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NEW ISSUE BOOK-ENTRYONLY
In tneOpinion of Ballard SpahrAndrews & Ingersoll, SpeCIal TaxCounsel, based on eXlstmg statutes, regulattons, rulmgs and ludlclal aeasonsand assummg comphence with certam covenants described herem and with the reqUirements of the Internal Revenue Code of 1986, as
amended, mtereston the Bonds ISexcluded from the gross mcome of the owners of the Bonds for federal income tax purposes SpeCialTaxCounsel IS further of the oplnton that mtereston the Bonds will not be treated as an Itemof tax preferencem calculating altemahvemuumum taxable income of indIViduals and corporattons, however, such Interest on Bonds held by certam corporatIons may besutnec: to an alternative minimum tax and enVironmental tax because of Its mcluslon m the earnmgs and profits of the corporate
holder MOrrison & Foerster, Bond Counsel, IS of the opinion that Interest on /he Bonds IS exempt from present State ofCalifornia personal Income taxes See "TAX EXEMPTION" herem.
$149,825,000CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY1992 LEASE REVENUE BONDS
(City of Oakland Convention Centers Project)
Dated: November 1, 1992 Due: October 1, as shown herein
The Bonds are bemg ISSUed In accordance With an Indenture of Trust, dated as of November 1, 1992, by and between the CalifornIaStatewide Communities Development Authonty (the "Authonty") and Amentrust Texas NalJOnal Associanon, as trustee (the "Trustee") Theproceeds of the Bonds Willbe used to pay Oalder ASSOCiates Limited Partnership and Oakbay ASSOCiates lImrted Partnership the acqUISitionprice In connection With the purchase of the Henry J. Kaiser Convention Center ("Kaiser ConventIOn Center") and the Oakland Convention
Center--<3eorge P Scotian Memonal ("Scotian Convention Center"), respectively, by the Authonty, to fund a reserve account created under theIndenture, and to pay costs Incurred In eonnecnon Withthe execution and delivery of the Bonds
Interest on the Bonds ISpayable semiannually on Apnl 1 and October 1 of each year commencing Apnl 1, 1993, as descnbed herein TheBonds will be Issued as fully regIstered Bonds In the minimum denominationof $5,000 or any Integral multiple thereof In book-entry form, wrthou1coupons, and, when delivered, will be Inrtlallyregistered In the name of Cede & Co , as nominee of The DePOSitoryTrust Company, New York,New York("DTC"), DTC Willactasseeunnes deposrtory of the Bonds IndIVidualpurchasersof Interests Inthe Bonds will be made In book-entryform only Purchasers of such InterestsWIll not receive Bonds PrinCIpal,premium, If any, and Interest are payable by the Trustee directly to DTCwhich Will remit such payments to the DTC Parneipants for subsequent disbursements to the BenefICIalOwners of the Bonds, as descnbedherem
The Bonds are subject to redemplJOn pnor to matunty as more fully descnbed herem See "THE BONDS"
The Bonds are special limited obligations of the Authonty and are payable solely from, and Willbe secured by, Lease Payments made bythe City of Oakland, California (the "City"), to the Authonty as rental for the Kaiser Convention Center and SCotian Convention Center
Payment of the pnnopai of and Interest on the Bonds when due WIll be guaranteed by a mUniCipal bond Insurance policy to be ISSUed
Simultaneously wrth the delivery of the Bonds by AMBAC Indemnity Corporation
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY AND DO NOT CONSTITUTE INDEBTEDNESS OR ACHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY THE BONDS ARE NOT A DEBT OF THE STATE OF CALIFORNIA ORANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE STATEOF CALIFORNIA NOR ANY OF ITS POLITICAL SUBDIVISIONS ISLIABLETHEREFOR THE PRINCIPAL OF AND INTERESTON THE BONDS ARE PAYABLE FROM AND SECURED BY A PLEDGEOF THELEASE PAYMENTS FROM THE CITYTOTHE AUTHORITY THE BONDS DONOT CONSTITUTE INDEBTEDNESSWITHIN THE MEANINGOF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION
MATURITY SCHEDULE
(see inside front cover)
This cover page contains certain Information for general reference only It ISnot Intended to be a summary of the s e c u ~ or terms of theBonds Investors are advised to read the entire OffICialStatement to obtain Information essential to the making of an InfOrmed InvestmentdeciSion
The Bonds are offered when, as and If Issued, by the Au/horlty and receIved by the Underwnters subJBctto the approval of the legality /hereofby Mornson & Foerster, San FranCISCo, California, Band Counseland BallardSpahrAndrews & Ingersoll, SpeCIal TaxCounsel, Washmgton,oC Certam legal matters are sublect to the approval of Wendel, Rosen, Black, Dean & Levitan, Oakland, CalifornIa, counsel to /he
Underwnters, and Ornck, Hernngton & Sutcliffe, Los Angeles, Callfomla, Counsel to /he Authonty. Certam legal matters Will bepassed upon for the City by Jayne W. Williams, CIty Attorney of the City of Oakland It IS antIcIpated that the Bonds WIll be
available for delIvery through DTe m New York, New Yorkon or about December 8, 1992
Goldman, Sachs & Co.
Pryor, McClendon & Counts & Co. Inc. Artemis Capital Group, Inc.
Henderson Capital Partners, Inc.
Dated November 13, 1992
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MATURITY SCHEDULE
$65,295,000 serial Bonds
Maturity Pnnclpal Interest Pncel Matunty Pnnclpal Interest Pnce
October 1 Amount Rate Yield October 1 Amount Rate Yiel
1995 $1,310,000 415% 100% 2002 $5,135,000 570% 575
1996 1,870,000 460 100 2003 5,430,000 580 590
1997 2,450,000 485 100 2004 7,845,000 60 0 1001998 2,570,000 510 100 2005 8,320,000 60 0 610
1999 2,705,000 520 53 0 2006 8,815,000 6Ve 620
2000 4,620,000 540 545 2007 9,355,000 620 625
2001 4,870,000 550 560
$31,900,000 6.00% Term Bonds Due October 1, 2010 to Yield 6.30°0
$52,630,000 5.50% Term Bonds Due October 1,2014 @ 90.50%
(Plus Accrued Interest)
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CALIFORNIA STATEWIDE COMMUNITIFS DEVEWPMENT AUTHORITY
DON BENNINGHOVEN, Chairman
DANIEL HARRISON, Vice Chairman
STEVE SWENDIMAN, Secretary
PAUL HAHN
NORMA LAMMERSSTEVEKEIL
JACK CRIST
THE CITY OF OAKLAND, CALIFORNIA
THE CITY COUNCIL
ELIHU M. HARRIS, MayorLEO BAZILE, ViceMayor
FRANK H. OGAWA
ALETA CANNON
MARGE GIBSON-HASKELL
RICHARD SPEES
NATHAN MILEY
MARY MOORE
IGNACIO DE LA FUENTE
CITY ADMINISTRATIVE OFFICERS
HENRY L. GARDNER, City Manager
ARRECE JAMESON, City Clerk
GARYBREAUX, Director of Finance
JAYNE W. WILLIAMS, City Attorney
BOND COUNSEL
Morrison & Foerster
San Francisco, California
SPECIAL TAX COUNSEL
SPECIAL SERVICES
SPECIAL AUTHORITY COUNSEL
Orrick, Herrington & Sutcliffe
Los Angeles, California
COUNSEL TO THE UNDERWRITERS
Ballard Spahr Andrews & Ingersoll
Washington, D.C.
TRUSTEE
Ameritrust Texas National Association
Houston, Texas
Wendel, Rosen, Black, Dean & Levitan
Oakland, California
FINANCIAL ADVISOR
Public Financial Management, Inc.
San Francisco, California
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(TIllS PAGE INTENTIONALLY LEFf BLANK)
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No dealer, broker, salesperson or other person has been authorized by the Authority, theCity or the Underwriters to give any information or to make any representations, other than
those contained herein, and, if given or made, such other information or representations must
not be relied upon as having been authorized by any of the foregoing. This Official Statement
does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be anysale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the
Bonds. Statements contained in this Official Statement that involve estimates, forecasts or
matters of opinion, whether or not expressly sodescribed herein, are intended solely as such andare not to be construed as representations of fact.
The information set forth herein has been obtained from official sources which arebelieved to be reliable, but it IS not guaranteed as to accuracy or completeness, and is not to be
construed as a representation by the Underwriters. The information and expressions of opinions
herein are subject to change without notice, and neither delivery of this Official Statement nor
any sale made hereunder shall, under any circumstances, create any implication that there hasbeen no change in the affairs of the City or the Authority since the date hereof. All summariescontained herein of the Indenture, the Lease Agreement or other documents are made subject
to the provisions of such documents, respectively, and do not purport to be complete statements
of any or all of such provisions.
This OfficialStatement is submitted in connection with the sale of the Bonds referred toherein and may not be reproduced or used, in whole or in part, for any other purpose.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOTOREFFECTTRANSACTIONSWHICHSTABILIZEORMAINTAINTHEMARKET
PRICE OF THEBONDS AT A LEVEL ABOVETHAT WHICH MIGHT OTHERWISE PRE-VAIL IN THE OPENMARKET, AND SUCHSTABILIZING, IF COMMENCED, MAYBE
DISCONTINUED AT ANY TIME.
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TABLE OF CONTENTS
OFFICIAL STATEMENT
INTRODUCTION. . . . . . . . . . . . . . . . .. 1
THE BONDS 2
Authority forIssuance 2
General 3
Description of the Bonds 3
Transfer and Exchange . . . . . . . . . . . .. 3
Optional Redemption . .. .. .. . . . . . .. 4
Mandatory Sinking Fund Redemptlon . . . . 4
Special Redemption from Net Proceeds of
Insurance or Condemnation . . . . . . . . 5
General Redemption Provisions 5
Notice of Redemption 5
Estimated Uses of Funds 6
Book-Entry-Only System 6
PLAN
OF FINANCING . . . . . ...
9ESTIMATED SOURCES AND USES OF
PROCEEDS OF THE BONDS . . . . . . . . 9
SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS . . . . . . . . . . . . . . . 9
General 9
Lease Payments . . . . . . . . . . . . . . . . . 10
Reserve Account .. 10
Municipal Bond Insurance . . . . . . . . . . . 11
Obliganon of the Autbonty . . . . . . . . . . 13
RISK FACTORS 13
THE GROUND LEASE . . . . . . . . . . . . .. 16
i i
THE LEASE AGREEMENT . . . . . . . . . . . 17
THE CITY AND THE AUTHORITY 23
The City of Oakland . . .. .. . . . . . 23
The Authority 24
LlTlGATION . . . . . . . . . .•.. . . . . . . . 24
TAX EXEMPTION 25
RATINGS 25
APPROVAL OF LEGAL PROCEEDINGS . . 26
UNDERWRITING 26
FINANCIAL ADVISOR . . . . . .. 26
MISCELLANEOUS 27
APPENDIX A - DESCRIPTION OF THE
CITY OF OAKLAND . . . . .. ..... A-I
APPENDIX B - THE CITY OF OAKLAND
AUDITEDFINANCIAL
STATEMENTSFOR THE FISCAL YEAR ENDED
JUNE 30, 1991 . . B-1
APPENDIX C - SUMMARY OF CERTAIN
PROVISIONS OF LEGAL DOCUMENTS c-i
APPENDIX D - FORM OF OPINION OF
BOND COUNSEL D-l
APPENDIX E - FORM OF OPINION OF
SPECIAL TAX COUNSEL . . . . . . . . . E-1
APPENDIX F - FORM OF MUNICIPAL
BOND INSURANCE POLICY F-1
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OFFICIAL STATEMENT
$149,825,000California Statewide Communities Development Authority
1992 Lease Revenue Bonds(City of Oakland Convention Centers Project)
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, table of contentsand Appendices hereto (collectively, the "Official Statement") is to provide certain informationconcerning the California Statewide Communities Development Authority (the"Authority"), theCity of Oaldand (the "City") and the proposed issuance of $149,825,000 aggregate principal
amount ofCaliforniaStatewideCommunities DevelopmentAuthority 1992Lease Revenue Bonds(City of Oakland Convention Centers Project) (the "Bonds") to be issued by the Authority. TheBonds are being issued in accordance with the Marks-Roes Local Bond Pooling Act of 1985,constituting Article 4, Chapter 5, Division 7, Title 1of the Government Code (commencing with
Section 6584), and pursuant to a resolution adopted by the Authority on October 19, 1992, andan Indenture of Trust, dated as of November 1, 1992 (the "Indenture"), by and between theAuthority and Ameritrust Texas National Association, as trustee (the "Trustee"). The Bonds arespecial limited obligations of the Authority payable solely from and secured by a pledge of theLease Payments by the City to the Authority under an Amended and Restated Lease andSublease Agreement dated as of November 1, 1992 (the "Lease Agreement") between the Cityand the Authority.
Pursuant to a Contract of Sale, dated as of September 21, 1992 (the "Kaiser Contract ofSale"), by and between the Authority, as assignee of the City, and Oakter Associates LimitedPartnership ("Oakter"), as seller, and a Contract of Sale, dated as of September 21, 1992 (the
"Scotlan Contract of Sale") between the Authority, as assignee of the City, and OakbayAssociates Limited Partnership ("Oakbay"), as seller (the Kaiser Contract of Sale and theScotian Contract of Sale sometimes being hereinafter referred to collectively as the "Contractsof Sale"), the Authority has agreed to purchase and acquire title to the Henry J. KaiserConvention Center (the "Kaiser Convention Center") and the Convention Center - George P.
Scotian Memorial (the "Scotian Convention Center"). (The Kaiser Convention Center and theScotian Convention Center are together called the "Convention Centers.") The Authority willlease the Convention Centers to the City pursuant to the Lease Agreement.
The proceeds of the Bonds will be used to (a) pay Oakter and Oakbay, respectively, theacquisition costs of the Kaiser Convention Center and Scotian Convention Center; (b) to fund
a Reserve Account to be created under the Indenture; and (c) to pay the costs incurred inconnection with the execution and delivery of the Bonds.
A portion of such acquisition costs will be used to (i) defease the $38,000,000 Certificates of Participation (Oakland Convention Center - George P. ScotianMemorial) Series 1983of the Redevelopment Agency of the City of Oakland (the"Agency"), dated December 1, 1983
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(the "Scotlan Certificates") and (ii) redeem the Agency's $43,500,000 Certificates of
Participation (Henry J. Kaiser Convention Center), dated September 1, 1982 (the "KaiserCertificates").
The Bonds are limited obligations of the Authority entitled, ratably and equally, to the
benefits of the Indenture, and are payable from and secured by an assignment and pledge of the
Authority's interest in the Lease Payments. The Lease Payments required to be made by the Cityunder the Lease Agreement are subject to the availability of the Convention Centers for use bythe City and will be in amounts sufficient to enable the Authority to make the payments of
principal of, premium, if any, and interest on the Bonds. The Authority will not be obligatedto make any payments on the Bonds except from the Lease Payments by or on behalf of the Citypursuant to the Lease Agreement.
Payment of the principal of and interest on the Bonds will beinsured by a municipal bond
insurance policy (the "Bond Insurance") to be issued by AMBAC Indemnity Corporation (the
"Insurer" or "AMBAC Indemnity") simultaneously with the issuance of the Bonds. Neither the
City nor the Authority has made any investigation and makes no representatior.s with respect to
the Insurer and the Bond Insurance, and reference should be made to "SECURITY ANDSOURCES OF PAYMENT FOR THE BONDS - Municipal Bond Insurance" and AppendixF hereto for a description of the Insurer and its specimen insurance policy, respectively. Theinformation herein with respect to the Insurer and Appendix F has been furnished by the Insurer.
There follows in this Official Statement descriptions of the Bonds, the Lease Agreement,the Indenture, the Bond Insurance, the Insurer, the Authority and the City. The descriptions andsummaries of documents herein do not purport to be comprehensive or definitive, and reference
is made to each such document for the complete details of all terms and conditions. All
statements herein are qualified in their entirety by reference to each such document and, with
respect to certain rights and remedies, to laws and principles of equity relating to or affecting
creditors' rights generally. Terms not defined herein shall have the meanings set forth in theIndenture and the Lease Agreement. Copies of the Indenture and the Lease Agreement are
available for inspection during business hours at the offices of the City.
THE BONDS
Authority for Issuance
The Bonds are being issued in accordance with the provisions of the Marks-Roos Local
Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (commencing with Section 6584). The Bonds were
authorized to be issued pursuant to a resolution adopted by the Authority on October 19, 1992.
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General
Under the Indenture, all of the Authority's right, title and interest in and to the Lease
Payments are pledged to the Trustee for the payment of the principal of, premium, if any, andinterest on the Bonds, and the Lease Payments constitute the sole source of payments for theprincipal of and interest on the Bonds.This pledge constitutes a first lien on and security interest
in the Lease Payments. The Indenture and the Lease Agreement provide the Trustee with thepower to enforce, either jointly with the Authority or separately, all of the rights of theAuthority to the Lease Payments.
Description of the Bonds
The Bonds will be dated and will bear interest at the rates per annum and will mature,subject to prior redemption, on the dates and in the principal amounts, all as set forth on thecover page hereof. Interest on the Bondswill be payable on April 1 and October 1 of each year,commencing April 1, 1993 (the "Payment Dates"). The Bondswill be issued in fully registeredform without coupons in denominations of $5,000 or any integral multiple thereof.
Interest on the Bonds will he computed on the basis of a 360-day year consisting of
twelve 3Q-day months. Each Bondshall bear interest from the Payment Date next preceding thedate of authentication thereof unless (i) it is authenticated on or prior to an Payment Date andafter the close of business on the fifteenth day of the month preceding such Payment Date, inwhich event it shall bear interest from such Payment Date, or (ii) it is authenticatedon or priorto March 15, 1993, in which event it shall bear interest from November 1, 1992; provided,however, that if at the time of authenticationof a Bond, interest is in default thereon, suchBondshall bear interest from the Payment Date to which interest has previously been paid or madeavailable for payment thereon.
Principal of the Bonds is payable upon presentation and surrender thereof, at maturityor prior redemption thereof, at the principal corporate trust office of the Trustee in Houston,Texas. Interest will be paid by the Trustee by check of draft mailed by frrst-elass mail, postageprepaid, on the Payment Date to the registered owners thereof as of the fifteenth day of themonth immediately preceding the Payment Date as such owners' names and addresses appearon the registration books kept by the Trustee as of such fifteenth day or, upon request of anowner of at least $1,000,000 in aggregate principal amount of Bonds by wire transfer to anaccount within the continental United States designated by such owner prior to such fifteenthday.
Transfer and Exchange
TheBonds may be transferred or exchanged at the principal corporate trust office of theTrustee inHouston, Texas, provided that the Trustee shall not be required to register the transferor exchange of any Bond selected for redemption pursuant to the Indenture.
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Optional Redemption
The serial Bonds maturing on or after October 1, 2002, and the term Bondsmaturing onOctober 1,2010, are subject to optional redemption, in such order of maturity as the City shalldirect and by lot within a maturity on any Payment Date, commencing October 1, 2002, at aredemption price equal to the principal amount of the Bonds to be redeemed together with the
premium set forth below (expressed as a percentage of the principal amount to be redeemed)plus accrued interest to the date fixed for redemption.
Redemption Dates (Dates Inclusive)
October 1, 2002 to September 30, 2003October 1, 2003 to September 30, 2004October 1, 2004 and thereafter
Redemption PremiUm
102%
101%
100%
The termBonds maturing onOctober 1, 2014, are subject to optional redemption, in suchorder of matunty as the City shall direct and by lot within a maturity on any Payment Date,
commencing October 1, 2002, at a redemption price equal to the principal amountof the Bondsto be redeemed, plus accrued interest to the date fixed for redemption.
Mandatory Sinking Fund Redemption
The Bonds maturing on October 1, 2010, and October 1, 2014, will be subject tomandatory redemption, or in part by lot, on October 1 in each year commencing October 1,2008, and October 1, 2011, respectively, at a redemption price equal to the principal amountthereof to be redeemed, without premium, in the aggregate respective principal amounts and inthe respective years as set forth in the following table; provided, however, that if some but notall of the Bonds maturing on October 1, 2010, and October 1, 2014, have been optionally
redeemed as described above or by special redemption as described below, the total amount ofall future sinking fund payments shall be reduced by the aggregate principal amount of Bondsso redeemed, to be allocated among such sinking fund payments on a pro rata basis in integralmultiples of $5,000 and that in lieu of mandatory sinking fund redemption such Bonds may bepurchased by the Authority on the open market.
Bonds Maturing October 1, 2010
Sinking AccountRedemption Date
(October 1)
20082009
2010·
'Maturity
Principal Amountto Be Redeemedor Purchased
$ 9,935,00010,530,00011,435,000
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Sinking AccountRedemption Date
(October 1)
2011
2012
20132014·
"Maturity
Bonds Maturing October 1, 2014
Principal Amountto Be Redeemed
or Purchased
$12,120,00012,785,000
13,495,00014,230,000
Special Redemption from Net Proceeds of Insurance or Condemnation
The Bonds are subject to mandatory redemption in whole on any date or in part on anyPayment Date (but not in a total redemption amount of less than $5,000 at anyone time), ininverse order of maturity and by lot within a maturity, without premium, at the principal
amount, together with accrued interest to the Payment Date fixed for redemption, from the NetProceeds of insurance or condemnation in an amount of $5,000 or more deposited with theTrustee pursuant to the provisions of the Lease Agreement concerning (i) proceeds of anyinsurance relating to an accident to or destruction of any part of the Convention Center Sites orthe Convention Centers, (ii) proceeds received under the title insurance provided for by the
Lease Agreement or (iii) proceeds in any condemnation proceeding undertaken by any governmental agency relating to the Convention Center Sites or the Convention Centers.
General Redemption Provisions
For purposes of selecting Bonds for redemption, the Bonds will be deemed to be
composed of $5,000 portions, and any such portions may be separately redeemed. I f less thanall the Bonds of any maturity are called for redemption at anyone time, and so long as the
Bonds are in book-entry form with DTC as the owner, DTC and the DTC Participants will select
the ownership interests of the Beneficial Owners to be redeemed by lot in any manner whichDTC and the DTC Participants deem fair. In the case of a partial redemption as describedabove, the Trustee will select certificated Bonds by lot in any manner which the Trustee deems
fair.
Notice of Redemption
Notice of redemption will be mailed no less than thirty (30) nor more than sixty (60) daysprior to the redemption date (i) to DTC or (ii) in the event the book-entry-only system isdiscontinued, to the respective registered owners of the Bonds designated for redemption at theiraddresses appearing on the bond registration books, and to certain securities depositaries and
information services. Neither failure to receive such notice nor any defect in the notice so mailed
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nor any failure on the part of DTC or failure on the part of a nominee of a Beneficial Owner
to notify the Beneficial Owner so affected will affect the sufficiency of the proceedings for
redemption of such Bonds or the cessation of interest on the redemption date.
Unless the book-entry-only system shall have been discontinued, the Authority and the
Trustee will only recognize DTC or its nominee as a Bond Owner. Conveyance of notices and
other communications by DTC to DTC Participants and by DTC Participants to Beneficial
Owners will be governed by arrangements between them, subject to any statutory and regulatory
requirements as may be in effect from time to time.
From and after the date fixed for redemption, if funds available for the payment of the
principal of, premium, if any, and interest on the Bonds so called for redemption shall have been
duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture
other than the right to receive payment of the redemption price, and no interest shall accrue
thereon from and after the redemption date specified in such notice.
Estimated Uses of Funds
The Underwriters will purchase the Bonds at the principal amount thereof, less discounts,
if any. The proceeds of the Bonds will be used (a) to pay the cash portion of the Acquisition
Costs to Oakbay and Oakter, respectively; (b) to fund the Reserve Account; and (c) to pay
Delivery Costs. The Trustee will deposit with the Escrow Bank a portion of the Acquisition
Costs of the Convention Centers in an amount sufficient (i) to prepay the Kaiser Certificates and
(ii) to defease the Scotlan Certificates.
Book-Entry-Only System
The Bonds when executed and delivered will be registered in the name of Cede & Co.,
as "Bond Owner" and nominee of The Depository Trus t Company, New York, New York
("DTC"). So long as DTC, or its nominee, Cede & Co., is the registered owner of all Bonds,
all payments on the Bonds will be made directly to DTC, and disbursement of such payments,
to the hereinafter described DTC Participants will be the responsibility of DTC, and disburse
ment of such payments to the persons for whom a DTC Participant acquires an interest in the
Bonds (individually, a "Beneficial Owner") will be the responsibility of the DTC Participants
as more fully described herein.
DTC is a limited-purpose trust company organized under the laws of the State of New
York, 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, as amended. DTC was
created to hold securities of its participants (the "DTC Participants") and to facilitate the clear
ance and settlement of securities transactions among DTC Participants in such securities through
electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need
of physical movement of securities certificates. DTC Participants include securities brokers and
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dealers, banks, trust companies, clearing corporations and certain other organizations, some ofwhom (or their representatives) own DTC. Access to theDTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or maintaina custodialrelationship with a DTC Participant, either directly or indirectly.
Ownership interests in the Bonds may be purchased by or through DTC Participants.
Such DTC Participants and the Beneficial Owners will not receive Bonds, but each DTC
Participant will receive a credit balance in the records of DTC in the amount of such DTC
Participant's interest in Bonds, which will be confirmed in accordance with DTC's standardprocedures. Each BeneficialOwner may desire to makearrangements with suchDTCParticipant
to receive a credit balance in the records of such DTC Participant, and may desire to make
arrangements with such DTC Participant to have all notices of redemption or other communi-
cations toDTC, which may affect such persons, forwarded in writing by such DTC Participantand to have notification made of all interest payments. NEITHER THE AUTHORITY, THE
CITYNORTHE TRUSTEEWILLHAVE ANY RESPONSmILITY OROBUGATIONWITH
RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR SUCH DTC
PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITHRESPECT TO THE BONDS NOR ANY OBUGATION TO MAINTAIN DTC'S BOOK
ENTRY SYSTEM. DTCWILL NOTBE DEEMED ANAGENT OF THEAUTHORITY, THE
CITY ORTHE TRUSTEE FOR ANY PURPOSE, AND NEITHER THE AUTHORITY, THE
CITY NOR THE TRUSTEE WILL BE RESPONSIBLE FOR THE ACTIONS OF DTC.
With respect to Bonds registered in the name of DTC or its nominee, Cede & Co.,
neither the Authority, the City nor the Trustee will have any responsibility or obligation to anyDTC Participant or to any person on behalf of whomsuch a DTC Participant holds an interest
in Bonds. Without limiting the scope of the immediately preceding sentence, the Authority, the
City, the Paying Agent and the Trustee will have no responsibility or obligation with respect to
(i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person,
other than a Bond Owner as shown in the registration books kept by the Trustee, of any notice
with respect to the Bonds, including any notice of redemption, (iii) the selection by DTC of the
beneficial interests in the Bonds to be redeemed, if any, (iv) the payment to any DTC Participantor any other person, other than a Bond Owner as shown in the registration books kept by theTrustee, of any amount with respect to the Bonds or (v) any consent given or otheraction taken
by DTC or Cede & Co. as Owner of the Bonds. The Authority, the City and the Trustee may
treat and consider each Bond Owner as shown in the registration books kept by the Trustee as
the holder and absolute owner of Bonds registered in such person's name for the purpose of
payment of principal of and interest on such Bonds, for the purpose of giving notice of
redemption and other matters with respect to such Bonds, for the purpose of registering transfers
with respect to such Bonds, and for all other purposes whatsoever. The Trustee will pay allprincipal of and interest on and purchase price of the Bonds only to the Bond Owners, as shown
in the registration books kept by the Trustee, and all such payments will be valid and effective
to fully sansfy and discharge the Authority's obligations with respect to payment of principal of
and interest on the Bonds to the extent of the sum or sums so paid.
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SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS
NOMINEE OF DTC, REFERENCES HEREIN TO A "BOND OWNER" OR "OWNER OF
BONDS" MEAN CEDE & CO. AS AFORESAID, AND SHALL NOT MEAN THE BENEFI
CIAL OWNERS OF THE BONDS.
DTC will receive payments from the Trustee to be remitted to the DTC Participants for
subsequent disbursement to the Beneficial Owners. The ownership interest of each Beneficial
Owner in the Bonds will be recorded through the records of the DTC Participants, the ownership
interests of which, in turn, are recorded through a computerized book-entry system operated byDTC.
Upon receipt of moneys, DTC's current practice is immediately to credit the amounts of
the DTC Participants in accordance with their respective holdings shown on the records ofDTC.
Payments by DTC Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is now the case with municipal securities held for the accounts of
customers in bearer form or registered in "street name," and will be the responsibility of such
DTC Participant and not ofDTC, the Trustee, the City or the Authority, subject to any statutoryand regulatory requirements as may be in effect from time to time.
When reference is made to any action which is required or permitted to be taken by the
BeneficialOwners, such reference shall only relate to action by such Beneficial Owners or those
permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for
such purposes. When notices are required or deemed appropriate to be given, they will be sent
by the Trustee to DTC only and not to the Beneficial Owners. DTC will forward (or cause to
be forwarded) the notices to the DTC Participants so that DTC Participants may forward (or
cause to be forwarded) the notices to the Beneficial Owners.
Beneficial Owners will receive a written confirmation of their purchase, detailing the
terms of the Bonds acquired. Transfers of ownership interests in the Bonds will be accomplished
by book entries made by DTC and by the DTC Participants who act on behalf of the Beneficial
Owners. Beneficial Owners will not receive Bonds in physical form.
For every transfer and exchange of interest in the Bonds, the Beneficial Owners thereof
may be charged a sum sufficient to cover any tax, fee or other governmental charge that may
be imposed in relation thereto.
DTC may determine to discontinue providing its services with respect to the Bonds at any
time by giving notice to the Authority and the City and discharging its responsibilities with
respect thereto under applicable law. Under such circumstances, unless another securities deposi
tory is selected, Bonds will be made available in physical form. The Beneficial Owners, uponregistration of Bonds held in their name, will become the Owners of such Bonds.
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The Authority may in its sole discretion determine to discontinue the system of bookentry transfers throughDTC (or a successor securities depository). In such event, the Bondswillbe made available in physical form.
PLAN OF FINANCING
The Bonds will finance a transaction in which the Authority will purchase two conventionfacilities: the Kaiser Convention Center from Oakter Associates Limited Partnership, aConnecticut limited partnership to which the City sold (via an intermediary corporation,Resources Property Development Corp., a Delaware corporation) the Kaiser Convention Centerin a sale-leaseback transaction in 1982 and from which the City presently leases the KaiserConvention Center; and the Scotian Convention Center from Oakbay Associates LimitedPartnership, a Connecticut limited partnership, to which the City sold (via an intermediarycorporation, Occen Corp., a Delaware corporation) the Scotian Convention Center in a saleleaseback transaction in 1983 and from which the City presently leases the Scotian ConventionCenter. The Authority will lease the Convention Centers to the City pursuant to an Amendedand Restated Lease Agreement, dated as of November 1, 1992 (the "Lease Agreement").
ESTIMATED SOURCES AND USES OF PROCEEDS OF THE BONDS
The following table presents the estimated sources and uses of funds of the Bonds, notincluding accrued interest:
Sources
Bond ProceedsTOTAL
Uses
Acquisition CostsCost of Kaiser Convention Center AcquisitionCost of Scotian Convention Center AcquisitionDebt Service Reserve Fund
Costs of IssuanceOriginal Issue Discount
TOTAL
$149.825.000.00$149.825.000.00
$62,854,604.8063,427,639.4112,928,115.234,285,955.966.328,684.60
$149.825,000.00
SECURITY AND SOURCES OF PAYMENT FOR TIlE BONDS
General
The Bonds are payable solely from Lease Payments made by the City to the Authorityunder the Lease Agreement and pledged to the payment of the principal of, premium, if any,
and interest on the Bonds pursuant to the Indenture, from moneys held by the Trustee in the
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Reserve Account, and from any other moneys held by the Trustee under the Indenture for thepayment of the Bonds. Lease Payments required to be made by the City under the LeaseAgreement are subject to the availability of the Convention Centers for use by the City.
The Bonds are special limited obligations of the Authority and do not constitute
indebtedness or a charge against the general credit of the Authority. The Bonds are not a debtof the State of California or any of its political subdivisions, and neither the State of Californianor any of its political subdivisions is liable therefor. The principal of and interest on the Bondsare payable from and secured by a pledge of the Lease Payments from the City to the Authority.The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory
debt limitation or restriction.
Lease Payments
The City has agreed to pay the Lease Payments to the Authority semi-annually on the15th day of March and September (each a "Lease Payment Date"), as rental for the right to
possession and use of the Convention Centers. Any amounts on deposit in theLease
PaymentAccount on each Lease Payment Date will be credited towards the Lease Payments coming dueand payable on such Lease Payment Date.
In addition, In the event of damage to or destruction of the Convention Centers, if theCity elects to repair, reconstruct or replace the Convention Centers, the City shall pay additionalLease Payments in an aggregate amount necessary to replenish any deficiencies in the ReserveAccount by reason of such damage or destruction of the Convention Centers, commencing onthe next Lease Payment Date following restoration and repair of the Convention Centers, for thelesser of five years or the remaining term of the Lease Agreement, until such additional Lease
Payments are paid in full.
In the Lease Agreement, the City covenants to include and maintain all Lease Payments
and other payments due under the terms of the Lease Agreement during any fiscal year in its
budget for such year, and further covenants to make the necessary appropriation therefor. The
City covenants to provide the Trustee with a certificate stating that Lease Payments have beenincluded in the final budget within twenty days after the printing of the final budget. The LeaseAgreement provides that the several actions required by such covenants shall be construed to beministerial duties imposed by law and it shall be the ministerial duty of the officials of the Cityto carry out and perform the covenants in the Lease Agreement.
Reserve Account
In satisfaction of the Reserve Requirement under the Indenture, the Authority shall causeto be deposited $12,928,115.23 in the Reserve Account to be used as a reserve for the paymentof the Bonds in the event amounts in the Lease Payment Account are insufficient therefor. Upon
receipt of any delinquent Lease Payment with respect to which moneys have been advanced fromthe Reserve Account, such Lease Payment shall be deposited in the Reserve Account to the
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extent of such advance. In addition, any additional Lease Payments made to replenish
deficiencies in the Reserve Account by reason of repair or reconstruction of the Convention
Centers will be deposited in the Reserve Account. I f moneys in the Reserve Account are applied
to pay amounts due on the Bonds prior to restoration of the Convention Centers and the City
does not thereafter take possession of the Convention Centers, the City will not be obligated to
make furtherLease
Payments or to replenish the Reserve Account.
Municipal Bond Insurance
The following information has been furnished by AMBAC Indemnity Corporation (the
"Insurer" or "AMBAC Indemnity") for use in this Official Statement. Reference is made to
Appendix F for a specimen of the Insurer's policy.
Payment Pursuant to Municipal Bond Insurance Policy. AMBAC Indemnity has made
a commitment to issue a municipal bond insurance policy (the "Municipal Bond Insurance
Policy") relating to the Bonds effective as of the date of issuance of the Bonds. Under the terms
of the Municipal Bond Insurance Policy, AMBAC Indemnity will pay to the United States TrustCompany of New York, in New York, New York or any successor thereto (the "Insurance
Trustee") that portion of the principal of and interest on the Bonds which shall become Due for
Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined
in the Municipal Bond Insurance Policy). AMBAC Indemnity will make such payments to the
Insurance Trustee on the later of the date on which such principal and interest becomes Due for
Payment or within one business day following the date on which AMBAC Indemnity shall have
received notice of Nonpayment from the Trustee. The insurance will extend for the term of the
Bonds and, once issued, cannot be canceled by AMBAC Indemnity.
The Municipal Bond Insurance Policy will insure payment only on stated maturity dates
and on mandatory sinking fund installment dates, in the case of principal, and on stated dates
for payment, in the case of interest. I f the Bonds become subject to mandatory redemption and
insufficient funds are available for redemption of all outstanding Bonds, AMBAC Indemnity will
rernam obligated to pay principal of and mterest on outstanding Bonds on the originally
scheduled interest and principal payment dates including mandatory sinking fund redemption
dates. In the event of any acceleration of the principal of the Bonds, the insured payments will
be made at such times and 10 such amounts as would have been made had there not been an
acceleration.
In the event the Trustee has notice that any payment of principal of or interest on a Bond
which has become Due for Payment and which is made to a Bondholder by or on behalfof the
Issuer has been deemed a preferential transfer and theretofore recovered from its registeredowner pursuant to the United States Bankruptcy Code in accordance WIth a final, nonappealable
order of a court of competent jurisdiction, such registered owner will be entitled to payment
from AMBAC Indemnity to the extent of such recovery if sufficient funds are not otherwise
available.
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The Municipal Bond Insurance Policy does not insure any risk other than Nonpayment,as defined in the Policy. Specifically, the Municipal Bond Insurance Policy does not cover:
1. payment on acceleration, as a result of a call for redemption (other thanmandatorysinking fund redemption) or as a result of any other advancement of maturity;
2. payment of any redemption, prepayment or acceleration premium; and
3. nonpayment of principal or interest caused by the insolvency or negligence of anyTrustee or Paying Agent, if any.
If it becomes necessary to call upon the Municipal Bond Insurance Policy, payment ofprincipal requires surrender of Bonds to the Insurance Trustee together with an appropriateinstrument of assignment so as to permit ownership of such Bonds to be registered in the nameof AMBAC Indemnity to the extent of the payment under the Municipal BondInsurance Policy.Payment of interest pursuant to the Municipal Bond Insurance Policy requires proof of
Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder'sright to payment to AMBAC Indemnity.
Upon payment of the insurance benefits, AMBAC Indemnity will become the owner ofthe Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bondand will be fully subrogated to the surrendering Bondholder's rights to payment.
In cases where the Bonds are issuable in book entry form, the Insurance Trustee shalldisburse principal and interest to a Bondholder only upon evidence satisfactory to the InsuranceTrustee and AMBAC Indemnity that the ownership interest of the Bondholder in the right topayment of such principal and interest has been effectively transferred to AMBAC Indemnity
on the books maintained for such purpose. AMBAC Indemnity shall be fully subrogated to allof the Bondholders' rights to payment to the extent of the insurance disbursements so made.
In the event that AMBAC Indemnity were to become insolvent, any claimsarising underthe Policy would be excluded from coverage by the California Insurance Guaranty Association,established pursuant to the laws of the State of California.
The Insurer. AMBAC Indemnity Corporation is a Wisconsin domiciled stock insurancecorporation regulated by the Office of the Commissioner of Insurance of the State ofWisconsinand licensed to do business in 50 states, the District of Columbia, and the Commonwealth ofPuerto Rico, with admitted assets of approximately $1,490,000,000 (unaudited) and statutory
capital of approximately $839,000,000 (unaudited)as ofJune 30, 1992. Statutory capital consistsof AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBACIndemnity is a wholly owned subsidiary of AMBAC Inc., a 100% publicly-held company.Moody's Investors Service, Inc. and Standard & Poor's Corporation have both assigned a tripleA claims-paying ability rating to AMBAC Indemnity.
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Copies ofAMBAC Indemnity's financial statementsprepared in accordance with statutory
accounting standards are available fromAMBAC Indemnity. The address of AMBAC Indemni
ty's administrative offices and its telephonenumber are One State Street Plaza, 17th Floor, New
York, New York 10004 and (212) 668-0340.
AMBAC Indemnity has entered into pro rata reinsurance agreements under which a
percentage of the insurance underwritten pursuant to certain municipal bond insurance programsof AMBAC Indemnity has been and will be assumed by a number of foreign and domestic
unaffiliated reinsurers.
AMBAC Indemnity has obtaineda ruling from the Internal Revenue Service to the effect
that the insuring of an obligation by AMBAC Indemnity will not affect the treatment for federal
income tax purposes of interest on such obligation and that insurance proceeds representing
maturing interest paid by AMBAC Indemnity under policy provisions substantially identical to
those contained in its municipal bond insurance policy shall be treated for federal income tax
purposes in the same manner as if such payments were made by the issuer of the Bonds. No
representation ismade by AMBAC Indemnity regarding the federal income tax treatment
of payments that are made by AMBAC Indemnity under the terms of the Policy due tononappropriation of funds by the Lessee.
AMBAC Indemnity makes no representation regarding the Bonds or the advisability of
investing in the Bonds and makes no representation regarding, nor has it participated in thepreparation of, the Official Statement other than the information supplied by AMBAC Indemnity
and presented under the heading "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS - Municipal Bond Insurance. "
Obligation of the Authority
THE OBLIGATIONOF THE AUTHORITY TOMAKEPAYMENTS ONTHE BONDSUNDERTHE INDENTURE IS A SPECIALLIMITED OBLIGATIONOF THE AUTHORITY,
PAYABLE SOLELYFROM LEASE PAYMENTS MADE BYTHE CITY TOTHE AUTHOR
ITY UNDER THE LEASE AGREEMENT. THE AUTHORITY SHALLNOT BEDIRECTLY
OR INDIRECTLY OR CONTINGENTLY OR MORALLY OBLIGATED TO USE ANY
OTHER MONEYS OR ASSETS OF THE AUTHORITY FOR THE PAYMENT OF THE
BONDS. THE BONDSDONOT CONSTITUTEA DEBTOFTHE AUTHORITY OR OF THE
STATE OF CALIFORNIA, OR ANYPOLmCAL SUBDIVISIONTHEREOF, WITHINTHE
MEANING OFANY CONSTITUTIONAL ORSTATUTORY LIMITATION. THE AUTHOR
ITY HAS NO TAXING POWER.
RISK FACTORS
The following factors, along with all other information in this Official Statement, should
be considered by potential investors in evaluating the risks inherent in the purchase of the Bonds.
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Sole Source of Payment. The sole source of payment of the Bonds are the Lease Pay-
ments to be made by the City under the Lease Agreement. The obligation of the City to pay the
Lease Payments does no t constitute an obligation of the City for which the City is obligated to
levy or pledge any form of taxation or for which the City has levied or pledged any form of
taxation. The obligation of the City to pay Lease Payments does not constitute a debt or
indebtedness of the City, the State of California or any of its political subdivisions, within the
meaning of any constitutional or statutory debt limitation or restriction.
Although the Lease Agreement does not create a pledge, lien or encumbrance upon the
funds of the City, the City is obligated under the Lease Agreement to pay Lease Payments from
any source of legally available funds (subject to certain exceptions) and the City has covenanted
In the Lease Agreement that, as long as the Convention Centers are available for its use, it will
make the necessary annual appropriations within the relevant budget of the City for each year's
Lease Payments. The City is currently liable on other obligations payable from general revenues
and has the capability to enter into additional obligations which may also constitute charges
against its revenues. To the extent that additional obligations are incurred by the City, the funds
available to make Lease Payments may be decreased. The limitation on expenditures imposed
by Article XIII B of the Constitution of the State of California may also affect the City's abilityto make Lease Payments should the City's expenditures reach such limits.
The Lease Payments due under the Lease Agreement will be abated during any period
in which by reason of damage, destruction, condemnation, or otherwise there is substantial
interference with the use and possession of the Convention Centers by the City; however,
abatement shall not result to the extent certain moneys held by the Trustee and certain insurance
proceeds and unabated Lease Payments are sufficient to make Lease Payments when and as due.
Such abatement will end with the substantial completion of work, repair or reconstruction of the
portion of the Convention Centers so damaged or destroyed. Under the Lease Agreement and
the Indenture, the City shall replace or repair the Convention Centers or any portion thereof so
damaged or destroyed unless the City is required or elects, pursuant to the Lease Agreement,to prepay all or less than all of the Lease Payments, thereby causing the redemption of the
Outstanding Bonds at the pnncipal amount thereof, together with accrued interest with respect
thereto.
Insurance Proceeds. There can be no assurance that (i) if the Convention Centers are
destroyed in whole, there will be sufficient net insurance proceeds to redeem all of the
Outstanding Bonds at the principal amount thereof, plus accrued interest, or (ii) if the
Convention Centers are damaged or destroyed in whole or in part, there will be sufficient net
insurance proceeds to rebuild or reconstruct the Convention Centers so that the fair rental value
thereof exceeds the annual Lease Payments and any additional Lease Payments to be made under
the Lease Agreement. Notwithstanding the foregoing, if insufficient funds are available forredemption of all outstanding Bonds, AMBAC Indemnity will remain obligated to pay principal
of and interest on outstanding Bonds on the originally scheduled interest and principal payment
dates including mandatory sinking fund redemption dates.
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EminentDomain. I f the Convention Centers are taken in part pursuant to eminent domain
proceedings and the remaining portion of the Convention Centers are still useful for the purposes
originally intended, the condemnation proceeds from. such proceedings will be used to redeem
Bonds in an amount equal to such condemnation proceeds. In such event, there can be no
assurance that the amount of such proceeds will be sufficient to redeem enough Bonds so that
the amount of Lease Payments which have not been abated will be sufficient to make all
principal and interest payments on the remaining Outstanding Bonds. In the event that theConvention Centers have been taken in whole pursuant to such eminent domain proceedings or
has been taken in part to such extent that theremaining portion of the Convention Centers are
no longer useful for the purposes originally intended, all condemnation proceeds, together with
funds available under the Indenture, will be applied to the redemption of the Bonds, and under
the Lease Agreement, remaining Lease Payment obligations will be abated in full and the Lease
Agreement terminated. In such event, there can be no assurance made that the amount of
eminent domain proceeds and other available moneys will be sufficient to redeem all of the
Outstanding Bonds at par, plus accrued interest.
Notwithstanding the foregoing provisions of the Lease Agreement and the Indenture
specifying the extent of abatement in the event of the City's failure to have use and possessionof the Convention Centers, such provisions may be superseded by operation of law, and, in such
event, the resulting Lease Payments of the City may not be sufficient to pay all of that portion
of the principal and interest represented by the remaining Outstanding Bonds.
United States Trust Company ofNew York v. Richmond Unified School District. In April
1992, a complaint was filed in Superior Court 10 Contra Costa County, California, seeking to
enforce payments by the Richmond Unified School District (the "District") under a leaseback
arrangement. (This action is not against the City or the Authority and does no t involve the Lease
Agreement.) TheRichmond case involves the lease of an existing District administration building
and seven warehouses to a corporation, which paid $9.8 million in pre-paid rent with funds
obtained through the sale of certificates ofparticipation, and the leaseback of such administrationbuilding and warehouses to the District by the corporation. In May 1992, in an answer to the
complaint, the District, through its State-appointed trustee and administrator, and the State
Superintendent of Public Instruction, another defendant in the action, contended, among other
things, that the District lease is unenforceable in that it constituted long-term debt of the District
which did no t receive voter approval as required by the State Constitution. On October 9, 1992,
the court denied plaintiffs motion for the issuance of a writ of mandate which would have
compelled the District to budget and appropriate funds to satisfy payments on the certificates as
required by a covenant in the lease agreement. No view is expressed herein or by Bond Counsel
as to the outcome of the above-mentioned litigation or any appeals thereof, or the effect, if any,
on the Bonds if decided adversely.
Bond Counsel is delivering its approving opinion, in the form ofExhibit D to the Official
Statement, incident to the closing of this transaction. That opinion provides, in part, that, subject
to the conditions and qualifications contained in the opinion, the Lease Agreement is a valid and
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binding obligation o f the City and does not constitute a debt o f the City within the meaning o f
any constitutional debt limitation.
State Budget. The State o f California has recently reduced the moneys it provides to cities
in California, including the City o f Oakland. No guarantee can be made as to the future levelo f funding to the City by the State. See Appendix A, "FINANCIAL INFORMATION - State
Budget Matters. "
TH E GROUND LEASE
Th e City is the owner o f the land on which the Convention Centers ar e located. Pursuant
to the Kaiser Contract of Sale, the Authority will obtain an assignment o f Oakter 's interest as
assignee o f and lessee under that certain Ground Lease, dated as o f September 1, 1982, between
the City and Bank o f America NT&SA with respect to the site on which the Kaiser Convention
Center is located (the "Kaiser Site") and an assignment o f Oakter's interest as sublessor o f the
Kaiser Site to the City pursuant to that certain Lease and Sublease Agreement, dated as of
September 1, 1982, between th e City and Oakter, as assignee thereof.
Pursuant to the Scotian Contract o f Sale, the Authority will obtain an assignment o f
Oakbay's interest as assignee o f and lessee under that certain Ground Lease, dated as of
December 1, 1983, between th e City and Bank o f America NT&SA with respect to the site on
which th e Scotian Convention Center is located (the "Scotian Site") and an assignment o f the
interests o f Oakbay and Oakmar Leasing Corp. as sublessors of the Scotian Site to the City
pursuant to that certain Sublease Agreement, dated as o f December 1, 1983 (as amended byAmendment N o . 1 to Sublease Agreement dated August 2, 1984), between the City and Oakbay,
as assignee thereof.
In connection with its acquisition of the Convention Centers, the City will lease the
Kaiser Site and Scotian Site (the "Convention Center Sites") to the Authority pursuant to anAmended and Restated Ground Lease, dated November 1, 1992, between the City as Lessor and
the Authority as Lessee (the "Ground Lease").
Th e term o f the Ground Lease commenced as of November 1, 1992, and shall end onthe earlier o f (i) October 1, 2019, or (ii) the date upon which Lease Payments ar e paid in full
or provision for the payment thereof In full shall have been made, unless extended or terminated
earlier in accordance with the provisions thereof. I f on October 1, 2019, the Lease Payments
shall not have been paid or provision for the payment thereof has not been made, then the term
of the Ground Lease shall be extended until ten (10) days after all the Bonds have been paid orprovision therefor has been made, except that in no event shall the term o f th e Ground Lease
be extended beyond October 1, 2032.
As base rent for the Convention Center Sites for the term o f the Ground Lease, the
Authority has agreed to pay th e City the sum o f On e Dollar ($1.00), payable on the Closing
Date.
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THE LEASE AGREEMENT
General. The City currently leases the Kaiser Convention Center from Oakter and the
Scotlan Convention Center from Oakbay. In connection with its acquisition of the Convention
Centers, the Authority will become the lessor of these facilities. The current leases for theConvention Centers will be amended, restated and consolidated as the Lease Agreement.
The term of the Lease Agreement commences as of November 1, and shall end on theearlier of (i) OCtober 1, 2014, or (ii) the date upon which Lease Payments are paid in full orprovision for the payment thereof in full shall have been made, unless extended or terminated
earlier in accordance with the provisions thereof. I f on OCtober 1, 2014, the Bonds have not
been paid or provision for the payment thereof has not been made, then the term of the Lease
Agreement shall be extended until ten (10) days after all the Bonds have been paid or provisiontherefor has been made, except that in no event shall the term of the Lease Agreement be
extended beyond October 1, 2032.
Lease Payments. The City has agreed to pay the Lease Payments to the Authority semi
annually on the Lease Payment Date as rental for the right to possession and use of theConvention Centers, provided that there shall be applied as a credit against the Lease Paymentspayable on each such date an amount equal to the sum of (i) the amount of interest or income,
if any, theretofore earned on the Lease Payment Account and Redemption Fund since the date
of the previous report made by the Trustee in accordance with the provisions of the Indenture,
plus (ii) the amount, if any, then on deposit in the Lease Payment Account, which total creditshall have been reported on the preceding March 1 or September 1 by the Trustee to the City
pursuant to the Indenture. In the event that the total amountof credit exceeds the Lease Payment
due on the Lease Payment Date following said report, the amount of said excess shall be applied
as a credit against subsequent Lease Payments. In addition, the amount in the Reserve Accountshall be applied as a credit against the last Lease Payments due prior to the expiration of the
term of this Lease Agreement.
In addition, in the event of damage to or destruction of the Convention Centers, if the
Cityelects to repair, reconstruct or replace the ConventionCenters, the City shall pay additional
Lease Payments in an aggregate amount necessary to replenish any deficiencies in the Reserve
Account by reason of such damage or destruction of the Convention Centers, payable in equal
semi-annual payments commencing on the next ()C(urring Lease Payment Date following
restoration and repair of the Convention Centers, for the lesser of five years or the remaining
term of the Lease Agreement, until such additional Lease Payments are paid in full.
Lease Payments for each semi-annual payment period during the term of the Lease
Agreement shall constitute the total amount due for said payment period, and shall be paid bythe City for and in consideration of the right of possession of, and the continued quiet use and
enjoyment of, the Convention Centers (including, in the case of additional Lease Payments as
described in the preceding sentence, the restored Convention Centers) during each such payment
period.
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Should any Lease Payment be made later than the Lease Payment Date to which suchLease Payment pertains, such Lease Payment shall bear interest at the same rate as the rate
represented by the interest component of said Lease Payment from such Lease Payment Date tothe date of actual payment.
The Authority has directed the City to make the Lease Payments directly to the Trustee
for deposit in the Lease Payment Account.
City's Budget. The City covenants to include and maintain all Lease Payments and otherpayments due under the terms of the Lease Agreement during any fiscal year in its budget forsuch year, and further covenants to make the necessary appropriations therefor. The LeaseAgreement provides that the several actions required by such covenants shall be construed to be
ministerial duties imposed by law and it shall be the ministerial duty of the officials of the Cityto carry out and perform the covenants in the LeaseAgreement. The City covenants to providethe Trustee with a certificate, within twenty days after each final budget of the City is printed,stating that Lease Payments have been included in the final budget.
Title. Throughout the term of the Lease Agreement, title to the Convention Centers shallremain vested in the Authonty and fee title to the Convention Center Sites shall remain vestedin the City, subject to Permitted Encumbrances. Permitted Encumbrances are defined to includeliens for taxes and assessments not then due and payable; easements, rights of way and otherrights, covenants, conditions or restrictions which do not impair or impede construction or useof the Convention Centers; and the lien of the Lease Agreement. Upon the expiration of the termof the Lease Agreement, the City may exercise an option granted pursuant to the LeaseAgreement to purchase the Convention Centers for a purchase price of One Dollar ($1).
Maintenance, Utilities, Taxes and Modifications. The City, at its own expense, has
agreed, pursuant to the Lease Agreement, to maintainthe Convention Centers in good repair and
working order and to pay the costs of necessary utilities, operation of the Convention Centersand repair and replacement of the Convention Centers and for ordinary wear and tear. TheAuthority has no responsibility for such repair. The City must payor cause to be paid all taxes,
other governmental charges and assessments with respect to the Convention Centers.
Insurance. The Lease Agreement requires the City to maintain or cause to be maintained
throughout the term of the Lease Agreement the following insurance against risk of physical
damage to Convention Centers structures and other risks for the protection of the Bond Owners,
the Authority and the Trustee:
(1) Public Liability and Property Damage. Coverages shall be maintained in
amounts authorized by the City's liability insurance program, and may be subject to a deductiblenot to exceed $500,000 or such greater amount as may be authorized by the City's liability
insurance program.
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(2) Fire and Extended Coverage. Coverage shall include loss or damage to any
part of the Convention Centers by fire and lightning, with extended coverage of loss or damage
by vandalism and malicious mischief at a level equal to the replacement value of the Convention
Centers. Such insurance may be subject to deductible amounts authorized by the City's liability
insurance program.
(3) Rental Interruption Insurance. Coverage shall be in an amount not less thanthe maximum total Lease Payments payable by the City in any four consecutive payments, to
insure against loss of Lease Payments caused by perils covered by the fire and extended
coverage insurance (including rental interruption insurance) described above.
(4) Worker's Compensation Insurance. Coverage of all persons employed in
connection WIth the Convention Centers who are not otherwise covered by worker's com-
pensation insurance shall be as required by the Labor Code of the State of California.
(5) Earthquake Insurance. The City shall maintain earthquake insurance on the
same terms as the insurance described in (2) above (except that earthquake insurance may
provide for a deductible charge of not to exceed ten percent (10%) of the replacement cost foranyone loss), but only if, in the opinion of the City, such earthquake insurance is available at
reasonable cost on the open market from reputable insurance companies.
Any insurance described above may be provided in the form of an alternate method of
insurance approved by AMBAC Indemnity.
Application ofNet Proceeds of Insurance. Any Net Proceeds of any insurance relating
to an accident to or destruction of any part of the Convention Centers which is collected by the
City in consequence of any such accident or destruction will be deposited by the City in the Net
Proceeds Account to be held in trust by the Trustee as assignee of Authority and will be applied
and disbursed as set forth below:
I f the City determines that such Net Proceeds are to be utilized for the repair,
reconstruction or replacement of the damaged or destroyed portion of the Convention Centers
and that such repair, reconstruction or replacement can be completed within two years from the
date of damage or destruction as evidenced by a certificate executed by an Authorized Officer
of the City and filed with the Trustee, then the City will cause such portion of the Convention
Centers to be repaired, reconstructed or replaced to at least the same good order, repair and
condition as it existed prior to the damage or destruction, insofar as the same may be
accomplished by the use of said Net Proceeds, and will direct the Trustee to withdraw said Net
Proceeds from the Net Proceeds Account from time to time to pay such Net Proceeds to the City
for the purpose of such repair, reconstruction or replacement. The City covenants that suchrepair, reconstruction or replacement will be completed and the Convention Centers made usable
within two years from the date of damage to or destruction of the Convention Centers. The City
will direct the Trustee to deposit any balance of said Net Proceeds remaining in the Net
Proceeds Account and not required for such repair, reconstruction or replacement into the Lease
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Payment Account as a prepayment ofLease Payments. Subject to the provisions of the following
two paragraphs, the City will be obligated to continue to make Lease Payments required by the
Lease Agreement notwithstanding accident to or destruction of all or a portion of the Convention
Centers; provided, however, that in the event that accident or damage to any portion of the
Convention Centers is such as to cause such portion not to be usable, then such Lease Payment
will be abated, in proportion to the portions of the Convention Center Sites and the Convention
Centers damaged or destroyed based upon the fair market value of the Convention Center Sitesand the Convention Centers on November 1, 1992, or the date of such abatement, whichever
is greater, or to the maximum extent permitted under law, except that there will be no abatement
so long as moneys then on deposit in the Lease Payment Account or Reserve Account or Net
Proceeds of rental interruption insurance are sufficient for the making of Lease Payments when
and as due.
In lieu of repair, reconstruction or replacement of the damaged or destroyed portion of
the Convention Centers, the City may (and, if the City shall determine that such repair,
reconstruction or replacement will not be completed within two years, the City shall) by a
certificate executed by an Authorized Officer of the City and filed with the Trustee, direct the
Trustee to apply the Net Proceeds of insurance to the prepayment of Lease Payments providedthat in the case where the City determines that such repair, reconstruction or replacement may
be completed within two years of such damage or destruction the remaining Lease Payments will
be sufficient to pay all of that portion of principal and interest on remaining Outstanding Bonds.
Any Net Proceeds of rental interruption insurance required by the Lease Agreement will
be used to pay Lease Payments during any period in which abatement of Lease Payments would
otherwise have occurred except for the availability of such Net Proceeds of rental interruption
insurance. Such Net Proceeds will be paid by the City to the Trustee, as assignee of the
Authority, for deposit in the Lease Payment Account and applied to the payment of any Lease
Payments then due and, thereafter, will be applied as a credit against the next subsequent Lease
Payments.
Abatement ofRental in the Event ofFailure to Have Use and Possession of the Site and
the Facilities. The Lease Payments shall be abated in whole or in part during any period during
which by reason of damage or destruction (other than by condemnation which is described
below) there is substantial interference with the use and possession of the Convention Center
Sites and the Convention Centers by the Lessee. The extent of such abatement shall be in
proportion to the portions of the Convention Center Sites and the Convention Centers damaged
or destroyed based upon the fair market value of the Convention Center Sites and the Convention
Centers on November 1, 1992, or the date of such abatement, whichever is greater or to the
maximum extent permitted by law; provided, however, that in the event such damage or
destruction results in redemption of Bonds, the remaining Lease Payments (including credits tobe applied thereto as provided in the Indenture) will be sufficient to pay all of that portion of
principal and interest on remaining Outstanding Bonds equal in amount to the then outstanding
principal amounts of the Lease Payments under the Lease Agreement. Such abatement shall not
result to the extent moneys held by the Trustee under the Indenture which are to be credited
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toward the Lessee's Lease Payments under the terms of the Indenture and Net Proceeds of
insurance and rental interruption insurance (plus unabated Lease Payments) are sufficient to
make Lease Payments when and as due, it being declared in the Lease Agreement that such
moneys and Net Proceeds constitute special funds for the payment of the Lease Payments.
Subject to the preceding sentence, such abatement or adjustment, if any, shall continue for the
period commencing with such damage or destruction and ending with the substantial completion
of the work or repair or reconstruction, if any. In the event of any such damage or destruction,
this Lease Agreement shall continue in full force and effect and the Lessee waives any right to
terminate this Lease Agreement by virtue of any such damage or destruction.
Title Insurance and Condemnation. The City will provide, or cause to be provided, at
its own expense, an American Land Title Association title insurance policy with endorsement
so as to be payable to the Trustee.
All Net Proceeds received under the title insurance policy provided for by the LeaseAgreement or in any condemnation proceeding undertakenby any governmental agency relating
to all or a portion of the Convention Center Sites or the Convention Centers will be paid to the
Trustee pursuant to the Indenture and will be applied and disbursed as set forth below:
(1) I f the City determines that such title defect or condemnation has not
materially affected the operation of the Convention Centers or the ability of the City or its
assignee to meet any of the obligations under the LeaseAgreement or if suchNet Proceeds are
insufficient to enable the City to prepay Lease Payments in full, as set forth in a certificate
executed by an Authorized Officer of the City and filed with the Trustee, the City shall direct
the Trustee by said certificate of an Authorized Officer to hold such Net Proceeds in the Lease
Payment Account and apply such Net Proceeds as a prepayment in part of Lease Payments.
Subject to the provisions of the following paragraph, the City will be obligated to continue tomake Lease Payments required by the Lease Agreement notwithstanding condemnation of or a
title defect relating to a portion of the Convention Center Sites or the Convention Centers;
provided, however, that in the event that such condemnation or defect is to such extent as to
cause such portion not to be usable, then such Lease Payments shall be abated, in the proportion
to which the unusable portion of the Convention Center Sites and the Convention Centers
damaged or destroyed bears to the entire Convention Center Sites and the Convention Centers,
except that abatement will not result so long as moneys then on deposit in the Lease Payment
Account or Net Proceeds of title insurance or condemnation are sufficient for the making of
Lease Payments.
(2) I f the City determines that such title defect or condemnation has materially
affected the operation of the Convention Centers or the ability of the City to meet any of its
obligations under the Lease Agreement, as set forth in a certificate executed by an Authorized
Officer of the City and filed with the Trustee, or if such Net Proceeds are sufficient to enable
the City to prepay LeasePayments in full as set forth in a certificate executed by an Authorized
Officer of the City and filed with the Trustee, the City shall direct the Trustee, by said
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of the City for any substantial part of its property, or shall make any general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become due or shall take anycorporate action in furtherance of any of the foregoing.
Upon the occurrence and continuance of any event of default described in (1) or (2)above, the Trustee, may proceed to (a) re-enter and take possession of the Convention Centers
holding the City liable for the Lease Payments and other amounts payable by the City pursuantto the Lease Agreement; (b) re-enter and take possession of the Convention Centers and re-let
the Convention Centers to a third party for the account of the City, holding the City liable forthe difference between the amount received under such lease and the Lease Payments payable
by the City under the Lease Agreement; or (c) take whatever action at law or in equity mayappear necessary or desirable to enforce the rights of the Authority. Under no circumstances
may the Authority or the Trustee declare the Lease Payments not then in default to be
immediately due and payable.
Option to Prepay. Under the Lease Agreement, the Authority grants to the City the
option to prepay the principal component of certain Lease Payments in whole or in part on or
after October 1, 2002. The City may exercise its option to make such prepayments on writtennotice to the Authority and the Trustee delivered at least sixty (60) days prior to the LeasePayment Date and by depositing, on the date of such prepayment, the prepayment price therefor.
Such prepayment price shall be equal to the amount necessary to prepay in whole or In part theunpaid principal component of Lease Payments attributable to Bonds maturing on or after
October 1, 2002, in accordance with the Indenture, plus accrued interest, plus any LeasePayment then due but unpaid, plus premium, if any, plus if the Lease Payments are being paid
in full, the City's share, if any of the fees and expenses payable to the Trustee and the Authontyunder the Indenture to the date of prepayment.
In the event of such prepayment in part, the amount of Lease Payments to be paid by the
City over the remaining term of the Lease Agreement shall be adjusted to reflect suchprepayment.
Upon the expiration of the Lease Agreement, the City may exercise an option granted
pursuant to the Lease Agreement to purchase the Convention Centers and the Authority'sleasehold interest in the Convention Center Sites for a purchase price of One Dollar ($1)
provided the City is not in default of any monetary obligation under the Lease Agreement orotherwise in material default under the Lease Agreement.
THE CITY AND THE AUTHORITY
The City of Oakland
The City ofOakland is located on the east side of SanFrancisco Bay approximately seven
miles from San Francisco via the San Francisco-Oakland Bay Bridge. An area of diverse
character, the City ranges from industrialized lands bordering the Bay to suburban foothills in
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the east. Historically the industrial heart of the Bay Area, Oakland has developed into a major
financial, commercial and governmental center. The City is the hub of an extensive transporta
tion network which includes a highly developed freeway system and the western terminals of
major railroads and trucking firms, as well as one of the largest container-ship ports on the West
Coast. Oakland supports an expanding international airport and rapid-transit lines which connect
it with most of the Bay Area.
The City was incorporated as a town in 1852, and as a city in 1854, and became a
charter city in 1889. The City's charter (the "Charter") was substantially revised in 1969 to take
advantage of what is now Section 7 of Article XI of the Constitution of the State of California
giving cities home rule as to municipal affairs. The Charter provides for the election, organi
zation, powers and duties of the legislative branch, known as the City Council; the powers and
duties of the executive and administrative branches; fiscal and budgetary matters, personnel
administration, franchise, licenses, permits, leases and sales; employees' pension funds; and the
creation and organization for the Port of Oakland.
For additional information concerning the City, its government and its financial affairs,
see Appendix A, "DESCRIPTION OF THE CITY OF OAKLAND."
The Authority
The Authority is a public entity organized pursuant to an Amended and Restated Joint
Exercise of Powers Agreement among a number of California counties and cities entered into
pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of
Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. The
Authority is authorized to issue bonds and to finance and refinance public capital improvementsfor local agencies within the State of California pursuant to the Marks-Roos Local Bond Pooling
Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division
7 of Title 1 of the Government Code of the State of California.
The Authority has sold and delivered its obligations, other than the Bonds, which other
obligations are and will be secured by instruments separate and apart from the Indenture and the
Lease Agreement. The holders of such obligations of the Authority have no claim on the security
of the Bonds and the Owners of the Bonds will have no claim on the security of such other
obligations ISSUed by the Authority.
LITIGATION
There is no litigation now pending or threatened (i) to restrain or enjoin the issuance or
sale of the Bonds; (ii) questioning or affecting the validity of the Lease Agreement or theobligation of the City to make Lease Payments; or (iii) questioning or affecting the validity of
any of the proceedings for the authorization, sale, execution or delivery of the Bonds.
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The City is involved in certain litigation and disputes incidental to its operations. Upon
the basis of information presently available, the City Attorney believes that there are substantial
defenses to such litigation and disputes and that, in any event, any ultimate liability in excess
of applicable insurance coverage resulting therefrom will not materially adversely affect thefinancial position or results of operations of the City.
A number of lawsuits have been filed in connection with the Oakland Hills Fire. Forfurther information, see Appendix A, "FINANCIAL INFORMATION - Oakland Hills Fire."
TAX EXEMPTION
In the opinion of Ballard Spahr Andrews & Ingersoll, Washington, D.C., Special TaxCounsel, based on existing statutes, regulations, rulings and judicial decisions and assuming the
accuracy of and continuing compliance by the Authority and the City with certain covenants in
the documents and requirements of the Internal Revenue Code of 1986, as amended, interest on
the Bonds is excluded from the gross incomeof the Owners of the Bonds for purposes of federalincome taxation. Failure by the Authority or the City to comply with such covenants and
requirements may, however, cause interest on the Bonds to be included in gross income forfederal income tax purposes retroactively to the date of delivery of the Bonds.
Interest on the Bonds will not be treated as an item of tax preference in calculating the
alternative minimum taxable income of individuals or corporations; however, such interest on
Bonds held by a corporation (other than an S corporation, regulated investment company, realestate investment trust or real estate mortgage investment conduit) may be indirectly subject to
federal alternative minimum tax and environmental tax because of its inclusion in the earnings
and profits of a corporate holder. Interest on Bonds held by certain foreign corporations may
be subject to the branch profits tax imposed by the Code.
Ownership of tax-exempt obligations may result in collateral income tax consequencesto certain taxpayers, including, without limitation, financial institutions, property, and casualty
insurance companies, certain S corporations with excess passive income, individual recipients
of Social Security or Railroad Retirement benefits, and taxpayers with outstanding indebtednessto purchase or carry tax exempt obligations. Special Tax Counsel expresses no opinion as to any
such collateral federal income tax consequences.
Morrison & Foerster, Bond Counsel, is of the opinion that interest on the Bonds is
exempt from personal income tax imposed by the State of California.
RATINGS
Moody's Investors Service ("Moody's") and Standard & Poor's Corporation ("S&P")
have assigned their municipal bond ratings of "Aaa" and "AAA", respectively, to the Bonds
with the understanding that upon delivery of the Bonds, a policy insuring the payment when due
of the principal of and interest on the Bonds will be issued by the Insurer. An explanation
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concerning the significance of the rating given by Moody's may be obtained from Moody's at99 Church Street, New York, New York 10007, (212) 553-0470. An explanation of the ratingsgiven by S&P may be obtained from S&P at 25 Broadway, New York, New York 10004, (212)208-8000. Certain information and materials concerning the Bonds, the Authority and the Citywere furnished to Moody's and S&P by the Authority and the City. If in the judgment of eitherof the rating services, circumstances so warrant, either rating service may raise, lower or
withdraw its rating. If a downward change or withdrawal occurs, it could have an adverse effecton the resale price of the Bonds.
APPROVAL OF LEGAL PROCEEDINGS
Certain legal matters incident to the issuanceof the Bonds have been or will be approvedby Morrison & Foerster, San Francisco, California, as Bond Counsel, and Ballard SpahrAndrews & Ingersoll, Washington, D.C., as Special Tax Counsel, with respect to the Bonds.Certain legal matters relating to the issuance of the Bonds will be passed upon for theUnderwriters by their counsel, Wendel, Rosen, Black, Dean & Levitan, Oakland, California;certain legal matters incident to the issuance of the Bonds will be passed upon for the City by
Jayne W. Williams, City Attorney of the City of Oakland; and certain legal matters will bepassed upon by Orrick, Herrington & Sutcliffe, Los Angeles, California, Counsel to theAuthority.
UNDERWRITING
The Underwriters have agreed to purchase the Bonds at a price of $141,820,033.15(which represents the $149,825,000 principal amount of the Bonds less an Underwriters'discount of $1,676,282.25 less an Original Issue Discount of $6,328,684.60) plus accruedmterest. The Underwriters will purchase all of the Bonds if any are purchased, the obligationto make such purchase being subject to certain terms and conditions contained in a Bond
Purchase Agreement and the approval of certain legal matters by counsel.
The Underwriters may offer and sell the Bonds to certain dealers and others at priceslower than the respective public offering prices stated herein. After the initial public offering,the respective offering prices may be changed from time to time by the Underwriters.
FINANCIAL ADVISOR
The City has retained Public Financial Management, Inc., San Francisco, California, asfinancial advisor (the "Financial Advisor") in connection with the preparation of this Official
Statement and with respect to the issuance of the Bonds. The Financial Advisor is not obligated
to undertake, and has not undertaken to make, an independent verification or to assumeresponsibility for the accuracy, completeness, or fairness of the information contained in thisOfficial Statement. The Financial Advisor IS an independent advisory firm and is not engagedin the business of underwriting, trading, or distributing municipal securities or other public
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securities. The Financial Advisor is a wholly-owned subsidiary ofMarine Midland Bank, N.A.,
New York, New York.
MISCELLANEOUS
All the summaries contained herein of the Indenture, the Lease Agreement, applicable
legislation, agreements and other documents are made subject to the provisions of suchdocuments respectively and do not purport to be complete statements of any or all of such
provisions. Reference is hereby made to such documents on file with the City for further
information in connection therewith.
Insofar as any statements made in this Official Statement involve matters of opinion or
of estimates, whether or not expressly stated, they are set forth as such and not as representa
tions of fact. No representation is made that any of such statements made will be realized.Neither this Official Statement nor any statement that may have been made orally or in writing
is to be construed as a contract with the Owners of the Bonds.
The execution and delivery of this Official Statement has been duly authorized by theAuthority and the City.
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
By: _
Norma Lammers
Member of the Commission
THE CITY OF OAKLAND
Henry L. Gardner
City Manager
By: - - :--- :---------
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APPENDIX A
DESCRIPfION OF THE CITY OF OAKLAND
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APPENDIX A
Description of the City of Oakland
GENERAL .................•.•Introduction . . .
City Government .
FINANCIAL INFORMATION .
Ad Valorem Property Taxation .
Assessed Valuations .
Tax Levies. Collections and Delinquencies
Tax Rates •••..•..•.•••••••.•Principal Taxpayers . . . . . . . . . . . . .
Budget Process .
Fmancial and Accountmg Information .
Comparattve Fmancial Statements . . . .Fmancial Obhgat.cns . . . . . . . . . . . .
A-IA-I
A-I
A-I
A-I
A-2
A-3
A-S
A-6
A-6
A-7
A-9
A-ll
Statement of Direct and Overlapping Debt A-13Labor Relations .. . . . . . . . . . . . .. A-IS
Retirement Programs . • . . . . . . . . .. A-IS
State Budget Matters . . . . . . . . . . .. A-I6
Oakland Hills Fire A-I7
ECONOMIC PROFIT.E A-I7
Introduction . . . . . . . . .•.. . . . . . A-I7
Population A-I9
E m p w ~ t A-20
Largest Employers A-22
Commercial Activity . . . . . . . . . . . . A-23
Construction Activity. . . . . . . . . . . . A-24
Median Household Income A-24
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GENERAL
Introduction
The City of Oakland (the "City") is located in the County of Alameda (the "County")
on the east side of San Francisco Bay, approximately seven miles from San Francisco via the
San Francisco-Oakland Bay Bridge. Oakland ranges from industrialized lands bordering the Bayin the west to suburban foothills in the east. Historically the industrial heart of the Bay Area,
Oakland has developed into a financial, commercial and governmental center. The City is the
hub of an extensive transportation network which includes a freeway system and the western
terminals ofmajor railroads and trucking firms, as well as one of the largest container-ship ports
in the United States. Oakland supports an expanding international airport and rapid-transit lines
which connect it with most of the Bay Area. Oakland is the seat of government for Alameda
County and is the sixth most populous city in the State.
City Government
The City was incorporated as a town in 1852, as a city in 1854 and became a charter cityin 1889. Oakland is governed by a nine-member City Council, seven of whom are elected by
district and two ofwhom, including the Mayor, are elected on a city-wide basis. The Mayor and
Council members serve four-year terms. The Council appoints a City Manager who is
responsible for daily administration ofCity affairs and preparation and submission of the annual
budget under the direction of the Mayor and City Council for the Mayor's submission to the City
Council.
Subject to civil service regulations, the CityManager appoints City employees except the
City Attorney, City Clerk and City Auditor. The City Council appoints the City Manager and
the City Attorney, and the City Clerk is appointed by the City Manager subject to City Council
approval. The Director of Finance is also appointed by the City Manager and serves as theCity's Treasurer. The City Auditor is elected at the same time as the Mayor.
The City provides a full range of services contemplated by statute or charter, including
those functions delegated to cities under State law. These services include public safety (police
and fire), sanitation and environmental health enforcement, recreational and cultural activities,
public improvements, planning, zoning and general administrative services.
FINANCIAL INFORMATION
Ad Valorem Property Taxation
City property taxes are assessed and collected by the County at the same time and on the
same rolls as are County, school and special district property taxes. Under California's 1991/92
adopted budget, the County was permitted to pass on costs for certain services provided to local
government agencies including the collection of property taxes. The County has imposed a fee
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on the City based on the County's cost for the previous year. This is a prorated charge to all
jurisdictions based on each jurisdiction's share of property tax receipts.
The valuation of secured property is established as of March 1, and is subsequentlyequalized in August, and is payable in two installments of taxes due November 1 andFebruary 1, respectively. Taxes become delinquent on December 10 and April 10 for each
respective installment. Taxes on unsecured property (personal property and leasehold) are dueon August 31 of each year based on the preceding fiscal year's secured tax rate.
State law exempts $7,000 of the full cash value of an owner-occupied dwelling, but this
exemption does not result in any loss of revenue to local agencies, since the State reimburseslocal agencies for the value of the exemptions.
Assessed Valuations
All property is assessed using full cash value as defined by Article XIllA of the StateConstitution. State law provides exemptions from ad valorem property taxation for certainclasses of property such as churches, colleges, nonprofit hospitals, and charitable institutions.
Future assessed valuation growth allowed under Article XIllA (new construction, certainchanges of ownership, 2% inflation) will be allocated on the basis of "situs" among the
jurisdictions that serve the tax rate area within which the growth occurs. Local agencies andschools will share the growth of "base" revenues from the tax rate area. Each year's growthallocation becomes part of each agency's allocation in the following year. The availability ofrevenue from growth in tax bases to such entities may be affected by the establishment ofredevelopment agencies which, under certain circumstances, may be entitled to revenues
resulting from the increase in certain property values.
For assessment and collection purposes, property is classified as either "secured" or
"unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured
roll" is that part of the assessment roll containing State-assessed property and real property
having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of thetaxes. Unsecured property comprises all property not attached to land such as personal propertyor business property. Boats and airplanes are examples of unsecured property. Unsecured
property is assessed on the "unsecured roll. "
The passage of AB 454 in 1987 changed the manner in which unitary and operatingnonunitary property is assessed by the State Board of Equalization. The legislation deleted the
formula for the allocation of assessed value attributed to such property and imposed a Statemandated local program by requiring the assignment of the assessment value of all unitary andoperating nonunitary property in each county of each State assessee other than a regulatedrailway company. The legislation established formulas for the computation of applicablecountywide tax rates for such property and for the allocation of property tax revenuesattributable to such property among taxing jurisdictions in the county beginning in fiscal year
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1988/89. This legislation requires eachcounty to issue each State assessee, other than a regulatedrailway company, a single tax bill for all unitary and operating nonunitary property.
The following table represents a six-year history of assessed valuations in the City:
CITY OF OAKLANDASSESSED VALUATIONS·
FIscal
Year Local Secured Utihty Unsecured Total
1987/88 $9,574,894,509 $953,123,290 $1,487,663,988 $12,015,681,787
1988/89 10,134,786,232 54,229,8012 1,516,573,931 11,705,589,964
1989/90 11,153,589,360 56,118,189 1,582,277,848 12,791,985,393
1990/91 12,211,539,476 51,665,85@ 1,557,854,483 13,821,059,815
1991/92 13,045,041,452 56,668,15!r 1,193,649,163 14,295,378,774
1992/93 13,095,938,157 38,475,148 1,761,686,799 14,896,100,104
1 Before redevelopment tax allocation mcrement deduction
2 Reflects implementation of AB454
Source: Alameda County Auditor-Controller
Tax Levies, Collections and Delinquencies
Taxes are levied for each fiscal year on taxable real and personal property which issituated in the Cityas of the precedingMarch 1. A supplemental roll is developed whenproperty
changes hands which produces additional revenue.
A ten percent penalty attaches to any delinquent payment for secured roll taxes. Inaddition, property on the secured roll with respect to which taxes are delinquent becomes taxdefaulted. Suchproperty may thereafter be redeemed by payment of the delinquent taxes and thedelinquency penalty, plus a redemption penalty to the time of redemption. If taxes are unpaidfor a period of five years or more, the property is subject to auction sale by the County Tax
Collector.
In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes onproperty on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue
beginning November 1st of the fiscal year, and a lien is recorded against the assessee. Thetaxing authority has four ways of collecting unsecured personal property taxes: (1) a civil actionagainst the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certainfacts in order to obtain a judgment lien on specific property of the taxpayer; (3) filing acertificate of delinquency for record in the County Recorder's office in order to obtain a lien on
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specified property of the taxpayer; and (4) seizure and sale of personal property, improvementsor possessory interests belonging or assessed to the assessee.
Each County levies (except for levies to support prior voter-approved indebtedness) andcollects all property taxes for property falling within that county's taxing boundaries. Thesecured tax levy and year-end delinquencies for the City for the most recent fiscal years are
shown in the table below:
CITY OF OAKLANDSECURED TAX LEVY ANDDELINQUENCIES
ApportionedAmount Delinquent as % Del. Secured Tax
Year Secured Tax Levy! of June 30 June 30 Collection'
1986/87 $119,856,503 $7,338,604 6.12% $30,082,473
1987/88 127,733,624 7,118,021 5.57 31,701,308
1988/89 126,097,763 7,008,343 5.56 34,108,364
1989/90 135,197,368 8,462,045 6.26 36,751,879
1990/91 146,349,421 9,920,924 6.78 39,751,879
1991192 156,037.784 10,426,030 6.68 40,803,034
1 All taxes collected by the County within the City.
2 Does not mclude tax mcrements paid to the Redevelopment Agency of the City of Oakland.
Source: CIty of Oakland, OfficeofFinance
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Tax Rates
The City is divided into 33 Tax Rate Areas. This figure includes one special Tax RateArea comprised of aircraft taxable within the City. The largest Tax Rate Area within the Cityis Tax Rate Area 17-001 which has a total assessedvaluation of $10,408,557,955 or 70.9% of
the City's total assessed valuation. A five-year history of the tax components within this Tax
Rate Area is shown below:
CITY OF OAKLAND
TAX RATE AREA 17-001
SUMMARY OF TAX RATES
(Percent of Property Assessed Value)
Tax Agency 1987/88 1988/89 1989/90 1990191 1991192
Countywide Tax' 1.0000% 1.0000% 1.0000% 1.0000% 1.0000%
Oakland Umfied 0.0236 0.0216 0.0184 0.0166 0.0166
School District
Peralta Commumty 0.0131 0.0126 0.0111 0.0109 0.0109
College Distnct
Oakland Umfied 0.0120 0.0114 0.0108 0.0109 0.0109
School Distncr'
Bay Area Rapid 0.0372 0.0319 0.0250 0.0251 0.0251
TllII1S1t District
East Bay Regional 0.0000 0.0047 0.0032 0.0028 0.0028
Park District
City of Oakland' 0.1575 0.1575 0.1575 Q:1lli 0.1713
Combined Tax Rates 1.2434% 1.2397% 1.2260% 1.2376% 1.2376%
1 Maximum rate for purposes other than paymg debt service m accordance with ArticleXllIA of the State of Constitution.
2 Represents tax levied under Education Code Section 16090.3 Represents tax levied to correct underfunded obligations m the Police and Fire
Retirement System.Source: Alameda CounJy Auditor-Controller.
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Property Owner
Principal Taxpayers
The following table lists the major taxpayers in the City in terms of their 1991/92assessed valuation:
CITY OF OAKLAND
20 LARGEST LOCALLY SECURED TAXPAYERS FOR 1991192
1991192 Assessed
Valuation
1. Eleven Eleven Associates
2. State of Califorma Pubhc Employees Retuement System
3. Kaiser Foundation Health Plan, Inc.
4. Clorox Company
5. Samuel Memtt Hospital [Sunumt Hospital]
6. Ordway Associates
7. Ahmanson Commercial Development Company
8. Lake Memtt PIau9. Bramelea Lmnted and City Square One
10. Kaiser Center, Incorporated
11. Owens Illinois Glass Container Incorporated
12. Webster Street Partners Limited
13. CF Oakland Associates Limited
14. Sparkmght15. FT International Incorporated and Toyomura Fumi
16. Safeway Stores, Incorporated
17. Feischmann's Yeast Incorporated
18. Springwood Investment
19. Argonaut Financial Services Incorporated
20. Silberblatt S.S. Incorporated and Oakland Associates
Total-Top Twenty
Percent of Total City-Wide Assessment: 9.81%
Source: California Municipal Statistics, Inc.
Budget Process
The City's budget is developed on a cash basis.
$127,949,526
101,225,400
95,527,525
93,915,380
87,460,445
85,527,148
83,034,523
79,899,48477,910,351
76,269,775
63,761,774
59,206,558
43,026,154
33,498,132
32,687,861
30,106,112
28,337,627
27,625,451
26,763,117
26,245,364
51,279,977,687
The budget process begins in the fall of each year with staff developing broad guidelinesfor the subsequent year's budget preparation. These are presented to and discussed with the city
Council and finalized.
Internal budget hearings are held between the CityManager and headsof each departmentto discuss resources and funding for the following year; concurrently, City Council members
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meet with departments and review their requests. Formal public hearings are held for each
departmental budget during May and June.
At least 30 days prior to the beginning of the fiscal year, the Mayor submits the proposed
budget to the City Council and the time is then set by the City Council for public hearings.
Upon conclusion of the public hearings, the City Council may make necessary revisions.
The operating budget is adopted by the City Council on or before June 30 of each year.
It contains appropriations for all funds and all first year appropriations for capital improvements.
The City Manager employs an independent certified public accountant who, upon request,
but at least annually, examines books, records, inventories and reports of all offices and
employees who receive, control, handle or disburse public funds, and those of any other officers,
employees or departments as the City Manager directs.
Within a reasonable period following the fiscal year-end, the accountant submits the final
audit to the City Council. The City then publishes the financial statements as of the close of the
fiscal year.
Fmancial and Accounting Information
The accounts of the City are organized on the basis of funds and account groups, each
of which is considered a separate accounting entity. The operations of each fund are accounted
for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures, or expenses, as appropriate. Government resources are allocated to
and accounted for in individual funds based on the purposes for which they are to be spent and
the means by which spending activities are controlled. The various funds are grouped into eight
generic fund types and three broad fund categories as follows:
Government Funds:
General Fund. The general fund is the general operating fund of the City. It is
used to account for all financial resources except those required to be accounted for in
another fund.
Special Revenue Funds. Special revenue funds are used to account for the
proceeds of specific revenue sources (other than special assessments, expendable trusts,
or major capital projects) that are legally restricted to expenditures for specified
purposes.
Debt Service Funds. Debt service funds are used to account for the accumulation
of resources for, and the payment of, the principal of and interest on general obligation
long-term debt, and related costs.
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Capital Projects Funds. Capital projects funds are used to account for financialresources to be used for the acquisition or construction of major capital facilities (other
than those financed by proprietary funds, special assessment funds and trust funds).
Special Assessment Funds. Special assessment funds are used to account for thefinancing of public improvements or services deemed to benefit the properties against
which special assessments are levied.
Proprietary Funds:
Enterprise Funds. Enterprise funds are used to account for operations (a) that arefinanced and operated in a manner similar to private enterprises where the intent of the
governing body is that the costs (expenses, including depreciation) of providing goods
or services to the general public on a continuing basis be financed or recovered primarilythough user charges; or (b) where the governing body has decided that periodic
determination of revenues earned, expenses incurred and/or net income is appropriate for
capital maintenance, public policy, management control, accountability, or other
purposes.
Internal Service Funds. Internal service funds are used to account for the financing
of goods or services provided by one department or agency to other departments or
agencies of the City, or to other governments, on a cost-reimbursement basis.
Fiduciary Funds:
Trust and Agency Funds. Trust and agency funds are used to account for assets
held by the City in a trustee capacity or as an agent for individuals, private organizations,
other governments and/or other funds.
All government funds are accounted for using the modified accrual basis of accounting.
Their revenues are recognized when they become measurable and available as net current assets.
Taxpayer-assessed income, gross receipts and other taxes are considered "measurable" when in
the hands of intermediary collecting governments and are recognized as revenue at that time.
Anticipated refunds of such taxes are recorded as liabilities and reductions of revenue when they
are measurable and their validity seems certain.
Expenditures are generally recognized under the modified accrual basis of accounting
when the related fund liability is incurred. Exceptions to this general rule include:
(1) accumulated unpaid vacation, sick pay, and other employee amounts which are not accrued;
and (2) principal and interest on general long-term debt which is recognized when due.
All proprietary funds are accounted for using the accrual baSIS of accounting. Their
revenues are recognized when they are incurred.
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Comparative Financial Statements
The following table reflects the City's general fund audited financial statements for thefiscal years 1987/88 through 1991/92, listing actual revenues, expenditures and fundbalances:
CITY OF OAKLANDGENERAL FUND
REVENUES, EXPENDITURES AND OPERATING RESULTS1987/88 THROUGH 1991/92
(IlOO's)
Actual
Total R.evenues aDd Actual Actual Actual Actual (unaudited)
Expenditures 1987/88 1988/89 1982/90 1290191 1991/92
REVENUESTaxes and Franchise Fees $155,403 $174,712 $170,084 $177,768 $182,637Permits and Licenses 4,775 4,946 5,518 6,160 5,300
Fines and peaalnes 4,787 6,423 7,117 7,420 6,158
Interest andrental
income 10,017 16,582 12,852 12,015 10,048Revenue from CU1'1'llI1t services
Grant revenue 15,105 16,987 17,619 22,105 21,438Other revenue 2,619 1,057 10,395 6,230 6,274TOTAL REVENUES ---ID. 3,472 6,629 7,802 8,465
$193,149 $224,179 $230,214 $239.500 $240,320EXPENDITURES
General government $ 18,092 $ 21,696 $ 26,993 $ 27,893 33,178
Public safety 88,122 103,163 130,420 143,287 150,411Office of Public Works 13,456 17,256 20,598 27,026 28,488
Office of General Services 4,519 6,196 5,890 5,006 4,558
Parks, Recreation andCultural 23,818 26,515 18,616 16,579 23,628Economic, Commumty and
Social Programs 3,514 3,858 6,485 6,579 6,358Nondepartmental' 16,701 7,445 11,216 15,243 6,161
Debt Service -.il l:__0 __0 __
TOTAL EXPENDITURES $168.347 $186,254 $220,218 $241,613 $252,782
Excess (deficiency) of Revenues
over Expenditures 24,802 37,925 9,996 (2,113) (12,462)
Operating Transfers (16,839r (SO,517)3 24,857 (9,581) 5,440
Combined Adjustmenti 13,461 365 26,185 (46,271)
Ending Balance $ 60,357 $ 58,830 $119,868 $ 61,903 s 54,881
1 Does not include rent payable on lease obligations.
2 Includes audlt reclassificab.ODS and net residual equity transfers,
3 Operating transfers related to the refunding of City and Various Properb.es Certl1icates of Participanon(1988/89) and theCertificates of PartiClpatlon related to theOakland Museum (1987/88). These
financings liquidated and trlIDSferred vanous restncted investments from the General Fund Group to
other Fund Groups.Source: City of OakkmdAudited Finanaal SIatemefllS,
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The following table reflects the City's revenues, expenditures and operating surpluses forthe general purpose fund for fiscal years 1988/89 through 1992/93:
CITY OF OAKLANDGENERAL PURPOSE FUND
REVENUES, EXPENDITURES AND OPERATING SURPLUSES1988/89 THROUGH 1990/91 ACTUAL1992/93 ADOPI'ED BUDGET
(OOO's)
ActualActual Actual Actual (unaudited) Adopted
Total Revenues and Expenditures 1988/89 1989/90 1990191 1991/92 1992/93
REVENUESTaxes $174,712 $170,084 $77,763 $182,750 $187,780
Penmts and LIcenses 4,946 5,518 6,160 7,100 7,190
Traffic fines and vanous penalties 6,423 7,117 7,420 6,160 7,400
Interest and rental income 16,582 12,852 12,015 7,070 6,010
Revenue from current services 16,987 17,619 22,105 16,480 27,300
Grant revenue 1,057 10,395' 6,230 10,390 5,880
Other revenue 3.472 6,629 20,6363 10,880 14,190
TOTAL REVENUES $224,179 $230,214 $252.334 $240,830 $255,750
EXPENDITURES
General government $ 21,696 s 26,993 s 27,893 $ 30,130 $32,400
Public safety 103,163 130,420 143,287 141,290 147,240
Officeof public works 17,256 20,598 27,026 25,080 38,660
Officeof general services 6,196 5,890 17,4323 4,730 4,470
Parks, Recreation and Cultural 26,515 18,616 16,579 22,550 26,300
Economic, Community and SOCial
Programs3,858 6,485 6,579 5,860 5,150
Nondepartmental 7,445 9,510 11,172 18,710 25,170
Capital Improvement 0 1,706 4,071 0 2,030
Interdepartmental Transfers 50.517 <24,857) 9.581 (1.540) (14,160)
TOTAL EXPENDITURES $236,646 $195,361 $263,620 $246,810 $267,260
Excess (deficiency) of Revenues
over Expenditures $(12,467) $ 34,853 $(11,750) $(5,980) $(11,510)
Increase reflects anticipated reimbursement from the Federal Emergency Management Assistance
program for earthquake related expenses,2 Operating transfers related to the refunding of City and Vanous Properties Certificates of
Parncipanon (1988/89) and the Certificates of Partrcipation related to the Oakland Museum(1987/88),
3 Includes amounts from Landscape & Lightmg Assessment District (LLAD).
Source: City ofOakland 1992/93 Adopted Policy Budget. CITy of Oakland Financial STatements.
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Financial Obligations
Short-Term. The City of Oakland implemented a short-term financing program in 1981
to finance general fund cash flow deficits during the fiscal year (July 1 through June 30). Shownbelow are the short-term borrowings for the most recent fiscal years. The City has neverdefaulted on the payment of any of these notes.
The 1992/93 notes were issued in the principal amount of $50,000,000 on October 14,1992. The notes will become due October 15, 1993, and bear interest at a rate of 3.50% (pricedto yield 2.60%). According to the terms of issuance, the City has pledged to set aside certainreceipts from taxes, revenues and other moneys which are received by the City for the City'Sgeneral fund sufficient to pay principal and interest on the notes. Such receipts are to be frommoneys received during fiscal year 1992/93 and will be set aside on certain dates all prior toJune 30, 1993.
CITY OF OAKLAND
SHORT-TERM BORROWING
YISCllI Year
1983/84
1984/851985/86
1986/871987/88
1988/891989/90
1990/91
1991/92
1992/93
Source: CIty ofOakland, OfficeofFinance.
Amount
$26,000,000
29,800,000
35,700,00039,000,000
26,000,00030,000,00022,500,000
27,500,000
35,000,000
50,000,000
Lease Obligations. Since 1982, the City has entered into four separate sale-leasebackarrangements involving City property. Certificates of participation were issued by the CivicImprovement Corporation to finance the acquisition and construction of capital improvementsto twenty-three City properties, and by the OaklandRedevelopment Agency for the acquisitionand improvements to the Henry J. Kaiser ConventionCenter, the George F. ScotIan MemorialConvention Center, and the Oakland Museum. Because the certificates in each case areultimately secured by lease payments from the City to various nonprofit corporations, the
certificates are recorded as direct obligations of the City.
Long-Term Borrowings. In 1988, the City issued revenue refunding bonds in the amountof $209,835,000 which mature from 1993 to 2021. Such bonds are payable solely from theproceeds of guaranteed annuity contracts held in trust with PFRS (as defined below at
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"Retirement Programs") in the Pension Annuity Expendable Trust fund. Because of the natureof the financing structure, such bonds are recorded as direct obligations of the City.
In addition, the Oakland Redevelopment Agency has issued three series ofTax AllocationBonds for two redevelopment project districts. In each case, the Tax Allocation Bonds arelimited obligations of the Agency and are solely payable from and secured by a pledge of an
incremental portion of tax revenues assessed on property within each respective project district.For fiscal year 1990/91, the redevelopment tax increment within the City is valued at$1,696,107,000.
Special Assessment Debt. In April 1989, the City issued $4,365,000 of Medical HillParking District Refunding Improvement Bonds. Such bonds are payable from additional
property tax assessments levied against property owners in the Medical Hill Parking District.In the event of continuing delinquencies in the payment of the property owners' installments, theCity, in the absence of any other bidder, is obligated to purchase at delinquent assessment salesand pay future delinquent installments of assessments and interest thereon until the land is resold
or redeemed.
Internal Service Fund Long-Term Obligations. In 1980, the Oakland RedevelopmentAgency purchased and leased back City Hall West to the City. In 1988, the Agency issued 1988City Hall West Lease Revenue and Refunding Bonds. The bonds are payable from and securedby a pledge of annual lease rentals to be received from the City.
Enterprise Funds Long-Term Obligations. Numerous revenue bonds and certificates ofindebtedness have been issued by the Port of Oakland and the Acorn Mortgage Program. In the
case of the Port of Oakland, the outstanding balance for such obligations was determined to be$320,526,000 as of June 30, 1992. The Port operates on an enterprise basis in that debt servicefor Port bonds is not payable from general City revenues. In the case of the Acorn Mortgage
Program, the outstanding balance for such obligations was determined to be $3,375,000 as ofJune 30, 1992. Such obligations are secured by a pledge of FHA insured mortgage loans issuedfrom the related bond proceeds to developers in the Acorn Redevelopment Project Area.
Oakland-Alameda County Coliseum. Oakland-Alameda County Coliseum, Inc. is a nonprofit corporation managed by a self-appointed BoardofDirectors. The Board manages the fiscal
affairs and policies of the corporation at its own discretion. The corporation has issued bonds
which are payable from the operating revenues of the Corporation. Currently, the City andCounty lease the Coliseum Complex from the Corporation. The lease obligates the City and the
County to make annual rent payments of $750,000 each. The lease terminates in 2006.
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In the fiscal years 1992/93 through 1996/97, the City of Oakland will be makingcombined lease payments from its general fund as shown below:
CITY OF OAKLANDGENERAL FUND LEASE OBLIGATIONS
Henry J. G.F. ScotianKaiser Memorial Civic
Convention Convent ion Improvement Oakland
Fiscal Year Center Corporation Musewn Total
1992/93 $4,339,313 $3,895,000 $6,909,000 $1,902,713 $17,046,0261993/94 4,339,313 3,895,000 6,894,000 3,072,648 18,200,9611994/95 4,704,312 4,200,000 6,867,000 3,192,828 18,964,1401995/96 5,069,313 4,502,238 6,735,000 3,192,240 19,498,7911996/97 5,065,506 4,505,754 4,980,000 3,191,490 17,742,750Balance Due' $43,500,000 $38,000,000 $51,500,000 $39,408,025 $173,208,000
1 Pnncipal balance as of July 1, 1992.Source: City ofOakland, OfficeofFinance.
The City has never defaulted on the payment of principal or interest on any of its
indebtedness or lease obligations.
Statement of Direct and Overlapping Debt
Contained within the City are numerous overlapping local agencies providing public
services. These local agencies have outstanding bonds issued in the form of general obligation,
lease revenue and special assessment bonds. The direct and overlapping debtof
the City isshown below. Self-supporting revenue bonds, tax allocation bonds and nonbonded capital lease
obligations are excluded from the debt statement.
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CITYOF OAKLANDSTATEMENT OFDIRECTAND OVERLAPPING DEBT
1991/91 Assessed Valuation: $13,648,141,114(after deducting$1,011,098,876 redevelopment incremental valuation)
Direct and Overlapping Bonded Debt % Applicable
San Francisco Bay Area Rapid Transit District 7.864%
Alameda-Contra Costa Transit Distnct Cert. of Part. 22.467Oakland-Alameda County Coliseum 60.188Alameda County Board of Educallon Pubhc Facilities Corp. 20.376
Alameda County Authonty and Cert. of Part. 20.376
East Bay Municipal Utrhty Distnct 21.290
East Bay Municipal UnhtyDistrict, Special Distnct #1 53.954
East Bay Regional Park Distnct 11.722
Bay Area Pollunon Control Authonty 3.645
Peralta Community College District 56.194
Oakland Umfied SchoolDistnct 99.996
Oakland Unified School Distnct Cert, of Part. 99.996San Leandro Unified SchoolDistrict Cert. of Part. 14.492
Castro Valley Unified School District and Cert. of Part. 0.008-0.120
City of Oakland 100City of Oakland Buildmg Authonties 100
City of Oakland 1915 Act Bonds 100
Debt 5/1192
s24,803,0566,284,0208,191,587
1,591,366
50,016,763
9,511,308
16,571,9716,821,032
4,1921,933,074
16,109,356
49,468,021
315,926
192
12,000,000381,185,000'
3,990,000
$588,796,8642
9,511,308
16,571,971
8,191,687
$554,521,998
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBTLess: East Bay Municipal Utihty Distnct (100% self-supportmg)
East Bay M.U.D., Special District #1 (100% self-supportmg
Oakland-Alameda County Coliseum (100% self-supporting)
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT
1 Excludes refunding Certificates of Participation 1992 Senes A.
2 Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and
nonbonded capital lease obhgations.
RATIOS TO ASSESSED VALUATION:
Gross Direct Debt ($399,990,000)
Net Direct Debt ($393,185,000)
Total Gross Debt
Total Net Debt
3.08%'
3.03%4.54%
4.27%
1 General Obligation BondsLease Revenue Bonds and Cert. of Part.
Share of Oakland Alameda County Cohseum
Lease-Revenue Bonds$10,722,154
$ 12,000,000
381,185,000
6,805.000
$399,990,000
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/91:Source: California MUniCIpaL Staiisncs, Inc.
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Labor Relations
City employees are represented by five labor unions and associations, described in thetable below, the largest one being Service Employees United Public Employees (Local 790)which represents approximately 49 percent of all City employees. Approximately 72 percent ofall City employees are covered by negotiated agreements.
CITY OF OAKLANDLABOR RELATIONS
Employee Organization Nwnber of Employees
Oakland Police Officers Association 743
Umted Public Employees (Local 790) 2,690
Intemational Brotherhood of Electncal Workers 26
InternationalAssociationof Firefighters 477
(Local #557)
Western Council of Engineers 95
Source: City ofOakland, Office ofPersonnel Resources Management
Retirement Programs
Contract Expiration Date
June 3D, 1995
June 3D, 1994
June 3D, 1994
In arbitration
June 30, 1994
The Police and Fire Retirement System (PFRS) is a defined benefit plan administered bya Board ofTrustees and covers uniformed employees hired prior to July 1, 1976. As of June 30,1991, PFRS covered 457 current employees and 1,525 retired employees. EffectiveJuly 1, 1976,
the City began providing for and funding an amount equal to the annual normal service cost ofall PFRS participants and the amortization of unfunded benefits accumulated as of that date overa forty year period. On June 7, 1988, voters approved a City measure to extend the amortizationperiod of the unfunded benefits to fifty years. In accordance with these voter approved measures,the City annually levies an ad valorem tax on all property within the City subject to taxation bythe City to help fund the accumulated unfunded benefits. For fiscal year 1991, the City levieda tax of .1575% for this purpose. The present value of vested benefits (benefits to whichparticipants are entitled regardless of future service) was an amount that exceeded related planassets at June 30, 1990 by approximately $702.6 million. Effective July 1, 1985, the City'scontributions to PFRS have been at the rate of 76 percent of all uniformed employees'compensation subject to retirement contribution.
The City's annual contribution to PFRS is determined by calculating the total pensionliability for public safety employees under both PFRS and the Public Employees RetirementSystem (PERS). The amount to be contributed to both plans is allocated between years such thata level percentage of payroll (61.04% in 1991) will amortize the unfunded liabilities by 2026
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and 2000 of PFRS and PERS, respectively. Contributions to PERS are deducted and thedifference is contributed to PFRS.
For the fiscal year ended June 30, 1991, contributions to PFRS totaling $31.4 million($28.9 million employer and $2.5 million employee) were made in accordance with actuariallydetermined contribution requirements. Employer and employee contributions equaled 105%and
19%, respectively, of current year covered payroll for plan participants. The City's actuariesdo not make an allocation of the contribution amount between normal cost and the unfundedactuarial liability because the plan is closed.
Oakland MunicipalEmployees' RetirementSystem (OMERS) is administered by the Cityand covers three nonuniformed employees hired prior to September 1, 1970 who have notelected to transfer to the PERS as well as 416 retired employees. For the year ended June 30,1991, the City, in accordance with actuarially determined contribution requirements, did notmake contributions to OMERS as the plan is fully funded.
PERS is a defined benefit plan administered by the State of California and covers all
nonuniformed employees except those who have not elected to transfer from OMERS and alluniformed employees hired after June 30, 1976. As of June 30, 1991, the unfunded pensionbenefit obligation under PERS was $13.1 million.
For accounting purposes, employees covered under PERS are classified as eithermiscellaneous employees or safety employees. City miscellaneous employees and City safetyemployees are required to contribute 7% and 9%, respectively, of their annual salary to PERS.The City's contribution rates for the fiscal year ended June 30, 1991, were 7.9% and 7.3% foreach group, respectively. The City pays the entire amount of the miscellaneous employees'annual contribution (7%) toPERS. The remainingportion of the required employee contribution,if any, is paid by the City.
PERS uses an actuarial method which takes into account those benefits that are expectedto be earned in the future as well as those already accrued. PERS also uses the level percentageof payroll method to amortize any unfunded actuarial liabilities. The amortization period of theunfunded actuarial liability ended June 30, 1990.
State Budget Matters
After well-publicized difficulties, the State adopted its budget on September 1, 1992.
After a decrease to the City's allocation for fiscal year 1992/93 as specified in AB8, the
City's property tax reduction was $4.25 million. However, this amount will be adjusted in theCity's favor by an estimated $750,000, which is the City's share of a "disaster pool" shared byall cities which have had federally-declared disasters since October 1, 1989. Although the City'sproperty tax base is permanently reduced by AB 8, the disaster allowance will continue until
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fiscal year 1996/97. The expected reduction of about $3.5 million for fiscal year 1992/93represents less than 2% of the City's total budget.
SB 844 allows the City of Oakland, among other cities with port facilities, to require thePort of Oakland to transfer to the City $4 million or 25% of the Port's discretionary reserves,whichever is greater. This amount, however, cannot exceed the amount of the City's property
tax loss, which is expected to be about $3.5 million for fiscal year 1992/93. Any existingcontracts or payments for services between the City and the Port of Oakland are not affected,and any city charter provisions to the contrary are overridden by SB 844.
Oakland Hills Fire
On October 20, 1991, a fire damaged the Oakland Hills. An estimated 1,990 acres of
forest and residential property were damaged. 2,354 homes and 456 apartment units weredestroyed in the fire, most of which were in Oakland. An additional 87 homes were damaged.Property destroyed in the fire has been subject to lower assessed valuations. After rebuildingsubstantially the same as the previous home, the value assigned to the new home will be the
same as the value of the home on the Assessor 's file prior to the fire.
The City has spent $35 million responding to the fire. The State has approved assistanceto the City and the City fully expects 100% of this cost to be reimbursed by the FederalEmergency Management Agency (FEMA). Additionally, the fire represents a $1.1 million loss
from property taxes or approximately 1% of the City 's total property tax. However, there islegislation to reimburse the City for lost property taxes as a result of the fire.
The City has completed its debris clean up and erosion control measures. Home
reconstruction is proceed at a steady pace. As of November I, 1992, 717 building permits havebeen issued, 52 homes completed, and 842 applications for permits have been received.
Litigation. On October 20, 1992, seven lawsuits on behalfof approximately 350 personswere filed in state superior court seeking monetary compensation for damages allegedly sustained
in the Oakland Hills Fire. With an earlier suit filed in September, 1992, the total number of fire-
related lawsuits is eight. The City believes that state law immunizes it from many of the causesof action filed against it in these lawsuits, but that protracted litigation will be necessary to
resolve those issues to which immunities may not be applicable.
ECONOMIC PROFILE
Introduction
Founded in 1852, Oakland occupies 53.8 square miles, with 19 miles of coastline on theSan Francisco Bay in northern California. It is the seat of government of Alameda County, oneof nine counties comprising the San Francisco Bay region, and the center of commerce for the
Bay Area. The Bay Area has a population of over 6,000,000 people. A large number of public
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Municipal Utility District, Pacific Gas and Electric, and Pacific Bell. In addition to other Bay
Area media, the City has its own regional newspaper, radio stations, and a television station.
Having begun its development as a commercial and transportation center with the Gold
Rush in 1849, Oaldand is today recognized as the center of commerce for the entire Bay Area.
It is also one of the main sea terminals for cargo moving between the Western United States and
the Pacific Rim, Latin America and Europe. Since 1960, Oakland International Airport, operatedby the Port of Oakland, has developed into a major regional center of ai r passenger and cargo
je t operations. Last year it was one of the fastest-growing airports in the nation in number ofpassengers served. It currently provides 56 percent of the Bay Area's cargo flights. The City's
foreign trade zone is the largest in the Bay Area with the number of goods flowing through thezone having doubled in 1990, and revenues in excess of $25 million.
Over the last 25 years, there have been significant gains in diversifying the City's
economic base. While manufacturing jobs have decreased, the economy now offers a balanced
mixture of trade, government, financial and service-oriented occupations, and has a growingskilled crafts sector. The City's abandoned warehouses, foundries, and long silent cigar,
macaroni and tent factories are being rapidly converted into live/work studios for crafts people.
Less obvious to people passing through Oakland are the City's increasingly robustneighborhood retail areas such as Glenview, Lakeshore and Grand Avenue, Piedmont Avenue,
Fruitvale, Montclair Village, Rockridge and Chinatown. In fact it was because of the activity
in these commercial/shopping districts that the City did not suffer a significant decline in sales
tax revenue despite temporary closure of several major retail stores after the 1989 Loma Prieta
earthquake.
Development of Oakland's downtown has long been a primary thrust of city plannmg.
Over the past two decades, the central business district (extending to Lake Merritt) has
undergone a dramatic physical renaissance. New office and retail buildings, refurbished publicfacilities, renovated historical buildings, a new convention center, transportation improvements,parking facilities, luxury hotels, park enhancements and outdoor art have created a cosmopolitan
environmental enhancing the City's status as the hub of the Bay Area.
The quality of life in the City is enhanced by abundant opportunities for recreation,entertainment and culture. The City has a moderate climate and has 64 parks within its borders
including Lake Merritt winch is located downtown. The Oakland-Alameda County Coliseum
hosts concerts and other special events, and is the home to Oakland A's baseball and Golden
State Warriors basketball. A variety ofmuseums, music, dance and theater groups, both amateur
and professional, perform regularly in the City.
Population
The City is the sixth largest in the State of California. Between 1980 and 1991, the City's
population increased by a total of 11%or 37,412. The County has experienced steady population
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growth since 1960, and it is estimated thatpopulation has grown by 187,621 or 17% since 1980.
The fastest growing cities are located in the southern and eastern portions of the County. The
County is the second most populous in the Bay Area and the sixth most populous in the State.
CITY OF OAKLAND AND ALAMEDA COUNTYPOPULATION
City of Oakland Alameda County
1960 367,548 908,209
1970 358,486 1,064,049
1980 339,288 1,105,379
1990 372,242 1,279,182
1991 376,700 1,293,000
Source: Stalistics fo r 1991 are Stale Department ofFinance estimates as ofJanuary 1. The 1960,
1970, 1980 and 1990 totals are U.S. Censusfigures.
Employment
During the past seven years of economic expansion, Alameda County's labor force has
grown steadily. It is expected that the Countywill continue to experience moderate job growthwith approximately 82,000 more jobs in the County by 1996 than in 1989. This represents an
increase of 13.8 percent or an average of2.0 percent per year. Re:O.ecting the national recession
in 1990 and 1991, local job growth was slower at that time than during the preceding several
years. As the overall economy recovers, job growth in the County will also accelerate. Federal
government employment will increase in 1993 when the new Oakland federal building iscompleted. At this time, the various military bases in the County are not slated for closure.
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The following table represents the labor patterns in the County for 1987 through 1990and for June 1991 and June 1992 and civilian labor force figures for the City for the same
period:
CIVll..IAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
ANNUAL AVERAGES
(OOO's)
ALAMEDA COUNTY
Jnne1987 1988 1989 1990 1991 1992
Civilian Labor Force 639.9 667.6 685.6 675.7 679.1 698.3
Employment 607.3 636.9 656.5 647.6 643.2 646.3
Unemployment 32.6 30.7 29.1 28.1 35.9 42.1
Unemployment Rate 5.1% 4.6% 4.2% 4.2% 5.3% 6.1%
Wage and Salary Employme
Total All Industries 552.2 573.3 598.7 608.6 600.2 N/A
Agncu1ture 1.8 1.9 1.859 1.5 1.4 N/ANonagriculture 550.4 571.4 6.9 607.1 598.8 N/A
MinIng & Construcnon 28.8 30.5 31.7 31.4 27.4 N/A
Manufacturing 74.7 80.4 83.3 81.9 81.7 N/A
Transportation & Public Utilities 35.7 36.5 38.8 40.5 39.3 N/A
Wholesale Trade 36.3 37.6 40.9 40.8 43.4 N/A
Retail Trade 100.1 102.9 106.1 108.3 100.2 N/A
Finance, Insurance & Real Estate 29.2 29.6 30.4 30.8 29.4 N/A
Services 127.4 134.1 143.3 149.6 153.2 N/A
Government 118.2 119.8 122.4 123.8 124.2 N/A
CIvilian Labor Force' 181.1 187.3 195.2 190.5 192.3 199.2
Employment 168.3 175.3 183.7 179.5 178.3 180.0
Unemployment 12.8 12.0 11.4 11.0 14.0 19.2
Unemployment Rate 7.0% 6.4% 5.9% 5.8% 7.3% 9.6%
1 Based on place of work.
2 Based on place of residence.
Source: California Employment Development Department
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Largest Employers
The following tables represent the largest public and private employers in the City ofOakland:
CITY OF OAKLAND
LARGEST PUBLIC EMPLOYERS
Public Entity Product/Service
AC Transu DIstrict
Alameda County
Bay Area Rapid Transit District
EastBay Municipal Utility District
Highland Hospital Oakland
CIty o f Oakland
Naval Hospital Oakland
Oakland Pubhc Schools
Oakland Army BasePeralta Community College
US Navy Supply Center
US Post Office
Source: Oakland Chamber ofCommerce
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Pubhc Transportation
Governmental Operations
Pubhc Transportation
Unlity/Water
County Medical Center
Governmental Operations
Hospital-Medical Center
Education
Military Traffic Management/Cargo ControlEducation
Government Installation
Postal Services
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Company
CITY OF OAKLAND
LARGESI' PRIVATE EMPLOYERS
Product/Service
American President Companies, Inc.
American Protective Services
AT&T
Blue Cross
Children's Hospital
C,tICOrpSavings
Clorox Company
Emporium
Granny Goose
ICF-KaJ.ser Engineers
Kaiser Foundation Health Plan
Kilpatricks Bakery
Mother's Cake & Cookie Co.
Oakland Scavenger
Owens-DlmoisPacific Bell
Pacific Gas & Electnc
Safeway Stores, Inc.
San Francisco French Bread Co.
Scott Co
Southern Pacific Transportation
Summit Medical Center
Sunshine Biscuits
The Tnbune
World Savmgs and Loan
Source: Oakland Chamber of Commerce.
Commercial Activity
Ocean Slnppmg
Security
Communications
Health Care Insurer
Hospital Service
Banking
Household Products
Department Store
Food Products
Aluminum ProductslEngineenng
Hospital Services
Bakery Products
Bakery Products
Garbage Collection
Glass ContainersPublic Utility
Public Utility
Grocery Stores
Bakery Products
MechanIcal
TransportatIon
Hospital Services
Bakery Products
Newspaper
Bankmg
A six-year history of retail sales for the City IS shown in the following table:
CITY OF OAKLANDTAXABLE TRANSACTIONS 1986-1991
Retail Sales
1986
1987
1988
1989
1990
1991
$2,366,556,000
2,352,164,000
2,472,515,000
2,530,690,000
2,447,917,000
2,406,366,000
Source: State Board ofEqualization, Department ofResearch and
Statisttcs.
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Construction Activity
A six-year history of building permits and valuation appears in the following table:
CITY OF OAKLANDBUll.DING PERMITS AND VALUATIONS 1986-1991
Year
19861987
198819891990
1991
ResidentialPennits
820650
612505336762
Residential Valuationan Thousands)
$144,902101,383106,892
73,94171,399
113,323
Nonresidential Valuation!In Thomands)
104,59682,709
92,26057,77649,28489,982
Source: 1986: "California Construction Trends, • Security Pacific Bank. 1987 through 1991:
"California Building Permit Activity, • Economic Sciences Corporation.
Median Household Ineome
Effective Buyer Income (EBI) is defined as personal income less personal income tax and
nontax payments, such as fines, fees or penalties. Median household EBI for the City is shownin the table below.
CITY OF OAKLAND AND ALAMEDA COUNTYMEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME
1985-1990 Median EBI
Year City of Oakland Alameda County California United States
1985 $20,712 $28,037 $26,557 $23,6801986 21,960 29,756 28,227 24,632
1987 23,028 31,220 30,537 25,888
1988 22,927 30,984 30,088 24,488
1989 23,257 31,440 30,713 25,976
1990 25,306 34,211 33,342 27,912
Note: Beginning In 1988, methodology used to calculate Median EB1 differs from that in previous
years.
Source: "Survey of Buying Power, • Sales and Marketing Management Magazine.
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APPENDIXB
GENERAL PURPOSE
FINANCIAL STATEMENTS
CITY OF OAKLAND
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Deloitte&Touche
2101 Webster Street Facsimile (510) 835-4888Oakland, California 94612-3027Telephone (510) 287-2700
INDEPENDENT AUDITORS' REPORT
Honorable Mayor and Members of the City Councilof the City of Oakland, California
We have audited the accompanying general purpose financial statements of the City ofOakland, California (the City) as of June 30, 1991, and for the year then ended. These
general purpose financial statements are the responsibility of the management of the City. Ourresponsibility is to express an opinion on these general purpose financial statements based onour audit. We did not audit the financial statements of the Oakland Convention Center
Management, Inc., the Oakland Municipal Employees' Retirement System, the OaklandRedevelopment Agency and the Police and Fire Retirement System, whose statements reflecttotal assets and total revenues constituting 23% and 2% of the combined totals of the SpecialRevenue Funds; 35% and 61% of the combined totals of the Debt Service Funds; 50% and
71% of the combined totals of the Capital Projects Funds; 2% and 5% of the combined totalsof the Enterprise Funds; 53% and 76% of the combined totals of the Fiduciary Fund Types;and 50% of the combined total liabilities of the General Long-Term Obligations AccountGroup. Those statements were audited by other auditors whose reports have been furnished tous, and our opinion, insofar as it relates to the amounts included for such entities 10 the SpecialRevenue, Debt Service, Capital Projects, and Enterprise Funds, Fiduciary Fund Types, and
the General Long-Term Obligations Account Group, is based solely on the reports of the otherauditors.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the general purpose financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in thegeneral purpose financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall general purpose financial statement presentation. We believe that our audit and the
reports of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, such general purpose
financial statements present fairly, in all material respects, the financial position of the City atJune 30, 1991, and the results of its operations and the cash flows of its proprietary fund typesfor the year then ended in conformity with generally accepted accounting pnncrples.
November 15, 1991
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..,. CITY OF OAKLAND
ALL FUND TYPES AND ACCOUNT GROUPSCOMBINED BALANCE SHEET
June 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt CapitalGeneral Revenue Service Projects
ASSETS AND OTHER DEBITS
Assets
Cash and investments $ 53,646 $32,333 $ 2,846 s 66,359Receivables (net of allowance for
uncollectibles):Accrued interest 1,412 887 827 4,838Property taxes 2,394 197Accounts 15,066 81 62 2,900Grants 1,666 7,846 871Due from other governments 293Special assessments 3,949
Due from other funds 29,144 1,260 102 2,770Advances to other funds 27,207 730Notes and loans receivable (net of
allowance for uncollectibles) 9,504 34,947 16,167 22,468Restricted cash and investments with
fiscal agents:Designated for deferredcompensation plan
Other 2,491 81,660 228,339InventoriesProperty and equipment (net, where
applicable of accumulateddepreciation)
Land held for resale 9,251Other 12
Other Debits
Amount available in debt service funds
Amount to be provided for long-termobligations
TOTAL ASSETS AND OlHER DEBITS $140,039 $80,784 $105,613 $338,089
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GENERAL PURPOSE FINANCIAL STATEMENTS
ProprietaryFund Types
EnterpriseInternalService
FiduciaryFund Types
Trustand
Agency
Account GroupsTotal
(MemorandumOnly)
$ 44,522 $14,456 $278,690 $ $ $ 492,852
303 4,732 12,9992,591
15,326 101 89 33,6251,628 12,011
2933,949
140 1,018 3,171 37,60527,937
8,463 91,549
9,743 33,631 43,374
29,034 9,233 217,791 568,548
668 668
595,075 13,018 460,910 1,069,0039,251
28,741 28,753
89,570 89,570
522,898 522,898
$731,347 $40,122 $538,104 $460,910 $612,468 $3,047,476
(conunued)
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"" CITY OF OAKLAND
ALL FUND TYPES ANDACCOUNT GROUPSCOMBINED BALANCE SHEET, continued
June 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt CapitalGeneral Revenue Service Projects
LIABILITIES, EQUITY ANDOTHER CREDITS
Liabilities
Accounts payable and
s 34.334ccrued liabilities s 3.937 $ 6,428 $ 3,415Due to other funds . 6.067 3.164 1.042 20,415Advances fromother funds 458Due to other governments 135Deferred revenue 9.842 35,283 3.949 12.992Tax and revenue anticipation
notes payable 27.500Tax exempt commercial paperMatured bonds and interest payable 4,618Long-term obligationsObligations under deferred
compensation plansOther 258 54 6 488
Total liabilities 78,136 42.438 16,043 37,768
Equity and Other Credits
Investment in general fixed assetsContributed capitalRetained earningsFund balances:
Reserved 29,448 25.054 89,570 300.321Unreserved:
Designated 19,689 9,250Undesignated 12,766 4,042
Total equity and other credits 61.903 38.346 89,570 300 321TOTAL UABllJTIES, EQUITYAND OTHER CREDITS $140,039 $80,784 $105,613 $338,089
The notes to the financial statements are an integra!part of this statement,
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GENERAL PURPOSE FINANCIAL STATEMENTS
ProprietaryFund Types
EnterpriseInternalService
FiduciaryFundTypes
Trustand
Agency
Account GroupsGeneral GeneralFixed Long-TermAssets Obligations
Total(Memorandum
Only)
$ 26,863 s 2,392 s 12,424 $ s s 89,7935,795 13 1,109 37,605
26,549 200 730 27,937135
18,754 129 80,949
27,50029,300 29,3009,905 14,523
327,613 3,960 3,950 612,468 947,991
9,743 33,631 43,37412,268" 1 13,075
466790 6,694 51.845 612,468 1.312,182
460,910 460,91050,185 17,382 67,567
214,372 16,046 230,418
482,792 927,185
1,538 30,4771.929 18,737
264,557 33,428 486,259 460,910 1.735,294
$731,347 $40,122 $538,104 $460,910 $612,468 $3,047,476
(concluded)
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'" CITY OF OAKLAND
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
Year ended lune 30, 1991(In Thousands)
Governmental Fund TypesSpecial Debt Capital
General Revenue Service ProjectsREVENUES
Taxes:Property $ 70,345 $12,755 $ 1,173 $25,126State 45,175 8,754Local 62,248
Licenses and permits 6,160 1Fines and penalties 7,420 2,434Interest and rental 12,015 2,248 4,274 27,387Charges for services 22,105 374Federal and state grants and subventions 6,230 33,510 2,766Pension annuity distributionsOther 7,802 6,111 1,934
TOTAL REVENUES 239.500 66,187 5,447 57,213
EXPENDITURES
Current:General government 27,893 628 11,758Public safety 143,287 920 1,793Public works 27,026 14,172 1,210General services 5,006 3,088 156Parks, recreation and cultural
development 16,579 10,083 210Community and economic
development 6,579 23,812 827Other 11,172 1,019 31 2,523
Capital outlay 4,071 9,501 38,475Debt service:
Principal retirement 3,695Interest charges 41,630Bond issuance costs 116
TOTAL EXPENDITURES 241.613 63,223 45,472 56,952
EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES,CARRIED FORWARD $ (2.113) $ 2,964 $ (40 025) $ 261
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• CITY OF OAKLAND
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUNDBALANCES, continued
YearEnded June 30, 1991
(In Thousands)
Governmental Fund TypesSpecial Debt Capital
General Revenue Service Projects
EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES,BROUGHT FORWARD $ (2,113) $ 2,964 $(40,025) $ 261
OTHER FINANCINGSOURCES (USES)
Property sale proceeds 56 17 1,468Proceeds from issuance of bonds 77 12,000Operating transfers in 1,204 1,268 49,681 12,479Operating transfers ou t (l0,841) (l,283) (3,731) (29,903)
TOTAL OTHER FINANCINGSOURCES (USES) (9.581) 2 46,027 (3,956)
EXCESS (DEFICIENCY) OF REVENUESANDOTIIER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTI:IER FINANCING USES (11,694) 2,966 6,002 (3,695)
Fund balances at beginning ofyear, as restated (Note 21) 119,868 36,778 40,619 298,957
Residual equity transfers in 339 42,949 5,059Residual equity transfers ou t (46,610) (1.398)
FUND BALANCES AT END OF YEAR $ 61,903 $ 38,346 $ 89.570 $300,321
Thenotes to thefinancial statements are an ~ t e g r a 1 panof thisstatement.
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FiduciaryFund TypeExpendable
Trust
$ 16,160
12707.532)
07,405)
(1,245)
221,187
(339)
$219,603
Total(Memorandum
Only)
$ (22,753)
1,54112,07764,759(63,290)
15,087
(7,666)
717,40948,347(48.347)
$709,743
(concluded)
GENERAL PURPOSE FINANCIAL STATEMENTS
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'" CITY OF OAKLAND
GENERAL FUND AND ANNUALLY BUDGETED SPECIAL REVENUE
AND DEBT SERVICE FUNDSCOMBINED SCHEDULE OF REVENUES, EXPENDITURES
AND ENCUMBRANCES· BUDGET ANDACTUAL
ON A BUDGETARY BASIS
Year endedJune 3D, 1991(In Thousands)
General FundActual on a Variance·
Revised Budgetary FavorableBudget Basis (Unfavorable)
REVENUES
Taxes:Property $ 72,115 $ 70,345 $ 0,770)State 43,990 45,175 1,185Local 64,672 62,248 (2,424)
Licenses and permits 8,955 6,160 (2,795)Fines and penalties 6,606 7,420 814Interest and rental 7,374 10,146 2,772Charges for services 25,554 22,105 (3,449)Federal and state grants and subventions 13,209 12,083 (1,126)Other 13,250 14.008 758
TOTAL REVENUES 255,725 249,690 (6,035)
EXPENDITURES AND ENCUMBRANCES
Current:General government 37,129 27,780 9,349Public safety 140,945 143,139 (2,194)Public works 31,700 26,945 4,755General services 5,513 4,983 530Parks, recreation and cultural
development 17,052 16,569 483Community and economic
development 7,633 6,602 1,031Other 17,519 21,430 (3,911)
Capital outlay 19,226 3,217 16,009
Debt serviceTOTAL EXPENDITURES ANDENCUMBRANCES 276717 250,665 26,052
EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURESAND ENCUMBRANCES $ (20,992) $ ( 9 7 ~ $20,017
11Ie notes10 the financial statements are an integral part of thisstatement
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GENERAL PURPOSE FINANCIAL STATEMENTS
Annually Budgeted Annually BudgetedSpecial Revenue Funds Debt Service Funds
Actual on a vartance- Actual ona Variance .
Revised Budgetary Favorable Revised Budgetary FavorableBudget Basis (Unfavorable) Budget Basis (Unfavorable)
$ $ $ $ $ 501 $ 5014,774 8,754 3,980
1,219 1,219286 286 541 541
1 16,889 1,364 (5,525)
88 88 16,121 15.429 (692)
11.663 11.712 49 16,121 16.471 350
9,359147
7,902124
1,45723
2 2
279 231 48
6,656 4,438 2,218 16 (16)16,119 15,924 195
16,441 12,695 3,746 16,121 15,940 181
$ (4,77ID $ (983) $ 3,795 $ $ 531 $ 531
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$ CITY OF OAKLAND
ALL PROPRIETARY FUND TYPES AND PENSIONTRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN RETAINED EARNINGS/FUND BALANCES
Year Ended June 30, 1991
(In Thousands)
Proprietary FiduciaryFundTypes FundTypes Total
Intemal Pension (MemorandumEnterprise Service Trust Only)
OPERATING REVENUESInterestandrental $100,004 s s 24,716 s 124,720Charges fOl services 14,839 26,143 40,982Conlributions 28,929 28,929Other 4773 52 4825
TOTAL OPERATING REVENUES 119.616 26195 53645 199456
OPERATING EXPENSESPersonnel 33,686 9,906 43,592Supplies 2,502 5,654 8,156Depreciation andamortization 21,979 3,180 25,159Conttaetua! servicesand supplies 16,422 146 16,568Repairs andmaintenance 4,512 923 5,435General and administrative 15,242 4,211 19,453Rental 633 682 1,315Benefit payments 44,586 44,586Intereston bonds 885 315 1,200WriUH>ffofotherassets 10,427 10,427Other 2014 333 865 3212
TOTALOPERATING EXPENSES 108302 25035 45766 179.103
OPERATING INCOME11314
1 1607879 20353
NON·OPERATING REVENUES (EXPENSES)Federalandstategrants 1,330 1,330Interest, net (18,954) 223 (18,731)Other,net (3052) 128 (2924)
TOTALNON-DPERATING REVENUES (EXPENSES) (22 0Q6) 1681 (20325)
INCOME (LOSS) BEFOREOPERATING TRANSFERS (10,692) 2,841 7,879 28
Operatmg transfers out (J 183) (43) Cl 326>
INCOME (LOSS) BEFOREEXTRAORDINARY ITEMS (11,875) 2,698 7,879 (1,298)
EXTRAORDINARY GAIN (LOSS)FROMEARTHQUAKE (NOTE24) (839) 3300 2461
NET INCOME (LOSS) (12,714) 5,998 7,879 1,163
Depreciation of fixed assetsacquiredwithcontributedcapital 1,931 1,931
Retainedearmngs/fund balancesat beginnmgof year,as restated (Note21) 225.155 1O.Q48 258;W 493980
RETAINED EARNINGS/FUNDBALANCES ATENDOF YEAR s214,372 s 16,046 s 266,656 S 497,074
The notes to the fmancial statementsare an integra! partof thisstatement.
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GENERAL PURPOSE FINANCIAL STATEMENTS
ALL PROPRIETARY FUND TYPES
COMBINED STATEMENT OFCASH FLOWS
Year ended June30, 1991
(In Thousands)
Enterprise
TotalInternal (MemorandumService Only)
(4,688) (78) (4,766)(1,326) (143) (1,469)(50) (150)
$ (6,164) $ (221) $ (6.385)
(continued)
CASH FLOWS FROM OPERATINGACI1VITIES:
Operating Income
Adjustments to reconcile operating income tonet cash provided by operating activities
Depreciation and amortization
Retirement of property and equipmentWritedown of other assetsChanges in assets and liabilities:
Accounts receivableNotes and loans receivableOther assetsAccounts payable and accrued liabilitiesDeferred revenueObligations under deferred
compensation plansOther
NET CASH PROVIDED BY
OPERATING AcnVITIES
CASH FLOWS FROM NON·CAPITALFINANCING ACTIVITIES:
Inter-fund borrowings - ne tOperating transfers to other fundsRepayment of long-term debt principal
NET CASH USED FOR NON-CAPITAL
FINANCING ACI1VITIES
$11,314
21,979
8,89410,427
1,451134(984)
(6,739)2,621
5,744(41)
54,700
$ 1,160
3,180
(19)
(19)1,360
5,662
$12,474
25,159
8,89410,427
1,432134
(1,003)(5,379)2,621
5,744(141)
60.362
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'" CITY OF OAKLAND
ALL PROPRIETARY FUND TYPES
COMBINED STATEMENT OF CASH FLOWS, continued
Year ended June 30,1991
(In Thousands)
Enterprise
TotalInternal (MemorandumService Only)
$25,000 $ $25,000
14 14(6,148) (6,148)
128 128(70,527) (4,272) (74,799)6,856 757 7,613
(20,587) (275) (20,862)(839) 3,300 2,461
(4,946) (4,946)(4,908) (4,908)
(76,085) (362) (76,447)
CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:
Issuance of commercial paper - netLong-term debt:New borrowingsRepayments
Proceeds from sale of fixed assetsAcquisition and construction of capital assets
Grants from governmental agenciesRepayment of long-term debt interestExtraordinary gain (loss) on earthquakeRepayment of inter-fund borrowingsOther
NET CASH USED FOR CAPITAL ANDRELATED FINANCING ACTIVITIES
CASH FLOWS PROVIDED BYINVESTING ACTIVITIES:
Decrease (increase) in restricted cash - netPurchase of investments - net
Purchase ofOPA partnership interestDeferred charges and other assets
NET CASH PROVIDED (USED)BY INVESTING ACTIVITIES
NET INCREASE (DECREASE) INCASH AND EQUIVALENTS
CASH AND EQUIVALENTS ATBEGINNING OF YEAR
CASH AND EQUIVALENTSAT END OF YEAR
28,434(3,631)
(2,550)(4.312)
17,941
(9,608)
54.130
$44,522
(2,802)(468)
(3,270)
1,809
12,647
$14,456
25,632(4,099)
(2,550)(4.312)
14,671
(7,799)
66,777
$58,978
Thenotes to the financial statements are an mtegral part of this statement.
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NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
June 30, 1991
(1) ORGANIZATION AND DEFINITION OF REPORTING ENTITY
The City ofOakland (the City) was chanered on May 4, 1852, by the State of California and
is organized and exists under and pursuant to the provisions of State law. The Charter
established a Council-Manager form of government consist ing of nine elected
Councilmembers, including the Mayor, and a Council-appointed City Manager.
The City has defined its reporting entity in accordance with generally accepted accounting
principles (GAAP), which provide guidance for determining which governmental activities,
organizations, and functions should be included in the reporting entity. The basic criterion
used by management for including a potential component unit within the reporting entity is
the governing body's ability to exercise oversight responsibility. Oversight responsibility is
derived from the governmental unit's power and includes, but is not lirmted to: (a) financial
interdependency; (b) selection of governing authority; (c) designation of management; (d)
ability to significantly influence operations; and (e) accountability for fiscal matters. The
most significant manifestation of oversight is financial interdependency. Manifestations of
financial interdependency include responsibility for financing deficits, entitlements to
surpluses and guarantees of, or "moral responsibility" for, debt.
The General Purpose Financial Statements present information on the activities of the City
for which the Mayor and City Council have oversight responsibility, and include the Oakland
Municipal Employees' Retirement System (OMERS), the Oakland Pol ice and Fire
Retirement System (PFRS), the Redevelopment Agency of the City of Oakland (the Agency),
the Port of Oakland (the Port), the Oakland Convention Management, Inc., and the Civic
Improvement Corporation (the Corporation). The entities included in the General Purpose
Financial Statements utilize principles of governmental accounting similar to the City.
The City'S General Purpose Financial Statements do not reflect the operations of the Oakland
Housing Authority (Housing Authority), the Oakland Unified School District, the PeraltaCommunity College District and the Oakland-Alameda County Coliseum (a public benefit
corporation jointly owned by the City and the County of Alameda). While the Housing
Authority Board of Commissioners is approved by the City Council, the Housing Authority is
not included as a component unit because it is not WIthin the oversight responsibility of the
City and is not subject to the financial controls of the City Manager or the budgetary controls
of the Mayor and the City Council . The School and Community College Districts are not
included because they have their own elected governing boards and are independent of the
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'" CITY OF OAKLAND
City as to fiscal accountability an d financial affairs. Th e Coliseum has a self-appointed Board
of Directors and is not subject to the financial controls of the City Manager or the budgetary
controls of the Mayor and the City Council. Therefore, it is excluded due to minimal financial
interdependency and the City's lack of oversight responsibility.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentaiion - Fund Accounting
Th e accounts of the City are organized on the basis of funds or account groups, each of which
is considered a separate accounting entity. The operations of each fund are accounted for with
a separate se t of self-balancing accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures or expenses, as appropriate. The various funds an d account
groups are summarized by type in the General Purpose Financial Statements. Fund types and
account groups used by the City are described below.
Governmental Fund Types
Th e General Fund is the primary operating fund of the City. It accounts for normal
recurring activities traditionally associated with governments which are not required
to be accounted for in another fund These activities are funded principally by
property taxes, sales and use taxes, business an d utility taxes, interest and rental
income, and Federal and State grants.
Special Revenue Funds account for certain revenue sources that are legally restricted
to be spent for specified purposes. Other restricted resources are accounted for intrust, debt service, and capital projects funds.
Debt Service Funds account for the accumulation of resources to be used for the
payment of general long-term debt principal and mterest as well as related costs.
Capital Projects Funds account for financial resources to be used for the acquisition,
construction or improvement of major capital facilities (other than those financed
through the proprietary fund types).
Proprietary Fund Types
En te rp r ise F u nd s account for operations that are financed and operated in a manner
similar to private business enterprises, where the intent of the City Council is that the
costs (expenses, including depreciation) of providing goods or services to the general
public on a continuing basis be financed or recovered primarily through user charges.
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NOTES TO FINANCIAL STATEMENTS
Internal Service Funds account for the financing of goods and services provided by
the Office of General Services to other City departments on a cost-reimbursement
basis.
Fiduciary Fund Types
Trust and Agency Funds account for assets held by the City in a trustee capacity or
as an agent for individuals, private organizations, other governmental units and/or
other funds. These include the pension trust, expendable trust, and agency funds.
Operations of the pension trust funds are accounted for and reponed in the same
manner as the proprietary fund types. Operations of expendable trust funds are
accounted for in essentially the same manner as governmental fund types. Agency
funds are custodial in nature and do not involve measurement of resultsof operations.
Account Groups
The General Fixed Assets Account Group accounts for recorded fixed assets of the
City, other than those accounted for in the proprietary fund types.
The General Long-Term Obligations Account Group accounts for all long-term
obligations, including claim liabilities and vested compensation and sick leave of the
City, except for those obligations accounted for in the proprietary fund types.
Basis of Accounting
Measurement Focus
The accounting and reporting treatment applied to a fund is determined by Its measurement
focus. All governmental fund types and expendable trust funds are accounted for using a
current financial resources measurement focus. Only current assets and current liabilities are
generally included on their balance sheets. Operating statements for these funds present
increases (revenues and other financing sources) and decreases (expenditures and other
financing uses) in net current assets.
All proprietary fund types and pension trust funds are accounted for on a flow of economic
resources measurement focus. With this measurement focus, all assets and liabilitiesassociated with the operations of these funds are included on the balance sheet. Proprietary
fund type operating statements present increases (revenues) and decreases (expenses) in nettotal assets. Reponed fund equity (net total assets) is segregated into contributed capital and
retained earnings components.
Modified Accrual BasisofAccounting
The modified accrual basis of accounting is followed in the governmental fund types and
expendable trust and agency funds. Under the modified accrual basis of accounting, revenues
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• CITY OFOAKLAND
are recorded when susceptible to accrual, that is, when both measurable and available.
"Measurable" means the amount of the transaction can be determined and "available" means
collectible within the current period or soon enough thereafter to be used to pay liabilities of
the current period. Expenditures, other than principal and interest on general long-term
obligations, are recorded when the fund liability is expected to be liquidated with expendableavailable resources. The exception to the general modified accrual expenditure recognition
criteria is that principal and interest on general long-term obligations are recorded when due
or when amounts have been accumulated in the debt service fund for payments to be made
early in the following year.
Intergovernmental revenues which are primarily grants and subventions received as
reimbursement for specific purposes or projects are recognized based upon the expenditures
recorded. Intergovernmental revenues which are virtually unrestricted as to purpose of
expenditure and revocable only for failure to meet prescribed compliance requirements are
reflected as revenues at the time of receipt or earlier i f they meet the availability criterion.
Property taxes receivable within the governmental fund types which have been collected
within sixty days following year-end are considered measurable and available and are
recognized as revenues 10 the funds. All other property taxes receivable (net of a reserve for
delinquencies of approximately 8%) for the governmental fund types are offset by deferred
revenues and, accordingly, have not been recorded as revenue.
The County of Alameda is responsible for assessing, collecting and distributing property
taxes in accordance with enabling state law, and for remitting such amounts to the City.
Property taxes are assessed and levied as of March 1 on all taxable property located in the
City, and result in a lien on real property. Property taxes are then due in two equal
installments, the first on November 1 and the second on March 1 of the following calendaryear, and are delinquent after December 10 and April 10, respectively. Since the passage of
California's Proposioon 13, beginning with fiscal year 1978-79, general property taxes are
limited to a flat I% rate applied to the 1975-76 full value of the property, or 1% of the sales
price of the property or of the construction value added after the 1975-76 valuation. Assessed
values on properties (exclusive of increases related to sales and construction) can rise at a
maximum of 2% per year depending on increases in the consumer price index. Taxes were
levied at the maximum 1% rate during the year ended June 30, 1991.
Special assessments are recorded as revenues to the extent installments are considered
current. The estimated installments receivable not considered current are recorded and offset
by deferred revenue.
Other major revenues are susceptible to accrual when they are collected within 60 days of
fiscal year end. These include interest, utility consumption taxes, business license taxes,
franchise fees, transient occupancy taxes, and certain rentals. Real estate transfer taxes on
assessed properties transferred prior to the fiscal year-end and held by Alameda County, and
sales taxes and motor vehicle in lieu taxes held by the State at year-end on behalfof the City
are also recognized as revenue.
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NOTES TO FINANCIAL STATEMENTS
Major revenues that are determined not to be susceptible to accrual because they are either
not available soon enough to pay liabilities of the current period or are not objectively
measurable include delinquent property taxes, licenses (other than business licenses), permits,
fines and forfeitures.
AccrualBasis ofAccounting
The accrual basis of accounting is utilized in all proprietary fund types and pension trust
funds. Under the accrual basis of accounting, revenues are recognized when earned andexpenses are recognized when incurred
DeferredRevenues
Deferred revenues are those revenues for which asset recognition criteria have been met, but
for which revenue recognition criteria havenot been met. The City typically records deferredrevenues related to: uncollected property taxes; estimated special assessments not yet
payable; intergovernmental revenues (primarily grants and subventions) received but notearned (qualifying expenditures not yet incurred); long-term contracts; and notes or loans
receivable arising from loan subsidy programswhich are charged tooperations upon funding.
Budgetary Data
OriginalBudget
In accordance with the provisions of the City Charter, the City prepares and adopts a budget
on or before June 30 for each fiscal year. The City Charter prohibits expending funds forwhich there is no legal appropriation. Therefore, the City is required to adopt budgets for all
City funds.
Prior to July I, the original adopted budget is finalized through the passage of a resolution by
the City Council. The level of legal budgetary control by the City Council is established at
the fund level. For management purposes, the resolution passed by the City Council adopts
the budget at the departmental level of expenditure within funds.
Revised Budget
The revised budgetary data presented in the accompanying "General Fund and AnnuallyBudgeted Special Revenue Funds and Debt Service Funds-Combined Statement of
Revenues, Expenditures and Encumbrances-Budget and Actual on a Budgetary Basis,"reflect the following changes to the onginal budget:
Certainprojects or programs are appropriated on a multi-yearrather than annual basis.
I f such projects or programs are not completed at the end of the fiscal year,
unexpendedappropriations are carried forward to the following year with the approval
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'" CITY OF OAKLAND
of the CityManager. Annually appropriated funds, (not related to multi-year projects
or programs) lapse at the end of the fiscal year, unless such funds were encumbered or
otherwise approved for carryforward by the City Manager. Appropriations carriedforward from the prior year are included in the revised budgetary data. Historically,
appropriations carried forward haveultimately resulted in expenditures.
Transfers of appropriations between funds must be approved by the City Council.Required supplemental appropriations financed by unanticipated revenues or
beginning available fund balances must also be approved by the City Council.Approximately $3,385,000 was added to the General Fund budget for suchappropriations during the fiscal year. Additional budget appropriations in the GeneralFund were $1,500,000 in construction loans to California Hotel, $594,000 for fundingto various overspent grant programs, $500,000 for Lighting and LandscapeAssessment District exemptions, and$791,000 for other minor projects and activities.
Transfers of appropriations between departments and projects within the same fundmust be approved by the City Manager. Revised budget amounts reported in theaccompanymg General Purpose Financial Statements reflect both the appropriationchanges approved by the City Council and the transfers approved by the CityManager.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments forexpenditure of funds are recorded to reserve that portion of the applicable appropriation, isemployed as an extension of formal budgetary control in the governmental fund types.
Encumbrances outstanding at year-end are reported as reservations of fund balances.Encumbrances do not constitute expenditures or liabilities because the commitments will behonored during the subsequent year. Encumbrances are combined with expenditures for
budgetary comparison purposes.
Budget-Basis ofAccounting
The City adopts budgets each fiscal year on a basis of accounting which is different fromgenerally accepted accounting principles (GAAP). The major areas of difference are as
follows:
For budgetary purposes, outstanding commitments related to construction contractsand other purchases of goods and services are recorded as expenditures at the timecontracts or purchase agreements are entered into. Under the GAAP basis, theseobligations are only recognized when goods are actually received or services are
actually rendered.
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NOTES TO FINANCIAL STATEMENTS
Certain reimbursements from the Port and other governmental agencies are budgeted
on a cash basis, whereas such items have been accrued as receivables or advances to
other funds for GAAP purposes.
Certain funds of the City contain capital projects, grant projects, loan programs or
other programs that are budgeted on a multi-year basis. The amounts of the projectsand programs budgeted on a multi-year basis are significant compared to the items
budgeted on an annual basis, therefore a comparison of budget to actual for the fund
would not be meaningful. As a result, the following funds are excluded from
budgetary reporting:
Special Revenue Funds
Federal and State Grants
Other Special Revenue
Oakland Redevelopment Agency
Debt Service Funds
Oakland Redevelopment Agency
Parks and Recreation
Capital Projects Funds
Convention Center Financing
Oakland Redevelopment Agency
The City-Agency Sale-Leaseback Financings and Civic Improvement Corporation
Debt Service Funds are not budgeted by the City because the funds are reported for
financial statement purposes only, and are the result of the collapse of certain sale andleaseback financings between the City and the Agency and between the City and the
Civic Improvement Corporation. Any financial activity related to these financings is
budgeted on a basis consistent with the form of the transactions, whereas for reporting
purposes the financial activity is recorded in a manner consistent with the substance
of the transaction.
The Parks and Recreation Debt Service Fund was not budgeted because the fund was
created subsequent to the adoption of the 1990-91 Budget and activity in that fund has
been restricted by bond indenture.
Certain transactions, such as lease payments, debt service transfers, and certain otheractivity between funds, are recorded as revenues and expenditures under the
budgetary basis. Under the GAAP basis, these items are reclassified and recognized asother financing sources, other financing uses, residual equity transfers, and reductions
of long-term advances.
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$ CITY OF OAKLAND
Cash and Investments
The City follows the practice of pooling cash of all funds for investment, except for restricted
funds held by outside custodians. Investments are stated at cost or amortized cost, except forassets of deferred compensation plans which are reported at market value and primarily
consist of investments with maturities greater than one year.
Income earned or losses arising from the investment of pooled cash are allocated on a
monthly basis to the participating funds and component units based on their proportionate
share of the average daily cash balance.
For purposes of the statement of cash flows, the City considers all highly liquid investments
(excluding restricted assets) with a maturity of three months or less when purchased to becash equivalents.
Interfund Receivables/Payables
During the course of operations, numerous transactions occur between individual funds for
goods provided or services rendered. These receivables and payables are classified as "due
from other funds" or "due toother funds."
Advances
Long-term interfund loan receivables are reported as advances and are offset equally by a
fund balance reservation which indicates that they do not constitute expendable available
resources and, therefore, are not available for appropriation.
Restricted Cash and Investments with Fiscal Agent
Proceeds from debt and other cash and investments held by fiscal agents by agreement are
classified as restricted assets.
Bond Discounts and Issuance Costs
Bond discounts and issuance costs for proprietary fund type debt are generally deferred and
amortized over the term of the bonds under the interest method. Bond discounts and issuance
costs for governmental fund type debt are expended when incurred.
Inventories
Inventories, consistingof materials and supplies held for consumption, are stated at cost Cost
is generally calculated using the first-in, first-out method. Inventory items are considered
expenditures when used.
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NOTES TO FINANCIAL STATEMENTS
General Fixed Assets
General fixed assets are those acquired for general governmental purposes. Such assets
currently purchased or constructed are recorded as expenditures in the governmental funds
and are capitalized at cost in theGeneral Fixed Assets Account Group, with the exception of
certain assets acquired prior to July 1, 1984, which have been recorded at estimated historicalcost. Donated fixed assets are recorded at estimated fair market value at the time of receipt.
Public domain infrastructure (general fixed assets consisting of certain improvements other
than buildings) is not capitalized and is not included in the General Fixed Assets AccountGroup. These assets include roads, bridges, curbs and gutters, streets and sidewalks, drainage
systems, lighting systems, and similar assets. Such assets normally are immovable and of
value only to the City; therefore, stewardship for capital expenditures is satisfied without
recording such assets.
No depreciation is provided on general fixed assets.
Fixed Assets - Proprietary Fund Types
Fixed assets in the proprietary fund types are generally stated at cost, with the exception of
certain assets acquired prior to July I, 1984, which have been recorded at estimated historical
cost. Depreciation is provided using the straight-line method based on the estimated useful
life of the asset as follows:
Facilities and improvements
Container cranesFurniture, machinery andother equipment
5-50 years
25 years5-10 years
Interest costs applicable to qualifying assets are capitalized as part of the cost of the assets.
Interest earned on temporary investments of the proceeds from qualifying tax-exempt debt isoffset against the capitalized interest costs.
Tenant improvements which revert to the Port at the end of the lease term are recorded in an
appropriate asset account, with an offsett ing credit to deferred revenue. The asset is
depreciated over its useful life, not less than the term of the lease, and the deferred revenue is
amortized over the term of the lease, including renewal options.
Land Held for Resale
The Agency charges capital outlay expenditures for the full cost of developing and
administering its projects. Land held for resale is recorded as an asset at the lower of cost or
estimated net realizable value, with an equal amount recorded as a reservation of fund
balance.
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$ CITY OFOAKLAND
Vacation and Sick Leave Pay
Vacation pay may be accumulated and is payable upon retirement or termination of an
employee. Sick leave vests to an employee upon being employed for at least ten years with
the City. Upon termination, a vested employee is entitled to one-third of the sick leave
accumulated to the date of termination.
Vested vacation, sick leave and compensatory time are accrued, as appropriate, for all funds.
With respect to obligations of the governmental fund types, amounts expected to be paid
monetarily or by way of compensatory time off are accrued in the appropriate fund if due
currently. The remainder is recorded in the General Long-Term Obligations Account Group.
Retirement Plans
The City has three defined benefit retirement plans: Oakland Police and Fire Retirement
System (PFRS), Oakland Municipal Employees' Retirement System (OMERS), and Public
Employees' Retirement System (PERS). Refer to Note 18 for additional information.
Claims and Judgments
The costs of claims and judgments estimated to be paid with current expendable resources are
accrued as current liabilities of the General Fund when the liabili ty is incurred and the
amount can be reasonably estimated. The remaining estimated costs are recorded in the
General Long-Term Obligations Account Group.
Interfund Transfers
Interfund transfers are generally recorded as operating transfers except for the following
types of transactions:
Charges for services are recorded as revenues of the performing fund and
expenditures of the requesting fund.
Reimbursements for services performed are recorded as a reduction of an expenditure
in the performing fund and as an expenditure of the requesting fund..
Residual equity transfers, which represent nonrecurring or non-routine transfers of
equity between funds, are reponed as decreases or increases in fund balance for
governmental fund types.
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NOTESTO FINANCIAL STATEMENTS
Contributed Capital
Contributed capital in the proprietary fund types represents the accumulation of contributionsin the form of cash or other assets which generally do not have to be returned to thecontributor. Such contributions are recorded directly to contributed capital and, accordingly,
are not recognized as revenue. The following transactions are recorded as contributions in theproprietary fund types:
Cash and other asset transfers of equity from other funds.
Receipts of federal and state grants and subventions externally restricted foracquisitionof fixed assets.
Fixed assets contributed from other funds or the General Fixed Assets Account
Group.
Fund Equity
Reservations of fund balances indicate those portions of fund equity which are not availablefor appropriation or expenditure or which have been legally restricted to a specific use.
Portions of unreserved fund balances have been designated to indicate that portion of fundequity for which the City has tentative plans for financial resource utilization in a futureperiod. These amountsmay not result In actualexpenditures.
Reclassifications
Certain 1990 amounts have been reclassified to conform to the financial statementpresentation for 1991.
Total Columns onCombined Financial Statements
Total columns on the accompanying General Purpose Financial Statements are captioned
"Memorandum Only" to indicate that they are presented only to facilitate financial analysis.Data in these columns do not purport to present financial position, results of operations, orcash flows of the City in conformity with GAAP. Such data is not comparable to a
consolidation.
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'" CITY OF OAKLAND
(3) CASH AND INVESTMENTS AND RESTRICTED CASH ANDINVESTMENTS WITH FISCAL AGENTS
The City maintains a cash and investment pool consisting of City funds and cash receivedand held for OMERS, PFRS and the Port. The City's funds are invested by the Director of
Finance according to the investment policy adopted by the City Council. The objectives ofthe policy are legality, safety, liquidity, diversity, and yield. The policy addresses soundnessof financial institutions in which the City can deposit funds, types of investment instrumentspermitted by the California Government Code, duration of the investments, and thepercentage of the portfolio which may be invested in certain instruments. Pooled investmentspermitted by the policy are United States Treasury bills and notes, federal agency issues,bankers' acceptances, commercial paper with ratings of Alar PI by either Standard andPoor's Corporation or Moody's Investor Service Inc., negotiable certificates of deposit, timecertificates of deposit, repurchase agreements, and reverse repurchase agreements. The City'Sinvestment policy stipulates that the collateral to back up the repurchase agreement bepricedat market value and be held in safekeeping by the City's principal banking institution.
Additionally, the City Council has adopted certain requirements prohibiting investments incompanies doing business in or with South Africa, and restricting investments in U.S.Treasury bills and notes due to their use in funding nuclear weapons research and production.As of June 30, 1991, the City was in compliancewith the above investing requirements.
Other deposits and investments are invested pursuant to the governing bond covenants orRetirement Systems' investment policies. Under the investment policies, the investmentcounsel is given the full authority to accomplish the objectives of the bond covenants orRetirement Systems subject to the discretionary limits set forth in the policies.
Total City deposits and investments are (in thousands):
DepositsInvestments
TOTAL
$ 2,8261.101.948
$1,104,774
These are classified on the Combined BalanceSheet as (in thousands):
Cash and investmentsRestricted cash and investments with fiscal agents
TOTAL
Deposits
$ 492,852611.922
$1,104,774
At June 30,1991, the carrying amount of the City's deposits was $2,826,000 and the bankbalance was $12,805,000. Deposits include substantially all checking accounts, interestearning savings accounts, money market funds, and non-negotiable certificates of deposit Of
the bank balance, $1,734,000 was covered by federal depository insurance or by collateral
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NOTES TO FINANCIAL STATEMENTS
held by the City's agent in the City's name and $11,071,000 was collateralized with securitiesheld by the pledging financial institution's trust department or agent in the City's name, in
accordance with Section 53652 of the CaliforniaGovernment Code.
The California Government Code requires governmental securities as collateral for demand
deposits and certificates of deposit at 110 percent of all deposits not covered by federaldeposit insurance. The collateral must be held at the pledging bank's trust department oranother bank, acting as the pledging bank's agent, in the City's name.
Investments
The City's investments are categorized to give an indication of the level of risk assumed bythe City at year-end. Category 1 includes investments that are insured or registered, orsecurities held by the City or its agent in the City's name. Category 2 includes uninsured and
unregistered investments, with the securities held by the counterparty's trust department oragent in the City'S name. Category 3 includes uninsured and unregistered investments, with
the securities held by the counterparty, or by its trust department or agent but not in the City'Sname.
At June 3D, 1991, investments included the following (in thousands):
Category Carrying MarketTypeof Investments 1 2 3 Amount Value
U.S.Treasury securities s 53,n3 $152,280 $- s 206,053 $ 220,915
Federal agencyissues 182,500 182,500 185,488
Repurchase agreements 14,750 14,750 14,750
CommeICial paper 63,524 63,524 63,726
Bankers'acceptances 78,801 78,801 78,554Corporatestocks and bonds 49,496 122,567 172,063 193,314
Real estatedeeds 14,493 14,493 15,316
Investment agreements 13059 13,059 13.059
$103,269 $641.974 $-
Mutual funds 159,684 159,685
Life insurance annuityconrracts 187,021 187,021
Local Agency InvestmentFund 10 000 10000
TOTAL INVESTMENTS $1,101,948 $1,141,828
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.. CITY OF OAKLAND
(4) INTERFUND RECEIVABLES AND PAYABLES
The following are the current interfund balances at June 30, 1991 (in thousands):
Due from Due to
General Fund $29,144 $ 6,067
Special Revenue FundsFederal and State Grants 791Traffic Safety and Control 104State Gas Tax 99Other Special Revenue 349 2,231Oakland Redevelopment Agency 120 730
1.260 3,164Debt Service Funds
MedicalHill
Parking District 72Civic Improvement Corporation 30 1,041Pension Annuity 1
102 1.042Capital Projects Funds
Municipal Improvement Capital 1,984 18,583Oakland Redevelopment Agency 786 1.832
2,770 20,415Enterprise Funds
Parks and Recreation 94Sewer Service 150
Portof
Oakland 5,200Oakland ConventionManagement, Inc, 140 351140 5,795
Internal Service Funds
Equipment 822Radio 13Facilities 71Reproduction 11Central Stores 114
1.018 13Fiduciary Fund Types
Pension Trust - PFRS 1,966Expendable Trust:Oakland Redevelopment Agency Projects 1,205 1,047Parks, Recreation and Cultural Trust 60Other Expendable Trust 2
3,171 1.109
TOTAL $37,605 $37,605
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NOTES TO FINANCIAL STATEMENTS
(5) ADVANCES
The balances ofinterfund advances at June 30,1991, are as follows (in thousands):
Advances Advances
to from
General Fund $27,207 $
Special RevenueFundOakland Redevelopment Agency 730
Capital Projects FundOakland Redevelopment Agency 458
Enterprise FundPort ofOakland 26,549
Internal Service Fund
Central Stores 200
Expendable TrustFundOaklandRedevelopment Agency 730
TOTAL $27,937 $27.937
(6) MEMORANDUMS OF UNDERSTANDING
The City and the Port have Memorandums of Understanding (MOUs) relating to variousadministrative, personnel, data processing, and financial services ("Special Services"), and
police, fire, public street cleaning andmaintenance, and similar services ("General Services'')provided by the City to the Port.
Commencing in fiscal year 1986-87, the Port agreed to reimburse the City for amountsrepresenting an interest factor claimed by the City to be due as a result of debt servicepayments made by the City on 1909, 1925 and 1955 series general obligation bonds whichbenefited the Port. Payments of $4,946,000 were made by the Port to the City in fiscal year1990-91.
Pursuant to the Sixth Supplemental Agreement to the MOUs, effective June 4, 1991, the Cityand the Port agreed that the total remainmg obligation of the Port to the City arising out of or
related to any and all general obligation bonds issued by the City for the benefit of the Portwas $31,749,000. This amount is a fixed sum on which no interest shall accrue. Payments of$5,200,000 are to be paid in fiscal year 1991-92 from fiscal year 1990-91 surplus declared bythe Board of the Port Commissioners. As of June 30, 1991, $26,549,000 has been recorded asadvances to other funds in the City's General Fund and advances from other funds in the Portof Oakland Enterprise Fund; the remaining balance of $5,200,000, representing the currentportion of the advance, has been recorded as due to/from other funds. Future annual
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.. CITY OF OAKLAND
payments are required, but are payable only to the extent the Port determines that surplusmonies are available in the Port's Revenue Fund.
Payments for Special Services are treated as a cost of Port operations and have priority overcertain other expenditures ofPort revenues. Payments for Special Services to the City totaled
$956,000 in fiscal year 1990-91.
The City has requested payments for General Services of $1,194,000 from the Port for fiscalyear 1990-91. The Port's legal counsel advised the Port that payments for General Services tothe City are payable only to the extent the Port determines annually that surplus monies are
available. While payments for General Services were made in the amount of $989,000 infiscal year 1989-90, the Port did not declare that surplus monies were available and thereforeno payments have been made for General Services for fiscal year 1990-91. The Citymaintains that a surplus does exist and the payment is due to the City. City and Port officials
and legal counsel are currently meeting to resolve this issue. The revenue has not beenreflected in the General Purpose Financial Statements.
(7) NOTES AND LOANS RECEIVABLE
Notes and loans receivable at June 30, 1991, consist of the following (in thousands):
B-30
Oakland Athletics, bearing interest at 7.5%, principal and interest
paid September 30,1991
Grant-in-aid loans at various interest rates and due dates
Acorn Project Mortgage Loan, bearing interest of 10.125%,monthly installments of $83,256, balance due October 1, 2010
Cahon, Inc., bearing interest at 9%, principal and interest dueDecember 1, 1991, or earlier under certain provisions of the
note
Oakland Hotel Associates, Ltd., bearing interest at 7.67%,principal and interest due July 1,2013, or earlier under certain
provisions of the note
Oakland Hotel Associates, Ltd., bearing interest at Bank ofAmerica reference rate, principal and interest payable in
monthly payments until August 28, 1994
Preservation Venture, bearing interest at 3%, principal and interestdue August 31, 1993
$15,000
30,780
8,463
1,100
6,019
2,879
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NOTES TO FI NANCIAL STATEMENTS
Preservation Venture, bearing interest at 3%, principal and interestdue August 31, 1998
Foothill Plaza Partnership, bearing interest at 3%, principal and
interest payable in equal monthly installments through July 20,
2018.
City Center Garage West Associates, bearing variable rate interest,principal and interest due May 8, 2016, or earlier under certain
provisions of the note
Preservation Venture, bearing interest at 1/2% over the Bank ofAmerica reference rate, principal and interest due August 31,
1993
Mar Associates, bearing interest at 9%, principal and interest due
January 10, 1991 (due date in process of being extended)
Touraine Partners, bearing interest at 6%, principal and interest due
September 22,1991
Pacific Renaissance Associates II, bearing interest at 10%,principal and interest due July 30, 2015
Other notes and loans receivable
Allowance for uncollectibles
TOTAL
1,582
1,433
1,167
4,578
5,071
1,334
7,000
4,195
(2,906)
$91,549
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• CITY OFOAKLAND
(8) PORT OF OAKLAND
Oakland Portside Associates
In prior years, the Port authorized a public/private expansion project on property owned by
the Port in the Jack London Waterfront area. Construction of various office and retailfacilities and public areas was completed in fiscal year 1989-90. A major portion of thisproject was developed by Oakland Portside Associates (OPA), in which the Port had a 75%general and limited partnership interest. The remaining 25% general and limited partnershipInterest was owned by Portside Properties. The Waterfront Association. effectively owned50% by the Port and 50% by OPA, maintains the common area of the Jack LondonWaterfront properties.
On August 17, 1990, the Port purchased the 24% general partnership interest in OPA fromPortside Properties for $2,550,000. Additionally, the 1% limited partnership interest in OPAwas transferred from Portside Properties to Portof Oakland Public Benefit Corporation (Port
PBC), a nonprofit benefit corporation. These transactions increased the Port's effectiveownership in OPA to 100%.
Accordingly, effective fiscal year 1990-91, the Port changed its consolidation policy toinclude OPA, Port-PBC and the Waterfront Association on a 100% consolidated basis. Priorto such acquisition, the Port's 75% investment in OPA was accounted for on the equitymethod. The change in consolidation policy had no effect on net income (loss) for the yearsended June 30, 1991, or 1990.
Writedown of OPA Assets
Based on current and projected operating revenues and expenses, the Port determined that itwould not recover its full investment in the Jack London Waterfront properties. In fiscal year1990-91, the Port recognized a writedown on the OPA real estate project of $6,844,000,reducing its carrying value to $28,000,000. Additionally, $1,256,000 in previously capitalizedcosts related to lease options and buyouts were expensed in fiscal year 1990-91.
Construction Loan
In connection with the development of the Jack London Waterfront properties, OPA secureda $40,000,000 construction loan with Bankers Trust Company in 1988 to cover the estimatedconstruction costs, less capital contributions, of the project's five buildings. Pnncipal and
interest are due and payable on June 30, 1993, although the maturity date can be extended fora period of two years if certain conditions specified in the loan agreement are met. The loanbears interest at Bankers Trust Eurodollars plus 1.75% or prime plus .5%.The interest rate onthe loan was 8.5% at June 30, 1991. The loan is secured by a first deed of trust andassignment of rent and fixtures on OPA's property and by a $5,000,000 guarantee from the
Port.
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NOTES TO FINANCIAL STATEMENTS
Provisions of the loan allow OPA to fund interest payments through additional principaldraws on the loan. The loan agreement contains certain restrictive provisions as to OPA andrequires thatOPA maintain certain financial ratios. Due to the change in partnership structurein August 1990, Bankers Trust notified OPA that it was in default of the loan agreement andwould not allow OPA any pnncipal draws on the loan.
On December 20, 1990, OPA signed a letter of understanding with Bankers Trust Company
regarding the proposed modification of the construction loan and have negotiated additional
loan modification terms. The Port anticipates signing modified loan documents by December
31, 1991.
In the opinion of management of the Port, this matter will be resolved in a manner which
does not have a material adverse effect on the financial position of the Port. In the event thatthe default is not cured, Bankers Trust has the option to seek remedies against OPA. This islimited to acceleration of principal repayments, foreclosure and payment from the Port.
Write-off of Sierra Tunnels
The Port entered into agreements with Union Pacific Railroad and American President Lines("APL") in the mid-1980s to modify railway passages through the Sierra Nevada mountains
to accommodate double-stacked high cube containers. The Port's $5,000,000 share of the
project was capitalized and included in Deferred Charges and Other Assets. Such
capitalization was based upon the expected recovery of the $5,000,000 by the Port from a
surcharge on certain container/rail shipments (other than from APL) originating at the Port
and using the Sierra Tunnels.
During fiscal year 1990-91, the Port determined that it was unlikely that it would recover any
of its costs by such surcharges. No incremental revenue had been received and none wasforecast for the foreseeable future. As a result, the Port wrote off its remaining $3,583,000 of
Sierra Tunnels' costs.
(9) FIXED ASSETS
A summary of changes in general fixed assets for the year ended June 30, 1991, is as follows
(in thousands):
Balance BalanceJuly 1, June 30,
Changes in General FixedAssets 1990 Additions Deletions 1991
Land $ 46,729 $ 3,842 $- $ 50,571Facilities and improvements 370,396 4,100 374,496Furniture, machinery and
equipment 17,185 4,340 45 21,480Construction in progress 4,450 9.913 14.363
TOTAL $438,760 s22,195 $45 $460,910
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• CITY OF OAKLAND
310
728,968
s
29,285
(16,267)
$13,018
(162,227)
$595,075
EnterpriseFunds
s 64,070627,55621,27444,402
757,302
Proprietary Fund Types
LandFacilities and improvementsFurniture, machinery and equipmentConstruction in progress
Less accumulated depreciationand amortization
TOTAL
A summary of property and equipment at June 30, 1991, is as follows (in thousands):
InternalServicefunds
Facilities and improvements in the Enterprise Funds consist primar ily of the Port of
Oakland's buildings and structures.
(10) TAX AND REVENUE ANTICIPATION NOTES PAYABLE
During the fiscal year ended June 30, 1991, the City issued tax and revenue anticipation notespayable of $27,500,000. The notes were issued to satisfy current General Fund obligations
and are to be repaid from current tax revenues. The notes bear an effective interest rate of
approximately 5.35%. Principal and interest payable were due and paid November 14, 1991.Funds have been segregated in a restricted account for the repayment of the notes.
(11) TAX-EXEMPT COMMERCIAL PAPER
During September 1989, pursuant to a Trust Indenture dated April 1, 1989, and the Third
supplemental Trust Indenture dated September 1,1989, the Port authorized the issuance of upto $75,000,000 of Commercial Paper Notes, Series A and B ("Notes"), of which $29,300,000
of Series A was outstanding as of June 30, 1991.
Proceeds of the Notes are used to provide monies for certain costs of acquisition,construction, reconstruction, improvement or expansion of Port facilities, and to pay issuance
costs and principal of maturing Notes. The Notes, the 1989 Revenue Bonds and the 1990
Revenue Bonds were all issued pursuant to the 1989 Indenture.
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NOTES TO FINANCIAL STATEMENTS
(12) LEASES
A major portion of the Port's property and equipment is held for lease. Leased assets includemarine terminal facilities, airport facilities, a golf course, office and commercial space, andland. All leases have been classified as operating leases.
Certain maritime facilit ies are leased under agreements which provide the tenants withpreferential, but nonexclusive, use of the facilities. Certain leases provide for rentals based on
gross revenues of the leased premises or, in the case of marine terminal facilities, on annualusage of the facilities. Such leases generally provide for minimum rentals, and certain
preferential assignments provide for both minimum and maximum rentals. A summary of
revenues from long-term leases for the fiscal year ended June 30, 1991, is as follows (inthousands):
Minimum noncancelable rentals,
including preferential assignmentsContingent rentals in excess of minimums
Secondary use of facilities leasedunder preferential assignments
Total revenues from long-term leases
$ 32,1507,138
4.683
$ 43,971
As of June 30, 1991, minimum future rental revenues for fiscal years ending June 30 undernoncancelable operating leases having an initial term in excess of one year are as follows (in
thousands):
199219931994
1995
1996Thereafter
Total minimum future rental revenues
$ 29,47526,515
25,89724,894
21,569177.Ql3
$305,363
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• CITY OFOAKLAND
(13) LONG-TERMOBLIGATIONS
General Long-Term Obligations
The following is a summary of changes in general long-term obligations for the year ended
June 30, 1991 (in thousands):
Balance at Additional Maturities,July 1, O b l i ~ t i o n s Retirements Balance1990 an Net and Net at June 30,
Increases Decreases 1991
Bonds payable $393,059 $12,000 $ 3,515 $401,544Certificates of participation 169,110 169,110Special assessment debt with
governmental commitment 4,365 180 4,185Accrued vacation and sick leave 13,370 499 13,869
Self-insurance liability forworkers' compensation 12,734 3,173 15,907
Estimated claims payable 14,243 6.390 7,853
TOTAL $606,881 $15,672 $10,085 $612,468
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NOTES TO FINANCIAL STATEMENTS
General long-term obligations at June 30, 1991 consisted of the following (in thousands):
Interest Balance atMaturity Rates June 30, 1991
BondsPayableGeneralObligatlOl1 Bonds,Series1991A(a) 1993-2015 5.5%-8.5% s 12,000SpecialRevenueRefundingBonds(b) 1993-2021 6.5%-7.6% 209,835OaklandRedevelopmentAgency
Tax AllocationBonds (c)CentralDistrict,Senes 1989A
Serial bonds 1993·2000 5.75%-6.55% 26,900Capital apprecianonbonds 2001-2009 6.6%-6.65% 11,899Tenn bonds 2010-2019 7.125% 51,600
TaxAllocationRefundingBonds(d)Central District,Series 1986
Serial bonds 1991-2000 5.25%-7.5% 19,560Tenn bonds 2001-2014 7.5% 66,375
AcornRedevelopmentProject,1988Serial bonds 1993-2000 6.30%-7.00% 1,300Tenn bonds 2007 7.40% 2.075
401544
Certificates of Participation
Civic ImprovementCorporation (e) 1992-2016 Yanable 52,300OaklandRedevelopmentAgency
HJ. KaiserConventionCenter(f) 2002 9.875% 8,550HJ. KaiserConvenuonCenter(f) 2014 10.00% 34,950ScotianMemorial Convention Center (g) 2014 10.25% 38,000OaklandMuseum 1987SeriesA (h) 1992-2002 6.20%-7.85% 9,850OaklandMuseum 1987SeriesA (h) 2007 8.10% 10,115
OaklandMuseum 1987SeriesA (h) 2012 8.125% 15345169 110
SpecialAssessment DebtwithGovemmentalCommitment
MedicalHill Parking DistrictBonds1989(i)
Other Long-Tenn Liabilities
Accruedvacation and sick leave 'Self-insurance liability forworkers' compensationEstimated claims payable
TOTALGENERALLONG-TERM OBLIGAnONS
2004 6.70%-7.50% 4185
13,86915,9077853
37 629$ 612,468
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'" CITY OF OAKLAND
Bonds Payable
(a ) General Obligation Bonds, Series 1991A
On February 19, 1991, the City i ssued $12 mil lion of Series 1991A GeneralObligation Bonds. The City received authorization to issue $60 million of generalobligation bonds by a two-thirds vote of the electorate on the November 6, 1990,general election. The proceeds from the bonds are to be used for the purpose of
financing the acquisition of land and to expand and develop park and recreation
facilities. The Series 1991A issue represents the first of five issues. Additional seriesare to be issued in 1994, 1997, 2000 and 2003. The City is obligated to levy ad
valorem taxes upon all property subject to taxation by the City without limitation ofrate or amount, for the payment of the principal and interest on the bonds.
(b ) Special Revenue Refunding Bonds
The Revenue Refunding Bonds are payable solely from the proceeds of life insurance
annuity contracts held in trust with PFRS in the Pension Annuity Expendable TrustFund. The Revenue Refunding Bonds maturing in 2021 are subject to mandatoryredemption prior to their stated maturities in direct order of their maturities fromsinking fund payments commencing on August 1,2004.
(c) Tax Allocation Bonds
On August I, 1989, the Central District Redevelopment Project Tax AllocationBonds, Series 1989A (''Tax Allocation Bonds"), were issued by the Agency. The net
proceeds of the Tax Allocation Bonds are used by the Agency to finance projects andrelated improvements in the Central District Redevelopment Project Area. The Tax
Allocation Bonds are a limited obligation of the Agency and are payable from and
secured by a pledge of a portion of tax revenues assessed on property within the
Central District Redevelopment Project Area, allocable to the Agency pursuant to
Redevelopment Law.
The lien created by the pledge of the tax revenues is subordinate to a lien on tax
revenues in favor of the Agency's Central District Redevelopment Project Tax
Allocation Refunding Bonds, Series 1986. The Agency may only incur additionalindebtedness payable from subordinated tax revenues on a parity with the Tax
Allocation Bond when set subordinated tax revenues received by the Agency in theprior year equals or exceeds 120% ofmaximum annual debt service, excluding debt
service on Series 1986 bonds.
The term bonds are subject to optional redemption in whole or in part on any interestpayment date, in such amounts as directed by the Agency. The Term Bonds are, also,subject to mandatory sinking fund redemption in whole, or in part by lot, on
September 1 in each year commencing September I, 2010.
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NOTES TO FINANCIAL STATEMENTS
(d ) Tax Allocation Refunding Bonds
In fiscal year 1986-87, the Central District Redevelopment Project Tax Allocation
Refunding Bonds, Series 1986, were used to defease the Central DistrictRedevelopment Project Tax Allocation Bonds, Series A andB.The outstanding balance at June 3.0, 1991, of the defeased bonds was $63,915,000.The Central District Redevelopment Project Tax Allocation Refunding Bonds arepayable from and secured by a pledge of incremental property taxes resulting from theincrease in assessed valuations within the Central District Redevelopment Projectsubsequent to the adoption of the related redevelopment plan. The Agency must setaside from incremental tax revenue received from the Central District an amountequal to 125% of the annual debt service requirement for the ensuing fiscal year.These funds are held by the fiscal agent.
The term bonds are subject to mandatory redemption requirements beginningFebruary 1,2001.
The Acorn Redevelopment Project 1988 Tax Allocation Refunding Bonds were usedto advance refund $2,895,000 of outstanding Acorn Redevelopment Project TaxAllocation Refunding Bonds (prior bonds) with an average coupon rate of 11.84%.As a result, the prior bonds are considered to be defeased and the liability of the priorbonds has been removed from the General Long-Term Obligations Account Group.
The Acorn Redevelopment Project 1988 Tax Allocation Refunding Bonds are payable
from and secured by a pledge of incremental property taxes allocated to the Agencyresulting from the increase in assessed valuation of properties within the AcornRedevelopment Project.
Bonds maturing in 2007 are subject to mandatory sinking fund requirementscommencing May 1,2001, and are subject to prior redemption.
Certificates ofParticipation
The Certificates of Participation have been recorded in the City's General Long-TermObligations Account Group because in substance, the Certificates were issued on the faith
and security of the City, and ultimately the City's lease payments to the Corporation willrepay principal and interest on the Certificates.
(e) Civic Improvement Corporation
On December I, 1985, the City entered into various simultaneous agreements tofinance the acquisition and construction of capital improvements on City property,such as traffic control devices, street resurfacing, parking lots, garages and the
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.-,. CITY OF OAKLAND
rehabilitation of various City buildings. The following is a summary of theagreements that have been entered into.
Certificates of Participation - The Civic Improvement Corporation (the
Corporation), a non-profit corporation, issued $52,300,000 variable ratedemand Certificates of Participation evidencing the proportionate interests of
the owners thereof 10 lease payments to be made by the City for certainproperty pursuant to a master lease agreement with the Corporation.
Master Lease Agreement - The City entered into a lease agreement with theCorporation whereby the Corporation agreed to provide financing for certainproposed capital improvements. Under the terms of the agreement, the Cityagreed to supervise and provide for the construction and improvement ofcertain City properties. The improvements are paid for by the Corporationfrom the proceeds of the Certificates that are held by the Trustee Once the
improvements are completed, the Corporation has agreed to lease the projectsto the City. The lease payments to be received by the Corporation will be
equal to the related principal and interest payments on the Certificates ofParticipation.
Letter of Credit - The Letter of Credit (Letter) is an irrevocable direct-payobligation of National Westminster Bank PLC (the Bank). This letter is due toexpire on September 24, 1995, but will automatically extend unless the Bankgives notice two years prior to the termination date that it will not extend theLetter. In aggregate, the City has available $53,400,499 as of June 30, 1991, ofwhich $52,300,000 may be drawn for the payment of the unpaid principal
amount of the Certificates. The balance of $1,100,499 may be drawn forpayment of interest accrued on the Certificates. In order to obtain the Letter,
the City is obligated to pay commission fees of three-eighths of one percent
per annum on the available amount outstanding on the Letter. For the yearended June 30, 1991, the City paid a total letter of credit fee of approximately
$204,000.
(0 Henry J. Kaiser Convention Center
In 1982 the Agency issued Certificatesof Participation in the amount of $43,500,000to finance the acquisition and renovation of the Henry J. Kaiser Convention Center.
The Certificates of Participation which are subject to prior redemption havemandatory sinking fund requirements commencing April 1, 1995.
Concurrently, the Agency sold the property to Oakter Associates Limited Partnership
(Oakter), an unrelated third party, for cash and a note receivable due in sixtysemi-annual principal and interest ins ta llments ranging from $2,170,000 to$2,535,000. The interest installments commenced April 1, 1985. Interest not covered
by the semi-annual payment has been deferred and added to the Agency's outstanding
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NOTES TO FINANCIAL STATEMENTS
note receivable balance. Principal reductions are scheduled to begin on April I, 1995.The note receivable has an effective interest rate of 9.97% per annum and is securedby a deed of trust and Oakter's rights in its lease agreement with the City.
Oakter subsequently leased the building and improvements to the City in a sale andleaseback transaction. The lease provides the City with the option to purchase thebuildings and improvements at the end of the lease term.
Due to the substance of the financing transaction, the effect of the sale and leaseback
transaction has been recorded directly as an issuance of debt to finance the
improvement of the related City structures. Accordingly, the Certificates of
Participation are recorded in the General Long-Term Obligations Account Group. The
note receivable referred to above and capital lease obligation owed to Oakter are notreflected in the City's General Purpose Financial Statements.
(g) George F. Scotian Memorial ConventionCenter
In 1983 the Agency issued Certificates of Participation in the amount of $38,000,000
to finance the acquisition of the George F. Scotlan Memorial Convention Center (theConvention Center). The Certificates of Participation have mandatory sinking fund
requirements commencing April I, 1995, and are subject to prior redemption.
The Agency s imultaneously sold the property to OCCEN Corporation Limited
Partnership (OCCEN), an unrelated third party for cash and a note receivable payable
in sixty-one semi-annual installments ranging from $1,948,000 to $2,253,000. The
interest installments commenced September 1, 1984. Principal reductions are
scheduled to begin on March 1, 1995. The note receivable has an effective interestrate of 10.25% per annum and is secured by a deed of trust and OCCEN's rights in its
lease agreement with the City.
Subsequently, OCCEN sold the buildings and improvements to Oakmar Leasing
Corporation (Oakmar) which leased the buildings and improvements back to the City
in a sale and leaseback transaction. The City has the option of purchasing the
buildings and improvements at the end of the lease term.
Due to the substance of the financing transaction, the effect of the sale and leasebacktransaction has been recorded directly as an issuance of debt to finance the
improvement of the related City structures. Accordingly, the Certificates ofParticipanon are recorded in the General Long-Term Obligations Account Group. Thenote receivable referred to above and the capital lease obligation owed to Oakmar are
not reflected in the City'S General Purpose Financial Statements.
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.. CITY OFOAKLAND
(h) Oakland Museum 1987 Series A
In October 1987, the Agency purchased the Oakland Museum (the Museum) from
Oakart Associates Limited Partnership (Oakart), to whom the City had sold the
Museum in 1982. The Museum was purchased for $6,700,000 and assumption of a
purchase money note from Oakart payable to the City in the amount of $23,000,000.
The Agency also assumed all rights of Oakart in the master lease agreement between
Oakart and the City.
Concurrent with the purchase, the Agency issued Certificates of Participation in the
amount of $35,310,000. The proceeds of the Certificates of Participation were used to
buy back the Museum and to advance refund the 1982 Municipal Improvement
Revenue Bonds, Series A. The Certificates of Participation are special limited
obligations of the Agency payable solely from payments made to the Agency by theCity under the terms of the master lease agreement between the Agency and the City.
The term Certificates of Participation mature in 2007 and 2012. These Certificates,
which are subject to prior redemption, have mandatory sinking fund requirements
commencing April 1, 2003.
Due to the substance of the financing transaction, the effect of the issuance of the
Certificates of Participation has been recorded directly as an issuance of debt to
finance the reacquisition of the Museum, and to advance refund the 1982 MunicipalImprovement Revenue Bonds, Series A. Accordingly, the Certificates of Participation
are recorded in the General Long-Term Obligations Account Group. The Agency's
direct financing lease receivable and City's capital lease obligation are not reflected inthe City'S General Purpose Financial Statements. •
Special Assessment Debt with Governmental Commitment
(i) Medical Hill Parking District Bonds
In April 1989, the City issued $4.365,000 of Medical Hill District Refunding
Improvement Bonds 1989 (Refunding Bonds) with an average coupon rate of 7.15%.
The net proceeds of $4,136,000 plus an additional prior bond reserve were depositedwith an escrow agent to provide for all future debt service payments on the refunded
bonds. The Refunding Bonds are payable from additional property tax assessments
levied against property owners in the Medical Hill District. In the event of continuing
delinquencies in the payment of the property owners' installments, the City, in the
absence of any other bidder, is obligated to purchase the delinquent property owner's
property at a delinquent assessment sale and pay delinquent and future installments of
assessments and interest thereon until the land is resold or redeemed.
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· NOTES TO FINANCIAL STATEMENTS
Internal Service Fund Long-Term Debt
The internal service fund debt at June 30, 1991, was as follows:
City Hall WestLease RevenueRefunding Bonds
InterestMaturity rates
1991-2010 5.20%-7.375%
Balance atJune 30,1991
$3,960,000
In 1980 the Agency purchased and leased back City Hall West to the City. In 1988 theAgency issued 1988 City Hall West Lease Revenue and Refunding Bonds. The bonds arepayable from and secured by a pledge of annual lease rentals to be received from the Cityunder the CityHallWest Lease Agreement.
Due to the substance of the financing transaction, the effect of the sale and leasebacktransaction has been recorded directly as an issuance of debt (and subsequent refunding) tofinance the improvements of the City Hall West. Accordingly, the City Hall West buildingand the debt outstanding are recorded in the City'S Facilities Internal Service Fund; theAgency's direct financing lease receivable and the City'S capital lease obligation are notreflected in the City'SGeneral Purpose Financial Statements.
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..,. CITY OF OAKLAND
Enterprise Funds Long-Term Debt
The enterprise fund debt at June 30, 1991,was as follows (in thousands):
Port ofOakland
Revenue Bonds:1957 Series (a)1966Airport Development1966HarborDevelopment1977 Small CraftHarbor1981 Small CraftHarbor1982 Small CraftHarbor1983 Small CraftHarbor1989 Revenue Bonds (b):
SenesASeries BSeriesC
1990 Revenue Bonds Series D (c)
Ceruficates of Indebtedness:1971, Seatrain facilIty (d)
Mitsubishi Note
Liability to U.S. Government
Consttucnon Loan, Oakland PortsideAssociates (See Note 8)
Oakland RedevelopmentAgency
AcornMortgage Program
Revenue Bonds:19801981
TOTAL EN1ERPRISE FUNDSLONG-TERM DEBT
Port ofOakland
Priority of Payment and Security
Maturity
1991-19992004-2006
2006
2009
201020192020
1992-20191992-20192003-20191992-2003
2001
2000
1992
1993
20112001
InterestRates
3.75%-7.00%4.125%-9.56%
3.75%4.50%6.00%6.00%6.10%
7.00%-7.70%6.75%-7.45%7.10%-7.25%6.125%-8.00%
6.00%-8.00%
9.00%
4.00%
8.50%
8.875%11.80%
Balance atJune 30,1991
s 49,9253,8132,5302,9981,6971,055367
72,74584,42023,31030360
273,220
10,890
2,013
58
32,537
6,2202675
$ 327,613
The 1957 Revenue Bonds (1957 Bonds) are secured by a pledge of gross revenues of all"Project Facilities" (consisting of certain revenue producing facilities in the Port areaincluding the entire Oakland Intemanonal Airport) and of the gross revenues of all "ExistingFacilities" (which include all facilities of the Port existing on January 21, 1957, and all laterextensions or improvements to these facilities). All income and revenues of Pan operationspledged to the 1957 Bonds are deposited in the City treasury in the Port Revenue Fund.
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NOTES TO FINANCIAL 5TATEMENTS
Revenues remaining in the Port Revenue Fund after required debt service payments on the
1957 Bonds are termed "Surplus Revenues." The 1966 Airport and Harbor DevelopmentRevenue Bonds (1966 Bonds) are secured by liens on Surplus Revenues. The Small Craft
Harbor Revenue Bonds are payable from general revenuesof
the Port. The 1957 Bonds, 1966Bonds, and Small Craft Harbor Revenue Bonds are considered "Senior Lien Bonds."
The 1971 Certificates of Indebtedness (1971 Certificates) are secured by rental payments
from the lease of the facilities financed by the 1971 Certificates and are also secured by asecond lien on Surplus Revenues (to a maximum of $918,000 per year) on a parity with the1966 Bonds.
The 1989 Revenue Bonds, the 1990 Revenue Bonds, and the tax exempt commercial papernotes are payable solely from and secured by a pledge of "Pledged Revenues." The 1989
Indenture and the Fifth Supplemental Trust Indenture, dated April 15, 1990, (Fifth
Supplemental Trust Indenture) define Pledged Revenues as substantially all revenues andother cash receipts of the Port, including amounts held in the Port Revenue Fund but
excluding amounts required for debt service and reserve fund deposits for the Senior LienBonds and 1971 Certificates, and certain other excluded amounts. In addition, payment ofbond principal and interest when due is guaranteed by municipal bond insurance policies
issued byBond Investors Guaranty Insurance Company for the 1989Bonds and by MunicipalBond Investors Assurance Corporation for the 1990Bonds.
(a) Revenue Bonds, 1957Series
Under the terms of the 1957 bond indentures, the Port is required to maintain
revenues, as defined,of
at least 150%of
the sumof
the required bond interest andprincipal maturities for the ensuing year. For the year ended June 30, 1991, suchrevenues were 498% of debt service.
(b) 1989Revenue Bonds, Series A,Band C
Pursuant to the 1989 Indenture, the Port issued the 1989 Revenue Bonds in threeseries during April and May 1989. Proceeds of the 1989 Revenue Bonds were used toredeem certain outstanding indebtedness. The Current Interest Serial and Term Bonds
pay interest semiannually. Interest accrues on the Capital Appreciation Serial andTerm Bonds and is compounded semiannually but is not paid until their maturity or
earlier redemption. Maturity dates for Current Interest Term Bonds reflect mandatorysinking fund redemption.
(c) 1990Revenue Bonds, Series D
The Port issued the 1990 Revenue Bonds during May 1990 pursuant to the 1989Indenture and the Fifth Supplemental Trust Indenture. The 1990 Bonds were issued toadvance refund $32,900,000 of 1957Series Q Revenue Bonds.
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• CITY OFOAKLAND
The Current Interest Serial and Term Bonds pay interest semiannually. Maturity dates
for Current Interest Term Bonds shown in the table reflect mandatory sinking fund
redemptions. The 1990 Bonds are not subject to optional redemption prior to their
respective maturity dates.
In the 1989Indenture, the Port covenanted to achieve in each fiscal year:
(1) Pledged Revenues, as defined, sufficient to pay the sum of the following:principal of and interest on the outstanding 1989 Revenue Bonds, 1990
Revenue Bonds and Senior Lien Bonds due in each year; amounts required to
be paid with respect to the 1971 Certificates of Indebtedness; all other
payments required under the 1989 Indenture including reserve fund deposits;all other payments necessary to meet ongoing legal obligations of the Port
payable from Pledged Revenues; and all current Operation and Maintenance
Expenses (as defined); and
(2) Net Revenues, as defined, of at least 125% of the actual debt service becoming
due in such year on the outstanding 1989 Revenue Bonds, 1990 Revenue
Bonds and Senior Lien Bonds less debt service paid in such year, from the
proceeds of other borrowings. For the year ended June 30, 1991, Net
Revenueswere 157%of debt service.
The Port has also covenanted in the 1989 Indenture not to issue any additionalobligations payable from or secured by Pledged Revenues which would rank superiorto the 1989 Revenue Bonds or any additional Bonds, as defined, issued under the
1989 Indenture. The 1990 Series D Bonds and the Tax-Exempt Commercial Paperhave been ISSUed at parity with the 1989Revenue Bonds. Additional Bonds may be
issued on a parity with the 1989 Series D Bonds, subject to certain debt service
coverage ratios and other requirements.
(d) 1971 Certificates of Indebtedness
The proceeds from the sale of the 1971Certificateswere used to acquire and improve
the Middle Harbor Terminal, then occupied by Seatrain Lines, Inc. In September
1982, Seatrain' s interest in the terminal was terminated, and the lease and preferential
assignment agreement were assumed in full byAmerican President Lines. The annual
rentals are equal to the annual debt service requirements (interest expense andprincipal payments).
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. , . CITY OFOAKLAND
Repayment Schedule
The annual requirements to amortize all long-term debt as of June 30, 1991, are as follows (inthousands):
General Long-Term Debt
$ 30,976 $ 18,215 s 49932,327 18,480 49138,465 18,371 49237,929 19,024 492
37,369 19,666 491705,816 353,143 4.355
882,882 446,899 6,820
Years EndingJune 30,
1992199319941995
1996Thereafter
Less amountsrepresentinginterest anddiscounts
Principal debtat June 30, 1991
BondsPayable
(481.338)
$401,544
Certificates ofParticipation
(277,789)
$169,110
SpecialAssessmentDebt withGovt'l
Commitment
(2,635)
$ 4,185
Interest rates related to the Civic Improvement Corporation Certificates of Participation (theCertificates) are adjustable. Estimates of future debt service payments included in theschedule above were determined by utilizing the maximum rate of twelve percent which is
allowable in accordance with the terms of the Certificates.
Interest rates related to the Port of Oakland bonds, except for the 1966 Harbor Development
Revenue Bonds and the 1977-1983 Small Craft Harbor Revenue Bonds (the Variable Bonds),are variable, This debt is recorded in the Enterprise Fund. Estimates of future debt servicepayments for the Variable Bonds were determined by utilizing the maximum rate allowablein accordance with the terms of the Variable Bond agreements.
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NOTES TO FINANCIAL STATEMENTS
Trust andEnterprise Internal Service Agency FundsFund Debt Funds Debt Debt Total
$ 27,363 $ 319 $ 2,285 $ 79,65760,669 380 162 112,50925,628 379 159 83,49425,612 377 156 83,59025,613 380 154 83,673
572,755 5,639 2,076 1.643,784
737,640 7,474 4,992 2,086,707
(410,027)
$327,613
(3,514)
$ 3,960
(1.042)
$ 3,950
(1.176.345)
$ 910,362
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• CITY OFOAKLAND
Other Liabilities
The following long-term debt has been issued by the City on behalf of named agents of theCity. The bonds do not constitute an indebtedness of the City. The bonds are payable solelyfrom revenue sources defined in the individual bond documents, and from other monies held
for the benefit of the bondholders pursuant to the bond indentures. In the opinion of Cityofficials, these bonds are not payable fromany revenues or assets of the City, and neither thefull faith and credit nor the taxing authority of the City, State or any political subdivisionthereof is obligated for the payment of theprincipal or interest on the bonds. Accordingly, noliability has been recorded in the General Long-Term Obligations Account Group. The debtissued and outstanding at June 30, 1991, was as follows (in thousands):
HousingMortgage ProgramsHousingRevenueBonds,SeriesA, 1979
HousingRevenueBonds,Series B, 1982HousingRevenueBonds,SeriesC, 1985Loanto Lender, 1980SkylineVariableRate, 1985
Authorized Outstandingatand Issued Maturity June 30, 1991
$112,890 1/1/11 $ 52,155
67,«JJ 12/15/13 10,565.23,175 5/1/17 3,6608,130 12/1196 1,71023,000 111/rB 23,000
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Cityof Oakland InsuredHospitalRevenueBonds(Children's HospitalMedicalCenterofNorthernCalifornia), 1979Series A
City lOlfOaklandHealth FacilityRevenueNote(The BloodBankof theAlameda-ContraCostaMed1caI Association), Series 1979
Cityof OaklandBconormc Development
CertificateS of DepositRevenueBonds(Leamington HotelProject),1982SenesA
City ofOaklandIndusttialDevelopmentRevenueBonds(Days InnHotelProject),Series 1982
Countyof A1amedaICity of OaklandVanableRateDemand RevenueBonds(TheOldOakland Company Project), December 1984
Cityof Oakland VanableRate DemandRevenueBonds(TheDelgerBlockIRossHouseCompany Project), December1984
Countyof AIameda/City of OaklandVariable RateDemandRevenue Bond (TheWilcox/LeimertCompanyProject),December1984
City of OaklandEconomicDevelopmentRevenueBonds(EastBayOutpanentSurgeryCenterProject), Series1984
23,000
2,500
9,000
5,200
9,900
9,500
9,500
3,000
5/1/rB
11/1/99
11/1,97
12/1ft)2
12{7/99
12/7/99
12/7/99
12/1,u4
19,875
1,125
8,755
4,335
9,900
9,500
9,500
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NOTES TO FINANCIAL STATEMENTS
City ofOakland LiquidityFacilityRevenueBonds (Associanon ofBayArea
Governments), Series 1984
City of Oakland HealthFacilityRevenueBonds(Children's HospitalMedical Center ofNorthernCalifornia),1987SeriesA
City of OaklandRefundingRevenueBonds(oaIdand YMCAProject), Series 1990
TOTAL
(14) RESIDUAL EQUITY TRANSFERS
Authorizedand Issued
s 3,300
30,000
8,700
Maturity
1211109
7/1/08
6/1/10
Outstanding atJune 30, 199.1
s 2,675
27,100
8600
$ 195,455
Residual equity transfers during the fiscal year ended June 30, 1991, were as follows (in
thousands):
General Fund
Other Special Revenue Fund
Municipal Improvement Capital Fund
Civic Improvement Corporation
Debt Service Fund
Other Expendable Trusts Fund
TOTAL
The amounts above are detailed as follows:
Transfers Out
$ 4 6 , ~ 1 O1,398
339
$48,347
Transfers In$ 339
5,059
42,949
$48,347
During fiscal year 1990-91, the City transferred $27,949,000 of restricted cash and
investments from the General Fund to the Civic Improvement Corporation Debt Service
Fund. The cash and investments were related to the $52,300,000 Certif icates of
Participation (COPs) issued on December I, 1985, and were required as collateral for a
letter of credit issued by Mitsubishi Bank, Ltd. They became unrestricted subsequent to
the City attaining a new letter of credit from the National Westminster Bank PLC. The
City amended the related bond indentures and approved the transfer which will allow the
cash and investments to be used for purposes stated in the amended bond indentures.
During fiscal year 1990-91, the City transferred the Oakland Athletics Notes Receivable
of $15,000,000, due October I, 1991, from the General Fund to the Civic Improvement
Corporation Debt Service Fund. The City passed a resolution authorizing the use of theloan proceeds for debt service on the Civic Improvement Corporation COPs and for loans
to the City Center Garage II Joint Venture.
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..,. CITY OF OAKLAND
During fiscal year 1990-91, the City transferred $3,587,000 of cash and investments fromthe General Fund to the Municipal Improvement Capital Fund. The cash and investmentsare related to the Local Government Finance Authority 1989 Refunding Revenue Bonds.Although the cash and investments were received by the City in the form of a General
Fund revenue fee collected from the Agency, the City determined that activities related tothe cash and investments would be more appropriately accounted for in the MunicipalImprovement Capital Fund, since the assets are yield and use restricted by the bondindenture.
During fiscal year 1990-91, the City transferred $74,000 from the General Fund to theMunicipal Improvement Capital Fund. The amount transferred consisted of contributionsfrom the City for public arts capital improvement projects.
During fiscal year 1990-91, the City closed certain activity within the Other SpecialRevenue Fund and approved the transfer of $1,398,000 to the Municipal Improvement
Capital Fund.
During fiscal year 1990-91, the City transferred $339,000 from the Other ExpendableTrusts Fund to the General Fund. The funds are related to the Drug Forfeiture Programand were awarded to the City based upon [mal determination by the courts.
(15) CONTRIB.UTED CAPITAL
A summary of changes in contributed capital for the year ended June 30, 1991, is as follows(in thousands):
InternalEnterprise ServiceFunds Funds Total
BALANCE AT JUNE 30,1990 $46,122 $17,382 $63,504
Grants from governmental agencies 5,994 5,994
Depreciation of property and equipmentacquired with contributed capital 0.931) 0.931)
BALANCE AT JUNE 30,1991 $50,185 $17,382 $67,567
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CITY OF OAKLAND
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.. CITY OFOAKLAND
(16) RESERVATIONS AND DESIGNATIONS OFFUND BALANCES
Following are the components of the City's reserved and unreserved-designated fund
balances at June 30, 1991 (in thousands).
Special Debt CapitalGeneral Revenue Service ProjectsFund Funds Funds Funds
RESERVED
Assets not available forappropriation:
Long-term receivables/advances $28,249 s 730 $ s
Restricted cash andinvestments
Capital projects 16,868 280,980Employees' retirement systemDebt service 89,570Land held for resale 9,251Encumbrances 1.199 7.456 10.090
TOTAL RESERVED FUND
BALANCES $29,448 $25,054 $89,570 $300,321
UNRESERVED·DESIGNATED
Capital improvement projects $12,585 $ 9,250 $ $Emergency management program 110Multi-purpose reserve 2,214Employee benefits 2,215
Mandatory garbage collection 1,914Telecommumcationsfranchise regulation 649
Street lighting undergrounddistrict connection 2
TOTAL UNRESERVED-DESIGNATED FUNDBALANCES $19,689 s 9,250 $ $
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Pension
Trust
Funds Total
NOTES TO FINANCIAL STATEMENTS
$ $ 28,979
215,885 215,885297,848
266,656 266,65689,5709,251
251 18,996
$482,792 $927,185
$ 1,538
$ 1,538
$ 23,373110
2,214
2,2151,914
649
2
$ 30,477
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.-,. CITY OF OAKLAND
(17) SEGMENT INFORMATION FOR ENTERPRISE FUNDS
The City accounts for operations which provide facilities, harbor and airport services,
housing programs, parks and recreation programs, sewage treatment, and convention
management as enterprise funds. These operations are financed by user charges or interestincome. Segment information for the year ended June 30,1991, follows (in thousands):
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Operating revenuesOperating incomeOperating grants, entitlements and
shared revenuesDepreciation and amortization
Current operating transfers outInterest and other non-operatingrevenues (expenses)
Extraordinary lossNet income (loss)Current capital contributionsProperty and equipment:
AdditionsDeletions
Net working capitalTotal assetsContributed capitalTotal equity
Long-term obligations and advances:Payable from operating revenuesPayable from other sources
SewerService
$14,3655,655
(369)555
5,286
3,887555
19,96542,148
41,833
OaklandPort of RedevelopmentOakland Agency
$98,038 $ 8974,367 3
21,172
(21,701)(839)
(18,173) 34,063
66,30935,142(27,289)676,273 9,34850,185219,797 308
345,267 8,8959,743
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Other Total
Enterprise EnterpriseFunds Funds
$ 6,316 $119,6161,289 11,314
(369)252 21,979
1,183 1,183
64 (21,637)(839)
170 (12,714)4,063
331 70,5271,088 36,7851,076 (6,248)3,578 731,347
50,1852,619 264,557
354,1629,743
NOTES TO FINANCIAL STATEMENTS
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"" CITY OF OAKLAND
SewerService
The City maintains sewer service facilities between the private property hookups and the
main collection system operated by the East Bay Municipal Utility District. The City's policy
is to fund operations through usercharges and/or operating transfers from the General Fund.
Port of Oakland
The Port of Oakland is a public enterprise fund established by the City of Oakland and is acomponent unit of the City. Operations include the Oakland International Airport, the Port of
Oakland marine terminal facilities, and commercial real estate, which includes Oakland
Portside Associates, Port of Oakland Public Benefit Corporation, and the WaterfrontAssociation. The Port is under the control of a seven-member appointed Board of Port
Commissioners and is administeredby anExecutive Director.
Oakland Redevelopment Agency
The operations of the Acorn Mortgage Revenue Bond Program within the Agency are
accounted for as an enterprise fund. The program provides loans to qualified individuals to
finance the purchase and rehabilitation of housing within the Acorn Redevelopment area. The
bonds are payable from principal and interest on loans or from specified assets and revenuesof the MortgageProgram.
Other
The Oakland Convention Management, Inc. Fund and the Parks and Recreation Funds
represent theother enterprise funds.
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NOTES TO FINANCIAL STATEMENTS
(18) PENSION PLANS AND DEFERRED COMPENSATION PLANS
The City has three defined benefit retirement plans: Police and Fire Retirement System
(pFRS), Oakland Municipal Employees' Retirement System (OMERS) and California Public
Employees' Retirement System (PERS). PFRS and OMERS are closed plans which cover
employees hired prior to July 1976 and September 1970, respectively. These two plans are
considered part of the City's reporting entity and are included in the City'S General Purpose
Financial Statements as pension trust funds. City employees hired subsequent to the plans'
closure dates are covered by PERS, which is administered by the State of California. The
details of each plan are presented below. The City's total payroll for fiscal year 1990-91 was$157,900,000. The information for the City'S three plans is presented below (in millions):
TypeofplanReporting enutyLastcompleteactuarial study
Police and FireRetirementSystem(PFRS)
SingleemployerCity
June 30,1990
Oakland MunicipalEmployees'
Retirement System(OMERS)
SmgleemployerCity
June30, 1990
Califomia PublicEmployees'
Retirement System(PERS)
Agent multi-employerState
June30. 1990
Actuarial Present Value of Credited Projected Benefits
PFRS OMERS PERS Total
$ 658.3 $14.9 $ 158.9
Retirees and beneficiariescurrently receiving benefits
and terminated employees not
yet receiving benefits
Current employees:
Accumulated employee
contributions including
allocated investmentearnings
Employer-financed
Vested
Nonvested
Total pensionbenefit obligation (PBO)(a)
Net assets available for
benefits, at cost
UNFUNDED PENSIONBENEFIT OBLIGAnON
Net assets available forbenefits, at market
36.9 0.1
252.4 0.5
947.6 15.5
(245.0) .£l.lj)
$ 702.6
$ 255.0
$ 832.1
90.6 127.6
117.8 370.76.7 6.7
374.0 1,337.1
(360 9) (619.4)
$ 13.1 $ 717.7
$ 409.2 $ 676.8
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..,. CITY OF OAKLAND
(a) A pension benefit obligation (PBO) is presented to provide a standardized disclosure
measure of the present value of pension benefits, adjusted for the effects of projected
salary increases, estimated to be payable in the future as a result of employee service
to date. The measure is the actuarial present value of credited projected benefits and is
independent of the actuarial funding method used to determine contributions to eachpension plan. It will help users assess the funding status of each plan on a going
concern basis, assess progress made in collecting enough assets to pay benefits when
due, and make comparisons among employers.
Contributions
PFRS OMERS PERS Total
Total City payroll covered by
the system $ 27.4 $108.7 $ 136.1
1991 contributions:
City'S shareEmployees share:
Paid by Employee
Paid by City
Aetuarially determined contribution rates:
Employee
Employer
28.9 11.1 40.0
2.5 2.59.8 9.8
7-11% 7-9% N/A
7.9-15.1% N/A
Significant actuarial assumptions (b)
General wage increase
InflationMerit or seniority
Investment return
6.5%
8.5%
3.0%6.5%
8.0%
5.0%2.0%
8.5%
N/AN/A
N/A
(b) Significant actuarial assumptions used to compute the contribution requirements are
the same as those used to compute the standardizedmeasure of the pension obligation.
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Employees covered as of June 30, 1990
Retirees and beneficiaries
currently receiving
benefits and terminated
employees entitled tobenefits but not currently
receiving themCurrent employees-a-vested
1,525
457366
2N/A
N/A
N/A
N/A
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NOTES TO FINANCIAL STATEMENTS
Trend Information
Trend information gives an indication of the progress made in accumulating assets to paybenefits when due. Ten-year historical trend information on revenues by source and expensesby type is not available.
PFRS OMERS PERS Total
Net assets available at cost - June 30:1991 $ 257.4 $11.9 $N/A $ N/A1990 245.0 13.5 360.9 619.41989 233.2 14.9 321.0 569.11988 218.0 16.0 283.3 517.31987 199.0 17.4 251.4 467.8
PBO - June 30:
1991 $ N/A $ N/A $N/A $ N/A1990 947.6 15.5 374.0 1,337.1
1989 876.0 16.2 331.2 1,223.41988 874.4 18.5 301.1 1,194.01987 N/A 20.1 276.4 N/A
Pen::entageof net assets availablelPBO - June 30:
1991 N/A N/A N/A N/A1990 26% 87% 96% 46%1989 27% 92% 97% 47%1988 25% 87% 94% 43%1987 N/A 87% 91% N/A
Unfunded PBO - June 30:1991 s N/A $ N/A $ N/A $ N/A
1990 702.6 2.0 13.1 717.71989 642.8 1.3 10.2 654.31988 678.0 2.5 17.8 698.31987 656.4 2.7 25.0 684.1
Annual covered payroll - June 30:
1991 s 24.1 108.7 132.81990 24.6 114.4 139.01989 26.2 101.7 127.91988 25.7 100.5 126.21987 N/A 96.4 N/A
Percentage of unfunded PBO/annualcovered payroll:
1991 N/A N/A1990 2856% 11% 516%1989 2453% 10% 512%1988 2638% 18% 553%1987 N/A 26% N/A
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'" CITY OF OAKLAND
City's actuarially determined
contributions (employer portion)/
annual covered payroll:
19911990
1989
1988
1987
Police and FireRetirement System
PFRS OMERS
105%107%
100%
119%
N/A
PERS
10%9%
10%
14%
17%
Total
29%26%
28%
35%
N/A
PFRS provides death, disability and service retirement benefits to uniformed employees and
their beneficiaries. Members who complete at least 25 years of service, or 20 years of service
and have reached the age of 55, or have reached the age of 65· are eligible for retirement
benefits. The basic retirement allowance equals 50% of the compensation attached to theaverage rank held during the three years immediately preceding retirement, plus an additional
allowance of 1-213%of such compensation for each year of service (up to ten) subsequent to:
a) qualifying for retirement, and b) July 1, 1951. Early retirees will receive reduced benefits
based on the number of years of service. Benefit provisions and all other requirements are
established by the City Charter (the Charter).
In accordance with the Charter, active members of PFRS contribute a percentage of earned
salaries based upon entry age as determined by the City's consulting actuary. By statute,
employee contributions are limited to 13% of earned salaries. Employee contributions are
refundable with interest at 4% per annum if an employee elects to withdraw from the Plan
upon termination of employment with the City.
The City's annual contribution to PFRS is determined by calculat ing the total pension
liability for public safety employees under both PFRS and PERS. The amount to be
contributed to both plans is allocated between years such that a level percentage of payroll
(61.04% in 1991) will amortize the unfunded liabilities by 2026 and 2000 of PFRS and
PERS, respectively. Contributions to PERS are deducted and the difference is contributed to
PFRS.
For the year ended June 30, 1991, contributions to PFRS totaling $31,406,000 ($28,921,000
employer and $2,485,000 employee) were made in accordance with actuarially determined
contribution requirements. Employer and employee contributions equaled 105% and 9%,respectively, of current year covered payroll for plan panicipants.
The City's actuaries do not make an allocation of the contribution amount between normal
cost and the unfunded actuarial liability because the plan is closed.
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NOTES TO FINANCIAL STATEMENTS
Oakland Municipal Employees' Retirement System
OMERS provides death, disability and service retirement benefits to participants of the plan.Members who complete at least 20 years of service and have reached the age of 52, or who
complete at least 5 years of service and reach the age of 60, are eligible for retirementbenefits. The retirement allowance is calculated on a basis which takes into account finalaverage compensation, age and the number of years of service. Benefit provisions and allother requirements are established by the Charter.
Employee contributions to OMERS totaling $5,513 were made in accordance with actuariallydetermined contribution requirements. Employee contributions are refundable with interest at
4-1/2% per annum if an employee elects to withdraw from the plan upon termination of
employment with the City. For the year ended June 30, 1991, the City, in accordance withactuarially determined contribution requirements, was not required to make contributions toOMERS.
California Public Employees' Retirement System
The City contributes to the California Public Employees' Retirement System (PERS), an
agent multiple-employer public employee retirement system that acts as a common
investment and administrative agent for participating public entities within the State of
California.
All full-time City employees who have served for six mo-nths or more are eligible toparticipate in PERS. Benefits vest after five years of service. To be eligible for service
retirement, the employee must be at least age 50 and have five years of PERS-credited
service. City employees who retire receive monthly retirement allowances for life. Theamount of the retirement allowance is dependent upon the number of years of PERS-credited
service, the benefit factor (the percent of pay to which each employee is entitled for each yearof service is determined by the employee's age at retirement) and final compensation (theemployee's monthly pay rate for the last consecutive 36 months). The System also providesfor a death benefit. These benefit provisions and all other requirements are established by
State statute.
City miscellaneous employees and City safety employees are required to contribute 7% and9%, respectively, of their annual salary to PERS. The City's contribution rates for the fiscalyear ended June 30, 1991, were 7.9% and 7.3% for miscellaneous employees and safety
employees, respectively. The City pays the entire amount of its employees' contribution ratefor miscellaneous and safety employees, including the annual contribution of 7% toPERS.
PERS uses the Entry Age Normal Actuarial Cost Method, which is a projected benefit costmethod. That is, it takes into account those benefits that are expected to be earned in thefuture as well as those already accrued. PERS also uses the level percentage of payrollmethod to amortize any unfunded actuarial liabilities. The amortization period of the
unfunded actuarial liability ends June 30, 2000.
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$ CITY OF OAKLAND
The City's contributions for employees for the year ended June 30, 1991, consisted of thefollowing amounts (dollars in millions):
Components ofcontribution
toPERSNonnalcostAmortization of unfunded
aetuanal accruedlIability
TOTAL
Employer andemployee portions
of contribution to PERSEmployerEmployee
Paid byCityPald by employees
TOTAL
Miscellaneous
$ 14.4
s 8.5
7.3
Percent of
CurrentCoveredPayroll
13.5%
14.9%=
7.9%
7.0
Safety
$ 6.6
$ 2.6
2.5
Percent ofCurrentCoveredPayroll
24.1%
a,8)
16.3%
7.3%
9,0
16.3%
TotalCombinedContribution
$ 21.0
--U)
s 20.9=
s 11.1
9.8
The credit for amortization of unfundedactuarial accrued liability for safety employees arosebecause the City had surplus assets as a result of actuarial gains in excess of actuarialestimates for safety employees.
Deferred Compensation Plans
The City and the Port offer their employees deferred compensation plans created inaccordance with Internal Revenue CodeSection 457. Separate plans are maintained for Cityand Port of Oakland employees. The plans, available to all employees, permit them to defer aportion of their salary until future years. The deferred compensation is not available toemployees until termination, retirement,death, or unforeseeable emergency.
All amounts of compensation deferred under the plans, all property and rights purchased withthose amounts, and all income attributable to those amounts, property or rights are (until paidor made available to the employee or other beneficiary) solely the property and rights of theCity and the Port (without being restricted to the provisions of benefits under the plan),
subject only to the claims of general creditors. Participants' rights under the plan are equal tothose of general creditors of the City and the Port in an amount equal to the fair market valueof the deferred account for each participant.
Deferred compensation plan assets of the City of $33,631,000 as of June 30, 1991, areincluded at fair market value in the Deferred Employee Compensation Agency Fund.
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NOTES TO FINANCIAL STATEMENTS
Deferred compensation plan assets of the Port are included at fair market value in the Port ofOakland Enterprise Fund and amounted to approximately $9,743,000 as of June 30, 1991.
(19)OAKLAND-ALAMEDA COUNTY COLISEUM
Oakland - Alameda County Coliseum, Inc. (the Coliseum) is a non-profit corporationorganized under the laws of the State of California to operate and manage the ColiseumComplex (the Complex) under an agreement between the City and the County of Alameda(the County) dated October 1963. The City and the County each have a 50% share in theagreements with the Coliseum. The Coliseum is governed by a ten-member Board ofDirectors. The Mayor of the City and the President of the Alameda County Board ofSupervisors recommend one member each for the Coliseum Board. A vacancy or vacancieson the Board of Directors is filled by the voteof a majority of the remaining directors.
In October 1963, the Coliseum executed a ground lease with the City and the County for aterm of forty years, subject to an agreement to construct the Complex. Concurrentlytherewith, the Coliseumsublet to the City and the County the complete facilities for a term toexpire ten days prior to expiration of the term of the ground lease. Rental provisions of thesublease require the City and the County to pay annual rent of $750,000 each, payable inmonthly installments.
Under the agreements, the City and the County hold title to the Complex. The agreementsspecifically state that no indebtedness or liability on the part of the City or the County shallbe created, except such indebtedness that may be repaid from the operating revenues of theComplex.
The Coliseum has authorized and issued 4-1/8% bonds for $25,500,000 of which$14,765,000 was outstanding as of October 31,1990, and due April 1, 2004. These bonds aresubject to an indenture placing properties and bond proceeds In trust for the benefit of thebondholders. Semi-annualpayments of principal and interest are made to the sinking fundonthe first day of April and October annually. Principal payments for April 1, 1991, andOctober 1, 1991, were$375,000 and $390,000, respectively. DebtService payments are madefrom lease revenues received from the Cityof Oakland and the County of Alameda under thesublease agreement
Additionally, the City and County each are entitled to receive 50% of the net operating
income of the Complex when the Coliseum has accumulated adequate funds to meet oneyear'soperating budget.
The City received nodistributions from the Coliseum during the fiscal year ended June 30,1991. Upon dissolution of the Coliseum, all assets are to be transferred to the City and theCounty.
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'" CITY OFOAKLAND
The following is a financial summary (memorandum only-total column) of the Coliseum as
of and for the fiscal year ended October 31, 1990, the date of the last audited [mandai
statements (in thousands):
ASSETS
LiabilitiesEquity
TOTAL UABlllTIES AND EQUITY
RevenuesExpenditures
DEFICIENCY OF REVENUES UNDER EXPENDITURES
$63,723
$19,68744,036
$63,723
$12,48303.948)
$ ( l , 4 6 ~
(20) RECONCILIATION OF OPERATIONS ON MODIFIED ACCRUAL BASIS
TO BUDGETARY BASIS
The "All Governmental Fund Types and Expendable Trust Funds Combined Statement ofRevenues, Expenditures and Changes in Fund Balances" has been prepared on the modified
accrual basis of accounting in accordance with GAAP. The "General Fund and AnnuallyBudgeted Special Revenue Funds and Debt Service Funds Combined Statement of Revenues,Expenditures and Encumbrances - Budget and Actual on a Budgetary Basis" has beenprepared on the budgetary basis, which is different from GAAP.
The following schedule is a reconciliation of the budgetary and GAAP results of operations
(in thousands):
AnnuallyBudgetedSpecial
General Revenue
Fund Funds
AnnuallyBudgetedDebt
ServiceFunds
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Excess (deficiency) of revenuesover expendituresand encwnbrances- budgetarybasis
Net changes in encwnbrancesFEMA andPan bond reimbursements
budgetedona cashbasis
Net lransactions budgetedon amulti-yearproject or program basis
EXCESS (DEFICIENCY) OFREVENUESANDOTHERFINANCING SOURCESOVER (UNDER)EXPENDITIJRES ANDOTHERFINANCING USES- GAAP BASIS
s (975)(411)
(11,292)
984
$(11,694)
$ (983)(20)
$ 531
5.471
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NOTES TO FI NANCIAL STATEMENTS
(21) FUND EQUITY RESTATEMENT
The beginning fund balance of the OMERS Pension Trust Fund has been reduced by$11,227,000 to reflect the liability associated with OMERS participants who were transferred
to PERS in 1973, 1976 and 1981. Employee contributions related to each transferredemployee were sent to PERS, as required by law; however, no assets related to employercontributions were transferred in 1976 or 1981 because of concerns about losses that wouldhave been incurred upon the saleof assets.
A liability to PERS for the non-transferred assets of $4,352,000 and the related accruedinterest ($7,637,000 as of June 30, 1991), was determined based on actuarial calculations.
Interest has been accumulated each year at the same rate as the investment yield of the Plan'sassets.
The liability to PERS will be paid in conjunction with the City of Oakland's actuarially
determined contributions to PERSover the next several years.
(22) FUND EXPENDITURES EXCEEDING BUDGETARY APPROPRIATIONS
The expenditures of the Pension Annuity Debt Service Fund exceeded budgetaryappropriations by $16,000. City management did not consider it necessary to pass a legalappropriation for such expenditures since amounts required to be expended are set forth in
bond indentures.
(23) POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
The City has several programs in place to partially pay health insurance premiums for certainclasses of retirees from City employment.
The City pays part of the health insurance premiums for all retirees from City employmentreceiving a pension annuity earned through City service and participating in a City-sponsoredPERS health benefit plan. The City contribution constituted an average of approximately 5%
of health insurance premium charges for retirees. Approximately $274,000 was paid to 1,500retirees under this program in fiscal year 1990-91.
A City Council Resolution, dated November 12, 1985, and a related City AdministrativeInstruction, dated May 1, 1991,established a quarterly payment of $150 to qualifying retireesfrom City employment who were active, full-time or permanent part-time, unrepresented Cityemployees at the time of retirement on or after July 1, 1985. Such payments commenced thelast quarter of fiscal year 1990-91 and constituted approximately 20% of the premiumpayment required for retirees. Fifty-one employees received this benefit in the fiscal year1990-91.An expendable trust fund was set up to finance these benefits and theCity has made
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• CITY OFOAKLAND
contributions to this fund to finance future payments. In fiscal year 1990-91, $7,550 in
benefit payments were made. The trust fund balance was $368,367 as of June 30,1991.
A City Council Resolution, dated October 13, 1987, approved a Letter ofUnderstanding with
Local 790 of the United Public Employees that established a trust to contribute toward thecost of health insurance premiums to retirees from City employment who were active, full
time City employees in represented units upon retirement on or after July I, 1987. The Letter
of Understanding required the City to contribute an annual amount of $119,333 to the trust
beginning on July I, 1987, and continuing through July I, 1992. Effective August 1, 1990,the City ini tia ted payments of $150 per quarter to e ligib le employees. This amount
constituted approximately 20% of the premium payment required for retirees. In fiscal year
1990-91, $34,600 in benefit payments were made. The trust fund balance was $658,626 as ofJune 30, 1991. Sixty-five employees received benefit payments in the last quarter of fiscalyear 1990-91.
The Port contributes monthly to a benefit account for certain qualifying retirees participatingin the PERS medical program. This program provides similar benefits as those offered to
retirees from City employment Qualifying retirees are paid the quarterly sums accrued in the
benefit account. At June 30, 1991, the Port's liability was $140,000. The Port contributed$45,000 in fiscal year 1990-91 and in fiscal year 1989-90.
(24) EARTHQUAKE DAMAGE
The City suffered significant damage from the October 17, 1989, Lorna Prieta earthquake.Consequently, the earthquake was declared a disaster by both the federal and state
governments. Damaged property and infrastructure have been identified and estimates ofreplacement and repair expenditures have been made. Additional ly, the City incurred
substantial non-recurring operational expenditures for police, fire, inspection, debris removal
and similar services.
The Federal Emergency Management Agency (FEMA) has been delegated the responsibility
for providing federal disaster assistance, under a Presidentially declared major disaster oremergency (disaster). It provides federal disaster assistance for individuals and their families,
for state and local governments, as well as for certain private, non-profit organizations.
Damage Survey Reports (DSRs) are the basis for reimbursement. Damage surveys are
usually conducted by a federal-state inspection team. An authorized local representativeaccompanies the federal-state inspection team and is responsible for representing the
applicant and ensuring that all damage and requirements for assistance are inspected. The
inspectors record pertinent information on a DSR, including a description of the damage,
proposed repairs or replacement, and the inspectors' best est imate of the cost of the
recommended work.
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NOTES TO FINANCIAL STATEMENTS
A summary of the earthquake related transactions through June 30, 1991, is as follows (inthousands):
ExpenditureslExpensesRecoveries
1991s 6,48215,525
City
1990$15,556
1,806
1991s2,5631,724
Port
1990s4,691
3,190
All essential repairs for general government service delivery have been completed. Estimateshave been made for the remaining property damage. Assuming all property damage will berepaired, the City believes that approximately $150 million ($103 million for the City and$47 million for the Port), including office building leases for housing displaced employeesand the repairs to City Hall and CityHallWest discussed below,will be the ultimate cost.
It is expected that most of the earthquake costs will be borne by the Federal Emergency
Management Agency, Federal Aviation Administration, private Insurance and the State ofCalifornia's Office of Emergency Services. City management believes that the ultimateresolution of the earthquake costs will not have a material adverse effect on the City'sfinancial positionor the Port's financial positionor results of operations.
City Hall
City Hall sufferedextensive damage rendering it unusable. As a result, the City wrote off thetotal carrying cost of $43,572,000 from the General Fixed Assets Account Group duringfiscal year 1989-90.
The City was self-insured for the total loss on the building, and is currently proceeding withthe repair and renovation of this building. The estimate to do this work is approximately$53,000,000. FEMA has approved a $45,799,000 DSR to rehabilitate the building. The Stateadvanced the City $18,118,000, which includes the State's share of the DSR plus anadditional $7,000,000 (the difference between the DSR amount and the total amountestimated to complete the building).
City Hall West
The City Hall West building also suffered extensive damage rendering I t unusable. As aresult, the City reported an extraordinary loss in fiscal year 1989-90 of $2,558,000,
representing the net carrying value of the building in the City'S Facilities Internal ServiceFund.
As required by the Agency, the City had combined insurance policies covering losses on thebuilding, its contents, and loss of rents. The City has settled with its insurance carriers andhas received $10,500,000 in insurance proceeds ($5.0 million in fiscal year 1989-90, $3.3million in fiscal year 1990-91,and $2.2million in fiscal year 1991-92).
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'" CITY OF OAKLAND
Since the 1988 Refunding Bonds on City Hall West continue to remain outstanding, the
Agency meets its debt service requirements with lease revenues received from the City. With
regards to the insurance proceeds, the Agency may either: (a) repair, replace, or reconstructCity Hall West, or (b) redeem all outstanding bonds at a redemption price of 100% of the
principal amount, plus accrued interest.
The Agency will not select either of the above stated options until a decision is made as to
whether the City Hall West site is the preferred location for a new City office building. In the
interim, the City has agreed to make lease payments on City Hall West so that the Agencycan continue to meet the debt service requirements on the outstanding bonds.
(25) COMMITMENTS AND CONTINGENT LIABILITIES
General Liability
Numerous lawsuits are pending or threatened against the City. The City Attorney estimates
that as of June 30, 1991, the amount of liability determined to be probable of occurrence is
approximately $12,300,000. Claims and litigation approximating $4,447,000 are estimated to
be payable with current expendable resources and are included as accrued liabilities of the
General Fund. The remainder is included in the General Long-Term Obligations Account
Group. The recorded liability is the City's best estimate based on available information and
may be revised as further information is obtained and as pending cases are litigated.
The City is self-insured for general liability. The City has not accumulated or segregated
assets or reserved fund balance for the payment of estimated claims and judgments.
Workers' Compensation and Unemployment Compensation
The City is self-insured for workers' compensation and unemployment compensation.
Payment of claims is provided through annual appropriations which are based on claim
payment experience and supplemental appropriations. Workers' compensation and
unemployment compensation approximating $7,400,000 are estimated to be payable with
current expendable resources and are included as accrued liabilities of the General Fund The
remaining amount of $15,907,000 is included in the General Long-Term Obligations Account
Group.
Grants and Subventions
Receipts from federal financial assistance programs are subject to audit by representatives ofthe federal and state governments to determine if the monies were expended in accordance
with appropriate statutes, grant terms and regulations. The City believes that no significant
liabilities will result from such audits.
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NOTES TO FINANCIAL STATEMENTS
Construction Commitments
The Port is undertaking a number of capital improvement projects, the most significant of-which include certain airport improvements, container terminal construction, new containercranes, and channel dredging to accommodate larger vessels. As of June 30, 1991, the Porthad entered into commitments totaling approximately $21,886,000 for the acquisition andconstruction of such assets.
Individual Fund Deficits
As of June 30, 1991, the Oakland Redevelopment Agency Projects Expendable Trust Fundhad a deficit of $671,000. This deficit is expected to be funded through increased overheadand user charges for costs incurred on Agency projects.
The Central Stores Internal Service Fund had a deficit of $100,000 at June 30, 1991. Billing
rates to user departments will be adjusted in fiscal year 1991-92 to recover this shortfall.
Other Contingencies
Port ofOaldand
In July 1987, the California Department of Health Services (the Department) issued aRemedial Action Order determining that the Port and a former tenant of the Port areresponsible for the costs of cleaning up hazardous substances on a site leased by severalformer tenants. If a Remedial Investigation Report submitted by the Port in May 1989 isapproved, the Department will issue a Final Remedial Action Plan which will include an
apportionmentofliability for the costs
ofhazardous substance removal and remedial actions.
During 1991, the Port submitted a feasibility study to the Department and anticipatesreceiving a Remedial ActionPlan during fiscal year 1991-92. During fiscal year 1989-90, thePort recorded a liability of $900,000 for its expected 50% share of the total estimatedinvestigation and monitoring costs related to this site. In October 1990, the Port and theformer tenant agreed to shareequally in the remediationcosts. The ultimate remediation costshave not been determined.
The Port has certain legal obligations to modify or remove various underground storagetanks. A Tank Management Strategy Report on Port-owned underground tanks was prepared
for the Port by an outside environmental consultingcompany. The Port recorded a liability of$1,232,000 in fiscal year 1989-90 for the expected costs to modify or remove designatedPort-owned underground storage tanks. During fiscal year 1990-91, the Port began soilremediation and tank removal. It is the opinion of the Port's counsel that the Port has noliability to tenant-owned tanks.
As of June 30, 1991, the Port accrued approximately $.3,000,000 for various environmentalremediation programs in addition to those noted above. The Port's management believes that
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'" CITY OF OAKLAND
it has identified all significant hazardous waste sites, and the estimated probable costs areincluded in this environmental accrual.
In prior years the Port provided $1,600,000 to restore the presidential yacht "Potomac" to itsoriginal condition. This was done pursuant to an agreement with the Association for thePreservation of the Presidential Yacht Potomac ("Potomac Association"). This amount wascapitalized in Construction in Progress. During fiscal year 1990-91, the Potomac Association
initiated transferral of the vessel to the U.S. Department of the Interior at the request of the
Port. The Port and the Potomac Association are in the process of transferring the Port's
interest in the vessel to the Potomac Association. As of June 30, 1991, the Port's $1,600,000in costs were written off and recorded in other expenses.
Oakland RedevelopmentAgency
In connection with the sale of land for a Central District project, the Agency entered into anagreement to place $1,000,000 of the sales proceeds in escrow pending removal of hazardoussubstances and contamination. The developer has filed claims amounting to approximately
$2,700,000 which were rejected by the Agency. In accordance with the agreement, the
Agency filed for arbitration with the American Arbitration Association, and as a result haspaid $184,439 in fiscal year 1990-91. On October 1, 1991, the Agency agreed to pay anadditional $1,300,000 in settlement of these claims.
As of June 30, 1991, the Agency was committed to fund $6,096,000 in loans and had issued
$6,442,000 in repayment guarantees and letters of credit in connection with several low andmoderate income housing projects. The repayment guarantees and letters of credit wereissued to facilitate the construction of low and moderate income housing within the City of
Oakland.
(26) SUBSEQUENT EVENTS
Oakland Hills Fire
On October 20, 1991, the City of Oakland suffered one of the worst disasters In the City's
history as fire raged through the Oakland Hills destroying approximately 2,600 homes and
450 apartment units, and lolling 25 people. The fire was declared an emergency and eligiblefor disaster assistance by both the federal and state governments.
Vanous City revenues are dependent upon income from the residential properties located inthe fire area. including property taxes, utility consumption taxes, sewer charges, business
license taxes, landscaping and lighting assessment district fees as well as interest earnings onthose revenues. The loss of City revenues in fiscal year 1991-92 is estimated at $2,350,000.
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NOTES TO FINANCIAl STATEMENTS
In addition, the City's budget will be impacted by the costs related to fire suppression and
recovery. For the first seven days following the disaster, it is estimated that the City spent
approximately $7,850,000 (excluding general administrative costs) for personnel andequipment in the departments of Police, Fire, Public Works, Parks and Recreation, and the
Office of General Services. Damage to public facilities is estimated at $2,600,000 anderosion control costs are expected to be $5,000,000. The total expenditure impact for fiscalyear 1991-92 is estimated at $17,600,000.
It is expected that most of the costs for fighting the Oakland Hills Fire and the subsequentcleanup and rebuilding will be borne by FEMA, the State of California's Office of
Emergency Services and private insurance companies. City management believes that the
ultimate resolution of the fire's costs will not have a material adverse effect on the financialposition of the City. As a result of the fire, lawsuits have been, and are expected to be, filed,
The effect of the lawsuits on the financial position of the City cannot be esnmated at this
time.
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APPENDIXC
SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS
THE FOLLOWING ARE SUMMARIES OF CERTAIN PROVISIONS OF THE
INDENTURE OF TRUST, THE LEASE AGREEMENT AND THE AMENDED AND
RESTATED GROUND LEASE. THESE SUMMARIES DO NOT PURPORT TO BE
COMPLETE OR DEFINITIVE AND ARE QUALIFIED IN THEIR ENTIRETIESBY REFERENCE TO THE FULL TERMS OF THE DOCUMENTS.
DEFINITIONS
ACquis i t ion Account. The term "Acquis i t ion
Account" means th e account by t h a t name es tab l i shed under,and held by th e Trustee pursuan t to , the Inden tu re .
ACquis i t ion Cost s . The term "Acquis i t ion Costs"means a l l cos t s of acqu i s i t ion of the i n t e re s t s in th e
Fac i l i t i e s , th e S ite s, and o ther p ro pe rty p ur su an t to theContracts of Sa le , in th e amounts descr ibed in the
Inden ture .
Addi t iona l Payments.Payments" means those paymentsth e Lea se Agreement .
The term "Addi t ional
spec i f i ed in Sect ion 411 of
Agency. The term "Agency" means the RedevelopmentAgency of the City of Oakland.
Amended and Resta ted Ground Lease. The term"Amended and Restated Ground Lease" means th e Amended andResta ted Ground Lease, dated as of November 1, 1992, betweenth e Ci ty , as l e s so r of th e Si t e s , and th e Au th or ity , asl e s see t he reo f .
Author i ty . The te rm "Au th or ity " means the
Cal i fo rn ia Statewide Communit ies Development Authori ty , asi s suer of the Bonds and l e s so r and sublessor under th e LeaseAgreement.
Author ized Representa t ive . The term "Author izedRepresen ta t ive" means: (a) with respec t to th e Authori ty ,
i t s Chairman, Vice Chairman, S ec re ta ry o r any Member of th eCommission of th e Author i ty , o r any othe r Person des igna ted
as an Authorized Represen ta t ive of the Author i ty by a
Writ tenCer t i f i c a t e of
th e Author i tys igned by i t s Chairmanand f i l ed with the Author i ty and the Trus tee ; (b ) with
re spec t to th e City , the City Manager or the Ci ty Manager 'sdepu t ies o r a s s i s t an t s o r any o the r o f f i c e r o r employee ofth e Ci ty who i s designated by the City Manager as anAuthorized Represen ta t ive fo r purposes of th e Indenture; and
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(c) with respect to the Trustee, any Senior Vice President,any Vice President, any Assis tant Vice Pres ident or anyTrust Officer of the Trustee and, when used with referenceto any act or document, also means any other Personauthorized to perform such ac t or sign any document by orpursuant to a resolut ion of the Board of Directors of theTrustee or the by-laws of the Trustee.
Bond Register . The term "Bond Register" means thebooks for reg is t ra t ion maintained by the Trustee pursuant tothe Indenture.
Bonds. The term "Bonds" means the Bonds issued byth e Authority purs uant to the Indenture.
Cert i f icates of par t ic ipat ion. The term"Cert if icates of Part icipat ion" means, col lect ively ,$43,500,000 Cert i f icates of Part ic ipat ion (Henry J . KaiserConvention Center) , executed and delivered pursuant to aTrust Agreement, dated as of September I , 1982, between theAgency and Bank of America National Trust and SavingsAssociation, and $38,000,000 Cert if ica tes of par t ic ipat ion(Oakland Convention Center - George P. ScotIan Memorial)Series 1983 executed and del ivered pursuant to a TrustAgreement, dated as of December I , 1983, between the Agencyand Bank of America National Trust and Savings Association.
City.C alifo rnia, asAgreement.
The term "City" means the City of Oakland,lessee and sublessee under the Lease
Closing Date. The term "Closing Date" means the
date of i n i t i a l delivery of the Bonds.
Delivery Costs. The term "Delivery Costs" meansa l l c os ts in cu rre d in connect ion with the preparation,review, execution and delivery of the Indenture, the Amendedand Restated Ground Lease, the Lease Agreement and theEscrow Agreement and in connect ion with th e iss ua nce, sa leand delivery of the Bonds, including, but not l imited to ,costs paid or incurred by the City, the Authori ty or theTrustee for f i l ing costs , print ing costs, reproduction andbinding costs , fees and charges of the Trustee, financingdiscounts, l ega l fees and charges and reimbursements,f inancial and other professional consultant fees and charges
and reimbursements, audi tors ' fees and charges andreimbursements, costs of ra t ing agencies for credit ra t ings ,fees for execution, regis tra t ion, t ranspor ta t ion andsafekeeping of the Bonds, municipal bond insurance premiums,i f any, and other charges and fees in connection with theforegoing.
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Fac i l i t i e s and the Si t e s pursuant to th e Lease A greemen t an das s e t for th in Exhibi t B at tached t he re to .
Municipal Bond Insurance Pol icy . The term"Munic ipal Bond Insurance Policy" means the munic ipa l bondin su ra nc e p ol ic y iss ue d by the I n su r e r insur ing the payment
when due ofthe p r i nc ipa l
of and i n t e r e s t onth e
Bondsas
provided the re in .
Municipal Obl iga t ions . Any bonds or o the r
ob l iga t i on s of any s t a t e of the United Sta tes of America or
of any agency, in s t rumenta l i ty o r l o ca l governmental un i t ofany such s t a t e which a re not ca l lab le a t the opt ion of the
ob l igor pr io r to matur i ty or as to which i r revocable
i n s t ruc t ions have been given by th e ob l igor to c a l I o n the
date spec i f i ed in the no t ice and which are ra ted , based onan i r revocable escrow account or fund, in the h ighes t ra t ingca tegory of S ta nda rd & Poor ' s CorporatioIl an d Mood y'sInves to r s Service o r any successors the re to .
Net Proceeds. The term "Net Proceeds" , when usedwith re spec t to any insurance o r condemnat ion award, meansth e proceeds from the insurance o r condemnat ion award withre spec t to which t ha t term i s used remaining a f t e r paymentof a l l expenses incurred in the col lec t ion of such proceeds .
Net Proceeds Account. The term "Net ProceedsAccount" means the account by t ha t name es tab l i shed under,and held by the Trustee pursuan t to , th e In de ntu re .
Outstanding. The term "Outs tanding" when used w ithr e fe rence to the Bonds and as of any par t i cu l a r da te means
a l l Bonds the re to fo re i s sued excep t : (a) any Bond cancel ledby th e Trus tee a t or be fore sa id d ate , (b) any Bond in l i euof o r in subs t i tu t ion fo r which another Bond s ha l l have beeni s sued pursuant to the Indenture , and (c) any Bond which i sdeemed to be defeased pursuant to th e terms and cond i t ions
of th e Indenture .
Owner. The term "Owner" o r "Bond Owner" o r "Ownerof Bonds" or any s imi la r t em when used w ith r e spec t to the
Bonds, means any person who sha l l be th e reg i s t e red Owner ofany Outstanding Bond; provided, however, t ha t the In su re r
sha l l be deemed to be th e Owner of Bonds insured by the
In su re r ( il a t a l l t imes fo r the purpose of giving consent
pursuan t to the Indenture or i n i t i a t i ng any ac t ion which maybe t aken by the t r u s t e e thereunder a t th e req ues t o r with
th e consent of the Owners of a major i ty in aggrega te
pr inc ipa l amount of Bonds Outstanding and ( i i ) fo l lowing anEvent of D efau lt fo r a l l other purposes .
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Payment Date. The term "Payment Date" meansOctober 1 and Apri l 1 of each year, commencing April 1,1993.
Permi tt ed Inves tment s. The term "PermittedInvestments" means:
(i) Federal Secur i t ies ;
( i i ) Obligations of the Export - Import Bank,Government National Mortgage Assoc ia tio n, th e Farmers Home
Administrat ion, th e Gene ral Services Admin is tr at ion , theU.S. Maritime Administration, the Small BusinessAdmini st ra tion, the U.S. Department of Housing & UrbanDevelopment or th e F edera l Housing Admin is tr atio n, o r acombination thereof, payable in cash, fo r which the fu l l
faith and credi t of the United States are pledged for thepayment of principal and in teres t ;
( i i i ) Bonds, notes or other evidences ofindebtedness rated "AAA" by Standard & Poor 's Corporationand "Aaa" by Moody's Investors Service issued by the FederalNational Mortgage Associat ion or the Federal Home LoanMortgage Corporation with remaining maturi t ies not exceedingthree years;
( iv) U.S dol la r denominated deposit accounts,federal funds and banker ' s acceptances with domesticcommercial banks which have a rat ing on the i r short termcer t i f i ca tes of deposi t on the date of purchase of "A-1" or"A-1+" by Standard & Poor 's Corporation and "P-I" by Moody'sI nves to rs Servi ce and maturing no more than 360 days a f te r
the date of purch ase ;
(v) Commercial paper which is ra ted a t thetime of purchase in the s ingle highest class i f icat ion, "A1+" by Standard & Poor 's Corporation and "P-l" by Moody'sI nves to rs Servi ce and which mature s not more than 270 daysaf te r the date o f pur chase ;
(vi)"AAAm" or "AAAm-G"
Corporation;
Investments in money market funds ratedor be t te r by Standard & Poor 's
(vii) Investment agreements approved in writingby the Insurer with not ice to Standard & Poor 's Corporation;
(vi i i ) Pre-refunded Municipal Obligations; and
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INDENTURE OF TRUST
AUTHORIZATION
Pursuant to th e In den tu re , the Trus tee i sauthor ized and d i rec ted to au then t i ca te and de l ive r to theUnderwriters the Bonds, which Bonds cons t i tu te spec ia l
l im i te d o b li ga ti on s of the Author i ty payable so l e ly fromLease Payments made by the Ci ty .
PLEDGE OF LEASE PAYMENTS
Pursuant to th e Indenture , the Lease Payments are
i r revocab ly pledged to , and s ha l l be used fo r , the punctualpayment of the p r i nc ipa l o f, premium, i f any, and i n t e re s ton the Bonds, and the Lease Payments sha l l not be used fo r
any o ther purpose while any of th e Bonds remain Outstanding.This pledge cons t i t u t e s a f i r s t and exc lus ive l i en on theLease Payments fo r the payment of the Bonds in accordance
with the terms t he reo f .
BONDS
Each Bond sha l l be dated as of November 1 , 1992.The pr inc ipa l o f , premium, if any, and i n t e r e s t on th e Bondssha l l be payable so le ly from the Lease Payments paid by the
City to th e Au th or ity fo r the l ease of the Fac i l i t i e s andth e sub lease of th e Si t e s , as s e t fo r th on Exhib i t B to theLease Agreement. The p r i nc ipa l of the Bonds sha l l bepayable on October 1 in each of the years and in th e amountsse t - fo r t h in the Indenture . I n t e r e s t on th e Bonds sha l l bepayable on October 1 and Apr i l 1 of each yea r , commencing on
Apri l 1, 1993, to and inc luding the da te of pr inc ipa lpayment or r edemp ti on , whi chever i s e a r l ie r . In te re s t onthe Bonds sha l l be payable from the Payment Date immediatelyp re ce din g th e da te of au then t i ca t ion th ere of , u nle ss :
(i) it i s au then t ica ted on a Payment Date, in which eventi n t e r e s t sha l l be payable from such Payment Date; o r ( i i ) it
i s au then t ica ted a f t e r the f i f t een th day of th e monthpreceding a Payment Date, in which event i n t e r e s t s ha l l bepayable from such Payment Date; or ( i i i ) it i s au then t ica ted
on o r before March 15, 1993, in which event i n t e r e s t sha l l
be payable from November 1, 1992; provided, however, t ha t
i f , as of the date of authent ica t ion of any Bond, i n t e r e s ton such Bond i s in defau l t such i n t e r e s t s ha l l be payable
from the Payment Date to which i n t e r e s t has prev ious ly beenpaid or made ava i l ab le fo r payment.
The Bonds sha l l be d el iv ere d in th e form of fu l ly
reg i s t e red Bonds without coupons in the denominat ion of$5,000 or any i n t e g r a l mu ltip le th e re of . The Bonds sha l l be
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payable in l awfu l money of th e United Sta tes of Americawhich a t th e t ime of payment i s l ega l t ender fo r th e paymentof pub lic and p r i va t e deb t s .
The regis trat ion of any Bond may, in accordancewith i t s te rms, be t rans fe r red o r exchanged upon th e BondRegister maintained by the Trustee as provided in th e
Indenture .
The principal of the Bonds sha l l be payable a t th eP rin cip al O f fic e of th e T rus te e. In t e r e s t on th e Bondssha l l be payable by check o r dra f t of the Trus tee mailed toth e Owners t h e r eo f as shown on th e Bond Regi s t e r on thef i f t eenth day of th e month p re ce din g th e Payment Date;provided, however, t h a t a t th e wr it te n d ir ec tio n f i l ed with
th e Trustee p r i o r to any Payment Date by th e Owner of Bondsin an aggregate pr inc ipa l amount of $1,000,000 o r more,i n t e r e s t on such Bonds sha l l be payable to th e Owner t he reofby federa l wire t r ans f e r i n i t i a t ed by the Trus tee on eachsucceeding Payment Date to the account number des igna ted in
such wri t t en d i r ec t i on .
The Bonds when executed, au then t ica ted anddel ivered wi l l be r eg i s te red in th e name of Cede & Co. , as
"Bond Owner" and nominee of the The Deposi tary Trus tCompany, New York, New York ("DT C"). So long as DTC, o r i t snominee, Cede & Co., i s the registered owner of a l l Bonds,a l l payments on th e Bonds wi l l be made direct ly to DTC, anddisbursements of such payments to DTC Participants wil l beth e responsibi l i ty of DTC, and disbursement of such paymentsto the person fo r whom a DTC Par t i c ipan t acqu i re s ani n t e r e s t in th e Bonds wi l l be the r e spons ib i l i t y of the DTC
Par t i c ipan t s .
FUNDS AND ACCOUNTS
Pursuan t to th e Indenture , th e Trustee s ha l le s t ab l i sh th e Convention Centers Trus t Fund. With in th e
Convention Centers Trus t Fund, th e Trustee s ha ll e sta bl is hth e A c qu is it io n Account, th e D eliv ery Costs Account , th e
Lease Payment Account, th e Reserve Account and th e NetP ro ceed s Acco un t. As provided by th e Indenture , th e Trustee
sha l l also es t ab l i sh a "Redemption Fund" and a "RebateFund". All am ounts on depos i t with th e T ru ste e, in clu din g,
without l im i t a t i on , in th e foregoing funds and accounts(except fo r th e Rebate Fund) are i r revocably pledged to the
Owners of th e Bonds fo r the punctual payment of th ep rin cip al o f, premium, i f any, and i n t e r e s t on th e Bonds.T his p led ge cons t i t u t e s a f i r s t and exclusive l i e n on the
foregoing funds and accounts (except fo r th e Rebate Fund)fo r the payment of th e Bonds in accordance with th e terms
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the reof .
ACOUISITION ACCOUNT
The Trustee sha l l depos i t in th e Acquis i t ion
Account pro ceeds of th e Bonds to be disbursed fo r payment of
Acquis i t ion Costs a s p rov id ed in th e Inden tu re .
DELIVERY COSTS ACCOUNT
The Trustee sha l l depos i t in th e Delivery CostsAccount proceeds of th e Bonds to be disbursed fo r paymenL o r
reimbursement of Del ivery Costs . Amounts remaining in s a id
account sha l l be t r an s fe r r ed to th e Lease Payment Account .
LEASE PAYMENTS; LEASE PAYMENT ACCOUNT
All Lease Payments and such o the r amounts to whichthe Author i ty may a t any t ime be en t i t l ed under th e LeaseAgreement, including moneys rece ived fo r the purpose o f
e f f ec t i ng a pa r t i a l o r comp le te p repayment of LeasePayments, sha l l be paid d i r ec t ly to th e Trustee as ass ignee
of the Authori ty under th e Lease A greem ent, and a l l of th e
Lease Payments and such amounts co l l ec ted or rece ived by th e
Authori ty sha l l be deemed to be held and to have beenco l lec ted o r received by th e Author i ty as the agen t of th e
Trustee , and i f rece ived by th e Author i ty a t any t ime sha l lbe depos i ted by th e Au th or ity with the Trustee, and a l l suchLease Payments and such o ther amounts sha l l be fo r thwi th
deposi t ed by th e T ru ste e upon th e r e ce ip t the reof in th e
Lease Payment Account. All amounts rece ived by the Trus tee
under th e Indenture s ha l l be held in t r u s t by th e T ru steefo r th e b en ef i t of the Bond Owners.
On each Payment Date , th e Trus tee sha l l withdrawfrom th e Lease Payment Account an amount su f f i c i en t to payany p r i nc ipa l o f , premium, i f any, and i n t e re s t on th e Bonds
due on such Payment Date .
Any amounts rece ived by the Trustee from the Ci ty
fo r th e purpose of pa r t i a l o r complete prepayment of LeasePayments sha l l be app lied to such prepayment . The Ci ty
s ha ll th e re af te r prepare and submit to th e Au th or ity and the
Trustee a rev i sed Lease Payment schedule re f lec t ing such
prepayments .
NET PROCEEDS ACCOUNT
The Trustee s ha l l e s t ab l i sh a spec ia l accountw ith in th e Convention Centers Trus t Fund designated as th e"Net Proceeds Account." The Trustee s ha l l disburse Net
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Proceeds deposited by the City pur suan t to the terms of theLease Agreement for th e rep air , r econs truc tion o rrepla cement o f the Si tes or the Faci l i t i es or for theprepayment of Lease Payments.
RESERVE ACCOUNT
There sha l l be deposited in the Reserve Accountproceeds of the Bonds in an amount equal to the ReserveRequirement. All moneys a t any time on deposi t in theReserve Account sha l l be applied as provided in theIndenture to make up any def ic ie nc ie s in the Lease PaymentAccount and as a cred i t against the l a s t r emaining LeasePayments. I f on any Payment Date, the amounts on deposi t inthe Lease Payment Account are less than the principal andi n t e res t then due on the Bonds, the Trustee sha l l t rans fe ran amount suff ic ient to make up such deficiency from theReserve Account to the Lease Payment Account. Upon receiptof any delinquent Lease Payment or portion th ere of w ithrespect to which moneys have been advanced from the Reserve
Account, such lease Payment or por ti on t he reof sha l l bedeposited in the Reserve Account.
INVESTMENT OF FUNDS
All moneys in any of the funds and accountsestabl ished pursuant the Indenture shal l be invested by theTrustee as directed by the City solely in PermittedInvestments. In the absence of t imely direction by theCity , as provided in the Indenture, such investments sha l lbe made in Permitted Investments selected by the Trustee ini t s sole discre t ion. All in te res t and other income receivedby the Trustee on in ve stmen t of the Lease Payment Account orRedemption Fund sha l l be retained in the Lease PaymentAccount or Redemption Fund and be applied as se t forth inthe Indenture, provided, however, tha t in the event tha tamounts on deposi t in the Reserve Account are less than theReserve Requirement, said in teres t or income shal l bedeposited in the Reserve Account unt i l there is on deposi tin the Reserve Account an amount equal to the ReserveRequirement. All i n t e res t and other income received by theTrustee on investment of the Reserve Account shal l bere ta ined in the Reserve Account in the event that amounts ondeposit in the Reserve Account are less than the ReserveRequirement. In the event that amounts then on deposit in
the Reserve Account equal or exceed the Reserve Requi rement ,su ch ex ces s sha l l be t ransferred to the Lease PaymentAccount. Any in teres t or other income received by theTrustee on the investment of the Acquisi t ion Account and theDelivery Costs Account sha l l be deposited, respect ively, in
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th e Acquis i t ion Account and th e D eliv ery Costs Account un t i lsa id accounts a re closed pursuan t to th e Inden tu re .
For th e purpose of determining th e amount in anyaccount held by the Trus tee under th e I nd en tu re , a l lPermit ted Investments c red i t ed to such account sha l l bevalued as prov id ed in th e Inden tu re .
Investments in any funds and accounts may becommingled in a separa te fund o r funds fo r purposes of
making, holding or dispos ing of i nv e stmen ts , no tw i th s tand ing
prov i s ions in th e In de ntu re fo r t r ans f e r to o r holding in o r
the c red i t of pa r t i cu l a r funds and accoun ts of amounts
received o r he ld by the Trus tee thereunder , provided t h a tthe Trustee s ha l l a t a l l i t ems account fo r such inves tmentss t r i c t l y in accordance with th e funds and accounts to whichthey are c red i t ed and o th erw is e a s prov ided in the
Inden ture .
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Pursuan t to the Lease Agreement, th e Authori ty hast r ans fe r red , assigned and s e t over to th e Trustee a l l o f the
Author i ty ' s r i gh t s in and to the Lease Agreement (except ingas to ce r t a i n of the Author i ty ' s r ig hts th er ein ), i nc lud ing
without l im i t a t i on a l l of th e A u th or ity 's r igh t s to exerc i se
such r igh t s and remedies confer red on th e Authori ty pursuant
to th e Lease Agreement as may be necessary o r convenient( i) to enforce payment of th e Lease Payments and any o the ramounts requ i red to be pa id under the Lease Agreement, and( i i ) otherwise to exerc ise th e Autho r i t y ' s r igh t s and t ake
any ac t ion to p ro t ec t the i n t e r e s t s of th e Bond Owners in
the case of an Event of Defau l t .
I f an Event of Defaul t occurs o f which th e Trus tee
has , or i s deemed to have, no t ice as prov ided in th e
Inden ture , the Trustee sha l l promptly g iv e n ot ice to the
Insure r and th e Owner of each Bond. Upon th e o cc urre nc e o fan Event of Defau l t , and in each and every such case dur ing
the cont inuance of the Event of Defau l t , th e Trustee may,
and upon the w ri t te n d i r ec t i on of the Owners of a major i ty
in aggregate p r inc ipa l amount of Bonds then Outstanding andupon r ece ip t of indemnity to i t s reasonab le s a t i s f a c t i on ,the Trus tee sha l l , upon no t i ce in w rit in g to the Author i ty
and the Insure r , exerc i se th e remedies prov ided in th e Lease
Agreement to the extent permi t ted by law. Anything in th eInden ture to the cont ra ry no tw i th s tand ing , upon th e
occurrence and cont inuance of an Event of D efau lt , th e
Insure r sha l l be ent i t l ed to con t ro l and d i r e c t the
enforcement of a l l r igh t s a nd remedies g ran ted to the BondOwners or the Trustee fo r th e b en ef i t of th e Owners of th e
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Bonds under the Indenture and the Insurer sha l l be ent i t ledto approve a l l waivers of Events of Default .
Notwithstanding anything in the Indenture or theLease Agreement to the contrary, there sha l l be no r ightunder any circumstances to accelerate the maturi t ies of theBonds or otherwise to declare any Lease Payment not then in
defaul t to be immediately due and payable.
AMENDMENT OF INDENTURE
The Indenture and the rights and obligations of theOwners of the Bonds may be modified or amended a t any timeby agreemen t among a l l of the par t ies and the Trustee, whichsha l l become effect ive upon the w ritten consent of theOwners of a majority in aggregate principal amount of theBonds then Outstanding. No such modification or amendmentsha l l impair the r igh t of any Owner to receive the principalof , premium, i f any, and i n t e res t on h is Bond.
The Indenture and the r ights and obligations of theOwners of the Bonds may be modified or amended a t any time,without the consent of any such Owners but only (1) to cure,correc t or supplement any ambiguous o r d ef ec tiv e provisioncontained in the Indenture, or (2) in regard to questionsar is ing under the In denture, as the City may deem necessaryo r d es ir ab le , and which sha l l not adversely af fec t thein te res ts of the Owners of the Bonds or the exclusion fromincome fo r Federal income tax purposes of the in te res t onthe Bonds. Notwithstanding the foregoing, any provision ofthe I nden tu re exp re ss ly r ecogni zing or grant ing r ights in orto the Insurer may not be amended in any manner whichaf fec t s the r ights of the Insurer without the pr ior writ tenconsent of th e Insurer.
CONSENT OF THE INSURER
Except as expressly provided in the Indenture, theInsurer 's consent sha l l be required in a dd itio n to theconsent of Bond Owners, when required, for the followingpurposes: (i) execution and delivery of any supplementalIndenture o r any amendment, supplement or change to ormodif icat ion of th e I nden tu re ; ( i i) removal of the Trusteeand select ion and appointment of any successor Trustee; and( ii i ) in it i at io n or approval of any other act ion requir ing
the consent of the Bond Owners.
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DEFEASANCE
The Bonds may be p a i d and discharged i n a n y o n e o rmore o f th e fo llowin g ways:
(a) by wel l and t r u l y paying o r c a u s i n g t o be p a i d
t h e p r i n c i p a l o f and i n t e r e s t on a l l Bonds, a s and when
t h e same become due and payable ;
(b) by d e p o s i t i n g with t h e T r u s t e e , i n t r u s t , a to r b e f o r e m a t u r i t y , moneys i n an amount which, t o g e t h e r
w it h t h e amounts t h e n on d e p o s i t i n the Lease PaymentAccount and t h e Rese rve Account , a r e f u l l y s u f fi c i e n t t o
pay a l l Bonds t h e n o u ts ta n d in g ;
(c ) by d e p o s i t i n g with t h e T r u s t e e , i n t r u s t , casha n d / o r d i r e c t o b l i g a t i o n s of t h e United S t a t e s o f
America i n such amount as w i l l , t o g e t h e r w i t h t h ei n t e r e s t t o be r e c e i ve d t h e r eo n and moneys t h e n on
d e p o s i t i n t h e Lease Payment Account and t h e Reserve
Account, t o g e t h e r with t h e i n t e r e s t t o be r e c e i v e dthereon , be f u ll y s u ff i c i e n t t o pay and d i s c h a r g e a l lBonds a t o r b e f o r e t h e i r r e s p e c t i v e m a t u r i t i e s ; o r
(d) by d e p o s i t i n g with t h e T r u s t e e , under anescrow d e p o s i t and t r u s t agreement, s e c u r i t y f o r thepayment of a l l Lease Payments a s provided i n t h e LeaseAgreement.
Notwithstanding t h a t any Bonds s h a l l n o t have beens u r r e n d e r e d f o r payment, upon t h e payment and d i s c h a r g e o f
t h e Bonds as prov ide d above, a l l o b l i g a t i o n s o f t h e
A u t h o r i t y , t h e T r u s t e e and t h e C i t y under t h e I n d e n t u r e
s h a l l cease and t e r m i n a t e except o n l y the o b l i g a t i o n of t h e
T r u s t e e t o p a y o r cause t o be p a i d , from Lease Payments p a i d
by o r on b e h a l f of t h e City from d e p o s i t s p u r s u a n t t o
paragraphs (b ) through (d) above, t o t h e Owners o f t h e Bondsn o t so surrendered and p a i d a l l sums due with r e s p e c t
t h e r e t o ; provided, however, t h a t n o tw i th s ta n d i ng a n yt hi ng i n
t h e Indenture t o t h e c o n tr a ry , i n t h e event t h a t t h e
p r i n c i p a l of o r i n t e r e s t on t h e Bonds s h a l l have been p a i d
by t h e I n su re r pursuant t o the Municipal Bond I n s u r a n c e
P o l i c y , t h e Bonds s h a l l remain Outstanding f o r a l l purposes ,n o t be defeased o r otherwise s a t i s f i e d and n ot c on si d er e d
p a i d by the A u t h o r i t y , and t h e assignment and p l e d g e of t h e
Lease Payments and o t h e r amounts under the I n d e n t u r e t o t h eT r u s t e e f o r t h e b e n e f i t o f t h e Bond Owners s h a l l c o n t i n u e t o
e x i s t and s h a l l run t o t h e b e n e f i t o f t h e I n s u r e r , and theI n s u r e r s h a l l be subrogated t o t h e r i g h t s of t h e Owners oft h e Bonds.
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COVENANTS
The Author i ty covenants and agrees with th e Owners
of the Bonds to perform a l l ob l iga t ions and du t ies imposedon it under the Leas8 .
LIMITATION OF LIABILITY
Except as prov ided in th e Indenture , ne i the r th eAuthor i ty nor th e Trustee s ha l l have any o blig atio n o rl i a b i l i t y to th e Owners of the Bonds with respec t to th epayment of th e Lease Payments by the City when due o r withr espec t to th e performance by the C ity of any o the rcovenants made by it in th e Lease Agreement.
AMENDED AND RESTATED GROUND LEASE
AGREEMENT TO LEASE; TERM OF LEASE« LEASE PAYMENT
The City agrees to lea se the Si tes to th e
Author i ty , and th e Au th or ity a g re e s to l e a se the S i t e s fromth e Ci ty , upon th e te rms and condi t ions s e t fo r th in theAmended and Resta ted Ground Lease .
The term of th e Amended and Resta ted Ground Leases ha l l commence as o f November 1, 1992 and sha l l end on theea r l i e r of October 1, 2019 o r the date on which th e LeasePayments sha l l have been paid in f u l l unless extended o rterminated e a r l i e r in accordance with th e p ro vis io nsthe reof . I f on October 1, 2019, the Lease Payments s ha l lnot have been pa id , then th e term of the Amended andResta ted Ground Lease sha l l be extended un t i l ten (10) days
a f t e r a l l the Bonds have been pa id . The term of the Amendedand Restated Ground Lease s ha l l in no even t extend beyondOctober 1, 2032.
The Author i ty agrees to pay to the Ci ty , as r en t a lfo r th e use and o ccup an cy of the Si t e s dur ing th e term ofth e Amended and Resta ted Ground Lease , payments as s e t for thin the Amended and Restated Ground Lease . No fu r t he r
amounts sha l l be due and payable by th e Authori ty to theCity under th e Amended and Resta ted Ground Lease.
Upon t e rmina t ion of the Amended and Resta ted Ground
Lease, a l l r i gh t , title and i n t e r e s t of th e Au th ori ty in and
to th e Si tes s ha l l rev er t to th e Ci ty .
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CONDEMNATION; DAMAGE OR DESTRUCTION
In th e event of damage or des t ruc t ion to th e Si t e s
or any pa r t the reof o r in th e event a proceeding in eminentdomain o r condemnation i s i n s t i t u t ed aga ins t th e Si t e s o rany pa r t the reof , the Lease Agreement wi l l e i t h e r con t inue
or t e rmina te pursuant to i t s terms. I f th e Lease Agreement
t e rmina tes (the C ity , as sub lessee o f the Si t e s and l e s seeof th e Fac i l i t i e s , has th e opt ion , a t its sa l e d i s c re t i on ,to exe r c i s e or not exe rc i se any r igh t s contained in th e
Lease Agreement), the Amended and Resta ted Ground Leasesh al l a ls o terminate and a l l Net Proceeds s ha l l be a l l oca t ed
in a cc or da nc e w ith the provis ions of th e Lease Agreement .I f th e Lease Agreement does not te rm ina te , the prov i s ions ofthe Lease Agreement with r espec t to r epa i r s o r r e s to r a t i onand th e a l loca t ion of Net Proceeds s ha l l govern .Notwithstanding the foregoing, in the event th a t fo r anyreason the Lease Agreement has been t e rmina ted and th e
Amended and Resta ted Ground Lease co ntinu es , th e Author i ty
sha l l no t be en t i t l ed to th e Net Proceeds o f any insurance
o r condemnat ion award o r any por t ion the reof , and a l l of the
same sha l l be th e proper ty of the C ity to th e ex ten t s e tfor th in th e Lease Ag reemen t.
MISCELLANEOUS
The Authori ty sha l l not , d i r ec t ly o r i nd i r e c t ly ,crea te , assume or su ff e r to ex i s t any mortgage, pledge ,l i en , charge, encumbrance o r claim on o r with re spec t to th e
Si t e s , o the r than the r espec t ive r i gh t s of th e Au th or ity andthe C ity as provided in th e Amended and Resta ted Ground
Lease.
LEASE AGREEMENT
AGREEMENT TO LEASE
In cons idera t ion of the payment by th e C ity to th e
Author i ty o r i t s assignee of the Lea se P ayments , the
A u th ority su blea se s th e Si t e s and l eases th e Fac i l i t i e s tothe City pursuant to , and on th e terms and condi t ions s e t
for th in , th e Lease Ag reemen t.
TERM OF LEASE AGREEMENT
The term of th e Lease Agreement sha l l commence asof November 1, 1992 and sha l l end on th e ea r l i e r of( i) October 1, 2014, o r ( i i ) the date upon which LeasePayments a re paid in fu l l , unless extended o r t e rmina ted
ea r l i e r in accordance with th e p ro visio ns h ereo f. I f onOctober 1, 2014, the Bonds have not been paid o r p ro vis io n
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for the payment thereof has not been made, then the term ofthe Lease Agreement sha l l be extended unt i l ten (10) daysaf t e r a l l the Bonds have been paid o r p ro vis io n therefor hasbeen made, except that in no event sha l l the term hereof beextended beyond October 1, 2032.
LEASE PAYMENTS
The City agr ee s to pay to the Authori ty , i t ssuccessors and assigns, as renta l for the use and occupancyof the Si tes and the Faci l i t ies , the Lease Payments. EachLease Payment shal l be for the r igh t to possess the Si tesand the Faci l i t i es for the semiannual period commencing thesecond day of October or April of each calendar year andending on the f i r s t day of the following October or Apri l .For each semiannual ren ta l period, the City sha l l make LeasePayments durin g sa id semiannual period as more part icularlyse t forth in Exhibit B to the Lease Agreement , as Exhibit Bmay from t ime to time be modified, following prepayment of
Lease Payments. In addition , in the event of damage to ordestruction of the Fac i l i t i e s , i f the City e lec ts to repair ,reconstruct or replace the Faci l i t i es and the Faci l i t ies arenot restored and made Usable within two years (or suchs ho rte r p eri od of time as Net Proceeds of renta linterruption insurance and moneys in the Reserve Account areavailable fo r the payment of Lease Payments), the City wil lpay addi t ional Lease Payments in an aggregate amountnecessary to replenish any deficiencies in the ReserveAccount by reason of such damage or destruct ion of theFaci l i t i es . Such addit ional Lease Payments wil l be made inconsiderat ion of the City 'S r ight to possession and use ofthe restored Faci l i t i es and sha l l be payable in equal
semiannual payments, commencing on the date fo r the paymentof Lease Payments hereunder next occurring followingrestorat ion and repair of the Faci l i t i es , fo r the le sse r offive years or the remaining term of the Lease Agreement,unt i l such additional Lease Payments are paid in fu l l .
Lease Payments for each semiannua l payment periodduring the term of the Lease Agreement sha l l consti tute theto ta l amount due for sa id payment period and shal l be paidby the City for and in considerat ion of the r igh t ofpossession of, and the continued quiet use and enjoyment ofthe Si tes and the Fac i l i t i e s (including, in the case ofaddit ional Lease Payments, the res tored Fac i l i t ie s ) during
such payment period.
An amount equal to the Lease Payment at tr ibutableto each semiannua l payment period sha l l be due on the 15thday of September and March in each year as specif ied inExhibit B to the Lease Agreement; provided tha t there sha l l
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be applied as a cred i t against the Lease Payment payable onsuch date an amount equal to the sum of ( il the amount ofin te res t or income, i f any, theretofore earned on the LeasePayment Account and Redemption Fund since the date of theprevious repor t made by the Trustee in accordance with theprovisions of the Indenture, plus (ii) the amount, i f any,then on deposi t in the Lease Payment Account, which to ta l
c re dit sh all have been reported on the precedingSeptember 15 or March 15 by th e T rustee to the City pursuantto the Indenture. In the event tha t the to ta l amount ofcredit exceeds the Lease Payment due on the Payment Datefollowing sa id re po rt , the amount of said excess shal l beapplied as a cred i t against subsequent Lease Payments. Inaddit ion, the amount in the Reserve Account sha l l be appliedas a cred i t agains t the l a s t Lease Payments due pr ior to theexpiration of the term of the Lease Agreement.
Should any Lease Payment be made l a te r than thePayment Date to which such Lease Payment per ta ins , suchLease Payment sha l l bear in te re st a t the same ra te as the
ra te represented by the in te res t component of said LeasePayment from such Payment Date to the date of actualpayment.
Pursuant to the Lease Agreement, the Authorityd ire cts th at the City make the Lease Payments direc t ly tothe Trustee fo r deposit in the Lease Payment Account.
PREPAYMENT OF LEASE PAYMENTS
The Lease Payments are su bject to mandatory andoptional prepayment as provided in the Lease Agreement andcorresponding to the mandatory and optional redemption of
the Bonds.
DEFEASANCE
The City may on any date secure the payment of a l lor a port ion of the Lease Payments by a deposit w ith theTrustee, as escrow holder under an escrow deposi t and t rus tagreement as referenced in the Indenture, of ei ther (i) anamount, i f any, which, together with amounts on deposi t inthe Lease Payment Account and the Reserve Account, i s , inthe opinion of an independent cer t i f ied public accountant,ful ly suff ic ien t to pay a l l unpaid Lease Payments, includingthe principal and in te res t components thereof , andprepayment penal ty, i f any, thereon, in accordance with theLease Payments schedule se t for th in Exhibi t B of the LeaseAgreement, or ( i i l direct obligat ions of the United Statesof America, together with cash, i f required, in such amountsas wil l , together with in te res t to acc rue t he reon and, i f
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MAINTENANCE; UTILITIES AND TAXES
Throughout t h e term o f t h e Lease Agreement, a s p a r t
o f t h e c o n s i d e r a t i o n f o r t h e r e n t a l o f t h e S i t e s and t h e
F a c i l i t i e s , a l l improvement , r e p a i r and maintenance o f t h e
S i t e s and t h e F a c i l i t i e s s h a l l be t h e r e s p o n s i b i l i t y o f t h e
C i t y , and the C i t y s h a l l pay f o r o r o t h e r w i s e arrange f o r
t h e payment of a l l u t i l i t y s e r v ic e s s u p p li e d t o theF a c i l i t i e s and a l l c o s t s o f o p e ra ti o n o f t h e F a c i l i t i e s anda l l c o s t s of t h e r e p a i r and replacement o f t h e F a c i l i t i e sr e s u l t i n g from o r d i n a r y wear and t e a r o r want of c a r e on t h e
p a r t o f t h e C i t y .
The C i t y s h a l l a l s o p a y o r cause t o be p a i d all
t a x e s and assessments o f any type o r n a t u re , i f any, chargedt o t h e A u t h o r i t y o r t h e C i t y and r e l a t e d t o t h e S i t e s o r t h e
F a c i l i t i e s o r t h e i n t e r e s t s o r e s t a t e s t h e r e i n .
MODIFICATION OF THE SITES OR THE FACILITIES
The C i t y s h a l l , a t i t s own expense , have t h e r i g h tt o remodel t h e F a c i l i t i e s o r t o make a d d i t i o n s ,
m o d i f i c a t i o n s and improvements t o t h e S i t e s and F a c i l i t i e s .A l l a d d i t i o n s , m o d i f i c a t i o n s and improvements s h a l l
t h e r e a f t e r comprise p a r t o f t h e S i t e s and F a c i l i t i e s and bes u b j e c t t o t h e p r o v i s i o n s o f t h e Lease Agreement. Sucha d d i t i o n s , m o d i f i c a t i o n s and improvements s h a l l not i n anyway damage t h e S i t e s o r F a c i l i t i e s o r cause them t o be usedf o r purposes o t h e r t h an t h o s e a u t h o r i z e d under t h e
p r o v i s i o n s of s t a t e and f e d e r a l law; and t h e S i t e s andF a c i l i t i e s , upon c omp le tio n o f any a d d i t i o n s , m o d i f i c a t i o n s
and improvemen ts made t h e r e t o pursuan t t o t h e Lease, s h a l l
be o f a v a l u e which i s no t s u b s t a n t i a l l y l e s s than t h e v a l u e
o f t h e S i t e s and F a c i l i t i e s immediately p r i o r t o t h e makingo f such a d d i t i o n s , m o d i f i c a t i o n s and improvements.
INSURANCE
The C i t y s h a l l m a i n t a i n o r cause t o be m a i n t a i n e d ,
th roughout t h e term o f t h e Lease Agreement , a comprehensiveg e n e r a l p u b li c l i a b i l i t y i n s u r a n c e p o l i c y o r p o l i c i e s
a g a i n s t d i r e c t o r c o n t i n g e n t l o s s o r l i a b i l i t y f o r damagesf o r p e r s o n a l i n j u r y , d e a t h o r p ro pe r t y damage occasioned byr e a s o n o f t h e o p e r a t i o n o f t h e S i t e s and t h e F a c i l i t i e s .S a i d p o l i c y o r p o l i c i e s f o r comprehensive g e n e r a l p u b l i c
l i a b i l i t y i n s u r a n c e s h a l l provide a t o t a l coverage i n
amounts a u t h o r i z e d by t h e C i t y ' s l i a b i l i t y insuranceprogram, and may be s u b j e c t t o a d e d u c t i b l e amount i n anamount n o t t o exceed $500,000, o r such g r e a t e r amount a s maybe a u t h o r i z e d by t h e C it y 'S l i a b i l i t y i n s u r a n c e program.
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The City shal l procure and maintain, or cause to beprocured and maintained, throughout the term of the LeaseAgreement, insurance ag ain st lo ss or damage to the Si tes andany structures const i tu t ing any pa r t of the Faci l i t i es byf i re and l ightning, with extended coverage and vandalism andmalicious mischief insurance, and earthquake insurance (butas to earthquake insurance only i f , in the opinion of the
City, such insurance i s avai lable a t reasonable cost on theopen market from reputable insurance companies). Saidextended coverage insurance sha l l , as nearly as pract icable ,cover loss or damage by explosion, windstorm, r io t ,ai rcraf t , vehicle damage, smoke and such other hazards asare normally covered by such insurance. Such insuranceshal l be in an amount equal to 100% of the replacement costof the Si tes and the Faci l i t i es . Such insurance may besubject to deductible amounts as may be authorized by theCity 's l i ab i l i ty insurance program, except tha t theearthquake insurance may be subjec t to a deductible clauseof not to exceed ten percent (10%) of said replacement costfor an yo ne lo ss .
The City sha l l maintain or cause to be maintainedthroughout the term of the Lease Agreement ren ta lin terrupt ion or use and occupancy insurance, in an amountnot le ss than the maximum to ta l Lease Payments payable bythe City on any four consecutive dates for payment ofsemiannual Lease Payments hereunder, to insure ag ainst lo ssof Lease Payments to the Authority or i t s assignee caused byany of the per i l s covered by the f i r e and extended coverageinsurance described above.
The City sha l l maintain or cause to be maintainedthroughout the term of the Lease Agreement , Workers'
Compensation I nsur ance cover a l l persons employed inconnection with the Faci l i t i es who are not o th erw ise coveredas required by the Labor Code of the State of Cali fornia .
Each policy of f i re and extended coverage andrental interruption insurance required by the LeaseAgreement shal l provide that a l l proceeds thereunder sha l lbe payable to the Trustee as and to the extent requiredunder the Lease Agreement.
APPLICATION OF NET PROCEEDS OF INSURANCE
Any Net Proceeds of any insurance re la t ing to an
accident to or dest ruct ion of any par t of the Si tes or theFaci l i t ies which i s col lected by the City in consequence ofany such accident o r d es tr uc tio n sha l l be deposi ted by theCity in the Net Proceeds Account to be held in t rus t by theTrustee as assig nee of the Authority pursuant to the
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Indenture and sha l l be applied and disbursed as se t forthbelow.
I f the Ci ty determines that such Net Proceeds areto be ut i l ized for the repair , reconstruction or replacementof the damaged or destroyed portion of the Si tes or theFaci l i t i es and tha t such repair , reconstruction or
r ep lacement can be completed within two years from the dateof damage or d estru ctio n, as evidenced by a cer t i f ica teexecuted by an Authorized Officer of the City and f i led withthe Trustee, then the City sha l l cause such port ion of theSites or the Faci l i t i es to be repaired, r econst ruct ed o rreplaced to a t l eas t the same good order, repair andconditio n a s it existed pr ior to the damage or destruction,insofar as the same may be accomplished by the use of saidNet Proceeds, and shal l di rec t th e T ru ste e to withdraw saidNet Proceeds from the Net Proceeds Account from time to timeand to pay such Net Proceeds to the City for the purpose ofsuch repair , reconstruction or replacement. The Citycovenants tha t such repair , reconstruction or replacement
shal l be completed and the Si tes or the Faci l i t i es madeUsable within two years from the date of damage to ordestruct ion of the Fac i l i t i e s . The City s ha ll d ire ct theTrustee to deposit any balance of said Net Proceedsremaining in the Net Proceeds Account and not re qu ire d fo rsuch repa i r , reconstruction or replacement into the LeasePayment Account as a prepayment of Lease Payments. Subjectto the provisions of the following two paragraphs, the Cityshal l be oblig ate d to continue to make Lease Paymentsrequired by the Lease Agreement notwithstanding accident too r d es tr uc tio n of a l l or a port ion of the Si tes or theFaci l i t i es ; provided, however, that in the event thataccident or damage to any port ion of the Si tes or the
Faci l i t i es i s such as to cause such portion not to beUsable, then such Lease Payments sha l l be abated in theproportion to which th e unu sab le portion of the Si tes andthe Fac i l i t i e s bears to the entire Sites and Faci l i t i esbased upon the fa i r market value of the Si tes and theFaci l i t i es on November 1, 1992 or the date of suchaba tement , whichever i s greater , or to the maximum extentpermitted by law, u nti l rep air of such damaged port ion iscompleted to such an extent as to enable use thereof .Notwithstanding the foregoing, there sha l l be no abatementso long as moneys then on deposit in the Lease PaymentAccount or Reserve Account or Net Proceeds of ren ta lin terrupt ion insurance are suff ic ien t for the making ofLease Payments when and as they become due and payable.
In l ieu of repair , reconstruction or replacement ofthe damaged or destroyed port ion of the Sites or theFaci l i t i es , the City may (and, i f the City sha l l determine
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tha t such repair , reconstruction or replacement sha l l not becompleted within two years, the City sha l l ) , by acer t i f ica te executed by an Authorized Officer of the Cityand f i led with the Trustee, d i rec t the Trustee to apply theNet Proceeds of insurance to the prepayment of LeasePayments, provided that , in the case where the Citydetermines tha t such repai r , reconstruction or replacement
may be completed within two years of such damage ordestruction, the remaining Lease Payments wil l be suff ic ien tto pay a l l of tha t port ion of principal and i n t e res t on theremaining Outstanding Bonds.
Any Net Proceeds of ren ta l in terrupt ion insurancerequired by the Lease Agreement sha l l be used to pay LeasePayments during any period in which abatement of LeasePayments would otherwise have occurred except for theava i lab i l i ty of such Net Proceeds of rental in terrupt ioninsurance. Such Net Proceeds sha l l be paid by the City tothe Trustee, as assig nee of the Authori ty, for deposi t inthe Lease Payment Account and applied to the payment of any
Lease Payments then· due and, . thereaf ter , sha l l be applied asa credi t against th e next subsequent Lease Payments.
TITLE INSURANCE AND CONDEMNATION
The City sha l l provide, or cause to be provided, a ti t s own expense, an American Land Tit le Associat ion t i t l einSurance policy with.such endorsement so as to be payableto the Trustee (as assignee of t he Au thor ity) . Such policysha l l insure the City 's fee t i t l e and the Authori ty ' sleasehold t i t l e to the Sites , the Authori ty 's t i t l e to theFaci l i t i es and the City 's subleasehold t i t l e to the Si tesand leasehold t i t l e to the Fac i l i t i e s . Said t i t l e insurance
polic y s ha ll be in a principal amount equal to the aggregateprincipal component of Lease Payments se t for th in Exhibi t Bto the Lease Agreement.
All Net ~ r o c e e d s received under the t i t l e insurancepolicy provided for by the Lease Agreement or in anycondemnation proceeding undertaken by any governmentalagency re la tin g to a l l or a port ion of the Si tes or theFaci l i t i es sha l l be paid to the Trustee and deposi ted in theNet Proceeds Account and shal l be applied and disbursed asse t forth below.
I f the City determines tha t such t i t l e defec t or
condemnation has not material ly affected the operation ofthe Sites or the Faci l i t i es or the abi l i ty of the City ori t s assignee to meet any of the obligations under the LeaseAgreement, or i f such Net Proceeds are insuff ic ien t toenable the City to prepay Lease Payments in fu l l , as se t
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fo rth in a cer t i f i ca t e executed by an AuthorizedRepresentative of the City and f i led with the Trustee, theCity sha l l di rec t the Trustee by said cer t i f i ca te of anAuthorized Representative to hold such Net Proceeds in theLease Payment Account and apply such Net Proceeds as aprepayment in par t of Lease Payments. SUbject to theprovisions of the fol lowing paragraph, the City shal l be
obligated to continue to make Lease Payments required by theLease Agreement notwithstanding condemnation of or a t i t l edefect re la t ing to a portion of the of the Si tes or theFaci l i t i es ; provided, however, tha t in the event that suchcondemnation or defect i s to such extent as to cause suchport ion not to be Usable, then such Lease Payments shal l beabated in the proportion to which the unusable port ion ofthe Sites and the Faci l i t i es bears to the en t i re Sites andthe Fac i l i t ie s based upon the fa i r market value of the Si tesand the Faci l i t i es on November 1, 1992 or the date of suchabatement, whichever i s greater , o r to the maximum extentpermit ted by law, except that abatement sha l l not resul t solong as moneys then on deposi t in the Lease Payment Account
or Reserve Account or Net Proceeds of t i t l e insurance orcondemnation are suff ic ient for the making of LeasePayments.
I f the City determines tha t such t i t l e defect orcondemnation has mate r ia ll y a f fec ted the operat ion of theSites or the Fac i l i t i e s or the ab i l i ty of the City to meetany of i t s obligations under the Lease Agreement, as se tfor th in a cer t i f i ca t e executed by an AuthorizedRepresentative of the City and f i led with th e T ru ste e, or i fsuch Net Proceeds are s uf fi ci en t to enable the City toprepay Lease Payments in fu l l as se t forth in the LeaseAgreement as se t forth in a cer t i f i ca te executed by an
Authorized Representative of the City and f i led with theTrustee, the City s ha ll d ire ct the Trustee, by sa idcer t i f i ca te of an Authorized Representative, to t r ea t suchNet Proceeds as the prepayment of Lease Payments in fu l l .
In the event of condemnation of the Si tes and theFaci l i t i es , the City wil l use a l l effor ts to assure that anyaward made as a resul t of said condemnation i s suff ic ien t topay the s t ipulated value (as se t forth in Exhibi t B of theLease Agreement) of the City ' s i n t e res t in the Si tes and theFaci l i t ies .
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EVENTS OF DEFAULT AND REMEDIES
The fo l lowing a re "Events of Defau l t " under the
Lease Agreement:
(i) Fai lure by th e C ity to pay any Lease Paymentwhen due and p ay ab le un de r the Lease Agreem ent, and the
con t inua t ion of such f a i l u r e to th e B usin ess Day p r i o rto the Payment Date to which such Lease Paymentpe r t a i n s ;
( i i ) Fa i lu re by th e C ity to pay any Addi t iona l
Payment when due and payable under th e Lease Agreementand th e c on tin ua tio n of such fa i lu re fo r a period of ten(10) days;
( i i i ) Fai lure by th e Ci ty to observe and perform anycovenant , condi t ion o r agreement on i t s pa r t to beobserved o r performed, o ther than as r e f e r r ed to in
c lause (i) above, fo r a pe r iod of s ix ty (60) days a f t e r
wri t t en no t ice spec i fy ing such fa i lu re and reques t ingt ha t it be remedied has been given to th e Ci ty by th e
Author i ty , the T ru ste e o r Owners of not l e s s than f ive
pe rcen t (5%) in aggrega te Pr inc ipa l Amount of Bonds then
Outs tanding, unless the Authori ty , Trus tee and such BondOwners agree in w ri t in g to an extension of such t imep r i o r to i t s exp i r a t i on ; provided, however, if thef a i l u re s t a t ed in th e no tice can be cor rec ted , but notwithin th e a pp lic ab le per iod , the Author i ty , the
Trus tee , o r such Bond Owners sha l l not unreasonablywi thho ld t h e i r consen t to an ex tens ion of such t ime ifcor rec t ive ac t ion i s i n s t i t u t ed by th e City within th e
app l icab le period and d i l i g en t l y pursued un t i l the
defau l t i s cor rec t ed ;
( iv) A cour t having j u r i sd i c t i on sha l l en t e r adecree o r order fo r r e l i e f in respec t of the City in aninvolunta ry case under app l i cab le b an kr up tc y, i ns ol ve nc yor o th er s im i la r laws in e f f e c t or appoint ing arece iver , l i qu ida to r , ass ignee , t r u s t e e , custodian ,
seques t ra to r o r s im i l a r o f f i c i a l of th e C ity o r fo r anysubs t an t i a l pa r t of i t s proper ty , o r o rd er in g the
winding up o r l i qu ida t ion of i t s a f f a i r s , and suchdecree o r orde r remains unstayed and in e f f e c t fo r s ix ty
(60) days ;
(v ) The City sha l l commence a volun ta ry case underany app l icab le b an kr up tc y, i ns ol ve nc y o r o th e r s imi la rlaw in e f f e c t or sha l l consen t to the en t ry of an orde r
fo r r e l i e f in an i nvo lun ta ry case under any such law, o r
sha l l consen t to th e a pp oin tm en t o f o r t ak ing possess ion
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by a receiver , l iquidator , assignee, t rus tee , custodian,sequest ra tor or other s imi lar off ic ia l of the City forany subs tan t ia l par t of i t s property, or sha l l make anygeneral assignment fo r the benef i t of credi tors or shal lfa i l generally to pay i t s debts as they become due andsha l l take any corporate act ion in f ur th er ance o f any of
the foregoing.
Upon the occurrence and continuance of any Event ofDefaul t descr ibed in ( il or ( i i l above, the Trustee, mayproceed to (a l re -en te r and take possession of theFaci l i t i es holding the City l iab le fo r the Lease Paymentsand other amounts payable by the City pursuant to the LeaseAgreement; (bl re-enter and take possession of theFaci l i t i es and r e - l e t the Faci l i t i es to a th ird party forthe account of the City, holding the City l iab le for thedifference between the amount received under such lease andthe Lease Payments payable by the City under the LeaseAgreement;
or(cl take whatever act ion a t law or
inequity
may appear necessary o r d es ir ab le to enforce the r ights oft he Au thor ity . Under no circumstances may the Author ity o rth e T ru stee declare the Lease Payments not then in defaul tto be immediately due and payable.
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APPENDIXD
FORM OF OPINION OF BOND COUNSEL
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APPENDIX D
Form o f opinion o f Bond Counsel
December __ , 1992
Cal i fo rn ia Statewide CommunitiesDevelopment Author i ty
7901 s toner idge Drive , su i t e 225
Pleasan ton , Cal i fo rn ia 94588
Re: Cal i fo rn ia Sta tewide CommunitiesDevelopment Author i ty 1992 LeaseRevenue Bonds (C i ty of OaklandConvention Centers Projec t )
Fina l Opinion
Ladies and Gentlemen:
We have ac ted as Bond Counsel in connect ion withth e a u th o ri za ti on , issuance and de l ive ry by th e Cal i fo rn ia
s ta tewide Communit ies Deve lopment Author i ty ( the
"Authori ty") of its 1992 Lease Revenue Bonds (Ci ty ofOakland Convention Centers Pro j e c t ) , dated December , 1992
( the "Bonds"). In t h a t connec t ion , we have examinedcer ta inp ro ce ed in gs o f th e Authori ty and th e Ci ty of Oakland,Cal i fo rn ia ( the "C i ty " ) , i nc lud ing but no t l imi t ed to
Au t hor it y Resol ut ion No. , adoptedOctober 19, 1992, and C ity O rd in an ce No. C.M.S.,
adopted October _, 1992 ( the "Resolut ion" and "Ordinance",r espec t ive ly ) and executed coun te rpar t s of th e Ind en tu re o f
Trus t , dated as o f November 1 , 1992 ( the " Inden tu re" ) , byand between Ameri t rus t Texas National Assoc ia t ion , ast ru s t ee ( the "Trus tee" ) , and th e Authori ty , the Amended andResta ted Lease and Sublease Agreement , dated as o f
November 1, 1992 ( the "Lease Agreement") , by and between th e
Author i ty and th e C ity , and such opinions and ce r t i f i c a t e sas to c er ta in f ac tu al mat te r s , and such othe r documents andmat te r s as we deemed necessary o r appropr ia te to render th i sopin ion . Any cap i t a l i zed term no t def ined here in sha l l haveth e meaning given to such term in the Inden ture .
The opin ions he re i na f t e r expressed (1) a re based onan examinat ion of ex is t ing s t a t u t e s , r egu la t ions , rUl ings
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Ca li fo rn ia s ta tew id e Communities
Development Author i ty
December __ , 1992Page Two
and jUdic ia l dec i s ions and cover ce r ta in matte rs n ot
d i rec t l y addressed by such au thor i t i e s ; (2) may be af fec ted
by events or ac tion s occurr ing a f t e r the date he reof ; and(3) are sUbjec t to the e f f e c t of bankruptcy , inso lvency ,
r eo rgan iza t ion , moratorium or s im i l a r laws genera l ly
a f fec t ing c r ed i t o r s ' r i gh t s and to the app lic a t io n ofgenera l pr inc ip les of eq uity , includ ing bu t no t l imi ted to
the r i gh t to spec i f i c performance, whereby a cou r t might not
enforce ce r ta in covenants if it concludes t h a t suchenforcement would be unreasonable or no t under taken in goodf a i t h under th e then ex is t ing c i rcumstances , and the
l imi t a t ions on remedies a v ai la b le a g ai ns t pUblic en t i t i e s .
Based on and sUbject to th e foregoing, and in
r e l i ance the reon, as of the da te hereo f, we are of the
fol lowing opinion:
1 .organized andCal i fo rn ia .
The Author i ty i s a j o i n t powers au thor i ty dUlyopera t ing under th e laws of th e Sta t e of
2. The City i s a municipal corpora t ion andcha r t e r c i t y , dUly organized and va l id ly exis t ing under th e
Cons t i tu t ion and laws of th e s t a t e of Cal i fo rn ia and dulyex i s t ing under i t s Char te r .
3. The Author i ty has f u l l power and au thor i ty
under th e laws of th e S ta te of C alifo rn ia to issu e theBonds, and th e Bonds cons t i tu t e th e l ega l , va l id and bindingl imi ted ob l iga t i on s of th e Au th or ity .
4. The Author i ty has fu l l power and au thor i ty
under the laws of the Sta te of Cal i fo rn ia to acqu i re title
to the Fac i l i t i e s and to l ease the Si tes from th e City , andto l ease and sublease to the City th e Fac i l i t i e s and the
s i t e s , re spec t ive ly , to en te r in to the Amended and Resta tedGround Lease and th e Lease Agreement, and to perform i t sobl igat ions the reunder .
5. The Indenture has been duly and va l id ly
author ized , executed and de l ivered and cons t i t u t e s thel ega l , val id and binding ob l iga t ion of the Author i ty . TheIndenture c rea t e s a va l id pledge, to secure th e payment ofth e p rin cip al o f , premium, i f any, and i n t e re s t on the
Bonds, of the Lease Payments and any other amounts( inc luding proceeds of the sa le of the Bonds) held in anyfund or account , o ther than the Rebate Fund, es tab l i shed
pursuan t to th e Indenture SUbject to the prov i s ions of the
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Cal i fo rn ia s ta tewide CommunitiesDevelopment Author i ty
December __ , 1992Page Three
Indenture p erm itt in g th e ap pl ica t ion th ereo f fo r the
purposes and on th e terms and cond i t ions s e t fo r th in the
Indenture . The Inden tu re a l so crea tes a val id ass ignment tothe Trus tee , fo r the bene f i t of th e h old ers of th e Bonds, ofthe r i gh t , title and i n t e r e s t of th e Author i ty in th e LeaseAgreement ( to the ex ten t and as more pa r t i cu l a r ly desc r ibed
t h e re i n ) .
6. The Lea se Agreement , th e Amended and Resta ted
Ground Lease and the Inden tu re have been dUly author ized ,
executed and del ivered by th e Authori ty and cons t i tu te th e
l ega l , va l id and binding ob l iga t ions of th e Author i tyenforceab le aga ins t the Author i ty in accordance with t h e i rrespect ive terms.
7. The Lease Agreement and th e Amended andRestated Ground Lease have been duly author ized , executedand de l ivered by th e C ity and are th e l ega l , va l id andbinding ob l iga t ions of th e City enforceable aga ins t th e Ci ty
in accordance with t he i r respect ive t e rms, and th e
ob l iga t ion of the c i ty to make the Lease Payments under th e
Lease Agreement does not cons t i tu te a deb t of the Ci ty , th e
s t a t e o f C ali fo rn ia or any po l i t i c a l subdivis ion t h e r eo f
within the meaning of any cons t i t u t i ona l o r s ta tu tory deb t
l imi t o r r e s t r i c t i on .
8. The Bonds a re lim ited ob l iga t ions of the
Author i ty and are not a l i en or charge upon the funds o rproperty of the Author i ty except to the ex ten t of th e
aforementioned pledge and ass ignment . The fa i th and c r ed i tof the A uthori ty i s not pledged to th e payment of p r i nc ipa l
of or premium or i n t e r e s t on the Bonds. The Bonds a re not adebt of th e s t a t e of Cal i fo rn ia or any po l i t i c a l subd iv i s ion
or agency the reof , othe r than th e Au th or ity to th e ex ten t of
the aforementioned pledge and ass ignment , and ne i t he r the
s t a t e nor any such po l i t i c a l subdivis ion or agency i s l i ab l efo r the payment the reof .
9. In t e r e s t on the Bonds i s exempt from s t a t e ofCali forn ia persona l income taxes .
Respec t fu l ly submi t t ed ,
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APPENDIXE
FORM OF OPINION OF SPECIAL TAX COUNSEL
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APPENDIX E
FORM OF OPINION OF SPECIALTAX COUNSEL
California Statewide CommunitiesDevelopment Authority
7901 Stoneridge, Suite 225
Pleasanton, California 94588-3657
Re:
Ladies &. Gentlemen:
$ Califomia Statewide Communities Development Authority 1992
Lease Revenue Bonds (City of Oakland Convention Centers Project)
We have acted as special tax counsel in connection with the issuance and sale by the
California Statewide Communiti..'sDevelopmentAuthority (the·Authority·)of its* _1992 Lease Revenue Bond' (Henry J. Kaiser Convention Center and George P. Scotian Memorial
Convention Center) (the "Bonds"). The Bonds are 'Aued under and pursuant to an Indenture of Trust
dated as of , 1992 (the ·Indenture"), between the Authority and Ameritrust Texas
National Association, as Trustee (the ·Trustee"). The proceeds of the Bonds will be used (a) to pay
Oalder Associates Umited Partnership ("Oalder·) and Oalcbay Associates Umited Partnership
("Oakbay") the acquisition price in connection with the purchase of the Henry J. Kaiser Convention
Center ("Kaiser Convention Center·) and the Oakland Convention Center-George P. Scotian Memorial
Convention Center (·ScotIan Convention C e ~ r " ) , respectively, by the Authority; (b) to fund a reserveaccount created under the Indenture; and (c) to pay COsts incurred In connection with the executionand delivery of the Bonds. The proceeds from the sale by Oaktar of the Kaiser Convention Center
will be used to prapay the related Installment Sale Agreements and redeem the Redevelopment
Agency of the City of Oakland', (the "Agency") $43,500,000 Certificates of Participation (Henry J.
Kaiser Convention Center), dated September 1, 1982 (the ·Kaiser CertifICates") and the proceeds from
the sale by Oakbay of the Scotian Convention Center will be used to prepay the related Installment
Sales Agreements and to redeem the Agency's $38,000,000 Certificates of Participation (Oakland
Convention CenteroGeorge P. Scotian Memorial) Series 1983 (the ·Scotlan Certificates"). Pursuant to
an Amended and Restated Lease and Sublease Agreement dated as of , 1992 (the ·Lease
Agreement") between the Authority and the City of Oakland, California (the •City), the Authority has
agreed to lease to the City the Kaiser Convention Center and the Scotian Convention Center and the
City has agreed to make leaM payments suffICient in amount to pay when due the principal of andinterest on the Bonds. The payment of the principal of and Interest on the Bonds will be guaranteed
under a municipal bond guaranty policy to be iAued by AMBAC Indemnity Corporation (the "lnsurer").
Terms not otherwise defined herein shall have the same meanings provided in the Indenture.
As special tax counsel, we have examined the pertinent statutes, such documents, records
and other Instruments.a we deemed necessary to enable UI to express the opinions set forth below,
including without limitation, the Indenture, the Lease Agreement and an Arbitrage and Tax Certificate
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Californl8 8mt8w1de Community
Development Authority
Page 2
of the Authority dated .. of th e date hereof. We ha"e alao examined and relied upon the legal
opinion of M o rri s o n . Foerster, bond counsel, dated .. o f th e date hereof, related to th e legal status
of, due authorization, execution and delivery by, and th e binding effect upon and enforceability
against, th e Authority o f th e Bonds.
Based on the foregoing, it is ou r opinion t ha t t he interest on the Bonds is excluded from gross
income fo r federal income ta x purposes under the Internal Revenue Code of 1986, as amended lthe
-Code-), under existing laws as enacted and construed on th e date of initial delivery of the Bonds,
assuming th e accuracy of and continuing compliance with th e certifications of th e Authority and the
City with certain covenants in th e documents and requirements of the Code. Failure by th e Authority
or the City to comply with such covenants and requirements may, however, cause interest on the
Bonds to be included In gross income fo r federal income ta x purposes retroactively to the date of
delivery of th e Bonds. Interest on th e Bonds will no t be an item of ta x preference fo r purposes of
either individual or corporate federal afternative minimum tax, but interest on th e Bonds held by a
corparation (other than an 8 corporation, regulated investment company, real estate investment trust
or real estate mortgage investment conduit! may be indirectly subject to federal alternative minimum
ta x and environmental ta x because of it s inclusion in th e earnings and profits of a corporate holder.
Interest on th e Bonds held by a foreign corparation may be subject to th e branch profits ta x imposed
by the Code.
Ownership of th e Bonds ma y result in collateral federal income ta x consequences to certain
taxpayers, including, without l imitat ion, financial institutions, property and casualty insurance
companies, certain S corporations, individual recipients of Social Security or Railroad Retirement
benefits, and taxpayers wh o ma y be deemed to have incurred or continued indebtedness to purchase
or carry th e Bonds. We exprasa no opinion as to such collateral tax consequences.
We have not been engaged to review, nor ha"e we undertaken to r ev ie w, t he accuracy,
completeness or sufficiency of the Official Statement or other offering material relating to the Bonds,
and we express no opinion herein relating thereto.
Very truly yours,
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APPENDIXF
FORM OF MUNICIPAL BOND INSURANCE POLICY
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IIIBACMunicipal Bond Insurance Policy
A \1BA( lndernmtv ( o r p o rJIHl'l
c- o ( " I COrpOfJlIOn ~ \ . , l c m ...
-H Fa...t vlrfflm .... t ~ J ( l I ..on \ \ r-con ...in ~ ~ - O ' "Adrniru-tranv v Ofbc c
One: 'llJ((.. vtrcet Pla?.J ' \C \ \ '\ or}... '\ Y IOOO-t
Issuer Polley Number
Bonds Prerniurn
Secretary
Authonzed Representatlveffective Date
AMBAC Indemnity Corporation (A"ffiAC) A Wbcon.>In Stock Insurance Company
m considerauon of the payment of the premium and subiect 10 the terms of thl> Poiley, hereby agree' to pay to the UnitedScatesTrust Cornpanv of New York, as trustee, or Its successor (the 'Insurance Trustee"), for the benefit of Bondholders, that
portion of the prmcipal of and interest on the above-described debt obhgauons (the" ') which shall become Due forPayment but shall be unpaid bv reason of !'<onpavment bv the Issuer
AMBAC will make such payments to the Insurance Trustee wuhm 5 davs folio AMBAC of Nonpavment
Upon a Bondholders presentauon and surrender to the Insurance Truste s r appurtenant coupons,uncanceled and In bearer form and free of any adverse claim, the Ins Tr t the Bondholder the face
amount of pnncipal and Interestwhich IS then Due for Pavment b a U nt, AMBAC shall become
the owner of the surrendered Bonds and coupons and shall er s rights to payment
In cases where the Bonds are issuable onlv 10 a form w r Bondholders or their assigns,the Insurance Trustee shall disburse prrncipal to a B aH d as afo on p ruauon and surrender to the
Insurance Trustee of the unpaid Bond, uncance n f t er With an Instrument of assignment,In form sausfactorv to the Insurance Trust ulve. such Bondholders dulv authorizedrepresentanve. so as to permit owners p su B arne of AMBAC or Its nornmee In cases
where the Bonds ar e Issuable on Iv r wh Ie egistered Bondholders or their assigns the
Insurance Trustee shall disburse 1 ere to a nih upon preseruauon to the Insurance Trustee ofproof that the claimarn IS en t he rest on the Bond and dellvery to the Insura.nce Trustee
of an rnsrrumenr of ass m ~ I 0 sa ate [ urance Trustee dulv executed bv the claimant Bondholder orsuch Bondholders Iv th ed se uve, ansf 109 to AMBAC all rrghts under such Bond to receive the Interest
rn respect of w. tH I ra dr u m ae AMBAC shall be subrogated to all of the Bondholders nghts topavrnenr on IS t ih xte of urance disbursements so made
As used here: the ho er m anv person other than the Issuer who, at the ume of Nonpavrnent, IS the owner
of a Bond Or0 to a Bond 'Due for Pavmem': when referring to the pnncipal of Bonds, IS when the
stated marunry date t dempuon date for the apphcauon of a required sinking fund mstallrnent has been
reached and does t r to ny earlier date on which pavment IS due by reason of call for redempuon (other than bv
apphcanon of requir g fund mstallrnents), accelerauon or other advancement of rnatunrv, and, when referring toInterest on the Bonds, hen the stated date for pavmem of interest has been reached "Nonpavmenr" means the failure
of the Issuer to have provided suffiCIent funds to the pavmg agent for payment 10 full of all prrncrpal of and mreresr on the
Bonds which ar e Due for Payment
ThISPohcv IS noncancelable The premium on thrs Pollcv IS not refundable for any reason, including pavment of the Bonds
pnor to maturirv ThIS Polleydoes not Insure against loss of an, redemption. prepayment or accelerauon premium which at
any time may become due In respect of anv Bond, nor agamst n ~ other than Nonpayment
In witness whereof AMBAC has caused this Polley to be affixed Witha facsrrmle of Its corporate seal and to be Signed by Its
duly authorized officers In facsrrnrle to become effective as Its ongrnal seal and signatures and brnding upon AMBAC by virtue
of the counter-signature of Its duly authorized representauve@ UNITED SW'ES TRUSTCOMPANY OFNEW'tORI<acknowledgesthat Ithas agreed 10perform the dulles of Insurance Trustee under tlusPolley
Form" S66-00(H (V901
~ ( < . tu-, ':7AuthorIZed Olficer
8/2/2019 Oakland 1992 SCDA Bonds
http://slidepdf.com/reader/full/oakland-1992-scda-bonds 178/178
MIBAC.
Endorsement
Pohcv issued to
AMBAC Indemruty Corporanon
c/o CT Corporation Systems44 East MIfflInStreet
MadISOn. WlSConsm53703AdrmrustranveOffice
One State Street Plaza
New York. NY 10004
Attached [0 and forming part of
Effective Date of Endorsement