bankruptcy, insolveney-or other laws affecting creditors* rights or remedies heretofore

to hereafter enacted. Kutak Rock LLP has not been requested to examine or review and has not examined

or reviewed the accuracy or sufficiency of the Official Statement relating to the Notes or any proceedings,

reports, correspondence, financial statements or other documents, containing financial or other

information relative to the District which have been or may be furnished or disclosed to purchasers of the

Notes, and-expresses no opinion with respect to such financial or-other information, or the accuracy or

sufficiency thereof-

Closing Certificate

Upon delivery of the Notes, the Underwriter will be furnished with the following items:

(a) a Certificate of the General Manager or Assistant General Manager—Finance of the District to the

effect that as of the date of this Official Statement and at all times subsequent thereto, up to and including

the time of delivery of the Notes, this Official Statement did not and does not contain any untrue

statements of material fact or omit to state a material fact necessary to make the statements herein, in light

of the circumstances under which they were mude, not misleading, and further stating that there has been

no adverse material change in the financial condition of the District since the date of the Official

Statement to the time of delivery of the Notes; (b) a Certificate signed by the General Manager or

Assistant General—Manager—Finance of the—District evidencing payment—for the—Notes: and

(c) a Certificate by the General Counsel for the District evidencing the due execution of the Notes,

including statements that (i) no litigation of any nature is pending nor. to the knowledge of the signer,

threatened, restraining or enjoining the issuance und delivery of the Notes or the upplicution of moneys to

pay the principal of and interest thereon, nor in any manner- questioning the proceedings and authority

under which the Notes wore authorized or affecting the validity of the Notes thereunder; (ii) neither the

corporate existence nor boundaries of the District nor the title of the signers to their respective offices is

being contested; and (iii) no authority or proceedings for the issuance of the Notes have been repealed,

revoked or rescinded.

Other Matters

MISCELLANEOUS

The Official Statement is not construed as a contract or agreement between the District and the

purchasers or holders of any of the Notes. Any statements made in the Official Statement involving

matters of opinion, whether or not expressly so stated, are intended merely as an opinion and not as

representation of fact. The information and expressions of opinion herein are subject to change without

02-1422.36.2 48

notice and neither the delivery of the Official Statement nor any sale made hereunder shall, under any

circumstances, create any implication that there has been no change in the affairs of the District since the

date hereof.

Additional information may be obtained upon request from the administrative offices of the

District at 1600 Franklin Street, Oakland, California 94612.

Dated:

ALAMEDA-CONTRA COSTA TRANSIT

DISTRICT

By

Assistant General Manager—Finance

CAiefJFinanciaLQfiicer

02-1422.16.2 49

APPENDIX A

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2002

v

APPENDIX B

CASH FLOW STATEMENTS

02-4365363142236.2

APPENDIX C

PROPOSED FORM OF NOTE COUNSEL OPINION

GM Memo 03-169

Attachment C

RESOLUTION NO.

PROVIDING FOR THE BORROWING OF FUNDS AND THE SALE

AND ISSUANCE OF 2003-04 REVENUE ANTICIPATION NOTES;

PROVIDING FOR A FISCAL AGENT; FIXING CERTAIN DETAILS

THEREOF; AUTHORIZING THE EXECUTION OF THE CONTRACT

FOR PURCHASE; APPROVING AND RATIFYING THE

DISTRIBUTION OF THE PRELIMINARY OFFICIAL STATEMENT;

AUTHORIZING THE EXECUTION, DELIVERY AND

DISTRIBUTION OF THE OFFICIAL STATEMENT; AND RATIFYING

AND AUTHORIZING THE ACTIONS OF CERTAIN OFFICERS OF

THE DISTRICT.

WHEREAS, the Alameda-Contra Costa Transit District (the "District"), a municipal

corporation dulyspecial transit district organized and existing under the constitution and laws of

the State of Calitbrnia, in the County of Alameda, State of California, has found and does hereby

find and determine that funds in the amount not to exceed $ are needed by the District

to satisfy obligations payable from the General Fund of the District for purposes for which the

District is authorized to use and expend funds (which funds are needed before the receipt by the

District of income, revenue, cash receipts and other moneys for the Fiscal Year commencing

July 1,2003 and ending June 30,2004 the (the "Fiscal Year")); and

WHEREAS, the District is authorized by Sections 53850 to 53858, both inclusive, of the

Government Code of the State of California (the "Government Code"), being Article 7.6,

Chapter 4, Part 1, Division 2, Title 5 of the Government Code (the "Act"), to borrow money for

such purpose by the issuance of temporary notes; and

WHEREAS, notes may be issued pursuant to a resolution authorizing the issuance

thereof adopted by the Board of Directors of the District (the "Board of Directors"), as provided

for in Section 53853 of the Government Code; and

WHEREAS, the District has determined it is in the interest of the District to issue notes

pursuant to the Act in the aggregate principal amount not to exceed $ —[31,000,0001 to

be titled "Alameda-Contra Costa Transit District (Alameda County, California) 2003-04

Revenue Anticipation Notes" (the "Notes"); and

WHEREAS, no money has heretofore been borrowed by or on behalf of the District in

anticipation of the receipt of, or payable from or secured by, taxes, income, revenue, cash

receipts or other moneys for or during the Fiscal Year; and

WHEREAS, the District finds and determines that said amount not to exceed

-f31,000,000], when added to the interest payable thereon, does not exceed 85% of

the estimated amount ot the uncollected taxes, revenue, cash receipts and other moneys of the

District attributable to the Fiscal Year and available for the payment of the Notes and the interest

thereon; and

O2-138320.1I38329.2

WHEREAS, pursuant to Section 53856 of the Government Code, certain revenues which

will be received by the District during and attributable to the Fiscal Year can be pledged for the

payment of the Notes and the interest thereon, as hereinafter provided; and

WHEREAS, the District deems it necessary and desirable to obtain the services of

[UNDERWRITER], as Underwriter (the "Underwriter"), to assist the District in structuring the

Note financing and to purchase the Notes; and

WHEREAS, the District desires to approve a Contract of Purchase (the "Contract of

Purchase") pursuant to which the District will sell the Notes to the Underwriter; and

WHEREAS, the District desires to approve a Fiscal Agent Agreement by and between

the District and [FISCAL AGENT] (defined herein) whereby Fiscal Agent will agree to perform

the duties of fiscal agent, paying agent, registrar and authenticating agent under this Resolution;

and

WHEREAS, the District desires to appoint Kutak Rock LLP as Note Counsel and Public

Financial Management Inc. as Financial Advisor in connection with the issuance of the Notes;

and

WHEREAS, the District desires to approve a Preliminary Official Statement relating to

the Notes and authorize and direct the execution of a final Official Statement;

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the District as

follows:

Section 1. Recital True and Correct'. All of the above recitals are true and correct, and

this Board of Directors so finds, determines and represents.

Section 2. Issuance of Notes. The District, pursuant to the Act and for the purpose of

obtaining funds to meet deficiencies of the District in the Fiscal Year, hereby determines to and

shall borrow the aggregate principal sum of not to exceed $ [31,000,000] (the

"Principal Amount"), by the issuance of temporary notes under the Act in anticipation oi income,

revenue, cash receipts and other moneys to be received by the District during or allocable to the

Fiscal Year, designated "Alameda-Contra Costa Transit District 2003-04 (Alameda County,

California) Revenue Anticipation Notes" (the "Notes"). The exact amount of funds to be

borrowed pursuant to the authority of this Resolution shall be determined by the General

Manager of the District or his designee prior to the issuance of the Notes after consultation with

nationally recognized bond counsel regarding appropriate issue size such that interest on the

Notes will not be includible in gross income for federal tax purposes and shall not exceed

$ . The Notes shall be issued as fully registered Notes, numbered R-l consecutively

upward in order of issuance, shall be in denominations of $5,000 or integral multiples thereof as

determined at the time of sale thereof, shall be dated the date of delivery, shall mature no more

than 365 days from such date of delivery as determined by the General Manager or his designee

prior to the sale (the "Maturity Date") unless such date shall be a non-business date, in which

case the Notes shall mature on the date preceding such non-business date, and shall bear interest,

payable at maturity and computed on a 30-day month/360-day year.

02-138339,1138329,2

The Notes shall be sold by negotiated sale in the manner provided in Section 4 hereof. In

no event shall the Notes bear interest at a rate exceeding [5%] per annum, and provided further

that no interest shall be payable for any period after maturity of the Notes during which any

holder thereof fails to properly present such Notes.

The Board of Directors hereby approves the form of the Notes substantially in the form

set forth in Section 10 of this Resolution and further hereby authorizes and directs the Notes to

be signed in accordance with Section 11 of this Resolution for and in the name of and on behalf

of the District; provided that in no event shall the Notes bear interest at a rate exceeding [5%] per

annum.

Both the principal of and interest on the Notes shall be payable in lawful money of the

United States of America. The Notes shall be payable as provided in Section 3 hereof unless

DTC, as defined in Section 3 hereof, determines not to continue to act as securities depository for

the Notes and another depository is not selected by the District in which case Notes shall be

payable only upon surrender thereof at the Principal Office of [FISCAL AGENT], as the fiscal

agent, paying agent, registrar and authenticating agent (the "Fiscal Agent"). "Principal Office"

of the Fiscal Agent means with respect to the payment, registration, surrender, exchange or

transfer of any Note or Notes, the principal corporate trust office of the Fiscal Agent at

, and with respect to all other matters regarding the duties and

responsibilities of the Fiscal Agent pursuant to this Agreement, the principal corporate trust

office of the Fiscal Agent at , or such other offices as the Fiscal Agent

may designate, [two different addresses with this Fiscal Agent]

The Notes, when and as issued, shall be sold to the Underwriter and shall be paid,

together with interest thereon, from the Pledged Revenues, as hereinafter defined, and to the

extent not so paid from Pledged Revenues shall be paid from any and all other moneys of the

District lawfully available therefor.

The registration of any fully registered Note may, in accordance with its terms, be

transferred upon the books required to be kept pursuant to the provisions of this Section by the

person in whose name it is registered, in person or by his/her duly authorized attorney, upon

surrender of such fully registered Note for cancellation, endorsed or accompanied by delivery of

a written instrument of transfer in a form approved by the Fiscal Agent, duly executed by the

registered owner or his/her duly authorized attorney.

Whenever any fully registered Note or Notes shall be surrendered for transfer, the Fiscal

Agent shall authenticate and deliver a new fully registered Note or Notes of like series, tenor and

maturity.

The District and Fiscal Agent shall deem and treat the person in whose name any

outstanding fully registered Note shall be registered upon the Note Register as the absolute

owner of such Note, whether such Note shall be overdue or not, for the purpose of receiving

payment of, or on account of, the principal and interest payments with respect to such Note for

all other purposes, and such payments so made to any such registered owner or upon his order

shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of

02-148MSU 138329.2

the sum or sums so paid, and the District and Fiscal Agent shall not be affected by any notice to

the contrary.

Fully registered Notes may be exchanged at the principal corporate trust office of the

Fiscal Agent for a like aggregate principal amount of fully registered Notes of other authorized

denominations of the same maturity. All fully registered Notes surrendered in such exchanges or

transfers shall thereupon be cancelled by the Fiscal Agent.

The Fiscal Agent shall not be required to register the transfer or exchange of any Note

within 15 days prior to its maturity.

If any Note shall become mutilated, the Fiscal Agent, at the expense of the owner of said

Note, shall execute and deliver a new Note of like series, tenor, maturity and principal amount in

exchange and substitution for the Note so mutilated, but only upon surrender to the Fiscal Agent

of the Note so mutilated. Every mutilated Note so surrendered to the Fiscal Agent shall be

cancelled by the Fiscal Agent. If any Note shall be lost, destroyed or stolen, evidence of such

loss, destruction or theft may be submitted to the Fiscal Agent, and, if such evidence is

satisfactory to the Fiscal Agent and, if an indemnity satisfactory to the Fiscal Agent shall be

given, the Fiscal Agent, at the expense of the Note owner, shall authenticate and deliver a new

Note of like series, tenor and maturity and numbered as the Fiscal Agent shall determine in lieu

of and in substitution for the Note so lost, destroyed or stolen. The Fiscal Agent may require

payment of an appropriate fee for each new Note delivered under this Section and of the

expenses which may be incurred by the Fiscal Agent in carrying out the duties under this

Section. Any Note issued under the provisions of this Section in lieu of any Note alleged to be

lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this

Resolution with all other Notes secured by this Resolution.

The Fiscal Agent shall keep or cause to be kept at its Principal Office a Note Register for

the registration and registration of transfer of the Notes; and, upon presentation for such purpose,

the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or cause to

be registered, on the Note Register, Notes and transfer thereof as hereinbefore provided.

Section 3. Book-Entry System. '

(a) Except as provided in paragraph (c) of this Section 3, the registered owner

of all of the Notes shall be DTC and the Notes shall be registered in the name of Cede &

Co., as nominee for DTC. Payment of principal or interest on any Note registered in the

name of Cede & Co. shall be made by wire transfer of New York Clearing House or

equivalent next day funds or by wire transfer of same day funds to the account of Cede &

Co. at the address indicated on the regular Record Date or special record date for Cede &

Co. in the registration books of the Registrar.

(b) The Notes shall be initially issued in the form of a separate single

authenticated fully registered Note certificate for each separate stated maturity of the

Notes. Upon initial issuance, the ownership of such Notes shall be registered in the

registration books of the Registrar in the name of Cede & Co., as nominee of DTC. The

Fiscal Agent, the Registrar and the District may treat DTC (or its nominee) as the sole

02-WW3O4138329.2

and exclusive owner of the Notes registered in its name for the purposes of payment of

the principal or interest on the Notes, giving any notice permitted or required to be given

to Bondholders under this Resolution or the Fiscal Agent Agreement, registering the

transfer of Notes, obtaining any consent or other action to be taken by Bondholders and

for all other purposes whatsoever, and none of the Fiscal Agent, the Registrar or the

District shall be affected by any notice to the contrary. None of the Fiscal Agent, the

Registrar or the District shall have any responsibility or obligation to any Participant, any

person claiming a beneficial ownership interest in the Notes under or through DTC or any

Participant or any other person which is not shown on the registration books as being a

Bondholder, with respect to the accuracy of any records maintained by DTC or any

Participant, the payment by DTC or any Participant of any amount in respect of the

principal of or interest on the Notes; any notice which is permitted or required to be given

to Bondholders under this Resolution or the Fiscal Agent Agreement; or any consent

given or other action taken by DTC as a Bondholder. The Fiscal Agent shall pay, from

funds held under the terms of the Agreement or otherwise provided by the District, all

principal of and interest on the Notes only to DTC as provided in the Representation

Letter and all such payments shall be valid and effective to satisfy and discharge fully the

District's obligations with respect to the principal of and interest on the Notes to the

extent of the sum or sums so paid. No person other than DTC shall receive an

authenticated Note evidencing the obligation of the District to make payments of

principal and interest pursuant to the Agreement. Upon delivery by DTC to the Fiscal

Agent of written notice to the effect that DTC has determined to substitute a new

nominee in place of Cede & Co., and subject to the provisions herein with respect to

Record Dates, the name "Cede & Co." in this Resolution shall refer to such new nominee

of DTC.

(c) In the event the District determines that it is in the best interest of the

Beneficial Owners that they be able to obtain Note certificates and notifies DTC, the

Fiscal Agent and the Registrar of such determination, then DTC will notify the

Participants of the availability through DTC of Note certificates. In such event, the Fiscal

Agent shall authenticate and the Registrar shall transfer and exchange Note certificates as

requested by DTC and any other Bondholders in appropriate amounts. DTC may

determine to discontinue providing its services with respect to the Notes at any time by

giving notice to the District and the Fiscal Agent and discharging its responsibilities with

respect thereto under applicable law. Under such circumstances (if there is no successor

securities depository), the District and the Fiscal Agent shall be obligated to deliver Note

certificates as described in this Resolution. In the event Note certificates are issued, the

provisions of this Resolution or the Fiscal Agent Agreement shall apply to, among other

things, the transfer and exchange of such certificates and the method of payment of

principal of and interest on such certificates. Whenever DTC requests the District and

the Fiscal Agent to do so, the Fiscal Agent and the District will cooperate with DTC in

taking appropriate action after reasonable notice (i) to make available one or more

separate certificates evidencing the Notes to any Participant having Notes credited to its

DTC account or (ii) to arrange for another securities depository to maintain custody of

certificates evidencing the Notes.

02-U8M8U 138329.2

(d) Notwithstanding any other provision of this Resolution or the Fiscal Agent

Agreement to the contrary, so long as any Note is registered in the name of Cede & Co.,

as nominee of DTC, all payments with respect to the principal of and interest on such

Note and all notices with respect to such Note shall be made and given, respectively, to

DTC as provided in the Representation Letter.

(e) In connection with any notice or other communication to be provided to

Bondholders pursuant to this Resolution or the Fiscal Agent Agreement by the District or

the Fiscal Agent with respect to any consent or other action to be taken by Bondholders,

the District or the Fiscal Agent, as the case may be, shall establish a record date for such

consent or other action and give DTC notice of such record date not less than 15 calendar

days in advance of such record date to the extent possible. Such notice to DTC shall be

given only when DTC is the sole Bondholder.

NEITHER THE DISTRICT NOR THE FISCAL AGENT WILL HAVE ANY

RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS OR BENEFICIAL OWNERS

WITH RESPECT TO: THE PAYMENT BY DTC, ANY PARTICIPANT OF THE PRINCIPAL

OF OR INTEREST ON THE NOTES; THE PROVIDING OF NOTICE TO PARTICIPANTS

OR BENEFICIAL OWNERS; THE ACCURACY OF ANY RECORDS MAINTAINED BY

DTC OR ANY PARTICIPANT; OR ANY CONSENT GIVEN OR OTHER ACTION TAKEN

BY DTC AS OWNER OF THE NOTES.

Section 4. Contract for Purchase and Sale of Notes. The proposed form of the

Contract for Purchase for the Notes between the District and the Underwriter, as submitted to

this meeting and attached hereto as Exhibit A and made a part of this Resolution as though set

forth fully herein, is hereby approved, with such insertions, relating to the principal amount of

the Notes, such amount not to exceed $ [31,000,0001, and the interest rate to be paid

for the Notes by the District, such rate not to exceed [d%J nor be less than [2%] calculated on the

basis of a 360-day year comprised of twelve 30-day months, all as shall be approved by the

General Manager or her designee.

The Notes may be sold to the Underwriter at a discount from the par amount thereof of an

amount to be determined by the General Manager or the Chief Financial Officer, such amount

not to exceed [1%] of the principal amount of the Notes, plus accrued interest on the Notes, if

any, from and including their date to but not including the date of delivery and payment therefor,

on the terms and conditions set fort in the Contract for Purchase, and upon the approval of the

General Manager of the District or his designee is hereby authorized and directed to execute and

deliver the Contract for Purchase on behalf of the District to the Underwriter.

Section 5. Use of Funds. The moneys so borrowed shall be deposited, on the date of

issuance of the Notes, in a special fund to be held by the Fiscal Agent and designated "2003-04

Revenue Anticipation Note Proceeds Fund" (the "Proceeds Fund"). Amounts on deposit in the

Proceeds Fund shall be disbursed to the District upon receipt by the Fiscal Agent of a written

request from the District and used and expended by the District for any purpose for which it is

authorized to use and expend funds from the General Fund of the District. The District

acknowledges that its receipt of moneys from the Fiscal Agent may be delayed to take into

account any notice provisions required under the authorized investments.

02 4083304138329.2

Section 6. Pledged Revenues and Funds. The Principal Amount of the Notes, together

with the interest thereon, shall be payable from revenue, cash receipts and other moneys which

are received by the District for the General Fund of the District, for the Fiscal Year. As used

herein, the term "Unrestricted Moneys" means taxes, income, revenue, cash receipts and other

moneys to be received by the General Fund of the District and which may lawfully be pledged

for the payment of the Notes and interest thereon and which are otherwise not so pledged.

As security for the payment of the Principal Amount of and interest on the Notes, the

District hereby pledges the Unrestricted Moneys and agrees to deposit into the Payment Fund, as

defined herein; (a) during the month of [April] of the Fiscal Year, an amount of Unrestricted

Moneys equal to fthree-fourthsone-half] of the Principal Amount of the Notes, plus an amount of

Unrestricted Moneys equal to | three-tourthsone-half| of the interest due on the Notes at maturity

thereof; and (b) during the month of May[June| ot the Fiscal Year, an amount of Unrestricted

Moneys equal to fone-fettftk-halfl of the Principal Amount of the Notes, plus an amount of

Unrestricted Mone'ys equal to |one-fettftb-half| of the interest due on the Notes to the date of

maturity thereof (such amounts being hereinafter called the "Pledged Revenues"), and the

principal of the Notes and the interest thereon shall constitute a first lien and charge on the

Unrestricted Moneys and shall be payable from the Pledged Revenues, and to the extent not so

paid as provided above shall be paid from any other moneys of the District lawfully available

therefor. In the event that on any of the foregoing months or period there are insufficient

Unrestricted Moneys received by the District to permit deposit into the Payment Account, as

hereinafter defined, of the full amount of Pledged Revenues to be deposited from such source by

the last business day of such month, then the amount of any deficiency shall be satisfied and

made up from any other moneys of the District lawfully available for the payment of the Notes

and interest thereon.

Subject to the terms of this Resolution, the District hereby pledges and assigns to the

Fiscal Agent a lien on and security interest in amounts deposited in the Proceeds Fund and

Payment Fund for the benefit and security for the payment of the Notes.

The District hereby directs the Fiscal Agent to transfer, on 1, 2004, amounts, if

any, remaining on deposit in the Proceeds Fund to the Payment Fund, to assist in satisfying the

District's sinking fund payment obligation to the Payment Fund.

Section 7. Fiscal Agent. [FISCAL AGENT] is hereby appointed to act as the Fiscal

Agent and to perform such duties of the Fiscal Agent as prescribed in this Resolution and the

Fiscal Agent Agreement (the "Fiscal Agent Agreement") by and between the District and the

Fiscal Agent. The Fiscal Agent Agreement is hereby approved in substantially the form attached

hereto as Exhibit B, with such additions, changes and corrections to such document as the

General Manager or his designee may approve, such approval to be conclusively evidenced by

the execution and delivery thereof. The Board of Directors hereby authorizes and directs the

General Manager or his designee to enter into the Fiscal Agent Agreement for and in the name of

and on behalf of the District.

Section 8. Payment Fund. The Pledged Revenues and any amounts transferred from the

Proceeds Fund in accordance with Section 6 hereof shall be held by the Fiscal Agent in a special

fund designated "2003-04 Revenue Anticipation Note Payment Fund" (the "Payment Fund") and

0243«MSU 138329.2

applied as directed in this Resolution. Any money placed in the Payment Fund shall be used

solely for the benefit of the owners of the Notes, and until the Principal Amount of the Notes and

all interest thereon are paid in full, the moneys in the Payment Fund shall be applied only for the

purposes for which the Payment Fund was created. The Payment Fund shall consist of, and there

is hereby established, a separate trust account designated the "Payment Account." All other

moneys received by the Fiscal Agent from the District are to be deposited solely in the Payment

Fund.

Funds for the payment of principal of and interest on the Notes shall be derived from the

following sources in the order of priority indicated:

(a) amounts deposited into the Payment Account pursuant to Sections 6 and 8

hereof; and

(b) from any lawfully available moneys of the District.

All Pledged Revenues shall, during the period or months in which received by the Fiscal

Agent, be deposited in the Payment Account. On the maturity date, the moneys in the Payment

Account shall be used, to the extent necessary, to pay the Principal Amount of and interest on the

Notes. Any moneys remaining in the Payment Account after the Principal Amount of the Notes

and the interest thereon to maturity have been fully paid, or provision for such payment has been

made, shall be transferred to the District and used for purposes for which the District is

authorized to use and expend funds.

Section 9. Investments. The District hereby authorizes and directs the Fiscal Agent to

continuously invest or reinvest all moneys held in the Proceeds Fund and the Payment Fund in

any one or more of the following as the General Manager or her designee shall direct:

(a) notes, certificates, bonds or other evidences of indebtedness which are


instrumentalities, or certificates or collateralized perfected repurchase agreements which

represent an interest therein, or a written investment agreement collateralized by


instrumentalities; or

(b) a written investment agreement with (i) a bank or trust company organized

and existing under the laws of the United States of America or any state thereof or a

foreign bank or trust company; (ii) a corporation organized and existing under the laws of

any state of the United States which is authorized to do business in California; or (iii) an

insurance company organized under the laws of any state of the United States, and

authorized to do business in California, any of which entities (A) has or is

unconditionally guaranteed by an entity which has capital and unimpaired surplus or

allocated liquidity in an amount in excess of $100,000,000; and (B) provides for the

payment of a specified rate or rates of interest or specifies a method for calculating such

rate or rates of interest on moneys, deposited thereunder; provided further that the

investment agreement provider or its guarantor is rated, on the date of such agreement, at

02-138330 1138329,2

least in one of the two highest rating classifications as established by Moody's Investors

Service or Standard & Poor's Ratings Group.

(c) any investment securities permitted by Section 25871 of the Public

Utilities Code of the State of California, as it is now in effect and as it may be amended,

modified or supplemented from time to time. All investment securities purchased by

moneys in the Proceeds Fund and the Payment Fund shall mature not later than the date

on which it is estimated that the Fiscal Agent will need such moneys either to pay the

Principal Amount of or interest on the Notes or to provide for such payment or to be

otherwise used by the District for District purposes.

If the Fiscal Agent has not received any investment direction from the General Manager

or his designee, then amounts held in the Proceeds Fund and the Payment Fund, shall be invested

in a money market fund which is rated in the highest rating category of Standard & Poor's

Ratings Group or Moody's Investors Service (including a mutual fund provided by the Fiscal

Agent).

Section 10. Form of Notes. The Notes shall be substantially in the following form:

02-138330,1138329.2



2003-04 REVENUE ANTICIPATION NOTE

Number R-1 Interest Rate: % Principal Amount: $

CUSIP No.:

FOR VALUE RECEIVED, the Alameda-Contra Costa Transit District (the "District"), a

municipal corporation,special transit district organized and existing under and by virtue of the

Constitution andthe laws of the State ot California, for value received, hereby acknowledges

itself indebted to~~and promises to pay to-Cede & Co., on , , the

principal sum of $ together with interest thereon, payable at the maturity thereof, at

the interest rate set forth above, computed on a 30-day month/360-day year basis, from the date

hereof. Both principal of and interest on this Note shall be payable in lawful money of the

United States of America only upon presentation and surrender of this Note at maturity at the

Principal Office, as defined herein, of [FISCAL AGENT], as fiscal agent, paying agent, registrar

and authenticating agent (the "Fiscal Agent"); provided, however, no interest shall be payable for

any period after maturity during which this Note is not properly presented for payment.

Reference is made to the Fiscal Agent Agreement for a complete recital of its terms.

"Principal Office" of the Fiscal Agent means with respect to the payment, registration,

surrender, exchange or transfer of any Note or Notes, the principal corporate trust office of the

Fiscal Agent at , in care of , and with respect to all

other matters regarding the duties and responsibilities of the Fiscal Agent pursuant to this

Agreement, the principal corporate trust office of the Fiscal Agent at , or

such other offices as the Fiscal Agent may designate.

It is hereby certified, recited and declared that this Note is one of an authorized issue of

2003-04 Revenue Anticipation Notes of the District (the "Notes") in the aggregate principal

amount of $ , all of like tenor, made, executed and given pursuant to and by authority

of a resolution of the Board of Directors of the District duly passed and adopted on

, 2003 (the "Resolution"), under and by authority of Article 7.6 (commencing

with Section 53850) of Chapter 4, Part 1, Division 2, Title 5 of the Government Code of the

State of California, and that all acts, conditions and things required to exist, happen and be

performed precedent to and in the issuance of this Note have existed, happened and been

performed in regular and due time, form and manner as required by law, and this Note, together

with all other indebtedness and obligations of the District, does not exceed any limit prescribed

by the constitution or statutes of the State of California.

The principal amount of the Notes, together with the interest thereon, shall be payable

from taxes, revenue, cash receipts and other moneys which are received by the District for the

General Fund of the District for the fiscal year commencing July 1, 2003 and ending June 30,

2004 (the "Fiscal Year"). As security for the payment of the principal of and interest on the

Notes, the District has pledged its Unrestricted Moneys and agrees to deposit into the payment

fund held by the Fiscal Agent (a) during the month of [April] of the Fiscal Year, an amount of

Unrestricted Moneys equal to [three■ fourthsone-half| of the principal amount of the Notes, plus

0243*3304138329.2 10

an amount of Unrestricted Money equal to [three-fourthsone-half] of the interest due on the

Notes at maturity thereof; and (b) during the month of [MayJune]"of the Fiscal Year, an amount

of Unrestricted Moneys equal to [one-fourth-half] of the principal amount of the Notes, plus an

amount of Unrestricted Moneys equal to fone-teufth-half] of the interest on the Notes to the date

of maturity thereof and the Notes shall be payable theretrom, and to the extent not so paid shall

be paid from any other moneys of the District lawfully available therefor. The term

"Unrestricted Moneys" means income, revenue, cash receipts and other moneys to be received

by the General Fund of the District and which may be lawfully pledged for the payment of the

Notes and the interest thereon and which are otherwise not so pledged.

The Notes are deliverable as fully registered Notes without coupons in the denomination

of $5,000 and any integral multiple thereof. Subject to the limitations and conditions, and upon

payment of the charges, if any, as provided in the Resolution, fully registered Notes may be

exchanged for a like aggregate principal amount of fully registered Notes of other authorized

denomination.

The registration of this Note shall be transferable only upon the Note Register, which

shall be kept for that purpose at the Principal Office of the Fiscal Agent upon surrender hereof

together with a written instrument of transfer satisfactory to the Fiscal Agent duly executed by

the registered owner or his duly authorized attorney. Upon the registration of the transfer, and

the surrender of this Note, the Fiscal Agent shall provide, in the name of the transferee, a newly

registered Note or Notes.

The Fiscal Agent shall not be required to register the transfer or exchange of any Note

within 15 days prior to its maturity.

Unless this certificate is presented by an authorized representative of The Depository

Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and

any certificate issued is registered in the name of Cede & Co., or such other name as requested

by an authorized representative of The Depository Trust Company, and any payment is made to

Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR

OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,

CEDE & CO., has an interest herein.

02-WO3Q4138329.2 1 1

IN WITNESS WHEREOF, the Alameda-Contra Costa Transit District has caused this

Note to be executed by its President and to be countersigned by its General Manager and District

Secretary by their manual or facsimile signatures and its official seal to be affixed hereto and to

be authenticated by an authorized officer of the Fiscal Agent this day of ,

2003.

[SEAL] ALAMEDA-CONTRA COSTA TRANSIT

DISTRICT

By. President, Board of Directors

Countersigned:

By

General Manager

By

District Secretary

138329.2 12

CERTIFICATE OF AUTHENTICATION

This is to certify that this Note is one of the Notes described in the within-mentioned

Resolution and is one of the 2003-04 Revenue Anticipation Notes of the Alameda-Contra Costa

Transit District.

Date:

[FISCAL AGENT], as Fiscal Agent

By. Authorized Signatory

[FORM OF ASSIGNMENT]

ASSIGNMENT

For value received, , the undersigned, do(es) hereby sell, assign

and transfer unto Tax I.D. No. the within-mentioned

registered Note and hereby irrevocably constitute(s) and appoint(s) Tax

I.D. No. attorney, to transfer the same on the certificate register of the Fiscal Agent

with full power of substitution in the premises.

Dated: , 20

Signature Guaranteed:

Note: The signature(s) on this Assignment

must correspond with the name(s) as written on

• the within registered of the Note in every

Note: Signature(s) must be a member particular without alteration or enlargement or

firm face of the New York Stock any change whatsoever.

Exchange or a commercial bank

or trust company.

**a^'

02-138320,1138329.2 13

Section 11. Execution of Notes. The President of the Board of Directors is hereby

authorized and directed to execute the Notes by either higher manual or facsimile signature, the

District Secretary and the General Manager are hereby authorized and directed to countersign the

Notes by either their manual or facsimile signature, respectively. The District Secretary is

hereby authorized to affix the seal of the District to the Notes either manually or by facsimile

impression thereof. The General Manager is also authorized to cause the blank spaces thereof to

be filled in as may be appropriate and to cause, if appropriate, the Notes to be authenticated by

the manual signature of an authorized signatory of the Fiscal Agent.

Section 12. Representations, Recitals, Proceedings and Actions. It is hereby

covenanted and warranted by the Board of Directors of the District that all representations and

recitals contained in this Resolution are true and correct, and that the District and its appropriate

officials have duly taken all proceedings and actions necessary to be taken by them, and will take

any additional proceedings and actions necessary to be taken by them, for the collection of

Unrestricted Moneys hereunder in accordance with the law for carrying out the provisions of this

Resolution and any pledge hereunder and the Notes.

Section 13. {Reserve Accounts Covenant. The District hereby covenants to comply

with {District Policy No. 360 and its Resolution No. 925} which require the District to fund

certain reserve accounts, to annually deposit any available moneys of the District at the end of

each fiscal year, if required, and to maintain the balance in each reserve account in accordance

with the provisions of Resolution No. 925. [Should we include any of the other District

Policies?!

Section 14. Special Tax Covenant's.

(a) Private Business Use Limitation. The District shall assure that (i) not in

excess of 10% of the proceeds of the Notes is used for Private Business Use, as that term

is defined in Section 141 of the Internal Revenue Code of 1986, as amended (the

"Code"), if, in addition, the payment of more than 10% of the principal and 10% of the

interest represented by the Notes coming due during the term thereof is, under the terms

of the Notes or any underlying arrangement, directly or indirectly, secured by any interest

in property used or to be used for a Private Business Use or in payments in respect of

property used or to be used for a Private Business Use or is to be derived from payments,

whether or not to the District, in respect of property or borrowed money used or to be

used for a Private Business Use; and (ii) in the event that both (A) in excess of 5% of the

proceeds of the Notes is used for a Private Business Use; and (B) an amount in excess of

5% of the principal and 5% of the interest represented by the Notes coming due during

the term thereof is, under the terms of the Notes or any underlying arrangement, directly

or indirectly, secured by any interest in property used or to be used for said Private

Business Use or in payments in respect of property used or to be used for said Private

Business Use or is to be derived from payments, whether or not to the District, in respect

of property or borrowed money used or to be used for said Private Business Use, then the

excess over said 5% of the proceeds of the Notes used for a Private Business Use shall be

used for a Private Business Use related to the governmental purpose for which the Notes

are issued.

02-44SMSU 138329.2 14

(b) Private Loan Limitation. The District shall assure that not in excess of

the lesser of $5,000,000 or 5% of the proceeds of the Notes is used, directly or indirectly,

to make or finance a loan (other than loans constituting Nonpurpose Obligations as

defined in Section 148 of the Code or assessments) to persons other than state or local

government units.

(c) Federal Guarantee Prohibition. The District shall not take any action or

permit or suffer any action to be taken if the result of the same would be to cause the

Notes to be "federally guaranteed" within the meaning of Section 149(b) of the Code.

Section 15. No Arbitrage Covenant. The District hereby covenants for the benefit of

each owner of the Notes that no use will be made of the proceeds of the Notes or of any moneys

in the Funds created hereunder and that no other action shall be taken which would cause the

Notes to be "arbitrage bonds" within the meaning of Section 148 of the Code and the regulations

prescribed thereunder.

Section 16. Official Statement. The Preliminary Official Statement, in substantially

the form attached hereto as Exhibit C, to be'used in connection with the offer and sale of the

Notes, is hereby adopted and approved, and the General Manager of the District, or his designee,

is hereby authorized to execute and deliver, at the time of issuance of the Notes, a final Official

Statement, with such additions, changes and corrections as the General Manager or his designee

may approve upon consultation with the District's legal counsel, such approval to be

conclusively evidenced by his execution and delivery thereof, and the General Manager or his

designee is hereby authorized to distribute electronic and printed copies of the Preliminary

Official Statement and the Official Statement in connection with the offering and sale of the

Notes. The General Manager or hediis designee is further authorized to execute a certificate

with respect to the Preliminary Official Statement relating to compliance with Securities and

Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934.

Section 17. Underwriter. The selection of , as Underwriter to assist the

District in structuring the Note financing and to purchase the Notes, is hereby approved.

Section 18. Note Counsel and Financial Advisor. Inasmuch as the District shall

require the services of certain professionals in connection with the issuance and sale of the

Notes, the City hereby appoints the firm of Kutak Rock LLP, as Note Counsel, and Public

Financial Management Inc., as Financial Advisor.

Section 19. Undertaking to Provide Ongoing Disclosure. This Section constitutes

the written undertaking for the benefit of the holders of the Notes required by Section (d)(3) of

Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934,

as amended (17 CFR Part 240, § 240.15c2-12) (the "Rule").

The District undertakes to provide Material Event Notices as provided in this Section. If

a Material Event occurs while any Notes are Outstanding, the District shall provide a Material

Event Notice in a timely manner to the Municipal Securities Rulemaking Board and the SID, if

any. Each Material Event Notice shall be so captioned and shall prominently state the date, title

and CUSIP numbers of the Notes.

02-138339,1138329.2 15

Notes.

"Material Event" means any of the following events, if material, with respect to the

(a)

(b)

(c) difficulties;

(d) difficulties;

(e)

(0 security;

(g)

(h)

0)

G) securities; and

principal and interest payment delinquencies;

non-payment related defaults;

unscheduled draws on debt service reserves reflecting financial

unscheduled draws on credit enhancements reflecting financial

substitution of credit or liquidity providers, or their failure to perform;

adverse tax opinions or events affecting the tax-exempt status of the

modifications to rights of security holders;

bond calls;

defeasance;

release, substitution, or sale of property securing repayment of the

(k) rating changes.

"Material Event Notice" means written or electronic notice of a Material Event.

"SID" means a state information depository as operated or designated by the State as such

for the purposes referred to in the Rule.

Unless otherwise required by law and subject to technical and economic feasibility, the

District shall employ such methods of information transmission as shall be requested or

recommended by the designated recipients of the District's information.

The continuing obligation hereunder of the District to provide Material Event Notices

shall terminate immediately once the Notes no longer are Outstanding. This Section or any

provision hereof, shall be null and void in the event that the District delivers to each then existing

nationally recognized municipal securities information repository ("NRMSIR") and the SID, if

any, an opinion of nationally recognized bond counsel to the effect that those portions of the

Rule which require this Section or any such provision, are invalid, have been repealed

retroactively or otherwise do not apply to the Notes. This Section may be amended without the

consent of the holders of the Notes, but only upon the delivery by the District to each then

existing NRMSIR and the SID, if any, of the proposed amendment and an opinion of nationally

138329.2 16

recognized bond counsel to the effect that such amendment, and giving effect thereto, will not

, adversely affect the compliance of this Section and by the District with the Rule.

Any failure by the District to perform in accordance with this Section shall not constitute

an event of default under this Resolution.

Section 20. Additional Authorization. The General Manager of the District or his

designee shall be, and hereby is, authorized and directed to execute the Tax Compliance

Certificate, the Blanket Letter of Representations, any investment agreements relating to

amounts on deposit in the Proceeds Fund or Payment Fund and all other documents, and take

such actions as they deem necessary or advisable in order to carry out and perform the purposes

of this Resolution, and the execution or taking of such action shall be conclusive evidence of

such necessity or advisability.

Section 21. Effective Date. This Resolution shall become effective immediately upon

its adoption by four affirmative votes of the Board of Directors.

RESOLUTION NO. WAS PASSED AND ADOPTED this day of

2003.

By. EairiqaPatnsha Piras, President

Attest:

By


02-138339.1138329.2 17

I, Rose Martinez, District Secretary for the Alameda-Contra Costa Transit District,

certify that the foregoing Resolution was passed and adopted at a Regular Meeting of the Board

of Directors held on the day of , 2003, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

DIRECTORS: Pir^s, Wallace, Kaplan, Bischofberg^r

Ndr

Approved as to Form:

By.

DIRECTORS: JNdne i

DIRECTORS: None

DIRECTORS: None

By.


Kenneth C. ScheldigScheidig, General Counsel

02-4O*WSU 138329.2 18

EXHIBIT A

FORM OF CONTRACT FOR PURCHASE

02-13832P, 1138329.2

EXHIBIT B

FORM OF FISCAL AGENT AGREEMENT

024083394138329.2

EXHIBIT C

FORM OF OFFICIAL STATEMENT

0243<33iUl 38329.2

Document comparison done by Delta View on Thursday, May 01, 2003 12:23:04

Legend:

Insertion

Deletion

Moved from

Moved to

Style change

Format change

Moved deletion

Inserted cell

Deleted cell

Moved cell

Split/Merged cell

Padding cell

6M Memo 03-169

Attachment D

CONTRACT OF PURCHASE




,2003

Board of Directors


1600 Franklin Street

Oakland, CA 94612

Ladies and Gentlemen:

The Underwriter, hereby proposes to purchase all of the Notes

from the District and to make a public offering of the Notes, subject to the written acceptance of

this Note Purchase Contract by the District and the delivery of such acceptance to the

Underwriter at or prior to 11:50 p.m., Pacific Time, on the date hereof, and subject to the

following provisions:

Section 1. Definitions. The following terms shall have the following meanings in this

Contract of Purchase, unless the context plainly does not so permit:

"Accountants" means [Macias, Gini & Company LLP].

"Closing" refers to the transaction at which the Notes are delivered by the District to the

Underwriter, and paid for by the Underwriter.

"Closing Documents" means the documents described in Section 9 hereof to be delivered

to the Underwriter at the Closing.

"Contract of Purchase" means this Contract of Purchase between the Underwriter and the

District.

"District" means the Alameda-Contra Costa Transit District, whose mailing address is

1600 Franklin Street, Oakland, California 94612.

"Fiscal Agent" means [FISCAL AGENT], with the functions and roles of fiscal agent,

paying agent, registrar and authenticating agent, whose address is .

"Fiscal Agent Agreement" means the Fiscal Agent Agreement by and between the

District and the Fiscal Agent, dated , 2003.

02-WW6SUB8369.2

,2003

Page 2

"Governmental Authority" means any legislative board or governmental official,

department, commission, board, bureau, agency, instrumentality, body, public corporation,

district or entity.

"Note Counser means Kutak Rock LLP whose mailing address is 1801 California Street,

Suite 3100, Denver, Colorado 80202-2658.

"Note Proceedings'" refers to all proceedings necessary to be completed by the District to

authorize the issuance and delivery of the Notes.

"Notes" means the $ Alameda-Contra Costa Transit District (Alameda

County, California) 2003-04 Revenue Anticipation Notes, due TJune 30, 2004, bearing

interest at a rate of % per annum computed on the basis of a 360-day year, as described in

the Official Statement.

"Official Statement" means the Official Statement of the District with respect to the

Notes, in form satisfactory to the Underwriter, dated , 2003, duly executed on its

behalf by the General Manager, or designee, including the cover page and all appendices,

exhibits, statements and letters included therein or attached thereto, and all supplements thereto,

with such changes as shall be approved in writing by the Underwriter and the District.

"Pledged Revenues" means the moneys pledged to the payment of the principal of and

interest on the Notes, as described in the Official Statement.

"Preliminary Official Statement" means the Preliminary Official Statement of the District

with respect to the Notes, dated , 2003. including the cover page and all

appendices, exhibits, statements and letters included therein or attached thereto.

"Resolution" means Resolution No. adopted by the Board of Directors of the

District on , 2003.

"Rule" means Rule 15c2-12 of the Securities Exchange Act of 1934, as amended.

"State" means the State of California.

"Underwriter" means [UNDERWRITER].

Section 2. Purchase Price. Upon the terms and conditions and upon the basis of the

representations and warranties hereinafter set forth, the Underwriter hereby agrees to purchase

from the District for reoffering to the public, and the District hereby agrees to sell to the

Underwriter for such purpose, all, but not less than all, of the Notes, for an aggregate purchase

price of $ (which equals the par amount of the Notes plus an original issue premium

of S , less an underwriter's discount of $ ).

Section 3. Public Offering of Notes. The Underwriter agrees to make a bona fide

public offering of all the Notes at the respective initial public offering prices as set forth on the

cover page of the Official Statement. Subsequent to such initial public offering, the Underwriter

,2003

Page 3

reserves the right to change the public offering prices as it may deem necessary in its

professional judgment in connection with the marketing of the Notes.

Section 4. Official Statement. The District agrees to deliver to the Underwriter, at

such addresses as the Underwriter shall specify, as many copies of the Official Statement (but

not to exceed ) as the Underwriter shall reasonably request as necessary to comply with

paragraph (b)(4) of the Rule and with Rule G-32 and all other applicable rules of the Municipal

Securities Rulemaking Board. The District agrees to deliver such Official Statements within

seven business days after the execution of this Contract of Purchase.

The District hereby authorizes and approves the Preliminary Official Statement and the

Official Statement, consents to their distribution and use by the Underwriter in connection with

the public offering of the Notes by the Underwriter prior to the date hereof and authorizes the

approval of the Official Statement by execution thereof by a duly authorized officer of the

District.

The Underwriter shall give notice to the District on the date after which no Participating

Underwriter, as such term is defined in the Rule, remains obligated to deliver Official Statements

pursuant to paragraph (b)(4) of the Rule.

Prior to the earlier to occur of (a) receipt of notice from the Underwriter pursuant to the

immediate preceding paragraph that Official Statements are no longer required under the Rule;

or (b) 90 days after the date of Closing, the District shall provide the Underwriter with such

information regarding the District, its current financial condition and ongoing operations as the

Underwriter may reasonably request.

Section 5. Closing, Delivery and Payment. The Closing shall take place at 9:00 a.m.,

Pacific Time, on , 2003, or at such other time or on such later business day as shall

have been mutually agreed upon in writing by the District and the Underwriter. At the Closing,

the District shall deliver to the Underwriter in New York, New York, or at such other place as

the District and the Underwriter may mutually agree, the Notes in definitive form, duly executed,

together with the Closing Documents; and the Underwriter shall accept such delivery and pay the

purchase price as set forth in Section 2 of this Contract of Purchase in immediately available

funds by check, draft or wire transfer to the- order of [FISCAL AGENT], as Fiscal Agent, on

behalf of the District for deposit in the Proceeds Fund as directed pursuant to the terms of the

Fiscal Agent Agreement. The Notes will be made available in New York, New York, at the

office of the Depository Trust Company ("DTC") by the Underwriter at least one business day

prior to the Closing, and shall be held in escrow by DTC, until authorized to be released by the

Underwriter on the day of Closing.

Section 6. Representations of the District. The District represents and warrants to the

Underwriter that:

(a) The District is validly existing under and by virtue of the laws of the State,

including Public Utilities Code Sections 24501 through 27509, inclusive, and the State

constitution, with full legal right, power and authority to adopt the Resolution, issue the

,2003

Page 4

Notes, and to execute, deliver and perform its obligations under this Contract of

Purchase, the Fiscal Agent Agreement, the Resolution and the Notes.

(b) (i) At or prior to the Closing, the District shall have taken all action

required to be taken by it to authorize the performance of its obligations thereunder and

to complete the Note Proceedings; (ii) the District has, and at the date of the Closing will

continue to have, full legal right, power and authority to adopt the Resolution and to enter

into this Contract of Purchase and the Fiscal Agent Agreement and, at the date of the

Closing, will have full legal right, power and authority to issue and deliver the Notes to

the Underwriter and to perform its obligations thereunder as provided in the Resolution,

this Contract of Purchase and the Fiscal Agent Agreement; (iii) this Contract of Purchase

and the Fiscal Agent Agreement have been duly executed and delivered and constitute

the valid and legally binding obligations of the District; (iv)the District has fully

authorized the consummation by it of all transactions relating to the District and

contemplated by this Contract of Purchase and the Fiscal Agent Agreement; and (v) at or

prior to the Closing, the execution and delivery of, and the performance by the District of

its obligations contained in the Notes, the Resolution, the Fiscal Agent Agreement and

this Contract of Purchase shall have been duly authorized.

(c) The District reasonably anticipates that the Pledged Revenues will be

received in the amounts and by the respective dates indicated in the Official Statement;

there are no present or foreseeable events, conditions or determinations of which the

District is aware that will prevent the receipt of and application by the District of the

Pledged Revenues as described in the Note Proceedings and the Official Statement; and

as of the Closing, except as disclosed in the Official Statement, the District shall have

taken all action to be taken by such date required by law, regulation or administrative

order or directive, or in the District's judgment necessary and feasible, in order to qualify

for and to receive the Pledged Revenues in such amounts and by such dates, and the

District will use its best efforts to cause the Pledged Revenues to be received in cash in

time to pay the Notes. The District will not issue any additional obligations of the

District in anticipation of receipt of the Pledged Revenues, or, prior to the maturity of the

Notes or provision for their payment, pledge any of the Pledged Revenues for any

purpose other than to secure the payment of the Notes.

(d) The Preliminary Official Statement is, and as of Closing the Official

Statement (excluding therefrom the "Prices" on the cover page is, and the information

under the captions ["TAX EXEMPTION" and "UNDERWRITING,"] as to which no

representations or warranties are made), will be true and correct in all material respects

and the Preliminary Official Statement does not, and the Official Statement will not,

contain any untrue statement of a material fact or omit to state a material fact necessary to

make the statements therein, in the light of the circumstances under which they were

made, not misleading.

(e) The issuance of the Notes, the adoption of the Resolution, the execution,

delivery- and performance of this Contract of Purchase (except Section 15

"Indemnification by the District") and the Fiscal Agent Agreement, the performance of

the District's obligations under the Notes and compliance with the provisions hereof and ]

,2003

Page 5

thereof by the District, do not and shall not conflict with or constitute on the part of the

District a breach of, or a default under, any existing law, charter, ordinance, regulation,

decree, order or resolution, or (to the best knowledge of the undersigned officer, after due

investigation) any agreement, indenture, mortgage, lease or other instrument, to which

the District is subject or by which it is bound; and the District is not in any material way

in breach of or default under any applicable law or administrative regulation of the State

or the United States of America or any applicable judgment or decree or any material

loan agreement, indenture, bond, note, resolution or other instrument to which the District

is a party or is otherwise subject and no event has occurred and is continuing which, with

the passage of time or the giving of notice or both, would constitute an event of default

under any one or more of the foregoing.

(f) All authorizations, consents or approvals, if any, of any Governmental

Authority or court necessary for the valid issuance of, and performance by the District of

its obligations under the Notes shall have been duly obtained or made prior to the

issuance of the Notes and disclosed to the Underwriter; provided, however, that no

representation is made by the District as to compliance with federal or state "blue sky" or

similar laws.

(g) As of the time of acceptance hereof and as of the Closing, except as

disclosed in the Official Statement, to the best knowledge of the District, no action, suit,

proceeding or investigation is or will be pending or threatened against the District or any

other person in any court or before any Governmental Authority seeking to restrain or

enjoin the issuance or delivery of any of the Notes or in any way contesting or affecting

the validity of the Note Proceedings, the Notes, the Resolution, this Contract of Purchase,

the Fiscal Agent Agreement, or the receipt of application of the Pledged Revenues or any

other revenues of the District that could affect payment of the Notes or the payment of

any other obligations of the District, or contesting the powers of the District to issue the

Notes, or in any manner questioning the corporate existence or boundaries of the District

or the titles to their respective offices of officials of the District who have acted with

respect to the Note Proceedings.

(h) The Notes shall conform in all respects to the descriptions thereof

contained in the Official Statement, and the Notes, when delivered and sold to the

Underwriter as provided herein, shall constitute validly issued and legally binding general

obligations of the District, secured as to principal and interest by a first lien and charge

against the Pledged Revenues, and shall be payable, to the extent not paid from the

Pledged Revenues, from any lawfully available unrestricted moneys of the District

therefor.

(i) The audited balance sheet of the District as of June 30, 2002 and the

related statements of revenues, expenditures and changes in financial position for the

fiscal year ended on such date as set forth in the Official Statement are true, complete and

correct and fairly present the financial condition of the District as of such date and the

results of its operations for such fiscal year. There has been no material adverse change

in the financial condition of the District since June 30, 2002 except as described in the

Official Statement.

, 2003

Page 6

(j) Between the date hereof and the Closing, without the prior written consent

of the Underwriter, the District shall not have issued in the name of the District any

bonds, notes or other obligations for borrowed money except for such borrowings as may

be described in or contemplated by the Official Statement.

(k) The District has not been notified of any listing or proposed listing by the

Internal Revenue Service to the effect that the District is a bond issuer whose arbitrage

certificates may not be relied upon.

(1) Any certificate signed by any official or other representative of the District

and delivered to the Underwriter shall be deemed a representation and warranty by the

District to the Underwriter as to the truth of the statements therein made.

(m) The District has never been in default at any time, as to the payment of or

interest on any debt obligation which it has issued, including those it has issued as a

conduit for another entity, except as specifically disclosed in the Official Statement.

Section 7. Conditions to Underwriter's Obligations. The Underwriter has entered

into this Contract of Purchase in reliance upon the representations and warranties of the District

contained herein, the Note Proceedings and the performance by the District of its obligations

hereunder, both as of the date hereof and as of the date of the Closing. The Underwriter's

obligations under this Contract of Purchase are and shall be subject to the following further

conditions as of the Closing:

(a) The representations and warranties of the District contained herein shall be

true at the date hereof and at and as of the Closing, as if made at and as of the Closing,

and the statements made in all certificates and other documents delivered to the

Underwriter at the Closing pursuant hereto shall be true at the Closing; and the District

shall be in compliance with each of the agreements made by it in this Contract of

Purchase.

(b) At the time of the Closing: (i) the Resolution, this Contract of Purchase

and the Fiscal Agent Agreement shall be in full force and effect; (ii)the Note

Proceedings and this Contract of Purchase shall not have been amended, modified or

supplemented except as may have been agreed to in writing by the Underwriter; (iii) all

action which, in the opinion of Note Counsel shall be necessary in connection with the

transactions contemplated hereby, shall have been duly taken and shall be in full force

and effect; (iv) the Closing Documents shall have been received by the Underwriter; and

(v) the District shall perform or have performed all of its obligations required under or

specified in the Note Proceedings, the Resolution, this Contract of Purchase, the Fiscal

Agent Agreement, or the Official Statement to be performed at or prior to the Closing.

(c) The provisions of law governing the payment of any of the moneys

pledged to pay the Notes shall be in full force and effect and shall not have been amended

in any respect that would adversely affect the prospects that such moneys will be received

in the amount and by the respective dates indicated in the Official Statement.

,2003

Page 7

(d) Except as disclosed in the Official Statement, no decision, ruling or

finding shall have been made or entered by any court or Governmental Authority since

the date of this Contract of Purchase (and not reversed on appeal or otherwise set aside)

(i) which has any of the effects described in Section 6(g); or (ii) which declares the

Resolution, this Contract of Purchase or the Fiscal Agent Agreement to be invalid or

unenforceable in whole or in part.

(e) Between the date of this Contract of Purchase and the Closing, (i) no

default by the District or any other transit district in the State, the State, the County of

Alameda or any other county in the State, except for Orange County, or any major city in

the State shall have occurred and be continuing with respect to any of its material

obligations; and (ii) no bankruptcy, insolvency or other similar proceeding in respect of

trie ^District of—fm¥—othfir-trflrifiili fiiRtrict in flip j^tjitfi- flip Sltjitp_itTip f^oiiTitrr nf Aijtrnpflji cw

any other county in the State) except for the County of Orangej or-any major city in the

v' State-shall be pending or to the knowledge of the District contemplated, and there shall

^ not have been enacted since the date of this Contract of Purchase any moratorium or

similar legislation with respect to any type of transit district obligation. For all purposes

-~ of this Contract of Purchase a default shall not be deemed to be continuing if it has been

' cured, waived or otherwise remedied.

(f) The credit rating on the Notes as shown on the cover page of the Official

Statement shall not have been changed or withdrawn.

If the conditions to the Underwriter's obligations contained in this Contract of Purchase

are not satisfied, this Contract of Purchase shall terminate and neither the District nor the

Underwriter shall have any further obligation, hereunder, except the respective obligations of the

parties to pay certain expenses as provided in Section 12 herein shall continue in full force and

effect.

Section 8. Conditions to District's Obligations. The performance by the District of its

obligations is conditioned upon (a) the performance by the Underwriter of its obligations

hereunder; and (b) receipt by the District and the Underwriter of opinions and certificates being

delivered at the Closing by persons and entities other than the District.

Section 9. Closing Documents. The Closing Documents shall consist of, or cover in

substance, the following, each properly executed, certified or otherwise verified, dated as of or

prior to the date of the Closing, and in such form as may be satisfactory to Note Counsel and the

Underwriter including, but not limited to, the matters hereinafter set forth:

(a) the final approving opinion of Note Counsel substantially in the form as

shown in Appendix {D}C to the Official Statement;

(b) the supplemental opinion of Note Counsel, addressed to and solely for the

benefit of the Underwriter to the effect that: (i) this Contract of Purchase has been duly

authorized, executed and delivered by the District; (ii) the Notes are exempt from the

registration requirements of the Securities Act of 1933, as amended, pursuant to

Section 3(a)(2) thereof, and none of the Note Proceedings or other documents relating to

,2003

Page 8

the issuance of the Notes need be qualified as an indenture under the Trust Indenture Act

of 1939, as amended; and (iii)the statements contained in the Official Statement under

the captions {"THE NOTES," and "TAX FyT?MPTfnN" Tind "DOCUMENTS

ACCOMPANYING DELIVERY~UF~THE NOTES Legal Matterc"] insofar as such

statements purport to summarize the Notes, the Resolution, the Act and the Code, each as

defined therein, present a fair and accurate summary thereof for the purpose of use in the Official Statement;

(c) a letter from Note Counsel to the effect that (i) the approving opinion

referred to in paragraph (b) above addressed to the District on the date of the Closing may

be relied upon by the Underwriter as though such opinion were addressed to it; and

(ii) based upon its limited participation in the preparation of the Official Statement as

Note Counsel in the transaction, and while it is not passing upon, and does not assume

responsibility for, the accuracy, completeness or fairness of the statements contained in

the Official Statement, Note Counsel, based solely upon its discussions with members of

the staff of the District and not upon any independent investigation of the District or of its

financial condition, is not aware of any failure by the District to disclose any fact which

would cause the Official Statement to contain a misstatement of fact or to omit to state a

fact necessary to make the statements contained in the Official Statement not materially

misleading in light of the circumstances under which they were made, and Note Counsel

does not express any belief or opinion as to any financial, technical or statistical data,

including projections, included in the Official Statement;

(d) the opinion of the District's Counsel substantially in the form attached

hereto as Exhibit B^A; ^J

(e) a tax compliance certificate duly executed on behalf of the District and

dated as of the Closing;

(f) copies, if any, of all authorizations, consents or approvals of, or filings or

registrations obtained by the District as described in Section 6(f) hereof;

(g) copies of the Note Proceedings certified by the District Secretary and

General Manager of the District to be in full force and effect and not amended or

rescinded as of the date of the Closing;

(h) executed counterparts of the Fiscal Agent Agreement;

(i) a certificate of a duly authorized officer of the Fiscal Agent;

(j) written evidence that the Notes have been rated [MIG 1] and

by Moody's Investors Service and Standard and Poor's Rating Services,~respectively;

(k) confirmation of Note Ratings; and

(1) such additional legal opinions, certificates, proceedings, instruments and

other documents as the Underwriter or Note Counsel may reasonably request to evidence

compliance by the District with legal requirements, the accuracy, as of the time of the

8

,2003

Page 9

Closing, of the District's representations herein contained and the due performance or

satisfaction by the District at or prior to such time of all agreements then to be performed

and all conditions then to be satisfied by the District or by any other person.

Section 10. Termination by Underwriter. In recognition of the desire of the District

and the Underwriter to effect a successful public offering of the Notes, and in view of the

potential adverse impact of any of the following events on a public offering, the Underwriter

shall have the right to cancel its obligations to acquire the Notes, by written notice from the

Underwriter to the District, if between the date of this Contract of Purchase and the Closing:

(a) the Official Statement shall have been amended, modified or supplemented without the

consent in writing of the Underwriter; (b) any event shall occur which, in the professional

judgment of the Underwriter, makes untrue any statement of a material fact set forth in the

Official Statement or results in an omission to state a material fact necessary to make the

statements therein, in the light of the circumstances under which they are made, not misleading;

or (c)the marketability of the Notes or the market price thereof, in the opinion of the

Underwriter, has been materially adversely affected by (i) an amendment to the Constitution of

the United States or by any legislation in or by the Congress of the United States or by the State

of California, or the amendment of legislation pending as of the date of this Contract of Purchase

in the Congress of the United States, or the recommendation to Congress or endorsement for

passage (by press release, other form of notice or otherwise) of legislation by the President of the

United States, the Treasury Department of the United States, the Internal Revenue Service or the

Chairman or ranking minority member of the committee on Finance of the United States Senate

or the committee on Ways and Means of the United States House of Representatives, or the

proposal for consideration of legislation by either such Committee or by any member thereof, or

the presentment of legislation for the staff of either such committee, or by the staff of the Joint

Committee on Taxation of the Congress of the United States, or the favorable reporting for

passage of legislation to either House of the Congress of the United States by a Committee of

such House to which such legislation has been referred for consideration, or any decision of any

federal or state court or and ruling or regulation (final, temporary or proposed) or official

statement on behalf of the United States Treasury Department, the Internal Revenue Service or

other federal or state authority affecting the federal or state tax status of the District, or the

interest on bonds or notes (including the Notes), or which would have the effect of changing

directly or indirectly, the federal income tax consequences of interest on obligations of the

general character of the Notes in the hands of the holders thereof; (ii) any outbreak of hostilities

or other national or international calamity or crisis or an event of fiscal default by the State or a

city, county, except for the County of Orange, municipality, district or authority located in the

State, the effect of such outbreak, calamity, crisis or default being such as would cause a material

disruption in the municipal bonds market; (iii) a general suspension of trading on the New York

Stock Exchange, or fixing of minimum or maximum prices for trading or maximum ranges for

prices for securities on the New York Stock Exchange, whether by virtue of a determination by

that Exchange or by order of the Securities and Exchange Commission or any other

Governmental Authority having jurisdiction; (iv) a general banking moratorium declared by

either federal or State authorities having jurisdiction; or (v) any action, suit, proceeding or

investigation described in Section 6(h) hereof or any decision described in Section 7(d) hereof.

If the Underwriter's obligations to acquire the Notes are canceled for any reason permitted by

this Contract of Purchase, this Contract of Purchase shall terminate and neither the District nor

the Underwater shall have no further obligations hereunder, except that the respective obligations

,2003

Page 10

of the parties to pay certain expenses as provided in Section 12 herein shall continue in full force

and effect.

Section 11. Changes Affecting the Official Statement After the Closing. At the

Closing, the Underwriter shall advise the District as to whether or not the Underwriter is still

offering Notes, and for a period of not exceeding 28 days after the Closing, if and so long as such

offering continues, (a) the District shall furnish such information with respect to itself as the

Underwriter may from time to time reasonably request; and (b) if any event shall occur as a

result of which it is necessary, in the opinion of the General Manager of the District, Note

Counsel or the Underwriter, to amend or supplement the Official Statement in order to make the

Official Statement not misleading in the light of the circumstances then existing, the District will

forthwith prepare and furnish to the Underwriter (at the expense of the Underwriter) a reasonable

number of copies of an amendment of or supplement to the Official Statement (in form and

substance satisfactory to Note Counsel and the Underwriter) which will amend or supplement the

Official Statement so that it will not contain an untrue statement of a material fact or omit to state

a material fact necessary in order to make the statements therein, in the light of the circumstances

then existing, not misleading.

Section 12. Expenses. The Underwriter shall be under no obligation to pay, and the

District shall pay the following expenses incident to the performance of the obligations of the

District hereunder: (1) the fees and disbursements of Note Counsel; (ii) the cost of printing and

delivering the Notes, the Preliminary Official Statement and the Official Statement; (iii) the fees

and disbursements of accounts, advisers and of any other experts or consultants retained by the

District, including the fees and expenses of the Financial Advisor; and (iv) any other expenses

and costs of the District incident to the performance of their respective obligations in connection

with the authorization, issuance and sale of the Notes, including out-of-pocket expenses and

regulatory expenses, and any other expenses agreed to by the parties.

The Underwriter shall pay all expenses incurred by them in connection with the public

offering and distribution of the Notes including, but not limited to: (i) all advertising expenses in

connection with the offering of the Notes; (ii) the fees and disbursements of Underwriter's

Counsel; and (iii) all out-of-pocket disbursements and expenses incurred by the Representative in

connection with the offering and distribution of the Notes, including, air travel and hotel

accommodations in connection with the pricing of the Notes; investor meetings, rating agency

trips and meetings; the closing; meals and transportation for the District, the Representative and

other working group personnel during rating agency investor meetings; pricing and closing trips;

expenses related to attending working group meetings, such parking, meals and transportation

and any other miscellaneous costs associated with the closing; (iv) all other expenses incurred by

the Representative in connection with the public offering and distribution of the Notes, except as

provided in (a) above or as otherwise agreed to by the Underwriter and the District and; (v) the

fees of the California Debt and Investment Advisory Commission.

Section 13. Notices. Any notice or other communication to be given to the District

under this Contract of Purchase may be given by delivering the same in writing to the District

Secretary or the General Manager of the District, or to such other person as may be designated in

writing, and to Note Counsel at its mailing address set forth in Section l(b) hereof, or at such

other address or to such other firm as the District shall hereafter advise the Underwriter in

10

,2003

Page 11

writing, and any notice or other communication to be given to the Underwriter under this

Contract of Purchase (other than the acceptance hereof as specified in the first paragraph hereof)

may be given by delivering the same in writing to the Underwriter, at [insert address].

Section 14. Entire Agreement; Parties and Interests; Survival of Representations.

This Contract of Purchase when accepted by the District in writing as heretofore specified shall

constitute the entire agreement between the District and the Underwriter and is made solely for

the benefit of the District and the Underwriter (including the successors or assigns of the

Underwriter). No other person shall acquire or have any right hereunder or by virtue hereof. All

the District's representations, warranties and agreements in this Contract of Purchase shall

survive regardless of (a) any investigation or any statement in respect thereof made by or on

behalf of the Underwriter for the Notes hereunder; or (b) the issuance and delivery of the Notes.

Section 15. Indemnification by the District. Subject to any limitations provided by

law, the District agrees to indemnify and hold harmless the Underwriter, and any person who

controls the Underwriter -within the meaning of the Securities Act of 1933 against any and all

losses, claims, damages and liabilities arising out of any untrue and material misstatement of any

of the District's representations contained in Section 6 hereof or the Certificate, or arising out of

any statement or information contained in the Official Statement relating to the District, its

properties and revenues that is untrue in any material respect, or the omission therefrom of any

information which should be contained therein or which is necessary to make the statements

therein, in the light of the circumstances under which they were made, not misleading in any

material respect and to the extent of the aggregate amount, exclusive of attorneys' fees, paid in

settlement of any litigation commenced or threatened arising from a claim based upon any such

untrue statement or omission if such settlement is effected with the written consent of the

District. In case any claim shall be made or action brought against the Underwriter or any

controlling person, as aforesaid, based upon the Official Statement, in respect of which

indemnity may be sought against the District, the Underwriter shall promptly notify the District

in writing setting forth the particulars of such claim or action and the District shall assume the

defense thereof including the retaining of counsel approved by the Underwriter (which approval

shall not be unreasonably withheld) and the payment of all expenses. The Underwriter or any

such controlling person shall have the right to retain separate counsel in any such action and to

participate in the defense thereof, but the fees and expenses of such counsel shall be at the

expense of the party retaining such counsel.

Section 16. Continuing Disclosure. The District will undertake, pursuant to the

Resolution, to provide notices of the occurrence of certain events, if material, as required by

Section (d)(3) of the Rule. A description of this undertaking is set forth in the Preliminary

Official Statement and will also be set forth in" the Official Statement.

Section 17. Counterparts. This Contract of Purchase may be executed in multiple

counterparts, all together constituting one and the same agreement.

11

,2003

Page 12

Section 18. Governing Law. This Contract of Purchase shall be governed by and construed in accordance with the laws of the State.

Very truly yours,

By. Name

Title ' ACCEPTED:

ALAMEDA-CONTRA COSTA

TRANSIT DISTRICT

By

General Manager

Approved as to Form:

By

Kenneth C. ScheldigScheidig, General Counsel

12

EXHIBIT A

DISTRICT COUNSEL OPINION

Kutak Rock LLP

18U1 California Street

Suite 31 UP

Denver, CO 80202

Ladies and Gentlemen:

In connection with the delivery of the Alameda-Contra Costa Transit District (the

"District") 2UU3-U4 Revenue Anticipation Notes (the "Notes"), you have requested my opinion

as to the matters set torth below. All terms used herein, unless otherwise defined herein, have

the definitions set torth m Resolution No. , duly adopted by the District on , 2UU3"

(the "Resolution").

I have examined such portions of the Constitution of the United States of America, the

Constitution and statutes ot the State ot California (the "State") and such applicable court

decisions as 1 deemed necessary or relevant tor purposes or the opinions set forth below, and

made such iurther inquiries and investigations as 1 deemed necessary or appropnate tor purposes

ot such opimons. Based on the foregoing, 1 advise you that in my opinion:

1. The /District is validly existing under the laws of the State, including the State

Constitution, with'right and power to issue the Notes and to execute, deliver and perform its

obligations under the Resolution, the Notes and the Fiscal Agent Agreement dated as or

, 20U3, by and between the District and [FISCAL AUbNl |, as Fiscal Agent (the

Agreement

2. Except as disclosed in the Official Statement, (a) no action, suit, proceeding or

investigation is pending or, to the best knowledge ol the District Counsel, threatened against the

District or any other person in any court or before any governmental authority seeking to restrain

or enjoin the issuance or delivery or any of the Notes or in any way contesting or affecting the

validity of the Note proceedings, the Notes, the Resolution, the hiscal Agent Agreement, or the

receipt or application of the revenues pledged to pay the Notes or any other revenues of the

District which could attect payment of the Notes or the payment or any other obligations of the

District, or contesting the powers of the District to issue^Notes, adopt the Resolution, or execute

and deliver the Fiscal Agent Agreement, or in any manner questioning the existence of the

District or the titles to their respective offices of ofricia

respect to the Note proceedings; (b) no decision, ruling

otherwise set aside) has been made or entered by any court or governmental authority having any

s of the District who have acted with

or finding (not reversed on appeal or

effects described in paragraph 5 of thisietter or whichj declares the Resolution or the Fiscal

Agent Agreement to be invalid or unenforceable in wholfc or in part; and (c) there are no matters

ol litigation now pending or, to the best knowledge o:

inquiry, threatened, the outcome oi which would have a rtnatenally adverse effect on the financial

condition ot the District

the District Counsel, based upon due

138369.2

,2003

Page 14

3. The Notes constitute validly issued and legally binding general obligations of the

DistricfTsecured as to principal by a first lien and charge against the certain moneys received or

accrued in the fiscal year 2003-04 and pledged to the payment thereof by the District and shall be

payable, to the extent not paid trom the moneys pledged thereto, from any lawfully available

moneys of the District;

4. The District has duly authorized, executed and delivered the Fiscal Agent

Agreement and it constitutes a legal, valid and binding obligation ot the District, enforceable

against the District in accordance with its terms;

5. To the best knowledge of the District Counsel, based on due inquiry, the

representations and warranties of the District contained in the Resolution were true on the date

thereof and are true on the date hereof as if made on and as of the date hereof, the statements

made in the Ueneral Certificate of the District delivered to Bond Counsel at the Closing are true

on the date hereof and the District is in compliance with each ot the representations and

warranties made by it in the Resolution; and

6. To the best knowledge of the undersigned, based on due inquiry, the District is

not in any material way in breach of or detault under any applicable law or administrative

regulation of the State of California or the United States ot America or any applicable judgment

or decree or any material loan agreement, indenture, bond, note, resolution or other instrument to

which the District is a part or is otherwise subject, and no event has occurred and is continuing

which, with the passage ot time or the giving of notice or both, would constitute an event ot

detault under any one or more of the foregoing; no bankruptcy, insolvency or other similar

proceeding in respect of the District is now pending or (to the best knowledge ot the

undersigned, based upon due inquiry) contemplated; and no moratorium or similar legislation

with respect to any material obligation ot the District has been enacted and is now in effect.

Very truly yours,

Kenneth C. Scheidig

General Counsel

14

Document comparison done by DeltaView on Thursday, May 01, 2003 12:14:45

Insertion

Deletion

Moved from

Moved to

Style change

Format change

Moved deletion

Inserted cell

Deleted cell

Moved cell

Split/Merged cell

Padding cell

CERTIFICATE OF THE DISTRICT SECRETARY


The undersigned, Rose Martinez, District Secretary, hereby certifies as follows:

The foregoing is a full, true and correct copy of Resolution No. (the "Resolution")

duly adopted at a meeting of the Board of Directors of the Alameda-Contra Costa Transit

District duly, regularly and legally held at the regular meeting place thereof on , 2003,

of which meeting all of such members had due notice and at which at least a majority thereof

were present.

At such meeting the Resolution was adopted by the following vote:

Piras, Wallace, Kaplan, Peeples, Harper, Jacquez,

The undersigned has carefully compared the foregoing with the original minutes of such

meeting on file and of record in her office, and the foregoing is a full, true and correct copy of

the original Resolution adopted at such meeting and entered in such minutes; and .

The Resolution has not been amended, modified or rescinded since the date of its

adoption and the same is in full force and effect as of the date hereof.

Dated: , 2003.

Rose Martinez, District Secretary of the


By_

Name

Title

02-138329.2


Series 2003-04 Revenue Anticipation Notes

Estimated Costs of Issuance

Par amount of $32,500,000

Estimated COI without LOC

Bond Counsel

Financial Advisor

Underwriter's Discount at 0.075%

Rating Agency Fee

Printer

Trustee & Counsel Fees

Miscellaneous

Expenses and Contingency

Total Costs of Issuance

Fees

60,000

40,000

24,375

25,000

5,000

5,000

5,000

15,000

$179,375

Estimated COI with LOC

Bond Counsel

Financial Advisor

Underwriter's Discount at 0.075%

Rating Agency Fee

Printer

Trustee & Counsel Fees

Miscellaneous

Expenses and Contingency

LOC Provider 0.50%

LOC Counsel

Total Costs of Issuance

Fees

75,000

40,000

24,375

25,000

5,000

5,000

5,000

15,000

162,500

30,000

$386,875

DC ft to 3 a o

8" * c o